<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CROWN NORTHCORP, INC.
---------------------
(Name of Registrant as Specified in its Charter)
N/A
---
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.01 per share
--------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
---
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
N/A
---
(4) Proposed maximum aggregate value of transaction:
N/A
---
(5) Total fee paid:
N/A
---
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
---
(2) Form, Schedule or Registration Statement No.:
N/A
---
(3) Filing Party:
N/A
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(4) Date filed:
N/A
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<PAGE> 2
CROWN NORTHCORP, INC.
1251 DUBLIN ROAD
COLUMBUS, OHIO 43215
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1999
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Crown NorthCorp, Inc., a Delaware
corporation, will be held at the company's corporate headquarters at 1251 Dublin
Road, Columbus, Ohio 43215 on Friday, May 14, 1999 at 2:00 P.M., Columbus time,
for the following purposes:
1. To elect seven directors for the ensuing year.
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 9, 1999 as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the meeting and any adjournment thereof.
Management requests that all stockholders sign, date and return the
enclosed proxy in the enclosed postage paid envelope. You may, if you wish,
revoke your proxy at any time prior to the time it is voted. It is important
that your stock be represented, regardless of the number of shares you hold.
By Order of the Board of Directors,
/s/ Stephen W. Brown
Stephen W. Brown
Secretary
Columbus, Ohio
April 20, 1999
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<PAGE> 3
PROXY STATEMENT
ANNUAL MEETING; ANNUAL REPORT
This Proxy Statement is furnished to stockholders in connection with the
solicitation by the Board of Directors of Crown NorthCorp, Inc., a Delaware
corporation, of proxies in the accompanying form for use at the Annual Meeting
of Stockholders of Crown to be held at the company's corporate headquarters at
1251 Dublin Road, Columbus, Ohio 43215 at 2:00 P.M. on May 14, 1999, and at any
adjournment thereof. This Proxy Statement and the accompanying Notice of Meeting
and Form of Proxy are being mailed to Crown's stockholders commencing on April
20, 1999. Crown's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998, which includes financial statements, is being mailed
concurrently herewith to each stockholder of record at the close of business on
April 9, 1999. Except as specifically incorporated by reference herein, however,
the Annual Report is not to be deemed a part of the proxy solicitation material.
The principal executive offices of Crown are located at 1251 Dublin Road,
Columbus, Ohio 43215.
VOTING SECURITIES
The company has outstanding 11,090,210 shares of common stock, par value
$.01 per share, all of one class and each share being entitled to one vote. No
cumulative voting rights are authorized and dissenters' rights for stockholders
are not applicable to the matters being proposed. The close of business on April
9, 1999 has been fixed by the Board of Directors as the record date for the
determination of stockholders of Crown entitled to vote at the meeting.
The company also has outstanding 900 shares of Series B Preferred Stock,
par value $.01 per share; 500 shares of Series C Convertible Preferred Stock,
par value $.01 per share; one share of Series AA Convertible Preferred Stock,
par value $.01 per share; and one share of Series BB Convertible Preferred
Stock, par value $.01 per share. Holders of the Series B Preferred, Series C
Preferred, Series AA Preferred and Series BB Preferred have no voting rights.
PRINCIPAL HOLDERS OF VOTING SECURITIES
Tucker. Tucker Holding Company, Ltd. holds 4,207,500 shares of the common
stock, representing approximately 37.9% of the outstanding common stock. Tucker
and Ronald E. Roark, the Chairman and Chief Executive Officer of the company,
whose business addresses are the same as the company's, have advised Crown that
(i) they constitute a "group" for purposes of Section 13(d)(3) of the Securities
Exchange Act of 1934, (ii) that Mr. Roark beneficially holds the ownership
interest in Tucker and (iii) each of Tucker and Mr. Roark shares the power to
direct the voting and disposition of these 4,207,500 shares. Each of Tucker and
Mr. Roark may be deemed to be in a position to exercise a controlling influence
over the company. Item 11 of the Annual Report, as modified by this paragraph,
is hereby incorporated by reference herein.
Harbert. Harbert Equity Fund I, L.L.C. ("Harbert Fund"), whose business
address is c/o Harbert Management Corporation ("Harbert"), One Riverchase
Parkway South, Birmingham, Alabama 35244, holds 1,365,746 shares of the common
stock, representing approximately 12.3% of the outstanding common stock.
Additionally, the company has issued one share of Series AA Preferred to the
Harbert Fund in exchange for $3,647,185 in cash. The Series AA Preferred
provides that, since certain trigger events did not occur by June 30, 1998,
Harbert has the right to designate a majority of the company's Board of
Directors until such time as the trigger events do occur. These trigger events
are, first, the closing of the public offering contemplated by the
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<PAGE> 4
registration statement filed March 24, 1998 with the Securities and Exchange
Commission by Strategic Realty Capital Corp. (or the closing of a comparable
fund opportunity) and, second, the company achieving certain specified
commercial loan origination volumes. The trigger events have not yet occurred
and the company does not anticipate being able to cause these events to occur in
the foreseeable future. Harbert has not given notice of its intent to exercise
its right to designate a majority of the company's Board of Directors. Raymond
J. Harbert and Michael D. Luce were elected to the company's Board of Directors
effective March 7, 1997 pursuant to the company's agreement with the Harbert
Fund. The Harbert Fund may be deemed to be in a position to exercise a
controlling influence over the Company. Item 11 of the Annual Report, as
modified by this paragraph, is hereby incorporated by reference herein.
Conti. Effective March 3, 1998, Crown issued one share of Series BB
Preferred and warrants to purchase up to 200,000 shares of common stock to
ContiWest Corporation, an affiliate of ContiFinancial Corporation ("Conti"), in
exchange for $2 million cash. ContiWest's business address is 277 Park Avenue,
38th Floor, New York, New York 10172. ContiWest may convert the Series BB
Preferred into 1,000,000 shares of common stock at any time. Crown has the
option to convert the Series BB Preferred upon the occurrence of the trigger
events. The company does not anticipate being able to exercise its conversion
option based upon the trigger events in the foreseeable future. Scott Mannes was
elected to the company's Board of Directors effective March 3, 1998 pursuant to
the company's agreement with ContiWest. This right to designate an individual to
serve on the company's Board of Directors terminates on the earlier of the date
Conti does not own or have the right to acquire a total of 1,000,000 shares of
the common stock or the date Conti terminates, fails to renew or substantially
reduces the funding facility available to the company under Conti's loan conduit
program Conti may be deemed to be in a position to exercise a controlling
influence over the company. Item 11 of the Annual Report, as modified by this
paragraph, is hereby incorporated by reference herein.
The company has entered into registration rights agreements with the
Harbert Fund and ContiWest with respect to the common stock these entities hold
or have a right to acquire. These agreements each provide for one demand
registration and up to three incidental registrations.
VOTING AGREEMENTS; ARRANGEMENTS REGARDING CHANGE OF CONTROL
Mr. Roark and Tucker (collectively, the "Tucker Parties") and the Harbert
Fund have entered into a voting agreement dated as of March 7, 1997, as amended
(the "Harbert Voting Agreement"). For a period of up to five years, the Tucker
Parties agree to vote all shares of the common stock beneficially owned by them
for such nominees for election as directors of the company as the Harbert Fund
is entitled to designate for nomination. Similarly, the Harbert Fund agrees to
vote all shares of the common stock beneficially owned by it for the election of
Mr. Roark as a director of the company. Additionally, since both trigger events
did not occur by June 30, 1998, the Tucker Parties agree to vote all shares of
the common stock beneficially owned by them as the Harbert Fund directs on any
matters submitted to the stockholders of the company until such time as both
trigger events occur. For so long as the Series AA Preferred is outstanding, the
Tucker Parties have also agreed to certain voting and disposition restrictions
on the common stock they hold. Under these restrictions, the Tucker Parties will
not vote their common stock in favor of a transaction which would lead to a
person who is not a Permitted Control Person acquiring control of the company.
The Tucker Parties also will not sell their common stock to a person who is not
a Permitted Control Person. A "Permitted Control Person," as defined in the
Harbert Voting Agreement, includes the Tucker Parties and their affiliates, the
Harbert Fund and its affiliates and such other parties as the Tucker Parties and
the Harbert Fund may designate from time to time. The Tucker Parties and the
Harbert Fund have designated Conti and its affiliates as a Permitted Control
Person.
ContiWest, the Tucker Parties and the Harbert Fund have entered into a
voting agreement whereby, for so long as ContiWest is entitled to designate a
nominee for election as a director of the company, each of ContiWest, the Tucker
Parties and the Harbert Fund agrees to vote all shares of the common stock
beneficially
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<PAGE> 5
owned by them for the election of each other's nominees for election as
directors. Item 11 of the Annual Report, as modified by this paragraph and the
preceding paragraph, is hereby incorporated by reference herein.
VOTING PROCEDURES
If a proxy in the accompanying form is duly executed and returned, the
shares represented thereby will be voted at the Annual Meeting and, where a
choice is specified, will be voted in accordance with the specification made.
Any stockholder who gives a proxy may revoke it at any time before it is
exercised by giving a later proxy, by attending the Annual Meeting and voting in
person or by giving notice of revocation to the company's Secretary. Executed
but unmarked proxies will be voted FOR the proposals at the Annual Meeting.
The presence, in person or by proxy, of at least a majority of the total
number of outstanding shares of the common stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Annual Meeting. If a quorum
exists, the affirmative vote of a plurality of the shares present or represented
at the Annual Meeting and entitled to vote will be required for the election of
directors. Shares held by nominees for beneficial owners will be counted for
purposes of determining whether a quorum is present if the nominee has the
discretion to vote on at least one of the matters presented even if the nominee
may not exercise discretionary voting power with respect to other matters and
voting instructions have not been received from the beneficial owner (a "broker
non-vote"). With respect to any other matter (other than the election of
directors) that may properly come before the Annual Meeting for stockholder
consideration, abstentions will be counted in determining the minimum number of
affirmative votes required for approval of any matter presented for stockholder
consideration and, accordingly, will have the effect of a vote against any such
matter. Broker non-votes will not be counted as votes for or against matters
presented for stockholder consideration. Stockholder's votes will be tabulated
by persons appointed by the Board of Directors to act as inspectors of election
for the Annual Meeting.
Crown will bear the expense of the solicitation of proxies. Following the
original mailing of the proxy material, solicitation of proxies may be made by
mail, telephone, telegraph, courier service, or personal interview by certain of
the regular employees of the company, who will receive no additional
compensation for their services. In addition, Crown will reimburse brokers and
other nominees for their reasonable expenses incurred in forwarding soliciting
material to beneficial owners.
ELECTION OF DIRECTORS (PROPOSAL ONE)
Crown's Restated Certificate of Incorporation and Bylaws provide that the
number of directors shall be not less than one and not more than nine, the exact
number to be determined by resolution of the Board of Directors from time to
time. The Board of Directors has fixed the number of directors at seven. Each of
the directors elected at the Annual Meeting will serve until the 2000 Annual
Meeting of Stockholders and upon the election and qualification of his successor
or until his earlier resignation or removal. The Board of Directors has
nominated Ronald E. Roark, John Everets, Gordon V. Smith, Raymond J. Harbert,
Michael D. Luce, Scott Mannes and Harold E. Cooke for election at the Annual
Meeting. All nominees currently are members of the Board of Directors.
The persons designated by the Harbert Fund for nomination as directors
are Raymond J. Harbert and Michael D. Luce. The person designated by Conti
for nomination as a director is Scott Mannes.
It is the intention of the persons named as proxies to vote the proxies
for the election to the Board of Directors of the seven nominees named below,
unless a stockholder directs otherwise. In the event that a vacancy (which is
not anticipated) arises among the nominees prior to the Annual Meeting due to
death or for some other reason, the proxy will be voted for the remaining
nominees and may be voted for a substitute nominee designated by the Board of
Directors. The affirmative vote of a plurality of the shares present or
represented at the Annual
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<PAGE> 6
Meeting entitled to vote will be required to elect each of the nominees as a
director of the company for the ensuing year.
Set forth below with respect to each nominee is his name, age, positions
with the company, principal occupation and business experience for the past five
years, and length of service as a director of Crown.
RONALD E. ROARK, age 48, has served as Chairman of the Board of Directors of the
company since August 4, 1994 and as Chief Executive Officer of the Company since
September 13, 1994. He served as Acting President and Chief Operating Officer
from August 31, 1996 to April 21, 1997. Since, June, 1991, he has served as
President of Crown. Since 1979, he has been President of REE, Inc. and R.E.
Roark Companies. In May 1993, an affiliate of his acquired control of a majority
interest in Ohio Financial Service Corporation and he became Chairman of its
Board of Directors.
JOHN EVERETS, age 52, has served as a director of the company since September
13, 1994. He has been Chairman of the Board and Chief Executive Officer of HPSC,
Inc. since July 1993 and a director of the company since 1983. From January 1990
to July 1993, he was Chairman of the Board of T.O. Richardson Co., Inc. Mr.
Everets also served as Chairman of the Connecticut Development Authority from
1991 to July 1994. Mr. Everets is a director of Dairy Mart Convenience Stores,
Inc. and the Eastern Company.
GORDON V. SMITH, age 66, has served as a director of Crown since October 1,
1996. He has been Chairman of the Board of Miller and Smith Holding, Inc. since
1964. From 1985 to 1994, he served as Chairman and Chief Executive Officer of
Providence Savings and Loan Association, F.A. He served as Chairman of Eastern
from 1993 until October 1, 1996. Mr. Smith has served as a director of Bank Plus
since 1996.
RAYMOND J. HARBERT, age 40, has served as a director of Crown since March 7,
1997, serving as one of Harbert's designees on the Board of Directors. Mr.
Harbert has been President and Chief Executive Officer of Harbert Corporation
and Harbert since July 1990. Prior to that time, he served as Vice President of
Harbert Corporation and as President of Harbert Properties Corporation.
MICHAEL D. LUCE, age 46, has served as a director of Crown since March 7, 1997,
serving as one of Harbert's designees on the Board of Directors. Since 1995, Mr.
Luce has served as Executive Vice President and Chief Financial Officer of
Harbert Corporation and Harbert. Mr. Luce also serves as President of The Seque
Group, Inc. Until 1995, he served as Senior Managing Director of the Investment
Banking Department of Bear, Stearns & Co.
SCOTT MANNES, age 40, has served as a director of the company since March 3,
1998, serving as Conti's designee on the Board of Directors. Mr. Mannes has been
Executive Vice President of Conti since July 1997, prior to which he had been
Senior Vice President since October 1995. He joined ContiFinancial Services
Corporation in September 1990 and was appointed Managing Director in August
1992. He was appointed Co-President of ContiFinancial Services in July 1997.
HAROLD E. COOKE, age 48, has served as President and Chief Operating Officer of
Crown since April 22, 1997 and as a director since April 13, 1998. Prior to
joining Crown, he served as a senior vice president of the Real Estate Financing
Group of the investment banking firm of Donaldson, Lufkin & Jenrette from
January 1996 to April 21, 1997. From 1980 until December 1995, he worked for the
investment banking firm of Credit Suisse First Boston as Director of Public
Finance, Chief Financial Officer and Director of Commercial Mortgage Corporation
as well as Vice President of the Mortgage Finance Department.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
NOMINEES SET FORTH ABOVE.
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DIRECTORS' FEES
Outside directors receive an annual retainer of $12,000, payable
quarterly, a $500 fee for each meeting of the Board of Directors, and $500 for
each committee meeting such director attended, plus expenses. Crown makes
retainer and attendance payments to directors quarterly in the form of common
stock based on the closing price of the common stock on the last trading day of
a quarter.
Under a stock option plan for the outside directors of Crown in existence
since 1995, each outside director may be granted options for 100,000 shares of
the common stock at an option price equal to the common stock's market value on
the date of the grant. The options vest over a four-year period if Crown
achieves certain stock price thresholds. No options have been granted under this
plan as of December 31, 1998.
MEETINGS AND COMMITTEES
During 1998, the Board of Directors met twelve times. In addition, during
that period, the Board of Directors took seven actions by unanimous written
consent. Each director attended at least 75% of the total number of meetings of
the Board of Directors and of all committees on which such director served
during that period.
The Board of Directors has an Audit Committee which is responsible for
reviewing and making recommendations regarding the company's engagement of
independent auditors, the annual audit of Crown's financial statements and the
company's accounting practices and policies. The current members of the Audit
Committee are Mr. Everets (Chairman) and Mr. Luce. The Audit Committee met once
during 1998.
The Board of Directors has a Compensation and Employee Benefit Plans
Committee, the function of which is to make recommendations to the Board of
Directors as to the salaries and bonuses of the officers of the company and as
to the terms and conditions of various benefit plans. The current members of the
Compensation and Employee Benefit Plans Committee are Mr. Harbert (Chairman) and
Mr. Smith. The Compensation and Employee Benefit Plans Committee met once during
1998.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the Chief
Executive Officer of the company and each of the four most highly compensated
executive officers other than the Chief Executive Officer.
<TABLE>
<CAPTION>
YEAR ENDED ALL OTHER
NAME DECEMBER 31 SALARY BONUS COMPENSATION
---- ----------- ------ ----- ------------
<S> <C> <C> <C> <C>
Ronald E. Roark, 1998 $300,000 $ 0 $10,000
Chairman and 1997 $300,000 $ 0 $10,000
CEO (1) 1996 $300,000 $200,000 $10,000
Harold E. Cooke, 1998 $227,400 $150,000 $10,000
President and 1997 $196,324 $ 0 $10,000
COO (2) 1996 $ 0 $ 0 $ 0
Jay N. Rollins, 1998 $116,265 $ 65,625 $10,000
Executive Vice 1997 $125,000 $ 27,228 $10,000
President (3) 1996 $100,744 $ 93,299 $10,000
</TABLE>
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<TABLE>
<CAPTION>
YEAR ENDED ALL OTHER
NAME DECEMBER 31 SALARY BONUS COMPENSATION
---- ----------- ------ ----- ------------
<S> <C> <C> <C> <C>
John S. Koczela, 1998 $184,807 $ 20,000 $61,701
Executive Vice 1997 $125,000 $ 30,000 $44,411
President (4) 1996 $ 65,924 $ 15,821 $ 0
Dean W. Melchi, 1998 $109,999 $ 20,000 $ 2,799
Vice President (5) 1997 $110,000 $ 11,028 $ 0
1996 $ 86,852 $ 0 $ 0
William R 1998 $ 80,868 $ 41,622 $ 1,153
Stanley (6) 1997 $115,341 $ 0 $ 1,164
1996 $102,333 $ 0 $ 0
</TABLE>
(1) Mr. Roark has served as Chairman and CEO of the company since August 4,
1994 and September 13, 1994 respectively. The company pays family medical
coverage premiums, an automobile allowance and disability insurance
premiums on his behalf.
(2) Mr. Cooke has served as President and COO of the company since April 22,
1997. The company and Mr. Cooke have entered into an employment agreement
effective April 22, 1997 and terminating April 21, 2002 providing for an
annual salary of $250,000 plus additional, performance-based bonuses. The
agreement grants Mr. Cooke warrants to purchase up to 1,000,000 shares of
common stock at $1.05 per share. These warrants vest and expire annually
through April 21, 2003 pursuant to a schedule based upon anniversary dates
of the employment agreement and the company achieving annual plan goals.
The company pays family medical coverage premiums on his behalf.
(3) Mr. Rollins was elected Executive Vice President of Crown upon the
company's acquisition of Eastern Realty Corporation on October 1, 1996.
The information for Mr. Rollins prior to that date is for Eastern. The
company and Mr. Rollins have entered into an employment agreement
effective October 1, 1996 that, as amended, terminates December 31, 1999.
The agreement provides for an annual salary of $125,000, additional
performance-based bonuses and warrants to purchase up to 125,000 shares of
common stock at $1.00 per share. A $500 monthly car allowance and family
medical coverage premiums are paid on his behalf by the company.
(4) Mr. Koczela has served as Executive Vice President of Crown since March 6,
1997 and administers the company's European Operations. In that capacity,
for an approximately two-year period ending in July 1998, Mr. Koczela
resided in Copenhagen, Denmark. The company and Mr. Koczela have entered
into an agreement effective December 18, 1998 providing for an annual
salary to Mr. Koczela of $200,000, certain performance-based bonuses,
warrants to purchase 25,000 shares of common stock at $1.4375 per share
and for continued salary payments for up to one year in the event of a
change of control of Crown.
(5) Mr. Melchi served as Vice President of Crown from March 6, 1997 until
his resignation January 31, 1999.
(6) Mr. Stanley served as Vice President of the company effective November 8,
1996 and as Senior Vice President, effective March 6, 1997, until his
resignation September 4, 1998.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth security ownership information regarding
the common stock as of March 16, 1999 by: (i) each person known by the company
to own beneficially more than 5% of the shares of the common stock; (ii) each
director of the company; (iii) each of the executive officers of the company
named in Item 10 of the company's Annual Report and (iv) all directors and
executive officers of the company as a group. Except as otherwise noted below,
each of the shareholders identified in the table has sole voting and investment
power over the shares beneficially owned by each such shareholder. Also, unless
otherwise indicated, the address of each beneficial owner is in care of the
company, 1251 Dublin Road, Columbus, Ohio 43215.
<TABLE>
<CAPTION>
NUMBER OF SHARES APPROXIMATE
NAME OF COMMON STOCK PERCENT OF CLASS
---- --------------- ----------------
<S> <C> <C>
Harbert Equity Fund I, L.L.C.(1) 4,839,256 30.0%
Ronald E. Roark (2)(3) 4,229,300 26.2%
Tucker Holding Company, Ltd. (2) 4,207,500 26.0%
ContiWest Corporation (4) 1,009,632 6.2%
Asdale Limited (5) 1,176,924 7.3%
The Gordon V. and Helen C. Smith Foundation (6) 948,055 5.9%
Gordon V. Smith (6) 948,055 5.9%
John Everets (7) 15,248 (15)
Raymond J. Harbert (1)(8) 4,839,256 30.0%
Michael D. Luce (1)(8) 4,839,256 30.0%
Scott Mannes (4)(9) 1,009,632 6.2%
Harold E. Cooke (10) 400,000 2.5%
Jay N. Rollins (11) 251,326 1.6%
John S. Koczela (12) 58,000 (15)
Dean W. Melchi (13) 7,075 (15)
William R. Stanley (14) -- (15)
All directors and executive officers as a group 11,750,817 72.8%
(11 persons)
</TABLE>
(1) The mailing address for the Harbert Fund is c/o Harbert, One Riverchase
Parkway South, Birmingham, Alabama 35244. The Harbert Fund holds 1,365,746
shares of common stock and one share of Series AA Preferred, which is
convertible into 3,473,510 shares of common stock. The Series AA Preferred
provides that, since certain trigger events did not occur by June 30,
1998, Harbert has the right to designate a majority of the company's Board
of Directors until such time as the trigger events do occur. The trigger
events have not yet occurred and the company does not anticipate being
able to cause these events to occur in the foreseeable future. Under these
circumstances, Harbert may be deemed to control the company.
(2) Tucker holds 4,207,500 shares of common stock. Until January 27, 1997, Mr.
Roark held an 80% ownership interest in Tucker and Louis J. Castelli,
formerly the President and Chief Operating Officer of the company, held a
20% ownership interest. On that date, Messrs. Roark and Castelli entered
into a securities purchase agreement whereby Mr. Roark agreed to purchase
Mr. Castelli's remaining ownership interest in Tucker for a total of
$400,000. The remaining balance of $125,000 is due in two equal annual
installments on or before September 1, 2000. Tucker has pledged 260,864
shares of common stock to secure the remaining obligations under this
agreement.
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<PAGE> 10
(3) Includes (a) 4,207,500 shares held by Tucker, (b) 4,600 shares held by his
wife and 17,200 shares held by Trident Air services, Inc., of which Mr.
Roark is president.
(4) The mailing address for ContiWest is c/o Conti, 277 Park Ave., 38th Floor,
New York, New York 10172. ContiWest holds 9,632 shares of common stock and
one share of the Series BB Preferred, which is convertible into 1,000,000
shares of common stock.
(5) The mailing address for Asdale Limited is 44 Lowndes Street, London
SW1X 9HX, England.
(6) The mailing address for The Gordon V. and Helen C. Smith Foundation and
Mr. Smith is c/o Miller and Smith Holding, Inc., 1568 Springhill Road,
McLean, Virginia 22102. Mr. Smith holds 327,290 shares of common stock and
warrants to acquire 82,088 shares of common stock at an exercise price of
$.75 per share on or before October 1, 1999. The Smith Foundation holds
538,677 shares of common stock. Mr. Smith, as President of the Smith
Foundation, may be deemed the beneficial owner of such shares. Mr. Smith
disclaims such beneficial ownership.
(7) The mailing address for Mr. Everets is c/o HPSC, Inc., 60 State Street,
35th Floor, Boston, Massachusetts 02109.
(8) The mailing address for Messrs. Harbert and Luce is c/o Harbert, One
Riverchase Parkway South, Birmingham, Alabama 35244. Messrs. Harbert and
Luce, as executive officers of Harbert, Manager of Harbert Fund, may be
deemed the beneficial owners of such shares. Messrs. Harbert and Luce
disclaim such beneficial ownership.
(9) The mailing address for Mr. Mannes is c/o Conti, 277 Park Avenue, 38th
Floor, New York, New York 10172. Mr. Mannes, as an executive officer of
Conti, may be deemed the beneficial owner of such shares. Mr.
Mannes disclaims such beneficial ownership.
(10) Mr. Cooke holds 100,000 shares of common stock, warrants to acquire
200,000 shares of common stock at an exercise price of $1.05 and, after
April 22, 1999, warrants to acquire an additional 100,000 shares of common
stock at the same price. Warrants with respect to 200,000 shares expire on
April 22, 2002; warrants with respect to 100,000 shares expire on April
22, 2003.
(11) Mr. Rollins holds 93,510 shares of common stock, warrants to acquire
22,816.08 shares of common stock at an exercise price of $.75 per share on
or before October 1, 1999, warrants to acquire 10,000 shares of common
stock at an exercise price of $.63 per share on or before December 31,
2003 and warrants to acquire 125,000 shares of the common stock at an
exercise price of $1 per share. These latter warrants expire ratably over
a three-year period ending September 30, 2001.
(12) Mr. Koczela holds 23,000 shares of common stock, warrants to acquire
10,000 shares of common stock at an exercise price of $.63 per share on or
before December 31, 2003 and warrants to acquire 25,000 shares of common
stock at a price of $1.4375 per share on or before November 30, 2003.
(13) The mailing address for Mr. Melchi is 1667 Oakhill Road, Columbus, Ohio
43220.
(14) The mailing address for Mr. Stanley is 2875 Factor Walk Boulevard,
Suwanee, Georgia 30024.
(15) Less than 1%.
-9-
<PAGE> 11
CERTAIN TRANSACTIONS
In 1998, Crown invested approximately $2.5 million in exchange for a
14.23% ownership interest in HMR Sweden, LLC, an affiliate of Harbert. Crown
funded its investment through a combination of cash on hand and a loan of
approximately $1 million from another affiliate of Harbert.
The company conducts some of its operations through joint ventures and
partnerships and provides services to certain of those entities.
During 1997, the company performed servicing, consulting and accounting
services for various companies affiliated with Mr. Roark. The company generated
revenues of approximately $7,000 in 1997 from these services. Also during 1997,
the company paid approximately $27,000 to affiliates of Mr. Roark for
miscellaneous services.
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
During 1997, all directors, officers and beneficial owners of more than
ten percent of the common stock timely filed all reports required by Section
16(a) of the Securities Exchange Act of 1934.
DIRECTORS AND EXECUTIVE OFFICERS
Crown currently has seven directors, two of which are also executive
officers of the company. All directors of the company hold office until the next
annual meeting of the stockholders and until their successors have been duly
elected and qualified.
Harold E. Cooke and Jay N. Rollins have entered into employment contracts
with the company. All other officers of Crown do not serve a term of years but
serve at the pleasure of the Board of Directors. In addition, Crown has entered
into agreements with John S. Koczela and Grace Jenkins calling for payments to
those individuals under certain circumstances in the event of a change of
control of the company.
The directors and executive officers of the company as of March 16, 1999
are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
<S> <C>
Ronald E. Roark 48 Chairman, Chief Executive Officer and Director
Harold E. Cooke 48 President, Chief Operating Officer and Director
John Everets 52 Director
Gordon V. Smith 66 Director
Raymond J. Harbert 40 Director
Michael D. Luce 46 Director
Scott Mannes 40 Director
Grace Jenkins 46 Executive Vice President
Jay N. Rollins 38 Executive Vice President
John S. Koczela 47 Executive Vice President
Richard A. Brock 49 Senior Vice President, Treasurer and Chief
Financial Officer
Stephen W. Brown 48 Secretary
</TABLE>
Set forth below are the principal occupations and affiliations during at
least the last five years of the executive officers other than Messrs. Roark and
Cooke. All information is as of March 16, 1999.
-10-
<PAGE> 12
GRACE JENKINS has served as Executive Vice President of Crown since March 6,
1997. She served as a Vice President of the Company from September 13, 1994 to
that date. She has been a Vice President of Crown since September 1993. Since
November 1991, she has served Crown in various capacities related to
administration and management information systems.
JAY N. ROLLINS has served as Executive Vice President of Crown since October
1, 1996. Mr. Rollins has served as President of Eastern since 1993. From
1989 until 1993, he was Director of Finance at NVR, L.P.
JOHN S. KOCZELA has served as Executive Vice President of the company since
March 6, 1997 and as Managing Director of Crown NorthCorp Euro A/S since its
founding in July 1996. From November 1990 until February 1996, he served as
Principal and Managing Director, New Business Development, for JCF Partners.
RICHARD A. BROCK has served as Senior Vice President and Chief Financial Officer
since March 6, 1997. He as served as Treasurer since September 13, 1994, from
which date he also served as Vice President and Acting Chief Financial Officer.
Since January 1991, he has served as Acting Chief Financial Officer of Crown
Revenue and, since January 1992, has been a vice president. From 1984 to January
1991, Mr. Brock was corporate director of investment management for Cardinal
Industries, Inc.
STEPHEN W. BROWN has served as Secretary of Crown since September 13, 1994 and
as Corporate Counsel since August 1996. Since March 1992, he has served Crown in
various asset management capacities and as a legal counsel. From December 1990
until February 1992, he worked for the RTC in resolving the affairs of
Mid-America Federal Savings and Loan Association.
STOCKHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Stockholders wishing to submit a proposal for action at the company's 2000
Annual Meeting of Stockholders and desiring the proposal to be considered for
inclusion in Crown's proxy materials relating thereto must provide a written
copy of the proposal to the Secretary of the company at its principal executive
offices not later than December 18, 1999 and must otherwise comply with the
rules of the SEC relating to stockholder proposals.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP has served as Crown's independent public
accountants for fiscal 1998. The appointment of the company's independent public
accountants is a matter for determination by the Board of Directors and is not
being submitted to the stockholders for approval or ratification. A
representative of Deloitte & Touche LLP is expected to attend the Annual Meeting
to respond to questions from the stockholders and to make a statement if such
representative desires to do so.
OTHER MATTERS
Management is not aware of any other matters to be considered at the
Annual Meeting other than as set forth in this Proxy Statement. However, if any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the accompanying Form of Proxy in their discretion to vote
the proxies in accordance with their judgment of such matters.
April 20, 1999
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<PAGE> 13
[CROWN NORTHCORP LOGO]
PROXY
CROWN NORTHCORP, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS-MAY 14, 1999
Ronald E. Roark, Harold E. Cooke and Stephen W. Brown, or any one of them,
with full power of substitution, are hereby appointed proxies to vote all shares
(unless number if specified on the other side) of stock of Crown NorthCorp, Inc.
(the "Company") that the undersigned would be entitled to vote at the Annual
Meeting of Stockholders of the Company to be held at the Company's corporate
headquarters at 1251 Dublin Road, Columbus, Ohio on May 14, 1999 at 2:00 p.m.,
Columbus time, and any adjournments thereof, with all powers the undersigned
would possess if personally present, for the election of directors, on each of
the other matters described in the Proxy Statement and in their discretion with
respect to matters incident to the conduct of the meeting, and matters as to
which the Board of Directors does not know, as of a reasonable time before the
solicitation of this proxy, are to be presented at the meeting.
The shares represented by this proxy will be voted as directed by the
Stockholder. If no direction is given, such shares will be voted for Proposal 1.
(Continued and to be SIGNED ON Reverse Side)
Crown NorthCorp, Inc.
c/o Corporate Trust Services
Mail Drop 10AT66-4129
38 Fountain Square Plaza
Cincinnati, OH 45263
fold and detach here
- --------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposal 1.
Proposal No. 1-Election of Directors
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) for all nominees listed below.
[ ] [ ]
Nominees: Ronald E. Roark, John Everets, Gordon V. Smith, Raymond J.
Harbert, Michael D. Luce, Scott M. Mannes and Harold E. Cooke
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
- --------------------------------------------------------------------------
Date:______________________________
Signature:_________________________
Signature:_________________________
Note: Please mark and date the proxy and
sign your name as it appears hereon. If
executed by a corporation, a duly
authorized officer should sign by name
and title. Executors, administrators and
trustees should so indicate when signing.
If shares are held jointly, EACH holder
should sign.
