SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
September 28, 2001
Date of report (Date of earliest event reported)
G & L REALTY CORP.
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(Exact name of registrant as specified in charter)
Maryland 1-12566 95-4449388
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(State or Other Jurisdiction of (Commission File (IRS Employer Identification No.)
Incorporation) Number)
439 N. Bedford Drive, Beverly Hills, California 90210
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(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code: (310) 273-9930
Not applicable.
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(Former name or former address, if changed since last report)
Item 5. Other Events.
On June 6, 2001, G&L Realty Corp. (the "Company") reported that Lyle Weisman and
certain of his associates (the "Weisman Group") had delivered to the special
committee of the board of directors a proposal to acquire, at the election of
the Company, either (i) all of the issued and outstanding common stock of the
Company for $15.00 per share or (ii) all of the assets of the Company (the
"Weisman Proposal").
On June 25, 2001, the Company reported that the Weisman Group had delivered to
the special committee a first amendment to the Weisman Proposal in which it
increased the price per share of common stock of the Company to $15.25 per share
and deleted the reference to purchasing the Company's assets.
On July 10, 2001, the Company reported that the Weisman Group had delivered to
the special committee a second amendment to the Weisman Proposal that: (i)
increased the price per share of common stock of the Company, if the Weisman
Group acquires 100% of such common stock, to $16.00 per share, subject to
satisfactory completion of customary corporate and legal due diligence, and with
a statement that the price per share would not be adjusted to less than $15.25
per share if the Weisman Group elected to continue with the transaction; and
(ii) offered to purchase, at the Company's election, less than all, but not less
than 50.1% of the Company's common stock on a fully diluted basis, at a price of
$15.25 per share, without a contingency for due diligence.
On July 19, 2001, the Company announced that the special committee had responded
in a letter addressed to the Weisman Group that it would be prepared to support
a proposal by the Weisman Group to acquire the Company in which: (i) all common
stockholders (other than the Weisman Group) received a price of not less than
$16.00 per share; (ii) there would be no contingencies for due diligence or
financing; (iii) the Weisman Group would make a nonrefundable payment of $2.5
million to the Company; and (iv) other requirements set forth in the response
were met.
On July 31, 2001, the Company announced that the special committee had received
a further amendment (the "Third Amendment") to the Weisman Proposal that: (i)
reaffirmed the Weisman Group's desire to acquire all, but not less than 50.1%,
of the Company's common stock; (ii) increased the proposed cash purchase price
per share to $16.35 per share, subject to satisfactory completion of customary
corporate and legal due diligence, or $15.35 per share without a contingency for
due diligence; (iii) conditioned the amended proposal on the negotiation and
execution of a definitive acquisition agreement and the termination of the
agreement and plan of merger dated as of May 10, 2001 between the Company and a
company owned by Daniel M. Gottlieb and Steven D. Lebowitz (the "Merger
Agreement"); and (iv) offered to deliver a deposit of $750,000 to counsel for
the special committee if the Company accepted the amended proposal, and to
increase the deposit by an additional $400,000 upon execution of a definitive
acquisition agreement, provided that the deposit would be refunded if the
transaction were unable to close prior to October 30, 2001, for any reason other
than a breach of the acquisition agreement by the Weisman Group.
On August 17, 2001, the special committee advised the Weisman Group that it was
unable to recommend to the full board of directors that it proceed with the
transaction outlined in the Third Amendment to the Weisman Proposal. The
special committee stated that the Third Amendment did not address its previously
expressed concerns that the proposed transaction could not be consummated
because Messrs. Gottlieb and Lebowitz and other stockholders would not support
it, and that the proposal did not provide for reimbursement of the Company for
losses it would incur in the event of a failed transaction.
On August 21, 2001, the special committee received a further amendment (the
"Fourth Amendment") to the Weisman Proposal to acquire all, but not less than
50.1%, of the Company's common stock. The Fourth Amendment: (i) offered to
deliver an initial deposit of $750,000 to counsel for the special committee,
which would be credited towards the purchase price of the Company's common
stock, (ii) provided for, no later than three business days following execution
of a definitive agreement between the Company and the Weisman Group (the
"Acquisition Agreement"), an increase to the deposit by $1,750,000, for a total
of $2,500,000 to be credited towards the purchase price of the Company's common
stock (the "Good Faith Deposit") and (iii) provided that the Good Faith Deposit
would become non-refundable to the Weisman Group and be paid to the Company
should no transaction whereby holders of the common stock of the Company receive
aggregate consideration of $12.00 or more for each share of the Company's common
stock they own (regardless of the originator of such transaction) close within
12 calendar months from the date of execution of the Acquisition Agreement.
On September 5, 2001, the Company announced that the special committee had
advised the Weisman Group that it was unable to recommend to the full board of
directors that it proceed with the transaction outlined in the Weisman Group's
latest proposal made August 21, 2001. The special committee stated that it had
concluded that there was no reasonable possibility that the Weisman Group could
complete the acquisition of at least 50.1% of the outstanding common stock of
the Company as contemplated by the proposal.
On September 5, 2001, the special committee received a further amendment (the
"Fifth Amendment") to the Weisman Proposal that: (i) increased the proposed
cash purchase price per share to $15.50 per share without a due diligence
contingency, or $16.50 per share with a due diligence contingency, (ii) reduced
the minimum required threshold for the Weisman Group's proposal to acquire the
Company's common stock to 45.0% (inclusive of the shares of common stock owned
by the Weisman Group); and (iii) provided that the Company would promptly, upon
completion of a transaction with the Weisman Group, take such steps as may be
necessary or appropriate for delisting the shares of common stock from trading.
On September 10, 2001, the Company announced that the special committee had
determined that the transaction contemplated by the Merger Agreement with the
company owned by Messrs. Gottlieb and Lebowitz providing for a merger in which
common stockholders of the Company would receive $12.00 per share continues to
be fair and reasonable to and in the best interests of the Company and its
unaffiliated common stockholders. The special committee reaffirmed its
recommendation that the Company consummate the transaction.
The special committee also advised the Weisman Group that it would not recommend
the Weisman Group's latest proposal dated September 5, 2001 to the full board of
directors. In considering the Weisman Group's latest proposal, the special
committee concluded that, since the latest proposal did not contemplate a
merger, it should be considered a proposal to make a tender offer for a minimum
of 45% of the Company's outstanding shares of common stock conditioned upon a
termination of the Merger Agreement. In reviewing the proposal, the special
committee considered a number of things, including the following:
(i) the Weisman Group's proposal was not in the form of an offer that
the Company could accept to create a legally binding contract; therefore,
it would require the Company to terminate the Merger Agreement in advance
of the existence of an obligation on the Weisman Group's part to deliver
the $2.5 million good faith deposit needed to reimburse the Company for the
costs that have been and would be incurred upon termination of the Merger
Agreement;
(ii) in the absence of any objective criteria for determining the
purchase price adjustments that would be applicable in the case of the
proposed $16.50 per share transaction in which due diligence was performed,
the special committee had to consider the proposal as at $15.50 per share;
(iii) based on expert advice, the special committee had concluded that it
is more likely than not that the Weisman Group would be unable to acquire
45% of the Company's outstanding common stock in a tender offer opposed by
Messrs. Gottlieb and Lebowitz who own approximately 42% of the Company's
outstanding common stock and have options to purchase an additional 167,000
shares, which they have advised the special committee they would do; the
only form of a tender offer that the special committee would be able to
recommend would be a tender offer made at an appropriate price, on an any
and all basis or subject to a minimum threshold that the special committee
determines is more likely than not to be satisfied, and with no
contingencies;
(iv) the special committee believed that there was a material risk that,
if the Merger Agreement were terminated and the Weisman Group did not meet
the 45% minimum threshold in its proposal, the Company's common stock would
trade at a significant discount from the $12.00 per share price specified
in the Merger Agreement, particularly in light of the advice of the special
committee's financial advisor that the range of values of the Company's
common stock is between $5.00 and $10.00 per share;
(v) the failure of the Weisman Group to provide the special committee
with any business plan or indication of its intentions with respect to the
future management or operation of the Company, notwithstanding numerous
requests from the special committee;
(vi) the fact that the Weisman Group did not need the approval or consent
of the special committee to conduct a tender offer; and
(vii) the special committee's concern that the continued lapse of time
would give rise to the right of Messrs. Gottlieb and Lebowitz to terminate
the Merger Agreement, leaving the Company's stockholders without an
opportunity to participate in any transaction.
On September 17, 2001, the Company announced that the special committee had
received an amended proposal from the Weisman Group to acquire the outstanding
common stock of the Company (the "Sixth Amendment"). If accepted, the amended
proposal would require the negotiation of definitive agreements and would result
in the termination of the Merger Agreement with the company owned by Messrs.
Gottlieb and Lebowitz requiring the payment by the Company of significant
amounts to Messrs. Gottlieb and Lebowitz as described below.
In the amended proposal, the Weisman Group set forth two alternative proposals
- Proposal A and Proposal B. In Proposal A, the Weisman Group had: (i) offered
to acquire all of the issued and outstanding common stock of the Company to be
effected via a cash-out merger at a purchase price of $15.50 per share of common
stock, (ii) waived due diligence as a pre-condition to any transaction at $15.50
per share, (iii) offered to deliver an initial deposit of $750,000 to counsel
for the special committee within two business days after the special committee
accepts the Weisman Group's offer, and no later than three business days
following execution of a definitive Acquisition Agreement between the Company
and the Weisman Group, to increase the deposit by $1,750,000, for a total of
$2,500,000 to be credited towards the purchase price of the Company's common
stock (the "Good Faith Deposit"), (iv) provided that the Good Faith Deposit
would become non-refundable to the Weisman Group and be paid to the Company
should no transaction whereby holders of the common stock of the Company receive
aggregate consideration of at least $12.00 for each share of the Company's
common stock they own (regardless of the originator of such transaction) close
within 12 calendar months from the date of the Acquisition Agreement, (v) not
conditioned the offer to any financing contingency, and (v) conditioned the
offer on the negotiation and execution of an Acquisition Agreement, and
termination of the Merger Agreement with the company owned by Messrs. Gottlieb
and Lebowitz.
In Proposal B, the Weisman Group asked the special committee and board of
directors of the Company to approve and recommend a direct offer from the
Weisman Group to all common stockholders of the Company containing the following
terms: (i) the purchase price would be $15.50 per share of common stock, (ii)
the acquiring party would be a new entity to be formed by the Weisman Group and
principally owned by them, (iii) the timing would be as soon as may be
practicable, consistent with applicable corporate and securities laws and
exchange regulations, (iv) the maximum number of shares would be 100% of issued
and outstanding common stock, (v) the minimum number of shares would be 40% of
issued and outstanding common stock, inclusive of shares owned by the Weisman
Group, (vi) there would be no due diligence condition, (vii) if the Weisman
Group acquires more than 50% of outstanding shares of common stock as a result
of the proposal, then it would as soon thereafter seek to effect a cash-out
merger between the acquiring entity and the Company upon the same terms and
conditions, (viii) the Merger Agreement with the company owned by Messrs.
Gottlieb and Lebowitz would be terminated, (ix) the board of directors would
issue a favorable recommendation in support of the Weisman Group's offer to the
common stockholders, (x) the Company would, upon completion
of the tender offer, take such steps as may be necessary or appropriate for
delisting the shares of common stock from trading, and (xi) the Good Faith
Deposit would be non-refundable to the Weisman Group as indicated in connection
with Proposal A, except that a transaction would be deemed to have occurred if
the Weisman Group achieved at least 40% minimum ownership.
Both proposals by the Weisman Group would require termination of the Merger
Agreement with the company owned by Messrs. Gottlieb and Lebowitz. Under the
Merger Agreement, except in certain circumstances relating to a superior
acquisition proposal as defined in the Merger Agreement, the Company is
prohibited from having any discussions or negotiations with any party relating
to an acquisition proposal. Acceptance by the special committee of either
proposal of the Weisman Group would permit the company owned by Messrs. Gottlieb
and Lebowitz to terminate the Merger Agreement, which would require prompt
payment of the termination fee and reasonable expenses of Messrs. Gottlieb and
Lebowitz, which are currently estimated to aggregate in excess of $2,500,000, in
accordance with the Merger Agreement. According to the amended proposal,
payment of the $750,000 initial portion of the Good Faith Deposit would occur
two business day after the special committee accepts the Weisman Group's offer,
and the $1,750,000 balance of the Good Faith Deposit would be paid no later than
three business days following execution of an Acquisition Agreement with the
Weisman Group. It is unclear from the amended proposal when the $1,750,000
balance of the Good Faith Deposit would be paid in the case of the tender offer
in Proposal B. Under both of the Weisman Group's proposals, the Good Faith
Deposit would not be available to the Company at the time the Company would be
required to pay the termination fee and expenses of Messrs. Gottlieb and
Lebowitz.
On September 20, 2001, the Company announced that the special committee of its
board of directors had advised the Weisman Group that it could not recommend the
Weisman Group's latest proposal dated September 17, 2001, because it was not in
the form of a definitive acquisition agreement executed by the Weisman Group,
which becomes immediately binding upon execution and delivery to the Weisman
Group by the Company and which is accompanied by a deposit of $2.5 million. The
body of the special committee's letter to the Weisman Group follows:
The Special Committee (the "Committee") of the Board of Directors of G & L
Realty Corp. (the "Company") is in receipt of and has considered your
proposal, dated June 5, 2001, as amended by your letters dated June 22,
2001, July 6, 2001, July 30, 2001, August 21, 2001, September 5, 2001 and
September 17, 2001 (the "WGFK Proposal"). We note the implicit criticisms
imbedded in your most recent letter, and take strong exception to any
implication that we are doing anything other than what is required of us
as the directors of a Maryland corporation.
As you know, we now have a transaction pursuant to a binding agreement,
subject to stockholder approval, at $12.00 per share. We received advice
from Houlihan Lokey Howard & Zukin Financial Advisors, Inc. that the range
of fairness for the Company's common stock is between $5.00 and $10.00.
Under the terms of the Agreement and Plan of Merger, dated as of May 10,
2001, between the Company and G & L Realty Acquisition, LLC (the "Merger
Agreement"), that transaction
must be consummated by October 15, 2001, or it will be lost to the
stockholders of this Company.
Given the totality of the circumstances facing the Company, including the
now highly uncertain capital markets as well as the declining economy as a
whole, it is our view as a Committee that we cannot consider any proposal
from you unless that proposal is in the form of definitive acquisition
agreement executed by you, which becomes immediately binding upon
execution and delivery to you by the Company and which is accompanied by a
deposit of not less than $2.5 million. We have consistently communicated
in our letters to you as well as in conversations with your counsel that
the Committee is not prepared to take any action which would deprive
stockholders of the benefits of the Merger Agreement and expose the
Company to liability for the termination fees provided for in that Merger
Agreement (which we have been informed by Messrs. Gottlieb and Lebowitz
now exceed $2.7 million), unless the Merger Agreement could be
simultaneously replaced by an alternative agreement and the payment of the
$2.5 million deposit. You have, and have had for more than the past four
months, a copy of the Merger Agreement. As we have previously indicated to
you, that document could easily serve as a model for any offer you might
want us to consider. Putting signature lines at the bottom of a letter
does not elevate a mere proposal describing a possible transaction into a
binding agreement -particularly where, as here, all of the obligations of
the would be "offeror" are as a practical matter contingent upon the
future negotiation, execution and delivery of a definitive acquisition
agreement.
The fact that you have over these many months never moved beyond the
"proposal" stage nor provided a copy of your business plan to the
Committee makes us doubt whether you really seek to acquire the common
stock of the Company . Alternatively, you are free to make such offer as
you believe to be appropriate on such terms as you believe to be
appropriate directly to the stockholders of the Company.
We stand prepared to receive and to consider any offer that you might make
that satisfies the above basic criteria. Additionally, in light of the
recent tragic events in our country and their impact on the capital
markets, the Committee also requests that any further proposals from you
be accompanied by an updated commitment letter evidencing your source of
financing, dated after September 11, 2001. We are not prepared to spend
any time or Company resources considering any further "proposals"
describing a possible transaction unless they are in the form of an offer
capable of being accepted.
Amendment to Merger Agreement: Special Committee Receives Limited Waiver
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Allowing It to Negotiate with the Weisman Group
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On September 28, 2001, the Company entered into Amendment No.1 to the
Merger Agreement which (i) extends the deadline for holding a stockholders
meeting to October 29, 2001, (ii) extends the deadline for completion of
the merger to November 30, 2001, and (iii) provides that the Company shall
pay reasonable expenses incurred by Messrs. Gottlieb and Lebowitz if the
Merger Agreement is terminated by either party because the merger has not
been completed by November 30, 2001.
Amendment to Merger Agreement
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On September 28, 2001, the Company entered into Amendment No. 1 to the
Merger Agreement which (i) extends the deadline for holding a stockholders
meeting to October 29, 2001, (ii) extends the deadline for completion of the
merger to November 30, 2001, and (iii) provides that the Company shall pay
reasonable expenses incurred by Messrs. Gottlieb and Lebowitz if the Merger
Agreement is terminated by either party because the merger has not been
completed by November 30, 2001.
On October 2, 2001, the Company announced that the special committee of its
board of directors had received a limited waiver under the Merger Agreement from
the company owned by Messrs. Gottlieb and Lebowitz that permits the special
committee to enter into discussions and negotiations with the Weisman Group and
its counsel regarding the latest Weisman Proposal without having to determine at
this time (as would otherwise be required by the Merger Agreement) that the
failure to do so would reasonably be expected to violate the special committee's
duties under applicable law or that the latest Weisman Proposal is, or is
reasonably likely to be, a "Superior Acquisition Proposal" (as defined in the
Merger Agreement).
The limited waiver is subject to the following conditions:
(1) The special committee must proceed with such discussions or
negotiations as expeditiously as practicable and must themconclude them within a
reasonable period of time given the stockholder meeting date of October 24, 2001
and applicable disclosure requirements of the Securities and Exchange
Commission;
(2) Any proposal recommended by the special committee must include the
payment to the Company of at least $2.5 million on a non-refundable basis,
except in the event of a breach by the Company; and
(3) Messrs. Gottlieb and Lebowitz must be afforded sufficient advance
notice of any record date for a vote of common stockholders or any tender offer
for common stock of the Company relating to any acquisition by the Weisman Group
or its affiliates such that, prior to such record date or tender offer, they are
able to become record holders of the shares of common stock of the Company
issuable on exercise of any outstanding options held by them.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit Description
No.
99.1 Amendment No. 1 to Agreement and Plan of Merger dated May 10, 2001, by
and between G&L Acquisition, LLC and G&L Realty Corp., dated as of
September 28, 2001
99.2 Press release issued by G&L Realty Corp. on October 2, 2001.
99.3 Limited waiver dated September 28, 2001 from G&L Acquisition, LLC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
G & L REALTY CORP.
By: /s/ David E. Hamer
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David E. Hamer
Chief Accounting Officer
DATED: October 4, 2001