AMENDMENT NO. 1
DATED AS OF AUGUST 5, 2002
TO THE STOCK PURCHASE AGREEMENT AMONG HX INVESTORS, L.P., EXETER CAPITAL
CORPORATION AND SHELBOURNE PROPERTIES II, INC.,
DATED AS OF JULY 1, 2002
Amendment No. 1, dated as of August 5, 2002 (the "Amendment"), to the
Stock Purchase Agreement, dated as of July 1, 2002 (the "Stock Purchase
Agreement"), among HX Investors, L.P. ("Purchaser"), Exeter Capital Corporation
("Exeter") and Shelbourne Properties II, Inc. (the "Company").
WHEREAS, Purchaser, Exeter and the Company are parties to the Stock
Purchase Agreement (capitalized terms used but not defined herein shall have the
meanings ascribed thereto in the Stock Purchase Agreement); and
WHEREAS, Purchaser, Exeter and the Company desire to amend the Stock
Purchase Agreement as described herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Purchaser, Exeter and the Company hereby agree as follows:
1. Per Share Amount. From and after the date hereof, the definition of
"Per Share Amount" in the Stock Purchase Agreement shall be amended to be
"$73.85" per Share.
2. Further Action; All Reasonable Efforts. From and after the date
hereof, Section 6.06 of the Stock Purchase Agreement shall be amended to add the
following clause (c) at the end thereof:
"(c) Purchaser agrees that for so long as its nominees (or
persons nominated or approved by such nominees) constitute (i) a
majority of the Board or (ii) with respect to any specific matter
submitted to the Board for action or vote, a majority of the directors
entitled or available to vote on or not disqualified from voting on
such matter, Purchaser will reimburse the Company and any plaintiffs in
the event of litigation seeking performance of the terms of this
Agreement (including, without limitation, the Plan of Liquidation) if
(x) such party prevails in such litigation and (y) it is determined
pursuant to a final nonappealable judgment that the Company failed to
fulfill a material obligation hereunder. Purchaser acknowledges and
agrees that specific performance is a proper remedy to be sought in any
such litigation."
3. Fees and Expenses. From and after the date hereof, the fee
referenced in Section 7.03(b) of the Stock Purchase Agreement shall be
"$900,000."
4. Corporate Governance Provisions. From and after the date hereof, the
Corporate Governance Provisions attached as Annex B to the Stock Purchase
Agreement (the "Corporate Governance Provisions") shall be amended as follows:
(a) The second sentence of Section 3(a) of the Corporate Governance
Provisions shall be amended and restated in its entirety to read as follows:
"For the purposes of this Agreement, "Independent Director" shall mean
a person who (i) is not an officer, director, security holder or
employee of Purchaser or one of its affiliates, or a relative of such
person, (ii) does not have any prior or current affiliation with the
executive officers of the Company, Purchaser or their respective
affiliates or (iii) has not served and is not serving along with any
other director of the Company on the board of directors of another
public company."
(b) Section 4 of the Corporate Governance Provisions shall be amended
to add the following clause (d) at the end thereof:
"(d) If the Plan of Liquidation is not approved by the
Stockholders at the Stockholders' Meeting (or any postponement or
adjournment thereof), the Board will, subject to its fiduciary duties
under applicable Law, use commercially reasonable efforts to market and
sell the Company's property located at 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
and to distribute the proceeds from such sale to the Stockholders by
the earlier of (i) 30 days following the end of the fiscal quarter in
which such sale occurs and (ii) 90 days following the date of such
sale."
(c) Section 11 of the Corporate Governance Provisions shall be
renumbered as Section 12, and the following shall be added as a new Section 11:
"11. Distributions. (a) Purchaser's nominees to the Board who
are not Independent Directors will, subject to their fiduciary duties
and existing obligations of the Company, recommend to the Board and
support the implementation of the following distribution policy:
(i) The Company will make quarterly distributions of
all operating cash flow in excess of budgeted capital
expenditures, anticipated corporate expenses and a reserve of
2% of the current appraised value of the Company's properties;
and
(ii) 80% of the Company's current excess net cash
will be used to retire existing debt and/or to make a
distribution to the Stockholders within 90 days of the
appointment or election to the Board of Purchaser's nominees
for director.
(b) If Stockholders have failed to receive aggregate
distributions on a per share basis equal to $56.00 by December 31,
2004, then Purchaser shall (i) endeavor to cause the next annual
meeting of Stockholders to be held no later than May 30, 2005 and (ii)
vote or cause to be voted all shares of Common Stock beneficially owned
by
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Purchaser in proportion to the votes cast by the other holders of
Common Stock on all matters properly brought before such meeting.
5. Plan of Liquidation. From and after the date hereof, the Plan of
Liquidation shall be amended as follows:
(a) Section 3 of the Plan of Liquidation shall be amended by adding the
following sentence at the end thereof:
"If the Plan of Liquidation is approved and the assets of the Company
are not fully liquidated by October 31, 2007, Purchaser will vote or
cause to be voted all shares of Common Stock beneficially owned by
Purchaser on any shareholder proposal in accordance with the votes cast
by holders of a majority of the shares of Common Stock not held by
Purchaser or its affiliates."
(b) Section 4(g) of the Plan of Liquidation shall be renumbered as
Section 4(h), and the following shall be added as a new Section 4(g):
"(g) sell, transfer or otherwise dispose of any property to
Purchaser or any of its affiliates or to NorthStar Capital Investment
Company or any of its affiliates; or"
(c) Existing Section 5 of the Plan of Liquidation shall be numbered as
Section 5(a), and the following shall be added as new Sections 5(b), 5(c) and
5(d):
"(b) The Company shall (i) distribute to its stockholders all
excess refinancing proceeds, if any, by the earlier of (x) 30 days
following the end of the fiscal quarter in which such refinancing
occurs and (y) 90 days following the date of such refinancing and (ii)
distribute to its stockholders all net property sale proceeds, if any,
by the earlier of (x) 30 days following the end of the fiscal quarter
in which such sale occurs and (y) 90 days following the date of such
sale.
"(c) Unless otherwise approved by the holders of a majority of
the outstanding shares of Common Stock other than shares of Common
Stock held by Purchaser and its affiliates, and for so long as
Purchaser's nominees to the Board (or persons approved of or nominated
by such nominees) comprise a majority of the Board, if the Company
fails to make any distribution contemplated by Section 5(b) of this
Plan of Liquidation, then (i) Purchaser shall no longer be entitled to
receive the fee contemplated by Section 6(ii) of the Plan of
Liquidation (in which case such amount shall be distributed to holders
of shares of Common Stock pursuant to Section 6(i) of this Plan of
Liquidation) and (ii) until the Company makes such distributions, (x)
Purchaser and it affiliates shall not be entitled to receive any
service fees otherwise payable by the Company to Purchaser or any of
its affiliates and (y) directors of the Company (other than directors
who voted in favor of making such distributions or who formally
objected to the Company's not making such distributions) shall not be
entitled to receive any fees or other compensation otherwise payable to
them by the Company.
"(d) Cash reserves of the Company in excess of $500,000 will
be invested only in short-term U.S. Treasuries or other short-term
federally insured obligations."
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(d) The first sentence of Section 6 of the Plan of Liquidation shall be
deleted and replaced with the following two sentences:
"Subject to the payments and provisions of Section 5 above, Purchaser
shall receive a fee equal to 15% of the excess of (x) the Net Proceeds
over (y) the Base Amount, which shall only be payable from and after
such time as the Company has made aggregate distributions equal to the
entire Base Amount (as defined below) and which shall be payable
simultaneously with all future distributions made by the Company from
and after the date on which the Company has made aggregate
distributions equal to the entire Base Amount. Subject to the
foregoing, all distributions made pursuant to this Plan of Liquidation
shall be made to holders of shares of Common Stock on a pro rata
basis."
(e) The second sentence of Section 7 of the Plan of Liquidation shall
be amended and restated in its entirety to read as follows:
"Thereafter, such fees shall be determined by a majority of the
Independent Directors; provided, however, that such fees shall not
exceed $200,000 per annum in the aggregate."
6. Representations and Warranties of the Company. The Company hereby
represents and warrants to Exeter and Purchaser that:
(a) The Company has all necessary power and authority to execute and
deliver this Amendment, to perform its obligations hereunder and under the Stock
Purchase Agreement and to consummate the Transactions; (b) the execution and
delivery of this Amendment by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Amendment or to consummate the Transactions
(other than, with respect to the Dissolution and Plan of Liquidation, the
approval and adoption of the Dissolution and Plan of Liquidation by the holders
of a majority of the then-outstanding shares of Common Stock, and the filing and
recordation of appropriate documents as required by Delaware Law); and (c) this
Amendment has been duly executed and delivered by the Company and, assuming the
due authorization, execution and delivery by Exeter and Purchaser, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
7. Representations and Warranties of Purchaser and Exeter. Exeter and
Purchaser hereby jointly and severally represent and warrant to the Company
that:
(a) Each of Exeter and Purchaser has all necessary power and authority
to execute and deliver this Amendment, to perform its obligations hereunder and
under the Stock Purchase Agreement and to consummate the Transactions; (b) the
execution and delivery of this Amendment by Purchaser and Exeter and the
consummation by Purchaser and Exeter of the Transactions have been duly and
validly authorized by all necessary action and no other proceedings on the part
of Purchaser or Exeter are necessary to authorize this Amendment or to
consummate the Transactions (other than, with respect to the Dissolution and
Plan of Liquidation, the filing and recordation of appropriate documents as
required by Delaware Law); and (c) this Amendment has been duly and validly
executed and delivered by Purchaser and
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Exeter and, assuming the due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of Purchaser and
Exeter, enforceable against Purchaser and Exeter in accordance with its terms.
8. Effect on Agreement. (a) From and after the date hereof, each
reference in the Stock Purchase Agreement, the Settlement and Mutual Release
made and entered into as of July 1, 2002 between plaintiff Purchaser and the
additional plaintiffs who are listed on Exhibit A thereto, the defendants
Shelbourne I, Shelbourne II, Shelbourne III, Presidio Capital Investment
Company, LLC and Shelbourne Management, LLC, or any other agreement in
connection therewith to "this Agreement", "hereunder", "hereof" or words of like
import referring to the Stock Purchase Agreement (including the Annexes thereto)
or the Plan of Liquidation, shall mean and be a reference to the Stock Purchase
Agreement (including the Annexes thereto) or the Plan of Liquidation as amended
by this Amendment.
(b) The Stock Purchase Agreement (including the Annexes thereto) as
specifically amended hereby and subject to the conditions herein, is and shall
remain in full force and effect and is in all respects ratified and confirmed.
9. Counterparts. This Amendment may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
and delivered shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
10. Governing Law. This Amendment shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed in that State.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto to duly authorized, as of the
date first above written.
HX INVESTORS, L.P.
By: Exeter Capital Corporation,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
EXETER CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
SHELBOURNE PROPERTIES II, INC.
By: /s/ Xxxxxxx X. XxXxxxxx
------------------------------
Name: Xxxxxxx X. XxXxxxxx
Title: Secretary
