<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BEDFORD PROPERTY INVESTORS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO]
[LOGO]
Dear Stockholder:
The directors and officers join me in extending to you a cordial invitation
to attend our Annual Meeting of Stockholders. This meeting will be held on
Wednesday, May 13, 1998 at 1:00 p.m. at the Lafayette Park Hotel, 3287 Mount
Diablo Boulevard, Lafayette, California.
Enclosed please find the Notice of Meeting, Proxy Statement and Proxy Card.
At this Meeting we are seeking to elect seven directors, all of whom will be
elected by the Stockholders, voting as a single class. Additionally, the
Stockholders will be asked to approve the amendment and restatement of the
Company's 1992 Directors' Stock Option and Employee Stock Option Plans. The
Stockholders will also be asked to ratify the appointment of KPMG Peat Marwick
LLP as the Company's independent public accountants for the upcoming year.
Your management and Board of Directors unanimously recommend that you vote
FOR all nominees for directors and FOR the other proposals.
Please take time to review and vote on each proposal. Your vote is
important. Please remember to return your Proxy Card.
I hope to see you at the Annual Meeting.
Very truly yours,
[LOGO]
Peter B. Bedford
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
[LOGO]
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
270 LAFAYETTE CIRCLE
LAFAYETTE, CA 94549
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1998
------------------------
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Bedford Property Investors, Inc., a
Maryland corporation (the "Company"), will be held at the Lafayette Park Hotel,
3287 Mount Diablo Boulevard, Lafayette, California, on Wednesday, May 13, 1998,
at 1:00 p.m. local time, to consider the following proposals:
1. Election by the holders of the Common Stock of seven directors to serve
until the next annual meeting of stockholders and until their successors
are duly elected and qualify;
2. To approve the amendment and restatement of the Company's 1992
Directors' Stock Option Plan, including the increase in the number of
shares of Common Stock reserved for issuance thereunder by 500,000
shares;
3. To approve the amendment and restatement of the Company's Employee Stock
Option Plan, including the increase in the number of shares of Common
Stock reserved for issuance thereunder by 2,100,000 shares;
4. To ratify the appointment by the Board of Directors of the Company's
independent public accountants for the year ending December 31, 1998; and
5. To transact such other business as may properly come before the meeting.
Only stockholders of record at the close of business on March 23, 1998 are
entitled to notice of and to vote at the meeting and any adjournment or
postponement thereof.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. THE
PRESENCE AT THE MEETING, IN PERSON OR BY PROXY, OF STOCK HOLDERS ENTITLED TO
CAST A MAJORITY OF ALL THE VOTES ENTITLED TO BE CAST AT THE MEETING WILL
CONSTITUTE A QUORUM. THIS PROXY STATEMENT IS ACCOMPANIED BY A PROXY CARD. IF YOU
CANNOT ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD
IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE.
By Order of the Board of Directors
[LOGO]
DENNIS KLIMMEK
SECRETARY
April 7, 1998
Lafayette, California
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
270 LAFAYETTE CIRCLE
LAFAYETTE, CA 94549
------------------------
PROXY STATEMENT
---------------------
MAY 13, 1998
ANNUAL MEETING OF STOCKHOLDERS
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board of Directors" or the "Board") of Bedford Property
Investors, Inc., a Maryland corporation (the "Company"), of proxies from the
holders (the "Common Stockholders") of the Company's issued and outstanding
shares of Common Stock, par value $.02 per share (the "Common Stock"), to be
exercised at the Annual Meeting of Stockholders to be held on Wednesday, May 13,
1998, at 1:00 p.m., local time, and at any adjournment(s) or postponement(s) of
such meeting (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. Unless otherwise
indicated, all information contained in this Proxy Statement, including, but not
limited to, Common Stock share numbers and per share amounts, reflects the
conversion of all of the Company's Series A Convertible Preferred Stock to
Common Stock effected on October 14, 1997.
The purpose of the Annual Meeting is to consider and act upon the following
proposals:
1. Election by the holders of Common Stock of seven directors to serve
until the next annual meeting of stockholders and until their successors
are duly elected and qualify;
2. To approve the amendment and restatement of the Company's 1992
Directors' Stock Option Plan, including the increase in the number of
shares of Common Stock reserved for issuance thereunder by 500,000
shares;
3. To approve the amendment and restatement of the Company's Employee Stock
Option Plan, including the increase in the number of shares of Common
Stock reserved for issuance thereunder by 2,100,000 shares;
4. To ratify the appointment by the Board of Directors of the Company's
independent public accountants for the year ending December 31, 1998; and
5. To transact such other business as may properly be brought before the
Annual Meeting.
This Proxy Statement and the enclosed Proxy Card are being mailed to the
Common Stockholders on or about April 7, 1998.
The holders of record of the shares of Common Stock at the close of business
on March 23, 1998 (the "Record Date") are entitled to notice of and to vote at
the Annual Meeting in relation to proposals 1, 2, 3 and 4, above, on which they
will vote as a class. At the close of business on the Record Date, 22,583,867
shares of Common Stock were outstanding (the "Outstanding Stock"), each of which
is entitled to cast one vote.
The presence at the Annual Meeting, in person or by proxy, of Common
Stockholders holding shares entitled to cast a majority for each proposal of all
the votes entitled to be cast at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes (i.e., votes not cast by a broker or other record holder in "street"
or nominee name solely because such record holder does not have discretionary
authority to vote on the matter) will be counted toward the
<PAGE>
presence of a quorum. The directors (Proposal 1) will be elected by a plurality
of all the votes cast at the Annual Meeting. Accordingly, abstentions as to the
election of directors will not affect the election of the candidates receiving a
plurality of votes. The affirmative vote of a majority of all the votes cast by
holders of Common Stock is necessary for approval of the amendments to both the
Directors' Stock Option Plan and the Employee Stock Option Plan and for
ratification of the appointment of independent public accountants for the fiscal
year ending December 31, 1998 (Proposals 2, 3 and 4, respectively). Abstentions
as to these proposals will not be counted as votes cast and will have no effect
on the result of the votes on these proposals.
Under the Maryland General Corporation Law ("MGCL"), holders of shares of
Outstanding Stock will not be entitled to appraisal rights with respect to such
shares with respect to any of the proposals.
All expenses in connection with the solicitation of proxies will be borne by
the Company. In addition to solicitation by mail, officers and directors of the
Company may also solicit proxies by mail, telephone, facsimile or in person.
Additionally, the Company may retain the services of a professional proxy
solicitation firm to assist in the solicitation of proxies, at a cost of
approximately $5,000 plus expenses, which would be borne by the Company.
This proxy statement is accompanied by a proxy card for use by the Common
Stockholders. The shares of Common Stock represented by properly executed proxy
cards will be voted at the Annual Meeting as indicated or, if no instruction is
given, in favor of proposals 1, 2, 3 and 4. The Company does not presently know
of any other business which may come before the Annual Meeting. Any person
giving a proxy has the right to revoke it at any time before it is exercised (a)
by filing with the Secretary of the Company a duly signed revocation or proxy
bearing a later date or (b) by voting in person at the Annual Meeting.
2
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is currently composed of seven members.
Accordingly, the Common Stockholders, voting as a class, have the right to elect
all seven members to the Board of Directors to serve until the next annual
meeting of Common Stockholders and until their respective successors are duly
elected and qualified.
The Board of Directors has nominated the seven individuals listed below to
serve as directors of the Company. Management knows of no reason why any of
these nominees would be unable or unwilling to serve, but if any nominee should
be unable or unwilling to serve, the proxies will be voted for the election of
such other persons for the office of director as management may recommend in the
place of such nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE "FOR"
THE SEVEN NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS DIRECTOR SINCE
- -------------------------- --- ----------------------------------------------------------------- ---------------
<S> <C> <C> <C>
Claude M. Ballard 68 Mr. Ballard is also a Trustee of The Urban Land Institute and a 1992
Limited Partner of the Goldman Sachs Group, L.P. Mr. Ballard
also serves on the Board of Directors of CBL & Associates, a
REIT, and Taubman Center Properties, Inc., a REIT. He is also a
Trustee of Mutual Life Insurance Company of New York, the
Chairman of Merit Equity Partners, Inc., a property acquisition
and management company, and a Director of Horizon Hotels, Inc.,
a hotel ownership and management company. Mr. Ballard attended
Memphis State University and the University of Tennessee.
Peter B. Bedford 60 Mr. Bedford has been Chairman of the Board since May 1992 and 1991
Chief Executive Officer since November 1992. Mr. Bedford has
been engaged in the commercial real estate business, primarily
in the Western United States, for over 36 years and has been
responsible for the acquisition, ownership, development and
management of an aggregate of approximately 19 million square
feet of industrial, office and retail properties, as well as
land, in 14 states. Mr. Bedford serves on the board of
directors of Bank of America Corporation, Bixby Ranch Company,
a real estate investment company, and First American Title
Guarantee Co., a title insurance company. Mr. Bedford is the
recipient of numerous awards recognizing his contributions to
the real estate industry and serves as a governor of the Urban
Land Foundation and an overseer of the Hoover Institution. His
previous experience also includes serving as Vice Chairman of
the National Realty Committee and of the Hoover Institution and
as Chairman of the Real Estate Advisory Board of the Wharton
School of Business.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS DIRECTOR SINCE
- -------------------------- --- ----------------------------------------------------------------- ---------------
Mr. Bedford received his B.A. in Economics from Stanford
University.
<S> <C> <C> <C>
Anthony M. Downs 67 Mr. Downs is a Senior Fellow at the Brookings Institution, a 1992
non-profit policy research organization. Mr. Downs serves on
the Board of Directors of each of Pittway Corporation, a
holding company with equity interests in publishing and
manufacturing entities, General Growth Properties, Inc., a
REIT, Massachusetts Mutual Life Insurance Co., the Urban
Institute, the NAACP Legal and Educational Defense Fund, Inc.,
the National Housing Partnership Foundation, a developer of
low-income housing, the Urban Land Institute, Counselors of
Real Estate and the Essex Property Trust, Inc. Mr. Downs
received a B.A. in International Relations and Political Theory
from Carleton College and an M.A. and Ph.D. in Economics from
Stanford University.
Thomas G. Eastman 51 Mr. Eastman is the owner of Forrester Capital, LLC which makes 1995
venture capital investments in real estate-related businesses.
Prior to forming Forrester Capital he was Co-Chairman and a
founder of Aldrich Eastman Waltch, a national real estate
investment advisor. Mr. Eastman continues as a member of the
Advisory Boards of AEW Capital Management and of AEW
International, which invests in emerging markets. He is on the
Board of Directors or of Advisors of a number of other real
estate companies, including those in which he has invested. Mr.
Eastman was Chairman of the National Association of Real Estate
Investors and is a member of the Urban Land Institute. Mr.
Eastman received a B.A. from Stanford University and an M.B.A.
from Harvard University.
Anthony M. Frank 66 Mr. Frank served as Postmaster General of the United states from 1992
1988 to 1992 and as Chairman and Chief Executive Officer of
First Nationwide Bank from 1971 to 1988. Prior to that time, he
was Chairman of the Federal Home Loan Bank of San Francisco,
Chairman of the California Housing Finance Agency, Chairman of
Independent Bancorp of Arizona, and the first Chairman of the
Federal Home Loan Mortgage Corporation Advisory Board.
Currently, he is Chairman of Acrogen, Inc., a biotechnology
company; Chairman of Belvedere Capital Partners; and serves on
the Board of Directors of Crescent Real Estate Equities, a
REIT; Irvine Apartment Communities, a REIT; Charles Schwab &
Co., a brokerage firm; Temple-Inland, Inc., a forest products
company; General American Investors Company, Inc., a
publicly-traded closed-end investment fund; and Cotelligent,
Inc., an information technology
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS DIRECTOR SINCE
- -------------------------- --- ----------------------------------------------------------------- ---------------
services company. Mr. Frank received a B.A. from Dartmouth
College and an M.B.A. from the Tuck School of Business at
Dartmouth.
<S> <C> <C> <C>
Thomas H. Nolan, Jr. 40 Mr. Nolan is a Managing Director of AEW Capital Management, L.P. 1995
(AEW), a national real estate investment adviser. Mr. Nolan
joined AEW in 1984. Mr. Nolan's responsibilities include the
oversight of investments made by certain partnerships managed
by AEW. In that capacity he serves on a number of boards of
private companies and has formerly served on the Board of
Directors of Crocker Trust, Inc., a REIT, and the Partnership
Committee of the Taubman Realty Group L.P. Mr. Nolan earned a
B.B.A. in Business Administration from the University of
Massachusetts.
Martin I. Zankel, Esq. 64 Mr. Zankel has been a Director of the Company since May 1992. He 1992
is Senior Principal in the law firm of Bartko, Zankel, Tarrent
& Miller. In addition, Mr. Zankel has more than 35 years
experience as a real estate investor and developer, including
President of Independent Holdings, Inc., a real estate
development company; Chairman of the Board and Chief Executive
Officer of Landsing Pacific Fund, Inc., a REIT (ASE); and
Managing Member of ZORO, LLC, a developer of San Francisco
multimedia real estate facilities. Mr. Zankel is the Chairman
of the Board of Trustees of the Berkeley Repertory Theatre. He
received a B.S. in Economics from the Wharton School of
Commerce and Finance at the University of Pennsylvania and a
J.D. from the Hastings College of the Law at the University of
California in San Francisco.
</TABLE>
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not employees of the Company are
currently paid an annual retainer fee of $17,500 and an additional fee of $2,500
for each Board meeting attended. Any non-employee Director attending in person a
duly constituted meeting of a committee of the Board of Directors of which such
Director is a member receives, in addition to any other fees to which he may be
entitled, a separate meeting attendance fee equal to $2,500 for his or her
attendance in person at any such committee meeting not held on the same day, the
day preceding or the day following a regular or special meeting of the Board of
Directors. Any non-employee member of the Board of Directors who participates in
a regular or special meeting of the Board of Directors by conference telephone
or similar communications equipment receives $600 for each such meeting.
Non-Employee Directors are reimbursed for out-of-pocket expenses in connection
with attendance at meetings. If a non-employee member of the Board of Directors
travels to conduct a site inspection of a property to be acquired by the
Company, he is paid $1,000 per day and reimbursed for related travel expenses.
Non-employee Directors receive no other cash compensation for their services on
behalf of the Company. Pursuant to the Company's Amended and Restated 1992
Directors' Stock Option Plan, all Directors (whether or not employed by the
Company) receive annual grants of 10,000 stock options and newly elected members
receive 25,000 stock options.
5
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four regular meetings and no special meeting
during 1997. Each member of the Board of Directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and the committees of the
Board of which he was a member during the last year.
The Company has an Audit Committee which consists of Messrs. Ballard
(Chairman), Downs, Frank and Nolan. The Audit Committee reviews the internal
control of the Company and reviews the services performed and to be performed by
the independent auditors of the Company during the year. The members of the
Audit Committee also meet regularly with the independent auditors to review the
scope and results of the annual audit. The Audit Committee met twice during
1997.
The Company also has a Compensation Committee which consists of Messrs.
Downs (Chairman), Ballard, Eastman and Frank. The Compensation Committee is
primarily responsible for reviewing compensation to be paid to officers of the
Company and for the administration of the Amended and Restated Employee Stock
Option Plan (the "Employee Plan"). The Compensation Committee met twice during
1997.
The Company also has a Nominating Committee which consists of Messrs.
Bedford (Chairman), Eastman, Frank and Zankel. The Nominating Committee is
responsible for submitting nominations for the directors, elections for whom are
held at the annual meeting of Stockholders. The Nominating Committee does not
consider nominees proposed by Stockholders. The Nominating Committee met once
during 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 1997 were Messrs. Downs,
Ballard, Eastman and Frank. None of these individuals were officers or employees
of the Company at any time during the year ended December 31, 1997, nor have any
of these individuals ever been an officer of the Company or any of its
subsidiaries. In addition, none of the executive officers of the Company served
on the compensation committee of another entity or as a director of an entity
which employs any of the members of the Compensation Committee.
Martin I. Zankel, a director of the Company, and his associates provided
legal services to the Company for which his firm was paid, in the aggregate,
$205,826 in 1997.
6
<PAGE>
PROPOSAL 2
PROPOSAL TO APPROVE
THE AMENDED AND RESTATED 1992 DIRECTORS' STOCK OPTION PLAN
The stockholders are being asked to approve the Amended and Restated 1992
Directors' Stock Option Plan (the "Director Plan"), which was adopted by the
Board effective September 4, 1997, subject to stockholder approval. The
amendment and restatement of the Director Plan is intended (i) to permit
directors to defer receipt of their annual retainers and meeting fees and
receipt of the shares of Common Stock otherwise deliverable upon exercise of
their stock options, (ii) to reduce the number of stock options granted to
directors upon their initial election to the Board, (iii) to clarify certain
ambiguities in the prior version of the Director Plan and (iv) to increase the
number of shares of Common Stock reserved for issuance under the Director Plan
from 500,000 to 1,000,000 shares. The full text of the Director Plan (as amended
and restated) is included as Appendix 1. Below is a summary of certain key
provisions of the Director Plan, which is qualified in its entirety by reference
to the text of the attached plan document.
DESCRIPTION OF THE DIRECTOR PLAN
PURPOSE. The Director Plan provides for automatic grants of stock options
to the Company's directors. The overall purpose of the Director Plan is to
promote the Company's long-term growth and financial success by attracting,
motivating and retaining directors of outstanding ability, and to foster a
greater identity of interest between the Company's directors and stockholders.
As described above, the purpose of the proposed amendment and restatement of the
Director Plan is (i) to permit directors to defer receipt of their annual
retainers and meeting fees and receipt of the shares of Common Stock otherwise
deliverable upon exercise of their stock options, (ii) to reduce the number of
stock options granted to directors upon their initial election to the Board,
(iii) to clarify certain ambiguities in the prior version of the Director Plan
and (iv) to increase the number of shares of Common Stock reserved for issuance
under the Director Plan from 500,000 to 1,000,000 shares.
ELIGIBILITY. All directors of the Company may participate in the Plan,
including directors who are also employees of the Company.
SHARES RESERVED FOR ISSUANCE. A total of 110,000 shares of Common Stock are
presently available for issuance under the Director Plan. If an option lapses,
expires or is otherwise terminated without the issuance of shares, or if shares
are tendered to pay the exercise price of an option or withheld to satisfy any
applicable withholding tax obligation, the shares underlying the lapsed, expired
or terminated option or the shares so tendered or withheld will not reduce the
aggregate number of shares available for issuance under the Plan. Authorized and
unissued shares of Common Stock will be issued under the Director Plan. The
number of shares available for issuance will be adjusted if there is a change in
the Company's capitalization, a merger, or a similar transaction.
GRANTS OF STOCK OPTIONS. On the date of a director's initial election to
the Board, a director will be granted an option to purchase 25,000 shares of
Common Stock. At each annual meeting during the term of the Director Plan, each
individual who has continuously served as a director for a period ending on the
date of the annual meeting and who is reelected at such annual meeting or who
will otherwise continue to serve on the Board following the annual meeting will
receive an option to purchase 10,000 shares of Common Stock. All options will
have an exercise price equal to the fair market value of the Common Stock on the
date of grant and will become vested and exercisable six months after the date
of grant.
DEFERRALS.
IN GENERAL. The Director Plan permits directors to defer some or all of
their annual retainer and meeting fees. Any amount so deferred will be converted
into either phantom cash amounts or phantom
7
<PAGE>
stock units (or a combination thereof) and credited to a bookkeeping account
established by the Company for this purpose. In addition, the Director Plan
permits directors to defer receipt of the shares otherwise deliverable to them
upon exercise of their options. Such deferred shares will be credited to the
director's bookkeeping account in the form of phantom stock units.
PHANTOM STOCK UNITS. In connection with the deferral of director's fees,
the number of phantom stock units to be credited to a director's bookkeeping
account will be determined by dividing the amount of the deferred fees by the
fair market value of a share of Common Stock as of the date of crediting. One
phantom stock unit will be credited to a director's bookkeeping account for each
share of stock the receipt of which is deferred by a director upon the exercise
of a stock option. In the event that the Company pays a dividend or makes a
distribution in respect of the Common Stock, a director's bookkeeping account
will be credited with an additional number of phantom stock units determined by
dividing the amount of cash or the value of property distributed by the fair
market value of a share of Common Stock as of the date of such dividend payment
or distribution. Phantom stock units will be settled through the delivery to the
director of a corresponding number of shares of Common Stock on the payment date
or dates selected by the director in connection with the director's initial
deferral election.
PHANTOM CASH AMOUNTS. Phantom cash amounts credited to a director's account
will be credited with notional interest as of the last day of each month at an
annual rate of interest equal to the "applicable federal rate" for short-term
loans with monthly compounding, as promulgated by the Internal Revenue Service
under Section 1274 of the Internal Revenue Code of 1986, as amended (the
"Code"). Phantom cash amounts will be settled in cash on the payment date or
dates selected by the director in connection with the director's initial
deferral election.
DISTRIBUTION. Payment of deferred benefits in a director's deferred
compensation account must commence on the date specified in the deferral
election form (or earlier if the director ceases to be a member of the Board and
does not continue as an employee of the Company) and may be made in either a
lump sum or through no more than five annual installments.
TERMINATIONS OF SERVICE. If a director's service on the Board terminates by
reason of the director's death or disability, the director's vested options will
remain outstanding and the director's beneficiary may exercise the options at
any time through the first anniversary of the director's termination of service.
If a director ceases to be a member of the Board for any reason other than death
or disability and does not continue as an employee of the Company, the
director's options will be exercisable by the director for a period of three
months, to the extent vested at the time of termination of service. A director's
deferred benefits will be paid to the director immediately in one lump sum in
the event of the director's death. If a director's service on the Board
terminates in any other manner, the director's deferred benefit will be paid in
accordance with the director's distribution election.
ADMINISTRATION. The Chief Financial Officer (or another person appointed by
the Chief Executive Officer) (the "ADMINISTRATOR") will administer the Director
Plan. The Administrator will have authority to adopt rules and regulations that
it considers necessary or appropriate to carry out the purposes of the Director
Plan and to interpret and construe the provisions of the Plan.
AMENDMENT AND TERMINATION. The Board will have authority to amend or
terminate the Director Plan at any time. However, the Board may not, without
stockholder approval, increase the number of shares available for issuance under
the Director Plan.
TERM. Unless terminated earlier by the Board, the Director Plan will expire
on May 19, 2002. No further stock options will be awarded under the Director
Plan after that date.
STOCK PRICE. On March 27, 1998, the closing price of the Common Stock on
the New York Stock Exchange was $19 7/16.
8
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES.
STOCK OPTIONS. The grant of a stock option has no immediate federal income
tax effect. The director will not recognize taxable income and the Company will
not receive a tax deduction. In general, when the director exercises the option,
the director will recognize ordinary income and the Company will receive a tax
deduction, in each case measured by the difference between the exercise price
and the fair market value of the shares on the date of exercise. When the
director sells Common Stock obtained from exercising a stock option, any gain or
loss will be taxed as a capital gain or loss (long-term or short-term, depending
on how long the shares have been held).
DEFERRALS. A director will not recognize taxable income when the director
defers fees or the receipt of shares upon exercise of an option. A director will
recognize ordinary income equal to the amount of cash and the fair market value
of the Common Stock distributed to the director from the director's deferral
account at the time of such distribution. When the director sells Common Stock
distributed from the director's deferral account, any gain or loss will be taxed
as a capital gain or loss (long-term or short-term, depending on how long the
shares have been held).
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board believes that increasing the number of shares available for
issuance under the Amended and Restated 1992 Directors' Stock Option Plan will
provide the Company with equity award opportunities to attract, retain and
motivate the best available talent for the successful direction of the
management of its business, and more fully align the interests of management
with those of the public shareholders. The affirmative vote of a majority of all
the votes cast by holders of Common Stock is necessary for approval of the
Amended and Restated 1992 Directors' Stock Option Plan. Abstentions as to this
proposal will not be counted as votes cast and will have no effect on the result
of the vote on this proposal. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THE AMENDED AND RESTATED 1992 DIRECTORS' STOCK OPTION PLAN. IN THE ABSENCE
OF INSTRUCTIONS TO THE CONTRARY, PROXIES SOLICITED IN CONNECTION WITH THIS PROXY
STATEMENT WILL BE SO VOTED.
9
<PAGE>
PROPOSAL 3
PROPOSAL TO APPROVE
THE AMENDED AND RESTATED EMPLOYEE STOCK PLAN
(FORMERLY THE EMPLOYEE STOCK OPTION PLAN)
The stockholders are being asked to approve the Amended and Restated
Employee Stock Plan (formerly the Employee Stock Option Plan) (the "Employee
Plan"), which amendment and restatement was adopted by the Board effective as of
January 1, 1998, subject to stockholder approval. The amendment and restatement
of the Employee Plan is intended (i) to enable the Compensation Committee of the
Board (the "Compensation Committee") to grant additional types of equity-based
incentive awards, including options, stock appreciation rights and restricted
stock ("Awards"), to officers, employees and consultants of the Company, (ii) to
clarify certain ambiguities in the prior version of the Employee Plan and (iii)
to increase the number of shares reserved for issuance under the Employee Plan
by 2,100,000 shares.
In addition, the amendment and restatement of the Employee Plan, which is
described in more detail below, also made other changes necessary or advisable
to permit compliance of certain Awards with Section 162(m) of the Code. Section
162(m) of the Code limits the amount of compensation paid to executive officers
that may be deducted for federal income tax purposes in any year to $1 million,
unless the compensation qualifies as "performance-based" compensation. The full
text of the Employee Plan (as amended and restated) is included as Appendix 2.
Below is a summary of certain key provisions of the Employee Plan, which is
qualified in its entirety by reference to the text of the attached plan
document.
DESCRIPTION OF THE EMPLOYEE PLAN
PURPOSE. The overall purpose of the Employee Plan is to attract and retain
the services of qualified individuals for positions of responsibility and to
secure for the Company the benefits of the incentives inherent in increased
ownership of Common Stock by such individuals. The amendment and restatement of
the Employee Plan is intended (i) to enable the Compensation Committee to grant
additional types of equity-based incentive awards, including options, stock
appreciation rights and restricted stock, to officers, employees and consultants
of the Company, (ii) to clarify certain ambiguities in the prior version of the
Employee Plan, and (iii) to increase the number of shares reserved for issuance
under the Employee Plan from 900,000 to 3,000,000 shares.
ELIGIBILITY. All officers, employees and consultants of the Company are
eligible to receive Awards under the Employee Plan.
SHARES AVAILABLE FOR ISSUANCE. There are no shares of Common Stock
currently available for issuance under the Employee Plan. All shares of Common
Stock underlying Awards granted pursuant to the Employee Plan, including all
Awards of restricted stock granted by the Company, will be counted against the
limit. If an Award lapses, expires or is otherwise forfeited without the
issuance of shares, or if shares are tendered to pay the exercise price of an
Award or withheld to satisfy an employee's withholding obligation with respect
to an Award, the shares underlying the lapsed, expired or forfeited Award or the
shares so tendered or withheld will not reduce the aggregate number of shares
available for issuance under the Employee Plan. Authorized and unissued shares
of Common Stock will be issued under the Employee Plan. The number of shares
available for issuance will be adjusted if there is a change in the Company's
capitalization, a merger, or a similar transaction.
AWARDS. The following types of Awards are contemplated under the Employee
Plan:
STOCK OPTIONS. Stock options may be either incentive stock options within
the meaning of Section 422 of the Code or nonqualified stock options. The term
of a stock option may not be longer than ten years, and the exercise price of an
option may not be less than 85% of the fair market value of a share of
10
<PAGE>
Common Stock at the time of grant (100% in the case of incentive stock options).
The exercise price of a stock option may be paid in cash, previously owned
shares of Common Stock or through a broker-assisted cashless exercise procedure.
STOCK APPRECIATION RIGHTS. Each stock appreciation right entitles a
participant to receive the excess, if any, of the fair market value of a share
of Common Stock on the date of exercise over the base price of the stock
appreciation right. At the discretion of the Compensation Committee, payments to
an employee upon exercise of a stock appreciation right may be made in cash,
shares of Common Stock or both. The Committee may grant stock appreciation
rights alone or together with stock options. If a stock appreciation right is
granted in tandem with a stock option, the stock appreciation right may not be
exercised prior to, or later than, the time the related option could be
exercised.
RESTRICTED STOCK. A share of restricted stock entitles a participant to
receive a share of Common Stock at a specified vesting date, subject to vesting
criteria and, in the discretion of the Compensation Committee, performance
criteria. Grants of restricted stock to employees of the Company made by the
Compensation Committee in 1997 will be counted against the grant limit described
above.
ADMINISTRATION. The Compensation Committee administers the Employee Plan
and has the authority to select the participants, and determine the type, number
and other terms and conditions of the Awards including, but not limited to, the
ability of the participant to defer the receipt of shares of Common Stock
otherwise deliverable upon the exercise of an option. The Compensation Committee
may prescribe award agreements, establish rules and regulations for the
administration of the Employee Plan, construe and interpret the terms of the
Employee Plan and the award documents and make all other decisions or
interpretations as the Compensation Committee may deem necessary. Amendment and
Termination. The Board will have authority to amend or terminate the Employee
Plan at any time. However, the Board may not, without stockholder approval,
increase the number of shares available for issuance.
TERM. Unless terminated earlier by the Board, the Employee Plan will expire
on April 30, 2003. No further Awards will be granted under the Employee Plan
after that date.
STOCK PRICE. On March 27, 1998, the closing price of the Common Stock on
the New York Stock Exchange was $19 7/16.
NEW PLAN BENEFITS. Awards under the Employee Plan are authorized by the
Compensation Committee in its sole discretion. For this reason it is not
possible to determine the benefits or amounts that will be received by any
particular employees or group of employees in the future. Grants of Awards that
were made during the Company's fiscal year ending December 31, 1997 to the
Company's Named Executive Officers are described elsewhere in this proxy
statement. During the Company's fiscal year ending December 31, 1997, (i)
285,000 stock options and 38,000 shares of restricted stock were granted to all
executive officers of the Company as a group and (ii) 198,000 stock options and
4,500 shares of restricted stock were granted to all employees of the Company as
a group (excluding executive officers). Non-employee directors of the Company
are not eligible to receive Awards under the Employee Plan. As amended and
restated, the Employee Plan provides that Awards covering no more than 400,000
shares of Common Stock may be granted to an eligible participant in any fiscal
year.
FEDERAL INCOME TAX CONSEQUENCES.
NONQUALIFIED STOCK OPTIONS. The grant of a nonqualified stock option has no
immediate federal income tax effect. The employee will not recognize taxable
income and the Company will not receive a tax deduction. In general, when the
employee exercises the option, the employee will recognize ordinary income and
the Company will receive a tax deduction, in each case measured by the
difference between the exercise price and the fair market value of the shares on
the date of exercise. When the employee sells
11
<PAGE>
Common Stock obtained from exercising a stock option, any gain or loss will be
taxed as a capital gain or loss (long-term or short-term, depending on how long
the shares have been held).
INCENTIVE STOCK OPTIONS. When an employee is granted an incentive stock
option, or when the employee exercises the option, the employee will generally
not recognize taxable income (except for purposes of the alternative minimum
tax) and the Company will not receive a tax deduction. If the employee holds the
shares of Common Stock for at least two years from the date of grant and one
year from the date of exercise, any gain or loss upon a subsequent disposition
of the shares will be treated as long-term capital gain or loss.
STOCK APPRECIATION RIGHTS. When an employee is granted a stock appreciation
right, the employee will generally not recognize taxable income and the Company
will not receive a tax deduction. When the employee exercises the stock
appreciation right, the employee will recognize ordinary income and the Company
will receive a tax deduction equal to the value of the cash or stock paid to the
employee in settlement of the stock appreciation right.
RESTRICTED STOCK. When an employee is granted restricted stock, the
employee will generally not recognize taxable income and the Company will not
receive a tax deduction. Upon the lapse of the risk of forfeiture or
restrictions on transferability applicable to the Common Stock comprising the
Award of restricted stock, the employee will be taxed at ordinary income rates
on the then fair market value of the Common Stock and a corresponding deduction
will be allowable to the Company (subject to Section 162(m) of the Code). When
the employee subsequently sells the Common Stock underlying the Award of
restricted stock, any gain or loss will be taxed as a capital gain or loss
(long-term or short-term, depending on how long the shares have been held).
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board believes that increasing the number of shares available for
issuance under the Amended and Restated Employee Stock Plan will provide the
Company with equity award opportunities to attract, retain and motivate the best
available talent for the successful conduct of its business, and more fully
align the interests of employees with those of the public shareholders. The
affirmative vote of a majority of all the votes cast by holders of Common Stock
is necessary for approval of the Amended and Restated Employee Stock Plan.
Abstentions as to this proposal will not be counted as votes cast and will have
no effect on the result of the vote on this proposal. THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THE AMENDED AND RESTATED EMPLOYEE STOCK PLAN. IN
THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, PROXIES SOLICITED IN CONNECTION
WITH THIS PROXY STATEMENT WILL BE SO VOTED.
12
<PAGE>
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, Certified Public Accountants, served as independent
accountants of the Company for the fiscal year ended December 31, 1997. The
Board of Directors, acting upon the recommendation of its audit committee, has
appointed KPMG Peat Marwick LLP to audit the financial statements of the Company
for the fiscal year ending December 31, 1998. A representative of KPMG Peat
Marwick LLP is expected to be present at the Annual Meeting and will have the
opportunity to make a statement if he so desires and will be available to
respond to appropriate questions from the Common Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY.
INFORMATION REGARDING EXECUTIVE OFFICERS
EXECUTIVE OFFICERS OF THE COMPANY
The following persons serve as executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS OFFICER SINCE
- -------------------------- --- ----------------------------------------------------------------- ---------------
<S> <C> <C> <C>
Peter B. Bedford 60 Mr. Bedford has been Chairman of the Board since May 1992 and 1992
Chief Executive Officer since November 1992. Mr. Bedford has
been engaged in the commercial real estate business, primarily
in the Western United States, for over 36 years and has been
responsible for the acquisition, ownership, development and
management of an aggregate of approximately 19 million square
feet of industrial, office and retail properties, as well as
land in 14 states. Mr. Bedford serves on the board of directors
of Bank of America Corporation, Bixby Ranch Company, a real
estate investment company, and First American Title Guarantee
Co., a title insurance company. Mr. Bedford is the recipient of
numerous awards recognizing his contributions to the real
estate industry and serves as a governor of the Urban Land
Foundation and an overseer of the Hoover Institution. His
previous experience also includes serving as Vice Chairman of
the National Realty Committee and of the Hoover Institution and
as Chairman of the Real Estate Advisory Board of the Wharton
School of Business. Mr. Bedford received his B.A. in Economics
from Stanford University.
James R. Moore 57 Mr. Moore has been Executive Vice President and Chief Operating 1995
Officer since January 1998 and joined the Company in September
1995. From September 1995 to June 1997, Mr. Moore was Vice
President of Property/ Asset Management. From June 1997 to
January 1998, Mr. Moore was Senior Vice President of
Property/Asset Management. From 1983 to 1994, he was Managing
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS OFFICER SINCE
- -------------------------- --- ----------------------------------------------------------------- ---------------
Director of Cushman and Wakefield, an international commercial
real estate services firm. Mr. Moore was also a branch manager
and commercial real estate broker at Cushman and Wakefield. He
has served on the Board of Trustees of The Lindsay Museum since
1984. Mr. Moore has the CCIM designation and has lectured at
the University of San Francisco and San Francisco State
University. He received a B.A. in History from the University
of California at Berkeley, an M.B.A. from the University of San
Francisco and is currently a candidate for the Doctor of
Business Administration Degree at Golden Gate University.
<S> <C> <C> <C>
Scott R. Whitney 45 Mr. Whitney has been Senior Vice President and Chief Financial 1997
Officer of the Company since September 1997. From 1995 to 1997,
Mr. Whitney served as Senior Vice President/Chief Financial
Officer of WCI Communities of Naples, Florida, a master planned
community developer. From 1984 to 1995, Mr. Whitney served in
various positions at Equity Group Investments, Inc., and its
affiliates, a full service real estate and management concern,
most recently as Executive Vice President/Chief Financial
Officer of Equity Institutional Investors. Mr. Whitney has been
a certified public accountant since 1976. Mr. Whitney received
a B.S. in Accounting/Finance from Northern Illinois University.
Robert E. Pester 41 Mr. Pester has been Executive Vice President and Chief Operating 1994
Officer of Bedford Acquisitions, Inc. since January 1998 and
joined Bedford Acquisitions, Inc. in January 1995. From June
1997 to January 1998, Mr. Pester was Senior Vice President of
Bedford Acquisitions, Inc. From January 1995 to June 1997, Mr.
Pester served as Vice President of Bedford Acquisitions, Inc.
Prior to joining Bedford Acquisitions, Inc., he was a real
estate investment consultant from 1992 to 1993, President of
the Development Division of Bedford Property Holdings Limited
("BPHL") from 1989 to 1992 and Vice President of Cushman &
Wakefield in Northern California from 1980 to 1989. Mr. Pester
received a B.S. in Economics and in Political Science from the
University of California at Santa Barbara.
Hanh Kihara 50 Ms. Kihara has been Vice President and Controller of the Company 1993
since May 1993. Prior to joining the Company, she was
Controller and Assistant Controller of BPHL from 1990 to 1993.
From 1986 to 1990, Ms. Kihara was a Manager at Armstrong,
Gilmour and Associates, a certified public accounting firm. Ms.
Kihara has been a certified public accountant since
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS OFFICER SINCE
- -------------------------- --- ----------------------------------------------------------------- ---------------
1989. Ms. Kihara received a B.S. in Administration and
Accounting from California State University--Hayward.
<S> <C> <C> <C>
Dennis Klimmek 53 Mr. Klimmek has been Senior Vice President and Counsel of the 1997
Company since October 1997. From 1992 to 1997, Mr. Klimmek
served as Vice President and General Counsel of Kemper Real
Estate Management Company and its affiliates, a real estate
development and management company. From 1986 to 1992, he was
Vice President and General Counsel of BPHL. Mr. Klimmek has
been a member of the California Bar since 1974. He received a
B.S. in Business Administration/Economics from Pepperdine
University, an M.S. in Engineering from the University of
Southern California and a J.D. from Loyola University.
</TABLE>
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth information regarding compensation paid by
the Company, and Bedford Acquisitions, Inc. for services rendered during the
past three fiscal years for (i) the Chief Executive Officer, (ii) the three next
most highly compensated executive officers of the Company who were employed by
the Company as of December 31, 1997 and (iii) the Executive Vice President and
Chief Operating Officer of Bedford Acquisitions, Inc. (collectively, the "Named
Executive Officers").
15
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION RESTRICTED ALL OTHER
--------------------------------- STOCK COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) OPTIONS(#) ($)(10)
- ---------------------------------- --------- ---------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter B. Bedford ................. 1997 $ 150,000 $ 100,000(4) 150,938(7) 10,000(8) $ 6,840
Chief Executive Officer 1996 $ 150,000 $ 100,000(4) 75,000(9) $ 6,435
1995 $ 150,000 $ 50,000 10,000(8) $ 6,418
50,000(9)
5,000(8)
20,000(9)
James R. Moore(1) ................ 1997 $ 150,000 $ 100,000(5) 100,625(7) 30,000(9) $ 3,240
Executive Vice President and 1996 $ 150,000 $ 50,000 50,000(9) $ 135
Chief Operating Officer 1995 $ 50,000 -- -- $ 41
Scott R. Whitney(2) .............. 1997 $ 47,211 $ 75,000(6) 155,625(7) 50,000(9) $ 2,165
Senior Vice President and Chief
Financial Officer
Robert E. Pester(3) .............. 1997 $ 150,000 $ 350,000 150,938(7) 50,000(9) $ 6,390
Executive Vice President and 1996 $ 150,000 $ 200,000 50,000(9) $ 5,835
Chief Operating Officer of 1995 $ 150,000 $ 149,933 25,000(9) $ 2,668
Bedford Acquisitions, Inc.
Hanh Kihara ...................... 1997 $ 82,500 $ 40,000 60,375(7) 20,000(9) $ 1,590
Vice President and Controller 1996 $ 75,000 $ 25,000 10,000(9) $ 1,635
1995 $ 72,300 $ 20,000 5,000(9) $ 1,635
</TABLE>
- ------------------------
(1) Mr. Moore commenced employment with the Company on September 1, 1995.
(2) Mr. Whitney commenced employment with the Company in September 1997.
(3) Since January 1, 1995, Mr. Pester has been employed by Bedford
Acquisitions, Inc., a California corporation wholly-owned by Mr. Bedford.
All of Mr. Pester's compensation is paid by Bedford Acquisitions, Inc. See
"Certain Relationships and Related Transactions - Funding of Acquisitions
and Financing Costs."
(4) One-half of Mr. Bedford's 1997 and 1996 bonus was paid by Bedford
Acquisitions, Inc. See "Certain Relationships and Related Transactions -
Funding of Acquisitions and Financing Costs."
(5) One-half of Mr. Moore's 1997 bonus was paid by Bedford Acquisitions, Inc.
(6) Mr. Whitney's entire 1997 bonus was paid by Bedford Acquisitions, Inc.
(7) All restricted stock granted to date, except for the restricted stock
granted to Messrs. Whitney and Klimmek under the terms of their respective
employment agreements, will fully vest five years from the date granted. In
the case of restricted stock granted to Messrs. Whitney and Klimmek, 20% of
the restricted stock vests annually from the date granted. The aggregate
restricted stock held by the Named Executive Officers as of December 31,
1997 and the aggregate cash value of those shares based on the closing price
of the common stock on the date of grant were as follows: Mr Bedford-- 7,500
shares/$159,938; Mr. Moore--5,000 shares/$100,625; Mr. Whitney--7,500
shares/$155,625; Mr. Pester--7,500 shares/$150,938; and Ms. Kihara--3,000
shares/$60,375. The Named Executive Officers are paid dividends on their
restricted stock.
16
<PAGE>
(8) Represents stock options granted pursuant to the Director Plan.
(9) Represents stock options granted pursuant to the Employee Plan.
(10) Includes auto allowance (in an aggregate amount of $13,775 for 1997, $9,000
for 1996 and $5,816 for 1995), premiums paid by the Company for term life
insurance (in an aggregate amount of $450 for 1997, $540 for 1996, and $446
for 1995) and matching contributions under the Company's 401(k) Plan (in an
aggregate amount of $6,000 for 1997, $4,500 for 1996 and $4,500 for 1995).
OPTION GRANTS
The following table sets forth certain information concerning options
granted during 1997 to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO TERM(3)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(#) FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- --------------------------------- ----------- --------------- ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Peter B. Bedford................. 10,000(1) N/A $ 18.82 11/16/2007 $ 118,358 $ 299,942
75,000(2) 16% $ 17.625 5/16/2007 $ 831,320 $ 2,106,728
James R. Moore................... 30,000(2) 6% $ 17.625 5/16/2007 $ 332,528 $ 843,691
Scott R. Whitney................. 50,000(2) 10% $ 20.75 9/8/2007 $ 652,478 $ 1,653,508
Robert E. Pester................. 50,000(2) 10% $ 17.625 5/16/2007 $ 554,213 $ 1,404,486
Hahn Kihara...................... 20,000(2) 4% $ 17.625 5/16/2007 $ 221,685 $ 561,794
</TABLE>
- ------------------------
(1) Represents stock options granted pursuant to the Director Plan, which
options vest and become exercisable six months from the date of grant.
(2) Represents stock options granted pursuant to the Employee Plan.
(3) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates for appreciation
only, based on SEC rules, and do not represent the Company's estimate or
projection of the price of the Company's stock in the future. Actual gains,
if any, on stock option exercises depend upon the actual future performance
of the Common Stock and the continued employment of the option holders
throughout the vesting period. Accordingly, the potential realizable values
set forth in this table may not be achieved.
17
<PAGE>
AGGREGATE OPTION EXERCISES IN 1997 AND VALUES AT YEAR-END 1997
The following table sets forth information regarding the number of shares
acquired and value realized for options exercised by the Named Executive
Officers during the year ended December 31, 1997 and the number and aggregate
dollar value of unexercised options held at the end of 1997.
AGGREGATED OPTION/SAR
EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE- MONEY OPTIONS AT
YEAR-END(#) YEAR-END($)(1)
SHARES ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------------- --------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Peter B. Bedford............... -- $ 0 101,250 103,750 $ 2,214,844 $ 2,269,531
James R. Moore................. -- $ 0 6,250 48,750 $ 136,719 $ 1,066,406
Scott R. Whitney............... -- $ 0 -- 50,000 -- $ 1,093,750
Robert E. Pester............... -- $ 0 13,750 72,500 $ 300,781 $ 1,585,938
Hahn Kihara.................... -- $ 0 14,000 23,750 $ 306,250 $ 519,531
</TABLE>
- ------------------------
(1) For all unexercised in-the-money options, assumes a fair market value at
December 31, 1997 of $21 7/8 per share of Common Stock, which is the last
transaction in the Common Stock on the New York Stock Exchange on that date.
EMPLOYMENT AGREEMENT WITH PETER B. BEDFORD
On February 16, 1993, the Company entered into an employment agreement with
Mr. Bedford, Chairman and Chief Executive Officer of the Company, and amended
the agreement on September 18, 1995. Pursuant to the amended employment
agreement, Mr. Bedford has agreed to serve as Chairman and Chief Executive
Officer of the Company on a substantially full-time basis until the agreement's
expiration on September 18, 2000. After September 18, 2000, the agreement will
be automatically renewed for additional one-year terms unless either party gives
the other notice of non-renewal. Under the employment agreement, the Company
agrees to pay Mr. Bedford a salary of not less than $150,000 per annum, plus
automobile and parking allowances. The amended employment agreement provides
that the Company will pay Mr. Bedford a severance payment equal to his base
salary in the event that his employment is terminated by the Company without
cause or Mr. Bedford resigns following a change in control of the Company. The
agreement defines a "change in control" as a transaction not approved by a
majority of the Board that results in the acquisition by any person of 35% of
the voting stock of the Company, other than persons who had such voting control
at the time the agreement was originally entered into.
EMPLOYMENT AGREEMENT WITH SCOTT R. WHITNEY
On August 7, 1997, the Company entered into an employment agreement with Mr.
Whitney pursuant to which Mr. Whitney agreed to serve as Senior Vice President
and Chief Financial Officer of the Company. The term of employment is one year.
Under the employment agreement, the Company agreed to pay Mr. Whitney a base
salary of at least $150,000 per annum, plus an automobile allowance. Under the
terms of the agreement, Mr. Whitney will also be granted 50,000 stock options
and 7,500 restricted shares of the Company during each year of employment.
Additionally, Mr. Whitney will receive an annual incentive bonus, guaranteed to
be $200,000 for the first full year of his employment ($75,000 of which was paid
on September 8, 1997 and $125,000 of which will be paid on September 8, 1998).
The agreement provides that if, at any time during the first three years of Mr.
Whitney's employment, a change in control
18
<PAGE>
of the Company occurs or Mr. Whitney is otherwise terminated without cause, Mr.
Whitney will be entitled to (i) a severance payment equal to one year's salary
and maximum bonus and (ii) the immediate grant and vesting of 22,500 shares of
restricted stock and 150,000 stock options, less the number of shares of
restricted stock and stock options previously granted to him. Mr Whitney's
employment agreement defines "change in control" with reference to the agreement
governing the terms of his restricted stock, which utilizes the definition of
"change in control" used in the retention agreements described below.
RETENTION AGREEMENTS
The Company has entered into retention agreements ("Retention Agreements")
with Messrs. Bedford, Moore and Pester and Ms. Kihara providing for certain cash
payments in the event of an executive's termination of employment following a
change in control of the Company. For purposes of the Retention Agreements, a
"change in control" is defined as (i) the acquisition by any person of 30% or
more of the combined voting power of the Company (with certain exceptions), (ii)
a change in 50% of the membership of the Board during any consecutive 2-year
period, where new members of the Board were not approved by members at the
beginning of the period or by other members so approved, (iii) the occurrence of
a reorganization, merger, consolidation or other transaction after which the
stockholders of the Company immediately prior to the transaction do not,
immediately following the transaction, own more than 50% of the combined voting
power of the Company and (iv) a sale, liquidation or distribution of all or
substantially all of the assets of the Company.
In the event of an Involuntary Termination (as defined in the Retention
Agreements) of a participating executive within two years following a change in
control, such executive will be entitled to receive a cash payment equal to the
sum of the executive's salary plus 3-year average bonus. Any severance payable
under an executive's retention agreement will be reduced by any amount of
severance payable to such executive under any other plan, arrangement or
agreement under which the executive is entitled to receive cash severance
payments. In addition, the participating executive will be entitled to receive a
pro rata bonus for the year in which the Involuntary Termination occurs.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
During 1997 the members of the Compensation Committee were Messrs. Downs,
Eastman, Frank and Ballard. The Compensation Committee is responsible for the
general compensation policies of the Company, and in particular is responsible
for setting and administering the policies that govern executive compensation.
The Compensation Committee evaluates the performance of management and
determines the compensation levels for all executive officers.
The primary objectives of the Company's compensation policies and programs
are (i) to attract and retain key executives, (ii) to reward performance by
these executives which benefits the Stockholders and (iii) to align the
financial interests of the Company's executive officers directly with those of
the Stockholders. The primary elements of executive officer compensation are
base salary, annual cash bonus, and stock option and restricted stock awards.
The salary is based on factors such as related experience, level of
responsibility, and comparison to similar positions in comparable companies. The
annual cash bonuses are based on the Company's performance measured against
attainment of financial and other objectives and on individual performance.
Stock option and restricted stock awards are intended to align the executive
officer's interest with those of the Stockholders, and are determined based on
the executive officer's level of responsibility, number of options or shares
previously granted, and contributions toward achieving the goals and objectives
of the Company. Additional information on each of these compensation elements
follows.
19
<PAGE>
SALARIES
Base salaries for the executive officers are adjusted annually, following a
review by the Chairman and Chief Executive Officer (the "CEO") of the Company.
In completing the review, performance of the individual with respect to specific
objectives is evaluated, as are increases in responsibility and salaries for
similar positions. Comparisons are made to the total compensation packages of
other publicly traded real estate investment trusts of similar size, with a
comparable number of properties and employees. These comparisons are completed
through a review of various public filings as well as through a review of the
results of the REIT Executive Compensation Survey sponsored by the National
Association of Real Estate Investment Trusts (NAREIT). When all reviews are
completed, the CEO makes a recommendation to the Compensation Committee for its
review and final approval.
With respect to the CEO, the Compensation Committee considers a number of
factors in setting his compensation, the most important of which are the level
of compensation paid to chief executive officers of other real estate investment
trusts, the success of the Company's recent acquisitions of new properties, and
his importance to the Company's efforts to raise capital in the public markets.
The current base salary for Mr. Bedford, the Company's CEO, is less than the
average for chief executive officers of similar real estate investment trusts.
However, his total compensation is deemed appropriate in view of the restricted
stock and the stock options he holds.
ANNUAL BONUSES
Annual bonuses are awarded on a discretionary basis and reflect both Company
and individual performance. The Compensation Committee considers numerous
qualitative and quantitative factors in determining these bonus awards,
including the amount of equity capital raised, the success of the Company's
acquisition program and the growth in the Company's funds from operations, after
adjustment for lease commissions, tenant improvements and other capital
expenditures.
STOCK OPTION AWARDS
Stock options are an integral part of each executive officer's compensation
and are utilized by the Company to provide an incentive to the officer, and to
align the interests of the executive with those of the Stockholders by providing
him with a financial interest in the Company. Options granted by the
Compensation Committee under the Employee Plan are made at fair market value on
the date of the grant, vest over various time periods of up to five years and
expire after ten years. In making grants, the Compensation Committee takes into
account the executive officer's contributions to the Company, scope of
responsibilities, salary and the number of options previously granted. The
executive officers were granted a significant number of options in 1997, as the
Compensation Committee sought to implement its overall strategy of aligning the
financial interests of the executive officers with those of the Stockholders.
RESTRICTED STOCK AWARDS
A share of restricted stock entitles a participant to receive a share of
Common Stock at a specified vesting date, subject to vesting criteria, and, in
the discretion of the Compensation Committee, performance criteria. All
restricted stock granted to date, except for the restricted stock granted to
Messrs. Whitney and Klimmek under the terms of their respective employment
agreements, will fully vest five years from the date granted. In the case of
restricted stock granted to Messrs. Whitney and Klimmek, 20% of the restricted
stock vests annually from the date granted. Much like stock options, restricted
stock awards are utilized by the Company to provide an incentive to the
employee, and to align the interests of the employee with those of the
Stockholders by providing the employee with a financial interest in the Company.
To date, the Company has issued 42,500 shares of restricted stock.
20
<PAGE>
SECTION 162(M)
The Company intends that compensation paid to its executive officers will be
deductible under Section 162(m) of the Internal Revenue Code.
COMPENSATION COMMITTEE
A. M. Downs (Chairman)
T. G. Eastman
A. M. Frank
C. M. Ballard
21
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and any person who owns more than ten
percent of a registered class of the Company's equity securities, to file
reports of securities ownership on Form 3 and changes in ownership on Form 4 or
5 with the Securities and Exchange Commission (the "SEC"). Such officers,
directors and greater than ten percent stockholders are also required by SEC
rules to furnish the Company with copies of all Section 16(a) forms that they
file.
Based solely on its review of copies of such reports furnished to the
Company, the absence of a Form 3 or Form 5 or written representations that no
Form 5 was required, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
stockholders during the fiscal year ended December 31, 1997 were satisfied.
STOCK PRICE PERFORMANCE GRAPH
The following line graph illustrates a five-year comparison of the
cumulative total stockholder return on the Common Stock against the cumulative
total return of the Standard & Poor's 500 Composite Stock Index and the SNL
Securities Corporate Performance Index Value of all publicly-traded real estate
investment trusts ("REITs") holding greater than a 75% equity interest in their
REIT-qualifying assets. The graph assumes that $100 was invested on December 31,
1992 in the Common Stock and the indices, and that all dividends were reinvested
throughout the period.
FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN[UPDATE WITH 1997 DATA AND REMOVE
1991 DATA]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BEDFORD PROPERTY INVESTORS,
INC.
<S> <C> <C> <C>
Total Return Performance
Index Value
Bedford Property SNL All
Investors, Inc. S&P 500 Equity REITs
12/31/92 100.00 100.00 100.00
12/31/93 159.73 110.08 120.00
12/31/94 190.23 111.53 124.49
12/31/95 263.62 153.44 143.27
12/31/96 351.68 188.52 194.77
12/31/97 464.47 251.44 234.49
</TABLE>
22
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 15, 1998, with
respect to directors, certain employees of the Company and each person who is
known by the Company to own beneficially more than 5% of the shares of its
Common Stock, and with respect to shares of Common Stock owned beneficially by
all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OWNED CLASS
- ----------------------------------------------------------------------------------- ----------------- -------------
<S> <C> <C>
Bed Preferred No. 1 Limited Partnership(1)......................................... 4,166,667 18%
Peter B. Bedford................................................................... 1,069,112(2) 4.7%
Anthony M. Downs................................................................... 60,500(3) **
Anthony M. Frank................................................................... 63,200(4) **
Claude M. Ballard.................................................................. 60,000(4) **
Martin I. Zankel................................................................... 78,991(5) **
Thomas G. Eastman.................................................................. 45,000(6) **
Thomas H. Nolan, Jr................................................................ 45,000(6) **
Robert E. Pester................................................................... 66,280(7) **
Scott R. Whitney................................................................... 7,500 **
James R. Moore..................................................................... 37,025(8) **
Hanh Kihara........................................................................ 19,250(9) **
All directors and officers as a group (18 persons)................................. 1,577,983(10) 6.8%
</TABLE>
- ------------------------
** Less than 1%.
(1) A Delaware limited partnership beneficially owned by an investment fund
managed by AEW Capital Management. The shares held by this partnership were
acquired on October 14, 1997 upon the partnerships' conversion of all of
the shares of the Company's Series A Convertible Preferred Stock, then
outstanding, into shares of Common Stock.
(2) Includes 140,000 shares owned by Mr. Bedford's children (as to which Mr.
Bedford has sole voting power and may be deemed to be the beneficial
owner), 7,500 shares owned by Mr. Bedford's wife (as to which Mr. Bedford
has shared voting power and may be deemed to be beneficial owner), 50,000
shares owned by the Grindstone Trust (Mr. Bedford disclaims beneficial
ownership to these shares), and 101,250 shares of Common Stock subject to
options which are currently exercisable or will become exercisable within
60 days of March 15, 1998.
(3) Includes 35,000 shares subject to options which are currently exercisable
or will become exercisable within 60 days of March 15, 1998.
(4) Includes 60,000 shares subject to options which are currently exercisable
or will become exercisable within 60 days of March 15, 1998.
(5) Includes 8,991 partnership units convertible into 8,991 shares of Common
Stock and 60,000 shares subject to options which are currently exercisable
or will become exercisable within 60 days of March 15, 1998.
(6) Includes 45,000 shares subject to options which are currently exercisable
or will become exercisable within 60 days of March 15, 1998.
(7) Includes 17,500 shares subject to options which are currently exercisable
or will become exercisable within 60 days of March 15, 1998.
(8) Includes 6,250 shares subject to options which are currently exercisable or
will become exercisable within 60 days of March 15, 1998.
23
<PAGE>
(9) Includes 15,250 shares subject to options which are currently exercisable
or will become exercisable within 60 days of March 15, 1998.
(10) Includes 8,991 partnership units convertible into 8,991 shares of Common
Stock and 452,125 shares subject to options which are currently exercisable
or will become exercisable within 60 days of March 15, 1998.
24
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FUNDING OF ACQUISITION AND FINANCING COSTS
Due to the Company's limited financial resources, its activities relating to
the acquisition of new properties and debt and equity financings are currently
performed by Bedford Acquisitions, Inc., ("Bedford Acquisitions"), a corporation
wholly owned by Peter B. Bedford, the Company's Chairman and Chief Executive
Officer, pursuant to a written contract dated January 1, 1995. The contract
provides that Bedford Acquisitions is obligated to provide services to the
Company with respect to the Company's acquisition and financing activities, and
that Bedford Acquisitions is responsible for the payment of its expenses
incurred in connection therewith. Such expenses include certain costs incurred
by the Company on behalf of Bedford Acquisitions, including the cost of officers
and directors insurance coverage under the Company's insurance policy. Bedford
Acquisitions also paid one-half of Mr. Bedford's bonus ($50,000), one-half of
Mr. Moore's bonus ($50,000), Mr. Whitney's bonus ($75,000) and all of Mr.
Pester's compensation in 1997. Bedford Acquisitions must submit to the Company a
direct cost estimate for the Company's approval relating to each acquisition or
financing, setting forth the estimated timing and amount of all projected
Bedford Acquisitions costs relating to the acquisition or financing. Pursuant to
the contract, Mr. Bedford is obligated to make the payments of Bedford
Acquisitions' expenses described above if Bedford Acquisitions fails to make any
such payments in a timely fashion, provided that Mr. Bedford is not obligated to
pay any such amounts exceeding $1 million or following a termination of Bedford
Acquisitions' obligations based on the expiration or termination of the term of
the contract. The contract provides that Bedford Acquisitions is to be paid a
fee in an amount equal to the lesser of (i) 1 1/2% of the gross amount raised in
financings or the aggregate purchase price of property acquisitions, or (ii) an
amount equal to (a) the aggregate amount of approved expenses funded by Bedford
Acquisitions through the time of such acquisition or financing minus (b) the
aggregate amount of fees previously paid to Bedford Acquisitions pursuant to
such arrangement. In no event will the aggregate amount of fees paid to Bedford
Acquisitions exceed the aggregate amount of costs funded by Bedford
Acquisitions. The agreement with Bedford Acquisitions will expire on January 1,
1999.
During the year ended December 31, 1997, the Company paid Bedford
Acquisitions approximately $3,156,000 for acquisition, financing and development
activities performed pursuant to the foregoing arrangements which was
approximately $1,083,000 less than 1.5% of the gross amount raised in completed
financings, development activities, and the aggregate purchase price of acquired
properties. The Company believes that since the fees charged under the foregoing
arrangements (i) have been and continue to be comparable to those charged by
other sponsors of real estate investment entities or other third-party service
providers and (ii) have been and continue to be charged only for services on
acquired properties or completed financings, such fees were and continue to be
properly includable in direct acquisition costs and capitalized as part of the
asset or financing activities. If the Company were to discontinue this
arrangement, its acquisition and financing activities would have to be paid by
the Company, as incurred, out of cash from operations or borrowings and certain
of such costs would be reflected as operating expenses in its statement of
operations rather than being capitalized. For example, without the
above-described arrangement with Bedford Acquisitions, the Company may have
incurred substantial operating expenses relating to acquisition and financing
activities; if the Company had employed the same personnel and incurred the same
expenses as Bedford Acquisitions, net income and Funds from Operations for the
year ended December 31, 1997 each would have been reduced by approximately
$1,539,000 (or $0.10 per common share assuming full dilution) compared to the
corresponding amounts actually reported for that period. The Company intends to
discontinue this fee arrangement if and when its operating results permit it to
sustain acquisition and financing activities internally. However, the
termination of this arrangement prior to that time would likely require the
Company to decrease its acquisition and financing efforts, which could have a
material adverse effect on the Company's ability to grow.
25
<PAGE>
ACQUISITIONS INVOLVING AFFILIATES
None
OTHER TRANSACTIONS
Martin I. Zankel, a member of the Board of Directors of the Company, and his
associates provide legal services to the Company for which his firm was paid, in
the aggregate, $205,826 in 1997.
INDEBTEDNESS OF MANAGEMENT
In September 1995, the Company established a Management Stock Acquisition
program. Under the program, options exercised by key members of management
within ninety days of the grant date may be exercised and paid for either in
cash or with a note payable to the Company. Each note is due five years after
the date of its issuance or within ninety days from termination of employment,
with interest payable quarterly. During 1996, Mr. Bedford, Mr. Moore and Mr.
Pester each exercised options for 25,000 shares of Common Stock in exchange for
notes payable to the Company. The notes, of $325,000 each, bear interest at 7.5%
per annum. In 1995, Mr. Pester also borrowed $287,500 pursuant to this program.
As of March 31, 1998, $244,009 and $270,180 in principal amount were outstanding
under the notes owed by Mr. Bedford and Mr. Moore, respectively.
OTHER INFORMATION
A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, may be obtained, without charge, by writing to Dennis
Klimmek, Secretary, Bedford Property Investors, Inc., 270 Lafayette Circle,
Lafayette, CA 94549.
OTHER MATTERS
The Board of Directors knows of no matter to be presented at the Annual
Meeting other than those set forth in the Notice of Meeting and described in
this Proxy Statement. If, however, any other business should properly come
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in their discretion.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the annual meeting of
Stockholders to be held in 1999 must be received by the Company at its principal
executive offices no later than March 10, 1999 for inclusion in the Company's
Proxy Statement and form of proxy relating to that meeting. Such proposals must
meet the requirements of the rules of the Securities and Exchange Commission
relating to stockholder proposals.
By Order of the Board of Directors,
[LOGO]
Dennis Klimmek
SECRETARY
April 7, 1998
26
<PAGE>
APPENDIX 1
BEDFORD PROPERTY INVESTORS, INC.
AMENDED AND RESTATED
1992 DIRECTORS' STOCK OPTION PLAN
(Effective May 20, 1992, amended September 13, 1995 and
May 16, 1996 and amended and restated effective September 4, 1997)
In order to attract and retain the services of qualified individuals to
serve as members of the Board and to secure for the Company the benefits of the
incentives inherent in increased ownership of Common Stock by such individuals,
the Company hereby authorizes (i) grants to such individuals of Options and (ii)
deferrals by such individuals who are not employees of the Company of a portion
of their Director's Fees in accordance with the terms and conditions set forth
herein. Any capitalized term used herein without definition in the section where
first used shall have the meaning ascribed to such term in Section 10.
1. ADMINISTRATION. The Administrator will be responsible for administering
the Plan. The Administrator will have authority to adopt such rules as it may
deem appropriate to carry out the purposes of the Plan, and shall have authority
to interpret and construe the provisions of the Plan and any agreements and
notices under the Plan and to make determinations pursuant to any Plan
provision. Each interpretation, determination or other action made or taken by
the Administrator pursuant to the Plan shall be final and binding on all
persons. The Administrator shall not be liable for any action or determination
made in good faith, and shall be entitled to indemnification and reimbursement
in the manner provided in the Company's certificate of incorporation and by-laws
as such documents may be amended from time to time.
2. SHARES AVAILABLE. Subject to the provisions of Section 7(b) of the
Plan, the maximum number of shares of Common Stock which may be issued under the
Plan shall not exceed 1,000,000 shares (the "Limit"). Either authorized and
unissued shares of Common Stock or treasury shares may be delivered pursuant to
the Plan. For purposes of determining the number of shares that remain available
for issuance under the Plan, the following rules shall apply:
(a) the number of outstanding Phantom Stock Units and shares of Common
Stock underlying Options shall be charged against the Limit; and
(b) the Limit shall be increased by:
(i) the number of shares subject to an Option which lapses, expires
or is otherwise terminated without the issuance of such shares,
(ii) the number of shares tendered to pay the exercise price of an
Option, and
(iii) the number of shares withheld from the shares deliverable upon
exercise of and Option or contributed by a Director to satisfy a
Director's tax withholding obligations, if any.
3. OPTIONS. Each Director shall receive grants of Options under the Plan
as follows:
(a) OPTION GRANTS.
(i) INITIAL GRANT. On the date of a Director's initial election or
appointment to the Board, such Director (including any Director reelected
or reappointed after a period of at least 12 calendar months during which
he did not serve on the Board) shall be granted, subject to Section
3(a)(iii), an Option to purchase 25,000 shares of Common Stock. Such
Option shall have a per share exercise price equal to the Fair Market
Value of the Common Stock determined as of the date of grant and shall be
subject to the vesting schedule provided for in Section 3(b) and the
other terms and conditions provided for herein.
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<PAGE>
(ii) ANNUAL GRANTS. At each Annual Meeting during the term of the
Plan, each individual who has continuously served as a Director for a
period ending on the date of such Annual Meeting and who is reelected at
such Annual Meeting or who will otherwise continue to serve on the Board
following such Annual Meeting will receive, subject to Section 3(a)(iii),
an Option to purchase 10,000 shares of Common Stock. The Option shall
have a per share exercise price equal to the Fair Market Value of the
Common Stock determined as of the date of grant and shall be subject to
the vesting schedule provided for in Section 3(b) and the other terms and
conditions provided for herein.
(iii) INSUFFICIENT SHARES. If the number of shares underlying
Options to be granted under Section 3(a)(i) or 3(a)(ii) exceeds the
Limit, each Director to be granted an Option at such time shall receive a
pro rata grant determined by multiplying (A) the number of shares
underlying the Option which the Director would have been granted at such
time had the number of shares available for grant under the Plan been
sufficient by (B) a fraction, the numerator of which equals the Limit at
such time and the denominator of which equals the total number of shares
underlying Options which all Directors would have been granted had the
number of shares available for grant under the Plan been sufficient.
(b) VESTING SCHEDULE OF OPTIONS. Options awarded pursuant to the Plan
shall vest and become exercisable on the date that is six months from the
date of grant (the "Vesting Date") of the Option.
(c) TERM OF OPTIONS.
(i) TEN-YEAR TERM. Each Option shall expire ten years from its date
of grant, subject to earlier termination as provided herein.
(ii) EXERCISE FOLLOWING TERMINATION OF SERVICE DUE TO DEATH. If a
Director ceases to be a member of the Board by reason of such Director's
death, the Options granted to such Director that are then exercisable may
be exercised by such Director's Beneficiary at any time within one year
after the date of such termination of service, subject to the earlier
expiration of such Options as provided for in Section 3(c)(i) above. At
the end of such one-year period, the exercisable Options shall expire.
Options that are not exercisable at the date of termination of service
shall expire on such date.
(iii) EXERCISE FOLLOWING TERMINATION OF SERVICE DUE TO
DISABILITY. If a Director ceases to be a member of the Board by reason
of such Director's Disability, the Options granted to such Director that
are then exercisable may be exercised by the Director at any time within
one year after the date of such termination of service, subject to the
earlier expiration of such Options as provided for in Section 3(c)(i)
above. At the end of such one-year period, the exercisable Options shall
expire. Options that are not exercisable at the date of termination of
service shall expire on such date.
(iv) EXERCISE FOLLOWING OTHER TERMINATION OF SERVICE. If a Director
ceases to be a member of the Board for any reason other than death or
Disability, then the Director shall have the right, subject to the terms
and conditions hereof, to exercise the Option, at any time within three
months after the date of such termination, subject to the earlier
expiration of the Option as provided for in Section 3(c)(i) above, but
only to the extent that such Option was exercisable by the Director on
the date of such termination of service; provided, however, that in the
event that a Director is also an employee of the Company or becomes an
employee upon ceasing to be a member of the Board, the Option shall vest
and become exercisable in accordance with its terms and conditions and
shall remain exercisable for a period of three months after such
individual's employment with the Company terminates for any reason.
Except as provided in the previous
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<PAGE>
sentence, the unvested portion of the Option shall expire on the date of
the Director's termination of service with the Board. At the end of such
three-month period, the exercisable Options shall expire.
(d) TIME AND MANNER OF EXERCISE OF OPTIONS.
(i) NOTICE OF EXERCISE. Subject to the other terms and conditions
hereof, a Director may exercise any Options, to the extent such Options
are vested, by giving written notice of exercise to the Company;
PROVIDED, HOWEVER, that in no event shall an Option be exercisable for a
fractional share. The date of exercise of an Option shall be the later of
(A) the date on which the Company receives such written notice and (B)
the date on which the conditions provided in Section 3(d)(ii) are
satisfied.
(ii) PAYMENT. Subject to the last sentence of this Section
3(d)(ii), prior to the issuance of a certificate pursuant to Section
3(d)(v) hereof evidencing the shares of Common Stock in respect of which
all or a portion of an Option shall have been exercised, a Director shall
have paid to the Company the exercise price of the Option for all such
shares purchased pursuant to the exercise of such Option. Payment may be
made by personal check, bank draft or postal or express money order (such
modes of payment are collectively referred to as "cash") payable to the
order of the Company in U.S. dollars, or in shares of Common Stock
already owned by the Director for at least six months at the time of
exercise valued at their Fair Market Value as of the last business day
preceding the date of exercise, or in a combination of cash and shares.
Payment of the exercise price in shares of Common Stock shall be made (i)
by delivering to the Company the share certificate(s) representing the
required number of shares, with the Director signing his or her name on
the back or by attaching executed stock powers (the signature of the
Director must be guaranteed in either case) or (ii) attesting to
ownership of a sufficient number of shares of Common Stock. In addition
to the exercise methods described above, a Director may exercise an
Option through a procedure whereby the Director delivers to the Company
an irrevocable notice of exercise in exchange for the Company issuing the
shares of Common Stock subject to the Option to a broker previously
designated or approved by the Company, subject to such rules and
procedures as the Administrator may determine (for purposes of such a
transaction the value of shares of the Common Stock shall be deemed to
equal the Fair Market Value of the Common Stock on the date of exercise
of the Option).
(iii) STOCKHOLDER RIGHTS. A Director shall have no rights as a
stockholder with respect to any shares of Common Stock issuable upon
exercise of an Option until a certificate evidencing such shares shall
have been issued to the Director pursuant to Section 3(d)(v), and no
adjustment shall be made for dividends or distributions or other rights
in respect of any share for which the record date is prior to the date
upon which the Director shall become the holder of record thereof.
(iv) LIMITATION ON EXERCISE. No Option shall be exercisable unless
the Common Stock subject thereto has been registered under the Securities
Act and qualified under applicable state "blue sky" laws in connection
with the offer and sale thereof, or the Company has determined that an
exemption from registration under the Securities Act and from
qualification under such state "blue sky" laws is available.
(v) ISSUANCE OF SHARES. Subject to the foregoing conditions and
Section 3(d)(vi), as soon as reasonably practicable after its receipt of
a proper notice of exercise and payment of the exercise price of the
Option for the number of shares with respect to which the Option is
exercised, the Company shall deliver to the Director (or following the
Director's death, the Beneficiary entitled to exercise the Option), at
the principal office of the Company or at such other location as may be
acceptable to the Company and the Director (or such Beneficiary), one or
more stock certificates for the appropriate number of shares of Common
Stock issued in connection with
A-3
<PAGE>
such exercise. Shares sold in connection with a broker-assisted "cashless
exercise" shall be delivered to the broker designated or appointed by the
Company in the time and manner described in Section 3(d)(ii) above. Any
such shares shall be fully paid and nonassessable.
(vi) DEFERRAL OF PROFIT SHARES. Directors may elect to defer
receipt of shares of Common Stock otherwise deliverable upon exercise of
an Option. An election to defer such delivery shall be irrevocable and
shall be made in writing on a form (the "OPTION DEFERRAL ELECTION FORM")
acceptable to the Company at least six months prior to exercise. If a
Director exercises an Option at any time after delivery of an Option
Deferral Election Form with respect to such Option by tendering
previously-owned shares of Common Stock, the Director's Deferred
Compensation Account will be credited with a number of Phantom Stock
Units equal to the number of shares of Common Stock for which delivery is
deferred. Phantom Stock Units shall be paid by delivery of shares of
Common Stock in accordance with the timing and manner of payment elected
by the Director on his or her first Deferral Election Form filed in
accordance with Section 4, or, if no such election form has previously
been filed by the Director, then in accordance with the timing and manner
of payment elected by the Director on such Option Deferral Election Form.
(vii) TAX WITHHOLDING. Where applicable, upon the exercise of the
Option (or upon settlement of Phantom Stock Units), the Company shall be
entitled to require as a condition of delivery of Common Stock that a
Director remit, or, in appropriate cases, agree to remit when due, an
amount sufficient to satisfy all federal, state and local withholding and
employment tax requirements relating to such exercise. A Director will be
entitled to elect to have the Company withhold from the Common Stock to
be delivered upon the exercise of the Option, or to elect to deliver to
the Company from shares of Common Stock owned separately by the Director,
a sufficient number of such shares of Common Stock to satisfy the
federal, state and local withholding and employment tax obligations
relating to the Director's exercise of the Option (and the Company's
withholding obligations) to the extent, if any, permitted under rules and
regulations adopted by the Administrator and in effect at the time of
such exercise. In such case, the Common Stock withheld or the Common
Stock surrendered will be valued at the Fair Market Value on the date of
exercise determined in accordance with the Plan.
(e) TRANSFERABILITY OF OPTIONS. Options may not be transferred,
pledged, assigned or otherwise disposed of except by will or the laws of
descent and distribution; PROVIDED, HOWEVER, that Options may be, with the
approval of the Administrator, transferred to a member or members of a
Director's immediate family (as defined below) or to one or more trusts or
partnerships established in whole or in part for the benefit of one or more
of such immediate family members (collectively, "PERMITTED TRANSFEREES"),
subject to such rules and procedures as may from time to time be adopted or
imposed by the Administrator. If an Option is transferred to a Permitted
Transferee, it shall be further transferable only by will or the laws of
descent and distribution or, for no consideration, to another Permitted
Transferee of the Director. A Director shall notify the Company in writing
prior to any proposed transfer of an Option to a Permitted Transferee and
shall furnish the Company, upon request, with information concerning such
Permitted Transferee's financial condition and investment experience. For
purposes of the Plan, a Director's "immediate family" means any child,
stepchild, grandchild, spouse, son-in-law or daughter-in-law and shall
include adoptive relationships; provided, however, that if the Company
adopts a different definition of "immediate family" (or similar term) in
connection with the transferability of employee stock options awarded to
employees of the Company, such definition shall apply, without further
action by the Board, to the Plan.
4. DEFERRAL OF DIRECTOR'S FEES.
(a) DEFERRAL ELECTIONS.
A-4
<PAGE>
(i) GENERAL PROVISIONS. Directors may elect to defer all or a
specified percentage of their Director's Fees with respect to a Deferral
Period in the manner provided in this Section 4. A Director's Deferred
Benefit is at all times nonforfeitable.
(ii) DEFERRAL ELECTION FORMS. Before the Election Date applicable
to a Deferral Period, each Director will be provided with a Deferral
Election Form and a Beneficiary Designation Form (which may, in the
discretion of the Administrator, be combined in one form). In order for a
Director to participate in the deferral portion of the Plan for a given
Deferral Period, a Deferral Election Form, completed and signed by him,
must be delivered to the Company on or prior to the applicable Election
Date. A Director electing to participate in the Plan for a given Deferral
Period shall indicate on his Deferral Election Form:
(A) the percentage of the Director's Fees for the Deferral Period
to be deferred;
(B) if the Deferral Election Form is the first such form filed
by the Director, the Director's election, in accordance with Sections
4(f) and 4(g), as to the timing and manner of payment of the Deferred
Benefits. A Director's election as to the timing and manner of
payment of Deferred Benefits in the initial Deferral Election Form
shall govern the timing and manner of payment of all subsequent
deferrals under the Plan and may not be changed or revoked; and
(C) whether amounts deferred for the Deferral Period will be
credited to the Deferred Compensation Account as Phantom Stock Units
in accordance with Section 4(b) below or Phantom Cash Amounts in
accordance with Section 4(c) below. A Director's election as to the
method of crediting deferred amounts for a given Deferral Period may
not be subsequently changed or revoked. Director's Fees for a given
Deferral Period may be deferred in part in Phantom Cash Amounts and
in part in Phantom Stock Units. Any such allocation shall be in
multiples of 10% (not to exceed 100%) of the amounts deferred.
(iii) EFFECT OF NO DEFERRAL ELECTION. A Director who does not
submit a completed and signed Deferral Election Form to the Company on or
prior to the applicable Election Date may not defer his Director's Fees
for the Deferral Period. However, a Director's Deferral Election Form
filed for one Deferral Period shall be effective for subsequent Deferral
Periods if not otherwise revoked by the Director.
(b) ESTABLISHMENT OF DEFERRED COMPENSATION ACCOUNTS. A Director's
deferrals will be credited to a Deferred Compensation Account set up for
that Director by the Company in accordance with the provisions of this
Section 4.
(c) CREDITING OF PHANTOM CASH AMOUNTS TO DEFERRED COMPENSATION
ACCOUNTS. The portion of the Director's Fees that a Director elects to
defer in the form of Phantom Cash Amounts shall be credited to the Deferred
Compensation Account (i) for any cash retainer payable to a Director, as of
the last business day of the fiscal quarter in which such amount would
otherwise have been payable to the Director and (ii) for all other
Director's Fees (including, but not limited to, fees payable for attendance
at a meeting of the Board or a committee thereof or in connection with a
site inspection of property in which the Company is contemplating making an
investment), as of the date such services are performed. The Phantom Cash
Amount credited to the Deferred Compensation Account shall thereafter be
credited with notional interest as of the last day of each month. The annual
rate of interest in effect for a Deferral Period shall be the "applicable
federal rate" for short-term loans with monthly compounding, as promulgated
by the Internal Revenue Service under section 1274 of the Code for the first
month in such Deferral Period.
(d) CREDITING OF PHANTOM STOCK UNITS TO DEFERRED COMPENSATION ACCOUNTS.
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(i) NUMBER OF PHANTOM STOCK UNITS. The portion of the Director's
Fees that a Director elects to defer in the form of Phantom Stock Units
shall be credited to the Deferred Compensation Account (i) for any cash
retainer payable to a Director, as of the last business day of the fiscal
quarter in which such amount would otherwise have been payable to the
Director and (ii) for all other Director's Fees (including, but not
limited to, fees payable for attendance at a meeting of the Board or a
committee thereof or in connection with a site inspection of property in
which the Company is contemplating making an investment), as of the date
such services are performed. The number of Phantom Stock Units to be
credited to the Deferred Compensation Account shall be determined by
dividing (1) the amount of the Director's Fees deferred by (2) the Fair
Market Value of a share of Common Stock as of the date of crediting. Any
partial Phantom Stock Unit that results from the application of the
previous sentence shall be rounded to the nearest whole Phantom Stock
Unit.
(ii) DIVIDEND EQUIVALENTS. In the event that the Company pays any
cash or other dividend or makes any other distribution in respect of the
Common Stock, each Phantom Stock Unit credited to the Deferred
Compensation Account of a Director will be credited with an additional
number of Phantom Stock Units (including fractions thereof) determined by
dividing (A) the amount of cash, or the value (as determined by the
Administrator) of any securities or other property, paid or distributed
in respect of one outstanding share of Common Stock by (B) the Fair
Market Value of a share of Common Stock as of the date of such payment or
distribution. If the sum of such additional Phantom Stock Units (or
fractions thereof) would cause the crediting of a partial Phantom Stock
Unit, such partial Phantom Stock Unit shall be rounded to the nearest
whole Phantom Stock Unit. Such credit shall be made effective as of the
date of the dividend or other distribution in respect of the Common
Stock.
(iii) NO RIGHTS AS STOCKHOLDER. The crediting of Phantom Stock
Units to a Director's Deferred Compensation Account shall not confer on
the Director any rights as a stockholder of the Company.
(e) WRITTEN STATEMENTS OF ACCOUNT. The Company will furnish each
Director with a statement setting forth the value of such Director's
Deferred Compensation Account as of the end of each Deferral Period and all
credits to and payments from the Deferred Compensation Account during the
Deferral Period. Such statement will be furnished no later than 60 days
after the end of the Deferral Period.
(f) MANNER OF PAYMENT OF DEFERRED BENEFIT. Payment of the portion of
the Deferred Benefits under the Plan credited as Phantom Cash Amounts shall
be in cash and payment of the portion of the Deferred Benefits credited in
Phantom Stock Units shall be in shares of Common Stock. Payment shall be
made either in a single lump sum or in a series of five or fewer annual
installments. The amount of each installment payment to a Director shall be
determined in accordance with the formula B/(N - P), where "B" is the total
value of the Deferred Compensation Account as of the installment calculation
date, "N" is the number of installments elected by the Director and "P" is
the number of installments previously paid to the Director. If a Director's
Deferred Benefit is credited in part in Phantom Cash Amounts and in part in
Phantom Stock Units and the Director elects the payment of Deferred Benefits
in more than one installment, then the formula in the previous sentence
shall be applied separately with respect to each such portion of the
Deferred Compensation Account.
(g) COMMENCEMENT OF PAYMENT OF DEFERRED BENEFIT. Payment of a
Director's Deferred Benefit shall commence as soon as practicable (but in no
event more than 60 days) after the earlier to occur of:
(i) termination of service as a member of the Board or, in the case
of a member of the Board who is also an employee of the Company or who
becomes an employee upon such
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individual's termination of service as a member of the Board, after such
individual's termination of service as an employee of the Company; or
(ii) the date specified in the Deferral Election Form executed by
the Director.
(h) DEATH. In the event of a Director's death, the Director's entire
Deferred Benefit (including any unpaid portion thereof corresponding to
installments not yet paid at the time of death), to the extent not
distributed earlier pursuant to Section 4(g), will be distributed in a lump
sum to the Director's Beneficiary as soon as practicable after the date of
death, but in no event more than six months after the Director's date of
death.
(i) RESTRICTIONS ON TRANSFER. The Company shall pay all Deferred
Benefits payable under the Plan only to the Director or Beneficiary
designated under the Plan to receive such amounts. Neither a Director nor
his Beneficiary shall have any right to anticipate, alienate, sell,
transfer, assign, pledge, encumber or change any benefits to which he may
become entitled under the Plan, and any attempt to do so shall be void. A
Deferred Benefit shall not be subject to attachment, execution by levy,
garnishment, or other legal or equitable process for a Director's or
Beneficiary's debts or other obligations.
(j) EARLY PAYMENT OF DEFERRED BENEFITS. In the event that the Internal
Revenue Service shall make a final determination that all or a portion of a
Director's Deferred Benefits are subject to ordinary income tax prior to the
scheduled date of payment of such Deferred Benefit pursuant to the terms of
this Plan and the applicable deferral election made by the Director, such
Deferred Benefits shall, to the extent determined to be subject to current
taxation, be immediately paid to the Director.
5. DESIGNATION OF BENEFICIARY.
(a) BENEFICIARY DESIGNATIONS. Each Director may designate a Beneficiary
to receive any Deferred Benefit due under the Plan or to exercise an Option
upon the Director's death by executing a Beneficiary Designation Form.
(b) CHANGE OF BENEFICIARY DESIGNATION. A Director may change an earlier
Beneficiary designation by executing a later Beneficiary Designation Form
and delivering it to the Administrator. The execution of a Beneficiary
Designation Form and its receipt by the Administrator revokes and rescinds
any prior Beneficiary Designation Form.
6. CHANGE IN CONTROL.
Anything in the Plan to the contrary notwithstanding, in the event of a
Change in Control of the Company, the following provisions shall apply:
(a) Any Options outstanding as of the date such Change in Control is
determined to have occurred that are not yet exercisable and vested on such
date shall become fully exercisable and vested; PROVIDED, HOWEVER, that if
the Administrator shall receive an opinion from a nationally recognized firm
of accountants to the Company that the accelerated vesting of some or all of
the Options will prohibit the utilization of "pooling of interests"
accounting in connection with the transaction resulting in the Change in
Control of the Company, then such Options shall not become fully exercisable
and vested upon the Change in Control.
(b) All Deferred Benefits credited to a Director's Deferred Compensation
Account shall be paid to the Director (or to the Director's Beneficiary if
the Director dies prior to payment) on or prior to the date of the Change in
Control. Payment of the portion of the Deferred Benefits under the Plan
credited as Phantom Cash Amounts shall be in cash and payment of the portion
of the Deferred Benefits credited in Phantom Stock Units shall be in shares
of Common Stock.
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7. RECAPITALIZATION OR REORGANIZATION.
(a) AUTHORITY OF THE COMPANY AND STOCKHOLDERS. The existence of the
Plan shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of
the Company, any issue of stock or of options, warrants or rights to
purchase stock or of bonds, debentures, preferred or prior preference stocks
whose rights are superior to or affect the Common Stock or the rights
thereof or which are convertible into or exchangeable for Common Stock, or
the dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(b) CHANGE IN CAPITALIZATION. Notwithstanding any other provision of
the Plan, in the event of any change in the outstanding Common Stock by
reason of a stock dividend, recapitalization, reorganization, merger,
consolidation, stock split, combination or exchange of shares (a "CHANGE IN
CAPITALIZATION"), (i) such proportionate adjustments as may be necessary (in
the form determined by the Administrator in its sole discretion) to reflect
such change shall be made to prevent dilution or enlargement of the rights
of Directors under the Plan with respect to the aggregate number of shares
of Common Stock authorized to be awarded under the Plan, the number of
shares of Common Stock covered by each outstanding Option and the exercise
prices in respect thereof, the number of shares of Common Stock covered by
future Option grants and the number of Phantom Stock Units credited to a
Director's Deferred Compensation Account and (ii) the Administrator may make
such other adjustments, consistent with the foregoing, as it deems
appropriate in its sole discretion.
(c) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each outstanding Option will vest
and become exercisable on a date prior to the consummation of the proposed
action that is reasonably sufficient to enable the Directors to exercise
their Options. All Deferred Benefits credited to the Director's Deferred
Compensation Account as of the date of the consummation of a proposed
dissolution or liquidation shall be paid in cash to the Director or, in the
event of death of the Director prior to payment, to the Beneficiary thereof
on the date of the consummation of such proposed action. The cash amount
paid for each Phantom Stock Unit shall be the Fair Market Value of a share
of Common Stock as of the date of the consummation of such proposed action.
8. TERMINATION AND AMENDMENT OF THE PLAN.
(a) TERMINATION. The Plan shall terminate upon the first to occur of
(i) the adoption of a resolution of the Board terminating the Plan or (ii)
May 19, 2002 (the "TERMINATION DATE"). Following the Termination Date, no
further grants of Options shall be made pursuant to the Plan and no further
Director's Fees may be deferred by a Director.
(b) GENERAL POWER OF BOARD. Notwithstanding anything herein to the
contrary, the Board may at any time and from time to time terminate, modify,
suspend or amend the Plan in whole or in part; provided, however, that no
such termination, modification, suspension or amendment shall be effective
without stockholder approval if such approval is required to comply with any
applicable law or stock exchange rule; and provided further that the Board
may not, without stockholder approval, increase the maximum number of shares
issuable under the Plan except as provided in Section 7(b) above.
(c) WHEN DIRECTORS' CONSENTS REQUIRED. The Board may not alter, amend,
suspend, or terminate the Plan without the consent of any Director to the
extent that such action would (i) adversely affect his or her rights with
respect to Options that have previously been granted or (ii) result in the
distribution to such Director of amounts then credited to his Deferred
Compensation Account in any
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manner other than as provided in the Plan or could reasonably be expected to
result in the immediate taxation to such Director of Deferred Benefits.
9. MISCELLANEOUS.
(a) NO RIGHT TO REELECTION. Nothing in the Plan shall be deemed to
create any obligation on the part of the Board to nominate any of its
members for reelection by the Company's stockholders, nor confer upon any
Director the right to remain a member of the Board for any period of time,
or at any particular rate of compensation.
(b) UNFUNDED PLAN.
(i) GENERALLY. This Plan is unfunded. Amounts payable under the
Plan will be satisfied solely out of the general assets of the Company
subject to the claims of the Company's creditors.
(ii) DEFERRED BENEFITS. A Deferred Benefit represents at all times
an unfunded and unsecured contractual obligation of the Company and each
Director or Beneficiary will be an unsecured creditor of the Company. No
Director, Beneficiary or any other person shall have any interest in any
fund or in any specific asset of the Company by reason of any amount
credited to him hereunder, nor shall any Director, Beneficiary or any
other person have any right to receive any distribution under the Plan
except as, and to the extent, expressly provided in the Plan. The Company
will not segregate any funds or assets for Deferred Benefits or issue any
notes or security for the payment of any Deferred Benefits. Any reserve
or other asset that the Company may establish or acquire to assure itself
of the funds to provide benefits under the Plan shall not serve in any
way as security to any Director, Beneficiary or other person for the
performance of the Company under the Plan.
(c) OTHER COMPENSATION ARRANGEMENTS. Benefits received by a Director
pursuant to the provisions of the Plan shall not be included in, nor have
any effect on, the determination of benefits under any other arrangement
provided by the Company.
(d) SECURITIES LAW RESTRICTIONS. The Administrator may require each
Director purchasing or acquiring shares of Common Stock pursuant to the Plan
to agree with the Company in writing that such Director is acquiring the
shares for investment and not with a view to the distribution thereof. All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission or any exchange upon
which the Common Stock is then listed, and any applicable federal or state
securities law, and the Administrator may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions. No shares of Common Stock shall be issued hereunder unless the
Company shall have determined that such issuance is in compliance with, or
pursuant to an exemption from, all applicable federal and state securities
laws.
(e) EXPENSES. The costs and expenses of administering the Plan shall be
borne by the Company.
(f) GOVERNING LAW. Except as to matters of federal law, the Plan and
all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Maryland without giving effect to
conflicts of law principles.
10. DEFINITIONS.
"ADMINISTRATOR" means the Chief Financial Officer of the Company or the
individual appointed by the Chief Executive Officer of the Company to
administer the Plan.
"ANNUAL MEETING" means an annual meeting of the Company's stockholders.
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"BENEFICIARY" or "BENEFICIARIES" means an individual or entity
designated by a Director on a Beneficiary Designation Form to receive
Deferred Benefits and to exercise Options in the event of the Director's
death; provided, however, that if no such individual or entity is designated
or if no such designated individual is alive at the time of the Director's
death, Beneficiary shall mean the Director's estate.
"BENEFICIARY DESIGNATION FORM" means a document, in a form approved by
the Administrator to be used by Directors to name their respective
Beneficiaries. No Beneficiary Designation Form shall be effective unless it
is signed by the Director and received by the Administrator prior to the
date of death of the Director.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" shall mean the occurrence of any of the following:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act (other than (A) AEW Capital Management, (B) the Company or
any of its subsidiaries or (C) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of any of its
subsidiaries), is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities entitled to vote in the election of directors of the Company;
(ii) during any period of two (2) consecutive years, individuals who
at the beginning of such period constituted the Board and any new
directors, whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least three-fourths
( 3/4) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
thereof;
(iii) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company, in each case with respect to
which the stockholders of the Company immediately prior to such
transaction do not, immediately after such transaction, own more than 50%
of the combined voting power of the Company or other corporation
resulting from such transaction; or
(iv) all or substantially all of the assets of the Company are sold,
liquidated or distributed.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
applicable rules and regulations promulgated thereunder.
"COMMON STOCK" means the common stock of the Company, par value $0.02
per share.
"COMPANY" means Bedford Property Investors, Inc., a Maryland
corporation, or any successor to substantially all of its business.
"DEFERRAL ELECTION FORM" means a document, in a form approved by the
Administrator, pursuant to which a Director makes a deferral election under
the Plan.
"DEFERRAL PERIOD" means each calendar year. A short Deferral Period
under the Plan shall commence on December 9, 1997 and end on December 31,
1997 for purposes of deferring Board meeting fees scheduled to be paid on
December 9, 1997. If an individual becomes eligible to participate in the
Plan after the commencement of a Deferral Period, the Deferral Period for
the individual shall be the remainder of such Deferral Period.
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"DEFERRED BENEFIT" means an amount that will be paid on a deferred basis
under the Plan to a Director who has made a deferral election.
"DEFERRED COMPENSATION ACCOUNT" means the bookkeeping record established
for each Director. A Deferred Compensation Account is established only for
purposes of measuring a Deferred Benefit and not to segregate assets or to
identify assets that may be used to pay a Deferred Benefit.
"DIRECTOR" means a member of the Board.
"DIRECTOR'S FEES" means the cash portion of (i) any retainer fee payable
to a Director for service on the Board, (ii) any other fee payable for
service on, or for acting as chairperson of, any committee of the Board, or
in connection with a site inspection of property in which the Company is
contemplating making an investment and (iii) any other fee or fees payable
in respect of service on the board of directors of any Subsidiary or any
committee of any such board of directors.
"DISABILITY" shall have the meaning set forth in the Company's long-term
disability plan, regardless of whether the Director is a participant in such
plan.
"EFFECTIVE DATE" shall mean September 4, 1997.
"ELECTION DATE" means the day immediately preceding the commencement of
a Deferral Period. If an individual first becomes eligible to participate in
the Plan on an Annual Meeting date or after the start of a Deferral Period,
the Election Date shall be the 30th day following such Annual Meeting date
or initial participation date, as the case may be. The Election Date for the
short Deferral Period commencing on December 9, 1997 and ending on December
31, 1997 shall be December 8, 1997.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the applicable rules and regulations promulgated thereunder.
"FAIR MARKET VALUE" means the value of Common Stock determined as
follows:
(i) If the Common Stock is listed on the New York Stock Exchange or
any other established stock exchange or a national market system
(including without limitation the NASDAQ National Market), its Fair
Market Value shall be the mean between the high and low sales prices for
such stock or the closing bid if no sales were reported, as quoted on
such system or exchange (or the exchange with the greatest volume of
trading in the Common Stock) for the date of determination or, if the
date of determination is not a trading day, the immediately preceding
trading day, as reported in THE WALL STREET JOURNAL or such other source
as the Committee deems reliable.
(ii) If the Common Stock is regularly quoted on the NASDAQ system
(but not on the NASDAQ National Market) or quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the high and low asked prices for the
Common Stock on the date of determination or, if there are no quoted
prices on the date of determination, on the last day on which there are
quoted prices prior to the date of determination.
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Committee.
"OPTION" means an option to purchase shares of Common Stock awarded to a
Director pursuant to the Plan.
"PHANTOM CASH AMOUNTS" means the amounts credited to a Deferred
Compensation Account in accordance with Section 4(c).
"PHANTOM STOCK UNIT" means a bookkeeping unit representing one share of
Common Stock credited to a Deferred Compensation Account in accordance with
Section 4(d).
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"PLAN" means the Bedford Property Investors, Inc. Amended and Restated
1992 Directors' Stock Option Plan.
"SUBSIDIARY" means any corporation that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code with respect to the
Company.
11. EFFECTIVE DATE. The amendments to the Plan set forth herein by
restatement shall be effective as of the Effective Date, subject to the approval
thereof by the stockholders of the Company by no later than the next Annual
Meeting to occur after the Effective Date. If such stockholder approval is not
obtained on or before the date of such Annual Meeting, all Director's Fees
previously deferred under the Plan (together with notional interest credited at
the rate described in the last sentence of Section 4(c) above) shall be paid to
the Directors in cash within ten days following the date of the Annual Meeting
and the amendments to the Plan herein shall be void ab initio.
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BEDFORD PROPERTY INVESTORS, INC.
AMENDED AND RESTATED
EMPLOYEE STOCK PLAN
(formerly the Employee Stock Option Plan, effective May 20, 1985,
amended April 15, 1986 and June 9, 1993,
and amended and restated effective January 1, 1998)
In order to attract and retain the services of qualified individuals for
positions of responsibility and to secure for the Company the benefits of the
incentives inherent in increased ownership of Common Stock by such individuals,
the Company hereby authorizes grants of Stock Options, Stock Appreciation Rights
and Restricted Stock to the officers, employees and consultants of the Company
and its subsidiaries. Any capitalized term used herein without definition in the
section where first used shall have the meaning ascribed to such term in Section
12.
1. ADMINISTRATION. The Committee will be responsible for administering the
Plan. The Committee will have authority to adopt such rules as it may deem
appropriate to carry out the purposes of the Plan, and shall have authority to
interpret and construe the provisions of the Plan and any agreements and notices
under the Plan and to make determinations pursuant to any Plan provision. Each
interpretation, determination or other action made or taken by the Committee
pursuant to the Plan shall be final and binding on all persons. The Committee
shall not be liable for any action or determination made in good faith, and
shall be entitled to indemnification and reimbursement in the manner provided in
the Company's certificate of incorporation and by-laws as such documents may be
amended from time to time. The Committee shall have the full power and
authority, subject to the express provisions hereof, to select Participants from
the Eligible Individuals and (ii) to make Awards in accordance with the Plan.
2. SHARES AVAILABLE. Subject to the provisions of Section 9(b) of the
Plan, the maximum number of shares of Common Stock which may be issued under the
Plan shall not exceed 3,000,000 shares (the "LIMIT"). Authorized and unissued
shares of Common Stock may be delivered pursuant to the Plan. For purposes of
determining the number of shares that remain available for issuance under the
Plan, the following rules shall apply:
(a) the number of Shares subject to outstanding Awards shall be charged
against the Limit; and
(b) the Limit shall be increased by:
(i) the number of shares subject to an Award (or portion thereof)
which lapses, expires or is otherwise terminated without the issuance of
such shares or is settled by the delivery of consideration other than
shares,
(ii) the number of shares tendered to pay the exercise price of a
Stock Option or other Award, and
(iii) the number of shares withheld from any Award or contributed by
a Participant to satisfy a Participant's tax withholding obligations.
3. ELIGIBLE INDIVIDUALS.
(a) ELIGIBILITY CRITERIA. Awards may be granted by the Committee to
individuals ("ELIGIBLE INDIVIDUALS") who are officers or other employees or
consultants of the Company or a Subsidiary with the potential to contribute
to the future success of the Company or its Subsidiaries. Members of the
Compensation Committee will not be permitted to receive Awards under the
Plan.
(b) MAXIMUM NUMBER OF SHARES PER ELIGIBLE INDIVIDUAL. In accordance
with the requirements under Section 162(m) of the Code, no Eligible
Individual shall receive grants of Awards with respect to an aggregate of
more than 400,000 shares of Common Stock in respect of any fiscal year of
the
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Company. For purposes of the preceding sentence, any Award that is made as
bonus compensation, or is made in lieu of compensation that otherwise would
be payable to an Eligible Individual, shall be considered made in respect of
the fiscal year to which such bonus or other compensation relates or
otherwise was earned.
4. AWARDS GENERALLY. Awards under the Plan may consist of Stock Options,
Stock Appreciation Rights and Restricted Stock. The terms and provisions of an
Award shall be set forth in a written Award Agreement approved by the Committee
and delivered or made available to the Participant as soon as practicable
following the date of the Award. The vesting, exercisability, payment and other
restrictions applicable to an Award (which may include, without limitation,
restrictions on transferability or provision for mandatory resale to the
Company) shall be determined by the Committee and set forth in the applicable
Award Agreement. Notwithstanding the foregoing, the Committee may accelerate (i)
the vesting or payment of any Award, (ii) the lapse of restrictions on any Award
or (iii) the date on which any Option or Stock Appreciation Right first becomes
exercisable. The date of a Participant's termination of employment for any
reason shall be determined in the sole discretion of the Committee. The
Committee shall also have full authority to determine and specify in the
applicable Award Agreement the effect, if any, that a Participant's termination
of employment for any reason will have on the vesting, exercisability, payment
or lapse of restrictions applicable to an outstanding Award.
5. STOCK OPTIONS.
(a) TERMS OF STOCK OPTIONS GENERALLY. Subject to the terms of the Plan
and the applicable Award Agreement, each Stock Option shall entitle the
Participant to whom such Stock Option was granted to purchase the number of
shares of Common Stock specified in the applicable Award Agreement and shall
be subject to the terms and conditions established by the Committee in
connection with the Award and specified in the applicable Award Agreement.
Upon satisfaction of the conditions to exercisability specified in the
applicable Award Agreement, a Participant shall be entitled to exercise the
Stock Option in whole or in part and to receive, subject to the terms of the
Award Agreement, upon satisfaction or payment of the exercise price or an
irrevocable notice of exercise in the manner contemplated by Section 5(d)
below, the number of shares of Common Stock in respect of which the Stock
Option shall have been exercised. Stock Options may be either Nonqualified
Stock Options or Incentive Stock Options.
(b) EXERCISE PRICE. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and set forth in the Award Agreement, PROVIDED, that the
exercise price per share shall be no less than 85% of the Fair Market Value
per share on the date of grant.
(c) OPTION TERM. The Committee shall fix the term of each Stock Option
to be set forth in the Award Agreement; PROVIDED, HOWEVER, that a Stock
Option shall not be exercisable after the expiration of ten years after the
date the Stock Option is granted.
(d) METHOD OF EXERCISE. Subject to the provisions of the applicable
Award Agreement, the exercise price of a Stock Option may be paid (i) by
personal check, bank draft or postal or express money order (such modes of
payment are collectively referred to as "cash") payable to the order of the
Company in U.S. dollars, (ii) by delivery of previously owned shares of
Common Stock, (iii) by a combination thereof and, (iv) if the applicable
Award Agreement so provides, in whole or in part through the withholding of
shares subject to the Stock Option with a value equal to the exercise price.
Payment of the exercise price in shares of Common Stock shall be made (i) by
delivering to the Company the share certificate(s) representing the required
number of shares, with the Participant signing his or her name on the back
or by attaching executed stock powers (the signature of the Participant must
be guaranteed in either case) or (ii) attesting to ownership of a sufficient
number of shares of Common Stock. In addition to the exercise methods
described above, a Participant may exercise a Stock Option through a
procedure whereby the Participant delivers to the Company an
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irrevocable notice of exercise in exchange for the Company issuing the
shares of Common Stock subject to the Stock Option to a broker previously
designated or approved by the Company, subject to such rules and procedures
as the Committee may determine (for purposes of such a transaction the value
of shares of the Common Stock shall be deemed to equal the Fair Market Value
of the Common Stock on the date of exercise of the Stock Option).
(e) LIMITATION ON EXERCISE. No Option shall be exercisable unless the
Common Stock subject thereto has been registered under the Securities Act
and qualified under applicable state "blue sky" laws in connection with the
offer and sale thereof, or the Company has determined that an exemption from
registration under the Securities Act and from qualification under such
state "blue sky" laws is available.
(f) ISSUANCE OF SHARES. Subject to the foregoing conditions and the
terms of the applicable Award Agreement, as soon as reasonably practicable
after its receipt of a proper notice of exercise and payment of the exercise
price of the Stock Option for the number of shares with respect to which the
Stock Option is exercised, the Company shall deliver to the Participant, at
the principal office of the Company or at such other location as may be
acceptable to the Company and the Participant, one or more stock
certificates for the appropriate number of shares of Common Stock issued in
connection with such exercise. Shares sold in connection with a
broker-assisted "cashless exercise" shall be delivered to the broker
designated or appointed by the Company in the time and manner described in
Section 5(d) above. Any such shares shall be fully paid and nonassessable.
6. STOCK APPRECIATION RIGHTS. Stock Appreciation Rights shall be subject
to the terms and conditions established by the Committee in connection with the
Award thereof and specified in the applicable Award Agreement. Upon satisfaction
of the conditions to the payment specified in the applicable Award Agreement,
each Stock Appreciation Right shall entitle a Participant to an amount, if any,
equal to the Fair Market Value of a share of Common Stock on the date of
exercise over the Stock Appreciation Right exercise price specified in the
applicable Award Agreement. At the discretion of the Committee, payments to a
Participant upon exercise of a Stock Appreciation Right may be made in Shares,
cash or a combination thereof. A Stock Appreciation Right may be granted alone
or in addition to other Awards, or in tandem with a Stock Option. If granted in
tandem with a Stock Option, a Stock Appreciation Right shall cover the same
number of shares of Common Stock as covered by the Stock Option (or such lesser
number of shares as the Committee may determine) and shall be exercisable only
at such time or times and to the extent the related Stock Option shall be
exercisable, and shall have the same term and exercise price as the related
Stock Option. Upon exercise of a Stock Appreciation Right granted in tandem with
a Stock Option, the related Stock Option shall be canceled automatically to the
extent of the number of shares covered by such exercise; conversely, if the
related Stock option is exercised as to some or all of the shares covered by the
tandem grant, the tandem Stock Appreciation Right shall be canceled
automatically to the extent of the number of shares covered by the Stock Option
exercise.
7. RESTRICTED STOCK AWARDS.
(a) GRANT OF AWARDS. The Committee may grant Restricted Stock under the
Plan in such amounts and subject to such terms and conditions as the
Committee shall from time to time in its sole discretion determine. The
vesting of Restricted Stock granted under the Plan may be conditioned upon
the completion of a specified period of employment with the Company or any
Affiliate, upon the attainment of specified performance goals, and/or upon
such other criteria as the Committee may determine in its sole discretion.
(b) PAYMENT. Each Award Agreement with respect to a grant of Restricted
Stock award shall set forth the amount (if any) to be paid by the grantee
with respect to such award. If a grantee makes any payment for Restricted
Stock that does not vest, appropriate payment may be made to the grantee
following the forfeiture of such award on such terms and conditions as the
Committee may determine.
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(c) FORFEITURE UPON TERMINATION OF EMPLOYMENT. Each Award Agreement
with respect to a grant of Restricted Stock award shall set forth such terms
and conditions as the Committee may determine regarding the vesting and
forfeiture of Restricted Stock.
(d) ISSUANCE OF SHARES. The Committee may provide that one or more
certificates representing Restricted Stock shall be registered in the
grantee's name and bear an appropriate legend specifying that such shares
are not transferable and are subject to the terms and conditions of the Plan
and the applicable Plan agreement, or that such certificate or certificates
shall be held in escrow by the Company on behalf of the grantee until such
shares vest or are forfeited, all on such terms and conditions as the
Committee may determine. Unless the applicable Award Agreement otherwise
provides, no Restricted Stock may be assigned, transferred, otherwise
encumbered or disposed of by the grantee until such Restricted Stock has
vested in accordance with the terms of such award. Subject to the provisions
of Section 11(d), as soon as practicable after any Restricted Stock vests,
the Company shall issue or reissue to the grantee (or to the grantee's
estate in the event of the grantee's death) one or more certificates for the
Common Stock represented by such Award.
8. CHANGE IN CONTROL.
Anything in the Plan to the contrary notwithstanding, in the event of a
Change in Control of the Company, any Awards outstanding as of the date such
Change in Control is determined to have occurred that are not yet exercisable
and vested on such date shall become fully exercisable and vested; PROVIDED,
HOWEVER, that if the Committee shall receive an opinion from a nationally
recognized firm of accountants to the Company that the accelerated vesting of
some or all of the Awards will prohibit the utilization of "pooling of
interests" accounting in connection with the transaction resulting in the Change
in Control of the Company, then such Awards shall not become fully exercisable
and vested upon the Change in Control.
9. RECAPITALIZATION OR REORGANIZATION.
(a) AUTHORITY OF THE COMPANY AND STOCKHOLDERS. The existence of the
Plan shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the
Company's capital structure or its business, any merger or consolidation of
the Company, any issue of stock or of options, warrants or rights to
purchase stock or of bonds, debentures, preferred or prior preference stocks
whose rights are superior to or affect the Common Stock or the rights
thereof or which are convertible into or exchangeable for Common Stock, or
the dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(b) CHANGE IN CAPITALIZATION. Notwithstanding any other provision of
the Plan, in the event of any change in the outstanding Common Stock by
reason of a stock dividend, recapitalization, reorganization, merger,
consolidation, stock split, combination or exchange of shares (a "CHANGE IN
CAPITALIZATION"), (i) such proportionate adjustments as may be necessary (in
the form determined by the Committee in its sole discretion) to reflect such
change shall be made to prevent dilution or enlargement of the rights of
Participants under the Plan with respect to the aggregate number of shares
of Common Stock authorized to be awarded under the Plan, the number of
shares of Common Stock covered by each outstanding Option and the exercise
prices in respect thereof and the number of shares of Common Stock covered
by future Option grants and (ii) the Committee may make such other
adjustments, consistent with the foregoing, as it deems appropriate in its
sole discretion.
(c) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each outstanding Award will vest
and become exercisable on a date prior to the consummation of the proposed
action that is reasonably sufficient to enable the Participants to exercise
their Awards.
10. TERMINATION AND AMENDMENT OF THE PLAN.
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(a) TERMINATION. The Plan shall terminate upon the first to occur of
(i) the adoption of a resolution of the Board terminating the Plan or (ii)
April 30, 2003 (the "TERMINATION DATE"). Following the Termination Date, no
further grants of Awards shall be made pursuant to the Plan.
(b) GENERAL POWER OF BOARD. Notwithstanding anything herein to the
contrary, the Board may at any time and from time to time terminate, modify,
suspend or amend the Plan in whole or in part; PROVIDED, HOWEVER, that no
such termination, modification, suspension or amendment shall be effective
without stockholder approval if such approval is required to comply with any
applicable law or stock exchange rule; and PROVIDED FURTHER that the Board
may not, without stockholder approval, increase the maximum number of shares
issuable under the Plan except as provided in Section 9(b) above.
(c) WHEN PARTICIPANTS' CONSENTS REQUIRED. The Board may not alter,
amend, suspend, or terminate the Plan without the consent of any Participant
to the extent that such action would adversely affect his or her rights with
respect to Awards that have previously been granted.
11. MISCELLANEOUS.
(a) NO RIGHT TO GRANTS OR EMPLOYMENT. No Eligible Individual or
Participant shall have any claim or right to receive grants of Awards
under the Plan. Nothing in the Plan or in any Award or Award Agreement
shall confer upon any employee of the Company or any Subsidiary any right
to continued employment with the Company or any Subsidiary, as the case
may be, or interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any
time, with or without cause.
(b) UNFUNDED PLAN. The Plan is intended to constitute an unfunded
plan for incentive compensation. With respect to any payments not yet
made to a Participant by the Company, nothing contained herein shall give
any such Participant any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock or payments in
lieu thereof with respect to awards hereunder.
(c) OTHER EMPLOYEE BENEFIT PLANS. Payments received by a Participant
under any Award made pursuant to the provisions of the Plan shall not be
included in, nor have any effect on, the determination of benefits under any
other employee benefit plan or similar arrangement provided by the Company.
(d) SECURITIES LAW RESTRICTIONS. The Committee may require each
Participant purchasing or acquiring shares of Common Stock pursuant to the
Plan to agree with the Company in writing that such Participant is acquiring
the shares for investment and not with a view to the distribution thereof.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission or any exchange upon
which the Common Stock is then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions. No
shares of Common Stock shall be issued hereunder unless the Company shall
have determined that such issuance is in compliance with, or pursuant to an
exemption from, all applicable federal and state securities laws.
(e) EXPENSES. The costs and expenses of administering the Plan shall be
borne by the Company.
(f) TAX WITHHOLDING. Where applicable, upon the exercise or vesting of
an Award, the Company shall be entitled to require as a condition to
delivery of Common Stock or cash that a Participant remit, or, in
appropriate cases, agree to remit when due, an amount sufficient to satisfy
all federal, state and local withholding and employment tax requirements
relating to such exercise or vesting. A
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Participant will be entitled to elect to have the Company withhold from the
Common Stock to be delivered upon the exercise or vesting of an Award, or to
elect to deliver to the Company from shares of Common Stock owned separately
by the Participant, a sufficient number of such shares of Common Stock to
satisfy the federal, state and local withholding and employment tax
obligations relating to the Participant's exercise of the Award or the
Award's vesting (and the Company's withholding obligations) to the extent
permitted under rules and regulations adopted by the Committee and in effect
at the time of such exercise or vesting. In such case, the Common Stock
withheld or the Common Stock surrendered will be valued at the Fair Market
Value on the date of exercise or vesting determined in accordance with the
Plan.
(g) LOANS. On such terms and conditions as shall be approved by the
Committee, the Company may directly or indirectly lend money to a
Participant to accomplish the purposes of the Plan, including to assist such
Participant to acquire or carry shares of Common Stock acquired upon the
exercise of Stock Options granted hereunder, and the Committee may also
separately lend money to any Participant to pay taxes with respect to any of
the transactions contemplated by the Plan.
(h) STOCKHOLDER RIGHTS. A Participant shall have no rights as a
stockholder with respect to any shares of Common Stock issuable upon
exercise of a Stock Option or a Stock Appreciation Right until a certificate
evidencing such shares shall have been issued to the Participant, and no
adjustment shall be made for dividends or distributions or other rights in
respect of any share for which the record date is prior to the date upon
which the Participant shall become the holder of record thereof.
(i) Compliance with Rule 16b-3.
(i) The Plan is intended to comply with Rule 16b-3 under the
Exchange Act or its successors under the Exchange Act and the Committee
shall interpret and administer the provisions of the Plan or any Award
Agreement in a manner consistent therewith. To the extent any provision
of the Plan or Award Agreement or any action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee. Moreover, in the event the Plan or
an Award Agreement does not include a provision required by Rule 16b-3 to
be stated therein, such provision (other than one relating to eligibility
requirements, or the price and amount of Awards) shall be deemed
automatically to be incorporated by reference into the Plan or such Award
Agreement insofar as Participants subject to Section 16 of the Exchange
Act are concerned.
(ii) Notwithstanding anything contained in the Plan or any Award
Agreement to the contrary, if the consummation of any transaction under
the Plan would result in the possible imposition of liability on a
Participant pursuant to Section 16(b) of the Exchange Act, the Committee
shall have the right, in its sole discretion, but shall not be obligated,
to defer such transaction to the extent necessary to avoid such
liability.
(j) AWARD AGREEMENT. In the event of any conflict or inconsistency
between the Plan and any Award Agreement, the Plan shall govern, and the
Award Agreement shall be interpreted to minimize or eliminate any such
conflict or inconsistency.
(k) GOVERNING LAW. Except as to matters of federal law, the Plan and
all actions taken thereunder shall be governed by and construed in
accordance with the laws of the State of Maryland without giving effect to
conflicts of law principles.
12. DEFINITIONS.
"ANNUAL MEETING" means an annual meeting of the Company's stockholders.
"AWARD" means an award made pursuant to the terms of the Plan to an
Eligible Individual in the form of Stock Options, Stock Appreciation Rights
or Restricted Stock (including all grants of Restricted Stock made by the
Company during calendar year 1997).
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"AWARD AGREEMENT" means a written agreement or certificate granting an
Award. An Award Agreement shall be executed by an officer on behalf of the
Company and shall contain such terms and conditions as the Committee deems
appropriate and that are not inconsistent with the terms of the Plan. The
Committee may in its discretion require that the Participant to whom the
relevant Award is made execute an Award Agreement.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" shall mean the occurrence of any of the following:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any
syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act (other than (A) AEW Capital Management, (B) the Company or
any of its subsidiaries or (C) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of any of its
subsidiaries), is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities entitled to vote in the election of directors of the Company;
(ii) during any period of two (2) consecutive years, individuals who
at the beginning of such period constituted the Board and any new
directors, whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least three-fourths
( 3/4) of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a majority
thereof;
(iii) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Company, in each case with respect to
which the stockholders of the Company immediately prior to such
transaction do not, immediately after such transaction, own more than 50%
of the combined voting power of the Company or other corporation
resulting from such transaction; or
(iv) all or substantially all of the assets of the Company are sold,
liquidated or distributed.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
applicable rules and regulations promulgated thereunder.
"COMMITTEE" means the Compensation Committee of the Board, any successor
committee thereto or any other committee appointed by the Board to
administer the Plan.
"COMMON STOCK" means the common stock of the Company, par value $0.02
per share.
"COMPANY" means Bedford Property Investors, Inc., a Maryland
corporation, or any successor to substantially all of its business.
"EFFECTIVE DATE" shall mean January 1, 1998.
"ELIGIBLE INDIVIDUALS" means the individuals described in Section 3 who
are eligible for Awards under the Plan.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the applicable rules and regulations promulgated thereunder.
"FAIR MARKET VALUE" means the value of Common Stock determined as
follows:
(i) If the Common Stock is listed on the New York Stock Exchange or
any other established stock exchange or a national market system
(including without limitation the NASDAQ
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<PAGE>
National Market), its Fair Market Value shall be the mean between the
high and low sales prices for such stock or the closing bid if no sales
were reported, as quoted on such system or exchange (or the exchange with
the greatest volume of trading in the Common Stock) for the date of
determination or, if the date of determination is not a trading day, the
immediately preceding trading day, as reported in THE WALL STREET JOURNAL
or such other source as the Committee deems reliable.
(ii) If the Common Stock is regularly quoted on the NASDAQ system
(but not on the NASDAQ National Market) or quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the high and low asked prices for the
Common Stock on the date of determination or, if there are no quoted
prices on the date of determination, on the last day on which there are
quoted prices prior to the date of determination.
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Committee.
"INCENTIVE STOCK OPTION" means a Stock Option that is an "incentive
stock option" within the meaning of Section 422 of the Code and designated
by the Committee as an Incentive Stock Option in an Award Agreement.
"NONQUALIFIED STOCK OPTION" means a Stock Option that is not an
Incentive Stock Option.
"PARTICIPANT" means an Eligible Individual to whom an Award has been
granted under the Plan.
"PLAN" means the Bedford Property Investors, Inc. Amended and Restated
Employee Stock Plan.
"RESTRICTED STOCK" means an Award to receive a specified number of
shares of Common Stock granted to an Eligible Individual pursuant to Section
7 hereof.
"STOCK APPRECIATION RIGHT" means an Award to receive all or some portion
of the appreciation on shares of Common Stock granted to an Eligible
Individual pursuant to Section 6 hereof.
"STOCK OPTION" means an Award to purchase shares of Common Stock granted
to an Eligible Individual pursuant to Section 5 hereof.
"SUBSIDIARY" means any corporation that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code with respect to the
Company.
13. EFFECTIVE DATE. The amendments to the Plan set forth herein by
restatement shall be effective as of the Effective Date, subject to the approval
thereof by the stockholders of the Company by no later than the next Annual
Meeting to occur after the Effective Date. If such stockholder approval is not
obtained on or before the date of such Annual Meeting, the amendments to the
Plan herein shall be void AB INITIO.
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PROXY FOR COMMON STOCKHOLDERS
BEDFORD PROPERTY INVESTORS, INC.
PROXY FOR 1998 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY MANAGEMENT
The undersigned stockholder of Bedford Property Investors, Inc., a
Maryland corporation (the "Company"), hereby appoints Dennis Klimmek and
Scott R. Whitney, and each of them, as proxies for the undersigned, with full
power of substitution in each of them, to attend the 1998 Annual Meeting of
Stockholders of the Company to be held on Wednesday, May 13, 1998 at 1:00
p.m. at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette,
California, and at any adjournment(s) or postponement(s) thereof, to cast on
behalf of the undersigned all votes that the undersigned is entitled to cast
at such meeting and otherwise to represent the undersigned at the meeting,
with the same effect as if the undersigned were present. The undersigned
hereby revokes any proxy previously given with respect to such shares.
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TRIANGLE FOLD AND DETACH HERE TRIANGLE
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Please mark
your votes as
indicated in
this example /X/
1. Election of Directors Nominees: Claude M. Ballard; Peter B. Bedford;
Anthony M. Downs; Thomas G. Eastman: Anthony M. Frank; Thomas H. Nolan;
Martin I. Zankel.
/ / FOR / / AGAINST / / ABSTAIN
For all (Except Nominee(s) written below.)
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
2. Approval of the Amendment and Restatement to the Company's 1992 Directors'
Stock Option Plan to increase the number of shares reserved for issuance
thereunder by 500,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. Approval of the Amendment and Restatement to the Company's Employee Stock
Option Plan to increase the number of shares reserved for issuance
thereunder by 2,100,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
4. Ratification of appointment by the Company's Board of Directors of KPMG
Peat Marwick LLP to serve as Company's independent auditors for fiscal
year ended December 31, 1998.
/ / FOR / / AGAINST / / ABSTAIN
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS
MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE FOREGOING
PROPOSALS AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE MEETING OR
ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
/ / MARK HERE IF YOU PLAN TO ATTEND THE MEETING
Please sign exactly as name appears hereon and
date. If the shares are held jointly, each holder
should sign. When signing as an attorney,
executor, administrator, trustee, guardian or as
an officer signing for a corporation, please give
full title under signature.
Signature
-----------------------------------------
Signature, if held jointly
------------------------
Dated , 1998
---------------------------
Votes must be indicated by filling in X in Black or Blue ink.
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope
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TRIANGLE FOLD AND DETACH HERE TRIANGLE
