UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
CROWN NORTHCORP, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class of Securities)
228429106
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(CUSIP Number)
Joseph Wollard
ContiFinancial Corporation
277 Park Avenue
New York, New York 10172
212-207-5833
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 3, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. /_/
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
CUSIP No.228429106 13D Page 2 of 14 Pages
------------------------ -- ---
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ContiWest Corporation; ID Number: 88-0368437
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /_/
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2 (e) /_/
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
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7 SOLE VOTING POWER
NUMBER OF 1,000,000
SHARES ---------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 0
EACH ---------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,000,000
WITH ---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* /_/
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.5% of 11,790,899 shares of Common Stock consisting of 10,790,899
shares of Common Stock outstanding as of March 3, 1998 and 1,000,000
shares of Common Stock issued upon conversion of the Series BB
Convertible Preferred Stock
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
CUSIP No.228429106 13D Page 2B of 14 Pages
------------------------ --- ---
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ContiFinancial Corporation; ID Number: 13-3852588
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /_/
(b) /X/
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3 SEC USE ONLY
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4 Source of Funds*
AF
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5 CHECK OF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /_/
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
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7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,000,000
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,000,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* /_/
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.5% of 11,790,899 shares of Common Stock consisting of 10,790,899
shares of Common Stock outstanding as of March 3, 1998 and 1,000,000
shares of Common Stock issued upon conversion of the Series BB
Convertible Preferred Stock
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
CUSIP No.228429106 13D Page 2C of 14 Pages
------------------------ --- ---
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Continental Grain Company; ID Number: 36-0947870
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /_/
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2 (e) /_/
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,000,000
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,000,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* /_/
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.5% of 11,790,899 shares of Common Stock consisting of 10,790,899
shares of Common Stock outstanding as of March 3, 1998 and 1,000,000
shares of Common Stock issued upon conversion of the Series BB
Convertible Preferred Stock
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
CUSIP No.228429106 13D Page 2D of 14 Pages
------------------------ --- ----
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michel Fribourg
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /_/
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2 (d) or 2 (e) /_/
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,000,000
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,000,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* /X/
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.5% of 11,790,899 shares of Common Stock consisting of 10,790,899
shares of Common Stock outstanding as of March 3, 1998 and 1,000,000
shares of Common Stock issued upon conversion of the Series BB
Convertible Preferred Stock
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
CUSIP No.228429106 13D Page 2E of 14 Pages
------------------------ --- ---
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mary Ann Fribourg
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /_/
(b) /X/
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
AF
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) /_/
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 0
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,000,000
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,000,000
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES* /X/
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
8.5% of 11,790,899 shares of Common Stock consisting of 10,790,899
shares of Common Stock outstanding as of March 3, 1998 and 1,000,000
shares of Common Stock issued upon conversion of the Series BB
Convertible Preferred Stock
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE>
Page 3 of 14 pages
ITEM 1. SECURITY AND ISSUER
This Schedule 13D ("Schedule 13D") relates to the Common
Stock, par value $0.01 per share (the "Common Stock"), of Crown Northcorp, Inc.,
a Delaware corporation (the "Issuer"). The principal executive offices of the
Issuer are located at 1251 Dublin Road, Columbus, Ohio 43215.
ITEM 2. IDENTITY AND BACKGROUND
NAME OF PERSON FILING: Pursuant to Rule 13d-1(k)(1) of Regulation 13D-G of the
Rules and Regulations under the Securities Exchange Act of 1934, as amended (the
"Act"), the undersigned hereby file this Schedule 13D Statement on behalf of
ContiWest Corporation, a Nevada corporation, ContiFinancial Corporation, a
Delaware corporation, Continental Grain Company, a Delaware corporation, Michel
Fribourg, an individual, and Mary Ann Fribourg, an individual (collectively, the
"Reporting Persons"). As described in Item 5 below, Continental Grain Company,
Michel Fribourg and Mary Ann Fribourg are disclaiming beneficial ownership to
the Series BB Convertible Preferred Stock that is the subject of this Schedule
13D.
CONTIWEST CORPORATION
(A) NAME: ContiWest Corporation
(B) ADDRESS OF PRINCIPAL PLACE OF BUSINESS AND OFFICE:
3811 West Charleston Boulevard
Las Vegas, NV 89102
(C) PRINCIPAL BUSINESS: Primarily purchases, sells and securitizes
asset-backed receivables
(D) CRIMINAL PROCEEDINGS: None
(E) CIVIL PROCEEDINGS: None
(F) CITIZENSHIP: Nevada
OFFICERS AND DIRECTORS: See Schedule A attached hereto, and incorporated herein
by reference with respect to each executive officer and director of ContiWest
Corporation.
CONTIFINANCIAL CORPORATION
(A) NAME: ContiFinancial Corporation
(B) ADDRESS OF PRINCIPAL PLACE OF BUSINESS AND OFFICE: 277 Park Avenue
New York, NY 10172
(C) PRINCIPAL BUSINESS: Primarily a holding company for financial services
subsidiaries
(D) CRIMINAL PROCEEDINGS: None
(E) CIVIL PROCEEDINGS: None
(F) CITIZENSHIP: Delaware
OFFICERS AND DIRECTORS: See Schedule A attached hereto, and incorporated herein
by reference with respect to each executive officer and director of
ContiFinancial Corporation.
<PAGE>
Page 4 of 14 pages
CONTINENTAL GRAIN COMPANY
(A) NAME: Continental Grain Company
(B) ADDRESS OF PRINCIPAL PLACE OF BUSINESS AND OFFICE: 277 Park Avenue
New York, NY 10172
(C) PRINCIPAL BUSINESS: Primarily agribusiness and financial services
D) CRIMINAL PROCEEDINGS: None
(E) CIVIL PROCEEDINGS: None
(F) CITIZENSHIP: Delaware
OFFICERS AND DIRECTORS: See Schedule A attached hereto, and incorporated
herein by reference with respect to each executive
officers and directors of Continental Grain
Company.
INDIVIDUALS REPORTING
(A) NAME: Michel Fribourg
(B) BUSINESS ADDRESS: c/o Continental Grain Company
277 Park Avenue
New York, NY 10172
(C) PRESENT PRINCIPAL OCCUPATION: Director, Continental Grain Company
CORPORATION NAME: Continental Grain Company
CORPORATION ADDRESS: 277 Park Avenue, New York, New York 10172
(D) CRIMINAL PROCEEDINGS: None
(E) CIVIL PROCEEDINGS: None
(F) CITIZENSHIP: USA
(A) NAME: Mary Ann Fribourg
(B) BUSINESS ADDRESS: c/o Continental Grain Company
277 Park Avenue
New York, NY 10172
(C) PRESENT PRINCIPAL OCCUPATION: None
CORPORATION NAME: N/A
CORPORATION ADDRESS: N/A
(D) CRIMINAL PROCEEDINGS: None
(E) CIVIL PROCEEDINGS: None
(F) CITIZENSHIP: USA
<PAGE>
Page 5 of 14 pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The purchase price will be paid with general corporate funds
of ContiWest Corporation. The purchase price of the one share of Series BB
Convertible Preferred Stock of the Issuer purchased by ContiWest which is the
subject of this Schedule 13D was $1,999,990.
ITEM 4. PURPOSE OF TRANSACTION
The shares of Common Stock beneficially owned by the Reporting
Persons were acquired by the Reporting Persons for investment purposes. The
Reporting Persons will continue to evaluate their potential investment in the
Issuer on the basis of various factors, including the Issuer's business,
financial condition, results of operations and prospects, general economic and
industry conditions, the securities markets in general and those for the
Issuer's securities in particular, as well as the Reporting Persons' personal
liquidity requirements and other developments and investment opportunities.
Based upon such evaluation, the Reporting Persons will take such actions in the
future as the Reporting Persons may deem appropriate in light of the
circumstances existing from time to time. Depending on market and other factors,
the Reporting Persons may determine to dispose of some or all of their
investment or acquire additional shares in the Issuer, either in open market or
privately negotiated transactions. The Reporting Persons may acquire additional
securities of the Issuer pursuant to the warrant dated March 3, 1998 described
below in Item 6. In addition, in order to create a seat on the Issuer's Board of
Directors ("Board") for ContiWest Corporation's nominee (as described in Item 6
below) the number of Board seats may be increased. Other than as described in
this Item 4, the Reporting Persons currently have no plans or proposals which
would result in any of the actions described in clauses (a) through (j) of Item
4 of Schedule 13D.
<PAGE>
Page 6 of 14 pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The following information with respect to ContiWest
Corporation's ownership of Common Stock is provided as of March 3, 1998. The
following information does not include any shares, if any, owned by officers or
directors of any of the Reporting Persons which are corporations, with respect
to which ContiWest Corporation disclaims beneficial ownership.
(A) AMOUNT BENEFICIALLY OWNED. . . . . 1,000,000
(B) PERCENT OF CLASS . . . . . . . . . . . . 8.5
(C) NUMBER OF SHARES AS TO WHICH
SUCH PERSON HAS:
(I) SOLE POWER TO VOTE OR TO
DIRECT THE VOTE . . . . . . . . . 1,000,000
(II) SHARED POWER TO VOTE OR TO
DIRECT THE VOTE. . . . . . . . . 0
(III) SOLE POWER TO DISPOSE OR TO
DIRECT DISPOSITION OF . . . . . 1,000,000
(IV) SHARED POWER TO DISPOSE OR TO
DIRECT DISPOSITION OF . . . . . 0
The following information with respect to ContiFinancial
Corporation's ownership of Common Stock is provided as of March 3, 1998. The
following information does not include any shares, if any, owned by officers or
directors of any of the Reporting Persons which are corporations, with respect
to which ContiFinancial Corporation disclaims beneficial ownership.
(A) AMOUNT BENEFICIALLY OWNED. . . . . 1,000,000
(B) PERCENT OF CLASS . . . . . . . . . . . . 8.5
(C) NUMBER OF SHARES AS TO WHICH
SUCH PERSON HAS:
(I) SOLE POWER TO VOTE OR TO
DIRECT THE VOTE . . . . . . . . . 0
(II) SHARED POWER TO VOTE OR TO
DIRECT THE VOTE. . . . . . . . . 1,000,000
(III) SOLE POWER TO DISPOSE OR TO
DIRECT DISPOSITION OF . . . . . 0
<PAGE>
Page 7 of 14 pages
(IV) SHARED POWER TO DISPOSE OR TO
DIRECT DISPOSITION OF . . . . 1,000,000
The following information with respect to Continental Grain
Company's, Michel Fribourg's and Mary Ann Fribourg's ownership of Common Stock
is provided as of March 3, 1998. The following information does not include any
shares, if any, owned by officers or directors of any of the Reporting Persons
which are corporations, with respect to which Continental Grain Company, Michel
Fribourg and Mary Ann Fribourg disclaim beneficial ownership.
(A) AMOUNT BENEFICIALLY OWNED. . . . . 0
(B) PERCENT OF CLASS . . . . . . . . . . . . 8.5
(C) NUMBER OF SHARES AS TO WHICH
SUCH PERSON HAS:
(I) SOLE POWER TO VOTE OR TO
DIRECT THE VOTE . . . . . . . . . 0
(II) SHARED POWER TO VOTE OR TO
DIRECT THE VOTE. . . . . . . . . 1,000,000
(III) SOLE POWER TO DISPOSE OR TO
DIRECT DISPOSITION OF . . . . . 0
(IV) SHARED POWER TO DISPOSE OR TO
DIRECT DISPOSITION OF . . . . 1,000,000
CONTIWEST CORPORATION: ContiWest Corporation beneficially owns one share of
Series BB Convertible Preferred Stock (par value $.01) (the "Preferred Share")
of the Issuer, which is convertible into 1,000,000 shares of the outstanding
Common Stock of the Issuer, as described below in Item 6. ContiWest Corporation
has the right to designate one individual to serve as a director on the Issuer's
Board, as described below in Item 6. In addition, ContiWest Corporation may have
the right to purchase additional shares of Issuer's common stock pursuant to the
Warrant described in Item 6 below.
ContiWest Corporation has the sole power to vote or direct the vote and
to dispose or direct the disposition of 1,000,000 shares of the Issuer's Common
Stock, when and if ContiWest Corporation converts the Preferred Share. Based on
this, ContiWest Corporation beneficially owns, pursuant to Rule 13d-3 of the
Act, 1,000,000 shares, or 8.5%, of the Issuer's Common Stock.
To the best knowledge of ContiWest Corporation none of the persons
named in Schedule A hereto under ContiWest Corporation owns securities of the
Issuer.
CONTIFINANCIAL CORPORATION: ContiFinancial Corporation, through its wholly owned
subsidiary ContiWest Corporation, beneficially owns the Preferred Share and the
Warrant and has the right to
<PAGE>
Page 8 of 14 pages
nominate one director of the Issuer. ContiFinancial Corporation has the shared
power, through its wholly owned subsidiary ContiWest Corporation, to vote or
direct the vote and to dispose or direct the disposition of 1,000,000 shares of
the Issuer's Common Stock, when and if ContiWest Corporation converts the
Preferred Share. Based on this, ContiFinancial Corporation beneficially owns,
pursuant to Rule 13d-3 of the Act, 1,000,000 shares, or 8.5%, of the Issuer's
Common Stock.
To the best knowledge of ContiFinancial Corporation none of the persons
named in Schedule A hereto under ContiFinancial Corporation owns securities of
the Issuer.
CONTINENTAL GRAIN COMPANY: Because Continental Grain Company owns 75% of
ContiFinancial Corporation, Continental Grain Company may, pursuant Rule 13d-3
of the Act, be deemed to be the beneficial owner of 1,000,000 shares of the
Issuer's Common Stock, which constitutes approximately 8.5% of the Issuer's
outstanding shares of Common Stock. Pursuant to Rule 13d-4 of the Act,
Continental Grain Company disclaims beneficial ownership of the shares of the
Issuer's Common Stock beneficially owned by ContiWest Corporation, except to the
extent of its pecuniary interest therein. Continental Grain Company, may have
the shared power to vote and to dispose or direct the disposition of 1,000,000
shares of the Issuer's Common Stock, when and if ContiWest Corporation converts
the Preferred Share.
MICHEL FRIBOURG: Because of his position as a director of Continental Grain
Company, and because he is the husband of Mary Ann Fribourg, a controlling
shareholder of Continental Grain Company, Michel Fribourg may, pursuant Rule
13d-3 of the Act, be deemed to be the beneficial owner of 1,000,000 shares of
the Issuer's Common Stock, which constitutes approximately 8.5% of the Issuer's
outstanding shares of Common Stock. Pursuant to Rule 13d-4 of the Act, Michel
Fribourg disclaims beneficial ownership of the shares of the Issuer's Common
Stock beneficially owned by ContiWest Corporation, except to the extent of his
pecuniary interest therein. As a director of Continental Grain Company, Michel
Fribourg may have the shared power to vote and to dispose or direct the
disposition of 1,000,000 shares of the Issuer's Common Stock, when and if
ContiWest Corporation converts the Preferred Share.
MARY ANN FRIBOURG: Because of her position as a controlling shareholder of
Continental Grain Company, Mary Ann Fribourg may, pursuant to Rule 13d-3 of the
Act, be deemed to be the beneficial owner of 1,000,000 shares of the Issuer's
Common Stock, which constitutes approximately 8.5% of the Issuer's outstanding
shares of Common Stock. Pursuant to Rule 13d-4 of the Act, Mary Ann Fribourg
disclaims beneficial ownership of the shares of the Issuer's Common Stock
beneficially owned by ContiWest Corporation, except to the extent of her
pecuniary interest therein. As a controlling shareholder of Continental Grain
Company, Mary Ann Fribourg may have the shared power to vote and to dispose or
direct the disposition of 1,000,000 shares of the Issuer's Common Stock, when
and if ContiWest Corporation converts the Preferred Share.
To the best of the Reporting Persons' knowledge, except as set forth
herein, no other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, any shares of the
Common Stock which the Reporting Persons may be deemed to beneficially own.
Subsection (e) of this Item 5 is not applicable to any of the Reporting Persons.
<PAGE>
Page 9 of 14 pages
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
The Issuer's Series BB Convertible Preferred Stock (par value
$.01) (the "Preferred Share") was created pursuant to a Certificate of
Designations dated March 3, 1998 (the "Certificate of Designations"). ContiWest
Corporation purchased the Series BB Convertible Preferred Stock pursuant to a
stock purchase agreement (the "Stock Purchase Agreement") dated March 3, 1998
between the Issuer and ContiWest Corporation for a purchase price of $1,999,990.
The Series BB Convertible Preferred Stock can be converted to 1,000,000 shares
of the Issuer's Common Stock by ContiWest Corporation at any time. Pursuant to
the Certificate of Designations, for so long as ContiWest corporation owns the
Preferred Share or 1,000,000 shares of Common Stock and for so long as a certain
credit agreement from ContiTrade Services, LLC to the Issuer is in effect,
ContiWest Corporation has the right to designate one individual to serve as a
director on the Issuer's Board. ContiWest Corporation, Ronald E. Roark, Tucker
Holding Company, Ltd. and Harbert Equity Fund I, L.L.C. entered into a voting
agreement dated March 3, 1998 providing for the election of their respective
nominees to the Board.
In addition pursuant to the Stock Purchase Agreement, on March 3, 1998
the Issuer granted to ContiWest Corporation a warrant interest (the "Warrant")
which entitles ContiWest Corporation to purchase up to 200,000 shares of the
Issuer's Common Stock. ContiWest Corporation's interest in the shares of the
Issuer's Common Stock underlying the Warrant vests in blocks of 20,000 shares
(each a "Block") at various times and subject to the fulfillment or continuation
of various conditions. The earliest date upon which ContiWest Corporation could
exercise any portion of the Warrant is on or about the date of the release of
the Issuer's Annual Report on Form 10-KSB for the fiscal year ending December
31, 1998. ContiWest Corporation's right to purchase each Block of the Issuer's
Common Stock expires on the date that is one year after the date on which
ContiWest Corporation's interest in such Block vests.
Except as set forth in this Item 6, to the best of ContiWest
Corporation's, ContiFinancial Corporation's and Continental Grain Company's
knowledge no executive officer or director of ContiWest Corporation,
ContiFinancial Corporation or Continental Grain Company has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Issuer.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as Exhibits to this Schedule
13D:
Exhibit Description
--------- ---------------------------------------------------------------
A Consent to Joint Filing of Schedule 13D pursuant to Rule
13d-1(k)
B Form of Certificate of Designations dated March 3, 1998
C Form of Stock Purchase Agreement dated March 3, 1998 between
ContiWest Corporation and the Issuer
D Form of Voting Agreement dated March 3, 1998 among ContiWest
Corporation, Ronald E. Roark, Tucker Holding Company, Ltd. and
Harbert Equity Fund I, L.L.C.
<PAGE>
Page 10 of 14 pages
E Form of Warrant dated March 3, 1998 of Crown Northcorp, Inc. in
favor of ContiWest Corporation
<PAGE>
Page 11 of 14 pages
SIGNATURE:
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: March 16, 1998
CONTIWEST CORPORATION
By: /s/Peter Abeles
------------------------------------
Name/Title: President
---------------------------------------------
CONTI FINANCIAL CORPORATION
By: /s/ Scott M. Mannes
---------------------------------------------
Name/Title: Executive Vice President
---------------------------------------------
CONTINENTAL GRAIN CORPORATION
By: /s/ Paul J. Fribourg
---------------------------------------------
Name/Title: Chairman and Chief Executive Officer
---------------------------------------------
MICHEL FRIBOURG
/s/ Michel Fribourg
---------------------------------------------
MARY ANN FRIBOURG
/s/ Mary Ann Fribourg
---------------------------------------------
<PAGE>
Page 12 of 14 pages
SCHEDULE A
CONTIWEST CORPORATION
During the last five years, to the best of ContiWest Corporation's
knowledge, none of the executive officers and directors of ContiWest Corporation
have been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgement, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. During the last five years to the best
of ContiWest Corporation's knowledge, none of the executive officers and
directors of ContiWest Corporation have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors). The business address of
each director and executive officer is 3811 West Charleston Blvd., Las Vegas,
Nevada 89102. Each executive officer or director of ContiWest Corporation is a
United States citizen.
Set forth below is the name and certain other information with respect
to each director and executive officer of ContiWest Corporation.
Name Principal Position
- ---- ------------------
Peter Abeles President and Director; Senior Vice President of
ContiFinancial Corporation; Managing Director of
ContiFinancial Services Corporation
Robert J. Babjak Director; Senior Vice President of ContiFinancial
Corporation; Executive Vice President and Chief Operating
Officer of ContiMortgage Corporation
James J. Bigham Director; Vice Chairman, Executive Vice President and
Chief Financial Officer of Continental Grain Company
Daniel J. Egan Director; Senior Vice President of ContiFinancial
Corporation; Senior Vice President and Chief Financial
Officer of ContiMortgage Corporation
Robert A. Major Director; Executive Vice President of ContiFinancial
Corporation and President and Chief Executive Officer of
ContiMortgage Corporation
James E. Moore Director; President and Chief Executive Officer of
ContiFinancial Corporation
Jerome M. Perelson Director; Senior Vice President of ContiFinancial
Corporation; Managing Director and Chief Credit Officer
of ContiFinancial Services Corporation
Robert E. Riedl Vice President, Treasurer and Secretary; Vice President
of ContiFinancial Services Corporation
Joy B. Tolbert Vice President, Assistant Secretary and Managing Director
Todd W. Hart Assistant Vice President and Assistant Secretary
Denise Mechling Assistant Vice President and Assistant Secretary
CONTIFINANCIAL CORPORATION
<PAGE>
Page 13 of 14 pages
During the last five years, to the best of ContiFinancial Corporation's
knowledge, none of the executive officers and directors of ContiFinancial
Corporation have been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgement, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws. During
the last five years to the best of ContiFinancial Corporation's knowledge, none
of the executive officers and directors of ContiFinancial Corporation have been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). The business address of each director and executive officer is
277 Park Avenue, New York, New York 10172. Each executive officer or director of
ContiWest Corporation is a United States citizen.
Set forth below is the name and certain other information with respect
to each director and executive officer of ContiFinancial Corporation.
Name Principal Position
- ---- ------------------
James J. Bigham Director; Vice Chairman, Executive Vice President and
Chief Financial Officer of Continental Grain Company
Paul J. Fribourg Director; President and Chief Executive Officer of
Continental Grain Company
John W. Spiegel Director; Executive Vice President and Chief Financial
Officer of SunTrust Banks, Inc.
Donald L. Staheli Director
John P. Tierney Director
Lawrence G. Weppler Director; Vice President and General Counsel-Corporate of
Continental Grain Company
Michael J. Zimmerman Director; Senior Vice President-Investments and Strategy
of Continental Grain Company
James E. Moore Director, President and Chief Executive Officer of
ContiFinancial Corporation
Robert A. Major Executive Vice President
Glenn S. Goldman Executive Vice President
Scott M. Mannes Executive Vice President
Peter Abeles Senior Vice President
Robert J. Babjak Senior Vice President
A. John Banu Senior Vice President
Daniel J. Egan Senior Vice President
<PAGE>
Page 14 of 14 pages
CONTINUED
CONTIFINANCIAL CORPORATION
Name Principal Position
- ---- ------------------
Michael J. Festo Senior Vice President, Human Resources
Alan L. Langus Senior Vice President, Chief Counsel and Secretary
Jerome M. Perelson Senior Vice President
Daniel J. Willett Senior Vice President and Chief Financial Officer
Debra J. Huddleston Vice President - Internal Audit
Dennis G. Sullivan Vice President and Controller
Frank W. Baier Vice President and Treasurer
CONTINENTAL GRAIN COMPANY
During the last five years, to the best of Continental Grain Company's
knowledge, without independent investigation, none of Continental Grain
Company's executive officers or directors have been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or have been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in her or his being subject to a judgment, decree or
final order enjoining future violation of, or prohibiting or mandating
activities subject to, federal or state securities laws or a finding of any
violation with respect to such laws.
<PAGE>
Exhibit A:
Pursuant to Rule 13d-1(k)(1)(iii) of Regulation 13D of the Rules and Regulations
of the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, the undersigned agree that the statement to which this Exhibit
is attached is filed on behalf of them in their capacities set forth below.
Date: March 16, 1998
CONTIWEST CORPORATION
By: /s/Peter Abeles
-----------------------------------------
Name/Title: President
---------------------------------------------
CONTI FINANCIAL CORPORATION
By: /s/ Scott M. Mannes
---------------------------------------------
Name/Title: Executive Vice President
---------------------------------------------
CONTINENTAL GRAIN CORPORATION
By: /s/ Paul J. Fribourg
---------------------------------------------
Name/Title: Chairman and Chief Executive Officer
---------------------------------------------
MICHEL FRIBOURG
/s/ Michel Fribourg
---------------------------------------------
MARY ANN FRIBOURG
/s/ Mary Ann Fribourg
---------------------------------------------
<PAGE>
CERTIFICATE OF DESIGNATION
OF SERIES BB 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 February 13, 1998 creating a series of the
Corporation's preferred stock, par value $.01 per share, designated "Series BB
Convertible Preferred Stock":
Designation. There shall be a series of Preferred Stock to be
known as Series BB Convertible Preferred Stock, par value $.01 per share
(hereinafter referred to as "Series BB Preferred Stock"), consisting of one
authorized share. After the issuance of the Series BB 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 BB Preferred Stock with
respect to such matters without having obtained the prior written consent of
two-thirds of the holders thereof.
Liquidation in General. In the event of a Liquidation (as
defined below), the holders of record of the Series BB 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 $2,000,000 per share, plus an amount,
expressed in dollars, equal to a twelve percent (12%) cumulative dividend on the
sum of $2,000,000 from the date that the Series BB 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 BB
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 BB 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 BB 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 BB 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 (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"), the Corporation's Series AA Convertible Preferred Stock, par value $.01
per share (the "Series AA Preferred Stock"),
<PAGE>
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, Series BB Preferred Stock, and subsequent series of Preferred Stock
issued with rights equivalent to the Series B Preferred Stock, Series C
Convertible Preferred Stock, Series AA Preferred Stock, and Series BB 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 BB 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.
Conversion Rights. At the Option of the Holders of Record.
All, and not less than all, of the Series BB Preferred Stock will be convertible
at the option of the holders of record thereof at any time into 1,000,000 shares
of the Common Stock, reflecting a conversion ratio of one share of the Series BB
Preferred Stock for 1,000,000 shares of the Common Stock (the "Conversion
Ratio").
(ii) At the Option of the Corporation. All, and not less than
all, of the Series BB Preferred Stock will be convertible at the option of the
Corporation into 1,000,000 shares of the Common Stock upon the occurrence of
both of the Trigger Events (as hereinafter defined), reflecting the Conversion
Ratio. As used herein, the term "Trigger Events" means (a) the consummation of
the initial public offering of the CHC Commercial Holdings, Inc. REIT (the
"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 Equity Fund I, L.L.C., in which ContiWest
Corporation ("Conti") and its affiliates have an interest that is economically
similar to their interest in the REIT as agreed by the Corporation and Conti and
its affiliates as of March 3, 1998, and (b) the Corporation's average commercial
loan origination volume for the then preceding three calendar months equals at
least $16.7 million per month.
(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 BB Preferred Stock, duly endorsed in blank for transfer
with 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 BB Preferred Stock which
have been
<PAGE>
converted into Common Stock after the original issuance thereof shall be
outstanding or shall ever again be reissued, sold, or transferred.
Redemption Rights. The Corporation will have the right, but
not the obligation, to redeem the Series BB 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 BB
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) $2,000,000, plus (b)
an amount, expressed in dollars, equal to a twelve percent (12%) cumulative
dividend on the sum of $2,000,000 from the date that the Series BB 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 BB Preferred Stock during the Redemption Period
pursuant to the preceding paragraph C(i). On the applicable redemption date, the
holders of the Series BB Preferred Stock will deliver certificates representing
the shares of Series BB 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 BB Preferred Stock which have been
so redeemed after the original issuance thereof shall be outstanding or shall
ever again be reissued, sold, or transferred.
Voting Rights. The Series BB 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. For so long as all of the Series
BB Preferred Stock is outstanding, the holder thereof shall have the right to
designate one individual to serve as a Director of the Corporation; provided,
however, that the foregoing right shall irrevocably terminate upon the earlier
of (a) the date that Conti does not own and hold of record at least 1,000,000
shares of the Common Stock (such ownership and record holdings being deemed to
include, for this purpose, the right to acquire shares of the Common Stock by
conversion of the Series BB Preferred Stock or by warrant) or (b) the date that
the credit facility created under that certain Program Agreement, dated as of
July 1, 1997, between the Corporation and ContiTrade Services LLC ("ContiTrade")
is cancelled, terminated, not renewed, or substantially reduced by ContiTrade;
provided further, however, that to accomplish such designation, the Corporation
may choose to expand its Board of Directors and appoint individuals designated
by such holder to fill resulting vacancies in lieu of the resignation of
existing Directors of the Corporation; and provided further, however, that Conti
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 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.
<PAGE>
Preemptive Rights. The holders of Series BB Preferred Stock
shall have no preemptive rights.
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 BB 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.
Adjustment of Number of Shares of Common Stock. Stock
Dividends; Stock Splits. If the number of shares of Common Stock outstanding at
any time after the date of issuance of the Series BB 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 BB 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 BB Preferred Stock been converted immediately
prior thereto.
Combination of Shares. If the number of shares of Common Stock
outstanding at any time after the date of issuance of the Series BB 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 BB 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 BB Preferred Stock been
converted immediately prior thereto.
Adjustment for Reorganization, Consolidation, and Merger. In
case of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable on the conversion of the
Series BB Preferred Stock) after the date that the Series BB Preferred Stock is
issued, or in case, after such date, the Company (or any such other corporation)
shall consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation or reclassify any of its
equity securities, then and in each such case holders of the Series BB Preferred
Stock, upon the conversion of the Series BB Preferred Stock as provided herein
at any time after the consummation of such reorganization, reclassification,
consolidation, merger, or conveyance, shall be entitled to receive, upon the
conversion of the Series BB Preferred Stock, such stock, other securities, or
other property that such holders would have received if such Holders had
converted the Series BB Preferred Stock immediately prior to such
reorganization, reclassification, consolidation, merger, or conveyance.
Issuance of Shares of Common Stock. From the date that the
Series BB Preferred Stock is issued to and through the date that the Series BB
Preferred Stock is converted in its entirety into Common Stock (the "Dilution
Protection Period"), if at any time the Corporation issues or sells
<PAGE>
(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 Conti for Common Stock by virtue of its
purchase of the Series BB Preferred Stock (assuming solely for such purpose that
by its purchase of the Series BB Preferred Stock, Conti had purchased 1,000,000
shares of the Common Stock for a purchase price per share of $2.00, in each case
as adjusted to reflect any of the events described in the preceding paragraphs
(a), (b), and (c) 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 3,
1998, then the number of shares of Common Stock that holders of the Series BB
Preferred Stock will receive upon conversion of the Series BB Preferred Stock
shall be equal to the quotient of (a) $2,000,000, 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), (b), and (c).
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 BB Preferred Stock, the full number of
shares of Common Stock then deliverable upon the conversion of all of the Series
BB Preferred Stock then outstanding.
Issue Tax. The issuance of certificates representing shares of
Common Stock upon conversion of Series BB 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 BB Preferred Stock that is being
converted.
IN WITNESS WHEREOF, this Certificate of Designation has been
executed as of February ____, 1998.
________________________________________
Name: Richard A. Brock
Title: Chief Financial Officer
________________________________________
Name: Stephen W. Brown
Title: Secretary
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March __,
1998, is between and among CONTIWEST CORPORATION, a Nevada corporation with
offices at 277 Park Avenue, 38th Floor, New York, New York 10172 (the
"Purchaser"), and CROWN NORTHCORP, INC., a Delaware corporation with offices at
1251 Dublin Road, Columbus, Ohio 43215 (the "Seller").
WITNESSETH:
WHEREAS, the Purchaser desires to purchase from the Seller, and the
Seller desires to sell to the Purchaser, one share of the Series BB Convertible
Preferred Stock, par value $.01 per share, of the Seller (the "Seller Preferred
Stock"), and a warrant to purchase shares of the Common Stock, par value $.01
per share, of the Seller on the terms and conditions set forth herein;
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:
ARTICLE I.
The Purchase and Sale
SECTION 1.1 Terms of the Purchase and Sale. On the basis of and in
reliance upon the representations and warranties set forth in Section 2.1 and
Article III, and subject to the terms and conditions set forth herein:
(a) The Seller shall issue at the Closing (as hereinafter
defined) to the Purchaser a certificate registered in the name of the
Purchaser for one share (the "Closing Share") of Seller Preferred
Stock.
(b) The Seller shall issue at the Closing to the Purchaser a
warrant (the "Warrant") to purchase up to 200,000 additional shares of
the Common Stock, par value $.01 per share, of the Seller ("Seller
Common Stock") in the form attached as Exhibit A hereto and hereby made
a part hereof.
(c) As consideration for the Closing Share and the Warrant,
the Purchaser shall deliver at the Closing to the Seller $2,000,000 in
cash, by certified check, or by wire transfer of immediately available
funds to an account designated in writing by the Seller. The parties
hereto agree that (i) the consideration for the Closing Share shall be
$1,999,990, and (ii) the consideration for the Warrant shall be $10.
SECTION 1.2 The Closing. The closing of the transactions contemplated
by Section 1.1 (the "Closing") shall take place at such place and time on or
before March ____, 1998 as the Purchaser and the Seller agree.
<PAGE>
SECTION 1.3 Conditions to the Obligation of the Purchaser to Consummate
the Transactions to be Consummated Hereunder at the Closing. The obligations of
the Purchaser to consummate the transactions to be consummated hereunder at the
Closing are subject to the following conditions (unless waived by the Purchaser
in its discretion):
(a) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Seller contained
in Article II of this Agreement shall be true and correct as of the
Closing; as of the Closing the Seller shall have performed and complied
with all covenants and agreements and satisfied all conditions required
to be performed and complied with by the Seller at or before such time
by this Agreement; and the Purchaser shall have received a certificate
executed by the Chairman of the Board and Chief Executive Officer of
the Seller, dated the Closing Date, to that effect, substantially in
the form of Exhibit B.
(b) Opinion of Counsel. The Seller shall have delivered to
the Purchaser on the Closing Date the favorable opinions of each of
Powell, Goldstein, Frazer & Murphy LLP, counsel to the Seller and
Stephen W. Brown, Secretary of the Seller, each dated as of such date,
collectively addressing matters customarily addressed by counsel to an
issuer with respect to transactions of this type as determined by the
Purchaser and the Seller, and each in the form agreed upon by the
Purchaser and the Seller, each in each case acting reasonably and in
good faith.
(c) Other Closing Documents. The Seller shall have delivered
to the Purchaser on or prior to the Closing such other documents as the
Purchaser may reasonably request in order to enable the Purchaser to
determine whether the conditions to its obligations under this
Agreement have been met and otherwise to carry out the provisions of
this Agreement.
(d) Legal Action . A party other than the Seller, the
Purchaser, or any of their respective affiliates shall not have
instituted or threatened any legal proceeding relating to, or seeking
to prohibit or otherwise challenge the consummation of, the
transactions contemplated by this Agreement or any of the other
agreements, instruments, and other documents executed or to be executed
and delivered pursuant hereto or in connection therewith (collectively,
and including this Agreement, the "Operative Documents"), or to obtain
substantial damages with respect thereto.
(e) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement or any of the other
agreements, instruments, and other documents executed and delivered
pursuant hereto or in connection herewith (collectively, the "Operative
Documents"), by any federal, state, local, or other governmental
authority or by any court or other tribunal, including the entry of a
preliminary or permanent injunction, which, in the reasonable judgment
of the Purchaser, (i) makes any of the transactions contemplated by
this Agreement illegal, (ii) results in a material delay in the ability
of the Purchaser to consummate any of the transactions contemplated by
this Agreement, (iii) imposes limitations on the ability of the
Purchaser
<PAGE>
effectively to exercise full rights of ownership of the Closing Share
and, when issued in accordance with the Warrant, the shares of Seller
Common Stock issuable upon exercise of the Warrant (the "Warrant
Shares"), including the right to vote, when issued in accordance with
the Warrant, the Warrant Shares, on all matters properly presented to
the stockholders of the Seller, or (iv) otherwise prohibits, restricts,
or materially delays consum mation of any of the transactions
contemplated by this Agreement.
(f) "Blue-Sky" Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications, and
other authorizations from the state securities authorities having
jurisdiction over the state in which the Purchaser then resides as
shall be necessary for the Seller to legally issue the Closing Share
and the Warrant to the Purchaser under the state securities laws of
such state.
(g) Contractual Consents Needed. The Seller shall have
obtained at or prior to the Closing all consents, if any, required for the
consummation of the transactions to be consummated hereunder at the Closing from
any party to any contract, agreement, instrument, lease, license, arrangement,
or understanding to which the Seller or any of its consolidated subsidiaries or
consolidated affiliates (each, a "Subsidiary", and collectively, the
"Subsidiaries") is a party, or to which any of them or any of their respective
businesses, properties, or assets are subject, or from any governmental body,
authority, or tribunal.
SECTION 1.4 Conditions to the Obligation of the Seller to Consummate
the Transactions to be Consummated Hereunder at the Closing. The obligations of
the Seller to consummate the transactions to be consummated hereunder at the
Closing are subject to the following conditions (unless waived by the Seller in
its discretion):
(a) Accuracy of Representations and Compliance with
Conditions. All representations and warranties of the Purchaser
contained in Article III of this Agreement shall be true and correct as
of the Closing; as of the Closing the Purchaser shall have performed
and complied with all covenants and agreements and satisfied all
conditions required to be performed and complied with by the Purchaser
at or before such time by this Agreement; and the Seller shall have
received a certificate executed by Authorized Signatories of the
Purchaser, dated the date of the Closing, to that effect, substantially
in the form of Exhibit C.
(b) Opinion of Counsel. The Purchaser shall have delivered
to the Seller on the date of the Closing the favorable opinion of the
Chief Counsel of the Purchaser, dated as of such date, addressing the
matters customarily addressed by counsel to the purchaser with respect
to transactions of this type as agreed by the Purchaser and the Seller
and in the form agreed upon by the Seller and the Purchaser, each in
each case acting reasonably and in good faith.
(c) Other Closing Documents. The Purchaser shall have
delivered to the Seller at or prior to the Closing such other
documents, including, without limitation, an Investors Questionnaire,
as the Seller may reasonably request in order to enable the Seller to
determine
<PAGE>
whether the conditions to its obligations under this Agreement have
been met and otherwise to carry out the provisions of this Agreement.
(d) Legal Action. A party other than the Seller, the
Purchaser, or any of their respective affiliates shall not have
instituted or threatened any legal proceeding relating to, or seeking
to prohibit or otherwise challenge the consummation of, the
transactions contemplated by the Operative Documents or in connection
therewith, or to obtain substantial damages with respect thereto.
(e) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by any of the Operative Documents, by any
federal, state, local, or other governmental authority or by any court
or other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of the Seller, (i) makes
any of the transactions contemplated by this Agreement illegal, (ii)
results in a material delay in the ability of the Seller to consummate
any of the transactions contemplated by this Agreement, or (iii)
otherwise prohibits, restricts, or materially delays consum mation of
any of the transactions contemplated by this Agreement.
(f) "Blue-Sky" Law Compliance. The Seller shall have
received such consents, approvals, registrations, qualifications, and
other authorizations from the state securities authorities having
jurisdiction over the state in which the Purchaser then resides as
shall be necessary for the Seller to legally issue the Closing Shares
and the Warrant to the Purchaser under the state securities laws of
such state.
(g) Contractual Consents Needed. The Seller shall have
obtained on or prior to the Closing all consents required for the
consummation of the transactions to be consummated hereunder at the
Closing from any party to any contract, agreement, instrument, lease,
license, arrangement, or understanding to which the Seller or any
Subsidiary is a party, or to which any of them or any of their
respective businesses, properties, or assets are subject, or of any
governmental body, authority, or tribunal.
(h) Fairness Opinion. The Board of Directors of the Seller
shall have obtained the favorable opinion of Delta Financial Group
Incorporated as to, among other things, the fairness, from a financial
point of view, of the transactions contemplated hereby to the
stockholders of the Seller, which opinion shall be in form and
substance satisfactory to the Board of Directors of the Seller (the
"Fairness Opinion").
ARTICLE II.
Representations and Warranties of the Seller.
SECTION 2.1 Representations and Warranties. The Seller represents and
warrants to the Purchaser as of the Closing as follows:
<PAGE>
(a) Organization and Qualification. The Seller owns, either
directly or through one or more Subsidiaries, all the outstanding
shares of capital stock of the Subsidiaries. All of the Subsidiaries
are listed on Schedule 2.1(a). Other than the Subsidiaries, neither the
Seller nor any Subsidiary has a consolidated subsidiary or consolidated
affiliate corporation or owns any material interest in any other
person, firm or entity ("Person") except as set forth on Schedule
2.1(a). Schedule 2.1(a) also correctly sets forth as to the Seller and
as to each Subsidiary its place of incorporation or organization,
principal place of business, jurisdictions in which it is qualified to
do business, and the business which it currently conducts; and as to
each Subsidiary its authorized capitalization (if applicable), its
shares of capital stock or other equity interests outstanding, and the
record and beneficial owner of those shares. Each of Seller and each of
the Subsidiaries is a corporation, limited partnership, or limited
liability company duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation or
organization, with all requisite power and authority, and all necessary
consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all
federal, state, local, and other governmental authorities and all
courts and other tribunals, to own, lease, license, and use its
properties and assets and to carry on the business in which it is now
engaged, in each case except for such consents, authorizations,
approvals, orders, licenses, certificates, permits, declarations, and
filings, the absence of which, individually or in the aggregate, could
not reasonably be expected to have a material and adverse effect upon
the business, financial condition, or results of operation of the
Seller and the Subsidiaries, taken as a whole (a "Material Adverse
Effect"). Each of the Seller and each of the Subsidiaries is duly
qualified to transact the business in which it is engaged and is in
good standing as a foreign corporation in every jurisdiction in which
its ownership, leasing, licensing, or use of property or assets or the
conduct of its business makes such qualification necessary, except
where the absence of such qualification or good standing could not
reasonably be expected to have a Material Adverse Effect.
(b) Capitalization TC. The authorized capital stock of the
Seller consists of (i) 30,000,000 shares of Seller Common Stock, of
which 10,790,899 shares are outstanding as of the date hereof
(excluding the Closing Shares), and (ii) 1,000,000 shares of Preferred
Stock, par value $.01 per share ("Preferred Stock"), of which (A) 1,500
shares of Series B Preferred Stock, par value $.01 per share, (B) 500
shares of Series C Convertible Preferred Stock, par value $.01 per
share, and (C) 1 share of Series AA Convertible Preferred Stock, par
value $.01 per share, are outstanding as of the date hereof and are
convertible as set forth on Schedule 2.1(b). Each of such outstanding
shares of Seller Common Stock and each outstanding share of each
outstanding series of Preferred Stock is duly authorized, validly
issued, fully paid, and nonassessable, and was not issued in violation
of any applicable law or of any preemptive right of stockholders. All
persons who, to the Knowledge of the Seller (as hereinafter defined),
own of record or beneficially five percent or more of any class or
series of capital stock of the Seller are set forth on Schedule 2.1(b).
Except for this Agreement and as set forth on Schedule 2.1(b), there is
no commitment, plan, or arrangement to issue, and no outstanding
option, warrant, or other right calling for the issuance of, any share
of capital stock of the Seller or of any Subsidiary or any security or
other instrument convertible into, exercisable for, or exchangeable for
capital stock of the Seller or of any Subsidiary. Except as set forth
on Schedule 2.1(b), there is outstanding no security or other
<PAGE>
instrument convertible into or exchangeable for capital stock of the
Seller or of any Subsidiary. As used herein, "Knowledge of the Seller"
means the actual knowledge of any one or more of Ronald E. Roark,
Harold E. Cooke, Stephen W. Brown, or Richard Brock, assuming that each
possesses the actual knowledge that an officer or director with their
responsibilities would possess after reasonable inquiry into the
applicable matter.
(c) Financial Condition. The Seller has delivered to the
Purchaser true and correct copies of the following: audited
consolidated balance sheets of the Seller as of December 31, 1996 (the
"Last Balance Sheet) and December 31, 1995; audited consolidated
statements of income, consolidated statements of retained earnings, and
consolidated statements of cash flows of the Seller for the years ended
December 31, 1996 and December 31, 1995; and the unaudited consolidated
balance sheet (the "Unaudited Balance Sheet"), consolidated statement
of income, consolidated statement of retained earnings, and
consolidated statement of cash flows of the Seller for the nine months
ended September 30, 1997 (collectively the "Financial Statements").
Each such consolidated balance sheet presents fairly the financial
condition, assets, liabilities, and stockholders' equity of the Seller
and its consolidated subsidiaries as of its date; each such
consolidated statement of income and consolidated statement of retained
earnings presents fairly the results of operations of the Seller and
its consolidated subsidiaries for the period indicated; and each such
consolidated statement of cash flows presents fairly the information
purported to be shown therein, in each case subject in the case of such
unaudited consolidated balance sheet, consolidated statement of income,
consolidated statement of retained earnings, and consolidated balance
sheet to changes resulting from year-end audit adjustments. The
financial statements referred to in this Section 2.1(c) have been
prepared in accordance with generally accepted accounting principles
("GAAP") consistently applied throughout the periods involved except as
otherwise permitted by GAAP or, with respect to financial statement
footnotes, the rules and regulations of the Securities and Exchange
Commission (the "Commission") and are in accordance with the books and
records of the Seller and its consolidated subsidiaries. Except as set
forth on Schedule 2.1(c), since September 30, 1997 (the "Reference
Date"):
(d) There has at no time been a material adverse change in
the business, financial condition, or results of operations of the
Seller and its consolidated subsidiaries, considered as a whole
(including, without limitation, any adverse change in the rating of the
Seller as a special servicer by any nationally recognized rating
agency);
(i) Except as required by the terms of any
outstanding series of Preferred Stock, neither the Seller
nor any Subsidiary has authorized, declared, paid, or
effected any dividend or liquidating or other distribution
in respect of its capital stock or other outstanding equity
interests or any direct or indirect redemption, purchase, or
other acquisition of any stock of the Seller or any equity
interest of any Subsidiary;
(ii) The operations and business of the Seller and
each Subsidiary have been conducted in all respects only in
the ordinary course; and
<PAGE>
(iii) Neither the Seller nor any Subsidiary has
suffered an extraordi nary loss (whether or not covered by
insurance) or waived any right of material value.
(e) Tax and Other Liabilities. Neither the Seller nor any
Subsidiary has any liability of any nature, whether accrued, absolute,
known, unknown, contingent or otherwise, including without limitation
liabilities for federal, state, local, or foreign taxes and penalties,
interest, and additions to tax ("Taxes") and liabilities to customers
or suppliers, other than the following:
(i) Liabilities for which full provision has been
made on the Unaudited Balance Sheet; and
(ii) Other liabilities arising since the Reference
Date and prior to the Closing in the ordinary course of
business which are not inconsistent with the representations
and warranties of the Seller set forth in this Article II.
Without limiting the generality of the foregoing, the
amounts set up as provisions for Taxes on the Unaudited
Balance Sheet are sufficient for all accrued and unpaid
Taxes of the Seller and the Subsidiaries, whether or not due
and payable and whether or not disputed, under tax laws, as
in effect on September 30, 1997 (the "Unaudited Balance
Sheet Date"), for the period ended on such date and for all
fiscal periods prior thereto. Each of Seller and each of the
Subsidiaries has filed all federal, state, local, and
foreign tax returns required to be filed by it; has
delivered to the Purchaser a true and correct copy of each
such return which was filed in the past three years; has
paid (or has established on the Unaudited Balance Sheet a
reserve for) all Taxes, assessments, and other governmental
charges payable or remittable by it or levied upon it or its
properties, assets, income, or franchises which are due and
payable, in each case as of the Reference Date; and has
delivered to the Purchaser a true and correct copy of any
report as to adjustments received by it from any taxing
authority during the past three years and a statement as to
any litigation, governmental or other proceeding (formal or
informal), or investigation pending, threatened, or in
prospect with respect to any such report or the subject
matter of such report. Except as set forth in Schedule
2.1(d), neither the Seller nor any Subsidiary is a party to
any contract or commitment to guarantee the payment or
performance of any liability or other obligation by any
other Person, or pursuant to which the Seller or any
Subsidiary is or may become liable for the indebtedness or
other obligations of any other Person. Except as set forth
on Schedule 2.1(d), Seller is not a party to any currently
effective tax sharing agreement or arrangement or a control
person for tax purposes of any Person other than the
Subsidiaries.
(iii) Litigation and Claims. Except as set forth on
Schedule 2.1(e), there is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or
investigation pending or, to the Knowledge of the Seller,
threatened or in prospect (or any basis therefor to the
Knowledge of the Seller) with respect to the Seller, any
Subsidiary, or any of their respective businesses,
properties, or assets. None of the matters disclosed on
Schedule 2.1(e) could reasonably be expected to have a
Material Adverse Effect. Neither the Seller nor any
Subsidiary
<PAGE>
is affected by any current or threatened strike or other
labor disturbance nor to the Knowledge of the Seller is any
union attempting to represent any employee of the Seller or
of any Subsidiary as collective bargaining agent. Neither
the Seller nor any Subsidiary is in violation of, or in
default with respect to, any law, rule, regulation, order,
judgment, or decree, which violation or default could
reasonably be expected to have a Material Adverse Effect;
nor to the Knowledge of the Seller is the Seller or any
Subsidiary required to take any action in order to avoid
such violation or default.
(f) Properties.
(g) Contracts and Other Instruments. Schedule 2.1(g)
accurately and completely sets forth the information required to be
contained therein regarding all contracts, agreements, instruments,
leases, licenses, arrangements, or understandings with respect to the
Seller and each Subsidiary, identifying whether the matter disclosed
therein relates to the Seller or to a Subsidiary named therein. The
Seller has furnished to the Purchaser (i) the certificate of
incorporation (or other charter or organizational document) and by-laws
(or other governing document) of the Seller and each Subsidiary and all
amendments thereto, as currently in effect, and (ii) the following: (a)
true and correct copies of all contracts, agreements, and instruments
referred to in Schedule 2.1(g); and (ii) true and correct copies of all
leases and licenses referred to in Schedule 2.1(g). Neither the Seller,
any Subsidiary, nor (to the Knowledge of the Seller) any other party to
any such contract, agreement, instrument, lease, or license is now or
expects in the future to be in violation or breach of, or in default
with respect to complying with, any material term thereof; each such
contract, agreement, instrument, lease, or license that is material to
the business of the Seller is in full force and effect and is the
legal, valid, and binding obligation of the parties thereto and
(subject to applicable bankruptcy, insolvency, and other laws affecting
the enforceability of creditors' rights generally) is enforceable as to
them in accordance with its terms; and each such contract, agreement,
instrument, lease or license that is not material to the business of
the Seller is, to the Knowledge of the Seller, in full force and effect
and is the legal, valid, and binding obligation of the parties thereto
and (subject to applicable bankruptcy, insolvency, and other laws
affecting the enforceability of creditors' rights generally) is
enforceable as to them in accordance with its terms. Each of the Seller
and each of the Subsidiaries enjoy peaceful and undisturbed possession
under all leases and licenses under which it is operating. Neither the
Seller nor any Subsidiary is in violation or breach of, or in default
with respect to, any term of its certificate of incorporation (or other
charter or organizational document) or by-laws (or other governing
document). Neither the Seller nor any Subsidiary is a member of a
customer or user organization or of a trade association.
(h) Employees.
(i) Except as set forth on Schedule 2.1(h), neither
the Seller nor any Subsidiary has, or contributes to, any
pension, profit-sharing, option, other incentive plan, or
any other type of Employee Benefit Plan (as defined in
Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), or has any obligation to or
customary arrangement with employees for
<PAGE>
bonuses, incentive compensation, vacations, severance pay,
insurance, or other benefits. The Seller has furnished to
the Purchaser: (A) true and correct copies of all documents
evidencing plans, obligations, or arrangements referred to
in Schedule 2.1(h) (or true and correct written summaries of
such plans, obligations, or arrangements to the extent not
evidenced by documents) and true and correct copies of all
documents evidencing trusts, summary plan descriptions, and
any other summaries or descriptions relating to any such
plans; and (B) the two most recent annual reports (Form
5500's), if any, including all schedules thereto and the
most recent annual and periodic accounting of related plan
assets with respect to each Employee Benefit Plan.
(ii) All Accrued Liabilities (for contributions or
otherwise) (as defined in this Section 2.1(h)(ii)) of the
Seller or any Subsidiary as of the Closing Date to each
Employee Benefit Plan and with respect to each obligation to
or customary arrangement with employees for bonuses,
incentive compensation, vacations, severance pay, insurance,
or other benefits have been paid or accrued for all periods
ending prior to the date of the Closing and no payment to
any Employee Benefit Plan or with respect to any such
obligation or arrangement since the Last Balance Sheet Date
has been dispropor tionately large compared to prior
payments. For purposes of the preceding sentence, "Accrued
Liabilities" shall include a pro rata contribution to each
Employee Benefit Plan or with respect to each such
obligation or arrangement for that portion of a plan year or
other applicable period which commences prior to and ends
after the Closing Date, and Accrued Liabilities for any
portion of a plan year or other applicable period shall be
determined by multiplying the liability for the entire such
year or period by a fraction, the numerator of which is the
number of days preceding the date of the Closing in such
year or period and the denominator of which is the number of
days in such year or period, as the case may be.
(iii) There has been no violation of the reporting
and disclosure requirements imposed either under ERISA or
the Internal Revenue Code of 1986, as amended, or its
predecessor statute (the "Code") for which a penalty has
been or may be imposed with respect to any Employee Benefit
Plan of the Seller or of any Subsidiary and which could
reasonably be expected to have a Material Adverse Effect. No
Employee Benefit Plan or related trust of the Seller or any
Subsidiary has any material liability of any nature, accrued
or contingent, including without limitation liabilities for
Taxes (other than for routine payments to be made in due
course to participants and beneficiaries, except as set
forth in Schedule 2.1(h)) which liabilities could reasonably
be expected to have a Material Adverse Effect. There has
been no violation by any Employee Benefit Plan of the Seller
or any Subsidiary, which is a group health plan within the
meaning of Section 162(i)(3) of the Code with the applicable
requirements of Section 162(k) of the Code. Other than the
health care continuation requirements of Section 162(k) of
the Code, neither the Seller nor any Subsidiary has any
obligation to provide post-retirement medical benefits or
life insurance coverage to any current or former employees.
There is no litigation, arbitration, claim, governmental or
other proceeding (formal
<PAGE>
or informal), or investigation pending, threatened, or in
prospect (or any basis therefor to the Knowledge of the
Seller) with respect to any Employee Benefit Plan or related
trust or with respect to any fiduciary, administrator, or
sponsor (in its capacity as such) of any Employee Benefit
Plan, which could reasonably be expected to have a Material
Adverse Effect. No Employee Benefit Plan or related trust
and no such obligation or arrangement is in material
violation of, or in default with respect to, any law, rule,
regulation, order, judgment, or decree, which violation or
default could reasonably be expected to have a Material
Adverse Effect nor to the Knowledge of the Seller is the
Seller, any Subsidiary, any Employee Benefit Plan, or any
related trust required to take any action in order to avoid
violation or default. No event has occurred or is threatened
or about to occur which would constitute a prohibited
transaction under Section 406 of ERISA and which could
reasonably be expected to have a Material Adverse Effect.
(iv) Each Pension Plan maintained for the employees
of the Seller or of any Subsidiary has been qualified, from
its inception, under Section 401(a) of the Code and any
related trust has been an exempt trust for such period under
Section 501 of the Code. Each Pension Plan has been operated
in accordance with its terms, except where the failure to so
operate could not reasonably be expected to have a Material
Adverse Effect. No investigation or review by the Internal
Revenue Service is currently pending or (to the Knowledge of
the Seller) is contemplated in which the Internal Revenue
Service has asserted or may assert that any Pension Plan is
not qualified under Section 401(a) of the Code or that any
related trust is not exempt under Section 501 of the Code.
No assessment of any federal taxes has been made or (to the
Knowledge of the Seller) is contemplated against the Seller,
any Subsidiary, or any related trust of any Pension Plan and
nothing has occurred which would result in the assessment of
unrelated business taxable income under the Code. Form
5500's have been timely filed with respect to all Pension
Plans.
(v) Neither the Seller nor any Subsidiary currently
contributes to or since December 31, 1994 has effectuated
either a complete or partial withdrawal from any
multi-employer Pension Plan within the meaning of Section
3(37) of ERISA or sponsored or otherwise maintained a
Pension Plan subject to Title IV of ERISA.
(vi) Schedule 2.1(h) contains a true and correct
statement of the names, relationship with the Seller or any
Subsidiary, current rates of compensation (whether in the
form of salary, bonuses, commissions, or other supplemental
compensation now or hereafter payable), and aggregate annual
compensation as of January 1, 1998 of each director,
officer, or other employee of the Seller or of any
Subsidiary whose aggregate compensation currently exceeds
the rate of $75,000 per annum. Since January 1, 1998,
neither the Seller nor any Subsidiary has changed the rate
of compensation of any of its directors, officers, or
employees, nor has any Employee Benefit Plan or program been
instituted or amended to increase benefits thereunder.
<PAGE>
(i) Questionable Payments. Neither the Seller, any
Subsidiary, nor any director, officer, employee, or other person
associated with the Seller or any Subsidiary when acting on behalf of
the Seller or any Subsidiary, has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment, or
other unlawful expenses relating to political activity; made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; made
any false or fictitious entry on the books or records of the Seller or
any Subsidiary; made any bribe, rebate, payoff, influence payment,
kickback, or other unlawful payment; given any favor or gift which is
not deductible for federal income tax purposes; or made any bribe,
kickback, or other payment of a similar or comparable nature, whether
lawful or not, to any person or entity, private or public, regardless
of form, whether in money, property, or services, to obtain favorable
treatment in securing business or to obtain special concessions, or to
pay for favorable treatment for business secured or for special
concessions already obtained.
(j) Authority to Sell TC. The Seller has all requisite power
and authority to execute, deliver, and perform this Agreement and each
of the Operative Documents to which the Seller is a party. All
necessary corporate proceedings of the Seller have been duly taken to
authorize the execution, delivery, and performance of this Agreement
and each of the Operative Documents to which the Seller is a party by
the Seller. Each of this Agreement and each of the Operative Documents
to which the Seller is a party has been duly authorized, executed, and
delivered by the Seller, constitutes the legal, valid, and binding
obligation of the Seller, and is enforceable against it in accordance
with its terms. Except as set forth on Schedule 2.1(j), no consent,
authorization, approval, order, license, certificate, or permit of or
from, or declaration or filing with, any federal, state, local, or
other governmental authority or any court or other tribunal is required
by the Seller or any Subsidiary for the execution, delivery, or
performance of this Agreement or any of the other Operative Documents
to which the Seller is a party, by the Seller. No consent of any party
to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which the Seller or any Subsidiary is a party, or to
which it or any of their respective businesses, properties, or assets
are subject, is required for the execution, delivery, or performance of
this Agreement or any of the other Operative Documents to which the
Seller is a party (except such consents referred to in Schedule
2.1(j)); and the execution, delivery, and performance of this Agreement
and each of the Operative Documents to which the Seller is a party will
not (if the consents referred to in Schedule 2.1(j) are obtained prior
to the Closing) violate, result in a breach of, conflict with, or (with
or without the giving of notice or the passage of time or both) entitle
any party to terminate or call a default under, entitle any party to
rights and privileges that such party was not receiving or entitled to
receive immediately before this Agreement or any of the Operative
Documents (if now executed) were executed under, or create any
obligation on the part of the Seller or any Subsidiary that it was not
paying or obligated to pay immediately before this Agreement or any of
the Operative Documents (if now executed) were executed under, any term
of any such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate or result in a breach of any
term of the certificate of incorporation (or other charter or
organizational document) or by-laws (or
<PAGE>
other governing document) of the Seller or any Subsidiary, or (if each
of the conditions precedent set forth herein or in a schedule hereto
are satisfied) violate, result in a breach of, or conflict with any
law, rule, regulation, order, judgment, or decree binding on the Seller
or any Subsidiary or to which it or any of its respective businesses,
properties, or assets are subject. Upon their issuance pursuant hereto,
the Closing Share and the Warrant, and upon their issuance in
accordance with the Warrant, the Warrant Shares, will be validly
authorized, validly issued, fully paid, and nonassessable and will not
have been issued in violation of any preemptive right of stockholders,
and the Purchaser will then have good title to the Closing Share and
the Warrant, and upon their issuance in accordance with the Warrant,
the Warrant Shares, 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. Assuming the
accuracy of the representations and warranties made by the Purchaser
pursuant to Article III, the issuance of the Closing Share and the
Warrant to the Purchaser hereunder will be exempt from registration
under the Securities Act and will comply with the state securities laws
of the State of New York.
(k) Intellectual Property Rights. Neither the Seller nor any
Subsidiary owns any patents, patent applications and registrations,
trademarks, trademark applications and registrations, copyright
applications and registrations, trade names or industrial designs. The
Seller and the Subsidiaries license computer software as listed on
Schedule 2.1(k), and to the Knowledge of the Seller neither the Seller
nor any of the Subsidiaries is in violation of any of such licenses.
The Seller and the Subsidiaries own computer software as listed on
Schedule 2.1(k), and the conduct of the business of the Seller and the
Subsidiaries and the use of such software does not infringe upon, and
neither the Seller nor any Subsidiary has received any notice,
complaint, threat, or claim alleging infringement of, any patent,
trademark, trade name, copyright, industrial design, trade secret, or
any other intellectual property right or proprietary right of any
Person.
(l) Insurance. The Seller and the Subsidiaries are the
respective owners of the insurance policies set forth on Schedule
2.1(l), which policies provide adequate coverage to insure the assets,
properties, and businesses of the Seller and the Subsidiaries against
such risks and in such amounts as are prudent and customary for
companies similar to the Seller and the Subsidiaries, and all of such
policies are in full force and effect.
(m) Related Party Transactions. Except as set forth on
Schedule 2.1(m), neither the Seller nor any Subsidiary is directly a
party to any oral or written contract, agreement, lease, or arrangement
with, or commitment to, any Related Party (as defined below). Except as
set forth on Schedule 2.1(m), no Related Party directly or indirectly
owns or controls any assets or properties used in the business of the
Seller or any Subsidiary, and no Related Party, directly or indirectly,
engages in or has any significant interest in any business which is a
competitor, customer, or supplier of the Seller or any Subsidiary. As
used herein, the term "Related Party" means, collectively, (A) any
Person which, to the Knowledge of the Seller, owns 5% or more of any
class of the outstanding securities of the Seller or any Subsidiary,
(B) any director, officer, or employee of the Seller or any Subsidiary,
or (C) any Person in which any director or officer of the Seller or any
Subsidiary or any Person referred to in clause (A) above is a partner
or member, or holds a 5% or more equity interest.
<PAGE>
(n) Environmental Conditions. To the Knowledge of the
Seller:
(i) There is no existing or pending Environmental
Law (as hereinafter defined) with a future compliance date
that will require operational changes, business practice
modifications, or capital expenditures at any Real Property
or Real Property Improvements;
(ii) All hazardous substances and solid waste on,
in, or under any Real Property or Real Property
Improvements, wherever located, have been properly removed
and disposed of, and no past or current disposal, discharge,
spill, or other release of, or treatment, transportation, or
other handling of hazardous materials or solid waste on, in
or under any Real Property or Real Property Improvements,
will subject the Seller or any Subsidiary to corrective or
compliance action or any other liability; and
(iii) There are no currently pending or overtly
threatened legal action or administrative proceedings or
orders, judgments, decrees, or rulings against or involving
the Seller or any Subsidiary relating to any alleged past or
ongoing violation of any Environmental Law, nor is the
Seller or any Subsidiary subject to any liability for any
such past or ongoing violation.
As used herein, "Environmental Law" means any
federal, state, local, or municipal statute, rule,
regulation, or ordinance ("Law") relating to health, safety,
or the environment, including, without limitation, any Law
relating to the manufacture, generation, processing,
distribution, application, use, treatment, transport or
handling, storage of, or emissions, discharges, releases, or
threatened releases into the environment of, pollutants,
contaminants, hazardous substances, petroleum products,
chemicals or industrial waste, other solids, liquids, gases,
or wastes, heat, light, noise, radiation, electro-magnetic
fields and other forms of matter and energy of every kind
and nature and the proper containment and disposal of the
same.
(o) Disclosure. Neither this Agreement or any of the
Operative Documents, nor any other written document, description,
certificate, or statement furnished to the Purchaser by or on behalf of
the Seller pursuant hereto or thereto, contains or will contain any
untrue statement of a material fact, or omits or will omit to state a
material fact, necessary to make the statements contained herein and
therein not misleading in light of the circumstances under which they
have been or will be made.
(p) Brokerage Fees. Neither the Seller nor any Subsidiary
has created any liability of any Person for any brokerage or finders
fee in connection with the transactions contemplated by this Agreement.
<PAGE>
ARTICLE III.
Representations and Warranties of the Purchaser
SECTION 3.1 Representations and Warranties. The Purchaser represents
and warrants to the Seller as of the Closing as follows:
(a) Organization. The Purchaser is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Nevada, with all requisite power and authority to own, lease,
license, and use its properties and assets and to carry on the business
in which it is now engaged and to own securities issued by the Seller
as herein contemplated. The Purchaser is duly qualified to do business
as a foreign corporation and is in good standing in the State of New
York. The Purchaser resides in the State of New York, and is an
affiliate of ContiFinancial Corporation.
(b) Authority to Buy. The Purchaser has all requisite power
and authority to execute, deliver, and perform this Agreement and each
of the other Operative Documents to which it is or is to be a party.
All necessary proceedings of the Purchaser have been duly taken to
authorize the execution, delivery, and performance of this Agreement
and each of the other Operative Documents to which the Purchaser is or
is to be a party by the Purchaser. This Agreement and each of the
Operative Documents to which the Purchaser is a party has been duly
authorized, executed, and delivered by the Purchaser, is the legal,
valid, and binding obligation of the Purchaser, and is enforceable
against the Purchaser in accordance with its terms.
(c) Non-Distributive Intent. The Purchaser is an "accredited
investor" (as defined in Rule 501(a) under the Securities Act of 1933,
as amended (the "Securities Act")). The Purchaser is acquiring the
securities to be acquired by it at the Closing for its own account (and
not for the account of others) for investment and not with a view to
the resale or other distribution thereof. The Purchaser will not sell
or otherwise dispose of such securities (whether pursuant to a
liquidating dividend or otherwise) without registration under the
Securities Act or an exemption therefrom, and the certificate or
certificates representing such securities may contain a legend to the
foregoing effect and all legends necessary or desirable, in the
judgment of the Purchaser, pursuant to any applicable state securities
law, rule, or regulation. The Purchaser understands that it may not
sell or otherwise dispose of such Shares in the absence of either a
registration statement under the Securities Act or an exemption from
the registration provisions of the Securities Act.
(d) Investment Company. The Purchaser is not subject to
regulation as an investment company under the Investment Company Act of
1940, as amended.
(e) Broker Fees. Neither the Purchaser nor any of its
subsidiaries or parents has created any liability of any Person for any
brokerage or finders fee in connection with the transactions
contemplated by this Agreement.
<PAGE>
ARTICLE IV.
Covenants of the Seller
The Seller covenants to the Purchaser as follows:
SECTION 4.1 Furnish Future Information. After the Closing, the Seller
shall deliver to the Purchaser the following so long as the Purchaser owns any
of the Closing Share, the Warrant, or the Warrant Shares:
(a) within 45 days after the end of each of the first three
quarterly fiscal periods in each fiscal year of the Seller, a
consolidated balance sheet of the Seller and its consolidated
subsidiaries as at the end of such period, and a consolidated statement
of income, consolidated statement of retained earnings, and
consolidated statement of cash flows of Seller and its consolidated
subsidiaries for such period, in each case prepared from the books and
records of the Seller and its consolidated subsidiaries in accordance
with generally accepted accounting principles ("GAAP") consistently
applied throughout the periods involved except as permitted by GAAP or,
with respect to financial statement footnotes, by the applicable rules
and regulations of the Commission, setting forth in each case in
comparative form the figures for the corresponding period of the
previous fiscal year, all in reasonable detail, subject to changes
resulting from year-end audit adjustments;
(b) within 90 days after the end of each fiscal year of the
Seller, a consolidated balance sheet of the Seller and its consolidated
subsidiaries as at the end of such year, and a consolidated statement
of income, consolidated statement of retained earnings, and
consolidated statement of cash flows of the Seller and its consoli
dated subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail, such consolidated financial statements to be audited
by and to be accompanied by an opinion of the Seller's independent
certified public accountants of recognized national standing, which
opinion shall state that such consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles consistently applied and that the audit by such accountants
in connection with such consolidated financial statements has been made
in accordance with generally accepted auditing standards;
(c) promptly upon their becoming available, copies of all
financial statements, reports, notices, and proxy statements sent by
the Seller to its stockholders, all regular and periodic reports filed
by the Seller with any securities exchange or with the Commission, and
all press releases; and
(d) with reasonable promptness, such other material and
public information and data with respect to the Seller or any of its
Subsidiaries as from time to time may be requested by the Purchaser.
SECTION 4.2 Reasonable Best Efforts. Each of the Seller and the
Purchaser agrees to cooperate and to use its reasonable best efforts to cause
the conditions precedent to the Closing to
<PAGE>
be satisfied in a timely manner. Without limiting the generality of the
foregoing, the Seller shall use its reasonable best efforts to obtain the
Fairness Opinion and, in the event of the termination or revocation of the
Fairness Opinion prior to Closing, to obtain a substitute fairness opinion as
soon as reasonably practicable.
SECTION 4.3 Reservation of Authorized Shares. From the date hereof
through the Closing hereunder and until the expiration or surrender of the
Warrant, the Seller shall continuously hold in reserve sufficient shares of
Seller Common Stock to consummate the Closing and to perform its obligations
under the Warrant.
SECTION 4.4 Use of Proceeds. The Seller agrees that the proceeds
received by the Seller as a result of the transactions contemplated hereby will
be set aside and utilized by the Seller, at the direction of the Board of
Directors of the Seller, pursuant to specific appropriations only for the
following purposes: to expand the Corporation's commercial mortgage origination
capabilities by the addition of personnel, the acquisition of mortgage banking
firms, or other means; to complete a real estate investment trust or other fund
opportunity in which Purchaser and its affiliates have an interest that is
economically similar to their interest in the CHC Commercial Holdings, Inc. REIT
as agreed by the Seller and the Purchaser and its affiliates on the date hereof;
and, to the extent of up to $500,000 of such proceeds, to fund the Corporation's
commercial mortgage origination operations as in existence on the date hereof.
ARTICLE V.
Covenants of the Purchaser
The Purchaser covenants to the Seller as follows:
SECTION 5.1 Compliance with Securities Laws. The Purchaser agrees to
make all filings required to be made by it under the Securities Exchange Act of
1934 (the "Exchange Act")with respect to its holdings of securities issued by
the Seller on a timely basis.
SECTION 5.2 Change of Residence and Principal Executive Office. The
Purchaser agrees to promptly notify the Seller of any change in the state of its
residence or any change in the state that its principal executive office is
located prior to the Closing.
ARTICLE VI.
Indemnification
SECTION 6.1 Indemnification by the Seller. The Seller hereby agrees to
defend, indemnify and hold harmless the Purchaser, its affiliates, subsidiaries,
and parent entities, and their respective past, current, and future officers,
directors, employees, counsel, agents, and equity holders, and each person, if
any, who controls, controlled, or will control any of them within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act (the
"Purchaser Indemnitees"), from and against any and all losses, liabilities,
damages (other than consequential or punitive damages), costs and expenses
whatsoever (including but not limited to reasonable attorneys' fees of one
counsel
<PAGE>
(and the costs of one local counsel in each jurisdiction requiring local
representation) and any and all expenses whatsoever incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any claims whatsoever, and any and all amounts paid in
settlement of any claim or litigation), as and when incurred, arising out of,
based upon, or in connection with any misrepresentation or breach of any
warranty made by the Seller contained in any Operative Document. The foregoing
agreement to indemnify shall be in addition to any liability the Seller may
otherwise have, including without limitation liabilities arising out of any
Operative Document.
SECTION 6.2 Indemnification by the Purchaser. The Purchaser hereby
agrees to defend, indemnify and hold harmless the Seller, its subsidiaries and
affiliates, and their respective past, current, and future officers, directors,
employees, counsel, agents, and equity holders, and each person, if any, who
controls, controlled, or will control any of them within the meaning of Section
15 of the Securities Act or Section 20(a) of the Exchange Act (the "Seller
Indemnitees"), from and against any and all losses, liabilities, damages (other
than consequential or punitive damages), costs and expenses whatsoever
(including but not limited to reasonable attorneys' fees of one counsel (and the
costs of one local counsel in each jurisdiction requiring local representation)
and any and all expenses whatsoever incurred in investigating, preparing, or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any claims whatsoever, and any and all amounts paid in
settlement of any claim or litigation), as and when incurred, arising out of,
based upon, or in connection with any misrepresentation or breach of any
warranty made by the Purchaser contained in any Operative Document. The
foregoing agreement to indemnify shall be in addition to any liability the
Purchaser may otherwise have, including without limitation liabilities arising
out of any Operative Document.
SECTION 6.3 Method of Asserting Claims. In the event that any claim or
demand for which the Seller could be liable to a Purchaser Indemnitee hereunder
is asserted or sought to be collected from a Purchaser Indemnitee by a third
party, the Purchaser Indemnitee shall promptly notify the Seller in writing of
such claim or demand, specifying the nature of such claim or demand and the
amount or estimated amount thereof to the extent then feasible, which estimate
shall not be conclusive of the final amount of such claim and demand (the "Claim
Notice"). The Seller shall have 20 days from the date that such Claim Notice is
made hereunder (the "Notice Period") to notify the Purchaser Indemnitee in
writing (A) whether or not it disputes its liability to the Purchaser Indemnitee
hereunder with respect to such claim or demand, and (B) notwithstanding any such
dispute, whether or not it desires, at its sole cost and expense, to defend the
Purchaser Indemnitee against such claim or demand.
(a) If the Seller disputes its liability with respect to
such claim or demand or the amount thereof (whether or not the Seller
desires to defend the Purchaser Indemnitee against such claim or demand
as provided in subsections (b) and (c) below), such dispute shall be
resolved in compliance with Section 6.5. Pending the resolution of any
dispute by the Seller of its liability with respect to any claim or
demand, such claim or demand shall not be settled without the prior
written consent of the Purchaser Indemnitee.
(b) In the event that the Seller notifies the Purchaser
Indemnitee within the Notice Period that it desires to defend the
Purchaser Indemnitee against such claim or
<PAGE>
demand then, except as hereinafter provided, the Seller shall have the
right to defend the Purchaser Indemnitee by appropriate proceedings,
which proceedings shall be promptly settled or prosecuted by it to a
final conclusion in such a manner as to avoid any risk of the Purchaser
Indemnitee becoming subject to liability for any other matter;
provided, however, that the Seller shall not, without the prior written
consent of the Purchaser Indemnitee, consent to the entry of any
judgment against the Purchaser Indemnitee or enter into any settlement
or compromise which does not include, as an unconditional term thereof,
the giving by the claimant or plaintiff to the Purchaser Indemnitee of
a release, in form and substance satisfactory to the Purchaser
Indemnitee, from all liability or obligations in respect of such claim
or litigation. If the Purchaser Indemnitee desires to participate in,
but not control, any such defense or settlement, it may do so at its
sole cost and expense through counsel of its choice. If, in the
reasonable opinion of the Purchaser Indemnitee, any such claim or
demand or the litigation or resolution of any such claim or demand
involves an issue or matter which could have a material adverse effect
on the business, operations, assets, properties, or prospects of the
Purchaser Indemnitee, then the Purchaser Indemnitee shall have the
right to control the defense or settlement of any such claim or demand
and its reasonable costs and expenses shall be included as part of the
indemnification obligation of the Seller hereunder; provided, however,
that the Purchaser Indemnitee shall not settle any such claim or demand
without the prior written consent of the Seller, which consent shall
not be unreasonably delayed or withheld. If the Purchaser Indemnitee
should elect to exercise such right, the Seller shall have the right to
participate in, but not control, the defense or settlement of such
claim or demand at its sole cost and expense.
(c) (i) If the Seller elects not to defend the Purchaser
Indemnitee against such claim or demand, whether by not giving the
Purchaser Indemnitee timely notice as provided above or otherwise, then
the amount of any such claim or demand, or, if the same may be defended
by the Seller or by the Purchaser Indemnitee (but the Purchaser
Indemnitee shall not have any obligation to defend any such claim or
demand), then that portion thereof as to which such defense is
unsuccessful, in each case shall be conclusively deemed to be a
liability of the Seller hereunder unless the Seller has disputed its
liability to the Purchaser Indemnitee as provided in subsection (a)
above, in which case such dispute shall be resolved as provided in
Section 6.5.
(ii) In the event that a Purchaser Indemnitee should
have a claim or demand against the Seller that does not
involve a claim or demand being asserted or sought to be
collected from it by a third party, the Purchaser Indemnitee
shall promptly send a Claim Notice with respect to such
claim to the Seller. If the Seller disputes its liability
with respect to such claim or demand, such dispute shall be
resolved in accordance with Section 6.5; if the Seller does
not notify the Purchaser Indemnitee within the Notice Period
that it disputes such claim, the amount of such claim shall
be conclusively deemed a liability of the Seller hereunder.
(d) All claims for indemnification by a Seller Indemnitee
hereunder shall be asserted and resolved utilizing the procedures set
forth above, substituting in the appropriate place "Seller Indemnitee"
for "Purchaser Indemnitee" and variations thereof and "Purchaser" for
"Seller."
<PAGE>
SECTION 6.4 Payment. Upon the determination of the liability under
Section 6.1, 6.2, or 6.3, the appropriate party shall pay to the other, as the
case may be, within 10 days after such determination, the amount of any claim
for indemnification made hereunder. In the event that the indemnified party is
not paid in full for any such claim pursuant to the foregoing provisions
promptly after the other party's obligation to indemnify has been determined in
accordance herewith, it shall have the right, notwithstanding any other rights
that it may have against any other person or entity, to setoff the unpaid amount
of any such claim against any amounts owed by it under any of the Operative
Documents. Upon the payment in full of any claim, either by setoff or otherwise,
the entity making payment shall be subrogated to the rights of the indemnified
party against any person or entity with respect to the subject matter of such
claim.
SECTION 6.5 Mediation. Subject to Section 6.6, the parties hereto agree
to attempt in good faith to resolve any controversy or claim arising out of or
relating to this Agreement or any of the Operative Documents by mediation in
such manner as shall be chosen by the parties hereto; provided, however, that
nothing shall prevent the parties from settling any dispute by mutual agreement
at any time; and provided further, however, that either party hereto shall be
entitled to litigate any such dispute before a court of competent jurisdiction,
except as otherwise provided herein, in the event that such dispute is not
resolved in such mediation within 30 days after such mediation commences.
SECTION 6.6 Other Rights and Remedies Not Affected. The indemnification
rights of the parties hereunder are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty, or failure to fulfill any agreement
or covenant hereunder on the part of any party hereto, including without
limitation the right to seek specific performance, rescission, or restitution,
none of which rights or remedies shall be affected or diminished hereby.
ARTICLE VII.
Miscellaneous
SECTION 7.1 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 7.2 Availability of Equitable Remedies. Since a breach of the
provisions of this Agreement may not adequately be compen sated by money
damages, any party shall be entitled, in addition to any other right or remedy
available to it, 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 the issuance of such an injunction and to the
ordering of specific performance.
SECTION 7.3 Survival. The covenants, agreements, representations, and
warranties contained in or made pursuant to this Agreement shall survive the
Closing and any delivery of any
<PAGE>
purchase price by the Purchaser, irrespective of any investigation made by or on
behalf of any party, as follows:
(a) the representations and warranties of the Seller
relating to Taxes, ERISA, the Foreign Corrupt Practices Act, and
environmental laws, rules and regulations shall survive until the
expiration of the applicable statute of limitation;
(b) all other representations and warranties contained
herein shall survive the Closing when made for a period of two (2)
calendar years after such Closing; and
(c) all other provisions of the Operative Documents shall
survive until the expiration of the applicable statute of limitations.
SECTION 7.4 Modification. This Agreement and the Exhibits and Schedules
hereto and the other Operative Documents set forth the entire understanding of
the parties with respect to the subject matter hereof, supersede all existing
agreements among them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party (except as otherwise
provided in Section 7.5).
SECTION 7.5 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 7.5):
If to the Purchaser:
ContiWest Corporation
277 Park Avenue
38th Floor
New York, New York 10172
Attn: Chief Counsel
Fax: 212-207-2937
With a copy to:
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10172
Attn: Lauris G. L. Rall, Esq.
Fax: 212-912-7751
<PAGE>
If to the Seller:
Crown NorthCorp, Inc.
1251 Dublin Road
Columbus, Ohio 43215
Attn: Stephen W. Brown, Esq.
Fax: 614-488-9780
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Jonathan R. Shils, Esq.
Fax: 404-572-6999
SECTION 7.6 Waiver. Any waiver by any party of a breach of any term of
this Agreement shall not operate as 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 7.7 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, and shall inure to the benefit of each
Purchaser Indemnitee, Seller Indemnitee, and their respective successors and
assigns (if not a natural person) and his assigns, heirs, and personal
representatives (if a natural person).
SECTION 7.8 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 (except as provided in Section 7.7).
SECTION 7.9 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 circum stance,
it shall nevertheless remain applicable to all other persons and circumstances.
SECTION 7.10 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 7.11 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.
<PAGE>
SECTION 7.12 Assignments. This Agreement may be assigned by operation
of law without the consent of any party hereto. This Agreement may be assigned
by the Purchaser to its affiliate without the consent of the Seller. 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.
SECTION 7.13 Termination of Prior Agreement. The parties hereto hereby
irrevocably terminate that certain Stock Purchase Agreement, dated as of October
2, 1997, between and among the Seller and the Purchaser, and agree that such
Stock Purchase Agreement shall be of no force and effect whatsoever.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
CONTIWEST CORPORATION
[SEAL]
By: ___________________________________
Name:
Title: Authorized Signatory
By: ___________________________________
Name:
Title: Authorized Signatory
CROWN NORTHCORP, INC.
[SEAL]
By: ___________________________________
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF WARRANT
[See Exhibit E of this 13D]
<PAGE>
EXHIBIT B
SELLER'S OFFICER'S CERTIFICATE
Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed thereto in that certain Stock Purchase Agreement,
dated as of March ____, 1998, between and among ContiWest Corporation and Crown
NorthCorp, Inc. (the "Stock Purchase Agreement").
The undersigned, being the Chairman of the Board and Chief Executive
Officer of CROWN NORTHCORP, INC., a Delaware corporation (the "Seller"), DOES
HEREBY CERTIFY, in the name and on behalf of the Company, as follows:
1. All representations and warranties of the Seller contained in
Article II of the Stock Purchase Agreement are true and correct as of the date
hereof.
2. As of the date hereof, the Seller has performed and complied with
all covenants and agreements, and satisfied all conditions required to be
performed and complied with, by the Seller at or before the date hereof by the
Stock Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto, in the
name and on behalf of the Company, as of March ____, 1998.
CROWN NORTHCORP, INC.
By: ___________________________________
Ronald E. Roark
Chairman of the Board and
Chief Executive Officer
<PAGE>
EXHIBIT C
PURCHASER'S OFFICER'S CERTIFICATE
Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed thereto in that certain Stock Purchase Agreement,
dated as of March ____, 1998, between and among ContiWest Corporation and Crown
NorthCorp, Inc. (the "Stock Purchase Agreement").
Each of the undersigned, each being an Authorized Signatory of
CONTIWEST CORPORATION, a Nevada corporation (the "Purchaser"), DOES HEREBY
CERTIFY, in the name and on behalf of the Purchaser, as follows:
1. As of the date hereof, all representations and warranties of the
Purchaser contained in Article III of the Stock Purchase Agreement are true and
correct as of the date hereof.
2. As of the date hereof, the Purchaser has performed and complied with
all covenants and agreements, and satisfied all conditions required to be
performed and complied with, by the Purchaser at or before the date hereof
by the Stock Purchase Agreement.
3. The Purchaser is an "accredited investor," as defined in Rule 501(a)
under the Securities Act, because it is a corporation with assets in excess of
$5,000,000.
4. The Purchaser is purchasing the Closing Share for its own account,
for investment purposes only, and without a view toward the resale or
distribution thereof.
5. The Purchaser's chief executive office and principal place of
business is located in the State of New York.
6. The Seller has made available to the Purchaser a reasonable time
before the Closing the opportunity to ask questions of and receive answers
concerning the Seller and the terms and conditions of the transaction to be
consummated at the Closing.
IN WITNESS WHEREOF, the undersigned has set his hand hereunto, in the
name and on behalf of the Company, as of March ____, 1998.
CONTIWEST CORPORATION
By: ___________________________________
Name:
Title: Authorized Signatory
By: ___________________________________
Name:
Title: Authorized Signatory
<PAGE>
This VOTING AGREEMENT, dated as of March __, 1998, 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"), CONTIWEST CORPORATION, a Nevada corporation with an office at 277
Park Avenue, 38th Floor, New York, New York 10172 ("Conti"), 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")
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, Conti intends to acquire the Series BB Convertible
Preferred Stock, par value $.01 per share, of the Company (the "Series BB
Preferred Stock") pursuant to that certain Stock Purchase Agreement, dated as of
even date herewith, between and among Conti and the Company (the "Stock Purchase
Agreement"); and
WHEREAS, Harbert beneficially owns shares of the Common Stock
and the Series AA Convertible Preferred Stock, par value $.01 per share, of the
Company (the "Series AA Preferred Stock"), and has rights to designate a number
of individuals for election as directors of the Company pursuant to that certain
Stock Purchase Agreement, dated as of March 7, 1997, between and among the
Company and Harbert, as amended to date (as so amended, the "Harbert Stock
Purchase Agreement") and pursuant to 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, 1988 (the "Series AA Certificate of Designation");
and
WHEREAS, Harbert and the Roark Parties are parties to that
certain Voting Agreement, dated as of March 7, 1997, between and among Harbert,
Roark, and Tucker, as amended to date (as so amended, the "Harbert Voting
Agreement"), whereby (i) each of the Tucker Parties has agreed, among other
things, to vote its shares in accordance with the provisions of the Harbert
Voting Agreement to more fully effectuate certain provisions of the Harbert
Stock Purchase Agreement and the Series AA Certificate of Designation, under
which Harbert is entitled to designate a number of individuals for election as
directors of the Company, and for other purposes, and (ii) Harbert and its
affiliates have agreed, among other things, to vote its shares in accordance
with the provisions of the Harbert Voting Agreement for the continued election
of Roark as a Director of the Company; and
WHEREAS, Conti desires that each of the Tucker Parties and
Harbert agree to vote its shares in accordance with the provisions of this
Agreement to more fully effectuate certain provisions of the Certificate of
Designation establishing the Series BB Preferred Stock, as filed with the
Secretary of State of the State of Delaware on March __, 1998 (the "Certificate
of Designation"),
1
<PAGE>
under which Conti is entitled to designate one individual for election as a
director of the Company; and
WHEREAS, Harbert desires that Conti vote its shares in
accordance with the provisions of this Agreement to more fully effectuate
certain provisions of the Harbert Stock Purchase Agreement and the Series AA
Certificate of Designation, under which Harbert is entitled to designate a
number of individuals for election as a director of the Company; and
WHEREAS, the Tucker Parties desire that Conti and its
affiliates agree to vote their shares in accordance with the provisions of this
Agreement for the continued election of Roark as a director of the Company;
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
Stock Purchase Agreement.
SECTION 2. Voting Agreement of the Tucker Parties With Respect
to Conti. Each of the Tucker Parties, severally and not jointly, agrees:
To vote all shares of securities issued by the Company and entitled to vote in
the election of directors ("Voting Securities") beneficially owned by him or it
for the election of such nominee for election as a director of the Company as
Conti is entitled to designate pursuant to the Certificate of Designation;
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 Voting Securities
beneficially owned by him, her, or it for the election as a director of the
Company of such nominee for election as a director of the Company as Conti is
entitled to designate for nomination as such pursuant to the Certificate of
Designation;
In the event a director so designated for nomination by Conti ceases to be a
director for any reason before his term expires, to vote all shares of Voting
Securities beneficially owned by him or it in favor of another person designated
by Conti for election as a director of the Company to the extent Conti is then
entitled to designate another person for election as a director of the Company
pursuant to the Certificate of Designation; and
(d) In the event a director of the Company so designated for nomination by Conti
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 Voting
Securities owned by him, her, or it in favor of another individual designate for
nomination by Conti for election as a director of the Company to the extent that
Conti is then entitled to designated another person for election as a director
of the Company pursuant to the Certificate of Designation.
2
<PAGE>
Notwithstanding the foregoing, however, to the extent that the
Tucker Parties beneficially own, but collectively do not possess the sole power
to vote or direct the voting of any such Voting Securities from time to time
(the shares as to which the Tucker Parties do not so possess such voting power
being referred to herein as "Non-Exclusive Tucker Shares"), they shall be
obligated to use their reasonable commercial efforts to cause such Non-Exclusive
Tucker Shares to be voted in compliance with the foregoing.
SECTION 3. Voting Agreement of Conti With Respect to Roark.
Conti agrees:
To vote all shares of Voting Securities beneficially owned by it for the
election of Roark as a director of the Company;
To cause each Person controlling it, controlled by it, or under common control
with it (collectively, the "Conti Affiliates") to vote all shares of Voting
Securities owned by him, her, or it for the election of Roark as a director of
the Company;
In the event that Roark ceases to be a director for any reason before his term
as such expires, to vote all shares of Voting Securities beneficially owned by
it in favor of another individual nominated by Roark or, in the event of Roark's
death or incapacity, his heirs, legatees, executors, successors, guardians,
legal representatives, or administrators, as the case may be, beneficially
owning at least a majority of the Voting Securities beneficially owned by Roark
immediately prior to his death or incapacity, for election as a director of the
Company; and
(d) In the event that Roark ceases to be a director of the Company for any
reason before his term as such expires, to cause each of the Conti Affiliates to
vote all shares of Voting Securities owned by him, her, or it in favor of
another individual nominated by Roark or, in the event of Roark's death or
incapacity, his heirs, legatees, executors, successors, guardians, legal
representatives, or administrators, as the case may be, beneficially owning at
least a majority of the Voting Securities beneficially owned by Roark
immediately prior to his death or incapacity, for election as a director of the
Company.
Notwithstanding the foregoing, however, to the extent that
Conti and the Conti Affiliates (collectively, the "Conti Parties") collectively
beneficially own but do not possess the sole power to vote or direct the voting
of any such Voting Securities from time to time (the shares as to which the
Conti Parties do not so possess such voting power being referred to herein as
"Non-Exclusive Conti Shares"), then Conti shall be obligated to use its
reasonable commercial efforts to cause such Non-Exclusive Conti Shares to be
voted in compliance with the foregoing.
SECTION 4. Voting Agreement of Harbert With Respect to Conti.
Harbert agrees:
To vote all shares of Voting Securities beneficially owned by it for the
election as a director of the Company of such nominee for election as a director
of the Company as Conti is entitled to designate for nomination as such pursuant
to the Certificate of Designation;
3
<PAGE>
To cause each Person controlling it, controlled by it, or under common control
with it (collectively, the "Harbert Affiliates") to vote all shares of Voting
Securities beneficially owned by him, her, or it for the election as a director
of the Company of such nominee for election as a director of the Company as
Conti is entitled to designate for nomination as such pursuant to the
Certificate of Designation;
In the event a director of the Company so designated for nomination by Conti
ceases to be a director of the Company for any reason before his or her term as
such expires, to vote all shares of Voting Securities owned by it in favor of
another individual designated for nomination by Conti for election as a director
of the Company to the extent Conti is then entitled to designate such other
individual for nomination for election as a director of the Company pursuant to
the Certificate of Designation; and
In the event a director of the Company so designated for nomination by Conti
ceases to be a director of the Company for any reason before his or her term as
such expires, to cause each of the Harbert Affiliates to vote all shares of
Voting Securities owned by him, her, or it in favor of another individual
designated for nomination by Conti for election as a director of the Company to
the extent Conti is then entitled to designate such other individual for
nomination as a director of the Company pursuant to the Certificate of
Designation.
Notwithstanding the foregoing, however, to the extent that Harbert and the
Harbert Affiliates collectively beneficially own but do not possess the sole
power to vote or direct the voting of any such Voting Securities from time to
time (the shares as to which Harbert and the Harbert Affiliates do not so
possess such voting power being referred to herein as "Non-Exclusive Harbert
Shares"), they shall be obligated to use their reasonable best efforts to cause
such Non-Exclusive Harbert Shares to be voted in compliance with the foregoing.
SECTION 5. Voting Agreement of Conti With Respect to Harbert.
Conti agrees:
To vote all shares of Voting Securities beneficially owned by 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 Harbert Stock Purchase Agreement, the Series AA Certificate
of Designation, or both, as the case may be;
To cause each of the Conti Affiliates to vote all shares of 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 Harbert Stock
Purchase Agreement, the Series AA Certificate of Designation, or both, as the
case may be;
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 Voting Securities owned by 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
4
<PAGE>
individual for nomination for election as a director of the Company pursuant to
the Harbert Stock Purchase Agreement or the Series AA Certificate of
Designation, as the case may be; and
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 cause each of the Conti Affiliates to vote all shares of 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 as a director of the Company pursuant to the Harbert Stock Purchase
Agreement or the Series AA Certificate of Designation, as the case may be.
Notwithstanding the foregoing, however, to the extent that Conti and the Conti
Affiliates collectively beneficially own but do not possess the sole power to
vote or direct the voting of any such Voting Securities from time to time , they
shall be obligated to use their reasonable commercial efforts to cause such
Non-Exclusive Conti Shares to be voted in compliance with the foregoing.
SECTION 6. Legends. Within thirty days after (i) with respect
to Voting Securities currently beneficially owned by them, the date hereof, and
(ii) with respect to Voting Securities of which they subsequently acquire
beneficial ownership, the date of such acquisition, the Tucker Parties, Conti,
and Harbert will, and the Tucker Parties will cause the Roark Affiliates to, and
Conti will cause the Conti Affiliates to, and Harbert will cause the Harbert
Affiliates to, deliver certificates representing the 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 sale, assignment, or other transfer of such Voting
Securities to a Person not subject to the purview of this Agreement):
"The shares of such Voting Securities represented by this certificate are
subject to restrictions on voting, as provided in a Voting Agreement dated as of
March __, 1998, between and among ContiWest Corporation, Tucker Holding Company,
Ltd., Ronald E. Roark, and Harbert Equity Fund I, L.L.C., a copy of which is on
file with the Secretary of the Company."
SECTION 7. Secretary to Retain Copy. A copy of this Agreement
shall be filed with the Secretary of the Company.
SECTION 8. Stock Changes. The provisions of this Agreement
shall be deemed to apply equally to any share of Stock or other securities
distributed in respect of shares of Stock.
SECTION 9. 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 10. Availability of Equitable Remedies. Since a breach
of the provisions of this Agreement could not adequately be compen sated 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,
5
<PAGE>
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 11. Modification. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all existing agreements among them concerning such subject matter
(except for the Harbert Voting Agreement), and may be modified only by a written
instrument duly executed by each party.
SECTION 12. 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. 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 13. 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 14. 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 respec
tive assigns, heirs, and personal representatives of the individual parties
hereto.
SECTION 15. 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 16. 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 circum
stance, it shall nevertheless remain applicable to all other persons and
circumstances.
SECTION 17. 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 18. Pronouns. Any masculine personal pronoun shall be
considered to mean the corresponding feminine or neuter personal pronoun, as the
context requires.
SECTION 19. 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
6
<PAGE>
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.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
TUCKER HOLDING COMPANY, LTD.
By: _______________________________
Name: Ronald E. Roark
Title: Managing Member
RONALD. E. ROARK
CONTIWEST CORPORATION
By: _______________________________
Name:
Title: Authorized Signatory
By: _______________________________
Name:
Title: Authorized Signatory
HARBERT EQUITY FUND I, L.L.C.
By: Harbert Management Corporation, Manager
By: _______________________________
Name:
Title:
7
<PAGE>
March __, 1998
Crown NorthCorp, Inc.
1251 Dublin Road
Columbus, Ohio 43215
Ladies and Gentlemen:
As you know, we have the right to nominate one individual for election
as a director of Crown NorthCorp, Inc., a Delaware corporation (the "Company"),
pursuant to the Certificate of Designation establishing the Series BB
Convertible Preferred Stock, par value $.01 per share, of the Company, as filed
with the Secretary of State of the State of Delaware on March __, 1998 (the
"Certificate of Designation"). We hereby agree to nominate Scott M. Mannes for
election as a director of the Company pursuant to the Certificate of Designation
from and after the date hereof until we have appointed in writing a successor to
replace Mr. Mannes, for so long as (i) we are so entitled to nominate an
individual for election as a Director of the Company pursuant to the Certificate
of Designation, and (ii) Mr. Mannes is not disqualified from such nomination
pursuant to the Certificate of Designation.
Moreover, at the time when we are no longer entitled to nominate one
individual for election as a director of the Company pursuant to the Certificate
of Designation, we agree to promptly cause any individual so nominated by us who
then is serving as a director of the Company to promptly resign as a director of
the Company.
CONTIWEST CORPORATION
By: ___________________________________
Name:
Title: Authorized Signatory
By: ___________________________________
Name:
Title: Authorized Signatory
<PAGE>
WARRANT
W-__ March 3, 1998
The securities represented by this Warrant and issuable upon
exercise hereof have not been registered or qualified under the Securities Act
of 1933, as amended (the "1933 Act"), or under the provisions of any applicable
state securities laws, but have been acquired by the registered holder hereof
for purposes of investment and in reliance on statutory exemptions under the
1933 Act and under any applicable state securities laws. These securities and
the securities issued upon exercise hereof may not be sold, pledged, transferred
or assigned, nor may this Warrant be exercised, except in a transaction which is
exempt under provisions of the 1933 Act and any applicable state securities laws
or pursuant to an effective registration statement; and in the case of an
exemption, only if the Company has received an opinion of counsel satisfactory
to the Company that such transaction does not require registration of any such
securities.
WARRANT TO PURCHASE UP TO 200,000 SHARES OF COMMON STOCK
1. Grant of Warrant
2. Subject to the provisions of this Warrant including,
without limitation, Section 1 (c), Crown NorthCorp, Inc., a Delaware corporation
(the "Company"), hereby agrees that CONTIWEST CORPORATION or its successors or
permitted assigns (the "Holder") is entitled, subject to the provisions of this
Warrant, to purchase from the Company, at any time or from time to time, during
the period commencing on the date hereof, up to 200,000 fully paid and
non-assessable shares of Common Stock at a price of $2.00 per share (the
"Exercise Price").
3. The term "Common Stock" means the Common Stock, par value
$.01 per share, of the Company as constituted on March 3, 1998 (the "Grant
Date"), together with any other equity securities that may be issued by the
Company in substitution therefor. The number of shares of Common Stock to be
received upon the exercise of this Warrant may be adjusted from time to time as
hereinafter set forth. The shares of Common Stock deliverable upon such
exercise, and as adjusted from time to time, are hereinafter referred to as
"Warrant Stock." The term "Company" means and includes the corporation named
above as well as (i) any successor corporation resulting from the merger or
consolidation of such corporation with another corporation, or (ii) any
corporation to which such corporation has transferred its property or assets as
an entirety or substantially as an entirety.
Notwithstanding any provision of this Warrant to the contrary,
the Holder's rights to purchase Warrant Shares hereunder shall vest and expire
in accordance with the following schedule, with the effect that the Holder shall
not have the right to purchase any Warrant Shares with respect to which such
rights have not vested in accordance with the following schedule or with respect
to which such rights have terminated in accordance with the following schedule:
(i) The Holder shall have the right to purchase
20,000 shares of the Common Stock, as adjusted pursuant hereto,
commencing upon the release date of the first
<PAGE>
Annual Report on Form 10-KSB of the Company released after the Grant
Date reporting that the Company has been profitable for any of its
fiscal years occurring after the Company's fiscal year ended December
31, 1997, which right shall terminate at 5:00 p.m., E.S.T., on the date
that is one year after the date that such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company has been profitable for
any of its fiscal years occurring after the Company's fiscal year ended December
31, 1997, provided that the credit facility created under that certain Program
Agreement, dated as of July 1, 1997, between the Company and ContiTrade Services
L.L.C. (the "Warehouse Facility") has not then been cancelled, terminated, not
renewed, or substantially reduced by ContiTrade Services L.L.C. ("Conti")
(unless such action results from a default or material breach of such credit
facility by the Company) which right shall terminate at 5:00 p.m., E.S.T., on
the date that is one year after the date that such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company had earnings per share
of the Common Stock of at least 15 cents during any of its fiscal years
occurring after the Company's fiscal year ended December 31, 1997, which right
shall terminate at 5:00 p.m., E.S.T., on the date that is one year after the
date that such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company had earnings per share
of the Common Stock of at least 15 cents during any of its fiscal years
occurring after the Company's fiscal year ended December 31, 1997, provided that
the Warehouse Facility has not then been cancelled, terminated, not renewed, or
substantially reduced by Conti (unless such action results from a default or
material breach of such credit facility by the Company), which right shall
terminate at 5:00 p.m., E.S.T., on the date that is one year after the date that
such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company had earnings per share
of the Common Stock of at least 30 cents during any of its fiscal years
occurring after the Company's fiscal year ended December 31, 1997, which right
shall terminate at 5:00 p.m., E.S.T., on the date that is one year after the
date that such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company had earnings per share
of the Common Stock of at least 30 cents during any of its fiscal years
occurring after the Company's fiscal year ended December 31, 1997, provided that
the Warehouse Facility has not the been cancelled, terminated, not renewed, or
substantially reduced by Conti
<PAGE>
(unless such action results from a default or material breach of such credit
facility by the Company), which right shall terminate at 5:00 p.m., E.S.T., on
the date that is one year after the date that such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company had earnings per share
of the Common Stock of at least 40 cents during any of its fiscal years
occurring after the Company's fiscal year ended December 31, 1997, which right
shall terminate at 5:00 p.m., E.S.T., on the date that is one year after the
date that such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company had earnings per share
of the Common Stock of at least 40 cents during any of its fiscal years
occurring after the Company's fiscal year ended December 31, 1997, provided that
the Warehouse Facility has not then been cancelled, terminated, not renewed, or
substantially reduced by Conti (unless such action results from a default or
material breach of such credit facility by the Company), which right shall
terminate at 5:00 p.m., E.S.T., on the date that is one year after the date that
such right so vests.
The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB of the Company
released after the Grant Date reporting that the Company had earnings per share
of the Common Stock of at least 50 cents during any of its fiscal years
occurring after the Company's fiscal year ended December 31, 1997, which right
shall terminate at 5:00 p.m., E.S.T., on the date that is one year after the
date that such right so vests.
(x) The Holder shall have the right to purchase an additional
20,000 shares of the Common Stock, as adjusted pursuant hereto, commencing upon
the release date of the first Annual Report on Form 10-KSB released after the
Grant Date reporting that the Company had earnings per share of the Common Stock
of at least 50 cents during any of its fiscal years occurring after the
Company's fiscal year ended December 31, 1997, provided that the Warehouse
Facility has not then been cancelled, terminated, not renewed, or substantially
reduced by Conti (unless such action results from a default or material breach
of such credit facility by the Company), which right shall terminate at 5:00
p.m. E.S.T., on the date that is one year after the date that such right so
vests.
Notwithstanding any provision of this Warrant to the contrary,
however, the rights granted hereunder and to vest pursuant to subsections (ii),
(iv), (vi), (viii), and (x) of Section 1(c), whether or not vested, shall
irrevocably terminate in their entirety upon the first actual cancellation,
termination, non-renewal, or substantial reduction of the Warehouse Facility by
Conti (unless such action results from a default or material breach of such
credit facility by the Company).
4. Exercise of Warrant. Subject to the limitations set forth
in Sections 1(c) and 5 hereof, this Warrant may be exercised in whole or in part
at any time or from time to time during the period commencing on the date
hereof, to the extent permitted by Section 1(c) hereof, by
<PAGE>
presentation and surrender of this Warrant to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Warrant
Exercise Form attached hereto duly executed and accompanied by payment (either
in cash, by certified or official bank check, payable to the order of the
Company, or by wire transfer of immediately available funds to an account
designated in writing by the Company) of the Exercise Price for the number of
shares specified in such form. If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Company of
this Warrant, together with the Exercise Price, at its office, or by the stock
transfer agent of the Company at its office, in proper form for exercise, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
the Company shall then be closed or that certificates representing such shares
of Common Stock shall not then be actually delivered to the Holder.
5. The Company will at all times reserve for issuance and
delivery all shares of Common Stock issuable upon exercise of this Warrant. All
such shares shall be duly authorized and, when issued upon such exercise, shall
be validly issued, fully paid and non-assessable and free of all preemptive
rights. No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant, but the Company shall pay the Holder
an amount equal to the applicable Exercise Price multiplied by such fraction in
lieu of each fraction of a share otherwise called for upon any exercise of this
Warrant.
6. Adjustments.
(a) Capital Adjustments. In case at any time or from time to
time after the Grant Date the holders of Common Stock of the Company (or any
shares of stock or other securities at the time receivable upon the exercise of
this Warrant) shall have received, or, on or after the record date fixed for the
determination of eligible shareholders, shall become entitled to receive,
without payment therefor, other or additional stock or other securities or
property by way of dividend (other than ordinary dividends payable in cash out
of the Company's earnings), or other or additional stock or other securities or
property (including cash) by way of stock-split, spin-off, reclassification,
combination of shares, or similar corporate rearrangement, (other than
additional shares of Common Stock of the Company, or any other stock or
securities into which such Common Stock shall have been changed, or any other
stock or securities convertible into or exchangeable for such Common Stock or
such other stick or securities, issued as a stock dividend or stock-split,
adjustments in respect of which shall be covered by the terms of Section 4(c) or
4(d)), then and in each such case Holder, upon the exercise hereof as provided
herein, shall be entitled to receive the amounts of stock and other securities
and property (including cash in the cases referred to above) which such Holder
would hold on the date of such exercise if on the Grant Date he had been the
holder of record of the number of shares of the Common Stock of the Company
called for on the face of this Warrant, as adjusted in accordance herewith, and
had thereafter, during the period from the Grant Date, to and including the date
of such exercise, retained such shares and/or all other or additional stock and
other securities and property (including cash in the cases referred to above)
receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by Sections 4(a) and (b).
<PAGE>
Adjustment for Reorganization, Consolidation, and Merger. In
case of any reorganization of the Company (or any other corporation the stock or
other securities of which are at the time receivable on the exercise of this
Warrant) after the Grant Date, or in case, after such date, the Company (or any
such other corporation) shall consolidate with or merge into another corporation
or convey all or substantially all of its assets to another corporation, then
and in each such case Holder, upon the exercise hereof as provided herein at any
time after the consummation of such reorganization, consolidation, merger, or
conveyance, shall be entitled to receive, upon the exercise of this Warrant,
such stock, other securities, or other property that it would had received if
such Holder had exercised this Warrant immediately prior to the consummation of
such reorganization, consolidation, merger, or conveyance, all subject to
further adjustment as provided in Sections 4(a), 4(c), and 4(d); in each case,
the terms of this Warrant shall be applicable to the shares of stock or other
securities or property receivable upon the exercise of this Warrant after such
consummation.
Adjustment for Issue or Sale of Common Stock at Less than
Purchase Price. In case at any time or from time to time on or after the Grant
Date the Company shall issue or sell shares of its Common Stock (other than
those excepted by Section 4(c)(6) and other than by subdivision or combination
of the outstanding Common Stock) for a consideration per share less than the
Exercise Price (or, if an adjusted Exercise Price shall be in effect by reason
of an adjustment under this Section 4(c) or Section 4(d) as provided below, then
less such adjusted Exercise Price), then (i) the Exercise Price then in effect
shall be reduced to a number equal to the quotient of (x) the product obtained
by multiplying the number of shares of Common Stock of the Company outstanding
immediately prior to such issuance or sale by the Exercise Price (or, if an
adjusted Exercise Price shall be in effect by reason of a previous adjustment
under this Section 4(c) or Section 4(d), by such adjusted Exercise Price),
divided by (y) the number of shares of Common Stock outstanding immediately
after such purchase and sale, and (ii) in each such case Holder, upon the
exercise hereof as provided herein, shall be entitled to receive, in lieu of the
shares of Common Stock theretofore receivable upon the exercise of this Warrant,
a number of shares of Common Stock determined by (I) dividing the Exercise Price
then in effect, as adjusted as a result of such sale, into (II) the product
obtained by multiplying the number of shares of Common Stock called for on the
face of this Warrant, as adjusted in accordance herewith, by the Exercise Price
in effect immediately prior to such adjustment caused by such purchase and sale.
For the purpose of this Section 4(c), the following paragraphs
(1) to (6) shall be applicable:
Issuance or Sale of Convertible Securities. In case at any
time after the Grant Date the Company shall issue or sell any stock or other
securities of the Company directly or indirectly convertible into or
exchangeable for Common Stock ("Convertible Securities"), there shall be
determined the price per share for which Common Stock is issuable upon the
conversion or exchange thereof, such determination to be made by dividing (a)
the total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof by (b) the maximum number of shares of Common Stock of the
Company issuable upon conversion or exchange of all of such Convertible
Securities, and such issue or sale shall be deemed to be an issue or sale for
cash (as of the date of issue or sale of such Convertible
<PAGE>
Securities) of such maximum number of shares of Common Stock at the price per
share so determined.
If such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of
exchange, upon the conversion or exchange thereof, the adjusted Exercise Price
shall, forthwith upon any such increase becoming effective, be readjusted (but
to no greater extent than originally adjusted) to reflect the same.
If any rights of conversion or exchange evidenced by such
Convertible Securities shall expire without having been exercised, the adjusted
Exercise Price shall forthwith be readjusted (but to no greater extent than
originally adjusted) to be the adjusted Exercise Price which would have been in
effect had an adjustment been made on the basis that the only shares of Common
Stock issued or sold were those issued upon conversion or exchange of such
Convertible Securities, and that they were issued or sold for the consideration
actually received by the Company upon such conversion or exchange, plus the
consideration, if any, actually received by the Company for the issue or sale of
such of the Convertible Securities as were actually converted or exercised.
Grant of Rights or Options for Convertible Securities. In case
any time after the Grant Date the Company shall grant any rights or options to
subscribe for purchase or otherwise acquire Common Stock, there shall be
determined the price per share for which Common Stock is issuable upon the
exercise of such rights or options, such determination to be made by dividing
(a) the total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the minimum
aggregate amount of additional consideration payable to the Company upon the
exercise of such rights or options, by (b) the maximum number of shares of
Common Stock of the Company issuable upon the exercise of such rights or
options; and the granting of such rights or options shall be deemed to be an
issue or sale for cash (as of the date of the granting of such rights or
options) of such maximum number of shares of Common Stock at the price per share
so determined.
If such rights or options shall by their terms provide for an
increase or increases, with the passage of time, in the amount of additional
consideration payable to the Company upon the exercise thereof, the adjusted
Exercise Price shall, forthwith upon any such increase becoming effective, be
readjusted (but to no greater extent than originally adjusted) to reflect the
same.
If such rights or options shall expire without having been
exercised, the adjusted Exercise Price shall forthwith be readjusted (but to no
greater extent than originally adjusted) to be the adjusted Exercise Price which
would have been in effect had an adjustment been made on the basis that the only
shares of the Common Stock so issued and sold were those issued or sold upon the
exercise of such rights or options and that they were issued or sold for the
consideration actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting of all
such rights or options, whether or not exercised.
Grant of Rights or Options for Convertible Securities. In case
at any time after the Grant Date the Company shall grant any rights or options
to subscribe for, purchase, or otherwise acquire Convertible Securities, such
Convertible Securities shall be deemed, for purposes of Section
<PAGE>
4(c)(2), to have been issued and sold (as of the actual date of the issue or
sale of such rights or options) for the total amount received or receivable by
the Company as consideration for the granting of such rights or options plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of such rights or options.
If such rights or options shall by their terms provide for an
increase or increases, with the passage of time, in the amount of additional
consideration payable to the Company upon the exercise thereof, the adjusted
Exercise Price shall, forthwith upon any such increase becoming effective, be
readjusted (but to no greater extent than originally adjusted) to reflect the
same.
If any such rights or options shall expire without having been
exercised, the adjusted Exercise Price shall forthwith be adjusted (but to no
greater extent than originally adjusted) to be the adjusted Exercise Price which
would have been in effect had an adjustment been made upon the basis that the
only Convertible Securities so issued or sold were those issued and sold upon
the exercise of such rights or options and that they were issued or sold for the
consideration actually received by the Company for such exercise, plus the
consideration, if any, actually received by the Company for the granting of all
such rights or options, whether or not exercised.
Dilution in case of Other Stock or Securities. In case any
shares of stock or other securities, other than Common Stock of the Company,
shall at the time be receivable upon the exercise of this Warrant, and in case
any additional shares of such stock or any additional such securities (or any
stock or any additional securities convertible into or exchangeable for any such
stock or securities) shall be issued or sold for a consideration per share such
as to dilute the purchase rights evidenced by this Warrant, then and in each
such case the adjusted exercise Price shall forthwith be adjusted, substantially
in the manner provided for above in this Section 4(c), so as to protect the
holders of this Warrant against the effect of such dilution.
Determination of Consideration. Upon any issuance or sale for
a consideration other than cash, or a consideration part of which is other than
cash, of any shares of Common Stock or Convertible Securities or any rights or
options to subscribe for, purchase, or otherwise acquire any Common Stock or
Convertible Securities, the amount of the consideration other than cash received
by the Company shall be deemed to be the fair value of such consideration as
determined in good faith by the Board of Directors of the Company. In case any
Common Stock or Convertible Securities or any rights or options to subscribe
for, purchase, or otherwise acquire any Common Stock or Convertible Securities
shall be issued or sold together with other stock or securities or other assets
of the Company for a consideration which covers both, the consideration for the
issue or sale of such Common Stock or Convertible Securities or such other
rights or options shall be deemed to be the portion of such consideration
allocated thereto by the Board of Directors of the Company.
No adjustment pursuant to this Section 4(c) shall be made by
reason of the issuance of (a) shares of Common Stock issued pursuant to the
Company's stock option plans, stock purchase arrangements, or employment
agreements with officers, directors, or employees of the Company, as currently
in effect or as in effect in the future, approved by the Board of Directors of
the Company, (b) shares of Common Stock issuable upon the conversion of
preferred stock of the Company outstanding on the Grant Date, (c) shares of
Common Stock issuable upon the exercise of options and warrants to purchase the
Company's Common Stock outstanding on the Grant Date,
<PAGE>
or (d) any shares of Common Stock issuable upon exercise of any Warrant issued
pursuant to the Stock Purchase Agreement, dated as of March 3, 1998, between and
among ContiWest Corporation and the Company.
Excepted Issues and Sales. No adjustment pursuant to this
Section 4(c) shall be made by reason of the issuance of (a) shares of Common
Stock issued pursuant to the Company's stock option plans, stock purchase
arrangements, or employment agreements with officers, directors, or employees of
the Company, as currently in effect or as in effect in the future, approved by
the Board of Directors of the Company, (b) shares of Common Stock issuable upon
the conversion of preferred stock of the Company outstanding on the Grant Date,
(c) shares of Common Stock issuable upon the exercise of options and warrants to
purchase the Company's Common Stock outstanding on the Grant Date, or (d) any
shares of Common Stock issuable upon exercise of any Warrant issued pursuant to
the Stock Purchase Agreement, dated as of March 3, 1998, between and among
ContiWest Corporation and the Company.
Stock Split and Reverse Stock Split. If the Company at any
time or from time to time after the Grant Date effects a subdivision of the
outstanding Common Stock, the Exercise Price (or the adjusted Exercise Price)
then in effect immediately before that subdivision shall be proportionately
decreased and the number of shares of Common Stock theretofore receivable upon
the exercise of this Warrant shall be proportionately increased. If the Company
at any time or from time to time after the Grant Date combines the outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price (or
adjusted Exercise Price) then in effect immediately before that combination
shall be proportionately increased and the number of shares of Common Stock
theretofore receivable upon the exercise of this Warrant shall be
proportionately decreased. Each adjustment under this Section 4(d) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
Notice to Warrant Holder of Adjustment. Whenever the number of
shares of Warrant Stock or the Exercise Price is adjusted as herein provided,
the Company shall cause to be mailed to the Holder in accordance with the
provisions of this Section 4 a notice (i) stating that an event giving rise to
an adjustment hereunder has occurred, (ii) setting forth the adjusted number of
shares of Warrant Stock and the adjusted Exercise Price and (iii) showing in
reasonable detail the computations and the facts upon which such adjustments are
based.
7. Restrictions on Exercise Imposed by Federal and State
Securities Laws. The Holder hereby acknowledges that neither this Warrant nor
any of the securities that may be acquired upon exercise of this Warrant have
been registered or qualified under the 1933 Act or under the securities laws of
any state. The Holder acknowledges that, upon exercise of this Warrant, the
securities to be issued upon such exercise may be subject to applicable federal
and state securities (or other) laws requiring registration, qualification or
approval of governmental authorities before such securities may be validly
issued or delivered upon notice of such exercise. The Holder agrees that the
issuance of such securities may be deferred until the issuance or sale of such
securities shall be lawful in all respects. The restrictions imposed by this
Section 5 upon the exercise of this Warrant shall cease and terminate as to any
particular shares of Warrant Stock (i) when such securities shall have been
effectively registered and qualified under the 1933 Act and all applicable state
securities laws and disposed of in accordance with the registration statement
covering such
<PAGE>
securities, or (ii) when such restrictions are no longer required in order to
insure compliance with the 1933 Act and all applicable state securities laws.
8. Legends. Unless (i) the shares of Warrant Stock have been
registered under the 1933 Act, or (ii) in the opinion of counsel for the Company
such legend is no longer required in order to ensure compliance with the 1933
Act and all applicable state securities laws, upon exercise of any of the
Warrants and the issuance of any of the shares of Warrant Stock, all
certificates representing such shares shall bear on the face thereof
substantially the following legend:
The securities represented by this certificate have not been
registered or qualified under the Securities Act of 1933, as amended (the "1933
Act"), or under the provisions of any applicable state securities laws, but have
been acquired by the registered holder hereof for purposes of investment and in
reliance on statutory exemptions under the 1933 Act, and under any applicable
state securities laws. These securities may not be sold, pledged, transferred or
assigned, except in a transaction which is exempt under provisions of the 1933
Act and any applicable state securities laws or pursuant to an effective
registration statement.
9. Notices of Record Date, Etc. In case:
10. The Company shall establish a record date for the holders
of its Common Stock for the purpose of entitling them 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 to receive any other
right;
11. Of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, any share exchange for
shares of capital stock of another corporation or any conveyance of all or
substantially all of the assets of the Company to another corporation;
12. Of any voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
13. The Company shall enter into a letter of intent or
agreement with respect to a transaction by which all of the outstanding shares
of Common Stock of the Company are to be acquired by a third party; then the
Company shall mail or cause to be mailed to each Holder at the time outstanding
a notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights, and stating the
amount and character of such dividend, distribution or rights, (ii) the date on
which such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding up is to take place, and the time, if any is
to be fixed, as to which the holders of record of Common Stock shall be entitled
to exchange their shares for securities or other property deliverable upon the
completion of such transaction, or (iii) the closing of the acquisition by a
third party of all of the outstanding shares of Common Stock. Such notice shall
be mailed as soon as practicable after the occurrence or likelihood of such
event is publicly disclosed.
14. Transfer and Assignment.
<PAGE>
15. Except as set forth in Section 8(b), neither this Warrant
nor any rights hereunder may be assigned, transferred, pledged or hypothecated
in any way (whether by operation of law or otherwise). This Warrant shall not be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of this Warrant contrary to
the provisions of this Agreement shall be null and void and without legal
effect.
16. The Holder may assign or transfer this Warrant in whole or
in part; provided, however, that prior to such assignment or transfer the Holder
provides to the Company evidence reasonably satisfactory to the Company that the
proposed transfer will be effected in compliance with all applicable laws,
including without limitation federal and state securities laws.
17. Notices. All notices required hereunder must be in writing
and shall be deemed given when telefaxed, delivered personally or within three
days after mailing when mailed by certified or registered mail, return receipt
requested, if to the Company, at 1251 Dublin Road, Columbus, Ohio 43215, or at
such other address of which the Holder has been advised by notice hereunder, and
if to the Holder, at the address for the registered Holder as it appears on the
books of the Company, or at such other address of which the Company has been
advised by notice hereunder.
18. Rights as a Shareholder. The Holder shall have no rights
as a shareholder with respect to any shares covered by this Warrant until the
date of issuance of such shares.
19. Lost or Destroyed Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant and, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date. The Holder agrees with the Company that this Warrant is
issued, and all the rights hereunder shall be held subject to, all of the
conditions, limitations and provisions set forth herein.
20. Applicable Law. The Warrant is issued under and shall for
all purposes be governed by and construed in accordance with the laws of the
State of Delaware, without reference to the conflict of law principles thereof.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed on its behalf, in its corporate name, by its duly authorized officer, as
of the day and year first above written.
CROWN NORTHCORP, INC.
By: ___________________________________
Print Name:
Title:
[CORPORATE SEAL]
Attest:
Print Name:
Title:
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing __________ shares of Common Stock of
Crown NorthCorp, Inc., a Delaware corporation, and hereby makes payment of
$____________ in payment therefor.
___________________________________
Signature
Signature, if jointly held
Date:
******************************************************************************
<PAGE>
INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered holder of the within Warrant)
Name ____________________________________________________
(Please typewrite or print in block letters)
Address _______________________________________________
_______________________________________________
Social Security or Taxpayer Identification Number
******************************************************************************
ASSIGNMENT FORM
FOR VALUE RECEIVED, ______________________________ hereby
sells, assigns and transfers unto ______________________________________________
Name (please typewrite or print in block
letters)
the right to purchase Common Stock of Crown NorthCorp, Inc., a Delaware
corporation, represented by this Warrant to the extent of shares as to which
such right is exercisable and does hereby irrevocably constitute and appoint
______________________________, Attorney, to transfer the same on the books of
the Company with full power of substitution in the premises.
Dated:
________________________________________
Signature
________________________________________
Signature, if jointly held
