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
XXXXXXX EQUITY FUND I, L.L.C., a Georgia limited liability company
with offices at Xxx Xxxxxxxxxx Xxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx
00000 (the "Purchaser"), and CROWN NORTHCORP, INC. a Delaware
corporation with offices at 0000 Xxxxxx Xxxx, Xxxxxxxx, Xxxx 00000
(the "Seller"), and with respect to Section 5 hereof, XXXXXX X.
XXXXX, an individual with an office at 0000 Xxxxxx Xxxx, Xxxxxxxx,
Xxxx 00000 ("Xxxxx"), and XXXXXX HOLDING COMPANY, LTD., an Ohio
limited liability company with an office at 0000 Xxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000 ("Xxxxxx").
WITNESSETH:
WHEREAS, the Purchaser and the Seller entered into that certain
Stock Purchase Agreement, dated as of March 7, 1997, between and
among the Purchaser and the Seller, as amended on October 2, 1997
(together with the schedules and exhibits thereto, the "Original
Agreement"), pursuant to which, among other things, the Purchaser
(A) has purchased certain shares of the common stock, par value
$0.01 per share, of the Seller ("Seller Common Stock"), and (B) is
obligated to purchase additional shares of the Seller Common Stock
upon the occurrence of certain events relating, among other things,
to the proposed consummation by the Seller of certain acquisitions
and the creation of a fund satisfying certain criteria; and
WHEREAS, the Purchaser desires to exercise its options to
purchase securities issued by the Seller pursuant to Sections 2.5
and 3.5 of the Original Agreement, as amended hereby; and
WHEREAS, the Seller desires the Purchaser to purchase
securities issued by the Seller pursuant to Sections 2.5 and 3.5 of
the Original Agreement, as amended hereby:
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the adequacy, sufficiency, and
receipt of which are hereby acknowledged, the parties hereto agree
as follows:
SECTION 1. CERTAIN DEFINED TERMS. Capitalized terms used
herein but not otherwise defined herein shall have the meanings
ascribed thereto in the Original Agreement.
SECTION 2. EXERCISE BY THE PURCHASER OF THE OPTION. Subject
to the conditions precedent set forth in Section 3 hereof, the
Purchaser hereby exercises the Second Closing Option and the Third
Closing Option (collectively, the "Option").
SECTION 3. AMENDMENT OF ORIGINAL AGREEMENT. Notwithstanding
anything to the contrary in the Original Agreement:
(i) the terms "Second Closing Option Shares" and "Third
Closing Shares," wherever used in the Original Agreement, shall be
deemed to refer to one share of the Series AA Preferred 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
Xxxxxxxxxx Xxxxxxxx LLP, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx,
Xxxxxxx 00000, 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:
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(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, Xxxxxx & Xxxxxx 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.
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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 Xxxxxx Parties (as
defined therein) vote all shares of Voting Securities (as defined
therein) beneficially owned by them, and cause the Xxxxx 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
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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:
Xxxxxxx Equity Fund I, L.L.C.
Xxx Xxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxx
Fax: 000-000-0000
With a copy to:
Xxxxxxxxxx Xxxxxxxx LLP
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx, Esq.
Fax: 000-000-0000
If to the Seller, Xxxxx, or Xxxxxx:
c/o Crown NorthCorp, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
Xx. Xxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
With a copy to:
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
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.
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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.
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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.
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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"
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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.
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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, Xxxxxxx 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
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.
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Xxxxxx X. Xxxxx Xxxx Xxxxxxx
abstain
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Xxxxxx X. Xxxxx Xxxxxxx X. Xxxxxxx
abstain
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Xxxxxxx X. Xxxx
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