SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 1)
CROWN NORTHCORP, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(Title of Class of Securities)
664015-10-4
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(CUSIP Number)
Michael D. Luce, Chief Financial Officer, Harbert Management Corporation
P.O. Box 1297, Birmingham, Alabama 35201
(205) 987-5507
- ------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 17, 1997, December 9, 1997, and January 26, 1998
--------------------------------------------------------
(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 which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box. / /
<PAGE>
SCHEDULE 13D/A
CUSIP NO. 664015-10-4
-----------
1. NAME OF REPORTING PERSON S.S. OR IRS
IDENTIFICATION NO. OF ABOVE PERSON
Harbert Equity Fund I, L.L.C.
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I.R.S Identification No. 72-1342204
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
_________________________________________________________________
3. SEC USE ONLY
_________________________________________________________________
4. SOURCE OF FUNDS*
AF
_________________________________________________________________
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
_________________________________________________________________
NUMBER OF 7. SOLE VOTING POWER
SHARES 4,809,522 Shares of Common Stock
BENEFICIALLY --------------------------------
OWNED BY
EACH 8. SHARED VOTING POWER None
REPORTING --------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
4,809,522 shares of Common Stock
--------------------------------
10. SHARED DISPOSITIVE POWER None
--------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,809,522 shares of Common Stock
____________________________________________________________
12. CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES*
____________________________________________________________
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.7% of Common Stock
____________________________________________________________
14. TYPE OF REPORTING PERSON (See Instructions)
OO
____________________________________________________________
<PAGE>
Item 1. SECURITY AND ISSUER.
This Amendment No. 1 relates to the Common Stock par value
$.01 per share of Crown NorthCorp, Inc. (the "Issuer"), with its
principal executive offices located at 1251 Dublin Road,
Columbus, Ohio 43215. This Amendment No. 1 amends the initial
Schedule 13D filed April 4, 1997.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is amended to add the following:
The funds used to acquire 150,936 shares of Common Stock
from the Issuer in October 1997 ($158,484.16) and 185,076 shares
of Common Stock from the Issuer in December 1997 ($194,330.40)
were obtained from Harbert Management Corporation, Harbert
Corporation, and MarRay Corporation, the members of Harbert
Equity Fund I, L.L.C., the reporting person ("Harbert").
The funds (in the amount of $3,647,185.44) used to acquire
one share of Series AA Preferred Stock from the Issuer in January
1998, which preferred share is currently convertible into
3,473,510 shares of the Issuer's Common Stock, were obtained from
Harbert Management Corporation, Harbert Corporation, and MarRay
Corporation, the members of Harbert.
Item 4. PURPOSE OF THE TRANSACTION.
Harbert acquired the 336,012 shares of Common Stock reported
here and the share of Series AA Preferred Stock of the Issuer
pursuant to its obligations under the Stock Purchase Agreement,
as amended, to provide the Issuer with additional working
capital.
The one share of Series AA Preferred Stock is convertible
into 3,473,510 shares of the Issuer's Common Stock at the option
of Harbert at any time and at the Issuer's option upon the
occurrence of certain triggering events, pursuant to the Stock
Purchase Agreement (Exhibit 10) and Amendment No. 2 to the Stock
Purchase Agreement (Exhibit 11).
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5, Sections (a) (b) and (c) are amended as follows:
(a)(b) Harbert presently beneficially owns 4,809,522 shares of
the Common Stock of the Issuer (3,473,510 of which shares
underlie currently exercisable conversion rights under a share of
Series AA Preferred Stock held by Harbert). The shares of Common
Stock owned by Harbert together with those subject to a currently
exercisable right to acquire pursuant to conversion of the
preferred share represent approximately 33.7% of the Issuer's
outstanding shares of Common Stock, assuming conversion of the
preferred share. This percentage ownership is based on the
number of outstanding shares of Common Stock reported by the
Issuer (10,444,749 shares) in its most recent filing on Form 10Q
(September 1997) as adjusted for the issuances of additional
shares reported here occurring after that date. Harbert has the
sole power to vote and dispose of these shares.
(c) The following transaction in Common Stock of the Issuer was
effected by Harbert during the past 60 days: On January 26,
1998, Harbert acquired one share of Series AA Preferred Stock,
which is currently convertible into 3,473,510 shares of the
Issuer's Common Stock. Harbert paid $3,647,185.44 for that
share, or $1.05 for each share of Common Stock into which the
preferred share is convertible. The transaction was effected
pursuant to the terms of the Stock Purchase Agreement, as
amended.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
The following is to be added to Item 6:
See voting agreements, Exhibit L to the Stock Purchase
Agreement (Exhibit 10), Amendment No. 2 to the Stock Purchase
Agreement (Exhibit 11), and Amendment No. 1 to the Voting
Agreement (Exhibit 12), whereby Ronald E. Roark and Tucker
Holding Company, LTD. agree to vote their shares for directors
nominated by Harbert and Harbert agrees to vote its shares for
the election of Ronald E. Roark as a director according to the
terms and conditions thereof.
Item 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is amended as follows:
Exhibit 11: Amendment No. 2 to Stock Purchase Agreement,
dated as of December 31, 1997, between and among Harbert Equity
Fund I, LLC and Crown Northcorp, Inc. and with respect to Section
5 thereof, Ronald E. Roark and Tucker Holding Company LTD.
Exhibit 12: Amendment No. 1 to Voting Agreement,
effective as of December 31, 1997, between and among Ronald E.
Roark, Tucker Holding Company LTD. and Harbert Equity Fund I,
LLC.
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: February 19, 1998
-----------------------------------
Harbert Equity Fund I, L.L.C.
By: Harbert Management Corporation, its Member
By: /s/ David Boutwell
David Boutwell, Vice President and Controller
AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT
This AMENDMENT NO. 2 TO STOCK PURCHASE AGREEMENT (this
"Agreement"), dated as of December 31, 1997, is between and among
HARBERT EQUITY FUND I, L.L.C., a Georgia limited liability company
with offices at One Riverchase Parkway South, Birmingham, Alabama
35244 (the "Purchaser"), and CROWN NORTHCORP, INC. a Delaware
corporation with offices at 1251 Dublin Road, Columbus, Ohio 43215
(the "Seller"), and with respect to Section 5 hereof, RONALD E.
ROARK, an individual with an office at 1251 Dublin Road, Columbus,
Ohio 43215 ("Roark"), and TUCKER HOLDING COMPANY, LTD., an Ohio
limited liability company with an office at 1251 Dublin Road,
Columbus, Ohio 43215 ("Tucker").
WITNESSETH:
WHEREAS, the Purchaser and the Seller entered into that certain
Stock Purchase Agreement, dated as of March 7, 1997, between and
among the Purchaser and the Seller, as amended on October 2, 1997
(together with the schedules and exhibits thereto, the "Original
Agreement"), pursuant to which, among other things, the Purchaser
(A) has purchased certain shares of the common stock, par value
$0.01 per share, of the Seller ("Seller Common Stock"), and (B) is
obligated to purchase additional shares of the Seller Common Stock
upon the occurrence of certain events relating, among other things,
to the proposed consummation by the Seller of certain acquisitions
and the creation of a fund satisfying certain criteria; and
WHEREAS, the Purchaser desires to exercise its options to
purchase securities issued by the Seller pursuant to Sections 2.5
and 3.5 of the Original Agreement, as amended hereby; and
WHEREAS, the Seller desires the Purchaser to purchase
securities issued by the Seller pursuant to Sections 2.5 and 3.5 of
the Original Agreement, as amended hereby:
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the adequacy, sufficiency, and
receipt of which are hereby acknowledged, the parties hereto agree
as follows:
SECTION 1. CERTAIN DEFINED TERMS. Capitalized terms used
herein but not otherwise defined herein shall have the meanings
ascribed thereto in the Original Agreement.
<PAGE>
SECTION 2. EXERCISE BY THE PURCHASER OF THE OPTION. Subject
to the conditions precedent set forth in Section 3 hereof, the
Purchaser hereby exercises the Second Closing Option and the Third
Closing Option (collectively, the "Option").
SECTION 3. AMENDMENT OF ORIGINAL AGREEMENT. Notwithstanding
anything to the contrary in the Original Agreement:
(i) the terms "Second Closing Option Shares" and "Third
Closing Shares," wherever used in the Original Agreement, shall be
deemed to refer to one share of the Series AA Preferred Stock, par
value $.01 per share, of the Seller (the "Transferred Stock" or the
"Series AA Preferred Stock"), which Series AA Preferred Stock shall
be issued under a Certificate of Designation relating thereto which
contains the terms and conditions set forth in Exhibit A hereto and
shall otherwise be in form and substance reasonable acceptable to
the Purchaser;
(ii) the closing of the Option (the "Option Closing") shall
take place at 11:00 a.m. on _____________, 1998 at the offices of
Kilpatrick Stockton LLP, 1100 Peachtree Street, N.E., Atlanta,
Georgia 30309, and the terms "Second Closing" and "Third Closing,"
wherever used in the Original Agreement, shall be deemed to refer to
the Option Closing;
(iii) at the Option Closing, the Seller shall issue to the
Purchaser a certificate registered in the name of the purchaser for
the Transferred Stock;
(iv) as consideration for the Transferred Stock, the Purchaser
shall deliver to the Seller $3,647,185.44 (the "Purchase Price") by
certified check, or by wire transfer of immediately available funds
to an account previously designated in writing by the Seller;
(v) the respective obligations of the Seller and the Purchaser
to consummate the purchase and sale of the Transferred Stock at the
Option Closing shall be subject to the prior satisfaction (or
waiver) of the conditions set forth in Section 2.3, 2.4, 3.3, 3.4,
and 4.2 of the Original Agreement, except that the conditions
precedent set forth in Section 2.3 (a) and Section 3.3(a) need not
be satisfied by the Seller;
(vi) for purposes of the Option Closing, the term "First
Closing Shares," wherever used in Section 4.1 of the Original
Agreement, shall be deemed to refer to the Transferred Stock; and
(vii) the obligation of the Purchaser to consummate the
purchase and sale of the Transferred Stock at the Option Closing
shall also be subject to the prior satisfaction of the following
conditions precedent:
2<PAGE>
(A) Seller's independent auditors shall have agreed to
concur with management's accounting for the transactions set
forth in this Amendment No. 2 as creating "subscription
receivable" and "preferred stock not mandatorily redeemable" on
the asset and equity accounts, respectively, of the
Consolidated Balance Sheet of the Seller dated as of December
31, 1997, in the amount of the Purchase Price;
(B) the opinion of Powell, Goldstein, Frazer & Murphy LLP
("PGFM") referred to in Sections 2.3(c) and 3.3(c) of the
Original Agreement shall include, in addition to the matters
set forth in Exhibit B to the Original Agreement, the favorable
opinion of such counsel, in form and substance reasonably
acceptable to the Purchaser, that, upon completion of the
Option Closing, (I) the Transferred Stock has been duly
authorized and validly issued and is fully paid and non-
assessable, and (ii) in reliance without independent
investigation upon a certificate of the Secretary of the Seller
identifying all pertinent agreements, instruments, and other
documents, and based upon PGFM's review of such agreement,
instruments, and other documents, (x) the Transferred Stock was
not issued in conflict with the rights of any other stockholder
of the Seller or in violation of any agreement by which the
Seller is bound, and (y) the Purchaser has good title to the
Transferred Stock, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts other than as set forth in the
Operative Documents; and
(C) resolution substantially in the form attached hereto
as Exhibit B shall have been approved and adopted by the Board
of Directors of the Seller.
The occurrence of the Option Closing shall irrevocably
extinguish the Seller's rights and obligations to issue addition
securities to the Purchaser pursuant to Sections 2.1, 2.5, 3.1, and
3.5 of the Original Agreement, and the Purchaser's rights and
obligations to purchase additional securities of the Seller pursuant
to Sections 2.1, 2.5, 3.1, and 3.5 of the Original Agreement.
SECTION 4. AMENDMENT OF THE REGISTRATION RIGHTS AGREEMENTS.
The definition of the term "Shares" set forth in Section 1 of that
certain Registration Rights Agreement, dated as of March 7, 1997,
between the Purchaser and the Seller, is hereby amended to include
(in addition to the Seller Common Stock already included in that
definition) any and all Seller Common Stock received by the
Purchaser in connection with the conversion of the Transferred
Stock, and the parties agree to execute such additional documents
effecting such amendment as the Purchaser may reasonably request.
3<PAGE>
SECTION 5. AMENDMENT OF THE VOTING AGREEMENT. Each of Roark,
Tucker, and the Purchaser agree that that certain Voting Agreement,
dated as of March 7, 1997, among Roark, Tucker, and the Purchaser,
is hereby amended to add a requirement that the Tucker Parties (as
defined therein) vote all shares of Voting Securities (as defined
therein) beneficially owned by them, and cause the Roark Affiliates
(as defined therein) to vote all shares of Voting Securities
beneficially owned by them, for the election as a director of the
Company of such individuals as the Purchaser may be entitled to
designate in accordance with the terms of the Transferred Stock
described in Section H of Exhibit A hereto, in the same manner as
such parties are presently obligated to vote for nominees of the
Purchaser pursuant to Sections 1(a), (b), (c) and (d) of such Voting
Agreement, and Roark, Tucker, and the Purchaser agree to execute
such additional documents effecting such amendment as the Purchaser
may reasonably request.
SECTION 6. SECTION 16(b). The Seller agrees not to approve or
enter into any agreement providing for any transaction (other than
the transactions to be consummated at the Option Closing) that would
make it reasonably likely that, in the opinion of the Purchaser
based on the advice of its or the Seller's counsel, the acquisition
of the Transferred Stock at the Option Closing would be matchable
with any sale by the Purchaser of securities of the Seller in any
such transaction so that the Purchaser would have any liability
under Section 16(b) of the Securities Exchange Act of 1934.
SECTION 7. ESTOPPEL. Each of the parties hereto irrevocably
agrees, and hereby represents and warrants to the other party
hereto, that the Original Agreement as amended hereby, remains its
legal, valid, and binding obligation, enforceable against them in
accordance with its respective terms (subject to Section 3 of
Amendment No. 1 to Stock Purchase Agreement, dated as of October 2,
1997, between and among Purchaser and Seller and subject to Section
11 hereof).
SECTION 8. FURTHER ACTIONS. At any time and from time to
time, each party agrees, at its or his expense, to take such actions
and to execute and deliver such documents as may be reasonably
necessary to effectuate the purposes of this Agreement.
SECTION 9. MODIFICATION. This Agreement may only be modified
by a written instrument executed by each party.
SECTION 10. NOTICES. Any notice or other communication
required or permitted to be given hereunder shall be in writing and
shall be mailed by certified mail, return receipt requested (in
which case it shall be deemed to be given five days after mailing)
or by Federal Express, Express Mail, or similar overnight delivery
or courier service (in which case it will be deemed to be given upon
4<PAGE>
actual receipt by the recipient) or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against
receipt to the party to whom it is to be given at the address of
such party set forth below (or to such other address as the party
shall have furnished in writing in accordance with the provisions of
this Section 10):
If to the Purchaser:
Harbert Equity Fund I, L.L.C.
One Riverchase Parkway South
Birmingham, Alabama 35244
Attn: Mr. Michael Luce
Fax: 205-987-5505
With a copy to:
Kilpatrick Stockton LLP
1100 Peachtree Street, N.E.
Atlanta, Georgia 30309-4530
Attn: Joel B. Piassick, Esq.
Fax: 404-815-6555
If to the Seller, Roark, or Tucker:
c/o Crown NorthCorp, Inc.
1251 Dublin Road
Columbus, Ohio 43215
Attn: Mr. Ronald R. Roark
Mr. Harold E. Cooke
Stephen W. Brown, Esq.
Fax: 614-488-9780
With a copy to:
Powell, Goldstein, Frazer & Murphy LLP
101 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Jonathan R. Shils, Esq.
Fax: 404-572-6999
SECTION 11. EFFECT. Notwithstanding anything to the contrary
herein or in the Original Agreement, if the transactions
contemplated hereby are not consummated on or before January 15,
1998 or are earlier terminated, than this Amendment No. 2 shall be
null and void AB INITIO and shall be of no effect whatsoever.
5<PAGE>
SECTION 12. WAIVER. Any waiver by any party of a breach of
any terms of this Agreement shall not operate or be construed to be
a waiver of any other breach of that term or of any breach of any
other term of this Agreement. The failure of a party to insist upon
strict adherence to any term of this Agreement on one or more
occasions will not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.
SECTION 13. BINDING EFFECT. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Seller, the
Purchaser, and their respective successors and assigns.
SECTION 14. NO THIRD PARTY BENEFICIARIES. This Agreement does
not create, and shall not be construed as creating, any rights by
any person not a party to this Agreement except as contemplated by
the Original Agreement, as amended hereby.
SECTION 15. SEPARABILITY. If any provision of this Agreement
is invalid, illegal, or unenforceable, the balance of this Agreement
shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to
all other persons and circumstances.
SECTION 16. HEADINGS. The headings in this Agreement are
solely for convenience of reference and shall be given no effect in
the construction or interpretation of this Agreement.
SECTION 17. COUNTERPARTS; GOVERNING LAW. This Agreement may
be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument. It shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving
effect to conflict of laws. Except as contemplated by Section
9.5(a) of the Original Agreement, as amended hereby, any action,
suit, or proceeding arising out of, based upon, or in connection
with this Agreement or the transactions contemplated hereby may be
brought only in a United States District Court located in the State
of Georgia and each party covenants and agrees not to assert, by way
of motion, as a defense, or otherwise, in any such action, suit, or
proceeding, any claim that it is not subject personally to the
jurisdiction of such court, that its property is exempt or immune
from attachment or execution, that the action, suit, or proceeding
is brought in an inconvenient forum, that the venue of the action,
suit, or proceeding is improper, or that this Agreement or the
subject matter hereof may not be enforced in or by such court.
6<PAGE>
SECTION 18. ASSIGNMENTS. This Agreement may be assigned by
operation of law without the consent of any party hereto. This
Agreement may not otherwise be assigned by any party hereto without
the prior written consent of the other party hereto, which consent
shall not be unreasonably delayed or withheld.
7<PAGE>
EXHIBIT A
THE SERIES AA PREFERRED STOCK
A. The Series AA Preferred Stock will have a par value of $.01 per
share.
B. There will be one share of authorized Series AA Preferred
Stock.
C. The Series AA Preferred Stock will be issued on a parity with
(but not superior to) the Seller's outstanding Series B
Preferred Stock and Series C Cumulative Preferred Stock with
respect to dividends, liquidation, and redemption.
D. The Series AA Preferred Stock will have a non-cumulative
dividend of five percent per annum.
E. The Series AA Preferred Stock will have a liquidation
preference of $3,647,185.44 plus accrued but unpaid dividends.
F. The Series AA Preferred Stock will be convertible at the
Purchaser's option at any time into 3,473,510 shares of the
Seller's Common Stock, par value $.01 per share. The Series AA
Preferred Stock will be convertible at the Seller's option into
3,473,510 shares of the Seller's Common Stock, par value $.01
per share, upon the occurrence of both of the Trigger Events
(as hereinafter defined).
G. The Series AA Preferred Stock will be redeemable at the
Seller's option at any time upon 30 days' prior written notice
to the Purchaser for a redemption price equal to a 12%
cumulative dividend on the sum of $3,647,185.44 from the date
that the Series AA Preferred Stock is issued until the day that
it is so redeemed. The Purchaser will have the right to
convert the Series AA Preferred Stock during such 30-day notice
period in accordance with the preceding Section F.
H. If the Series AA Preferred Stock is still outstanding on June
30, 1998 and, on that date, both of the Trigger Events (as
hereinafter defined) have not occurred, then the Purchaser
shall have the right to designate such number of individuals to
serve as Directors of the Seller as shall constitute a majority
of the Seller's Board of Directors until such time as both of
the Trigger Events have occurred, it being understood and
agreed that to accomplish the foregoing the Seller may choose
to expand its Board of Directors and to appoint individuals
designated by the Purchaser to fill resulting vacancies in lieu
of the resignation of existing Directors of the Seller and it
being further understood and agreed that the Purchaser will not
designate for such service any individual who does not satisfy
the requirements set forth in Section 6.2 (a) and (b) of the
Original Agreement. As used herein, the term "Trigger Events"
8<PAGE>
mean (a) the consummation of the initial public offering of the
Crown Hybrid Mortgage REIT or the completion of another fund
opportunity as contemplated by Section 3.3(a) of the Original
Agreement, and (b) the Seller's average commercial loan
original volume for the then preceding three months equals at
least $16.7 million per month.
9<PAGE>
AN ACTION BY THE UNANIMOUS CONSENT OF THE
BOARD OF DIRECTORS OF CROWN NORTHCORP, INC.
DECEMBER 30, 1997
The undersigned, being all of the members of the Board of Directors
of Crown NorthCorp, Inc. (the "Corporation") hereby adopt the
following resolutions and agree that the following resolutions shall
have the same force and effect as if adopted at a meeting of the
Board of Directors, duly called and held in accordance with the
Bylaws of the Corporation.
WHEREAS, Harbert Equity Fund I, L.L.C. ("HEF") and the
Corporation are parties to a certain Stock Purchase Agreement
dated as of March 7, 1997 (the "SPA"); and
WHEREAS, capitalized terms used herein but not otherwise
defined herein shall have the meanings ascribed thereto in the
SPA; and
WHEREAS, HEF is interested in amending the SPA to exercise its
Option upon certain terms and conditions set forth in Amendment
No. 2 to the SPA; and
WHEREAS, this Board has determined that it is in the best
interests of the Corporation to enter into Amendment No. 2 to
the SPA;
NOW THEREFORE BE IT RESOLVED, that the form of Amendment No. 2
to the SPA and other Operative Documents to be executed and
delivered by the Corporation on the Option Closing Date, in the
forms presented to this meeting and with such changes therein
as the Chief Executive Officer, Chief Operating Officer, Chief
Financial Officer or Secretary of the Corporation
(collectively, the "Authorized Officers") may determine to be
necessary or advisable in their sole discretion (the exercise
of such discretion being conclusively evidenced by the
execution and delivery by the Corporation of such Operative
Documents as hereinafter provided) be, and they hereby are, and
each of them hereby is, authorized, approved and ratified in
all respects.
FURTHER RESOLVED, that the Series AA Convertible Preferred
Stock, par value $.01 per share, as described on Exhibit A to
Amendment No. 2 to the SPA be and is hereby authorized.
FURTHER RESOLVED, that the Chairman and the Secretary of the
Corporation be and are hereby authorized to take any and all
actions necessary and appropriate to file a Certificate of
<PAGE>
Designation with respect to the Series AA Convertible Preferred
Stock with the Secretary of the State of Delaware and to issue
the stock described therein to HEF.
FURTHER RESOLVED, that, subject to the execution and delivery
of Amendment No. 2 to the SPA and upon the issuance, delivery
and payment for the Series AA Convertible Preferred Stock, the
Series AA Convertible Preferred Stock shall be duly authorized,
validly issued, fully paid and nonassessable.
FURTHER RESOLVED, that the price to be paid for the Option
shall be as set forth in Amendment No. 2 to the SPA in the form
executed and delivered by the Corporation.
FURTHER RESOLVED, that the proceeds received by the Corporation
pursuant to Amendment No. 2 to the SPA shall be set aside and
utilized by the Corporation, at the direction of the Board,
pursuant to specific appropriations only for the following
purposes: to expand the Corporation's commercial mortgage loan
origination capabilities the addition of personnel, the
acquisition of mortgage banking firms or other means; to
complete a real estate investment trust or other fund
opportunity; and to fund operations.
FURTHER RESOLVED, that the appropriate officers of the
Corporation be and are hereby authorized to execute and deliver
on behalf of the Corporation such other documents as may be
necessary to effect the purposes and intents of the foregoing
resolutions.
Each of the undersigned has executed this Unanimous Consent as of
the day and year set forth above.
- ----------------------------- ---------------------------
Ronald E. Roark John Everets
abstain
- ----------------------------- ---------------------------
Gordon V. Smith Raymond A. Harbert
abstain
- -----------------------------
Michael D. Luce
11
AMENDMENT NO. 1 TO VOTING AGREEMENT
This AMENDMENT NO. 1 TO VOTING AGREEMENT (this "Agreement"),
dated as of January __, 1998 to be effective as of December 31,
1997, is between and among RONALD E. ROARK, an individual with an
office at 1251 Dublin Road, Columbus, Ohio 43215 ("Roark"), TUCKER
HOLDING COMPANY, LTD., an Ohio limited liability company with an
office at 1251 Dublin Road, Columbus, Ohio 43215 ("Tucker"), and
HARBERT EQUITY FUND I, L.L.C., a Georgia limited liability company
with an office at One Riverchase Parkway South, Birmingham, Alabama
35233 ("Harbert").
WITNESSETH:
WHEREAS, Roark and Tucker (collectively, the "Tucker Parties")
and Harbert beneficially own shares of the Common Stock, par value
$.01 per share (the "Stock"), of Crown NorthCorp, Inc., a Delaware
corporation (the "Company"); and
WHEREAS, the parties desire that Harbert purchase one share of
the Company' Series AA Convertible Preferred Stock, par value $.01
par share (the "Series AA Preferred Stock"), on the date hereof, and
in order to induce Harbert to agree to purchase the Series AA
Preferred Stock, the Tucker Parties are willing to agree to vote
their shares of Common Stock as set forth herein; and
WHEREAS, Harbert desires that each of the Tucker Parties agrees
to vote its shares in accordance with the provisions of paragraph F
of the Certificate of Designation establishing the Series AA
Preferred Stock, as filed with the Secretary of State of the State
of Delaware on January 21, 1998 (the "Certificate of Designation"),
in order more fully to effectuate certain provisions of the
Certificate of Designation whereby Harbert is entitled to designate
one or more persons to serve as directors of the Company for a
certain period;
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the adequacy, sufficiency, and
receipt of which are hereby acknowledged, the parties agree as
follows:
SECTION 1. DEFINED TERMS. Capitalized terms used herein but
not otherwise defined herein shall have the meaning ascribed thereto
in the Original Agreement.
SECTION 2. AMENDMENT OF SECTION 2 OF THE ORIGINAL AGREEMENT.
Section 2 of the Original Agreement is hereby amended in its entity
to read in its entirety as follows:
<PAGE>
"SECTION 2. VOTING AGREEMENT OF THE TUCKER PARTIES. In
addition to, and not in limitation of, Section 3 and 4 hereof,
during the Corporate Governance Period, each of the Tucker Parties,
severally and not jointly, agrees:
(a) To vote all shares of securities issued by the
Company and entitled to vote in the election of directors
("Board Voting Securities") beneficially owned by him or it for
the election as a director of the Company of such nominees for
election as a director of the Company as Harbert is entitled to
designate for nomination as such pursuant to the Stock Purchase
Agreement or pursuant to paragraph F of the Certificate of
Designation establishing the Company's Series AA Convertible
Preferred Stock, par value $.01 per share (the "Series AA
Preferred Stock"), as filed with the Secretary of State of the
State of Delaware on January 21, 1998 (the "Certificate of
Designation");
(b) To cause (x) each of the members of Roark's immediate
family, (y) each entity controlled by any Tucker Party, and (z)
each trust of which Roark is a grantor (collectively, the
"Roark Affiliates"), to vote all Board Voting Securities
beneficially owned by him, her, or it for the election as a
director of the Company of such nominees for election as a
director of the Company as Harbert is entitled to designate for
nomination as such pursuant to the Stock Purchase Agreement or
pursuant to paragraph F of the Certificate of Designation;
(c) In the event a director of the Company so designated
for nomination by Harbert ceases to be a director of the
Company for any reason before his or her term as such expires,
to vote all shares of Board Voting Securities beneficially
owned by him, her or it in favor of another individual
designated for nomination by Harbert for election as a director
of the Company to the extent Harbert is then entitled to
designate such other individual for nomination for election as
a director of the Company pursuant to the Stock Purchase
Agreement or pursuant to paragraph F of the Certificate of
Designation; and
(d) In the event a director of the Company so designated
for nomination by Harbert ceases to be a director of the
Company for any reason before his or her term expires, to cause
each of the Roark Affiliates to vote all shares of Board Voting
Securities owned by him, her or it in favor of another
individual designated for nomination by Harbert for election as
a director of the Company to the extent Harbert is then
entitled to designate such other individual for nomination for
election as a director of the Company pursuant to the Stock
Purchase Agreement or pursuant to paragraph F of the
Certificate of Designation.
2<PAGE>
Notwithstanding the foregoing, however, to the extent that the
Tucker Parties and Roark Affiliates collectively do not possess the
sole power to vote or direct the voting of any such Board Voting
Securities from time to time (the shares as to which the Tucker
Parties and Roark Affiliates do not so possess such voting power
being referred to herein as "Non-Exclusive Board Shares"), they
shall be obligated to use their reasonable best efforts to cause
such Non-Exclusive Board Shares to be voted in compliance with the
foregoing."
SECTION 3. INSERTION OF NEW SECTION 3 IN THE ORIGINAL AGREEMENT.
The following provision is hereby inserted as Section 3 of the
Original Agreement (provided that the existing Section 3 of
the Original Agreement, all subsequent Sections thereof, and all
cross references thereto in the Original Agreement shall be
renumbered accordingly:
"SECTION 3. ADDITIONAL VOTING AGREEMENT OF THE TUCKER PARTIES.
In addition to, and not in limitation of, Sections 2 and 4 hereof,
if the Series AA Preferred Stock is outstanding on June 30, 1998,
has not been satisfied in full before June 30, 1998, and has not
been sold, assigned, transferred, or otherwise conveyed by Harbert
to a Person (as defined below) that is not a Harbert Affiliate on or
before June 30, 1998, then during the Pre-Trigger Period (as defined
below), if any, each of the Tucker Parties, severally and not
jointly, agrees:
(a) (i) To vote all shares of securities issued by the
Company ("General Voting Securities") beneficially owned
by him or it as and in the manner directed by Harbert on
any matter submitted o the shareholders of the Company for
a vote to the fullest extent that such securities are
entitled to vote thereon, and (ii) in respect of the
General Voting Securities beneficially owned by him or it,
to execute and deliver consents in writing to any actions
which may lawfully be taken by the stockholders of the
Company without a meeting, as and in manner directed by
Harbert; and
(b) (i) To cause the Roark Affiliates to vote all General
Voting Securities beneficially owned by him, her, or it as
and in the manner directed by Harbert on any matter
submitted to the shareholders of the Company for a vote to
the fullest extent that such securities are entitled to
vote thereon, and (ii) to cause the Roark Affiliates, in
respect of the General Voting Securities beneficially
owned by him, her, or it, to execute and deliver consents
in writing to any actions which may lawfully be taken by
the stockholders of the Company without a meeting, as and
in the manner directed by Harbert.
3<PAGE>
Notwithstanding the foregoing, however, to the extent that the
Tucker Parties and Roark Affiliates collectively do not possess the
sole power to vote or direct the voting of any such General Voting
Securities from time to time or to execute and deliver written
consents with respect thereto (the shares as to which the Tucker
Parties and Roark Affiliates do not so possess such voting power
being referred to herein as the "Non-Exclusive General Shares"),
they shall be obligated to use their reasonable best efforts to
cause such Non-Exclusive General Shares to be voted, or written
consents in respect thereof to be executed and delivered, in
compliance with the foregoing. For purposes of this Agreement, the
term "Pre-Trigger Period" means the period commencing on June 30,
1998 and continuing until the earlier of (i) the time that the
Series AA Preferred Stock is redeemed, is satisfied in full, is no
longer outstanding, or is sold, assigned, transferred, or otherwise
conveyed by Harbert to a Person that is not a Harbert Affiliate, and
(ii) such time as both of the following events have occurred: (A)
the initial public offering of the Crown Hybrid Mortgage REIT has
been consummated, or another fund opportunity as contemplated by
Section 3.3(a) of the Stock Purchase Agreement has been completed,
and (B) the Company's average commercial loan origination volume for
the then preceding three months equals at least $16.7 million per
month. As used herein, the term "Harbert Affiliate" shall mean any
Person Controlling (as hereinafter defined), Controlled by (as
hereinafter defined), or under common Control (as hereinafter
defined) with, Harbert. As used in this Agreement, at any time of
determination, (i) one Person is "Controlling" another if such
Person then possesses the exclusive power, directly or indirectly,
to direct or cause the direction of the management or policies of
the subject Person, (ii) one Person is "Controlled" by another
Person if such other Person then possesses the exclusive power,
directly or indirectly, to direct or cause the direction of the
management or policies of the subject Person, through the ownership
of voting securities, by contract, or otherwise, unless such power
is solely the result of an official position with such subject
Person, and (iii) one exclusive power, directly or indirectly, to
direct or cause the direction of the management or policies of the
subject Person and such other Person, through the ownership of
voting securities, by contract, or otherwise, unless such power is
solely the result of an official position with such Person. As used
in this Agreement, the term "Person" means any individual or
entity."
SECTION 4. INSERTION OF NEW SECTION 4 IN THE ORIGINAL AGREEMENT.
The following provision is hereby inserted as Section 4 of the
Original Agreement (provided that the existing Section 4 of the
Original Agreement, all subsequent Sections thereof, and all
references thereto in the Original Agreement, shall be renumbered
accordingly):
"SECTION 4. ADDITIONAL AGREEMENT RELATING TO CHANGE OF CONTROL.
In addition to, and not in limitation of, Sections 2 and 3 hereof,
for so long, and only for so long, as (i) the Series AA Preferred
Stock is outstanding or has not been satisfied in full, and (ii)
Harbert or any Harbert Affiliate is the owner and holder of record
4<PAGE>
of all of the Series AA Preferred Stock, each of the Tucker Parties,
severally and not jointly, agrees:
(a) (i) Not to vote any General Voting Securities
beneficially owned by him or it in favor of any
transaction (or multiple related transactions) which, to
the actual knowledge of Roark or Tucker at that time,
would result in any Person who is not then a Permitted
Control Person (as hereinafter defined) to acquire Control
of the Company, and (ii) subject to the remaining
provisions of this Section 4, not to voluntarily sell,
assign, transfer, convey, or otherwise alienate any
General Voting Securities beneficially owned by him or in
connection with any transaction (or multiple related
transactions) which, to the actual knowledge of Roark or
Tucker at that time, would result in any Person who is not
then a Permitted Control Person to acquire Control of the
Corporation, in each case unless the Company (y)
voluntarily redeems all of the Series AA Preferred Stock
pursuant to Section E of the Certificate of Designation
prior to or concurrently with the consummation of the
first of such transactions to be consummated that confers
Control of the Company on such Person, or (z) calls the
Series AA Preferred Stock for redemption, and the Series
AA Preferred Stock is converted during the pertinent
Redemption Period (as defined in the Certificate of
Designation) prior to or concurrently with the
consummation of the first of such transactions to be
consummated that confers Control of the Company on such
Person; and
(b) (i) To cause the Roark Affiliates not to vote any General
Voting Securities beneficially owned by him, her or it in
favor of any transaction (or multiple related
transactions) which, to the actual knowledge of Roark or
Tucker at that time, would result in any Person who is not
then a Permitted Control Person to acquire Control of the
Company, and (ii) subject to the remaining provisions of
this Section 4, to cause the Roark Affiliates not to
voluntarily sell, assign, transfer, convey, or otherwise
alienate any General Voting Securities beneficially owned
by him, her, or it, in connection with any transaction (or
multiple related transactions) which, to the actual
knowledge of Roark or Tucker at that time, would result in
any Person who is not then a Permitted Control Person to
acquire Control of the Company, in each case unless the
Company (x) voluntarily redeems all of the Series AA
Preferred Stock pursuant to Section E of the Certificate
of Designation prior to or concurrently with the first of
such transactions to be consummated that confers Control
of the Company on such Person, or (y) calls the Series AA
Preferred Stock for redemption, and the Series AA
Preferred Stock is converted during the pertinent
Redemption Period prior to or concurrently with the first
5<PAGE>
of such transactions to be consummated that confers
Control of the Company on such Person.
Notwithstanding any provision of this Agreement to the
contrary, however, the parties hereto agree as follows:
(i) The parties acknowledge that certain of the General Voting
Securities currently are pledged, hypothecated, or
otherwise encumbered on the date thereof. The parties
agree that each of such pledges, hypothecations, and
encumbrances, as amended, modified, or superseded at any
time and from time to time, are permitted notwithstanding
the other provisions of this Section 4, and that any
foreclosure upon, assignment of, payment of any judgment
with, or levy or execution or levy upon, any of such
General Voting Securities pursuant to any such pledge,
hypothecation, or encumbrance shall not constitute a
breach of this Section 4.
(ii) Each of the Tucker Parties and the Roark Affiliates shall
be entitled to pledge, hypothecate, or otherwise encumber
all or any portion of the General Voting Securities on and
after the date hereof to secure the repayment of any
indebtedness of any kind or nature whatsoever on or after
the date hereof, and the parties agree that each of such
pledges, hypothecations, and encumbrances shall be
permitted notwithstanding the other provisions of this
Section 4 and that any foreclosure upon, assignment of,
payment of any judgment with, or levy or execution of levy
upon, any such General Voting Securities pursuant to any
such pledge, hypothecation, or encumbrance shall not
constitute a breach of this Section 4.
(iii) The passing of the ownership, beneficial or
otherwise, of any such General Voting Securities upon the
death of any individual to that individual's heirs,
executors, creditors, or personal representatives shall
not constitute a violation of this Section 4.
(iv) To the extent that the Tucker Parties and the Roark
Affiliates collectively do not possess the sole power to
vote or direct the voting of any such General Voting
Securities (the shares as to which the Tucker Parties and
Roark Affiliates do not so possess such voting and
dispositive power being referred to herein as the "Non-
Exclusive Control General Shares"), they shall be
obligated to use their reasonable best efforts to cause
such Non-Exclusive Control General Shares to be voted,
held, and disposed of in compliance with the foregoing.
6<PAGE>
As used therein, the term "Permitted Control Person" shall mean
one or more of any of the following persons: Harbert, any Harbert
Affiliate, any Tucker Party, any Roark Affiliate, and any other
Person who, by written agreement of the parties hereto is designated
as a Permitted Control Person for purposes of this Agreement."
SECTION 5. AMENDMENT OF SECTION 5 OF THE ORIGINAL AGREEMENT.
Section 5 of the Original Agreement is hereby amended in its
entirety to read in its entirety as follows:
"SECTION 5. LEGENDS. The Tucker Parties and Harbert will, and
the Tucker Parties will cause the Roark Affiliates to, and Harbert
will cause the Harbert Affiliates to, deliver certificates
representing Voting Securities beneficially owned by them to the
Company for imprinting with the following legend (which legend shall
be removed, with respect to any of such Voting Securities, upon the
earlier of (i) the sale, assignment, or other transfer of such
Voting Securities to a Person not subject to the purview of this
Agreement, and (ii) the expiration of this Agreement), in each case
on or before the date that is the last to occur of (x) 30 days from
the date of this Agreement, and (y) their acquisition of beneficial
ownership of such Voting Securities:
"The voting securities represented by this certificate are
subject to restrictions on voting, as provided in a Voting
Agreement, dated as of March 7, 1997, between and among Harbert
Equity Fund I, L.L.C., Tucker Holding Company, Ltd., and Ronald
E. Roark, as amended, a copy of which is on file with the
Secretary of the Company."
Notwithstanding the foregoing, however, Harbert will be
obligated to utilize its reasonable best efforts to cause the
beneficial owners of the Non-Exclusive Harbert Shares to comply with
this Section 5, and the Tucker Parties shall be obligated to utilize
their respective reasonable best efforts to cause the beneficial
owners of the Non-Exclusive Board Shares, the Non-Exclusive General
Shares, and the Non-Exclusive Control General Shares to comply with
this Section 5."
SECTION 6. SECRETARY TO RETAIN COPY. A copy of this Agreement
shall be filed with the Secretary of the Company.
SECTION 7. FURTHER ACTIONS. At any time and from time to time
each party agrees, at its or his expense, to take such actions and
to execute and deliver such documents as may be reasonably necessary
to effectuate the purposes of this Agreement.
SECTION 8. AVAILABILITY OF EQUITABLE REMEDIES. Since a breach
of the provisions of this Agreement could not adequately be
compensated by money damages, any party shall be entitled, in
addition to any other right or remedy available to him, to an
7<PAGE>
injunction restraining such breach or a threatened breach and to
specific performance of any such provision of this Agreement, and in
either case no bond or other security shall be required in
connection therewith, and the parties hereby consent to such
injunction and to the ordering of specific performance.
SECTION 9. MODIFICATION. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof, supersedes all existing agreements among them concerning
such subject matter, and may be modified only by a written
instrument duly executed by each party.
SECTION 10. NOTICES. Any notice or other communication
required or permitted to be given hereunder shall be in writing and
shall be mailed by certified mail, return receipt requested or
delivered against receipt to the party to whom it is to be given at
the address of such party set forth in the preamble to this
Agreement or at such other address as the other parties hereto shall
have been notified in writing pursuant hereto. Except as otherwise
specifically provided in this Agreement, any notice given by
certified mail shall be deemed given at the time of certification
thereof except for a notice changing a party's address which shall
be deemed given at the time of receipt thereof.
SECTION 11. WAIVER. Any waiver by any party of a breach of
any provisions of this Agreement shall not operate as or be
construed to be a waiver of any other breach of such provision or of
any breach of any other provision of this Agreement. The failure of
a party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
SECTION 12. BINDING EFFECT. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto
and the respective successors and assigns of the corporate parties
hereto and the respective assigns, heirs, and personal
representatives of the individual parties hereto.
SECTION 13. NO THIRD PARTY BENEFICIARIES. This Agreement does
not create, and shall not be construed as creating, any rights
enforceable by any person not party to this Agreement.
SECTION 14. SEPARABILITY. If any provision of this Agreement
is invalid, illegal, or unenforceable, the balance of this Agreement
shall remain in effect, and if any provision is inapplicable to any
person or circumstance, it shall nevertheless remain applicable to
all other persons and circumstances.
8<PAGE>
SECTION 15. HEADINGS. The headings in this Agreement are
solely for convenience of reference and shall be given no effect in
the construction or interpretation of this Agreement.
SECTION 16. PRONOUNS. Any masculine personal pronoun shall be
considered to mean the corresponding feminine or neuter personal
pronoun, as the context requires.
SECTION 17. COUNTERPARTS; GOVERNING LAW. This Agreement may
be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument. It shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving
effect to the conflict of law principles thereof.
SECTION 18. REPRESENTATIONS AND WARRANTIES OF TUCKER. Tucker
hereby represents and warrants to Harbert that:
(i) It is a limited liability company duly
organized, validly existing, and in good standing under
the laws of the State of Ohio, with full limited liability
company power and authority to conduct its business as
currently conducted; and
(ii) Assuming the due authorization, execution,
and delivery of this Agreement by the other parties
hereto, this Agreement constitutes its legal, valid, and
binding obligation, enforceable against it in accordance
with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium,
or other laws affecting creditors' rights generally and by
the availability of equitable remedies.
SECTION 19. RATIFICATION. Each of the parties hereby
confirms, ratifies, and agrees that the Original Agreement, as
amended hereby, continues to be in full force and effect, as amended
hereby.
9<PAGE>
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
10
