-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WLJfdJMrKn/k9vl121CEIo1+NXEVC8lEGgti9kiGg5SpbHMT4Kluo7dbfUhB2SA9 uDdSfOrlkkLOr0NdzhmHlg== 0000950149-97-000708.txt : 19970403 0000950149-97-000708.hdr.sgml : 19970403 ACCESSION NUMBER: 0000950149-97-000708 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970516 FILED AS OF DATE: 19970402 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEDFORD PROPERTY INVESTORS INC/MD CENTRAL INDEX KEY: 0000910079 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 680306514 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12222 FILM NUMBER: 97573772 BUSINESS ADDRESS: STREET 1: 270 LAFAYETTE CIRCLE STREET 2: P. O. BOX 1058 CITY: LAFAYETTE STATE: CA ZIP: 94549 BUSINESS PHONE: 510-283-89 PRE 14A 1 NOTICE OF ANNUAL MEETING MAY 16, 1997 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [x] Filed by a Party other than the Registrant [ ] Check the appropriate box: [x] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 Bedford Property Investors, Inc. --------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) --------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of filing fee (Check the appropriate box): [x] 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: --------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: --------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee was calculated and state how it was determined): --------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: --------------------------------------------------------------------------- (5) Total fee paid: --------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. --------------------------------------------------------------------------- [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: --------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: --------------------------------------------------------------------------- (3) Filing Party: --------------------------------------------------------------------------- (4) Date Filed: --------------------------------------------------------------------------- 2 [Letterhead of Bedford Property Investors] 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 Friday, May 16, 1997 at 1:00 p.m. at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette, California. Enclosed please find the Notice of Meeting, Proxy Statement, and one of two separate Proxy Cards, one to be used by Common Stockholders and the other to be used by Preferred Stockholders. At this Meeting we are seeking to elect seven directors, two of whom will be elected by the Preferred Stockholders, voting separately as a single class, and five of whom will be elected by the Common Stockholders, voting separately as a single class. In addition, the Common Stockholders will also be asked to approve an amendment to the Company's Charter to increase the authorized number of shares of the Company's Common Stock from 15 million to 50 million and to ratify the appointment of KPMG Peat Marwick LLP as the Company's independent public accountants for the upcoming year. Your management and Board of Directors unanimously recommend that you vote FOR all nominees for directors and FOR the other proposals. Please take time to review and vote on each proposal. Your vote is important. Please remember to return your Proxy Card. I hope to see you at the Annual Meeting. Very truly yours, /s/ Peter B. Bedford Peter B. Bedford Chairman of the Board and Chief Executive Officer 3 BEDFORD PROPERTY INVESTORS, INC. 270 LAFAYETTE CIRCLE LAFAYETTE, CA 94549 - -------------------------------------------------------------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 16, 1997 - -------------------------------------------------------------------------------- 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 Friday, May 16, 1997 at 1:00 p.m. local time, to consider the following proposals: 1. Election of five directors by the holders of the Common Stock for the ensuing year (the "Common Stock Directors"); 2. Election of two directors by the holders of the Preferred Stock for the ensuing year (the "Preferred Stock Directors"); 3. To approve an amendment to the Company's Charter to increase the number of authorized shares of the Company's Common Stock, par value $.02 per share (the "Common Stock"), from 15 million to 50 million shares. 4. To ratify the appointment by the Board of Directors of the Company's independent public accountants for the year ending December 31, 1997; 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 31, 1997 are entitled to notice of and to vote at the meeting and any adjournment thereof. STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. THE PRESENCE AT THE MEETING, IN PERSON OR BY PROXY, OF STOCKHOLDERS ENTITLED TO CAST A MAJORITY OF ALL THE VOTES ENTITLED TO BE CAST AT THE MEETING SHALL CONSTITUTE A QUORUM. THIS PROXY STATEMENT IS ACCOMPANIED BY ONE OF TWO FORMS OF PROXY CARD: ONE CARD FOR USE BY THE HOLDERS OF THE COMPANY'S COMMON STOCK AND THE OTHER CARD FOR USE BY THE HOLDERS OF THE COMPANY'S PREFERRED STOCK. IF YOU CANNOT ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE APPROPRIATE PROXY CARD IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE. By Order of the Board of Directors /s/ Jennifer I. Mori JENNIFER I. MORI Secretary April 16, 1997 Lafayette, California 4 BEDFORD PROPERTY INVESTORS, INC. 270 LAFAYETTE CIRCLE LAFAYETTE, CA 94549 ------------------------ PROXY STATEMENT ------------------------ MAY 16, 1997 ANNUAL MEETING OF STOCKHOLDERS INTRODUCTION This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the "Board of Directors" or the "Board") of Bedford Property Investors, Inc., a Maryland corporation (the "Company"), of proxies from the holders (the "Common Stockholders") of the Company's issued and outstanding shares of Common Stock, par value $.02 per share (the "Common Stock"), and from the holders (the "Preferred Stockholders" and, collectively with the Common Stockholders, the "Stockholders") of the Company's Series A Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock"), to be exercised at the Annual Meeting of Stockholders to be held on Friday, May 16, 1997, at 1:00 p.m., local time, and at any adjournment(s) or postponement(s) of such meeting (the "Annual Meeting"), for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. Unless otherwise indicated, all information contained in this Proxy Statement, including, but not limited to, Common Stock share numbers, share prices and per share amounts, reflects a one-for-two reverse stock split of the Common Stock effected on March 29, 1996. The purpose of the Annual Meeting is to consider and act upon the following proposals: 1. Election of five directors by the holders of the Common Stock for the ensuing year (the "Common Stock Directors"); 2. Election of two directors by the holders of the Preferred Stock for the ensuing year (the "Preferred Stock Directors"); 3. To approve an amendment to the Company's Charter to increase the authorized number of shares of Common Stock from 15 million to 50 million; 4. To ratify the appointment by the Board of Directors of the Company's independent public accountants for the year ending December 31, 1997; and 5. To transact such other business as may properly be brought before the Annual Meeting and any postponements or adjournments thereof. This Proxy Statement and the enclosed Proxy Card are being mailed to the Stockholders on or about April 16, 1997. The holders of record of the shares of Common Stock at the close of business on March 31, 1997 (the "Record Date") are entitled to notice of and to vote at the Annual Meeting in relation to proposals 1, 3 and 4, above, on which they will vote as a class. The holders of record of Preferred Stock at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting only in relation to proposal 2, on which they will vote as a separate class. At the close of business on the Record Date, 11,126,450 shares of Common Stock and 8,333,334 shares of Preferred Stock were outstanding, each of which is entitled to cast one vote (collectively, the Common Stock and Preferred Stock are referred to herein as the "Outstanding Stock"). 5 The presence at the Annual Meeting, in person or by proxy, of Stockholders holding shares entitled to cast a majority for each proposal of all the votes entitled to be cast at the Annual Meeting shall constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes (i.e., votes not cast by a broker or other record holder in "street" or nominee name solely because such record holder does not have discretionary authority to vote on the matter) will be counted toward the presence of a quorum. The Common Stock Directors (Proposal 1) will be elected by a plurality of all the votes cast at the Annual Meeting. Similarly, the Preferred Stock Directors (Proposal 2) will be elected by a favorable vote of a plurality of the shares of Preferred Stock voted at the Annual Meeting. Accordingly, abstentions as to the election of directors will not affect the election of the candidates receiving the plurality of votes. The affirmative vote of holders of a majority of all the outstanding shares of Common Stock is required for the approval of the proposed charter amendment (Proposal 3). Abstentions and broker non-votes as to this proposal will have the same effect as votes against the proposal. The affirmative vote of a majority of all the votes cast by holders of Common Stock is necessary for ratification of the appointment of independent public accountants for the fiscal year ending December 31, 1997 (Proposal 4). 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. Under the Maryland General Corporation Law ("MGCL"), holders of shares of Outstanding Stock will not be entitled to appraisal rights with respect to such shares with respect to any of the proposals. All expenses in connection with the solicitation of proxies will be borne by the Company. In addition to solicitation by mail, officers and directors of the Company may also solicit proxies by mail, telephone, facsimile or in person. Additionally, the Company may retain the services of a professional proxy solicitation firm to assist in the solicitation of proxies, at a cost of approximately $5,000 plus expenses, which would be borne by the Company. This proxy statement is accompanied by one of two forms of proxy card: one card is for use by the Common Stockholders and the other card is for use by the Preferred Stockholders. The shares of Common Stock represented by properly executed Common Stock proxy cards will be voted at the Annual Meeting as indicated or, if no instruction is given, in favor of proposals 1, 3 and 4. The shares of outstanding Preferred Stock represented by all properly executed Preferred Stock proxy cards will be voted at the Annual Meeting as indicated or, if no instruction is given, in favor of proposal 2. The Company does not presently know of any other business which may come before the Annual Meeting. Any person giving a proxy has the right to revoke it at any time before it is exercised (a) by filing with the Secretary of the Company a duly signed revocation or proxy bearing a later date or (b) by voting in person at the Annual Meeting. 2 6 PROPOSAL 1 ELECTION OF COMMON STOCK DIRECTORS The Company's Charter provides that the Preferred Stockholders have the right, subject to expansion in certain situations, to elect two members of the Board of Directors annually and that the Common Stockholders have the right to elect the remaining directors. The Company's Board of Directors is currently composed of seven members. Accordingly, the Common Stockholders, voting as a class, have the right to elect five members to the Board of Directors to serve until the next annual meeting of Stockholders and until their respective successors are duly elected and qualified. The Board of Directors has nominated the five individuals 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 Common Stock proxies will be voted for the election of such other persons for the office of director as management may recommend in the place of such nominee. THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE "FOR" THE FIVE NOMINEES LISTED BELOW.
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS DIRECTOR SINCE ---------------------- --- ---------------------------------------------------- -------------- Claude M. Ballard 67 Mr. Ballard is also a Trustee of The Urban Land 1992 Institute, and a Limited Partner of the Goldman Sachs Group, L.P. Mr. Ballard also serves on the Board of Directors of CBL & Associates, a REIT, and Taubman 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 59 Mr. Bedford has been Chairman of the Board since May 1991 1992 and Chief Executive Officer since November 1992. Mr. Bedford has been engaged in the commercial real estate business, primarily in the Western United States, for over 30 years and has been responsible for the acquisition, ownership, development and management of an aggregate of approximately 18 million square feet of industrial, office and retail properties, as well as land, in 14 states. Mr. Bedford is the sole stockholder of Bedford Property Holdings Limited ("BPHL"). Mr. Bedford serves on the board of directors of BankAmerica Corporation, Bixby Ranch Company, a real estate investment company, and First American Title Guarantee Co., a title insurance company. Mr. Bedford is the recipient of numerous awards recognizing his contributions to the real estate industry and serves as a trustee of the Urban Land Institute, 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.
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NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS DIRECTOR SINCE ---------------------- --- ---------------------------------------------------- -------------- Anthony M. Downs 65 Mr. Downs is a Senior Fellow at the Brookings 1992 Institution, a non-profit policy research organization, and is a consultant to Salomon Brothers Inc., and Aetna Realty Investors, the real estate investment subsidiary of Aetna Life and Casualty Company. 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, and the Essex Property Trust, Inc. Mr. Downs received a B.A. in International Relations and Political Theory from Carlton College and an M.A. and Ph.D. in Economics from Stanford University. Anthony M. Frank 65 Mr. Frank served as Postmaster General of the United 1992 States from 1988 to 1992 and as Chairman and Chief Executive Officer of First Nationwide Bank from 1971 to 1988. Prior to that time, he was Chairman of the Federal Home Loan Bank of San Francisco, Chairman of the California Housing Finance Agency, Chairman of 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; consultant/director of TransAmerica HomeFirst; a residential mortgage company; 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; Living Centers of America, Inc., a company engaged in the operation of long-term health care centers; and Cotelligent, Inc., a temporary services company. Mr. Frank received a B.A. from Dartmouth College and an M.B.A. from the Tuck School of Business at Dartmouth. Martin I. Zankel, Esq. 62 Mr. Zankel is the Senior Partner of the law firm of 1992 Bartko, Zankel, Tarrant & Miller. His previous experience includes serving as Chairman of the Board of Directors, Chief Executive Officer and President of Landsing Pacific Fund, Inc., a REIT. Mr. Zankel received a B.S. from the University of California, and his LL.D. from the Hastings College of the Law.
COMPENSATION OF DIRECTORS Members of the Board of Directors who are not employees of the Company are currently paid an annual retainer fee of $12,500 and an additional fee of $2,500 for each Board meeting attended. Any 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 or she may be entitled, a separate meeting attendance fee equal to $2,500 for his or her attendance in person at any such committee meeting not held on the same day, the day preceding or the day following a regular or special meeting of the Board of Directors. Any 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, such Director is paid $1,000 per day 4 8 and reimbursed for related travel expenses. Non-employee Directors receive no other compensation for their services on behalf of the Company (except under the 1992 Directors' Stock Option Plan, as amended). COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS The Board of Directors held four regular meetings and no special meeting during 1996. Each member of the Board of Directors attended at least 75% of the aggregate number of meetings of the Board of Directors and the committees of which he was a member during the last year. The Company has an Audit Committee which consists of Messrs. Ballard (Chairman), Downs, Frank and Nolan. The Audit Committee reviews the internal controls of the Company and reviews the services performed and to be performed by the independent accountants of the Company during the year. The members of the Audit Committee also meet with the independent accountants to review the scope and results of the annual audit. The Audit Committee met twice during 1996. The Company also has a Compensation Committee which consists of Messrs. Downs (Chairman), Ballard, Eastman and Frank. The Compensation Committee is responsible, with respect to stock options, for the administration of stock option plans of the Company, including the Employee Stock Option Plan and the 1992 Directors' Stock Option Plan, as amended. The Compensation Committee met twice during 1996. 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 various officers and for directors, elections for whom are held at the annual meeting of Stockholders. The Nominating Committee does not consider nominees proposed by Stockholders. The Nominating Committee met once during 1996. Messrs. Eastman and Nolan were placed on the Board in September 1995 in connection with the sale of the Preferred Stock to Bed Preferred No. 1 Limited Partnership. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee during 1996 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, 1996, 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, $213,000 in 1996. On December 17, 1996, in a "Down REIT" transaction, the Company acquired an industrial property in Modesto, California in exchange for 108,495 units of limited partnership interest (the "Units") in Bedford Realty Partners, L.P (the "Partnership"), a partnership in which the Company is the general partner. Pursuant to this transaction, Martin I. Zankel, a member of the Board of Directors of the Company, acquired 8,991 Units in exchange for his 9% ownership interest in such property. Mr. Zankel did not participate in the approval of this transaction. Each holder of the Units may, subject to certain limitations, require that the Partnership redeem all or a portion of such holder's Units beginning on March 17, 1997. Upon redemption, a holder will receive, at the option of the Company, as general partner of the Partnership, either (i) a number of shares of Common Stock equal to the number of Units redeemed or (ii) cash in an amount equal to the average market value of the number of shares of Common Stock the holder would have received pursuant to (i) above. In lieu of the Partnership redeeming Units, the Company, as general partner, in its sole discretion, has the right to assume directly and satisfy the redemption right of the holder of the Units. 5 9 PROPOSAL 2 ELECTION OF PREFERRED STOCK DIRECTORS The Company's Charter provides that the Preferred Stockholders, voting as a class, have the right, subject to expansion in certain situations, to elect two members of the Board of Directors annually, to serve until the next annual meeting of Stockholders and until their respective successors are duly elected and qualified. The Board of Directors has nominated the two individuals listed below to serve as directors of the Company. Management knows of no reason why either of these nominees would be unable or unwilling to serve, but if either nominee should be unable or unwilling to serve, the Preferred Stock proxies will be voted for the election of such other persons for the office of director as management may recommend in the place of such nominee. THE BOARD OF DIRECTORS RECOMMENDS THAT THE PREFERRED STOCKHOLDERS VOTE "FOR" THE TWO NOMINEES LISTED BELOW.
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS DIRECTOR SINCE - ---------------------- --- ------------------------------------------------ -------------- Thomas G. Eastman 50 Mr. Eastman is a director and co-founder of 1995 Aldrich Eastman Waltch, a national real estate investment advisor. He is a board member and former Chairman of the National Association of Real Estate Investment Managers. He is a Member of the Urban Land Institute and its Finance and Membership Committees. He is a Member of the Executive Committee of the Institutional Real Estate Clearinghouse. Mr. Eastman received a B.A. from Stanford University and an M.B.A. from Harvard University. Thomas H. Nolan, Jr. 39 Mr. Nolan serves as a director of, and is 1995 responsible for the management of commingled investment fund portfolios for, AEW Capital Management, L.P. (AEW), a national real estate investment adviser. Mr. Nolan joined AEW in 1984. Mr. Nolan serves 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.
6 10 PROPOSAL 3 APPROVAL OF AMENDMENTS TO THE COMPANY'S CHARTER On March 19, 1997, the Board of Directors unanimously adopted, subject to Common Stockholder approval, an amendment to Article V the Company's Charter to increase the authorized number of shares of Common Stock from 15 million to 50 million. The Common Stockholders are asked to approve the adoption of this amendment to the Company's Charter. DESCRIPTION OF THE PROPOSAL The text of Article 5, as it is proposed to be amended, is as follows: "Section 1. Authorized Shares. The total number of shares of stock which the Corporation has authority to issue is 70,000,000 shares, of which 50,000,000 shares are shares of Common Stock, $0.02 par value per share ("Common Stock"), 10,000,000 shares are shares of Preferred Stock, $0.01 par value per share ("Preferred Stock"), and 10,000,000 shares are shares of Series A Convertible Preferred Stock, $0.01 par value per share ("Series A Preferred"). The aggregate par value of all authorized shares of stock having a par value is $1,200,000." The additional Common Stock to be authorized by adoption of the proposed amendment would have rights identical to the currently outstanding Common Stock of the Company. Adoption of the proposed amendment and issuance of the Common Stock would not affect the rights of the holders of currently outstanding Common Stock, except for effects incidental to increasing the number of shares of the Common Stock outstanding, such as dilution of the earnings per share and voting rights of current holders of Common Stock. The holders of Common Stock do not presently have preemptive rights to subscribe for the additional Common Stock proposed to be authorized. Under the Company's current Charter, the Company has the authority to issue 15,000,000 shares of Common Stock, $0.02 par value per share. At the close of business on the Record Date, 11,126,450 shares of Common Stock were outstanding and held of record by 501 holders. Accordingly, as of the Record Date, after taking into account the 1,400,000 shares reserved for issuance upon the exercise of options granted under the Company's option plans, the 900,000 shares of Common Stock currently reserved for issuance pursuant to the Company's Dividend Reinvestment and Stock Purchase Plan and the 95,049 shares of Common Stock potentially issuable upon the redemption of certain units of limited partnership in Bedford Realty Partners, L.P., there remained approximately 1,478,501 of Common Stock available for issuance. Beginning on September 18, 1997, the 8,333,334 shares of Preferred Stock currently outstanding will become convertible into shares of Common Stock. The conversion rate for these shares of Preferred Stock is currently set at 1/2 share of Common Stock for each share of Preferred Stock. Accordingly, the Company may be required to issue as many as 4,166,667 shares of Common Stock pursuant to these conversion provisions. If the Company is unable to obtain shareholder approval for the proposed amendment to its Charter, it would have an insufficient number of shares of Common Stock authorized to satisfy the Preferred Stockholders' conversion rights. The proposed amendment would provide for approximately 32,311,834 shares of Common stock available for issuance, assuming full conversion of the Preferred Stock into Common Stock at the current conversion rate. The purpose of the increase in authorized shares is to provide sufficient shares of Common Stock to satisfy the conversion rights of the Preferred Stock and to provide additional shares of Common Stock that could be issued for corporate purposes without further stockholder approval unless required by applicable law or regulation. Future uses for these additional shares could include effecting acquisitions of other businesses or properties, increasing the shares available for issuance pursuant to the Company Stock Dividend and Dividend Reinvestment Plan, paying stock dividends, providing equity incentives to employees, officers or directors and securing additional financing for the operation of the Company through the issuance of additional shares. The Board of Directors believes that it is in the best interests of the Company to have additional shares of Common stock authorized at this time in order to alleviate the expense and delay of holding a special meeting of stockholders if and when there is a need to issue additional shares of Common Stock. The Company is 7 11 continually evaluating various alternatives for raising additional capital through the sale of its Common Stock, including increasing the number of shares authorized under its Dividend Reinvestment and Stock Purchase Plan and making shares available for sale pursuant to an underwritten public offering. The Company anticipates completion of one or more of these financing events during 1997. The additional shares of Common Stock that would become available for issuance if the proposed amendment were adopted could also be used by the Company to oppose a hostile takeover attempt or delay, defer or prevent changes of control of the Company. For example, without further stockholder approval, the Board of Directors could strategically sell shares of Common Stock in a private transaction to purchasers who would oppose a takeover or favor the current Board of Directors. Although this proposal to increase the number of authorized shares of Common Stock has been prompted by business and financial considerations, not by the threat of any hostile takeover attempt (nor is the Board of Directors currently aware of any such attempts directed at the Company), stockholders nevertheless should be aware that approval of the proposal could facilitate future efforts by the Company to deter, defer or prevent changes of control of the Company, including transactions in which the stockholders might otherwise receive a premium for their shares over then- current market prices. VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS An amendment to the Company's Charter requires, under Section 2-104(b)(4) of the MGCL and the Company's Charter, the affirmative vote of a majority of the votes entitled to be cast on the matter. Accordingly, failure to vote for this amendment, even by abstaining or by failing to be represented at the Annual Meeting, constitutes a vote against the amendment. If the amendment is adopted, it will become effective upon filing of the Articles of Amendment with the State department of Assessments and Taxation of Maryland. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS AMENDMENT TO THE COMPANY'S CHARTER (AS SET FORTH IN EXHIBIT A ATTACHED HERETO). IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, PROXIES SOLICITED IN CONNECTION WITH THIS PROXY STATEMENT WILL BE SO VOTED. 8 12 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, 1996. 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, 1997. A representative of KPMG Peat Marwick LLP is expected to be present at the Annual Meeting and will have the opportunity to make a statement if he so desires and will be available to respond to appropriate questions from Stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY. INFORMATION REGARDING EXECUTIVE OFFICERS EXECUTIVE OFFICERS OF THE COMPANY The following five persons serve as executive officers of the Company:
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS OFFICER SINCE - -------------------- --- ------------------------------------------------------ ------------- Peter B. Bedford 59 Mr. Bedford has been Chairman of the Board since May 1992 1992 and Chief Executive Officer since November 1992. As of March 31, 1997, Mr. Bedford assumed the responsibilities of chief financial officer. Mr. Bedford has been engaged in the commercial real estate business, primarily in the Western United States, for over 30 years and has been responsible for the acquisition, ownership, development and management of an aggregate of approximately 18 million square feet of industrial, office and retail properties, as well as land in 14 states. Mr. Bedford is the sole stockholder of BPHL. Mr. Bedford serves on the board of directors of BankAmerica Corporation, Bixby Ranch Company, a real estate investment company, and First American Title Guarantee Co., a title insurance company. Mr. Bedford is the recipient of numerous awards recognizing his contributions to the real estate industry and serves as a trustee of the Urban Land Institute, 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.
9 13
NAME AGE BUSINESS EXPERIENCE DURING PAST FIVE YEARS OFFICER SINCE - -------------------- --- ------------------------------------------------------ ------------- James R. Moore 56 Mr. Moore joined the Company as Vice President of 1995 Property/Asset Management in September 1995. From 1983 to 1994, he was Managing Director of the San Francisco office of Cushman and Wakefield, an international commercial real estate services firm. Mr. Moore was also a branch manager and commercial real estate broker at Cushman and Wakefield. He has served on the Board of Trustees of The Lindsay Museum in Walnut Creek, California since 1984. Mr. Moore has studied at the Commercial Investment Real Estate Institute and has lectured at the University of San Francisco and San Francisco State University. He received a B.A. in History from the University of California at Berkeley, an M.B.A. from the University of San Francisco and is currently working toward a Doctor of Business Administration at Golden Gate University. Robert E. Pester 40 Mr. Pester has been Vice President of Acquisitions of 1994 Bedford Acquisitions, Inc. since February 1994. Prior to joining Bedford Acquisitions, Inc., he was a real estate investment consultant from 1992 to 1993, President of the Development Division of BPHL from 1989 to 1992 and Vice President of Cushman & Wakefield in Northern California from 1980 to 1989. Mr. Pester received a B.S. in Economics and in Political Science from the University of California at Santa Barbara. Hanh Kihara 49 Ms. Kihara has been the Controller of the Company 1993 since May 1993. Prior to joining the Company, she was Controller and Assistant Controller of BPHL from 1990 to 1993. From 1986 to 1990, Ms. Kihara was a Manager of Armstrong, Gilmour and Associates, a certified public accounting firm. Ms. Kihara has been a certified public accountant since 1989. Ms. Kihara received a B.S. in Administration and Accounting from California State University -- Hayward.
COMPENSATION OF NAMED EXECUTIVE OFFICERS The following table sets forth information regarding compensation paid by the Company for services rendered during the past three years for the four most highly compensated executive officers of the Company who were employed by the Company as of December 31, 1996 (collectively, the "Named Executive Officers"). No executive officer other than the Named Executive Officers earned more than $100,000 on an annualized basis in any year. The salary of the Vice President -- Acquisitions was, as of December 31, 1994, paid by BPI Acquisitions, a separate division of the Company which was funded by Mr. Bedford, and as of 10 14 January 1, 1995 was paid by Bedford Acquisitions, Inc. See "Certain Relationships and Related Transactions -- Funding of Acquisition and Financing Costs." SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION --------------------- SECURITIES UNDERLYING ANNUAL COMPENSATION OPTIONS/SARS ---------------------------- --------------------- ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS SARS COMPENSATION(8) - ---------------------------------------- ---- -------- -------- ------ ----- --------------- Management of Bedford Property Investors: Peter B. Bedford...................... 1996 $150,000 $100,000(4) 10,000(5) -0- $ 6,435 Chief Executive Officer 50,000(6)(7) 1995 $150,000 $ 50,000 5,000(5) -0- $ 6,418 20,000(6) -0- 1994 $150,000 -0- 5,000(5) -0- $ 3,897 25,000(6) Donald A. Lorenz(1)................... 1996 $150,000 $ 90,000 50,000(6)(7) -0- $ 5,835 Executive Vice President and 1995 $150,000 $ 87,133 25,000(6)(7) -0- $ 2,668 Chief Financial Officer 1994 $ 25,000 -0- -0- -0- $ 38 James R. Moore(2)..................... 1996 $150,000 $ 50,000 50,000(6)(7) -0- $ 135 Vice President Property/Asset 1995 $ 50,000 -0- -0- -0- $ 41 Management Hanh Kihara........................... 1996 $ 75,000 $ 25,000 10,000(6)(7) -0- $ 1,635 Controller 1995 $ 72,300 $ 20,000 5,000(6) -0- $ 1,635 1994 $ 71,400 -0- 5,000(6) 5,000 $ 1,135 Management of Bedford Acquisitions, Inc.: Robert E. Pester...................... 1996 $150,000 $200,000 50,000(6)(7) -0- $ 5,835 Vice President -- Acquisitions 1995 $150,000 $149,933 25,000(6)(7) -0- $ 2,668 1994 $133,558 -0- 10,000(6)(7) 5,000 $ 90
- --------------- (1) Mr. Lorenz did not commence full-time employment with the Company until January 1, 1995. From September 1, 1994 to December 31, 1994 he was a part-time employee. Mr. Lorenz resigned from his position with the Company as of March 31, 1997. (2) Mr. Moore commenced employment with the Company on September 1, 1995. (3) Mr. Pester commenced employment with the Company in February 1994. Commencing January 1, 1995, Mr. Pester was employed by Bedford Acquisitions, Inc. All of Mr. Pester's compensation was paid by Bedford Acquisitions, Inc., a California corporation wholly-owned by Mr. Bedford. See "Certain Relationships and Related Transactions -- Funding of Acquisitions and Financing Costs." (4) 50% of Mr. Bedford's 1996 bonus was paid by Bedford Acquisitions, Inc., a California corporation wholly-owned by Mr. Bedford. See "Certain Relationships and Related Transactions -- funding of Acquisitions and Financing Costs." (5) Represents stock options granted pursuant to the 1992 Directors' Stock Option Plan, as amended. (6) Represents stock options granted pursuant to the Employee Stock Option Plan. (7) The stock options granted to certain executives pursuant to the Employee Stock Option Plan on May 16, 1996 initially expired 90 days after the grant date. However, the options included a provision extending the expiration date in certain circumstances. Specifically, for each option exercised by an executive, the expiration date on one of that executives' remaining options was extended until May 16, 2006. Pursuant to this provision, Mr. Bedford, Mr. Lorenz, Mr. Moore and Mr. Pester each exercised 25,000 options, thereby extending the expiration date on their remaining options granted in 1996. Ms. Kihara elected not to exercise any options granted to her in 1996. Thus, all of Ms. Kihara's 10,000 options have expired. In addition, each executive was entitled to finance the exercise of his or her options pursuant to the 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 notes payable to the Company. All of the options exercised by Mr. Bedford, Mr. Lorenz, Mr. Moore and Mr. Pester were financed with note payable to the Company. See "Certain Relationships and Related Transactions -- Indebtedness of Management." (8) Includes auto allowance (in an aggregate amount of $13,200 for 1996, $6,900 for 1995 and $3,800 for 1994), premiums paid by the Company for term life insurance (in an aggregate amount of $675 for 1996, $395 for 1995 and $225 for 1994) and matching contributions under the Company's 401(k) Plan (in an aggregate amount of $6,000 for 1996 and $4,500 for 1995). The Company's 401(k) Plan was implemented in 1995. 11 15 OPTION GRANTS The following table sets forth certain information concerning options granted during 1996 to the Named Executive Officers. OPTION GRANTS IN 1996
INDIVIDUAL GRANTS POTENTIAL REALIZABLE ---------------------------------------------------------- VALUE OF ASSUMED NUMBER OF PERCENT OF ANNUAL RATES OF STOCK SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR UNDERLYING GRANTED TO OPTION TERM OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ----------------------- NAME GRANTED FISCAL YEAR PRICE DATE 5% 10% - ----------------------- ---------- ------------- -------- ---------- -------- ---------- Peter B. Bedford....... 10,000(2) N/A $14.22 11/16/2006 $ 89,429 $ 226,630 50,000(3)(4) 18.7% $13.00 5/16/2006 $408,782(5) $1,035,933(5) Donald A. Lorenz(1).... 50,000(3)(4) 18.7% $13.00 5/16/2006 $408,782(5) $1,035,933(5) James R. Moore......... 50,000(3)(4) 18.7% $13.00 5/16/2006 $408,782(5) $1,035,933(5) Hahn Kihara............ 10,000(3)(4) 3.7% $13.00 N/A $102,196(5) $ 258,984(5)
- --------------- (1) Mr. Lorenz resigned from his position with the Company as of March 31, 1997. (2) Stock Options granted pursuant to 1992 Directors Stock Option Plan, as amended, which options vest and become exercisable six months from the date of grant. (3) Stock Options granted pursuant to Employee Stock Option Plan. (4) See footnote 7 to the Summary Compensation Table on page 13. (5) The potential realizable value assumes for each employee that all of the options granted in 1996 were still outstanding, even though each of Mr. Bedford, Mr. Lorenz, Mr. Moore and Mr. Pester has already exercised 25,000 options and Ms. Kihara's options have expired. AGGREGATE OPTION EXERCISES IN 1996 AND VALUES AT YEAR-END 1996 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, 1996 and the number and aggregate dollar value of unexercised options held at the end of 1996. AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTIONS/SAR VALUES
VALUE OF SECURITIES NUMBER OF SECURITIES UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY SHARES OPTIONS/SARS AT YEAR-END OPTIONS AT YEAR-END(1) ACQUIRED ON VALUE ----------------------------- ----------------------------- NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE - ----------------------- ----------- -------- ----------- ------------- ----------- ------------- Peter B. Bedford....... -0-(2) -0- 50,000 -0- $ 875,000 -0- 25,000(3)(4) $ 3,125 23,750 46,250 $ 415,625 $ 809,375 Donald A. Lorenz(5).... 25,000(3)(4) $21,875 -0- 25,000 -0- $ 437,500 Robert E. Pester....... 25,000(3)(4) $ 3,125 -0- 25,000 -0- $ 437,500 James R. Moore......... 25,000(3)(4) $ 3,125 7,500 32,500 $ 131,250 $ 568,750
- --------------- (1) For all unexercised in-the-money options, assumes a fair market value at December 31, 1996 of $17.50 per share of Common Stock, which is the last transaction in the Common Stock on the New York Stock Exchange as of that date. (2) Stock Options granted pursuant to the 1992 Directors' Stock Option Plan, as amended. (3) Stock Options granted pursuant to the Employee Stock Option Plan. (4) See footnote 7 to the Summary Compensation Table on page 13. (5) Mr. Lorenz resigned from his position with the Company as of March 31, 1997. 12 16 EMPLOYMENT AGREEMENT WITH PETER B. BEDFORD On February 16, 1993, the Company entered into an employment agreement with Mr. Bedford, Chairman and Chief Executive Officer, and amended the agreement on September 18, 1995. Pursuant to the amended employment agreement, Mr. Bedford has agreed to serve as Chairman and Chief Executive Officer of the Company on a substantially full-time basis until the agreement's expiration on September 18, 2000. After September 18, 2000, the agreement will be automatically renewed for additional one-year terms unless either party gives the other notice of non-renewal. Under the employment agreement, the Company agrees to pay Mr. Bedford a salary of not less than $150,000 per annum, plus an automobile and parking allowance. The amended employment agreement provides for a severance payment to Mr. Bedford equal to one year's salary in the event that the Company terminates his employment without cause or Mr. Bedford resigns under specified circumstances, or due to a change in control of the Company. BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Overview During 1996 the members of the Compensation Committee were Messrs. Downs, Eastman, Frank and Zankel. 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 awards. The salary is based on factors such as related experience, level of responsibility, and comparison to similar positions in comparable companies. The annual cash bonuses are based on the Company's performance measured against attainment of financial and other objectives, and on individual performance. Stock option awards are intended to align the executive officer's interest with those of the Stockholders, and are determined based on the executive officer's level of responsibility, number of options previously granted, and contributions toward achieving the goals and objectives of the Company. Additional information on each of these compensation elements follows. Salaries Base salaries for the executive officers are adjusted annually, following a review by the Chairman and Chief Executive Officer (the "CEO") of the Company. In completing the review, performance of the individual with respect to specific objectives is evaluated, as are increases in responsibility and salaries for similar positions. Comparisons are made to the total compensation packages of other publicly traded real estate investment trusts of similar size, with a comparable number of properties and employees. These comparisons are completed through a review of various public filings as well as through a review of the results of the REIT Executive Compensation Survey sponsored by the National Association of Real Estate Investment Trusts (NAREIT). When all reviews are completed, the CEO makes a recommendation to the Compensation Committee for its review and final approval. With respect to the CEO, the Compensation Committee considers a number of factors in setting his compensation, the most important of which are the level of compensation paid to chief executive officers of other real estate investment trusts, the success of the Company's recent acquisitions of new properties, and his importance to the Company's efforts to raise capital in the public markets. The current base salary for Mr. Bedford, the Company's CEO, is less than the average for chief executive officers of similar real estate investment trusts. However, his total compensation is deemed appropriate in view of the stock options he holds and his significant equity ownership. In light of the relatively low salaries of the Company's executive officers, the Compensation Committee has not developed a position regarding the Internal Revenue Code provision limiting deductions for salaries to $1 million per person. 13 17 Annual Bonuses Annual bonuses are awarded on a discretionary basis and reflect both Company and individual performance. The Compensation Committee considers numerous qualitative and quantitative factors in determining these bonus awards, including the amount of equity capital raised, the success of the Company's acquisition program and the growth in the Company's funds from operations, after adjustment for lease commissions, tenant improvements and other capital expenditures. Stock Option Awards Stock options are an integral part of each executive officer's compensation and are utilized by the Company to provide an incentive to the officer, and to align the interests of the executive with those of the Stockholders by providing him with a financial interest in the Company. Options granted by the Compensation Committee under the Company's Employee Stock Option Plan are made at fair market value on the date of the grant, vest over various time periods of up to five years and expire after ten years. In making grants, the Compensation Committee takes into account the executive officer's contributions to the Company, scope of responsibilities, salary and the number of options previously granted. The executive officers were granted a significant number of options in 1996, as the Compensation Committee sought to implement its overall strategy of aligning the financial interests of the executive officers with those of the Stockholders. COMPENSATION COMMITTEE A. M. Downs (Chairman) T. G. Eastman A. M. Frank M. I. Zankel COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and any person who owns more than ten percent (10%) of a registered class of the Company's equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange Commission (the "SEC"). Such officers, directors and ten percent (10%) stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms that they file. Based solely on its review of copies of such reports received or written representations from certain reporting persons, the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and ten percent (10%) stockholders during the fiscal year ended December 31, 1996 were complied with. 14 18 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, 1991 in the Common Stock and the indices, and that all dividends were reinvested throughout the period. FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURN
MEASUREMENT PERIOD (FISCAL YEAR COVERED) BEDFORD PROPERTY S&P 500 EQUITY REITS 12/31/91 100.00 100.00 100.00 12/31/92 125.00 107.62 115.96 12/31/93 199.66 118.47 139.15 12/31/94 237.76 120.03 144.36 12/31/95 329.52 165.13 166.13 12/31/96 439.60 202.69 225.85
TOTAL STOCKHOLDER RETURN
YEAR ENDING BEDFORD PROPERTY INVESTORS S&P 500 EQUITY REITS ------------------------------- -------------------------- ------- ------------ 12/31/91....................... $ 100.00 $100.00 $ 100.00 12/31/92....................... $ 125.00 107.62 115.96 12/31/93....................... $ 199.66 118.47 139.15 12/31/94....................... $ 237.76 120.03 144.36 12/31/95....................... $ 329.52 165.13 166.13 12/31/96....................... $ 439.60 202.69 225.85
15 19 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as of March 15, 1997, with respect to directors, certain employees of the Company and each person who is known by the Company to own beneficially more than 5% of the shares of its Preferred Stock or its Common Stock, and with respect to shares of Common Stock owned beneficially by all directors and officers of the Company as a group.
TITLE OF NUMBER OF SHARES PERCENT OF CLASS NAME AND ADDRESS BENEFICIALLY OWNED CLASS - ------------ -------------------------- ------------------ ---------- Preferred Bed Preferred No. 1 8,333,334 100% Stock Limited Partnership 225 Franklin Street Boston, MA 02110-2803 Common Stock Peter B. Bedford 1,019,663(1) 9.0% Common Stock Anthony M. Downs 50,500(2) (7) Common Stock Anthony M. Frank 50,500(3) (7) Common Stock Claude M. Ballard 50,000(4) (7) Common Stock Martin I. Zankel 68,991(5) (7) Common Stock Thomas G. Eastman 50,000(6) (7) Common Stock Thomas H. Nolan, Jr. 50,000(8) (7) Common Stock Robert E. Pester 71,250(9) (7) Common Stock Donald A. Lorenz(10) 57,100(11) (7) Common Stock James R. Moore 32,005(12) (7) Common Stock Hanh Kihara 13,750(13) (7) Common Stock All directors and officers 1,513,759(14) 13.0% as a group (12 persons)
- --------------- (1) 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 81,250 shares of Common Stock subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (2) Includes 25,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997 (3) Includes 50,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (4) Includes 50,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (5) Includes 8,991 partnership units convertible into 8,991 shares of Common Stock and 50,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. See "Certain Relationships and Related Transactions." (6) Includes 50,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (7) Less than 1%. (8) Includes 50,000 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (9) Includes 13,750 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (10) Mr. Lorenz resigned from his position with the Company as of March 31, 1997. (11) Includes 6,250 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (12) Includes 6,250 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (13) Includes 12,750 shares subject to options which are currently exercisable or will become exercisable within 60 days of March 31, 1997. (14) Includes 8,991 partnership units convertible into 8,991 shares of Common Stock and options to purchase 395,250 shares which are currently exercisable or become exercisable within 60 days of March 31, 1997. 16 20 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) and all of Mr. Pester's compensation in 1996. 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, 1998. From February 1993 through December 1994, the Company's activities relating to debt and equity financings and the acquisition of new properties were handled under arrangements similar to the current arrangement with Bedford Acquisitions through BPI Acquisitions, a separate division within the Company. This division operated under an arrangement with Mr. Bedford whereby he provided acquisitions and financing personnel, allocable overhead costs and the costs of all due diligence conducted prior to an acquisition. Upon the completion of a financing or the acquisition of a property, Mr. Bedford was paid a fee by the Company substantially identical to that described above. In no event could the aggregate amount of fees paid to Mr. Bedford exceed the aggregate amount of costs funded by Mr. Bedford. As of December 31, 1996, the Company had paid Mr. Bedford and Bedford Acquisitions an aggregate of approximately $4,853,000 for acquisition and financing activities performed since February 1993 pursuant to the foregoing arrangements which was approximately $602,000 less than 1.5% of the gross amount raised in completed financings and the aggregate purchase price of acquired properties. Of this amount, approximately $1,808,000 was paid during 1996. 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 arrangements with Mr. Bedford and Bedford Acquisitions, the Company may have incurred substantial operating expenses relating to acquisition and financing activities; if the Company had employed the same personnel and incurred the same expenses as Bedford Acquisitions, net income and Funds from Operations for the year ended December 31, 1996 each would have been reduced by approximately $863,000 (or $.09 per common share assuming full dilution) compared to the corresponding amounts actually reported 17 21 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. ACQUISITIONS INVOLVING AFFILIATES On December 17, 1996, in a "Down REIT" transaction, the Company acquired an industrial property in Modesto, California in exchange for 108,495 units of limited partnership interest (the "Units") in Bedford Realty Partners, L.P (the "Partnership"), a partnership in which the Company is the general partner. Pursuant to this transaction, Martin I. Zankel, a member of the Board of Directors of the Company, acquired 8,991 Units in exchange for his 9% ownership interest in such property. Mr. Zankel did not participate in the approval of this transaction. Each holder of the Units may, subject to certain limitations, require that the Partnership redeem all or a portion of such holder's Units beginning on March 17, 1997. Upon redemption, a holder will receive, at the option of the Company, as general partner of the Partnership, either (i) a number of shares of Common Stock equal to the number of Units redeemed or (ii) cash in an amount equal to the average market value of the number of shares of Common Stock the holder would have received pursuant to (i) above. In lieu of the Partnership redeeming Units, the Company, as general partner, in its sole discretion, has the right to assume directly and satisfy the redemption right of the holder of the Units. OTHER TRANSACTIONS On June 8, 1994, Kingswood Realty Advisors, Inc. ("Kingswood") filed a petition in the United States Bankruptcy Court for the Northern District of California for protection from its creditors under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). On September 8, 1994, Kingswood converted its case to an action under Chapter 7 of the Bankruptcy Code. Kingswood's case was closed and a final decree entered by the Court on February 21, 1996. Mr. Bedford was president, director and sole shareholder of Kingswood. Martin I. Zankel, a member of the Board of Directors of the Company, and his associates provide legal services to the Company for which his firm was paid, in the aggregate, $213,000 in 1996. 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 thirty days of the grant date may be exercised and paid for either in cash or with a note payable to the Company. Such note bears interest at 7.5% or the Applicable Federal Rate as defined by the Internal Revenue Service, whichever is higher. 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. Lorenz, Mr. Moore and Mr. Pester, all of whom are executive officers of the Company, each exercised options for 25,000 shares of Common Stock in exchange for notes payable to the Company. The notes, of $325,000 each, bear interest at 7.5% per annum. In 1995, Mr. Lorenz and Mr. Pester also borrowed $287,500 pursuant to this program. As of February 28, 1997, $282,434, $520,423, $306,071 and $405,164 in principal amount were outstanding under the notes owed by Mr. Bedford, Mr. Lorenz, Mr. Moore and Mr. Pester, respectively. OTHER INFORMATION A copy of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, may be obtained, without charge, by writing to Jennifer I. Mori, Secretary, Bedford Property Investors, Inc., 270 Lafayette Circle, Lafayette, CA 94549. 18 22 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. STOCKHOLDER PROPOSALS Proposals of Stockholders intended to be presented at the annual meeting of Stockholders to be held in 1998 must be received by the Company at its principal executive offices no later than March 17, 1998 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, /s/ Jennifer I. Mori April 16, 1997 Jennifer I. Mori Secretary 19 23 EXHIBIT A ARTICLES OF AMENDMENT OF CHARTER OF BEDFORD PROPERTY INVESTORS, INC. THIS IS TO CERTIFY THAT: FIRST: The charter of Bedford Property Investors, Inc., a Maryland corporation (the "Corporation"), is hereby amended by deleting existing Section 1 of Article V and adding a new Section 1 as follows: Section 1. Authorized Shares. The total number of shares of stock which the Corporation has authority to issue is 70,000,000 shares, of which 50,000,000 shares are shares of Common Stock, $0.02 par value share ("Common Stock"), 10,000,000 shares are shares of Preferred Stock, $0.01 par value per share ("Preferred Stock"), and 10,000,000 shares are shares of Series A Convertible Preferred Stock, $.01 par value per share ("Series A Preferred"). The aggregate par value of all authorized shares of stock having a par value is $1,200,000. SECOND: The total number of shares of stock which the Corporation had authority to issue immediately prior to this amendment was 15,000,000 shares of Common Stock, $0.02 par value per share, 10,000,000 shares of Preferred Stock, $0.01 par value per share, and 10,000,000 shares of Series A Convertible Preferred Stock, $0.01 par value per share, having an aggregate par value of $500,000. THIRD: The total number of shares of stock which the Corporation has authority to issue, pursuant to the charter of the Corporation as hereby amended, is 50,000,000 shares of Common Stock, $0.02 par value per share, 10,000,000 shares of Preferred Stock, $0.01 par value per share, and 10,000,000 shares of Series A Convertible Stock, $0.01 par value per share, having an aggregate par value of $1,200,000. FOURTH: The amendment to the charter of the Corporation as set forth above has been duly advised by the board of directors and approved by the Stockholders of the Corporation as required by law. FIFTH: The undersigned President acknowledges these Articles of Amendment to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, the Corporation has caused these Articles to be signed in its name and on its behalf by its President and attested to by its Secretary on this day of , 1997. ATTEST: BEDFORD PROPERTY INVESTORS, INC. By: -------------------------------------- Its President (seal) By: -------------------------------------- Its Secretary (seal) 20 24 (THIS PROXY IS TO BE USED BY COMMON STOCKHOLDERS ONLY) BEDFORD PROPERTY INVESTORS, INC. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED BY MANAGEMENT The undersigned stockholder of Bedford Property Investors, Inc., a Maryland corporation (the "Company"), hereby appoints Jennifer I. Mori and Hahn Kihara, and each of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the Annual Meeting of Stockholders of the Company to be held on Friday, May 16, 1997 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 acknowledges receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement and revokes any proxy previously given with respect to such shares. 1. Election of Common Stock Directors Nominees: Clauda M. Ballard; Peter B. Bedford; Anthony M. Downs; Anthony M. Frank; Martin I. Zankel. [ ] FOR ALL NOMINEES [ ] WITHHOLD AS TO ALL NOMINEES [ ] For all Nominee(s) (Except written below.) ------------------------------------------ 2. Approval of the amendment to the Company's Charter to increase the number of authorized shares of the Company's Common Stock, par value $.02 per share, from 15,000,000 to 50,000,000. [ ] FOR [ ] AGAINST [ ] ABSTAIN 3. Ratification of appointment by the Company's Board of Directors of KPMG Peat Marwick LLP to serve as Company's independent accountants for fiscal year ending December 31, 1997. [ ] FOR [ ] AGAINST [ ] ABSTAIN THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST 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 or other entity, please give full title under signature. Dated , 1997 -------------------- ------------------------------------------------ Signature ------------------------------------------------ Signature, if held jointly Votes must be indicated by filling in X in Black or Blue Ink. Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. 25 (THIS PROXY IS TO BE USED BY PREFERRED STOCKHOLDERS ONLY) BEDFORD PROPERTY INVESTORS, INC. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED BY MANAGEMENT The undersigned stockholder of Bedford Property Investors, Inc., a Maryland corporation (the "Company"), hereby appoints Jennifer I. Mori and Hahn Kihara, and each of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the Annual Meeting of Stockholders of the Company to be held on Friday, May 16, 1997 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 acknowledges receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement and revokes any proxy previously given with respect to such shares. 1. Election of Preferred Stock Directors Nominees: Thomas G. Eastman; Thomas H. Nolan, Jr. [ ] FOR ALL NOMINEES [ ] WITHHOLD AS TO ALL NOMINEES [ ] For both Nominees (Except written below) ------------------------------------------ THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST 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 or other entity, please give full title under signature. Dated , 1997 -------------------- ------------------------------------------------ Signature ------------------------------------------------ Signature, if held jointly Votes must be indicated by filling in X in Black or Blue Ink. Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. -----END PRIVACY-ENHANCED MESSAGE-----