EXHIBIT 99.2
G & L Realty Corp.
October 19, 2001
Mr. Lyle Weisman
Mr. Asher Gottesman
Mr. Len Fisch
Mr. Igor Korbatov
c/o Aaron A. Grunfeld, Esquire
Resch, Polster, Alpert & Berger, LLP
10390 Santa Monica Boulevard
Fourth Floor
Los Angeles, California 90025-5058
Re: WGFK Tender Offer
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Gentlemen:
I am writing to you today in my capacity as the Chairman of the
Special Committee (the "Special Committee") of the Board of Directors (the
"Board") of G & L Realty Corp. (the "Company"). The Special Committee has taken
into consideration the imminence of the upcoming meeting of stockholders of the
Company to consider the merger (the "Gottlieb/Lebowitz Merger") described in the
Agreement and Plan of Merger, dated as of May 10, 2001, by and between G & L
Acquisition, LLC and the Company, as amended (the "Gottlieb/Lebowitz Merger
Agreement"). Given the fact that the Company has reported that 53.2% of the
outstanding common stock of the Company ("Common Stock") has been voted in favor
of the Gottlieb/Lebowitz Merger, the consummation of the Gottlieb/Lebowitz
Merger, yielding a price to stockholders of $12.00 per share, is a certainty
absent a determination by the Special Committee to withdraw its recommendation
of the Gottlieb/Lebowitz Merger in favor of a Superior Acquisition Proposal (as
defined in the Gottlieb/Lebowitz Merger Agreement). As you are also aware, the
financing commitment secured by Messrs. Gottlieb and Lebowitz to complete the
Gottlieb/Lebowitz Merger expires on October 31, 2001 and, given the state of the
world, there is no reason to expect that their lender would continue to make
such financing available to them any time in the reasonable future. Therefore,
the only circumstance in which the Special Committee is willing to withdraw its
recommendation of the Gottlieb/Lebowitz Merger in favor of a possible Superior
Acquisition Proposal is one where the Special Committee deems the consummation
of such proposal a certainty.
Counsel for the Special Committee received a letter from counsel for
Messrs. Gottlieb and Lebowitz on October 18, 2001, which provided for the
retroactive revocation of the waiver permitting the Special Committee to
negotiate with Messrs. Lyle Weisman, Asher
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October 19, 2001
Page 2
Gottesman, Len Fisch and Igor Korbatov, such individuals being jointly and
severally referred to herein as "WGFK." The letter asserts that any proposal by
WGFK must include a nonrefundable payment of at least $2.5 million immediately
payable to the Company in order to protect the Company's stockholders from
exposure to liability for the termination fee and costs provided for in the
Gottlieb/Lebowitz Merger Agreement. The letter goes on to provide that Messrs.
Gottlieb and Lebowitz are prepared to enforce their rights, including seeking
damages, specific performance and injunctive relief. Without addressing the
validity of such claims, the Special Committee has acknowledged the risk to the
Company's stockholders that, even if your proposal were deemed to be a Superior
Acquisition Proposal, it may never be presented to the stockholders as a result
of the litigation which has been threatened. Messrs. Gottlieb and Lebowitz have
entered into an agreement with the Company pursuant to which they will (i)
release the Company from any claims arising out of any breach of Section 4.1 of
the Gottlieb/Lebowitz Merger Agreement (giving rise to liability above and
beyond the termination fee and costs), (ii) not take any action to terminate the
Gottlieb/Lebowitz Merger Agreement as a result of any alleged breach of Section
4.1 of such agreement and (iii) forbear from any injunctive action or other
similar interference in connection with the WGFK Tender Offer (as defined below)
if the Special Committee has deemed the WGFK Tender Offer to be a Superior
Acquisition Proposal, provided that any proposal put forth by the Special
Committee, or ultimately recommended as a Superior Acquisition Proposal,
includes the $2.5 million payment described above.
The Special Committee has reviewed with care your proposal of October
12, 2001, and considered the results of the conversations between our counsel,
Sharon Kroupa, and your counsel, Aaron Grunfeld. Based on that proposal and
those conversations, as well as the considerations described above, please be
advised that we are prepared to recommend to the Board the transaction set forth
below. In order to move this process forward, we have directed our counsel to
begin preparation of a definitive agreement (the "Definitive Agreement")
containing representations, warranties, covenants and such other terms as are
customary for transactions of this type. Upon your acceptance of and agreement
with the terms set forth in this letter (the "Letter"), we will forward to you
the Definitive Agreement for your review. If the terms of the transaction
described in this Letter have not been accepted by you by 12:00 midnight (PDT)
on October 22, 2001, then we will cease preparation of the Definitive Agreement.
1. Nature of the Transaction: WGFK agrees to make an any and all
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tender offer for the outstanding common stock of the Company at the purchase
price set forth below and upon the terms and conditions set forth in the
Definitive Agreement (the "WGFK Tender Offer"). The WGFK Tender Offer may be
made by an entity to be formed by WGFK for such purpose. However, the
obligations of that entity to perform its obligations shall be unconditionally
guaranteed by WGFK on a joint and severable basis. If WGFK (together with its
affiliates and associates) owns more than 50% of the Common Stock immediately
after the
Mr. Lyle Weisman et al.
October 19, 2001
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closing of the WGFK Tender Offer, a merger between the Company and an entity
formed by WGFK (the "WGFK Merger") will proceed immediately pursuant to the
terms of the Definitive Agreement, resulting in WGFK's beneficial ownership of
100% of the issued and outstanding Common Stock. WGFK agrees that it shall (and
that it shall cause its affiliates and associates to) vote any shares of Common
Stock held by them or under their control in favor of the transactions
contemplated by the Definitive Agreement. The purchase price in the WGFK Merger
shall be the greater of (a) the purchase price paid in the WGFK Tender Offer,
and (b) the highest price paid by WGFK (or any of its affiliates or associates)
for shares of Common Stock between and including the date of the close of the
WGFK Tender Offer and the effective date of the WGFK Merger.
2. Purchase Price: The purchase price shall be $16.50 per share, net
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to the seller, in cash, subject to adjustment, but in no event less than $15.50
per share, net to the seller. During the first two week period immediately
following the execution of the Definitive Agreement, WGFK and its
representatives shall be permitted to conduct due diligence on the Company. Any
nonpublic information obtained by WGFK and/or any of its representatives shall
be maintained in confidence subject to the terms of a confidentiality agreement
to be executed by both parties prior to the commencement of the due diligence
period. In the event that WGFK's due diligence reveals any matter which is
materially adverse to the Company and which should have been disclosed under
applicable federal securities laws, but was not so disclosed, then the purchase
price shall be adjusted (but not below $15.50 per share) to reflect the impact
of such information on the value of the Company. In the event that the parties
are unable to agree as to an appropriate adjustment, the matter shall be
resolved by Marshall & Stevens Incorporated, or another nationally recognized
appraisal firm reasonably acceptable to the parties, with the intention that
such matter be resolved within an additional period of two weeks, so as not to
delay the commencement of the tender offer. In the event that any such dispute
is not resolved, the tender offer shall be commenced at the price specified by
WGFK, provided that the difference between the price specified by WGFK and the
price specified by the Company shall be placed in escrow, for later distribution
to the tendering stockholders upon ultimate resolution of the dispute.
3. Other Terms of WGFK Tender Offer:
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3.1. Any and All: The WGFK Tender Offer shall be an any and all
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tender offer and shall not be subject to any minimum or maximum tender
condition.
3.2. Conditions: The WGFK Tender Offer shall not be subject to
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any conditions, other than (a) compliance by the Company with all of its
material obligations under the terms of the Definitive Agreement and (b) the
absence of any order by any court of competent jurisdiction permanently
enjoining the WGFK Tender Offer; provided however, that in the case of material
breach by the Company, the Company shall have a commercially
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October 19, 2001
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reasonable period of time following receipt of written notice from WGFK of such
breach in which to cure such breach, and that in the case of condition (b), the
existence of any such permanent injunction shall not release WGFK from liability
for failure to consummate the WGFK Tender Offer to the extent that such
permanent injunction was the result of any action or inaction on its part, or on
the part of any person or individual under the control of WGFK or any of the
members thereof. Since the transaction contemplated by the Gottlieb/Lebowitz
Merger Agreement could be closed as early as next Thursday, WGFK will need to be
willing to assume all financing risk and all risk of material adverse change
(including, without limitation, adverse change resulting from events of force
majeure), other than material adverse change directly consequented by a breach
of the Definitive Agreement by the Company.
3.3. Commencement of WGFK Tender Offer: WGFK shall commence the
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WGFK Tender Offer as soon as practical, but in no event more than thirty-one
(31) calendar days after the execution of the Definitive Agreement; provided
that the Company shall be given sufficient time to provide to Messrs. Gottlieb
and Lebowitz the notice described in paragraph 3.4, below.
3.4. Notice to Messrs. Gottlieb and Lebowitz: The Company shall
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provide five business days advance notice to Messrs. Gottlieb and Lebowitz such
that prior to the record date for a vote of common stockholders or a tender
offer, Messrs. Gottlieb and Lebowitz are able to become record holders of the
shares of Common Stock issuable on exercise of any outstanding options held by
them.
3.5. Duration of the WGFK Tender Offer: The WGFK Tender Offer
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shall close not more than twenty-five business days from the date the offer is
commenced, provided that, at the discretion of WGFK, the WGFK Tender Offer may
be extended for up to two periods of ten (10) business days each.
4. Appraisal Rights: Effective simultaneously with the closing of
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the WGFK Tender Offer, the Board shall adopt a new bylaw provision granting to
the stockholders of the Company the same appraisal rights as they would have had
under statutory law in the context of an acquisition of the Company if the
Common Stock were not listed on the New York Stock Exchange. This bylaw
provision shall provide that it may only be amended with the approval of the
holders of 80% of the Common Stock.
5. Waiver of Share Ownership Limitations: Subject to WGFK's
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satisfaction of the conditions set forth in Article IV, Section B(4)(i)(i) of
the charter of the Company (the "Charter"), the Company shall, effective
simultaneously with the closing of the WGFK Tender Offer, waive the common stock
ownership limitations set forth in Article IV, Section B(4)(b)(i) of the
Charter, pursuant to the authority granted to the Board in Article IV, Section
B(4)(i)(i) of the Charter, to the extent needed to permit WGFK to close the WGFK
Tender Offer and, if the
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October 19, 2001
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WGFK Merger proceeds, to permit WGFK to close the WGFK Merger.
6. Favorable Recommendation of the Special Committee: The Special
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Committee shall recommend the WGFK Tender Offer to the holders of Common Stock
as a Superior Acquisition Proposal (as that term is defined in the
Gottlieb/Lebowitz Merger Agreement); provided, however, that the Special
Committee reserves the right to withdraw its recommendation and to recommend an
alternative acquisition proposal, if the Special Committee determines that such
alternative proposal is superior to the WGFK Tender Offer.
7. Termination of Gottlieb/Lebowitz Merger Agreement: The Company
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shall terminate the Gottlieb/Lebowitz Merger Agreement upon the execution of the
Definitive Agreement.
8. Good Faith Payment: As evidence of its good faith and in order to
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protect the Company's stockholders from exposure to liability for the
termination fee and costs provided for in the Gottlieb/Lebowitz Merger
Agreement, WGFK shall forward with its signed copy of the Definitive Agreement a
bank cashier's check in the amount of $2,500,000 payable to the order of the
Company. The Company shall not be required to reimburse WGFK the amount of the
good faith payment for any reason other than (a) material breach by the Company
of its obligations under the Definitive Agreement, provided, however, that the
Company shall have a commercially reasonable period of time following the
receipt of written notice from WGFK of such breach, in which to cure the same,
or (b) the recommendation to stockholders by the Special Committee of an
alternative acquisition transaction and the withdrawal by the Special Committee
of its recommendation to stockholders of the WGFK Tender Offer. Nor shall the
Company have any obligation to reimburse the good faith payment in the event
that WGFK is in breach of its obligations under the Definitive Agreement.
9. Break-up Fee: In the event that the WGFK Tender Offer fails to
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close due to the fact that the Company has materially breached its obligations
under the Definitive Agreement (provided, however, that the Company shall have a
commercially reasonable period of time following the receipt of written notice
from WGFK of such breach, in which to cure the same) or has entered into an
alternative acquisition transaction as described above, and so long as WGFK is
not in breach of its obligations under the Definitive Agreement, then the
Company shall, within three (3) business days of the entering into of such
alternative acquisition transaction, pay to WGFK an amount equal to the sum of
(a) the reasonable costs and expenses of WGFK in connection with the Definitive
Agreement and the commencement of the WGFK Tender Offer and (b) $750,000. No
costs and expenses of WGFK or break-up fee shall be paid in the event that the
WGFK Tender Offer is consummated.
10. Financial Statements: Messrs. Weisman, Gottesman, Fisch, and
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Korbatov will provide such representations and warranties regarding their
financial statements and the
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October 19, 2001
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commitment letters from each of Pacific West Management LLC and Hanmi Bank as
are customary in transactions of this nature, which representations and
warranties shall survive the consummation of the transactions contemplated
hereby.
11. Further Cooperation: The Company and WGFK shall cooperate with
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each other in good faith in proceeding expeditiously to accomplish the
transactions contemplated by this Agreement, subject to the execution by the
parties of the Definitive Agreement.
This letter is not intended to be and does not constitute a legally
binding obligation of any of the parties and remains subject to the negotiation
and execution of the Definitive Agreement, as well as other ancillary documents
to accomplish the objective described above.
Thank you for your time and cooperation.
Sincerely,
/s/ S. Craig Tompkins
S. Craig Tompkins
Chairman, Special Committee
Accepted and Agreed to as of this ____ day of October, 2001.
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Lyle Weisman
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Asher Gottesman
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Len Fisch
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Igor Korbatov