<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __________)
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
[_] Definitive Proxy Statement Commission Only
[_] Definitive Additional Materials (as permitted by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
G&L REALTY CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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 is 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:
<PAGE>
G&L REALTY CORP.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 28, 1997
The Annual Meeting of Stockholders of G&L Realty Corp. (the "Company") will
be held at the Beverly Hilton Hotel, 9876 Wilshire Boulevard, Beverly Hills,
California on Wednesday, May 28, 1997 at 9:00 a.m. Los Angeles time, for the
purposes of:
(1) electing seven directors to serve until the 1998 annual meeting of
stockholders and until their successors are elected and have qualified;
(2) considering and acting upon a proposal to approve the issuance to
one or more directors of the Company, or entities in which they have a
substantial interest, of partnership interests in G&L Realty Partnership,
L.P. that are convertible into up to 5% of the outstanding shares of Common
Stock of the Company as consideration for acquisitions of property by the
Company from such persons or entities in transactions approved as fair to
the Company by a committee of independent directors and in which each such
partnership interest is valued at a premium of $0.25 over the market value
of a share of Common Stock;
(3) considering and acting upon a proposal to amend and restate the
Company's 1993 Stock Incentive Plan, and
(4) transacting such other business as may properly come before the
meeting.
Only stockholders whose names appear of record on the books of the Company
at the close of business on March 24, 1997 are entitled to notice of, and to
vote at, such Annual Meeting or any adjournment or adjournments thereof.
You are cordially invited to attend the meeting in person. WHETHER OR NOT
YOU EXPECT TO ATTEND THIS MEETING, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED SELF-ADDRESSED, POSTAGE-
PREPAID ENVELOPE. If you attend the Annual Meeting and wish to vote in person,
your proxy will not be used.
By Order of the Board of Directors
/s/ Quentin Thompson
Quentin Thompson
Secretary, Treasurer
and Chief Accounting Officer
Beverly Hills, California
April 20, 1997
<PAGE>
G&L REALTY CORP.
--------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MAY 28, 1997
This proxy statement is furnished to the stockholders of G&L Realty Corp.,
a Maryland corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held at the Beverly Hilton Hotel,
9876 Wilshire Boulevard, Beverly Hills, California at 9:00 a.m., Los Angeles
time, on May 28, 1997, and at any and all adjournments or postponements thereof.
The principal executive offices of the Company are located at 439 North Bedford
Drive, Beverly Hills, California 90210. The approximate date on which this
first proxy statement and form of proxy solicited on behalf of the Board of
Directors is expected to be sent to the Company's stockholders is April 20,
1997.
The cost of the solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, directors and officers of the Company, without
receiving any additional compensation, may solicit proxies personally or by
telephone or telegraph. The Company will request brokerage houses, banks, and
other custodians or nominees holding stock in their names for others to forward
proxy materials to their customers or principals who are the beneficial owners
of shares and will reimburse them for their expenses in doing so. The Company
has retained the services of Chase Mellon Shareholder Services to assist in the
solicitation of proxies from brokerage houses, banks, and other custodians or
nominees holding stock in their names for others.
On March 24, 1997, the record date for the determination of stockholders
entitled to notice of, and to vote at, the Annual Meeting, the Company had
4,062,500 shares of common stock, par value $.01 per share (the "Common Stock"),
outstanding. Each such share of Common Stock is entitled to one vote on all
matters properly brought before the meeting. The vote of a plurality of the
shares cast in person or by proxy is required to elect a nominee for director.
With respect to the election of each director at the Annual Meeting, each holder
of Common Stock is entitled to vote the number of shares owned by such
stockholder. The nominee who receives the greatest number of votes shall be
elected. Stockholders are not permitted to cumulate their shares of Common
Stock for the purpose of electing directors or otherwise. The vote of a
majority of shares present in person or by proxy and entitled to vote is
required to approve Proposals Two and Three as set forth below.
Presence at the Annual Meeting, in person or by proxy, of a majority of the
outstanding shares of Common Stock will constitute a quorum for the transaction
of business at the Annual Meeting. Abstentions or broker non-votes are counted
for purposes of determining the presence of a quorum for
<PAGE>
transaction of business. With regard to election of directors, votes may be cast
in favor or withheld; votes that are withheld will be excluded entirely from the
vote and will have no effect. Abstentions may be specified on proposals other
than the election of directors and will be counted as present for purposes of
the item on which the abstention is noted, and therefore counted in the
tabulation of the votes cast on a proposal with the effect of a negative vote.
Broker non-votes are shares which are represented at the Annual Meeting which a
broker or nominee has indicated it does not have discretionary authority to vote
on with respect to a particular matter. A broker non-vote will generally have
the effect of a negative vote.
Daniel M. Gottlieb, Steven D. Lebowitz and Quentin Thompson, the persons
named as proxies on the proxy card accompanying this Proxy Statement, were
selected by the Board of Directors to serve in such capacity. Messrs. Gottlieb
and Lebowitz are each directors of the Company.
UNLESS CONTRARY INSTRUCTIONS ARE INDICATED ON THE PROXY, ALL SHARES OF
COMMON STOCK REPRESENTED BY VALID PROXIES RECEIVED PURSUANT TO THIS SOLICITATION
(AND NOT REVOKED BEFORE THEY ARE VOTED) WILL BE VOTED AT THE ANNUAL MEETING FOR
THE NOMINEES NAMED BELOW FOR ELECTION AS DIRECTORS AND FOR THE PROPOSALS
DESCRIBED HEREIN. With respect to any other business which may properly come
before the Annual Meeting and be submitted to a vote of stockholders, proxies
received by the Board of Directors will be voted in accordance with the best
judgment of the designated proxy holders. Under the Company's Bylaws,
stockholder proposals may be made at the Annual Meeting only pursuant to a
timely notice delivered or mailed to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the Company's principal executive offices not less than 60 nor more than 90 days
prior to the first anniversary of the previous year's annual meeting, or, for
this annual meeting, not less than 60 days nor more than 90 days prior to May 7,
1997. A stockholder may revoke his or her proxy at any time before exercise by
delivering to the Secretary of the Company a written notice of such revocation,
by filing with the Secretary of the Company a duly executed proxy bearing a
later date, or by voting in person at the Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors of the Company is currently comprised of seven
members. All directors are elected each year at the annual meeting of
stockholders.
In the absence of instructions to the contrary, the persons named as proxy
holders in the accompanying proxy intend to vote in favor of the election of the
nominees designated below, each of whom is currently a director of the Company,
to serve until the next annual meeting of stockholders and until their
respective successors shall have been elected and qualified. The Board of
Directors expects that each of the nominees will be available to serve as a
director, but if any such nominee should become unavailable for election, the
shares of Common Stock represented by the enclosed proxy may (unless such proxy
contains instructions to the contrary) be voted for such other person or persons
as may be determined by the holders of such proxies.
Under the Company's Bylaws, nominations of persons for election to the
Board, other than those made by or at the direction of the Board, may be made at
the Annual Meeting only pursuant to a timely notice delivered or mailed to the
Secretary of the Company. To be timely, a stockholder's notice must be
2
<PAGE>
delivered to or mailed and received at the Company's principal executive offices
not less than 60 nor more than 90 days prior to the first anniversary of the
previous year's annual meeting, or, for this annual meeting, not less than 60
days nor more than 90 days prior to May 7, 1997.
The following table sets forth the name and age of each nominee for
director, the year he was first elected as a director and his position held with
the Company.
<TABLE>
<CAPTION>
Director
Name Age Position Since
- ---- --- -------- --------
<S> <C> <C> <C>
Daniel M. Gottlieb 56 Chief Executive Officer, 1993
Co-Chairman of the Board and
Director
Steven D. Lebowitz 56 President, Co-Chairman of the 1993
Board and Director
Richard L. Lesher 63 Director 1993
Leslie D. Michelson 46 Director 1995
Reese L. Milner 48 Director 1993
Charles P. Reilly 54 Director 1993
S. Craig Tompkins 46 Director 1993
</TABLE>
The following is a biographical summary of the experience of the directors
of the Company.
MR. GOTTLIEB is the Chief Executive Officer and Co-Chairman of the Board of
the Company and has been such since the Company commenced operations. Mr.
Gottlieb co-founded G&L Development in 1976, and has been a general partner of
G&L Development and active in commercial real estate management and development
since that time. Mr. Gottlieb received his B.A. with honors from the University
of Southern California and earned a J.D. from Boalt Hall School of Law at the
University of California at Berkeley. Prior to forming G&L Development, Mr.
Gottlieb first served as a Los Angeles County Deputy District Attorney for
Beverly Hills and later entered private practice specializing in real estate law
and business management. Mr. Gottlieb has also served on the Board of Directors
of the United States Chamber of Commerce, Washington, D.C. since February 1996.
MR. LEBOWITZ is the President and Co-Chairman of the Board of the Company
and has been such since the Company commenced operations. Mr. Lebowitz is the
co-founder and a general partner of G&L Development and has been active in the
development, management and ownership of a wide range of real estate properties
since 1968. Mr. Lebowitz received a B.S. in Accounting from the University of
Southern California, where he also received his MBA with highest honors in 1965.
From 1962 to 1964, Mr. Lebowitz worked for Deloitte & Touche and was licensed as
a Certified Public Accountant in 1964. From 1965 to 1968, Mr. Lebowitz worked
with the U.S. Department of Commerce and the Brookings Institution in Washington
D.C. Mr. Lebowitz served on the Board of Directors of the United States Chamber
of Commerce, Washington, D.C. from 1989 to 1994.
DR. LESHER has served as a director of the Company since the Company
commenced operations. Dr. Lesher has been the President and a member of the
Board of Directors of the United States Chamber of Commerce, Washington D.C.,
since 1975. He serves on numerous committees of the Board, including the
Executive and Budget committees. In addition, Dr. Lesher is a member of the
Board of Directors of World Heart Corporation (Ottawa, Canada), an artificial
heart research and development company and AIT Corporation, a high-tech company.
Dr. Lesher received a B.B.A. from the University of Pittsburgh in 1958, an M.S.
from Pennsylvania State University in 1960 and a D.B.A. from Indiana University
in 1963.
3
<PAGE>
MR. MICHELSON has served as a director of the Company since November, 1995.
Mr. Michelson is a co-founder and the Chairman and Co-Chief Executive Officer of
Value Health Sciences, Inc., the leading vendor of sophisticated clinical
software programs and consulting services for the managed care industry. Value
Health Sciences, Inc. is a member of the Value Health family of companies, which
serve over 64 million people and hundreds of clients in virtually every state,
including 58 of the nation's 250 largest corporations. Value Health Sciences,
Inc. is traded on the New York Stock Exchange. Prior to forming Value Health
Sciences, Inc. in 1988, Mr. Michelson served as Special Assistant to the General
Counsel of the United States Department of Health and Human Services. He
subsequently spent 8 years with a private investment firm, creating, acquiring
and building entrepreneurial companies primarily in the health care arena. Mr.
Michelson holds a law degree from Yale Law School and a bachelor's degree from
The Johns Hopkins University.
MR. MILNER has served as a director of the Company since the Company
commenced operations. Mr. Milner is a private real estate developer and
investor. Mr. Milner received a B.A. from the University of California at
Berkeley and a joint J.D./MBA from Stanford University. Mr. Milner practiced
law from 1975 through 1979 before entering the real estate industry in 1980.
MR. REILLY has served as a director of the Company since the Company
commenced operations. Mr. Reilly is the managing general partner of Shamrock
Investments, an investment and merchant banking firm that specializes in the
health care industry. Prior to forming Shamrock Investments in 1987, Mr. Reilly
served as Senior Executive Vice President and Chief Development Officer for
American Medical International. In this position, Mr. Reilly was responsible
for growth through the acquisition and development of new health care facilities
and related business in the United States and abroad. Mr. Reilly was a member
of American Medical International's Board of Directors and served on its
Finance, Management, and Executive Committees. Mr. Reilly is currently the
Chairman of the Board of PHP Healthcare, Inc., a New York Stock Exchange company
that is an owner/operator of primary care clinics for sponsored beneficiary
populations; Chairman of the Board of Dynamic Health, Inc., an owner/operator of
acute care hospitals; and former Chairman of the Board of Paragon Ambulatory
Surgery Centers, Inc., an owner/operator of freestanding ambulatory surgery
centers. Mr. Reilly holds a law degree from the University of Pennsylvania and a
bachelor's degree in accounting and finance from Pennsylvania State University.
He has served as a director, trustee, or governing council member of the
Federation of American Healthcare Systems, the National Committee for Quality
Health Care and the American Hospital Association, and is a past President of
the Beverly Hills Chamber of Commerce.
MR. TOMPKINS has served as a director of the Company since the Company
commenced operations. Mr. Tompkins is the President and a Director of Craig
Corporation, a New York Stock Exchange listed company engaged in the ownership
and strategic management of its controlling interests in other operating
companies, including a 77.4% voting interest in Reading Entertainment, Inc.
Reading Entertainment, whose shares are quoted on the NASDAQ/NMS, is principally
in the beyond-the-home entertainment business, primarily through its Cine Vista
Conventional multi-plex cinema chain in Puerto Rico, its 83.3% ownership
interest in the Angelika Film Center in the Soho district of New York City, and
its developmental Reading Cinema operations in Australia. Reading also owns a
26% interest in Citadel Holding Corporation, an American Stock Exchange listed
company, whose assets consist
4
<PAGE>
primarily of office buildings in California and Arizona. Mr. Tompkins also
serves on the Boards of Reading Entertainment (where he is Vice-Chairman) and
Citadel Holding Corporation (where he is also Vice-Chairman). Mr. Tompkins has
served, since the third quarter of 1994, as the Secretary, Treasurer and
Principal Accounting Officer of Citadel Holding Corporation. Beginning in
January 1984 and prior to joining Craig and Reading in March 1993, Mr. Tompkins
was a partner specializing in corporate and real estate law in the law firm of
Gibson, Dunn & Crutcher. Mr. Tompkins holds a bachelor's degree from Claremont
McKenna College and a J.D. from Harvard Law School.
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee of the Board of Directors consists of Messrs.
Gottlieb, Lebowitz, Milner, Reilly and Tompkins. The Audit Committee consists
of Messrs. Michelson, Milner and Tompkins. The Compensation Committee consists
of Messrs. Michelson, Lesher and Reilly. The Company does not have a nominating
committee.
The Executive Committee held six meetings in 1996. The primary function of
the Executive Committee is to authorize the acquisition and disposition of real
property and to authorize the execution of certain contracts and agreements.
The Audit Committee held three meetings in 1996. The function of the Audit
Committee is to make recommendations concerning the engagement of independent
public accountants, review with the independent public accountants the plans and
results of the audit engagement, approve professional services provided by the
independent public accountants, review the independence of the independent
public accountants, consider the range of audit and non-audit fees and review
the adequacy of the Company's internal accounting controls.
The Compensation Committee held two meetings in 1996. The Compensation
Committee determines officers' salaries and bonuses, as well as administers the
Company's 1993 Stock Incentive Plan.
BOARD AND COMMITTEE ATTENDANCE AND COMPENSATION
In 1996 the Board of Directors held four regular meetings and two special
meetings. All directors attended more than 75% of the aggregate of board and
committee meetings (for committees on which each served) held in 1996. The
Company pays an annual fee of $12,000 plus a fee of $1,000 for attending regular
meetings and $500 for committee meetings to its directors who are not employees
of the Company. Employees of the Company who are also directors are not paid
any director fees. In addition, pursuant to the 1993 Stock Incentive Plan, each
nonemployee director is automatically granted an option to purchase 500 shares
of Common Stock each year on the first business day after the date of the annual
meeting of stockholders of the Company and each person who becomes a nonemployee
director is granted an option to purchase 3,000 shares of Common Stock upon
joining the Board of Directors.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 21, 1997 regarding
the beneficial ownership of Common Stock and units of partnership interest
("Units") in G&L Realty Partnership, L.P. (the "Operating Partnership") by (i)
each person or company known by the Company to be the beneficial owner of more
than 5% of the Company's outstanding shares, (ii) each director of the Company,
(iii) each officer of the Company and (iv) the directors and officers of the
Company as a group. Each person named in the table has sole voting and
investment power with respect to all shares shown as beneficially owned by such
person except as set forth in the notes below. Only shares of Common Stock (and
not Units) are entitled to vote at the Annual Meeting.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF PERCENTAGE
SHARES OF SHARES OF INTEREST IN PERCENTAGE
NAME AND ADDRESS COMMON COMMON STOCK NUMBER OF OPERATING OWNERSHIP IN
OF BENEFICIAL OWNER STOCK (1) OUTSTANDING (2) UNITS (3) PARTNERSHIP (4) COMPANY (5)
- ------------------------------- ------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Daniel M. Gottlieb (6) 344,332 8.4% 262,748(7) 5.8% 13.0%
439 N. Bedford Drive
Beverly Hills, CA 90210
Gary Grabel 7,600(8) * --- --- *
439 N. Bedford Drive
Beverly Hills, CA 90210
Mark H. Hamermesh 970 * --- --- *
439 N. Bedford Drive
Beverly Hills, CA 90210
Steven D. Lebowitz (6) 266,668 6.5 175,166(9) 3.8 9.6
439 N. Bedford Drive
Beverly Hills, CA 90210
Richard Lesher 5,000(10) * --- * *
1615 H Street, N.W.
Washington, DC 20062
Leslie D. Michelson 3,500 * --- * *
2400 Broadway, Suite 100
Santa Monica, CA 90404
Reese L. Milner 4,000 * 47,486(11) 1.0 1.0
439 N. Bedford Drive
Beverly Hills, CA 90210
John H. Rauch 5,000 * --- --- *
439 N. Bedford Drive
Beverly Hills, CA 90210
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Charles P. Reilly 4,000 * --- --- *
2049 Century Park East
Suite 3330
Los Angeles, CA 90067
Quentin Thompson 15,333(12) * --- --- *
439 N. Bedford Drive
Beverly Hills, CA 90210
S. Craig Tompkins 7,000(13) * --- --- *
550 South Hope Street
Suite 1825
Los Angeles, CA 90071
Mitcheal C. Word --- --- --- --- ---
439 N. Bedford Drive
Beverly Hills, CA 90210
Directors and Officers 663,303 15.9% 485,400 10.6% 24.6%
as a group (12 persons)
</TABLE>
- ---------
* Less than 1%
(1) The number of shares beneficially owned includes shares that the following
individuals have the right to acquire within 60 days of March 21, 1997 upon
exercise of stock options, but not shares that such individuals have the
right to acquire upon exchange of Units, in the following amounts: (a)
33,500 shares as to each of Messrs. Gottlieb and Lebowitz, (b) 5,000 shares
as to each of Messrs. Grabel and Rauch, (c) 4,333 shares as to Mr.
Thompson, (d) 4,000 shares as to each of Messrs. Lesher, Milner, Reilly and
Tompkins and (c) 3,500 shares as to Mr. Michelson.
(2) For the purposes of determining the percentage of outstanding Common Stock
held by each person or group set forth in the table, the number of shares
is divided by the sum of the number of outstanding shares of Common Stock
as of March 21, 1997 plus the number of shares of Common Stock subject to
options exercisable currently or within 60 days of March 21, 1997 by such
person or group, in accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The ownership
percentages do not consider Units which are exchangeable for shares of
Common Stock currently or within 60 days of March 21, 1997.
(3) Units in the Operating Partnership (other than those held by the Company)
are exchangeable at the option of the holder for shares of Common Stock or
cash, at the election of the Company, at the date one year from the date of
issuance. All Units are currently exchangeable except 23,529 Units and
15,686 Units beneficially owned by Messrs. Gottlieb and Lebowitz,
respectively, which are exchangeable beginning June 28, 1997. The initial
exchange ratio is one Unit for one share of Common Stock.
(4) Based on the total number of Units outstanding, including those held by the
Company.
(5) Assuming all Units, other than those held by the Company, are exchanged for
shares of Common Stock at the initial exchange ratio of one Unit for one
share of Common Stock, and assuming all options exercisable currently or
within 60 days of March 21, 1997 by such person or group are exercised for
shares of Common Stock.
(6) Messrs. Gottlieb and Lebowitz have pledged 239,219 and 159,480 of their
Units, respectively, and 110,000 and 105,000 shares of Common Stock,
respectively, to Mr. Milner, members of the Milner family and related
entities to secure certain indebtedness. In addition Messrs. Gottlieb
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<PAGE>
and Lebowitz have pledged 23,529 and 15,686 of their Units, respectively,
and 200,832 and 128,168 shares of Common Stock, respectively, to a
financial institution to secure certain indebtedness.
(7) Includes 23,529 Units owned by 445 Bedford, a California limited liability
Company ("445 LLC") of which Mr. Gottlieb is a member, attributable to Mr.
Gottlieb in proportion to his interest in 445 LLC.
(8) Includes 1,000 shares held by MMG, Incorporated, of which Mr. Grabel is a
principal shareholder, director and officer, plus an additional 100 shares
held in a custodial account for the benefit of Mr. Grabel's son, of which
Mr. Grabel is the Custodian.
(9) Includes 15,686 Units owned by 445 LLC, of which Mr. Lebowitz is a member,
attributable to Mr. Lebowitz in proportion to his interest in 445 LLC.
(10) Includes 1,000 shares held in an individual retirement account for the
benefit of Dr. Lesher's spouse.
(11) Includes 13,128 Units held by Milner Investment Corporation, which is
controlled by Mr. Milner. Does not include 13,128 shares held by Mr.
Milner's sister, as to which Mr. Milner disclaims beneficial ownership.
(12) Includes 1,000 shares held in an individual retirement account for the
benefit of Mr. Thompson's spouse.
(13) Includes 500 shares held by a trust for the benefit of Mr. Tompkins'
daughter, of which Mr. Tompkins is the Trustee.
EXECUTIVE OFFICERS
The following table sets forth the names, ages and positions of each of the
Company's executive officers.
<TABLE>
<CAPTION>
Officer
Name Age Position Since
- ---- --- -------- --------
<S> <C> <C> <C>
Daniel M. Gottlieb 56 Chief Executive Officer and 1993
Co-Chairman of the Board
Gary Grabel 47 Senior Vice President 1996
Mark H. Hamermesh 40 Senior Vice President 1996
Steven D. Lebowitz 56 President and Co-Chairman of 1993
the Board
John H. Rauch 66 Senior Vice President, Operations 1996
Quentin Thompson 40 Secretary, Treasurer and Chief 1996
Accounting Officer
Mitcheal C. Word 36 Vice President 1996
</TABLE>
MR. GRABEL has been a Senior Vice President of the Company since 1996. Mr.
Grabel, who has over 20 years of experience in commercial and medical real
estate, is responsible for financing activities for healthcare facilities and
medical office buildings in the Company's portfolio. From 1994 to 1996 he was
principal of Grabel Financial, a Beverly Hills-based company that arranged debt
and equity
8
<PAGE>
funding for real estate developments, and from 1987 to 1994 he was a principal
in Grabel Zimbler, Inc., a mortgage banking firm, where he arranged over $600
million in debt and equity for commercial and residential real estate projects.
Mr. Grabel received his law degree from Albany Law School in 1975 and graduated
Summa Cum Laude from Lehigh University in 1972 with a Bachelor's degree in
accounting and finance.
MR. HAMERMESH has been a Senior Vice President of the Company since 1996.
Mr. Hamermesh additionally serves as Chief Executive Officer of GLN Capital Co.
LLC, in which the Company holds a minority interest. Mr. Hamermesh is
responsible for the Company's senior care loan origination and for arranging
credit enhancement for the Company's mortgage loans. From 1991 to 1996 he
served as executive vice president of American Capital Resource, a commercial
lender specializing in FHA insured financing for health care and multifamily
properties, where he managed the firm's nationwide loan origination network.
From 1986 to 1991 he was co-founder and president of The Real Estate Advisors, a
national mortgage and real estate brokerage firm. Mr. Hamermesh received his
master's degree in business administration with distinction from Harvard
Business School in 1982 and his bachelor's degree in political science from the
University of California, Los Angeles, graduating Magna Cum Laude in 1978.
MR. RAUCH has been Senior Vice President, Operations, of the Company since
1996. Mr. Rauch is responsible for the asset management of all of the Company's
medical office buildings. From 1975 to 1996 he was founder and President of
Camden Consultants, Inc., an economic consulting firm providing clients with
real estate and corporate planning information. Mr. Rauch was President of
Beverly Hills Bancorp from 1968 to 1975. Mr. Rauch received his law degree from
the University of Southern California with honors in 1961 and his bachelor's
degree in economics from the University of California, Los Angeles in 1954.
MR. THOMPSON has been controller of the Company since 1995 and Secretary,
Treasurer and Chief Accounting Officer of the Company since 1996. Mr. Thompson
has been actively engaged in the real estate industry since 1979. He has been
Vice President-Controller (1983-1989) and Chief Financial Officer (1990-1995) of
Sovereign/Ring Management, which prior to its acquisition was a fee only
management company with a $1 billion portfolio of properties under management.
He served as Chairman for the Real Estate Committee for the Los Angeles Chapter
of the California Society of CPAs from 1989 to 1993. He graduated from the
University of California, Santa Barbara, Magna Cum Laude in 1979 with a bachelor
of arts degree in business economics and is a registered Certified Public
Accountant.
MR. WORD has been a Vice President of the Company since 1996. Mr. Word is
responsible for loan origination, underwriting, asset management and HUD
processing for the Company's Senior Care Division. From 1990 to 1996 he served
as an independent consultant in the processing and closing of HUD insured health
care financing nationwide. He worked in the San Diego offices of Deloitte &
Touche LLP from 1984 to 1987 and was registered as a Certified Public Accountant
in 1987. Mr. Word graduated Cum Laude from San Diego State University in 1984
with a bachelor's degree in accounting.
9
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
chief executive officer of the Company and each of the executive officers of the
Company whose cash compensation exceeded $100,000 during the fiscal year ended
December 31, 1996 (collectively, the "Named Officers"). The Company did not
grant any restricted stock awards or stock appreciation rights or make any long-
term incentive plan payouts during such period to the Named Officers.
<TABLE>
<CAPTION>
Long Term
Compensation
-------------
Awards
-------------
Annual Compensation Securities
Fiscal Year ------------------------------------------------ Underlying
Ended Other Annual Options/
Name and Principal Position(1) December 31 Salary($) Bonus($) Compensation($) SARS(#)
- ------------------------------ ----------- --------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Daniel M. Gottlieb............
Chief Executive Officer, 1996 $181,125 $15,000 $275,000(2) ---
Co-Chairman of the Board 1995 157,500 63,000 --- 100,500
and Director 1994 150,000 --- --- ---
Steven D. Lebowitz............
President, Co-Chairman 1996 181,125 15,000 225,000(2) ---
of the Board and Director 1995 157,500 63,000 --- 100,500
1994 150,000 --- --- ---
</TABLE>
- ----------------------
(1) The Named Officers do not include Messrs. Grabel, Hamermesh and Rauch, none
of whom received cash compensation of more than $100,000 in 1996. Mr.
Grabel joined the Company in May 1996, Mr. Hamermesh joined the Company in
June 1996 and Mr. Rauch joined the Company in July 1996. Had Messrs.
Grabel, Hamermesh and Rauch been with the Company for the entire year then
it is likely that each would have received cash compensation of more than
$100,000 based on their respective annual compensation rates ($100,000 for
Mr. Grabel, $120,000 for Mr. Hamermesh and $95,000 for Mr. Rauch) and on
bonuses actually paid to them ($15,000 for Mr. Grabel, $15,000 for Mr.
Hamermesh and $5,000 for Mr. Rauch).
(2) Such amounts were paid to Messrs. Gottlieb and Lebowitz to partially defray
tax liabilities imposed upon them as a result of the transfer by the
Company of the property at 436 North Bedford Drive, Beverly Hills,
California to the lender in satisfaction of the loan on the property. For
further information related to these amounts, please refer to the
Compensation Committee Report under the section entitled "Special
Compensation to Chief Executive Officer and President in 1996".
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AGGREGATED OPTION/EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTIONS/VALUES
The following table sets forth information with respect to unexercised
options held by the Named Officers as of the end of the fiscal year ended
December 31, 1996. No options were granted to or exercised by the Named
Officers during such fiscal year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at Options at
Fiscal Year End Fiscal Year End(2)
------------------------------- ---------------------------------
Name and Principal Position Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Daniel M. Gottlieb............ 33,500 67,000(1) $247,063 $494,125
Steven D. Lebowitz............ 33,500 67,000(1) $247,063 $494,125
</TABLE>
(1) The unexercisable options vest in increments of 33,500 on December 18, 1997
and 1998 respectively.
(2) Each option has an exercise price of $9.625. The closing price of the
Common Stock on the New York Stock Exchange on December 31, 1996 was $17.
EMPLOYMENT AGREEMENTS
In December 1993, each of Daniel M. Gottlieb and Steven D. Lebowitz entered
into separate but identical employment agreements with the Company and the
Operating Partnership for a term of three years. The agreements provide for
automatic renewal for succeeding terms of one year unless the Company or Messrs.
Gottlieb or Lebowitz gives notice at least three months prior to expiration of
any term. The agreements each provide for annual base compensation of $150,000
with an annual increase of 5%, with the first such increase having occurred on
January 1, 1995. The Compensation Committee of the Board of Directors may
review the annual base compensation every twelve months in light of various
factors, and, following each such review, the annual base compensation may be
increased. Based on the 1996 annual review of the Compensation Committee of the
Board of Directors each of Messrs. Gottlieb and Lebowitz were granted a base
salary increase of 27% effective January 1, 1997. In addition, each of Messrs.
Gottlieb and Lebowitz shall be entitled to receive an annual bonus equal to 20%
of base salary based on a 5% increase in funds from operations per share above
the prior year's amount and an additional 8% of base salary for each additional
one percentage point increase in funds from operations per share above the prior
year's amount, up to a maximum of 100% of annual base compensation. At their
December 18, 1995 meeting, the Compensation Committee voted to supplement the
bonus program contained in the employment agreements between the Company and
Messrs. Gottlieb and Lebowitz. The supplemental program provides for annual
incentive bonuses of up to 50% of base salary based upon the accomplishment of
specific performance objectives as outlined in the Company's annual business
plan and approved by the Compensation Committee. Under this supplemental
incentive compensation program, the annual bonus available to Messrs. Gottlieb
and Lebowitz is equal to the greater of (x) the annual bonus as determined by
the percentage point increase in the Company's funds from operations, or (y) the
incentive compensation associated with specific objectives outlined in the
Company's business plan. Furthermore, each agreement provides that Messrs.
Gottlieb and Lebowitz are entitled: (i) to participate in all medical, dental,
life insurance, retirement, profit sharing, stock incentive, disability and
11
<PAGE>
bonus plans of the Company which may be made available to executives of the
Company (only medical plans presently exist) and (ii) to severance payments,
under certain circumstances, equal to two times their then-current annual
compensation. The agreements require Messrs. Gottlieb and Lebowitz to devote
substantially all of their working time and best efforts to performance of their
duties for the Company and, during the term of their employment, prohibits them,
with certain exceptions, from directly or indirectly owning or operating or
otherwise investing or participating in any other business that is in
competition with the business of the Company without the prior approval of a
majority of the independent members of the Board of Directors of the Company.
In June 1996 the Company entered into an employment agreement with Mr.
Hamermesh that provides for annual base compensation of $120,000 and bonuses in
the discretion of the Compensation Committee. The agreement provides that in the
event the Company terminates Mr. Hamermesh's employment prior to June 17, 1997
he will be paid the difference between $150,000 and the amount of salary and
bonus paid to Mr. Hamermesh as of the date of termination. Pursuant to the terms
of the agreement, the Company granted Mr. Hamermesh options to purchase 20,000
shares of Common Stock on June 18, 1996 pursuant to the 1993 Stock Incentive
Plan, which options have an exercise price of $13.75 per share and vest 1/3 on
each anniversary of the date of grant; provided, however, that all such options
vest immediately upon a change in control of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee is chartered to establish the general
compensation policy of the Company, to review and approve compensation of the
executive officers of the Company and to administer all of the Company's
employee benefit plans. The Compensation Committee reviews the overall
compensation program of the Company to assure that it (i) is reasonable and
consistent with competitive practices, (ii) adequately recognizes performance,
and (iii) meets overall company compensation and business objectives.
COMPENSATION PHILOSOPHY
The primary focus of the Company's compensation program is to create value
for stockholders. The Committee attempts to promote desired financial and
operational results by attracting, motivating and assisting in the retention of
key employees with outstanding ability. In addition, the compensation program
is designed to promote teamwork, initiative and resourcefulness on the part of
key employees whose performance and responsibilities directly affect Company
profits. In this regard, the compensation program is designed to balance short
and long-term incentive compensation to achieve desired results and above all to
pay for performance.
Section 162(m) limits the deductibility of compensation over $1 million to
certain executive officers unless, in general, the compensation is paid
pursuant to a plan which is performance related, non-discretionary and has been
approved by the Company's stockholders. The Company did not pay any
compensation in 1996 that would be subject to Section 162(m). The Compensation
Committee intends to establish policies regarding qualification of compensation
under Section 162(m) of the Code to the extent it considers such policies
appropriate.
12
<PAGE>
COMPENSATION MIX
The Company's executive compensation is based on three components designed
in each case to accomplish the Company's compensation philosophy.
Base Salary. Pursuant to three-year employment agreements effective
December 16, 1993, each of Messrs. Daniel M. Gottlieb, the Company's Chief
Executive Officer, and Steven D. Lebowitz, the Company's President, received
base compensation of $181,125 during 1996. The terms of these employment
agreements were determined when the terms of the initial public offering were
negotiated in December 1993, and not by the Compensation Committee. Salaries
for executives are reviewed by the Compensation Committee on an annual basis and
may be increased based upon an assessment of the individual's contribution to
the asset and financial growth of the Company as well as competitive pay levels.
Based on the 1996 annual review of the Compensation Committee of the Board of
Directors each of Messrs. Gottlieb and Lebowitz were granted a base salary
increase of 27% effective January 1, 1997 in partial recognition of their
reduced incentive compensation amounts (see bonus section below).
Bonus. In December of 1995, the Compensation Committee adopted a
resolution to supplement the existing compensation administration model. The
Committee added an annual incentive program based upon the accomplishment of
specific predetermined performance objectives which are linked to the Company's
business plan and approved annually by the Compensation Committee. Under the
supplemental program, incentive compensation is associated with specific
performance objectives. In addition, pursuant to their employment agreements
each of Messrs. Gottlieb and Lebowitz are entitled to receive an annual bonus
equal to 20% of their base salary based on a 5% increase in funds from
operations per share above the prior year's amount and an additional 8% of base
salary for each additional 1% increase in funds from operations per share up to
a maximum of 100% of annual base compensation. In conjunction with the
supplemental program, the annual bonus available to Messrs. Gottlieb and
Lebowitz is equal to the greater of (x) the annual bonus as determined by the
percentage point increase in the Company's funds from operations as contained in
their employment agreements, or (y) the incentive compensation associated with
specific objectives outlined in the Company's business plan. The Company's funds
from operations increased approximately 8.6% from $1.63 per share for 1995 to
$1.77 per share in 1996. The 1996 performance objectives were substantially
accomplished by Messrs. Gottlieb and Lebowitz; however, the two executives chose
to forego a major portion of the incentive compensation the Compensation
Committee might have awarded in consideration of the long term growth objectives
of the Company. Each of Messrs. Gottlieb and Lebowitz were granted a 1996 annual
bonus of $15,000 representing 8.3% of their 1996 base salaries.
Stock Options. The Compensation Committee may grant stock options and
restricted stock to executives and other key employees of the Company pursuant
to the 1993 Stock Incentive Plan. In 1996, 40,000, 30,000, 12,000, 15,000 and
10,000 options were granted to Messrs. Hamermesh, Grabel, Rauch, Thompson and
Word, respectively. In determining the grants of stock options and restricted
stock the Compensation Committee will take into account, among other things, the
respective scope of responsibility and the anticipated performance requirements
and contributions to the Company of each proposed award recipient as well as the
amount of prior grants. Stock options are designed to align the interest of
executives with those of the stockholders. The Committee is currently
contemplating various methods to provide additional incentives to management and
employees of the Company, including granting additional stock options. The
Compensation Committee believes that significant equity interests in the Company
held by the Company's management serve to retain and motivate management.
13
<PAGE>
SPECIAL COMPENSATION TO CHIEF EXECUTIVE OFFICER AND PRESIDENT IN 1996
In 1996 the Compensation Committee approved the payment to Messrs. Gottlieb
and Lebowitz of $275,000 and $225,000, respectively, to partially defray tax
liabilities imposed on them as a result of the transfer by the Company of 436
North Bedford Drive, Beverly Hills, California (which was contributed by Messrs.
Gottlieb and Lebowitz to the Company in exchange for Units in 1993) to the
lender in satisfaction of the loan on the property, followed by the subsequent
repurchase of the property by the Company.
The transfer of the property back to the lender caused Messrs. Gottlieb
and Lebowitz to realize a capital gain of approximately $5 million (allocated
60% to Mr. Gottlieb and 40% to Mr. Lebowitz), equal to the difference between
(x) the amount of the outstanding loan at the time of transfer and (y) Messrs.
Gottlieb's and Lebowitz's basis in the property. The transfer and reacquisition
of the property effectively reduced the Company's overall indebtedness by
approximately $10.5 million. The effect of such transactions, as reflected in
the Company's 1996 audited financial statements, provided a substantial positive
benefit to the Company. In contrast, other than the indirect benefit resulting
from their stock ownership in the Company, Messrs. Gottlieb and Lebowitz
received no benefit. The taxable gain allocated to the two executive
officers represented an allocation of tax consequences with no corresponding
cash or other financial benefit. For the 1996 calendar year, Messrs. Gottlieb
and Lebowitz were faced with an immediate and severe tax burden in excess of
their combined 1996 gross salaries and bonuses.
The Compensation Committee, in awarding such amounts to Messrs. Gottlieb
and Lebowitz, noted that, in order for the Company to achieve its business
objectives in transferring and subsequently repurchasing such property, it was
necessary for Messrs. Gottlieb and Lebowitz to realize such negative tax
consequences.
Richard L. Lesher
Leslie D. Michelson
Charles P. Reilly
14
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares cumulative total return of the Company, the S&P
500 Index and the Equity REIT Total Return Index of the National Association of
Real Estate Investment Trusts ("NAREIT") from December 9, 1993, the first day of
trading of the Common Stock on the New York Stock Exchange, to December 31,
1996. The S&P 500 Index and the NAREIT Equity REIT Total Return Index for the
month of December 1993 have been prorated to arrive at the beginning index used
in this graph. The comparison assumes $100 was invested on December 9, 1993 in
the Company's Common Stock and each of the foregoing indices and assumes
reinvestment of dividends before consideration of income taxes.
<TABLE>
<S> <C> <C> <C> <C> <C>
12/9/93 12/31/93 12/31/94 12/31/95 12/31/96
-------- --------- --------- --------- ---------
G&L REALTY CORP. $ 100.00 $ 92.49 $ 71.23 $ 56.88 $ 100.66
S&P 500 100.00 100.02 101.33 139.22 171.19
NAREIT EQUITY REIT 100.00 99.87 103.03 118.92 160.85
TOTAL RETURN INDEX
</TABLE>
[graph]
COMPARISON OF TOTAL RETURN AMOUNT
G&L REALTY CORP., THE S&P 500 INDEX AND
THE NAREIT EQUITY REIT TOTAL RETURN INDEX
The stock performance depicted in the above graph is not necessarily
indicative of future performance. The Stock Performance Graph shall not be
deemed to be "soliciting material" or to be "filed" with the SEC or subject to
Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act,
except to the extent that the Company specifically requests that such
information be treated as soliciting material or specifically incorporates them
by reference into a filing under the Securities Act or Exchange Act.
15
<PAGE>
PROPOSAL TWO
APPROVAL OF UNIT ISSUANCE
In June 1996, the Company entered into a transaction (the "June
Transaction") through which it acquired a hospital facility, two medical office
buildings and a parcel of vacant land in Tustin, California from 445 Bedford, a
California limited liability company ("445 LLC") in which Daniel M. Gottlieb,
Chief Executive Officer and Co-Chairman of the Board of the Company, and Steven
D. Lebowitz, President and Co-Chairman of the Board of the Company, have
substantial interests. As consideration for the purchase, 445 LLC received
Units in the Operating Partnership, which are generally convertible on a one-
for-one basis into shares of Common Stock of the Company, as set forth in
greater detail in the discussion under "Description of Units." The Company was
thus able to consummate the acquisition without a significant cash outlay and
without the cost and time involved in obtaining purchase money financing. The
Units were issued at an effective price per Unit equal to a premium over the
closing price of the Company's Common Stock on May 1, 1996, the commitment date.
Under Rule 312.03(b) of the New York Stock Exchange Listed Company Manual
("Exchange Rule 312.03(b)"), the Company is required to seek stockholder
approval for any transaction in which property is to be acquired, directly or
indirectly, from a director, officer or substantial security holder of the
Company or from an entity in which one of such persons has a substantial direct
or indirect interest if (1) the transaction involves the issuance of shares of
Common Stock or securities convertible into shares of Common Stock and (2) the
number of shares of Common Stock to be issued or the number of shares of Common
Stock into which such other securities may be convertible exceeds 1% of the
number of shares of Common Stock outstanding immediately prior to the issuance.
In the June Transaction, the Units issued to 445 Bedford were convertible into a
number of shares of Common Stock constituting less than 1% of the shares
outstanding on the date of issuance of the Units, and thus stockholder approval
was not required. However, in future transactions, the number of Units proposed
to be issued, directly or indirectly, to directors of the Company may be
convertible into a number of shares of Common Stock constituting more than 1% of
the outstanding shares, and thus Exchange Rule 312.03(b) would require
stockholder approval.
Although stockholder approval of the transactions subject to Exchange Rule
312.03(b) is not required under state law or otherwise, the Board of Directors
is committed to ensuring that the Company complies with the listing requirements
of the New York Stock Exchange and that the stockholders of the Company continue
to enjoy the benefits of trading the Common Stock on that active market; the
Board is therefore seeking stockholder approval of such transactions.
The Company presently anticipates that it may in the future enter into
other transactions similar to those described above with directors of the
Company, or entities in which they have a substantial interest, provided that
the terms of such transactions are fair to the Company. The Company also
anticipates that such transactions may involve the issuance of Units convertible
into shares of Common Stock greater than 1% of the shares outstanding. At the
Annual Meeting, the Board of Directors is seeking stockholder approval for any
and all such property acquisition transactions in the future that involve the
issuance of Units convertible into shares of Common Stock, so long as the
aggregate number of such Units does not represent conversion rights into more
than 203,125 shares of Common Stock (representing 5% of the number of
outstanding shares of Common Stock as of the date of this proxy statement),
provided that (1) the terms of each such transaction, including the purchase
price for the property to be acquired, are approved as being fair to the Company
by a committee of independent directors and (2) the price per Unit at which the
Units issuable in each transaction are valued is equal to a
16
<PAGE>
premium of $0.25 over the market value of a share of Common Stock on the date of
issuance of the Units, with the market value of a share of Common Stock being
equal to the average closing per share price of the Common Stock on the New York
Stock Exchange for the ten business days immediately preceding the date of such
issuance. Stockholders of the Company and Unitholders of the Operating
Partnership have no preemptive rights with respect to such Unit issuances.
The Board of Directors believes that stockholder approval of such future
transactions will provide the Company with the flexibility to acquire desirable
properties through equity financing with reduced cash outlays and without the
expense and delay involved in seeking purchase money financing.
DESCRIPTION OF UNITS
Substantially all of the Company's assets are held, and substantially all
of its operations are conducted, by or through the Operating Partnership. The
ownership interest of limited partners in the Operating Partnership is
denominated in Units. The Company is the general partner of the Operating
Partnership and also holds a substantial number of Units as a limited partner of
the Operating Partnership. As of March 21, 1997, the Company owned
approximately 89% of the outstanding Units. The Company's Common Stock is
listed on the New York Stock Exchange. Holders of Units (including the Company,
in its capacities as a limited partner and the general partner) are entitled to
share in cash distributions from, and in the profits and losses of, the
Operating Partnership. The number of Units held by the Company generally
corresponds to the number of shares of Common Stock that the Company has
outstanding, and thus the cash distribution per Unit by the Operating
Partnership should be the same as the cash dividend per Common Share paid by the
Company.
The Units are not listed on any exchange or quoted on any national market
system. Holders of Units who are admitted to the Operating Partnership have the
rights of limited partners under the Agreement of Limited Partnership dated
November 15, 1993 of the Operating Partnership (the "Partnership Agreement") and
the Delaware Revised Uniform Limited Partnership Act (the "Act"). The
Partnership Agreement imposes certain restrictions on the transfer of Units, as
described below.
The following description is only a summary of certain provisions of the
Partnership Agreement and is subject to, and qualified in its entirety by, the
Partnership Agreement.
Management
The Company, as the sole general partner of the Operating Partnership,
generally has the power and authority under the Partnership Agreement to manage
and conduct the business and affairs of the Operating Partnership, subject, in
certain circumstances, to the consent of the limited partners of the Operating
Partnership. The Board of Directors of the Company manages the affairs of the
Company and thereby the affairs of the Operating Partnership. No special
compensation is paid to the Company for its services as general partner. All
operating expenses are incurred at the Operating Partnership level, and the
limited partners therefore share in the expenses of operation.
Liability of General Partner and Limited Partners
The general partner is liable for all general recourse obligations of the
Operating Partnership to the extent not paid by the Operating Partnership. The
general partner is not liable for the nonrecourse obligations of the Operating
Partnership.
17
<PAGE>
The limited partners are not required to make additional contributions to
the Operating Partnership. Assuming that a limited partner does not take part in
the control of the business of the Operating Partnership and otherwise acts in
conformity with the provisions of the Partnership Agreement, the liability of
the limited partner for obligations of the Operating Partnership under the
Partnership Agreement and the Act will be limited, subject to certain possible
exceptions, generally to the loss of the limited partner's investment in the
Operating Partnership represented by his Units. Under the Act, a limited partner
may not receive a distribution from the Operating Partnership if, at the time of
the distribution and after giving effect thereto, the liabilities of the
Operating Partnership (other than liabilities to parties on account of their
interests in the Operating Partnership and liabilities for which recourse is
limited to specified property of the Operating Partnership) exceed the fair
value of the Operating Partnership's assets (other than the fair value of any
property subject to nonrecourse liabilities of the Operating Partnership but
only to the extent of such liabilities). The Act provides that a limited partner
who receives a distribution knowing at the time that it violates the foregoing
prohibition is liable to the Operating Partnership for the amount of the
distribution. Unless otherwise agreed, such a limited partner will not be liable
for the return of such distribution after the expiration of three years from the
date of such distribution.
The Operating Partnership is qualified to do business in certain
jurisdictions and may qualify to conduct business in the future in certain other
jurisdictions. Maintenance of limited liability may require compliance with
certain legal requirements of those jurisdictions and certain other
jurisdictions. Limitations on the liability of a limited partner for the
obligations of a limited partnership have not been clearly established in many
jurisdictions. Accordingly, if it were determined that the right, or exercise
of the right by the limited partners, to make certain amendments to the
Partnership Agreement or to take other action pursuant to the Partnership
Agreement constituted "control" of the Operating Partnership's business for the
purposes of the statutes of any relevant jurisdiction, the limited partners
might be held personally liable for the Operating Partnership's obligations.
The Operating Partnership seeks to operate in a manner that the general partner
deems reasonable, necessary and appropriate to preserve the limited liability of
the limited partners.
Meetings; Voting
The Partnership Agreement does not provide for annual meetings of the
limited partners, and the Company does not anticipate calling such meetings.
Meetings of the limited partners may be called only by the general partner, on
its own motion or upon written request of limited partners owning at least 51%
of the Units. Limited partners may vote either in person or by proxy at
meetings. Any action that is required or permitted to be taken by the limited
partners may be taken either at a meeting of the limited partners or without a
meeting if consents in writing setting forth the action so taken are signed by
limited partners owning not less than the minimum number of Units that would be
necessary to authorize or take such action at a meeting of the limited partners
at which all limited partners entitled to vote on such action were present.
Each limited partner (including the Company to the extent it holds Units) will
have a vote equal to the number of Units it holds on matters on which limited
partners are entitled to vote. A transferee of Units who has not been admitted
as a substitute limited partner of record with respect to such Units has no
voting rights with respect to such Units, even if such transferee holds other
Units as to which it has been admitted as a limited partner.
Limited Partner Approval Rights
Under the terms of the Partnership Agreement, the general partner may not,
without the consent of a majority of the outstanding percentage interest of the
limited partnership interests (including those
18
<PAGE>
held by the general partner) undertake, on behalf of the Operating Partnership,
any of the following actions or enter into any transaction which would have the
effect of such transactions: (i) make a general assignment for the benefit of
creditors or appoint or acquiesce in the appointment of a custodian, receiver or
trustee for all or any part of the assets of the Operating Partnership; (ii)
institute any proceeding for bankruptcy on behalf of the Operating Partnership;
(iii) transfer the partnership interest of the general partner or admit into the
Operating Partnership any additional or substitute general partner; and (iv)
sell or otherwise transfer all or substantially all of the assets of the
Operating Partnership. The Company owns 89% of the limited partnership interests
in the Operating Partnership and therefore has the power to consent or withhold
consent with respect to such actions. Notwithstanding the above, the general
partner may not, without the consent of the limited partners (for this purpose
excluding limited partnership interests held by the general partner) with
certain exceptions, amend, modify or terminate the Partnership Agreement other
than to reflect the admission, substitution, termination or withdrawal of
partners pursuant to the terms of the Partnership Agreement.
Removal of General Partner
The Company may not be removed as general partner of the Operating
Partnership by the limited partners with or without cause.
Distributions and Allocations
All distributions under the Partnership Agreement are made in accordance
with the respective percentage interests of the partners in the Operating
Partnership. The Operating Partnership's taxable income and tax losses for each
fiscal year are generally allocated in accordance with the respective percentage
interests of the partners in the Operating Partnership.
Transfer of Partnership Interests
The Partnership Agreement provides that no limited partner may transfer all
or any portion of its Units without the consent of the general partner, which
consent may be withheld in its sole and absolute discretion; provided, however,
that any limited partner may at any time, without the consent of the general
partner (i) make certain transfers for estate planning purposes, (ii) transfer
its Units to the Company pursuant to the conversion right described below. In
addition, Messrs. Gottlieb and Lebowitz are permitted to pledge their Units to
family members of Reese L. Milner, a director of the Company, and certain
related entities in connection with indebtedness of G&L Development (a general
partnership between Messrs. Gottlieb and Lebowitz) and Messrs. Gottlieb and
Lebowitz to such persons or entities. No transfer of Units by the limited
partners of the Operating Partnership may be made in violation of certain
regulatory and other restrictions set forth in the Partnership Agreement.
Conversion of Units
Each limited partner has the right to convert all or a portion of its Units
into shares of Common Stock or cash equal to the fair market value of such
shares of Common Stock, at the election of the Company, provided that no Unit
may be converted until one year after issuance. Each Unit is currently
convertible into one share of Common Stock. Such conversion ratio is subject to
adjustment upon the occurrence of certain events such as stock splits, reverse
stock splits and stock dividends. The consummation of a conversion is subject
to the expiration or termination of the applicable waiting period, if any, under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the stock ownership
limits set forth in the Company's Articles of Incorporation. In addition,
without the prior written consent
19
<PAGE>
of the general partner, a limited partner may not exercise its conversion rights
with respect to all of its Units unless after such conversion there shall be at
least one limited partner of the Operating Partnership. The Company anticipates
that it will elect to issue shares of Common Stock in connection with each such
transfer rather than paying cash.
Issuance of Additional Units
As general partner of the Operating Partnership, the Company has the
ability to cause the Operating Partnership to issue additional Units. The
Partnership Agreement provides that additional Units may not be issued for
consideration that is less, on a per-Unit basis, than the average closing per-
share price of the Common Stock on the New York Stock Exchange for the ten
business days immediately preceding the date of such issuance.
Funding of Investments
The Partnership Agreement provides that if the Operating Partnership
requires additional funds to pursue its investment objectives, the Company may
fund such investments by raising additional equity capital and making a capital
contribution to the Operating Partnership or by borrowing such funds and lending
the net proceeds thereof to the Operating Partnership on the same terms and
conditions as are applicable to the Company's borrowing of such funds. If the
Company raises such funds by issuing shares of Common Stock, it will receive,
upon contribution of such funds to the Operating Partnership, additional Units
equal to the number of shares of Common Stock so issued with appropriate
adjustments to reflect certain events as stock splits, reverse stock splits and
stock dividends.
Term of the Operating Partnership
The Operating Partnership has a term of fifty years, unless it is earlier
terminated in accordance with the terms of the Partnership Agreement.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL TWO.
---
---
20
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PROPOSAL THREE
APPROVAL OF AMENDMENTS TO THE
1993 STOCK INCENTIVE PLAN
The stockholders are asked to consider and vote to approve amendments to
the G&L Realty Corp. 1993 Stock Incentive Plan (the "Plan"), as set forth in the
form of G&L Realty Corp. Amended and Restated 1993 Stock Incentive Plan (the
"Amended Plan") attached hereto as Appendix A.
The Company has utilized stock options granted pursuant to the Plan to
provide additional incentives to its employees, directors and consultants. As
of March 21, 1997, only 192,900 shares of the Common Stock remained available
for issuance under the Plan. The Company does not have any other stock-based
incentive compensation plan in which its employees, directors or consultants are
eligible to participate. All of the awards outstanding under the Plan are stock
options which are not transferable except in limited circumstances. All options
granted have exercise prices equal to the market price of the underlying stock
on the date the options were granted, with the exception of certain options
which were repriced in 1995.
The Board of Directors amended and restated the Plan effective as of
February 15, 1997, subject to the approval of the stockholders, to (i) increase
the number of shares available for Awards (as defined in the Plan) under the
Plan by 120,000, to 640,000, (ii) include technical changes to conform the Plan
to recent changes in the rules adopted by the Securities and Exchange Commission
(the "SEC") pursuant to Section 16 of the Exchange Act and (iii) include
technical changes to conform the Plan to the deductibility requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
By conforming the Plan to the SEC's rules under Section 16 of the Exchange Act,
certain transactions under the Plan are exempt from certain provisions of such
Section. By conforming the Plan to the requirements of Section 162(m) of the
Code, the Company expects to be able to deduct for Federal income tax purposes
the "spread" or exercise price of all stock option and stock appreciation rights
("SARs") awarded to the Named Officers under the Plan to the extent otherwise
deductible.
Section 162(m) of the Code places a limit of $1,000,000 on the amount of
compensation that may be deductible by the Company in any tax year with respect
to each of the Company's highest paid executives, including compensation
relating to stock option exercises. However, compensation attributable to stock
options and other performance-based awards is not subject to the deduction limit
if certain restrictions approved by the stockholders are applied to stock
options and other awards granted to these executives. In order to minimize the
amount of taxable ordinary income allocable to stockholders by preserving the
deductibility of compensation relating to Awards (as defined below) made to
executive officers under the Plan, the Company is requesting stockholders to
approve the amendments to the Plan pertaining to Section 162(m).
In addition, the Board adopted amendments to the Plan to (i) change the
existing requirement that members of the committee administering the Plan be
"disinterested directors" to a requirement that the members of the committee be
"non-employee directors" (as those terms have been defined in the previous and
present versions of Rule 16b-3 under the Exchange Act), (ii) remove the
restriction that Section 4 of the Plan could only be amended once every six
months, in accordance with the termination of such restriction in the present
version of Rule 16b-3, and (iii) provide authority to both the full Board of
Directors and the Compensation Committee to administer the Plan, including the
granting of Awards thereunder, as permitted under the present version of Rule
16b-3.
21
<PAGE>
SUMMARY OF THE PLAN
The following description of the Plan is qualified in its entirety by
reference to the full text of the Plan, as it is proposed to be amended and
restated, a copy of which is attached as Appendix A to this proxy statement.
The purpose of the Plan is to enable the Company and the Operating
Partnership and their subsidiaries to attract, retain and motivate their
employees and consultants by providing for or increasing the proprietary
interests of such employees and consultants in the Company and to enable the
Company to attract, retain and motivate its nonemployee directors and further
align their interests with those of the Company's stockholders by providing for
or increasing the proprietary interest of such directors in the Company. The
Plan became effective on October 29, 1993, the date it was adopted by the Board
of Directors of the Company. The Plan was approved by the affirmative vote of
the holders of a majority of the outstanding capital stock of the Company, in
accordance with applicable state law, on October 29, 1993. Any person,
including any director of the Company, who is an employee of or consultant to
the Company, the Operating Partnership, or any of their subsidiaries (an
"Employee"), is eligible to be considered for the grant of Awards under the
Plan. The Plan also provides for the automatic grant of options to directors of
the Company who are not employees ("Nonemployee Directors"). The proposed
amendments were approved by the Board of Directors, subject to stockholder
approval, to enable the Company and the Operating Partnership and their
subsidiaries to continue to attract, retain and motivate their employees and
consultants and to maximize the deductibility of compensation relating to Awards
made to executive officers under the Plan.
As of March 21, 1997, approximately 23 Employees and five Nonemployee
Directors were participating in the Plan.
The maximum number of shares of Common Stock that may currently be issued
pursuant to Awards (including incentive stock options under the provisions of
Section 422 of the Code ("Incentive Options")) and Nonemployee Director Options
(as defined below) granted under the Plan is 520,000. The maximum number of
shares of Common Stock that may currently be issued pursuant to Incentive
Options granted under the Plan is 500,000. Under the proposed amendment to the
Plan, the number of shares that may be issued pursuant to Awards (including
Incentive Options) and Nonemployee Director Options granted under the Plan is
640,000, and the maximum number of shares of Common Stock that may be issued
pursuant to Incentive Options is 620,000. The Plan does not specify a minimum
exercise price or other consideration that a recipient of an Award must pay to
obtain the benefit of an Award, and therefore the maximum compensation payable
pursuant to the Plan, during the term of the Plan and Awards granted thereunder,
is equal to the number of shares of Common Stock with respect to which Awards
may be issued thereunder, multiplied by the value of such shares on the date
such compensation is measured. Any such exercise price or other consideration
will be determined by the Board or the Compensation Committee, as the case may
be, and included in the terms of such Award.
No Employee may be granted Awards under the Plan with respect to more than
120,000 shares of Common Stock during any calendar year. This limitation is
intended to satisfy the requirements of Section 162(m) of the Code so that
compensation attributable to Awards under the Plan qualifies as performance-
based compensation under Section 162(m) of the Code.
The number and type of shares issuable under the Plan is subject to
appropriate adjustment by the Board or the Compensation Committee if the
outstanding shares of Common Stock are increased or decreased in number, or
changed into or exchanged for a different number or kind of shares, through
22
<PAGE>
reorganization, recapitalization, reclassification, stock dividend (other than a
regular quarterly cash dividend), stock split or reverse stock split.
If any portion of a stock option or other award terminates or lapses
unexercised, or is canceled without having been fully exercised, or if
restricted stock is repurchased by the Company, the shares which were subject to
the unexercised portion of such option, or other award, or the restricted stock
repurchased, will continue to be available for issuance under the Plan.
Subject to the provisions of the Plan, both the Board and the Compensation
Committee are authorized and empowered to administer the Plan, including,
without limitation, adopting, amending and rescinding rules and regulations
relating to the Plan; determining which persons are Employees under the Plan and
to which of such Employees, if any, Awards shall be granted under the Plan;
granting Awards to Employees and determining the terms and conditions of Awards
granted under the Plan and the agreements relating to such Awards; determining,
with certain exceptions, the terms and conditions of the Nonemployee Director
Options that are automatically granted under the Plan and construing the Plan
and the terms, conditions and restrictions of any Awards and Nonemployee
Director Options granted under the Plan.
To satisfy the requirements of Section 162(m) of the Code, the Plan has
been amended to provide that if Awards under the Plan are to be made to persons
subject to Section 162(m) of the Code and such Awards are intended to give rise
to performance based compensation, then each of the Committee's members shall
also be an "outside director," as such term is defined in the regulations under
Section 162(m) of the Code.
The Plan is not subject to any provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA") and is not required to be qualified under Section
401(a) of the Code.
The statements set forth below are summaries of certain provisions of the
Plan. These statements do not purport to be complete and are qualified in their
entirety by reference to the provisions of the Plan.
Awards under the Plan
The Board or Compensation Committee is authorized under the Plan to enter
into any type of arrangement with an Employee, consistent with the provisions of
the Plan, that involves or might involve the issuance of (a) shares of Common
Stock, (b) an option, warrant, convertible security, stock appreciation right or
similar right, with an exercise or conversion privilege at a price related to
the shares of Common Stock, or (c) any other security or benefit with a value
derived from the value of the shares of Common Stock (any such arrangement is
defined herein as the "grant" of an "Award").
Awards are not restricted to any specified form or structure and may
include, without limitation, sales or bonuses of stock, restricted stock, stock
options, reload stock options, stock purchase warrants, other rights to acquire
stock, securities convertible into or redeemable for stock, stock appreciation
rights, limited stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares. An Award may consist of any one of
such security or benefit, or of two or more of them in tandem or in the
alternative. Any stock option granted to an Employee may be an Incentive Option
or a Nonqualified Option (as defined below). Shares of Common Stock may be
issued pursuant to an Award for any lawful consideration as determined by the
Compensation Committee, including, without limitation, services rendered by the
recipient of such Award.
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<PAGE>
An Award granted under the Plan to an Employee may include a provision
accelerating the receipt of benefits upon the occurrence of specified events,
such as a change in control of the Company or a dissolution, liquidation,
merger, reclassification, sale of substantially all of the property and assets
of the Company or other significant corporate transaction.
An Award to an Employee may permit the Employee to pay all or part of the
purchase price of the shares or other property issuable pursuant thereto, and/or
to pay all or part of such Employee's tax withholding obligation with respect to
such issuance, by (a) delivering previously owned shares of capital stock of the
Company or other property, (b) reducing the amount of shares or other property
otherwise issuable pursuant to the award, or (c) delivering a promissory note,
the terms and conditions of which will be determined by the Compensation
Committee.
The Plan provides that each person who becomes a Nonemployee Director of
the Company shall automatically be granted an option (a "Nonemployee Director
Option") to purchase 3,000 shares of Common Stock upon becoming a Nonemployee
Director. In addition, the Plan provides that each Nonemployee Director will, on
the first business day following the date of each annual meeting of stockholders
of the Company, or any adjournment thereof, at which directors of the Company
are elected, automatically be granted a Nonemployee Director Option to purchase
500 shares of Common Stock.
Each Nonemployee Director Option will have an exercise price equal to the
greater of (i) the fair market value of the underlying shares subject to such
option on the date of its grant or (ii) the aggregate par value of such shares
of Common Stock on such date.
Each Nonemployee Director Option granted pursuant to the Plan shall become
exercisable for the first time to purchase 100% of the shares of Common Stock
subject thereto six months after the date of grant of such Nonemployee Director
Option; provided, however, that such Nonemployee Director Option shall become
fully exercisable on the date upon which the optionee shall cease to be a
Nonemployee Director as a result of death or total disability.
Each Nonemployee Director Option granted under the Plan expires upon the
first to occur of the following: (i) the first anniversary of the date upon
which the optionee ceases to be a Nonemployee Director as a result of death or
total disability; (ii) the 90th day after the date upon which the optionee
ceases to be a Nonemployee Director for any reason other than death or total
disability; or (iii) the tenth anniversary of the date of grant of such
Nonemployee Director Option.
All outstanding Nonemployee Director Options theretofore granted under this
Plan terminate upon the first to occur of the following: (i) the dissolution or
liquidation of the Company; (ii) a reorganization, merger or consolidation of
the Company as a result of which the outstanding securities of the class then
subject to such outstanding Nonemployee Director Options are exchanged for or
converted into cash, property and/or securities not issued by the Company, which
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board, unless the terms of
such reorganization, merger or consolidation shall provide otherwise; or (iii)
the sale of substantially all of the property and assets of the Company, unless
the terms of such reorganization, merger or consolidation shall provide
otherwise.
New Plan Benefits
The following table discloses the number of shares subject to Awards (all
of which have been stock options) and Nonemployee Director Options that have
been granted under the Plan as of March 21,
24
<PAGE>
1997 to (i) the Named Officers, (ii) the Company's executive officers as a
group, (iii) the Nonemployee Directors, as a group, (iv) all nominees for
director, as a group, and (v) all Employees, other than executive officers, as a
group. The closing price of the Company's Common Stock on the New York Stock
Exchange was $17.75 on March 21, 1997.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION UNDERLYING OPTIONS
- ---------------------------------------- ------------------
<S> <C>
Daniel M. Gottlieb 100,500
Chief Executive Officer and Co-
Chairman of the Board
Steven D. Lebowitz 100,500
President and Co-Chairman of the
Board
Total for executive officers, as a 313,000
group (seven persons)
Total for Nonemployee Directors, as a 19,500
group (five persons)
Total for all nominees for director, as 220,500
a group (seven persons)
Total for all Employees, other than 32,100
executive officers, as a group (12
persons)
</TABLE>
Plan Duration
The Plan became effective as of October 29, 1993. The proposed amendments
will become effective as of February 28, 1997 after they have been approved by
the Company's stockholders. Awards may not be granted under the Plan after
October 29, 2003. Although Common Shares may be issued after that date pursuant
to Awards granted prior to such date, no Common Shares may be issued under the
Plan after October 29, 2013.
Amendments to the Plan
The Board of Directors may amend or terminate the Plan at any time and in
any manner, provided that no such action of the Board may deprive the recipient
of any Award of Nonemployee Director Option previously granted of his or her
rights with respect thereto without his or her consent.
FEDERAL INCOME TAX TREATMENT UNDER THE PLAN
The following is a brief description of the federal income tax treatment
which will generally apply to Awards made under the Plan, based on federal
income tax laws in effect on the date hereof. The exact federal income tax
treatment of Awards will depend on the specific nature of the Award. Such an
Award may, depending on the conditions applicable to the Award, be taxable as an
option, as restricted or unrestricted stock, as a cash payment, or otherwise.
Because the following is only a brief summary of the general federal income tax
rules, recipients of Awards should not rely thereon for individual tax advice,
as each taxpayer's situation and the consequences of any particular transaction
will vary
25
<PAGE>
depending upon the specific facts and circumstances involved. Each taxpayer is
advised to consult with his or her own tax advisor for particular federal, as
well as state and local, income and any other tax advice.
Incentive Options
Pursuant to the Plan, Employees may be granted options which are intended
to qualify as Incentive Options. Generally, the optionee is not taxed and the
Company is not entitled to a deduction on the grant or the exercise of an
Incentive Option. However, the amount by which the fair market value of the
shares acquired upon the exercise of an Incentive Option ("Option Shares")
exceeds the exercise price will be included as a positive adjustment in the
calculation of an optionee's "alternative minimum taxable income" in the year of
exercise, and thus the exercise of an Incentive Option may give rise to a tax
liability in the year of exercise.
If the optionee sells the Option Shares at any time within (a) one year
after the date of transfer of shares to the optionee pursuant to the exercise of
such Incentive Option or (b) two years after the date of grant of such Incentive
Option, then (1) such optionee will recognize capital gain in an amount equal to
the excess, if any, of the sales price over the fair market value of the Option
Shares on the date of exercise, (2) such optionee will recognize ordinary income
in an amount equal to the excess, if any, of the lesser of the sales price or
the fair market value of the Option Shares on the date of exercise, over the
exercise price of such Incentive Option, (3) such optionee will recognize
capital loss equal to the excess, if any, of the exercise price of such
Incentive Option over the sales price of the Option Shares, and (4) the Company
will generally be entitled to a deduction in an amount equal to the ordinary
income recognized by such optionee. If the optionee sells the Option Shares at
any time after the optionee has held the Option Shares for at least (a) one year
after the date of transfer of the Option Shares to the optionee pursuant to the
exercise of the Incentive Option and (b) two years after the date of grant of
the Incentive Option, then the optionee will recognize capital gain or loss
equal to the difference between the sales price and the exercise price of such
Incentive Option, and the Company will not be entitled to any deduction.
Nonqualified Options
The grant of an option or other similar right to acquire stock which does
not qualify for treatment as an Incentive Option, including a Nonemployee
Director Option (a "Nonqualified Option"), is generally not a taxable event for
the optionee. Upon exercise of the option, the optionee will generally
recognize ordinary income in an amount equal to the excess of the fair market
value of the stock acquired upon exercise (determined as of the date of the
exercise) over the exercise price of such option, and the Company will be
entitled to a tax deduction equal to such amount. See "Special Rules for Awards
Granted to Insiders," below. A subsequent sale of the stock generally will give
rise to capital gain or loss equal to the difference between the sales price and
the sum of the exercise price paid for such share plus the ordinary income
recognized with respect to such share.
Special Rules for Awards Granted to Insiders
If an optionee is a director, officer or stockholder subject to Section 16
of the Securities Exchange Act of 1934 (an "Insider"), the determination of the
amount and the timing of income recognition in connection with the exercise of
an option or the receipt or vesting of other Awards generally may be required to
be deferred until the expiration of any period during which the Insider would be
restricted from disposing of any stock received. Insiders should consult their
tax advisors to determine the tax consequences to them of exercising options
granted to them pursuant to the Plan.
26
<PAGE>
Restricted Stock
Awards under the Plan may also include stock sales, stock bonuses or other
grants of stock. Unless the recipient makes an 83(b) Election within 30 days
after the receipt of the restricted shares, the recipient generally will not be
taxed on the receipt of restricted shares until the restrictions on such shares
expire or are removed. When the restrictions expire or are removed, the
recipient will recognize ordinary income (and the Company will be entitled to a
deduction) in an amount equal to the excess of the fair market value of the
shares at that time over the purchase price. However, if the recipient makes an
83(b) Election within 30 days of the transfer of restricted shares to the
recipient, he or she will recognize ordinary income (and the Company will be
entitled to a deduction) equal to the excess of the fair market value of the
shares on the date of the transfer over purchase price. In the case of an
Insider (as defined above), the timing of income recognition (including the date
used to compute the fair market value of shares) with respect to restricted
shares may be deferred, as described above in "Special Rules for Awards Granted
to Insiders" above, unless the Insider makes a valid 83(b) Election.
Miscellaneous Tax Issues
Awards may be granted under the Plan which do not fall clearly into the
categories described above. The federal income tax treatment of these Awards
will depend upon the specific terms of such Awards. Generally, the Company will
be required to make arrangements for withholding applicable taxes with respect
to any ordinary income recognized by a participant in connection with Awards
made under the Plan.
The terms of the agreements pursuant to which specific Awards are made to
employees under the Plan may provide for accelerated vesting or payment of an
Award in connection with a change in ownership or control of the Company. In
that event and depending upon the individual circumstances of the recipient,
certain amounts with respect to such Awards may constitute "excess parachute
payments" under the "golden parachute" provisions of the Code. Pursuant to
these provisions, a recipient will be subject to a non-deductible 20% excise tax
on any "excess parachute payments" and the Company will be denied any deduction
with respect to such payment. Recipients of Awards should consult their tax
advisors as to whether accelerated vesting of an Award in connection with a
change of ownership or control of the Company would give rise to an excess
parachute payment.
As stated above, the Company obtains a deduction generally equal to the
ordinary income recognized by an optionee in connection with an Award. However,
the Company's deduction for compensation (including deductions arising from
Awards) paid to certain corporate officers or other employees may be limited to
$1 million (per person) annually.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF AMENDMENTS TO THE
---
---
1993 STOCK INCENTIVE PLAN AS SET FORTH IN PROPOSAL THREE.
27
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has adopted a policy pursuant to which material transactions
between the Company and its executive officers, directors and principal
stockholders (i.e., stockholders owning beneficially 5% or more of the
outstanding voting securities of the Company) shall be submitted to the Board of
Directors for approval by a disinterested majority of the directors voting with
respect to the transaction. For this purpose, a transaction is deemed material
if such transaction, alone or together with a series of similar transactions
during the same fiscal year, involves an amount which exceeds $60,000.
A corporation owned by Messrs. Gottlieb and Lebowitz receives approximately
$52,000 per year from Saint John's Hospital for providing certain management and
leasing services to Saint John's Hospital with respect to the space it leases
and subleases in the Company's property at 405 North Bedford Drive, Beverly
Hills, California.
Prior to April 1996, Messrs. Milner, Gottlieb and Lebowitz were beneficial
owners of 445 Bedford, a California limited liability company ("445 LLC"),
having equity interests of 59.0%, 24.6% and 16.4%, respectively. 445 LLC's
primary asset was an office building located at 445 N. Bedford Drive in Beverly
Hills, California. On April 26, 1996, the Company acquired Mr. Milner's interest
in 445 LLC for $808,000. On June 14, 1996, 445 LLC completed a tax-deferred
exchange transaction whereby it sold the office building and acquired, along
with the Operating Partnership as tenants-in-common, a hospital facility, two
medical office buildings and a parcel of vacant land in Tustin, California (the
"Tustin Properties"). Subsequently, 445 LLC redeemed the Company's interest in
445 LLC in exchange for a portion of 445 LLC's interest in the Tustin
Properties. On June 28, 1996, 445 LLC contributed its remaining interest in the
Tustin Properties to the Operating Partnership in exchange for 39,215 newly
issued Units in the Operating Partnership. The new Units were valued at a price
of $14.00 per Unit, which reflected a premium of $1.00 over the closing price of
a share of the Company's common stock on the date the Company's Board of
Directors approved the exchange. The contributed interest in the Tustin
Properties was valued according to the price paid by the purchaser of the office
building at 445 N. Bedford in connection with the exchange transaction involving
the Tustin Properties.
In 1996 the Compensation Committee approved the payment to Messrs. Gottlieb
and Lebowitz of $275,000 and $225,000, respectively, to partially defray tax
liabilities imposed on them as a result of the transfer by the Company of 436
North Bedford Drive, Beverly Hills, California (which was contributed by
Messrs. Gottlieb and Lebowitz to the Company in exchange for Units in 1993) to
the lender in satisfaction of the loan on the property, followed by the
subsequent repurchase of the property by the Company. The transfer of the
property back to the lender caused Messrs. Gottlieb and Lebowitz to
realize a capital gain of approximately $5 million (allocated 60% to Mr.
Gottlieb and 40% to Mr. Lebowitz), equal to the difference between (x) the
amount of the outstanding loan at the time of transfer and (y) Messrs.
Gottlieb's and Lebowitz's basis in the property. The transfer and reacquisition
of the property effectively reduced the Company's overall indebtedness by
approximately $10.5 million. The effect of such transactions, as reflected in
the Company's 1996 audited financial statements, provided a substantial positive
benefit to the Company. In contrast, other than the indirect benefit resulting
from their stock ownership in the Company, Messrs. Gottlieb and Lebowitz
received no benefit. The taxable gain allocated to the two executive officers
represented an allocation of tax consequences with no corresponding cash or
other financial benefit. For the 1996 calendar year, Messrs. Gottlieb and
Lebowitz were faced with an immediate and severe tax burden in excess of their
combined 1996 gross salaries and bonuses. The Compensation Committee, in
awarding such amounts to Messrs. Gottlieb and Lebowitz, noted that, in order for
the Company to achieve its business objectives in transferring and subsequently
repurchasing such property, it was necessary for Messrs. Gottlieb and Lebowitz
to realize such negative tax consequences.
28
<PAGE>
In February 1997 the Board of Directors approved a transaction with PHP
Healthcare Corporation ("PHP"), of which Mr. Reilly is Chairman of the Board of
Directors. Mr. Reilly was not present and did not participate in the Board's
consideration of the proposal and did not vote with respect thereto. The
transaction involved the formation of a new limited liability company named,
"GL/PHP, LLC" which purchased six medical office properties in New Jersey having
a total of 80,415 square feet at a purchase price of approximately $22.5
million. The Operating Partnership and PHP funded the $4.4 million down payment
in proportion to their ownership interests in GL/PHP, LLC (80.5% for the
Operating Partnership and 19.5% for PHP), with the Operating Partnership's
contribution financed by GLN Capital Co., LLC, a joint venture between the
Company and Nomura Asset Capital Corporation. The balance of the purchase price
was financed by two loans from PHP, secured by first and second deeds of trust.
Subject to certain conditions, PHP has a purchase option to acquire the
Operating Partnership's interest in the new entity at any time prior to July 31,
1997. PHP has leased the properties from GL/PHP, LLC pursuant to a 25-year net
operating lease and has entered into a 3-year contact with Blue Cross (the
seller of the properties) whereby PHP will provide medical services on the
properties to Blue Cross insurance plan members.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP audited the Company's financial statements for the
year ended December 31, 1996, and has been the Company's auditors since the
Company's organization. The directors have selected the firm of Deloitte &
Touche LLP as independent accountants for the Company for the fiscal year ending
December 31, 1997. A representative of Deloitte & Touche LLP is expected to be
present at the Annual Meeting with an opportunity to make a statement if he
desires to do so, and such representative is expected to be available to respond
to appropriate questions.
OTHER MATTERS
Submission of Stockholder Proposals for Next Year's Annual Meeting. The
proxy rules adopted by the Securities and Exchange Commission provide that
certain stockholder proposals must be included in the proxy statement for the
Company's Annual Meeting. For a proposal to be considered for inclusion in next
year's proxy statement, it must be received by the Company no later than 120
days prior to April 20, 1998.
Section 16(a) Beneficial Ownership Reporting Compliance. Based solely upon
a review of Securities and Exchange Commission Forms 3, 4 and 5 furnished to the
Company and certain written representations, the Company believes that all
reports required by Section 16(a) of the Securities and Exchange Act of 1934
with respect to the Company's fiscal year ended December 31, 1996 have been
filed by its officers and directors, except that each of Messrs. Grabel and
Rauch failed to file on a timely basis a Form 3 Initial Statement of Beneficial
Ownership of Securities; Mr. Hamermesh failed to file on a timely basis a Form 4
Statement of Changes of Beneficial Ownership of Securities for the month of
July, 1996 relating to an acquisition of 1,435 shares on July 3, 1996, and Mr.
Grabel failed to file on a timely basis a Form 4 Statement of Changes of
Beneficial Ownership of Securities for the month of May 1996, relating to an
acquisition of 500 shares of Common Stock on May 14, 1996.
Other Matters. The Board of Directors of the Company knows of no matters
to be presented at the Annual Meeting other than those described in this proxy
statement. Other business may properly come before the meeting, and in that
event it is the intention of the persons named in the accompanying proxy to vote
in accordance with their judgment on such matters.
Annual Report. The Company's Annual Report to Stockholders, including the
Company's audited financial statements for the year ended December 31, 1996, is
being mailed herewith to all stockholders of record. THE COMPANY WILL PROVIDE
WITHOUT CHARGE TO ANY PERSON SOLICITED HEREBY, UPON THE WRITTEN REQUEST OF ANY
SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K. SUCH REQUESTS
SHOULD BE
29
<PAGE>
DIRECTED TO THE SECRETARY OF THE COMPANY AT 439 NORTH BEDFORD DRIVE, BEVERLY
HILLS, CALIFORNIA 90210.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN AND RETURN THE ACCOMPANYING
PROXY CARD IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Quentin Thompson
Quentin Thompson
Secretary, Treasurer
and Chief Accounting Officer
Beverly Hills, California
April 20, 1997
30
<PAGE>
APPENDIX A
----------
G&L REALTY CORP.
AMENDED AND RESTATED
1993 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE OF PLAN
The purpose of this Amended and Restated 1993 Stock Incentive Plan (as
amended and restated, the "Plan") of G&L Realty Corp., a Maryland corporation
(the "Company"), is to enable the Company and G&L Realty Partnership, L.P. (the
"Partnership") and their subsidiaries to attract, retain and motivate their
employees and consultants by providing for or increasing the proprietary
interests of such employees and consultants in the Company, and to enable the
Company to attract, retain and motivate its nonemployee directors and further
align their interests with those of the stockholders of the Company by providing
for or increasing the proprietary interests of such directors in the Company.
SECTION 2. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is an employee of or
consultant to the Company, the Partnership or any of their subsidiaries (an
"Employee") shall be eligible to be considered for the grant of Awards (as
hereinafter defined) hereunder. Any director of the Company who is not an
Employee (a "Nonemployee Director") shall automatically receive Nonemployee
Director Options (as hereinafter defined) pursuant to Section 4 hereof, but
shall not otherwise participate in this Plan.
SECTION 3. AWARDS
(a) The Board (as hereinafter defined) or the Committee (as hereinafter
defined), on behalf of the Company, is authorized under this Plan to enter into
any type of arrangement with an Employee that is not inconsistent with the
provisions of this Plan and that, by its terms, involves or might involve the
issuance of (i) shares of common stock, par value $.01 per share, of the Company
("Common Shares") or (ii) a Derivative Security (as such term is defined in Rule
16a-1 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as such Rule may be amended from time to time) with an exercise
or conversion privilege at a price related to the Common Shares or with a value
derived from the value of the Common Shares. The entering into of any such
arrangement is referred to herein as the "grant" of an "Award."
(b) Awards are not restricted to any specified form or structure and may
include, without limitation, sales or bonuses of stock, restricted stock, stock
options, reload stock options, stock purchase warrants, other rights to acquire
stock, securities convertible into or redeemable for stock, stock appreciation
rights, limited stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares, and an Award may consist of one such
security or benefit, or two or more of them in tandem or in the alternative.
(c) Common Shares may be issued pursuant to an Award for any lawful
consideration as determined by the Board or the Committee, including, without
limitation, services rendered by the recipient of such Award.
<PAGE>
(d) Subject to the provisions of this Plan, the Board or the Committee, in
its sole and absolute discretion, shall determine all of the terms and
conditions of each Award granted under this Plan, which terms and conditions may
include, among other things:
(i) a provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to pay the
purchase price of the Common Shares or other property issuable pursuant to such
Award, or such recipient's tax withholding obligation with respect to such
issuance, in whole or in part, by any one or more of the following:
(A) the delivery of previously owned shares of capital stock of the
Company (including "pyramiding") or other property,
(B) a reduction in the amount of Common Shares or other property otherwise
issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and conditions of which
shall be determined by the Board or the Committee;
(ii) a provision conditioning or accelerating the receipt of
benefits pursuant to such Award, either automatically or in the discretion of
the Board or the Committee, upon the occurrence of specified events, including,
without limitation, a change of control of the Company, an acquisition of a
specified percentage of the voting power of the Company, the dissolution or
liquidation of the Company, a sale of substantially all of the property and
assets of the Company or an event of the type described in Section 7 hereof;
(iii) a provision required in order for such Award to qualify as
an incentive stock option under Section 422 of the Internal Revenue Code (an
"Incentive Stock Option"); or
(iv) any provision required in order for such Award to qualify
as "Performance-Based Compensation" as described in Section 162(m) of the
Internal Revenue Code (the "Code") and the regulations thereunder. If the amount
of compensation an Employee will receive under any Award is not based solely on
an increase in the value of Common Stock after the date of grant or award, the
Committee, in order to qualify an Award as Performance-Based Compensation, may
condition the grant, award, vesting, or exercisability of such an award on the
attainment of a pre-established, objective performance goal. For this purpose, a
pre-established, objective performance goal may include one or more of the
following performance criteria: (i) cash flow, (ii) earnings per share
(including earnings before interest, taxes, and amortization), (iii) return on
equity, (iv) total stockholder return, (v) return on capital, (vi) return on
assets or net assets, (vii) income or net income, (viii) operating income or net
operating income, (ix) operating margin, (x) return on operating revenue, and
(xi) any other similar performance criteria contemplated by the regulations
under Section 162(m) of the Code.
(e) Notwithstanding any other provision of this Plan, no Employee shall be
granted options for in excess of 120,000 shares of Common Stock in any one
calendar year; provided, however, that this limitation shall not apply if it is
not required in order for the compensation attributable to Awards hereunder to
qualify as Performance-Based Compensation. The limitation set forth in this
Section 3(e) shall be subject to adjustment as provided in Section 8, but only
to the extent such adjustments would not affect the status of compensation
attributable to Awards hereunder as Performance-Based Compensation.
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<PAGE>
SECTION 4. NONEMPLOYEE DIRECTOR OPTIONS
(a) Each year, on the first business day following the date of the annual
meeting of stockholders of the Company, or any adjournment thereof, at which
directors of the Company are elected (the "Date of Grant"), each Nonemployee
Director shall automatically be granted an option (a "Nonemployee Director
Option") to purchase 500 Common Shares. In addition, each person who becomes a
Nonemployee Director upon or subsequent to the closing of the sale of Common
Shares pursuant to the Company's first effective registration statement for
Common Shares filed under the Securities Act of 1933, as amended, shall
automatically be granted, upon becoming a Nonemployee Director, a Nonemployee
Director Option to purchase 3,000 Common Shares.
(b) If, on any date upon which Nonemployee Director Options are to be
automatically granted pursuant to this Section 4, the number of Common Shares
remaining available for option under this Plan is insufficient for the grant to
each Nonemployee Director of a Nonemployee Director Option to purchase the
entire number of Common Shares specified in this Section 4, then a Nonemployee
Director Option to purchase a proportionate amount of such available number of
Common Shares (rounded to the nearest whole share) shall be granted to each
Nonemployee Director on such date.
(c) Each Nonemployee Director Option granted under this Plan shall become
exercisable for the first time to purchase 100% of the Common Shares subject
thereto (rounded to the nearest whole share) six months after the Date of Grant
of such Nonemployee Director Option; provided, however, that such Nonemployee
Director Option shall become fully exercisable on the date upon which the
optionee shall cease to be a Nonemployee Director as a result of death or total
disability.
(d) Each Nonemployee Director Option granted under this Plan shall expire
upon the first to occur of the following:
(i) The first anniversary of the date upon which the optionee
shall cease to be a Nonemployee Director as a result of death or total
disability;
(ii) The 90th day after the date upon which the optionee shall
cease to be a Nonemployee Director for any reason other than death or total
disability;
(iii) The tenth anniversary of the Date of Grant of such
Nonemployee Director Option.
(e) Each Nonemployee Director Option shall have an exercise price equal to
the greater of (i) the aggregate Fair Market Value on the Date of Grant of such
option of the Common Shares subject thereto or (ii) the aggregate par value of
such Common Shares on such date.
(f) Payment of the exercise price of any Nonemployee Director Option
granted under this Plan shall be made in full in cash concurrently with the
exercise of such Nonemployee Director Option; provided, however, that, in the
discretion of the Board of Directors of the Company (the "Board"), the payment
of such exercise price may instead be made:
(i) in whole or in part, with Common Shares delivered
concurrently with such exercise (such shares to be valued on the basis of the
Fair Market Value of such shares on the date of such exercise), provided that
the Company is not then prohibited from purchasing or acquiring Common Shares;
and/or
A-3
<PAGE>
(ii) in whole or in part, by the delivery, concurrently with
such exercise and in accordance with Section 220.3(e)(4) of Regulation T
promulgated under the Exchange Act, of a properly executed exercise notice for
such Nonemployee Director Option and irrevocable instructions to a broker
promptly to deliver to the Company a specified dollar amount of the proceeds of
a sale of or a loan secured by the Common Shares issuable upon exercise of such
Nonemployee Director Option.
(g) For purposes of this Section 4, the "Fair Market Value" of a Common
Share or other security on any date (the "Determination Date") shall be equal to
the closing price per Common Share or unit of such other security on the
business day immediately preceding the Determination Date, as reported in The
Wall Street Journal, Western Edition, or, if no closing price was so reported
for such immediately preceding business day, the closing price for the next
preceding business day for which a closing price was so reported, or, if no
closing price was so reported for any of the 30 business days immediately
preceding the Determination Date, the average of the high bid and low asked
prices per Common Share or unit of such other security on the business day
immediately preceding the Determination Date in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System ("NASDAQ") or such other system then in use, or, if the Common
Shares or such other security were not quoted by any such organization on such
immediately preceding business day, the average of the closing bid and asked
prices on such day as furnished by a professional market maker making a market
in the Common Shares or such other security selected by the Board.
(h) All outstanding Nonemployee Director Options theretofore granted under
this Plan shall become fully exercisable immediately prior to a reorganization,
merger or consolidation of the Company as a result of which the outstanding
securities of the class then subject to this Plan are exchanged for or converted
into cash, property and/or securities not issued by the Company, unless such
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board.
(i) All outstanding Nonemployee Director Options theretofore granted under
this Plan shall terminate upon the first to occur of the following:
(i) the dissolution or liquidation of the Company;
(ii) a reorganization, merger or consolidation of the Company as
a result of which the outstanding securities of the class then subject to such
outstanding Nonemployee Director Options are exchanged for or converted into
cash, property and/or securities not issued by the Company, which
reorganization, merger or consolidation shall have been affirmatively
recommended to the stockholders of the Company by the Board, unless the terms of
such reorganization, merger or consolidation shall provide otherwise; or
(iii) the sale of substantially all of the property and assets of
the Company, unless the terms of such reorganization, merger or consolidation
shall provide otherwise.
(j) Each Nonemployee Director Option shall be nontransferable by the
optionee other than by will or the laws of descent and distribution, and shall
be exercisable during the optionee's lifetime only by the optionee or the
optionee's guardian or legal representative.
(k) Nonemployee Director Options are not intended to qualify as Incentive
Stock Options.
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<PAGE>
SECTION 5. STOCK SUBJECT TO PLAN
(a) The aggregate number of Common Shares that may be issued pursuant to
all Incentive Stock Options granted under this Plan shall not exceed 620,000,
subject to adjustment as provided in Section 8 hereof.
(b) The aggregate number of Common Shares issued and issuable pursuant to
all Awards (including Incentive Stock Options) and Nonemployee Director Options
granted under this Plan shall not exceed 640,000, subject to adjustment as
provided in Section 8 hereof.
(c) For purposes of Section 5(b) hereof, the aggregate number of Common
Shares issued and issuable pursuant to all Awards and Nonemployee Director
Options granted under this Plan shall at any time be deemed to be equal to the
sum of the following:
(i) the number of Common Shares which were issued prior to such
time pursuant to Awards and Nonemployee Director Options granted under this
Plan, other than Common Shares which were subsequently reacquired by the Company
pursuant to the terms and conditions of such Awards and with respect to which
the holder thereof received no benefits of ownership such as dividends; plus
(ii) the number of Common Shares which were otherwise issuable
prior to such time pursuant to Awards granted under this Plan, but which were
withheld by the Company as payment of the purchase price of the Common Shares
issued pursuant to such Awards or as payment of the recipient's tax withholding
obligation with respect to such issuance; plus
(iii) the maximum number of Common Shares which are or may be
issuable at or after such time pursuant to Awards and Nonemployee Director
Options granted under this Plan prior to such time.
SECTION 6. DURATION OF PLAN
Neither Awards nor Nonemployee Director Options shall be granted under this
Plan after October 29, 2003. Although Common Shares may be issued after October
29, 2003 pursuant to Awards and Nonemployee Director Options granted prior to
such date, no Common Shares shall be issued under this Plan after October 29,
2013.
SECTION 7. ADMINISTRATION OF PLAN
(a) This Plan may be administered by either the Board or a committee of
the Board (the "Committee") consisting of two or more directors, each of whom is
a "Non-Employee Director" (as such term is defined in Rule 16b-3 promulgated
under the Exchange Act, as such Rule may be amended from time to time);
provided, however, that prior to such time as any class of shares of the capital
stock of the Company are registered under Section 12 of the Exchange Act, none
of such directors are required to be Non-Employee Directors; provided, however,
that if Awards are to be made to persons subject to Section 162(m) of the Code
and such Awards are intended to constitute Performance-Based Compensation, then
the Committee shall grant such Awards and determine the terms and conditions
thereof, and each of the Committee's members shall also be an "outside
director," as such term is defined in the regulations under Section 162(m) of
the Code.
A-5
<PAGE>
(b) Subject to the provisions of this Plan, the Board and the Committee
shall be authorized and empowered to do all things necessary or desirable in
connection with the administration of this Plan, including, without limitation,
the following:
(i) adopt, amend and rescind rules and regulations relating to
this Plan;
(ii) determine which persons are Employees and to which of such
Employees, if any, Awards shall be granted hereunder;
(iii) grant Awards to Employees and determine the terms and
conditions thereof, including the number of Common Shares issuable pursuant
thereto;
(iv) determine the terms and conditions of the Nonemployee
Director Options that are automatically granted hereunder, other than the terms
and conditions specified in Section 4 hereof;
(v) determine whether, and the extent to which, adjustments are
required pursuant to Section 8 hereof; and
(vi) interpret and construe this Plan and the terms and
conditions of all Awards and Nonemployee Director Options granted hereunder.
SECTION 8. ADJUSTMENTS
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of securities, or if cash, property or securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, merger, consolidation, recapitalization,
restructuring, reclassification, dividend (other than a regular, quarterly cash
dividend) or other distribution, stock split, reverse stock split or the like,
or if substantially all of the property and assets of the Company are sold,
then, unless the terms of such transaction shall provide otherwise, the Board or
the Committee shall make appropriate and proportionate adjustments in (a) the
number and type of shares or other securities or cash or other property that may
be acquired pursuant to Incentive Stock Options and other Awards, and
Nonemployee Director Options theretofore granted under this Plan and (b) the
maximum number and type of shares or other securities that may be issued
pursuant to Incentive Stock Options and other Awards, and Nonemployee Director
Options thereafter granted under this Plan.
SECTION 9. AMENDMENT AND TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time and in any manner,
provided, however, that no such amendment or termination shall deprive the
recipient of any Award or Nonemployee Director Option theretofore granted under
this Plan, without the consent of such recipient, of any of his or her rights
thereunder or with respect thereto.
A-6
<PAGE>
SECTION 10. EFFECTIVE DATE OF PLAN
This Plan shall be effective as of October 29, 1993, the date upon which it
was approved by the Board; provided, however, that no Common Shares may be
issued under this Plan until it has been approved, directly or indirectly, by
the affirmative votes of the holders of a majority of the securities of the
Company present, or represented, and entitled to vote at a meeting duly held in
accordance with the laws of the State of Maryland.
A-7
<PAGE>
G&L REALTY CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 28, 1997
P The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
R of Stockholders and the accompanying Proxy Statement for the Special
O Meeting and revoking all prior Proxies, makes, constitutes and appoints
X Daniel M. Gottlieb, Steven D. Lebowitz and Quentin E. Thompson (and each of
Y them) proxies of the undersigned, each with full power of substitution, to
represent the undersigned, and to vote all shares of Common Stock of the
undersigned in G&L Realty Corp. (herein the "Company"), at the Annual
Meeting of Stockholders of the Company at the Beverly Hilton Hotel, 9876
Wilshire Boulevard, Beverly Hills, California, on May 28, 1997 at 9:00
a.m., local time, and at any adjournment(s) or postponement(s) thereof,
with all powers the undersigned would be entitled to vote if personally
present.
1. ELECTION OF DIRECTORS [_] FOR all nominees listed below (except as
marked to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all
nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME ON THE LIST BELOW.)
Daniel M. Gottlieb Steven D. Lebowitz Richard L. Lesher
Leslie D. Michelson Reese L. Milner Charles P. Reilly
S. Craig Tompkins
2. PROPOSAL TO APPROVE THE ISSUANCE TO ONE OR MORE DIRECTORS OF THE
COMPANY, OR ENTITIES IN WHICH THEY HAVE A SUBSTANTIAL INTEREST, OF
PARTNERSHIP INTERESTS IN G&L REALTY PARTNERSHIP, L.P. THAT ARE CONVERTIBLE
INTO UP TO 5% OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY AS
CONSIDERATION FOR ACQUISITIONS OF PROPERTY BY THE COMPANY FROM SUCH PERSONS
OR ENTITIES IN TRANSACTIONS APPROVED AS FAIR TO THE COMPANY BY A COMMITTEE
OF INDEPENDENT DIRECTORS AND IN WHICH EACH SUCH PARTNERSHIP INTEREST IS
VALUED AT A PREMIUM OF $0.25 OVER THE MARKET VALUE OF A SHARE OF COMMON
STOCK.
[_] FOR [_] AGAINST [_] ABSTAIN
3. PROPOSAL TO AMEND AND RESTATE THE COMPANY'S 1993 STOCK INCENTIVE PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
4. To transact such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof and as to which the
undersigned hereby confers discretionary authority.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
P This proxy when properly executed will be voted in a manner directed herein
R by the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
O VOTED FOR PROPOSALS 1, 2 AND 3 AND IN THE DISCRETION OF THE PROXIES ON
X MATTERS DESCRIBED IN PROPOSAL 4.
Y
Dated: 1997
---------------------------------- -------------------------
PLEASE MARK/SIGN, DATE AND RETURN Signature
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
-------------------------
Signature if held jointly
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS AN ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
