<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) DECEMBER 31, 1997
CROWN NORTHCORP, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-22936 22-3172740
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
1251 DUBLIN ROAD, COLUMBUS, OHIO 43215
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (614) 488-1169
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report.)
<PAGE> 2
ITEM 5. OTHER EVENTS
AMENDMENT TO STOCK PURCHASE AGREEMENT; CERTIFICATE OF DESIGNATION FOR
---------------------------------------------------------------------
SERIES AA CONVERTIBLE PREFERRED STOCK
-------------------------------------
Crown NorthCorp, Inc. (the "Company") and Harbert Equity Fund I, L.L.C.
(the "Harbert Fund") are parties to a certain Stock Purchase Agreement
dated as of March 7, 1997 (the "SPA") which provides for the Harbert
Fund to invest up to $5 million in the Company's Common Stock, par
value $.01 per share (the "Common Stock"). The Harbert Fund invested $1
million in the Company on March 7 and additional sums in October and
December 1997. On December 31, 1997, the Company and the Harbert Fund
entered into Amendment No. 2 to the SPA (the "SPA Amendment") pursuant
to which the Harbert Fund purchased one share of the Company's Series
AA Convertible Preferred Stock, par value $.01 per share (the "Series
AA Preferred") on the terms and conditions set forth in the SPA
Amendment. A copy of the SPA Amendment is attached hereto as Exhibit 1
and incorporated by referenced herein, and the description of the SPA
Amendment contained herein is qualified in its entirety by reference
thereto. Pursuant to the SPA Amendment, on January 26, 1998, the
Harbert Fund invested an additional $3,647,185.44 in the Company in
exchange for one share of the Series AA Preferred. The Certificate of
Designation for the Series AA Preferred is attached hereto as Exhibit 2
and incorporated by reference herein, and the description of the
Certificate of Designation contained herein is qualified in its
entirety by reference thereto.
As is further described in the Certificate of Designation, the Series
AA Preferred provides:
Liquidation Preference. In the event of a Liquidation (as
defined therein), holders of the Series AA Preferred are
entitled to a liquidation preference of $3,647,185.44, plus a
12% cumulative dividend thereon from January 26, 1998.
Dividends. The Series AA Preferred has a non-cumulative
dividend of 5% simple interest per annum.
Conversion Rights. The holders of the Series AA Preferred have
the option at any time to convert the one share of Series AA
Preferred into 3,473,510 shares of the Common Stock. The
Company has the option to convert the Series AA Preferred into
3,473,510 shares of the Common Stock upon the occurrence of
both Trigger Events (as defined below).
Redemption Rights. The Company has the right, but not the
obligation, to redeem the Series AA Preferred upon thirty
days' written notice for a redemption price of $3,647,185.44,
plus a 12% cumulative dividend thereon
<PAGE> 3
from January 26, 1998. Upon receipt of a redemption notice,
the holders of the Series AA Preferred have the right, but not
the obligation, to convert the Series AA Preferred to
3,473,510 shares of the Common Stock.
Trigger Events. The term "Trigger Events" means (i) the
consummation of an initial public offering of the Crown Hybrid
Mortgage REIT or the completion of another fund opportunity as
contemplated by the SPA and (ii) the Company's average
commercial loan origination volume for the then preceding
three months equaling at least $16.7 million per month.
Voting Rights; failure of Trigger Events to occur. The Series
AA Preferred shall generally not have any voting rights with
respect to directors of the Company or other matters. If the
Series AA Preferred is still outstanding on June 30, 1998 and
both Trigger Events have not occurred, then the Harbert Fund
shall have the right to designate a majority of the Company's
Board of Directors. This right shall continue until both
Trigger Events occur, provided the Harbert Fund continues to
hold all of the Series AA Preferred. Under these
circumstances, the Harbert Fund may be deemed to control the
Company.
Dilution Protection. The Harbert Fund has customary dilution
and price protection.
Upon conversion of the Series AA Preferred, the Harbert Fund would be
the largest holder of the Company's Common Stock.
AMENDMENT TO REGISTRATION RIGHTS AGREEMENT
------------------------------------------
The Company and the Harbert Fund entered into a certain registration
rights agreement dated as of March 7, 1997 with respect to the Common
Stock the Harbert Fund acquires pursuant to the SPA. This agreement
grants the Harbert Fund one demand registration and up to three
incidental registrations. To cause this agreement to cover share of
Common Stock issuable upon conversion of the Series AA Preferred, the
Company and the Harbert Fund have entered into Amendment No. 1 to
Registration Rights Agreement dated as of December 31, 1997, a copy of
which is attached hereto as Exhibit 3 and incorporated by reference
herein, and the description of said Amendment No. 1 set forth herein is
qualified in its entirety by reference thereto.
AMENDMENT TO VOTING AGREEMENT
-----------------------------
In conjunction with the execution of the SPA, the Harbert Fund, Ronald
E. Roark and Tucker Holding Company, Ltd., an Ohio limited liability
company ("Tucker") entered into a certain voting agreement dated as of
March 7, 1997. Mr. Roark is the Company's Chairman and Chief Executive
Officer. Tucker is currently the largest holder of the Company's Common
Stock. Mr. Roark and Tucker are collectively referred to herein as the
"Tucker Parties." This voting agreement provides that, for a
<PAGE> 4
period of up to five years as set forth in the SPA, the Tucker Parties
agree to vote their shares of the Common Stock for such nominees for
election as a director of the Company as the Harbert Fund is entitled
to designate for nomination. Similarly, the Harbert Fund agrees to vote
all its shares of the Common Stock beneficially owned by it for the
election of Mr. Roark as a director of the Company.
The Harbert Fund and the Tucker Parties, in conjunction with the
execution of the SPA Amendment, entered into Amendment No. 1 to Voting
Agreement, a copy of which is attached hereto as Exhibit 4 and
incorporated by reference herein, and the description thereof contained
herein is qualified in its entirety by reference thereto. To facilitate
the purposes and intends of the SPA Amendment, the Tucker Parties also
entered into the SPA Amendment solely with respect to Section 5
thereto.
As is further described therein, Amendment No. 1 to the Voting
Agreement provides:
Vote for additional Harbert Fund nominees. If, pursuant to the
SPA Amendment, the Harbert Fund comes to have the right on
June 30, 1998 to designate for nomination a majority of
Crown's Board of Directors until such time as both Trigger
Events occur, then the Tucker Parties shall vote their shares
of Common Stock in favor of those nominees.
Votes on matters presented to shareholders. If both Trigger
Events do not occur on or before June 30, 1998 then, until
such time as both Trigger Events occur (provided the Harbert
Fund continues to hold the Series AA Preferred), the Tucker
Parties shall vote their shares of Common Stock in the manner
the Harbert Fund directs on any matter submitted to the
shareholders of the Company.
Agreements relating to change of control; Permitted Control
Person. Effective December 31, 1997 and continuing for so long
as the Series AA Preferred is outstanding (provided the
Harbert Fund continues to hold the Series AA Preferred), the
Tucker Parties agree to certain voting and disposition
restrictions on the Common Stock they hold. First, the Tucker
Parties will not vote the Common Stock they hold in favor of
any transaction (or multiple related transactions) which, to
the actual knowledge of the Tucker Parties, would result in
any person who is not a Permitted Control Person (as
hereinafter defined) acquiring control of the Company.
Additionally, the Tucker Parties will not sell, assign or
transfer the Common Stock they hold in any transaction (or
multiple related transactions) which, to the actual knowledge
of the Tucker Parties, would result in any person who is not a
Permitted Control Person acquiring control of the Company.
These voting and disposition restrictions are not applicable
to the Tucker Parties, however, if, prior to or concurrently
with the first such change-of-control transaction, the
Company, pursuant to the Certificate of Designations, either
redeems the Series AA Preferred or calls the Series AA
Preferred for redemption and the Series AA Preferred is
converted to
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Common Stock during the applicable redemption period. The term
"Permitted Control Person" means any one of the following: the
Harbert Fund or an affiliate thereof; each of the Tucker
Parties and their affiliates; and any other person the Harbert
Fund and the Tucker Parties jointly designate as Permitted
Control Person.
Under the terms of Amendment No. 1 to the Voting Agreement, the Harbert
Fund may be deemed to control the Company.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
(a) Financial Statements
None
(b) Pro Forma Financial Information
None
(c) Exhibits
1. Amendment No. 2 to Stock Purchase Agreement dated as of
January 26, 1998 to be effective as of December 31, 1997
between and among Harbert Equity Fund I, L.L.C., Crown
NorthCorp, Inc. and , with respect to Section 5 thereto,
Ronald E. Roark and Tucker Holding Company, Ltd.
2. Certificate of Designation of Series AA Convertible Preferred
Stock, par value $.01 per share, of Crown NorthCorp, Inc.
3. Amendment No. 1 to Registration Rights Agreement, dated as of
December 31, 1997, by and between Harbert Equity Fund I,
L.L.C. and Crown NorthCorp, Inc.
4. Amendment No. 1 to Voting Agreement, dated as of December 31,
1997, by and among Harbert Equity Fund I, L.L.C., Ronald E.
Roark and Tucker Holding Company, Ltd.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
CROWN NORTHCORP, INC.
By: /s/ Stephen W. Brown
-----------------------
Stephen W. Brown
Secretary
Date: February 20, 1998
<PAGE> 7
INDEX TO EXHIBITS
-----------------
1. Amendment No. 2 to Stock Purchase Agreement dated as of
January 26, 1998 to be effective as of December 31, 1997
between and among Harbert Equity Fund I, L.L.C., Crown
NorthCorp, Inc. and , with respect to Section 5 thereto,
Ronald E. Roark and Tucker Holding Company, Ltd.
2. Certificate of Designation of Series AA Convertible Preferred
Stock, par value $.01 per share, of Crown NorthCorp, Inc.
3. Amendment No. 1 to Registration Rights Agreement, dated as of
December 31, 1997, by and between Harbert Equity Fund I,
L.L.C. and Crown NorthCorp, Inc.
4. Amendment No. 1 to Voting Agreement, dated as of December 31,
1997, by and among Harbert Equity Fund I, L.L.C., Ronald E.
Roark and Tucker Holding Company, Ltd.
<PAGE> 1
EXHIBIT 1
<PAGE> 2
AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT (this "Agreement"),
dated as of December 31, 1997, is between and among HARBERT EQUITY FUND I,
L.L.C., a Georgia limited liability company with offices at One Riverchase
Parkway South, Birmingham, Alabama 35244 (the "Purchaser"), and CROWN NORTHCORP,
INC. a Delaware corporation with offices at 1251 Dublin Road, Columbus, Ohio
43215 (the "Seller"), and with respect to Section 5 hereof, RONALD E. ROARK, an
individual with a office at 1251 Dublin Road, Columbus, Ohio 43215 ("Roark"),
and TUCKER HOLDING COMPANY, LTD., an Ohio limited liability company with an
office at 1251 Dublin Road, Columbus, Ohio 43215 ("Tucker").
WITNESSETH:
WHEREAS, the Purchaser and the Seller entered into that certain Stock
Purchase Agreement, dated as of March 7, 1997, between and among the Purchaser
and the Seller, as amended on October 2, 1997 (together with the schedules and
exhibits thereto, the "Original Agreement"), pursuant to which, among other
things, the Purchaser (A) has purchased certain shares of the common stock, par
value $0.01 per share, of the Seller ("Seller Common Stock"), and (B) is
obligated to purchase additional shares of the Seller Common Stock upon the
occurrence of certain events relating, among other things, to the proposed
consummation by the Seller of certain acquisitions and the creation of a fund
satisfying certain criteria; and
WHEREAS, the Purchaser desires to exercise its options to purchase
securities issued by the Seller pursuant to Sections 2.5 and 3.5 of the Original
Agreement, as amended hereby; and
WHEREAS, the Seller desires the Purchaser to purchase securities issued
by the Seller pursuant to Sections 2.5 and 3.5 of the Original Agreement, as
amended hereby;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the adequacy, sufficiency, and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. CERTAIN DEFINED TERMS. Capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed thereto in the
Original Agreement.
SECTION 2. EXERCISE BY THE PURCHASER OF THE OPTION. Subject to the
conditions precedent set forth in Section 3 hereof, the Purchaser hereby
exercises the Second Closing Option and the Third Closing Option (collectively,
the "Option").
SECTION 3. AMENDMENT OF ORIGINAL AGREEMENT Notwithstanding anything to
the contrary in the Original Agreement:
(i) the terms "Second Closing Option Shares" and "Third Closing
Shares," wherever used in the Original Agreement, shall be deemed to refer to
one share of the Series AA Preferred
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Stock, par value $.01 per share, of the Seller (the "Transferred Stock" or the
"Series AA Preferred Stock"), which Series AA Preferred Stock shall be issued
under a Certificate of Designation relating thereto which contains the terms and
conditions set forth in Exhibit A hereto and shall otherwise be in form and
substance reasonable acceptable to the Purchaser;
(ii) the closing of the Option (the "Option Closing") shall take place
at 11:00 a.m. on January 9, 1998 at the offices of Kilpatrick Stockton LLP, 1100
Peachtree Street, N.E., Atlanta, Georgia 30309, and the terms "Second Closing"
and "Third Closing," wherever used in the Original Agreement, shall be deemed to
refer to the Option Closing;
(iii) at the Option Closing, the Seller shall issue to the Purchaser a
certificate registered in the name of the Purchaser for the Transferred Stock;
(iv) as consideration for the Transferred Stock, the Purchaser shall
deliver to the Seller $3,647,185.44 (the "Purchase Price") by certified check,
or by wire transfer of immediately available funds to an account previously
designated in writing by the Seller;
(v) the respective obligations of the Seller and the Purchaser to
consummate the purchase and sale of the Transferred Stock at the Option Closing
shall be subject to the prior satisfaction (or waiver) of the conditions set
forth in Section 2.3, 3.3, 2.4, 3.4, and 4.2 of the Original Agreement, except
that the conditions precedent set forth in Section 2.3 (a) and Section 3.3(a)
need not be satisfied by the Seller;
(vi) for purposes of the Option Closing, the term "First Closing
Shares," wherever used in Section 4.1 of the Original Agreement, shall be deemed
to refer to the Transferred Stock; and
(vii) the obligation of the Purchaser to consummate the purchase and
sale of the Transferred Stock at the Option Closing shall also be subject to the
prior satisfaction of the following conditions precedent:
(A) Seller's independent auditors shall have agreed to concur
with management's accounting for the transactions set forth in this
Amendment No. 2 as creating a "subscription receivable" and "preferred
stock not mandatorily redeemable" on the asset and equity accounts,
respectively, of the Consolidated Balance Sheet of the Seller dated as
of December 31, 1997, in the amount of the Purchase Price;
(B) the opinion of Powell, Goldstein, Frazer & Murphy LLP
("PGFM") referred to in Sections 2.3(c) and 3.3(c) of the Original
Agreement shall include, in addition to the matters set forth in
Exhibit B to the Original Agreement, the favorable opinion of such
counsel, in form and substance reasonably acceptable to the Purchaser,
that, upon completion of the Option Closing, (i) the Transferred Stock
has been duly authorized and validly issued and is fully paid and
non-assessable, and (ii) in reliance without independent investigation
upon a certificate of the Secretary of the Seller identifying all
pertinent agreements, instruments, and other documents, and based upon
PGFM's review of such agreements, instruments, and other documents, (x)
the
<PAGE> 4
Transferred Stock was not issued in conflict with the rights of any
other stockholder of the Seller or in violation of any agreement by
which the Seller is bound, and (y) the Purchaser has good title to the
Transferred Stock, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, and voting
trusts other than as set forth in the Operative Documents; and
(C) resolutions substantially in the form attached hereto as
Exhibit B shall have been approved and adopted by the Board of
Directors of the Seller.
The occurrence of the Option Closing shall irrevocably extinguish the
Seller's rights and obligations to issue additional securities to the Purchaser
pursuant to Sections 2.1, 2.5, 3.1, and 3.5 of the Original Agreement, and the
Purchaser's rights and obligations to purchase additional securities of the
Seller pursuant to Sections 2.1, 2.5, 3.1, and 3.5 of the Original Agreement.
SECTION 4. AMENDMENT OF THE REGISTRATION RIGHTS AGREEMENT. The
definition of the term "Shares" set forth in Section 1 of that certain
Registration Rights Agreement, dated as of March 7, 1997, between the Purchaser
and the Seller, is hereby amended to include (in addition to the Seller Common
Stock already included in that definition) any and all Seller Common Stock
received by the Purchaser in connection with the conversion of the Transferred
Stock, and the parties agree to execute such additional documents effecting such
amendment as the Purchaser may reasonably request.
SECTION 5. AMENDMENT OF THE VOTING AGREEMENT. Each of Roark, Tucker,
and the Purchaser agree that that certain Voting Agreement, dated as of March 7,
1997, among Roark, Tucker, and the Purchaser, is hereby amended to add a
requirement that the Tucker Parties (as defined therein) vote all shares of
Voting Securities (as defined therein) beneficially owned by them, and cause the
Roark Affiliates (as defined therein) to vote all shares of Voting Securities
beneficially owned by them, for the election as a director of the Company of
such individuals as the Purchaser may be entitled to designate in accordance
with the terms of the Transferred Stock described in Section H of Exhibit A
hereto, in the same manner as such parties are presently obligated to vote for
nominees of the Purchaser pursuant to Sections 1(a), (b), (c) and (d) of such
Voting Agreement, and Roark, Tucker, and the Purchaser agree to execute such
additional documents effecting such amendment as the Purchaser may reasonably
request.
SECTION 6. SECTION 16(b). The Seller agrees not to approve or enter
into any agreement providing for any transaction (other than the transactions to
be consummated at the Option Closing) that would make it reasonably likely that,
in the opinion of the Purchaser based on the advice of its or the Seller's
counsel, the acquisition of the Transferred Stock at the Option Closing would be
matchable with any sale by the Purchaser of securities of the Seller in any such
transaction so that the Purchaser would have any liability under Section 16(b)
of the Securities Exchange Act of 1934.
SECTION 7. ESTOPPEL. Each of the parties hereto irrevocably agrees, and
hereby represents and warrants to the other party hereto, that the Original
Agreement, as amended hereby, remains its legal, valid, and binding obligation,
enforceable against them in accordance with its respective terms (subject to
Section 3 of Amendment No. 1 to Stock Purchase
<PAGE> 5
Agreement, dated as of October 2, 1997, between and among Purchaser and Seller
and subject to Section 11 hereof).
SECTION 8. FURTHER ACTIONS. At any time and from time to time, each
party agrees, at its or his expense, to take such actions and to execute and
deliver such documents as may be reasonably necessary to effectuate the purposes
of this Agreement.
SECTION 9. MODIFICATION. This Agreement may only be modified by a
written instrument executed by each party.
SECTION 10. NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested (in which case it shall be deemed to be
given five days after mailing) or by Federal Express, Express Mail, or similar
overnight delivery or courier service (in which case it will be deemed to be
given upon actual receipt by the recipient) or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the
party to whom it is to be given at the address of such party set forth below (or
to such other address as the party shall have furnished in writing in accordance
with the provisions of this Section 10):
If to the Purchaser:
Harbert Equity Fund I, L.L.C.
One Riverchase Parkway South
Birmingham, Alabama 35244
Attn: Mr. Michael Luce
Fax: 205-987-5505
With a copy to:
Kilpatrick Stockton LLP
1100 Peachtree Street, N.E.
Atlanta, Georgia 30309-4530
Attn: Joel B. Piassick, Esq.
Fax: 404-815-6555
If to the Seller, Roark, or Tucker:
C/o Crown NorthCorp, Inc.
1251 Dublin Road
Columbus, Ohio 43215
Attn: Mr. Ronald E. Roark
Mr. Harold E. Cooke
Stephen W. Brown, Esq.
Fax: 614-488-9780
<PAGE> 6
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
101 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Jonathan R. Shils, Esq.
Fax: 404-572-6999
SECTION 11. EFFECT. Notwithstanding anything to the contrary herein or
in the Original Agreement, if the transactions contemplated hereby are not
consummated on or before January 15, 1998 or are earlier terminated, then this
Amendment No. 2 shall be null and void ab initio and shall be of no effect
whatsoever.
SECTION 12. WAIVER. Any waiver by any party of a breach of any term of
this Agreement shall not operate or be construed to be a waiver of any other
breach of that term or of any breach of any other term of this Agreement. The
failure of a party to insist upon strict adherence to any term of this Agreement
on one or more occasions will not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement. Any waiver must be in writing.
SECTION 13. BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Seller, the Purchaser, and their
respective successors and assigns.
SECTION 14. NO THIRD PARTY BENEFICIARIES. This Agreement does not
create, and shall not be construed as creating, any rights by any person not a
party to this Agreement except as contemplated by the Original Agreement, as
amended hereby.
SECTION 15. SEPARABILITY. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
SECTION 16. HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
SECTION 17. COUNTERPARTS; GOVERNING LAW. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to conflict of laws. Except as contemplated by Section
9.5(a) of the Original Agreement, as amended hereby, any action, suit, or
proceeding arising out of, based upon, or in connection with this Agreement or
the transactions contemplated hereby may be brought only in a United States
District Court located in the State of Georgia and each party covenants and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit, or proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum,
<PAGE> 7
that the venue of the action, suit, or proceeding is improper, or that this
Agreement or the subject matter hereof may not be enforced in or by such court.
SECTION 18. ASSIGNMENTS. This Agreement may be assigned by operation of
law without the consent of any party hereto. This Agreement may not otherwise be
assigned by any party hereto without the prior written consent of the other
party hereto, which consent shall not be unreasonably delayed or withheld.
<PAGE> 8
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
HARBERT EQUITY FUND I, L.L.C.
BY: HARBERT MANAGEMENT CORPORATION,
MANAGER
[SEAL]
By: /s/ Michael D. Luce
----------------------------
Name: Michael D. Luce
Title: Executive Vice President
CROWN NORTHCORP, INC.
[SEAL]
By: /s/ Ronald E. Roark
----------------------------
Name: Ronald E. Roark
Title: Chairman and Chief Executive Officer
<PAGE> 9
AS TO SECTION 5:
By: /s/ Ronald E. Roark
----------------------------
RONALD E. ROARK
TUCKER HOLDING COMPANY, LTD.
By: /s/ Ronald E. Roark
----------------------------
Name: Ronald E. Roark
Title: Member
<PAGE> 10
EXHIBIT A
THE SERIES AA PREFERRED STOCK
A. The Series AA Preferred Stock will have a par value of $.01 per share.
B. There will be one share of authorized Series AA Preferred Stock.
C. The Series AA Preferred Stock will be issued on a parity with (but not
superior to) the Seller's outstanding Series B Preferred Stock and Series C
Cumulative Preferred Stock with respect to dividends, liquidation, and
redemption.
D. The Series AA Preferred Stock will have a non-cumulative dividend of five
percent per annum.
E. The Series AA Preferred Stock will have a liquidation preference of
$3,647,185.44 plus accrued but unpaid dividends.
F. The Series AA Preferred Stock will be convertible at the Purchaser's option
at any time into 3,473,510 shares of the Seller's Common Stock, par value
$.01 per share. The Series AA Preferred Stock will be convertible at the
Seller's option into 3,473,510 shares of the Seller's Common Stock, par
value $.01 per share, upon the occurrence of both of the Trigger Events (as
hereinafter defined).
G. The Series AA Preferred Stock will be redeemable at the Seller's option at
any time upon 30 days' prior written notice to the Purchaser for a
redemption price equal to the sum of (a) $3,647,185.44, plus (b) an amount,
expressed in dollars, equal to a 12% cumulative dividend on the sum of
$3,647,185.44 from the date that the Series AA Preferred Stock is issued
until the day that it is so redeemed. The Purchaser will have the right to
convert the Series AA Preferred Stock during such 30-day notice period in
accordance with the preceding Section F.
H. If the Series AA Preferred Stock is still outstanding on June 30, 1998 and,
on that date, both of the Trigger Events (as hereinafter defined) have not
occurred, then the Purchaser shall have the right to designate such number
of individuals to serve as Directors of the Seller as shall constitute a
majority of the Seller's Board of Directors until such time as both of the
Trigger Events have occurred, it being understood and agreed that to
accomplish the foregoing the Seller may choose to expand its Board of
Directors and to appoint individuals designated by the Purchaser to fill
resulting vacancies in lieu of the resignation of existing Directors of the
Seller and it being further understood and agreed that the Purchaser will
not designate for such service any individual who does not satisfy the
requirements set forth in Section 6.2 (a) and (b) of the Original
Agreement. As used herein, the term "Trigger Events" mean (a) the
consummation of the initial public offering of the Crown Hybrid Mortgage
REIT or the completion of another fund opportunity as contemplated by
Section 3.3(a) of the Original Agreement, and (b) the Seller's average
commercial loan original volume for the then preceding three months equals
at least $16.7 million per month.
<PAGE> 1
EXHIBIT 2
<PAGE> 2
CERTIFICATE OF DESIGNATION
OF
SERIES AA CONVERTIBLE PREFERRED STOCK
PAR VALUE $.01 PER SHARE
OF
CROWN NORTHCORP, INC.
The undersigned, being the Chief Financial Officer of Crown NorthCorp,
Inc., a Delaware corporation (the "Corporation"), DOES HEREBY CERTIFY that set
forth below are resolutions duly adopted by the Board of Directors of the
Corporation at a meeting held on January 16, 1998 creating a series of the
Corporation's preferred stock, par value $.01 per share, designated "Series AA
Convertible Preferred Stock":
A. DESIGNATION. There shall be a series of Preferred Stock to be known as Series
AA Convertible Preferred Stock, par value $.01 per share (hereinafter referred
to as "Series AA Preferred Stock"), consisting of one authorized share. After
the issuance of the Series AA Preferred Stock and until the redemption or
retirement of all outstanding shares thereof, the Corporation shall not
authorize or issue any shares of common or preferred stock having rights or
preferences with respect to liquidation, dividends, or redemption that are
senior to the rights and preferences of the Series AA Preferred Stock with
respect to such matters without having obtained the prior written consent of
two-thirds of the holders thereof.
B. LIQUIDATION IN GENERAL. In the event of a Liquidation (as defined below), the
holders of record of the Series AA Preferred Stock (to the extent that such
stock has not then been redeemed or converted) shall be entitled to be paid in
full the sum of $3,647,185.44 per share, plus an amount, expressed in dollars,
equal to a twelve percent (12%) cumulative dividend on the sum of $3,647,185.44
from the date that the Series AA Preferred Stock is issued until the date on
which the Liquidation occurs (collectively, the "Liquidation Preference"),
before assets of the Corporation shall be distributed among or paid over to the
holders of the Common Stock, par value $.01 per share, of the Corporation (the
"Common Stock") or other shares ranking junior to the Series AA Preferred Stock
("Junior Securities") in the distribution of assets or upon the Liquidation of
the Corporation and, upon payment in full of the Liquidation Preference, the
Series AA Preferred Stock shall be deemed to be satisfied in full for all
purposes whatsoever. Written notice of a Liquidation, stating a payment date and
the place where such payments shall be made, shall be given to the holders of
record of the Series AA Preferred Stock, such notice to be addressed to each
such holder at such holder's address as shown on the records of the Corporation.
The (i) liquidation, dissolution, or winding up of the Corporation, whether
voluntary or involuntary, (ii) Corporation's consolidation or merger with any
other entity or group of entities in which the stockholders of the Corporation
prior to such transaction do not own at least a majority of the voting capital
stock of the surviving entity after the merger or consolidation, or (iii)
Corporation's sale or transfer of all or substantially all of the Corporation's
assets, shall be deemed a "Liquidation" within the meaning of the provisions of
this Section B.
The Series AA Preferred Stock shall rank in respect of the distribution of
assets or upon the Liquidation of the Corporation, subject to the last sentence
of this paragraph, on a parity with the Corporation's Series B Non-Voting,
Non-Convertible Preferred Stock, par value $0.01 per share
<PAGE> 3
(the "Series B Preferred Stock"), the Corporation's Series C Non-Voting,
Convertible Preferred Stock, par value $0.01 per share (the "Series C
Convertible Preferred Stock"), and any other Senior Securities (as defined
below). If upon any Liquidation, the net assets available for distribution to
the holders of shares of the Series B Preferred Stock, Series C Convertible
Preferred Stock, Series AA Preferred Stock, and subsequent series of Preferred
Stock issued with rights equivalent to the Series B Preferred Stock, Series C
Convertible Preferred Stock, and Series AA Preferred Stock (collectively
referred to herein as "Senior Securities") shall be insufficient to pay the
holders of all of the outstanding shares of the Senior Securities the full
amounts to which they respectively shall be entitled, the holders of such
shares, without regard to classes or series, shall share in any distribution of
assets in proportion to the amounts respectively due to them on payment in full.
In the event of a Liquidation resulting from the Corporation's consolidation or
merger with any other entity or group of entities in which the stockholders of
the Corporation prior to such transaction do not own at least a majority of the
voting capital stock of the surviving entity after the merger or consolidation,
or the sale or transfer of all or substantially all of the Corporation's assets,
the Series AA Preferred Stock shall rank in respect of the distribution of
assets prior to any other Senior Securities whose terms do not specifically
include within the definition of "Liquidation" such consolidations, mergers, or
asset sales.
C. DIVIDENDS. The Series AA Preferred Stock will have a non-cumulative dividend
of five percent (5%) simple interest per annum. Dividends will accrue and be
payable in arrears on the last day of the first calendar month following the end
of each fiscal year of the Corporation. Such dividends shall not cumulate
regardless of whether earned or payable. Such dividends shall be paid solely and
only to the extent that corporate funds are legally available for the payment
thereof.
D. CONVERSION RIGHTS.
(i) AT THE OPTION OF THE HOLDERS OF RECORD. All, and not less than all,
of the Series AA Preferred Stock will be convertible at the option of
the holders of record thereof at any time into 3,473,510 shares of the
Common Stock, reflecting a conversion ratio of one share of the Series
AA Preferred Stock for 3,473,510 shares of the Common Stock (the
"Conversion Ratio").
(ii) AT THE OPTION OF THE CORPORATION. All, and not less than all, of
the Series AA Preferred Stock will be convertible at the option of the
Corporation into 3,473,510 shares of the Common Stock upon the
occurrence of both of the Trigger Events (as hereinafter defined),
reflecting the Conversion Ratio.
(iii) CONVERSION PROCEDURES. Such holders shall exercise their
conversion right by giving written notice of their exercise by
overnight courier to the Corporation at its principal executive office,
and the Corporation shall exercise its conversion right by giving
written notice of its exercise by overnight courier to such holders at
their address set forth on the Corporation's books and records. Any
such exercise shall be effective on the date that the pertinent
exercise notice is so sent. Within fifteen business days after any such
notice is sent, such holders shall deliver certificates representing
the Series AA Preferred Stock, duly endorsed in blank for transfer with
<PAGE> 4
signatures guaranteed, to the Corporation at its principal executive
office, whereupon the Corporation will instruct its transfer agent to
issue such shares of Common Stock in the name of such holders and to
deliver certificates representing such shares to the holders at their
address set forth on the Corporation's books and records. No shares of
Series AA Preferred Stock which have been converted into Common Stock
after the original issuance thereof shall be outstanding or shall ever
again be reissued, sold, or transferred.
E. REDEMPTION RIGHTS. The Corporation will have the right, but not the
obligation, to redeem the Series AA Preferred Stock, in compliance with
applicable law and all agreements and instruments by which it is bound, at any
time upon 30 days' (such 30 days being referred to herein as the "Redemption
Period") prior written notice to the holders of record of the Series AA
Preferred Stock (the date for which such redemption is so noticed being referred
to herein as the "Redemption Date") at their address on the records of the
Corporation, for a redemption price equal to the sum of (a) $3,647,185.44, plus
(b) an amount, expressed in dollars, equal to a twelve percent (12%) cumulative
dividend on the sum of $3,647,185.44 from the date that the Series AA Preferred
Stock is issued until the day that it is so redeemed (the "Redemption Price").
Such holders will have the right, but not the obligation, to convert all, but
not less than all, of the Series AA Preferred Stock during the Redemption Period
pursuant to the preceding paragraph D(i). On the applicable redemption date, the
holders of the Series AA Preferred Stock will deliver certificates representing
the shares of Series AA Preferred Stock to be redeemed to the Corporation, duly
endorsed for transfer in blank, along with such other documents and instruments
as the Corporation may reasonably request, and the Corporation will pay to such
holders the Redemption Price. In the event that any Redemption Date is not a
business day, then the related redemption shall occur on the next following
business day. The Redemption Price shall be payable in cash, by certified check,
or by wire transfer of immediately available funds to an account designated in
writing by such holders. No shares of Series AA Preferred Stock which have been
so redeemed after the original issuance thereof shall be outstanding or shall
ever again be reissued, sold, or transferred.
F. VOTING RIGHTS. The Series AA Preferred Stock shall not have any voting rights
with respect to directors of the Corporation or any other matter requiring
stockholder approval except as set forth below and as otherwise required by the
laws of the State of Delaware. If the Series AA Preferred Stock is outstanding
on June 30, 1998 and has not been satisfied in full before June 30, 1998 and, on
that date, both of the Trigger Events have not occurred, then for so long as
Harbert Equity Fund I, L.L.C. ("Harbert") is the owner and holder of record of
all of the Series AA Preferred Stock, Harbert shall the right to designate such
number of individuals to serve as Directors of the Corporation as shall
constitute a majority of the Corporation's Board of Directors until such time as
both of the Trigger Events have occurred; provided, however, that the foregoing
rights shall irrevocably terminate upon the earlier of (x) the occurrence of
both of the Trigger Events, and (y) Harbert ceasing to be the owner and holder
of record of all of the Series AA Preferred Stock or the satisfaction in full of
the Series AA Preferred Stock; provided further, however, that to accomplish
such designation, the Corporation may choose to expand its Board of Directors
and appoint individuals designated by such holders to fill resulting vacancies
in lieu of the resignation of existing Directors of the Corporation; and
provided further, however, that Harbert shall not be entitled to designate any
individual (x) with respect to whom, if then a Director of the Corporation, the
Corporation would be required to make disclosures pursuant to, among
<PAGE> 5
other things, Item 401(f) of Regulation S-K in any of its periodic reports or
proxy statements filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, or (y) who does not agree in writing to serve as a Director of the
Corporation. As used herein, the term "Trigger Events" means (a) the
consummation of the initial public offering of the Crown Hybrid Mortgage REIT or
the completion of another fund opportunity as contemplated by Section 3.3(a) of
the Stock Purchase Agreement, dated as of March 7, 1997, between and among the
Corporation and Harbert, and (b) the Corporation's average commercial loan
origination volume for the then preceding three months equals at least $16.7
million per month.
G. PREEMPTIVE RIGHTS. The holders of Series AA Preferred Stock shall have no
preemptive rights.
H. NOTICE OF RECORD DATE. In the event of any taking by the Corporation of a
record of holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase, or otherwise acquire any shares of
stock of any class or any other securities or property, or to receive any other
right, the Corporation shall mail to each holder of the Series AA Preferred
Stock, at least 10 days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend or distribution.
I. ADJUSTMENT OF NUMBER OF SHARES OF COMMON STOCK.
(a) STOCK DIVIDENDS; STOCK SPLITS. If the number of shares of
Common Stock outstanding at any time after the date of
issuance of the Series AA Preferred Stock is increased by a
stock dividend payable in shares of Common Stock or by a
subdivision or split-up of shares of Common Stock, then
immediately after the record date fixed for the determination
of holders of shares of Common Stock entitled to receive such
stock dividend or the effective date of such subdivision or
split-up, as the case may be, the Conversion Ratio shall be
appropriately reduced so that the holder of any shares of
Series AA Preferred Stock thereafter converted shall be
entitled to receive the number of shares of Common Stock which
such holder would have owned immediately following such action
had such shares of Series AA Preferred Stock been converted
immediately prior thereto.
(b) COMBINATION OF SHARES. If the number of shares of Common Stock
outstanding at any time after the date of issuance of the
Series AA Preferred Stock is decreased by a combination of the
outstanding shares of Common Stock, then immediately after the
effective date of such combination, the Conversion Ratio shall
be appropriately increased so that the holder of any shares of
the Series AA Preferred Stock thereafter converted shall be
entitled to receive the number of shares of Common Stock which
such holder would have owned immediately following such action
had such shares of Series AA Preferred Stock been converted
immediately prior thereto.
(c) ISSUANCE OF SHARES OF COMMON STOCK. From the date that the
Series AA Preferred Stock is issued to and through the date
that the Series AA Preferred Stock is converted
<PAGE> 6
in its entirety into Common Stock (the "Dilution Protection
Period"), if at any time the Corporation issues or sells (a
"Dilution Event") any shares of Common Stock or any other
class of voting common stock for per share consideration less
than the average per share consideration deemed to be paid by
Harbert for Common Stock by virtue of its purchase of the
Series AA Preferred Stock (assuming solely for such purpose
that by its purchase of the Series AA Preferred Stock, Harbert
had purchased 3,473,510 shares of the Common Stock for a
purchase price per share of $1.05, in each case as adjusted to
reflect any of the events described in the preceding
paragraphs (a) and (b) above) (the lowest such per share
consideration so paid to the Corporation during the Dilution
Protection Period being referred to herein as the "Dilution
Share Price"), in each case other than with respect to an
employee stock option plan for employees of the Corporation
and its subsidiaries or pursuant to obligations, contracts, or
other arrangements existing on March 7, 1997, then the number
of shares of Common Stock that holders of the Series AA
Preferred Stock will receive upon conversion of the Series AA
Preferred Stock shall be equal to the quotient of (a)
$3,647,185.44, divided by (b) the Dilution Share Price, with
the Conversion Ratio being appropriately adjusted to reflect
the foregoing, and subject to readjustment of each of the
foregoing quantities and amounts in order to give effect to
the events described in the immediately preceding paragraphs
(a) and (b) .
J. RESERVATION OF SHARES. The Corporation shall at all times reserve and keep
available, free from preemptive rights, out of its treasury shares or its
authorized but unissued shares of Common Stock, for the purpose of effecting the
conversion of the Series AA Preferred Stock, the full number of shares of Common
Stock then deliverable upon the conversion of all of the Series AA Preferred
Stock then outstanding.
K. ISSUE TAX. The issuance of certificates representing shares of Common Stock
upon conversion of Series AA Preferred Stock shall be made without charge to the
holders thereof for any issuance, stock transfer, or documentary stamp tax in
respect thereof; provided, however, that the Corporation shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in the name other than that of the
record holder of the Series AA Preferred Stock that is being converted.
<PAGE> 7
IN WITNESS WHEREOF, this Certificate of Designation has been executed
as of January 19, 1998.
/s/ Richard A. Brock
------------------------------------
Name: Richard A. Brock
Title: Chief Financial Officer
/s/ Stephen W. Brown
------------------------------------
Name: Stephen W. Brown
Title: Secretary
<PAGE> 1
EXHIBIT 3
<PAGE> 2
AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
This AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), dated as of December 31, 1997, is by and among HARBERT EQUITY FUND
I, L.L.C., a Georgia limited liability company (the "Purchaser"), and CROWN
NORTHCORP, INC., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, Purchaser and the Company are parties to that certain Stock
Purchase Agreement, dated as of March 7, 1997, as amended on October 2, 1997,
and as further amended by that certain Amendment No. 2 to Stock Purchase
Agreement of even date herewith between and among Purchaser, the Company, and as
to Section 5 thereof, Tucker Holding Company, Ltd. ("Tucker") and Ronald E.
Roark, as such Amendment No. 2 was further amended by that certain Amendment No.
1 to Amendment No. 2 to Stock Purchase Agreement, dated as of January 8, 1998 to
be effective as of December 31, 1997, between and among Purchaser, the Company,
Tucker, and Ronald E. Roark ("Roark"), and as such Amendment No. 2 was further
amended by that certain Amendment No. 2 to Amendment No. 2 to Stock Purchase
Agreement, dated as of January 13, 1998 to be effective as of December 31, 1997,
between and among Purchaser, the Company, Tucker, and Roark (collectively, the
"Second Amendment"); and
WHEREAS, pursuant to the Second Amendment, Purchaser has agreed to
purchase from the Company, and the Company has agreed to sell to Purchaser, one
share of the Series AA Convertible Preferred Stock, par value $.01 per share, of
the Company (the "Series AA Preferred Stock") on the date hereof; and
WHEREAS, the Purchaser and the Company previously entered into a
Registration Rights Agreement, dated March 7, 1997 (the "Original Agreement"),
and desire to amend the Original Agreement so that it encompasses the Common
Stock issuable upon conversion of the Series AA Preferred Stock (the "Conversion
Common Stock");
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt, adequacy, and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed thereto in the
Original Agreement.
SECTION 2. AMENDMENT OF THE DEFINED TERM "SHARES." The definition of
the defined term "Shares" set forth in Section 1 of the Original Agreement is
hereby amended in its entirety to read in its entirety as follows:
""SHARES" means (i) the shares of Common Stock purchased by the
Purchaser from the Company at any time and from time to time pursuant to the
Stock Purchase Agreement, and
<PAGE> 3
(ii) the shares of Common Stock issuable upon conversion of the Company's Series
AA Convertible Preferred Stock, par value $.01 per share."
SECTION 3. ADDITION OF NEW SECTION 8. The Original Agreement is hereby
amended by inserting the following new Section 8 after the end of Section 7 of
the Original Agreement and prior to the signature clause of the Original
Agreement:
"SECTION 8. RESIGNATION OF DIRECTORS. Notwithstanding any provision of
this Agreement to the contrary, capitalized terms used in this Section 8 but not
defined in this Section 8 shall have the meanings ascribed thereto in that
certain Certificate of Designation of the Company establishing its Series AA
Convertible Preferred Stock, par value $.01 per share, as filed with the Office
of the Secretary of State of the State of Delaware on January __, 1998 (the
"Certificate of Designation"). Pursuant to the Certificate of Designation, if
the Series AA Preferred Stock is outstanding on June 30, 1998 and has not been
satisfied in full before June 30, 1998, and, on that date, both of the Trigger
Events have not occurred, then for so long as the Purchaser is the owner and
holder of record of the Series AA Preferred Stock, the Purchaser has the right
to designate such number of individuals to serve as Directors of the Company as
shall constitute a majority of the Company's Board of Directors until such time
as both of the Trigger Events have occurred, the Series AA Preferred Stock is no
longer outstanding, or satisfaction in full of the Series AA Preferred Stock.
The Purchaser irrevocably agrees that, without limiting its rights pursuant to
the Stock Purchase Agreement, as amended from time to time, it will promptly
cause each of the Directors of the Company which it has so designated to resign
as a Director of the Company upon the earlier of (x) the occurrence of both of
the Trigger Events, and (y) the Purchaser ceasing to be the owner and holder of
record of all of the Series AA Preferred Stock or the satisfaction in full of
the Series AA Preferred Stock."
SECTION 4. MISCELLANEOUS
(a) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may not be amended, modified, or supplemented, and
waivers or consents to departure from the provisions thereof may not be given,
without the prior written consent of the parties hereto.
(b) NOTICES. Any notice, demand, request, consent, approval,
declaration, or other communication hereunder to be made pursuant to the
provisions of this Agreement, shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
-2-
<PAGE> 4
(i) If to any Holder or to the Purchaser:
Harbert Equity Fund I, L.L.C.
One Riverchase Parkway South
Birmingham, Alabama 35244
Attn: Mr. Michael D. Luce
With a copy to:
Kilpatrick Stockton LLP
1100 Peachtree Street, N.E.
Atlanta, Georgia 30309-4530
Attn: Joel B. Piassick, Esq.
(ii) If to the Company:
Crown NorthCorp, Inc.
1251 Dublin Road
Columbus, Ohio 43215
Attn: Mr. Ronald E. Roark
Stephen W. Brown, Esq.
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Jonathan R. Shils, Esq.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Every notice, demand, request, consent,
approval, declaration, delivery, or other communication hereunder shall be
deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) business days after the same
shall have been deposited in the United States mail.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties hereto. This Agreement may be assigned by the Company to any successor
to the Company without the consent of any Holder. This Agreement may not
otherwise be assigned by the Company without the prior written consent of the
Purchaser, which consent shall not be unreasonably delayed or withheld. Subject
to compliance with any applicable securities laws, the Purchaser may assign all
or any part of its rights hereunder in connection with any transfer, assignment,
sale or conveyance of all or any portion of its Registrable Securities.
-3-
<PAGE> 5
(d) HEADINGS. The headings in this Agreement are for convenience of
reference only, and shall not limit or otherwise affect the meaning thereof.
(e) GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Delaware, without regard to the conflict of law provisions thereof.
(f) SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
(g) ENTIRE AGREEMENT. This Agreement represents the complete agreement
and understanding of the parties in respect of the subject matter contained
herein and therein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject matter hereof.
(h) ARBITRATION AND LITIGATION. (i) Subject to clauses (ii) and (iii)
hereof, all disputes relating to this Agreement may be settled by arbitration in
Atlanta, Georgia before a single arbitrator pursuant to the rules of the
American Arbitration Association (the "Rules"). Arbitration may be commenced at
any time by any party hereto giving notice to the other parties hereto that are
parties to a dispute that such dispute has been referred to arbitration pursuant
hereto. The arbitrator shall be selected by agreement of the Purchaser and the
Company, but if they do not so agree within 20 days after the date of the notice
referred to above, the selection shall be made pursuant to the Rules from the
panel or arbitrators maintained by the Association. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties hereto; provided,
however, that any such award shall be accompanied by a written opinion of the
arbitrator giving the award. This provision shall be specifically enforceable by
the parties and the decision of the arbitrator in accordance herewith shall be
final and binding, and there shall be no right of appeal therefrom. Each party
shall pay its own expense of arbitration and the expenses of the arbitrator
shall be equally shared; provided, however, that if in the opinion of the
arbitrator any party to the arbitration has raised a frivolous claim, defense,
or objection, then the arbitrator may assess, as a part of his award, all or any
part of the arbitration expenses of the other parties (including reasonable
attorney's fees) against the party raising such frivolous claim, defense, or
objection.
(ii) To the extent that arbitration may not be legally permitted
hereunder or the parties to any dispute hereunder may not at the time of such
dispute mutually agree to submit such dispute to arbitration, any party may
commence a civil action in a court of appropriate jurisdiction to resolve
disputes hereunder. None of the provisions hereof shall prevent the parties from
settling any dispute by mutual agreement at any time.
-4-
<PAGE> 6
(iii) Any non-arbitration action, suit, or proceeding arising out of,
based upon, or in connection with this Agreement or the transactions
contemplated hereby may be brought only in a United States District Court
located in the State of Georgia and each party covenants and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such action, suit,
or proceeding, any claim that it is not subject personally to the jurisdiction
of such court, that its property is exempt or immune from attachment or
execution, that the action, suit, or proceeding is brought in an inconvenient
forum, that the venue of the action, suit, or proceeding is improper, or that
this Agreement or the subject matter hereof may not be enforced in or by such
court.
(i) RATIFICATION. Each of the parties hereto hereby ratifies, confirms,
and agrees that the Original Agreement, as amended hereby, continues to be in
full force and effect, as amended hereby.
-5-
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HARBERT EQUITY FUND I, L.L.C.
BY: HARBERT MANAGEMENT CORPORATION,
MANAGER
By: /s/ Michael D. Luce
-----------------------------
Name: Michael D. Luce
Title: Executive Vice President
CROWN NORTHCORP, INC.
By: /s/ Ronald E. Roark
--------------------------------
Name: Ronald E. Roark
Title: Chairman and Chief Executive
Officer
-6-
<PAGE> 1
EXHIBIT 4
<PAGE> 2
AMENDMENT NO. 1 TO VOTING AGREEMENT
This AMENDMENT NO. 1 TO VOTING AGREEMENT (this "Agreement"), dated as
of January __, 1998 to be effective as of December 31, 1997, is between and
among RONALD E. ROARK, an individual with an office at 1251 Dublin Road,
Columbus, Ohio 43215 ("Roark"), TUCKER HOLDING COMPANY, LTD., an Ohio limited
liability company with an office at 1251 Dublin Road, Columbus, Ohio 43215
("Tucker"), and HARBERT EQUITY FUND I, L.L.C., a Georgia limited liability
company with an office at One Riverchase Parkway South, Birmingham, Alabama
35244 ("Harbert").
W I T N E S S E T H :
---------------------
WHEREAS, Roark and Tucker (collectively, the "Tucker Parties") and
Harbert beneficially own shares of the Common Stock, par value $.01 per share
(the "Stock"), of Crown NorthCorp, Inc., a Delaware corporation (the "Company");
and
WHEREAS, the parties hereto previously entered into that certain Voting
Agreement, dated as of March 7, 1997 (the "Original Agreement"); and
WHEREAS, the parties desire that Harbert purchase one share of the
Company's Series AA Convertible Preferred Stock, par value $.01 per share (the
"Series AA Preferred Stock"), on the date hereof, and in order to induce Harbert
to agree to purchase the Series AA Preferred Stock, the Tucker Parties are
willing to agree to vote their shares of Common Stock as set forth herein; and
WHEREAS, Harbert desires that each of the Tucker Parties agrees to vote
its shares in accordance with the provisions of paragraph F of the Certificate
of Designation establishing the Series AA Preferred Stock, as filed with the
Secretary of State of the State of Delaware on January 21, 1998 (the
"Certificate of Designation"), in order more fully to effectuate certain
provisions of the Certificate of Designation whereby Harbert is entitled to
designate one or more persons to serve as directors of the Company for a certain
period;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the adequacy, sufficiency, and receipt of which are
hereby acknowledged, the parties agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein but not
otherwise defined herein shall have the meaning ascribed thereto in the Original
Agreement.
SECTION 2. AMENDMENT OF SECTION 2 OF THE ORIGINAL AGREEMENT. Section 2
of the Original Agreement is hereby amended in its entirety to read in its
entirety as follows:
"SECTION 2. VOTING AGREEMENT OF THE TUCKER PARTIES. In addition to, and
not in limitation of, Sections 3 and 4 hereof, during the Corporate Governance
Period, each of the Tucker Parties, severally and not jointly, agrees:
<PAGE> 3
(a) To vote all shares of securities issued by the
Company and entitled to vote in the election of directors
("Board Voting Securities") beneficially owned by him or it
for the election as a director of the Company of such nominees
for election as a director of the Company as Harbert is
entitled to designate for nomination as such pursuant to the
Stock Purchase Agreement or pursuant to paragraph F of the
Certificate of Designation establishing the Company's Series
AA Convertible Preferred Stock, par value $.01 per share (the
"Series AA Preferred Stock"), as filed with the Secretary of
State of the State of Delaware on January 21, 1998 (the
"Certificate of Designation");
(b) To cause (x) each of the members of Roark's
immediate family, (y) each entity controlled by any Tucker
Party, and (z) each trust of which Roark is a grantor
(collectively, the "Roark Affiliates"), to vote all Board
Voting Securities beneficially owned by him, her, or it for
the election as a director of the Company of such nominees for
election as a director of the Company as Harbert is entitled
to designate for nomination as such pursuant to the Stock
Purchase Agreement or pursuant to paragraph F of the
Certificate of Designation;
(c) In the event a director of the Company so
designated for nomination by Harbert ceases to be a director
of the Company for any reason before his or her term as such
expires, to vote all shares of Board Voting Securities
beneficially owned by him, her, or it in favor of another
individual designated for nomination by Harbert for election
as a director of the Company to the extent Harbert is then
entitled to designate such other individual for nomination for
election as a director of the Company pursuant to the Stock
Purchase Agreement or pursuant to paragraph F of the
Certificate of Designation; and
(d) In the event a director of the Company so
designated for nomination by Harbert ceases to be a director
of the Company for any reason before his or her term expires,
to cause each of the Roark Affiliates to vote all shares of
Board Voting Securities owned by him, her or it in favor of
another individual designated for nomination by Harbert for
election as a director of the Company to the extent Harbert is
then entitled to designate such other individual for
nomination for election as a director of the Company pursuant
to the Stock Purchase Agreement or pursuant to paragraph F of
the Certificate of Designation.
Notwithstanding the foregoing, however, to the extent that the Tucker
Parties and Roark Affiliates collectively do not possess the sole power to vote
or direct the voting of any such Board Voting Securities from time to time (the
shares as to which the Tucker Parties and Roark Affiliates do not so possess
such voting power being referred to herein as "Non-Exclusive Board Shares"),
they shall be obligated to use their reasonable best efforts to cause such
Non-Exclusive Board Shares to be voted in compliance with the foregoing.
<PAGE> 4
SECTION 3. INSERTION OF NEW SECTION 3 IN THE ORIGINAL AGREEMENT. The
following provision is hereby inserted as Section 3 of the Original Agreement
(provided that the existing Section 3 of the Original Agreement, all subsequent
Sections thereof, and all cross references thereto in the Original Agreement
shall be renumbered accordingly):
"SECTION 3. ADDITIONAL VOTING AGREEMENT OF THE TUCKER PARTIES. In
addition to, and not in limitation of, Sections 2 and 4 hereof, if the Series AA
Preferred Stock is outstanding on June 30, 1998, has not been satisfied in full
before June 30, 1998, and has not been sold, assigned, transferred, or otherwise
conveyed by Harbert to a Person (as defined below) that is not a Harbert
Affiliate on or before June 30, 1998, then during the Pre-Trigger Period (as
defined below), if any, each of the Tucker Parties, severally and not jointly,
agrees:
(a) (i) To vote all shares of securities issued by the Company
("General Voting Securities") beneficially owned by him or it
as and in the manner directed by Harbert on any matter
submitted to the shareholders of the Company for a vote to the
fullest extent that such securities are entitled to vote
thereon, and (ii) in respect of the General Voting Securities
beneficially owned by him or it, to execute and deliver
consents in writing to any actions which may lawfully be taken
by the stockholders of the Company without a meeting, as and
in the manner directed by Harbert; and
(b) (i) To cause the Roark Affiliates to vote all General Voting
Securities beneficially owned by him, her, or it as and in the
manner directed by Harbert on any matter submitted to the
shareholders of the Company for a vote to the fullest extent
that such securities are entitled to vote thereon, and (ii) to
cause the Roark Affiliates, in respect of the General Voting
Securities beneficially owned by him, her, or it, to execute
and deliver consents in writing to any actions which may
lawfully be taken by the stockholders of the Company without a
meeting, as and in the manner directed by Harbert.
Notwithstanding the foregoing, however, to the extent that the Tucker Parties
and Roark Affiliates collectively do not possess the sole power to vote or
direct the voting of any such General Voting Securities from time to time or to
execute and deliver written consents with respect thereto (the shares as to
which the Tucker Parties and Roark Affiliates do not so possess such voting
power being referred to herein as "Non-Exclusive General Shares"), they shall be
obligated to use their reasonable best efforts to cause such Non-Exclusive
General Shares to be voted, or written consents in respect thereof to be
executed and delivered, in compliance with the foregoing. For purposes of this
Agreement, the term "Pre-Trigger Period" means the period commencing on June
30,1998 and continuing until the earlier of (i) the time that the Series AA
Preferred Stock is redeemed, is satisfied in full, is no longer outstanding, or
is sold, assigned, transferred, or otherwise conveyed by Harbert to a Person
that is not a Harbert Affiliate, and (ii) such time as both of the following
events have occurred: (A) the initial public offering of the Crown Hybrid
Mortgage REIT has been consummated, or another fund opportunity as contemplated
by Section 3.3(a) of the Stock Purchase Agreement
<PAGE> 5
has been completed, and (B) the Company's average commercial loan origination
volume for the then preceding three months equals at least $16.7 million per
month. As used herein, the term "Harbert Affiliate" shall mean any Person
Controlling (as hereinafter defined), Controlled by (as hereinafter defined), or
under common Control (as hereinafter defined) with, Harbert. As used in this
Agreement, at any time of determination, (i) one Person is "Controlling" another
if such Person then possesses the exclusive power, directly or indirectly, to
direct or cause the direction of the management or policies of the subject
Person, whether through the ownership of voting securities, by contract, or
otherwise, unless such power is solely the result of an official position with
the subject Person, (ii) one Person is "Controlled" by another Person if such
other Person then possesses the exclusive power, directly or indirectly, to
direct or cause the direction of the management or policies of the subject
Person, through the ownership of voting securities, by contract, or otherwise,
unless such power is solely the result of an official position with such subject
Person, and (iii) one Person is under common "Control" with another Person if
one third party then possesses the exclusive power, directly or indirectly, to
direct or cause the direction of the management or policies of the subject
Person and such other Person, through the ownership of voting securities, by
contract, or otherwise, unless such power is solely the result of an official
position with such Person. As used in this Agreement, the term "Person" means
any individual or entity.
SECTION 4. INSERTION OF NEW SECTION 4 IN THE ORIGINAL AGREEMENT The
following provision is hereby inserted as Section 4 of the Original Agreement
(provided that the existing Section 4 of the Original Agreement, all subsequent
Sections thereof, and all references thereto in the Original Agreement, shall be
renumbered accordingly):
"SECTION 4. ADDITIONAL AGREEMENTS RELATING TO CHANGE OF CONTROL. In
addition to, and not in limitation of, Sections 2 and 3 hereof, for so long, and
only for so long, as (i) the Series AA Preferred Stock is outstanding or has not
been satisfied in full, and (ii) Harbert or any Harbert Affiliate is the owner
and holder of record of all of the Series AA Preferred Stock, each of the Tucker
Parties, severally and not jointly, agrees:
(a)(i) Not to vote any General Voting Securities beneficially owed by
him or it in favor of any transaction (or multiple related transactions) which,
to the actual knowledge of Roark or Tucker at that time, would result in any
Person who is not then a Permitted Control Person (as hereinafter defined) to
acquire Control of the Company, and (ii) subject to the remaining provisions of
this Section 4, not to voluntarily sell, assign, transfer, convey, or otherwise
alienate any General Voting Securities beneficially owned by him or it in
connection with any transaction (or multiple related transactions) which, to the
actual knowledge of Roark or Tucker at that time, would result in any Person who
is not then a Permitted Control Person to acquire Control of the Corporation, in
each case unless the Company (y) voluntarily redeems all of the Series AA
Preferred Stock pursuant to Section E of the Certificate of Designation prior to
or concurrently with the consummation of the first of such transactions to be
consummated that confers Control of the Company on such Person, or (z) calls the
Series AA Preferred Stock for redemption, and the Series AA Preferred Stock is
converted during the pertinent Redemption Period (as defined in the Certificate
of Designation) prior to or concurrently with the consummation of the first of
such transactions to be consummated that confers Control of the Company on such
Person; and
<PAGE> 6
(b)(i) To cause the Roark Affiliates not to vote any General Voting
Securities beneficially owned by him, her or it in favor of any transaction (or
multiple related transactions) which, to the actual knowledge of Roark or Tucker
at that time, would result in any Person who is not then a Permitted Control
Person to acquire Control of the Company, and (ii) subject to the remaining
provisions of this Section 4, to cause the Roark Affiliates not to voluntarily
sell, assign, transfer, convey, or otherwise alienate any General Voting
Securities beneficially owned by him, her, or it, in connection with any
transaction (or multiple related transactions) which, to the actual knowledge of
Roark or Tucker at that time, would result in any Person who is not then a
Permitted Control Person to acquire Control of the Company, in each case unless
the Company (x) voluntarily redeems all of the Series AA Preferred Stock
pursuant to Section E of the Certificate of Designation prior to or concurrently
with the first of such transactions to be consummated that confers Control of
the Company on such Person, or (y) calls the Series AA Preferred Stock for
redemption, and the Series AA Preferred Stock is converted during the pertinent
Redemption Period prior to or concurrently with the first of such transactions
to be consummated that confers Control of the Company on such Person.
Notwithstanding any provision of this Agreement to the contrary,
however, the parties hereto agree as follows:
(i) The parties acknowledge that certain of the General Voting
Securities currently are pledged, hypothecated, or otherwise
encumbered on the date hereof. The parties agree that each of
such pledges, hypothecations, and encumbrances, as amended,
modified, or superseded at any time and from time to time, are
permitted notwithstanding the other provisions of this Section
4, and that any foreclosure upon, assignment of, payment of
any judgment with, or levy or execution of levy upon, any of
such General Voting Securities pursuant to any such pledge,
hypothecation, or encumbrance shall not constitute a breach of
this Section 4.
(ii) Each of the Tucker Parties and the Roark Affiliates shall be
entitled to pledge, hypothecate, or otherwise encumber all or
any portion of the General Voting Securities on and after the
date hereof to secure the repayment of any indebtedness of any
kind or nature whatsoever on or after the date hereof, and the
parties agree that each of such pledges, hypothecations, and
encumbrances shall be permitted notwithstanding the other
provisions of this Section 4 and that any foreclosure upon,
assignment of, payment of any judgment with, or levy or
execution of levy upon, any such General Voting Securities
pursuant to any such pledge, hypothecation, or encumbrance
shall not constitute a breach of this Section 4.
(iii) The passing of the ownership, beneficial or otherwise, of any
of such General Voting Securities upon the death of any
individual to that individual's heirs, executors, creditors,
or personal representatives shall not constitute a violation
of this Section 4.
<PAGE> 7
(iv) To the extent that the Tucker Parties and Roark Affiliates
collectively do not possess the sole power to vote or direct
the voting of any such General Voting Securities (the shares
as to which the Tucker Parties and Roark Affiliates do not so
possess such voting and dispositive power being referred to
herein as the "Non-Exclusive Control General Shares"), they
shall be obligated to use their reasonable best efforts to
cause such Non-Exclusive Control General Shares to be voted,
held, and disposed of in compliance with the foregoing.
As used therein, the term "Permitted Control Person" shall mean one or
more of any of the following persons: Harbert, any Harbert Affiliate, any Tucker
Party, any Roark Affiliate, and any other Person who, by written agreement of
the parties hereto is designated as a Permitted Control Person for purposes of
this Agreement.
SECTION 5. AMENDMENT OF SECTION 5 OF THE ORIGINAL AGREEMENT. Section 5
of the Original Agreement is hereby amended in its entirety to read in its
entirety as follows:
"SECTION 5. LEGENDS. The Tucker Parties and Harbert will, and the
Tucker Parties will cause the Roark Affiliates to, and Harbert will cause the
Harbert Affiliates to, deliver certificates representing Voting Securities
beneficially owned by them to the Company for imprinting with the following
legend (which legend shall be removed, with respect to any of such Voting
Securities, upon the earlier of (i) the sale, assignment, or other transfer of
such Voting Securities to a Person not subject to the purview of this Agreement,
and (ii) the expiration of this Agreement), in each case on or before the date
that is the last to occur of (x) 30 days from the date of this Agreement, and
(y) their acquisition of beneficial ownership of such Voting Securities:
"The voting securities represented by this certificate are subject to
restrictions on voting, as provided in a Voting Agreement, dated as of
March 7, 1997, between and among Harbert Equity Fund I, L.L.C., Tucker
Holding Company, Ltd., and Ronald E. Roark, as amended, a copy of which
is on file with the Secretary of the Company."
Notwithstanding the foregoing, however, Harbert will be obligated to
utilize its reasonable best efforts to cause the beneficial owners of the
Non-Exclusive Harbert Shares to comply with this Section 5, and the Tucker
Parties shall be obligated to utilize their respective reasonable best efforts
to cause the beneficial owners of the Non-Exclusive Board Shares, the
Non-Exclusive General Shares, and the Non-Exclusive Control General Shares to
comply with this Section 5."
SECTION 6. SECRETARY TO RETAIN COPY. A copy of this Agreement shall be
filed with the Secretary of the Company.
SECTION 7. FURTHER ACTIONS. At any time and from time to time each
party agrees, at its or his expense, to take such actions and to execute and
deliver such documents as may be reasonably necessary to effectuate the purposes
of this Agreement.
<PAGE> 8
SECTION 8. AVAILABILITY OF EQUITABLE REMEDIES. Since a breach of the
provisions of this Agreement could not adequately be compensated by money
damages, any party shall be entitled, in addition to any other right or remedy
available to him, to an injunction restraining such breach or a threatened
breach and to specific performance of any such provision of this Agreement, and
in either case no bond or other security shall be required in connection
therewith, and the parties hereby consent to such injunction and to the ordering
of specific performance.
SECTION 9. MODIFICATION. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof,
supersedes all existing agreements among them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.
SECTION 10. NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested or delivered against receipt to the
party to whom it is to be given at the address of such party set forth in the
preamble to this Agreement or at such other address as the other parties hereto
shall have been notified in writing pursuant hereto. Except as otherwise
specifically provided in this Agreement, any notice given by certified mail
shall be deemed given at the time of certification thereof except for a notice
changing a party's address which shall be deemed given at the time of receipt
thereof.
SECTION 11. WAIVER. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to any
term of this Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
SECTION 12. BINDING EFFECT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and the respective
successors and assigns of the corporate parties hereto and the respective
assigns, heirs, and personal representatives of the individual parties hereto.
SECTION 13. NO THIRD PARTY BENEFICIARIES. This Agreement does not
create, and shall not be construed as creating, any rights enforceable by any
person not a party to this Agreement.
SECTION 14. SEPARABILITY. If any provision of this Agreement is
invalid, illegal, or unenforceable, the balance of this Agreement shall remain
in effect, and if any provision is inapplicable to any person or circumstance,
it shall nevertheless remain applicable to all other persons and circumstances.
SECTION 15. HEADINGS. The headings in this Agreement are solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
<PAGE> 9
SECTION 16. PRONOUNS. Any masculine personal pronoun shall be
considered to mean the corresponding feminine or neuter personal pronoun, as the
context requires.
SECTION 17. COUNTERPARTS; GOVERNING LAW. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. It shall be
governed by and construed in accordance with the laws of the State of Delaware,
without giving effect to the conflict of law principles thereof.
SECTION 18. REPRESENTATIONS AND WARRANTIES OF TUCKER. Tucker hereby
represents and warrants to Harbert that:
(i) It is a limited liability company duly organized,
validly existing, and in good standing under the laws of the
State of Ohio, with full limited liability company power and
authority to conduct its business as currently conducted; and
(ii) Assuming the due authorization, execution, and
delivery of this Agreement by the other parties hereto, this
Agreement constitutes its legal, valid, and binding
obligation, enforceable against it in accordance with its
terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, or other laws
affecting creditors' rights generally and by the availability
of equitable remedies.
SECTION 19. RATIFICATION. Each of the parties hereby confirms,
ratifies, and agrees that the Original Agreement, as amended hereby, continues
to be in full force and effect, as amended hereby.
<PAGE> 10
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
TUCKER HOLDING COMPANY, LTD.
By: /s/ Ronald E. Roark
----------------------------
Name: Ronald E. Roark
Title: Managing Member
/s/ Ronald E. Roark
-------------------------------
RONALD E.ROARK
<PAGE> 11
HARBERT EQUITY FUND I, L.L.C.
BY: HARBERT MANAGEMENT CORPORATION,
MANAGER
By: /s/ Michael D. Luce
----------------------------
Name: Michael D. Luce
Title: Executive Vice President
