<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2 )*
----------
CHANCELLOR CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
1588 28 10 3
- --------------------------------------------------------------------------------
(CUSIP Number)
Stephen G. Morison, Vice Chairman and Chief Executive Officer
Chancellor Corporation, 745 Atlantic Avenue, Boston, Massachusetts 02111
(617) 728-8500
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 12, 1996
- --------------------------------------------------------------------------------
(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 [ ].
Check the following box if a fee is being paid with the statement [ ]. (A
fee is not required only if the reporting person: (1) has previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for the reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes)
Page 1 of 14 Pages
<PAGE>
SCHEDULE 13D
- ------------------------------------- --------------------------------------
CUSIP No. 1588 28 10 3 Page 2 of 14 Pages
------------------------- ---------- ---------
- ------------------------------------- --------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stephen G. Morison
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 984,812
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY --0--
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 984,812
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--0--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
984,812
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 2 of 14 Pages
<PAGE>
SCHEDULE 13D
- ------------------------------------- -------------------------------------
CUSIP No. 1588 28 10 3 Page 3 of 14 Pages
------------------------- ---------- ---------
- ------------------------------------- -------------------------------------
- --------------------------------------------------------------------------------
NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bruce M. Dayton
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 46,321
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY --0--
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 46,321
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--0--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
46,321
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.5%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 3 of 14 Pages
<PAGE>
SCHEDULE 13D
- ------------------------------------ ------------------------------------
CUSIP No. 1588 28 10 3 Page 4 of 14 Pages
------------------------ ---------- ---------
- ------------------------------------ ------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Thomas W. Killilea
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 175,375
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY --0--
EACH -----------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 175,375
WITH -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--0--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
175,375
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 4 of 14 Pages
<PAGE>
SCHEDULE 13D
- ------------------------------------- -------------------------------------
CUSIP No. 1588 28 10 3 Page 5 of 14 Pages
------------------------- ---------- ---------
- ------------------------------------- -------------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Richard D. Rizzo
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 27,000
SHARES -----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,585,989 (only as to matters other than
EACH election of directors)
REPORTING -----------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 27,000
-----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--0--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,612,989
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 5 of 14 Pages
<PAGE>
This amended statement is being filed jointly by the persons named in Item
2 below (including Richard D. Rizzo, a new director who is being added by
amendment hereto as of April 12, 1996, and Bruce M. Dayton and Thomas W.
Killilea, who will cease to be reporting persons after the filing of this
amendment) who are directors of Chancellor Corporation. Such persons, although
filing jointly, had voting power over certain shares of stock only in their
capacity as directors and do not acknowledge that they constitute a "group"
within the meaning of Rule 13d-1 under the Securities Exchange Act of 1934 (the
"Exchange Act").
Item 1. Security and Issuer.
-------------------
(a) The name of the subject company is Chancellor Corporation, a
Massachusetts corporation (the "Company"). The address of its principal
executive offices is 745 Atlantic Avenue, Boston, Massachusetts 02111.
(b) The class of securities to which this statement relates is the Common
Stock, $.01 par value per share, of the Company.
Item 2. Identity and Background.
-----------------------
(a)-(c) The name and address of each person who is filing this statement
(a "Reporting Person"), together with his title with the Company and principal
occupation, are as follows:
<TABLE>
<CAPTION>
Name and Address Title with Company Principal Occupation
- --------------------- ------------------ -----------------------
<S> <C> <C>
Stephen G. Morison President, Chief Chief Executive Officer
745 Atlantic Avenue Executive Officer of the Company
Boston, MA 02111 and a Director
Bruce M. Dayton Director Senior Financial
745 Atlantic Avenue Consultant, Wingate
Boston, MA 02111 Group of Companies
Thomas W. Killilea Director Senior Vice President,
745 Atlantic Avenue Oppenheimer & Co.
Boston, MA 02111
Richard D. Rizzo Director Principal, The Andover
12 Algonquin Avenue Capital Group, Inc.
Andover, MA 01810
</TABLE>
(d)-(e) None of the Reporting Persons, during the last five years, has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor was he a party to a civil proceeding of a judicial or
administration body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities
Page 6 of 14 Pages
<PAGE>
subject to, federal or state securities laws or finding any violation with
respect to such laws.
(f) Each Reporting Person is a U.S. citizen.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Substantially all of the shares beneficially owned by Mr. Morison are
(i) shares awarded to him as an employee benefit or (ii) unexercised stock
options shares over which he has voting power under a voting agreement. Mr.
Morison paid no cash or other property for these shares. For a total of 173,312
shares owned outright by him, Mr. Morison paid a total of $24,100 in cash. Such
amounts came from personal funds. If and when Mr. Morison exercises outstanding
stock options, he would expect to use personal funds.
Likewise, all of Mr. Rizzo's beneficially owned shares are option shares or
shares over which he has voting power, with respect to which he has paid no cash
or other property. Mr. Rizzo owns no shares outright and has not paid any
amount for shares.
Item 4. Purpose of Transaction.
----------------------
The Company has awarded shares to Mr. Morison and stock options to all
three Reporting Persons and to other employees and directors of the Company from
time to time in recognition of their services to the Company, as an incentive to
their future efforts and as an inducement for them to remain in the Company's
employment or to serve as directors.
The Company entered into the Voting Agreement dated as of April 12, 1996
that is described in Item 6 below (the "Long-Term Voting Agreement") and its
predecessor Interim Voting Agreement dated July 25, 1996 (the "Interim Voting
Agreement") in order to provide for a mutually satisfactory set of arrangements
for the election of directors and governance of the Company among its largest
stockholder, Vestex Capital Corporation (together with its affiliates,
"Vestex"), and its directors. The manner in which the shares covered by the
Voting Agreement are to be voted is among the matters specified in such
Agreement. This includes the election as directors of five persons designated
by the Company's incumbent directors (other than affiliates of Vestex) or their
successors (currently, the four Reporting Persons) and Mr. Rizzo's right
individually to vote certain shares that are subject to the agreement in regard
to matters other than the election of directors. These voting rights have been
agreed upon in order to provide Company management and outside directors with a
greater voice in the governance of the Company after Vestex's investment in the
Company than they would have if there were no contractual provisions regarding
the voting of Vestex's shares.
Page 7 of 14 Pages
<PAGE>
As heretofore reported by the Company, at the time the Interim Agreement
was signed Vestex had subscribed to purchase from the Company 5,000,000 shares
of convertible preferred stock in December 1995, following which purchase Vestex
would have held a majority of the Company's outstanding shares. The voting of
such shares, together with those beneficially owned by Mr. Morison, would
thereafter have been governed by a new long-term voting agreement. However, on
September 25, 1995 Vestex defaulted in its obligations to the Company, and
voting power over Vestex's 1,600,000 shares of Common Stock was therefore been
transferred to the Reporting Persons pursuant to the terms of the Interim
Agreement.
On April 12, 1996 the Company entered into a revised recapitalization and
stock purchase agreement with Vestex and issued 5,000,000 shares of Series AA
Convertible Preferred Stock to Vestex. Concurrently, the parties entered into
the Long-Term Voting Agreement in substitution for the Interim Voting Agreement.
The Reporting Persons have no plans at present relating to (a) the
acquisition by any person of additional securities of the Company or the
disposition of securities of the Company (except that the Company is currently
conducting a private offering of up to 4,000,000 shares of its Common Stock to
certain private investors who are unaffiliated with the Company, the Reporting
Persons and Vestex), (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or any of its
subsidiaries, (c) any sale or transfer of a material amount of assets of the
Company or any of its subsidiaries, (d) any change in the present board of
directors or management of the Company, including any plans or proposals to
change the number or term of directors or to fill any existing vacancies on the
board (except for the right of each of (i) Vestex and (ii) the Reporting Persons
to nominate, pursuant to the provisions of the Voting Agreement, one additional
person to serve as a director of the Company and to nominate successors to
certain directors); (e) any material change in the present capitalization (apart
from the ongoing private offering of Common Stock) or dividend policy of the
Company, (f) any other material change in the Company's business or corporate
structure, (g) any changes in the Company's charter or bylaws or other actions
which may impede the acquisition of control of the Company by any person,
(h) causing any class of securities of the Company to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association,
(i) any class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act, or
(j) any action similar to any of those enumerated above.
Page 8 of 14 Pages
<PAGE>
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a) Each Reporting Person beneficially owns the following numbers of
shares, following the issuance on April 12, 1996 of the 5,000,000 shares of
Series AA Convertible Preferred Stock to Vestex and the transfer on April 12,
1996 of voting power as to matters other than the election of directors over
1,600,000 shares owned by Vestex from the Reporting Persons (subject to the
terms of the Interim Voting Agreement) to Vestex (subject to the terms of the
Long-Term Voting Agreement) and the transfer on April 12, 1996 of voting power
as to matters other than the election of directors over 2,585,989 shares of
Series AA Convertible Preferred Stock owned by Vestex to Mr. Rizzo (subject to
the terms of the Long-Term Voting Agreement):
<TABLE>
<CAPTION>
Number Nature of Percentage
of Shares Beneficial Ownership of Class(1)
--------- -------------------- -----------
Pro
Mr. Morison Actual Forma(2)
----------- ------ --------
<S> <C> <C> <C>
549,312 Owned outright 5.0% 3.8%
435,500 Stock options exercisable
within 60 days hereafter 4.0% 3.0%
--------- ------ --------
984,812 Total 9.0% 6.8%
Mr. Dayton
----------
38,821 Owned outright * *
7,500 Stock options exercisable
within 60 days hereafter * *
--------- ------ --------
46,321 Total * *
Mr. Killilea
------------
125,375 Owned outright 1.2% *
50,000 Stock options exercisable
within 60 days hereafter *
---------- * ------ --------
175,375 Total 1.7% 1.2%
</TABLE>
Page 9 of 14 Pages
<PAGE>
<TABLE>
<CAPTION>
Mr. Rizzo
---------
<S> <C> <C> <C>
0 Owned outright
27,000 Stock options exercisable
within 60 days hereafter * *
2,585,989 (3) Shares over which this 25.4% 7.1%
Reporting Person has
voting power as to matters
other than the election
of directors
--------- ------ -------
2,612,989 (3) Total 25.7% 7.4%
</TABLE>
- ----------------------------------
* Less than 1% of such shares
(1) Certain of the above percentages differ from each other because Securities
and Exchange Commission rules require each individual's option shares to be
separately included in the calculation of shares outstanding when expressing
such individual's beneficial ownership in percentage terms.
(2) Giving effect to the issuance and sale of an additional 4,000,000 shares of
Common Stock that are currently being offered by the Company in a private
placement, as if such shares had been issued and outstanding on April 12, 1996.
(3) Subject to reduction to 1,001,989 shares and 1,028,989 shares, respectively,
if all such 4,000,000 additional shares of Common Stock are sold.
(b) Messrs. Morison, Dayton, Killilea and Rizzo have sole power to vote and
to dispose of 984,812, 46,322, 175,375 and 27,000 shares set forth below their
respective names (including shares which they may acquire through exercise of
stock options). Mr. Rizzo has sole power to vote a total of 2,585,989 shares on
all matters other than the election of directors, but has no power to dispose of
such shares and no economic interest therein.
(c) The Reporting Persons effected the following transactions in or
relating to the Company's Common Stock during the past 60 days:
(i) On April 12, 1996 Vestex purchased from the Company 5,000,000
shares of Series AA Convertible Preferred Stock;
(ii) On April 12, 1996 the Reporting Persons ceased to have shared
voting power with respect to the 1,600,000 shares
Page 10 of 14 Pages
<PAGE>
owned by Vestex and 650,239 shares owned by certain employees; and
(iii) On April 12 1996, Mr. Rizzo acquired voting power as to matters
other than the election of directors with respect to 2,427,589 shares owned by
Vestex.
(d) The Reporting Persons do not know of any other person who has the right
to receive or the power to direct the receipt of dividends from, or the proceeds
of sale of, any shares referred to above.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
Interim Voting Agreement
- ------------------------
The Company, Vestex, the Reporting Persons and the Company's employees
entered into the Interim Voting Agreement on July 25, 1995. Pursuant to the
Interim Voting Agreement, for so long as Mr. Morison was an officer or director
of the Company following Vestex's default in its payment obligations to the
Company (but in no event later than July 31, 2000), the employees agreed (a) to
vote the subject shares for the election as directors of the nominees of the
Company's continuing directors other than nominees of Vestex ("Continuing
Directors") and (b) in other matters, to vote the subject shares as directed by
Mr. Morison. Vestex agreed that, in the event that it defaulted in its
obligation to purchase preferred stock from the Company, the Reporting Persons
and Mr. Morison would assume similar voting control over the Common Stock owned
by Vestex, and between September 25, 1995 and April 12, 1996 they did so.
Long-Term Voting Agreement
- --------------------------
The Long-Term Voting Agreement provides for the election of a Board of
seven Directors, two of whom will be nominated by Vestex and five of whom will
be Continuing Directors subject to election by the stockholders other than
Vestex ("Minority Stockholders"). The Long-Term Voting Agreement also requires
that, until April 12, 1998, certain issuances of stock, mergers, charter and by-
law amendments and other transactions, in which Vestex has an interest which
conflicts with or is distinct from that of the Company, will be subject to
approval by the Continuing Directors or the Minority Stockholders ("Minority
Approval").
The Long-Term Voting Agreement also provides that Mr. Rizzo, a new
Continuing Director (or a successor jointly appointed by Vestex and the Company,
or, failing such appointment, a successor selected by the Board of Directors of
the Company) will be
Page 11 of 14 Pages
<PAGE>
authorized to vote, in accordance with all applicable requirements of the Long-
Term Voting Agreement and otherwise at his discretion, that number of shares
owned by Vestex which from time to time exceed 39.6% of all shares of capital
stock of the Company then outstanding.
The Interim Voting Agreement has been superseded in its entirety by the
Long-Term Voting Agreement.
Continuing Directors. Stephen G. Morison, Bruce M. Dayton, Thomas W.
--------------------
Killilea and Richard D. Rizzo will be the four initial Continuing Directors.
Mr. Morison will be subject to re-election in 1996 and 1998, Mr. Rizzo in 1997
and 2000 and Messrs. Dayton and Killilea in 1996 and 1999. The Long-Term Voting
Agreement provides that, at all elections of directors prior to the Annual
Meeting of Stockholders to be held in the year 2001, the Company will nominate
each of the initial Continuing Directors for re-election or, if any such
Continuing Director does not choose to stand for re-election, a nominee
designated by a majority of the Continuing Directors then in office. Vestex has
agreed to vote all of its outstanding stock in favor of such nominees if they
are unopposed. If any such nominee is opposed, Vestex will vote all of its
outstanding stock in favor of the candidate who receives a plurality of the
votes cast by the Minority Stockholders. Vacancies which occur among the
Continuing Directors will be filled as designated by the remaining Continuing
Directors.
Minority Approval. Until April 12, 1998, the following types of
-----------------
transactions will be subject to approval by either a majority of the Continuing
Directors then in office or the holders of a majority of the shares of common
stock held by Minority Stockholders: (i) any issuance or transfer by the
Company of any stock or other securities of the Company to Vestex (other than
the issuance of common stock pursuant to the conversion of Series AA Convertible
Preferred Stock), (ii) any merger, consolidation or sale of assets involving the
Company and Vestex, (iii) any action taken by the Company which results in a
going private transaction subject to Rule 13e-3 under the Securities Exchange
Act of 1934, or (iv) the payment to Vestex of any fee or other similar type of
benefit (other than as contemplated in the Recapitalization Agreement, as
amended by the Amendment and a related consulting agreement). Vestex has agreed
not to attempt to commence or effect any of such transactions without first
obtaining the necessary approval. The foregoing does not apply to any
transaction in which Vestex does not have a conflict of interest, such as the
issuance of securities to an unrelated purchaser (notwithstanding that Vestex
would be entitled to receive a fee in connection with such transaction).
The foregoing summary is qualified by reference to the Long-Term Voting
Agreement, a copy of which is set forth as Exhibit 6 hereto.
Page 12 of 14 Pages
<PAGE>
Item 7. Material to be Filed as Exhibits.
--------------------------------
The following documents have been heretofore filed as Exhibits to this
statement, or are being filed herewith:
Exhibit Description
------- -----------
1.* Amendment No. 3 to Recapitalization and Stock Purchase
Agreement dated as of July 14, 1995 among the Company,
Bruncor, Inc. and Vestex.
2.* Interim Voting Agreement dated as of July 25 among the
Company, Vestex, Stephen G. Morison and the Company's other
Employees.
3.* Form of contemplated long-term voting Agreement among the
Company, Vestex, Steven G. Morison, Bruce M. Dayton and
Thomas W. Killilea.
4.* Schedule 13D Agreement
5.** Amendment No. 4 to Recapitalization and Stock Purchase
Agreement dated as of April 12, 1996.
6.** Voting Agreement dated as of April 12, 1996 among the
Company, Vestex Corporation, Vestex Capital Corporation,
Messrs. Morison, Dayton, Killilea and Richard D. Rizzo.
7.** Amended Schedule 13D Agreement
* Heretofore filed.
** Filed herewith.
Page 13 of 14 Pages
<PAGE>
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: April 12, 1996 /s/Stephen G. Morison
-----------------------
Stephen G. Morison
-----------------------
Print Name
Date: April 12, 1996
/s/Bruce M. Dayton
-----------------------
Bruce M. Dayton
-----------------------
Print Name
Date: April 12, 1996
/s/Thomas W. Killilea
-----------------------
Thomas W. Killilea
-----------------------
Print Name
Date: April 12, 1996
/s/Richard D. Rizzo
-----------------------
Richard D. Rizzo
-----------------------
Print Name
Page 14 of 14 Pages
<PAGE>
Exhibit 5
---------
AMENDMENT NO. 4 TO
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 4 TO RECAPITALIZATION AND STOCK PURCHASE AGREEMENT (this
"Amendment"), dated as of this 11th day of April, 1996, by and between
CHANCELLOR CORPORATION, a Massachusetts corporation (the "Company"), VESTEX
CORPORATION, a Massachusetts corporation (the "Purchaser"), and VESTEX CAPITAL
CORPORATION, a Massachusetts corporation (the "Assignee" and, together with the
Purchaser, "Vestex"), amends, modifies and supplements that certain
Recapitalization and Stock Purchase Agreement dated as of September 20, 1994
among the Company, the Purchaser and Bruncor Inc., a New Brunswick corporation
("Bruncor") (as amended by Amendment No. 1 to Recapitalization and Stock
Purchase Agreement dated as of November 18, 1994, that certain letter agreement
dated as of February 28, 1995 ("Amendment No. 2"), and Amendment No. 3 to
Recapitalization and Stock Purchase Agreement dated as of July 14, 1995, each
among the Company, the Purchaser and Bruncor, the "Agreement") as the Agreement
relates to the Company and the Purchaser, but not as it relates to Bruncor.
Capitalized terms used in this Amendment and not otherwise defined herein shall
have the meanings ascribed to them in the Agreement.
WHEREAS, the parties hereto wish to amend, modify and supplement the
Agreement upon the terms and conditions set forth hereinbelow;
<PAGE>
- 2 -
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Preferred Stock; Purchase Price; Expenses; Closing Date. The Assignee
-------------------------------------------------------
hereby agrees to pay to the Company, by bank check or wire transfer, and in
addition to amounts previously paid by the Purchaser to the Company pursuant to
the Agreement, $1,350,000.00 (the "Purchase Price"). Upon receipt of the
Purchase Price, the Company shall issue and deliver to the Assignee 5,000,000
shares of Series AA Convertible Preferred Stock (the "Preferred Stock") having
the terms and conditions set forth on Exhibit A hereto. Immediately upon
---------
receipt of the Purchase Price, the Company shall reimburse to the Purchaser, by
wire transfer, its costs and expenses in connection with due diligence,
negotiation and closing the transactions contemplated hereby stipulated to be in
the amount of $312,500.00. The payment by the Assignee to the Company of the
Purchase Price, the reimbursement by the Company to the Purchaser of its costs
and expenses, and the issuance by the Company to the Assignee of the Preferred
Stock, shall take place at a closing (the "Preferred Stock Closing") to be held
on the date of this Amendment (the "Closing Date"), or such later date
<PAGE>
- 3 -
to which the parties may agree (the "Delayed Closing Date"), but in no event
later than May 14, 1996 (the "Final Closing Date"), in any case, at 10:00 a.m.
at the offices of the Company. If the Preferred Stock Closing does not occur on
or before the Final Closing Date, the Agreement, as amended hereby, shall be
null and void.
2. Common Stock Offering; Modification of Preferred Stock Closing. Vestex
--------------------------------------------------------------
acknowledges that the Company is currently conducting an offering of up to
9,000,000 shares of its Common Stock (the "Common Stock Offering").
Notwithstanding anything contained herein to the contrary, the number of shares
of Preferred Stock to be issued to the Assignee shall be reduced from 5,000,000
by that number of shares of Common Stock (if any) in excess of 4,000,000 for
which subscriptions have been received by the Company on or before the Preferred
Stock Closing, and the Purchase Price shall be reduced by $.27 per share for
each share of Preferred Stock (if any) less than 5,000,000 issued to the
Assignee at the Preferred Stock Closing. Upon the Preferred Stock Closing, the
Common Stock Offering shall be terminated if subscriptions for 4,000,000 or more
shares of Common Stock have then been subscribed for, or if fewer than 4,000,000
shares of Common Stock have then been subscribed for, the Common Stock
<PAGE>
- 4 -
Offering shall be reduced to a maximum of 4,000,000 shares of Common Stock.
3. Other Closing Matters. At the Preferred Stock Closing, the Company,
---------------------
the Assignee and/or the Purchaser (as the case may be) shall execute and deliver
(a) a Registration Rights Agreement in the form attached hereto as Exhibit B,
---------
(b) a Voting Agreement in the form attached hereto as Exhibit C, (c) Releases in
---------
the forms attached hereto as Exhibit D, and (d) an Amendment to Consulting
---------
Agreement in the form attached hereto as Exhibit E.
---------
4. Further Amendments to Agreement. The Agreement is hereby further
-------------------------------
amended by eliminating the Escrow Agreement and any references thereto, it being
agreed that the Purchase Price shall be immediately available to the Company for
working capital purposes. The date by which the Company's current severance
policies shall be terminated pursuant to Article V(n)(iv) of the Agreement is
hereby amended to be the anniversary of the Preferred Stock Closing.
5. Revised Schedules. The Schedules to the Agreement are hereby revised
-----------------
and restated in the forms attached hereto.
<PAGE>
- 5 -
6. Affirmation of Agreement. Except as modified, amended and supplemented
------------------------
hereby, the Agreement is hereby affirmed, ratified and approved as the legal,
valid and binding agreement of the parties thereto, enforceable in accordance
with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date and year
first above written.
CHANCELLOR CORPORATION VESTEX CORPORATION
By: /s/ Stephen G. Morison By: /s/ Brian M. Adley
---------------------- ------------------
Title: CEO Title: CEO
------------------- ---------------
VESTEX CAPITAL CORPORATION
By: /s/ Brian M. Adley
------------------
Title: CEO
---------------
[SCHEDULES AND EXHIBITS OMITTED]
<PAGE>
Exhibit 6
---------
VOTING AGREEMENT
VOTING AGREEMENT, dated as of April 11, 1996 (the "Agreement"), is made by
and among Chancellor Corporation, a Massachusetts corporation (the "Company"),
Vestex Corporation and Vestex Capital Corporation, each a Massachusetts
corporation (collectively, "Vestex"), each of those persons who are directors of
the Company and who have entered into this Agreement (individually referred to
as a "Director" and collectively referred to as the "Directors") and each of
those persons who are employees of the Company and who have entered into this
Agreement (individually referred to as an "Employee" and collectively referred
to as the "Employees").
W I T N E S S E T H:
-------------------
WHEREAS, the Company, Bruncor Inc., a New Brunswick corporation and an
affiliate of the Company ("Bruncor"), and Vestex have entered into a
Recapitalization and Stock Purchase Agreement dated as of September 20, 1994, as
successively amended by four amendments (the "Recapitalization Agreement"),
providing for, among other things, the purchase by Vestex of 1,600,000 shares of
the Company's Common Stock (the "Common Shares") from Bruncor and the subsequent
purchase by Vestex of 5,000,000 shares of the Company's Series AA Convertible
Preferred Stock (the "Preferred Shares") from the Company (such transactions
referred to as the "Purchases");
WHEREAS, it is the intention of the parties that, following the
consummation of both the Purchases, the Board of Directors of
<PAGE>
the Company will consist of up to seven members, up to two of whom will be
nominees of Vestex; and
WHEREAS, it is the intention of the parties that upon consummation of the
Purchases the business of the Company and its subsidiaries will continue to be
conducted in the ordinary and usual course of its business with such changes as
are determined by the Board of Directors of the Company; and
WHEREAS, it is the intention of Vestex to preserve the goodwill of the
Company and to allow the Company to maintain and expand the valuable business
relationships established by it; and
WHEREAS, the Company intends, subject to the continuing review of the
Company's Board of Directors, to continue the Company's efforts to expand its
business, and to permit the Company to operate its business under its current
management and from its existing location and under its current corporate name;
and
WHEREAS, the parties understand the importance and desirability of
maintaining an active public trading market for the Company's common stock; and
WHEREAS, Vestex has no present intention of taking any action which would
cause (a) the Company's common stock to cease to be quoted in the over-the-
counter market by member firms of the National Association of Securities Dealers
Inc. or (b) the Company to no longer be subject to Sections 12 or 13 of the
Securities Exchange Act of 1934, as amended; and
- 2 -
<PAGE>
WHEREAS, the parties intend that certain types of corporate transactions
proposed to occur within two years following the consummation of the Purchases
will require the approval of either (i) the holders of a majority of the
outstanding shares of the Company's common stock not held by Vestex or its
affiliates or (ii) a majority of those directors then in office who are not
affiliates of Vestex and who either were directors of the Company prior to the
Purchases or subsequently were elected as successor directors (A) with a
plurality of the votes cast by the holders of the outstanding shares of the
Company's common stock not held by Vestex or its affiliates or (B) by
designation of a majority of the Continuing Directors then in office
("Continuing Directors"); and
WHEREAS, the parties hereto wish to agree on certain other matters relating
to the voting of certain shares of the Company's common stock and preferred
stock held by Vestex and to the operation of the business of the Company
following the consummation of the Purchases;
NOW, THEREFORE in consideration of the mutual covenants and agreements set
forth herein, the parties hereto hereby agree as follows:
ARTICLE I
---------
1.1. Voting of Shares.
----------------
(a) In any and all elections of directors of the Company (whether at a
meeting or by written consent in lieu of a
- 3 -
<PAGE>
meeting) prior to the Company's 2001 Annual Meeting of Stockholders, Vestex,
the Directors and the Employees shall vote or cause to be voted ("Vote") any and
all Shares (as defined in Section 1.2 below) owned by it or its affiliates, or
over which it or its affiliates have voting control, and otherwise use their
respective best efforts, so as to fix the number of directors of the Company at
seven and to elect directors as provided herein. Upon consummation of Vestex's
purchase of the Preferred Shares, the Board shall consist of up to two members
designated by Vestex (one of whom shall be subject to ratification by a majority
of the directors theretofore in office ("Ratification")) and five members who
shall be Continuing Directors (one of whom shall be subject to Ratification).
The directors initially designated by Vestex are Brian M. Adley and another
person yet to be designated (the "New Vestex Nominee"), and the directors
initially designated by the Continuing Directors are Bruce M. Dayton, Thomas W.
Killilea, Richard D. Rizzo, Stephen G. Morison and another person yet to be
designated (the "New Non-Vestex Nominee"). The designation of the New Vestex
Nominee and the New Non-Vestex Nominee and the designation of their respective
successors shall require Ratification. Messrs. Dayton and Killilea and the New
Vestex Nominee shall be subject to re-election at the Company's 1996 Annual
Meeting of Stockholders (and, if re-elected in 1996) at the 1999 Annual Meeting
of Stockholders, Messrs. Adley and Rizzo shall be subject to re-election at the
Company's 1997 Annual Meeting of Stockholders (and, if re-elected in 1997) at
the 2000 Annual
- 4 -
<PAGE>
Meeting of Stockholders, and Mr. Morison (who would have been subject to re-
election at the 1995 Annual Meeting of Stockholders, had such a meeting been
held) and the New Non-Vestex Nominee shall be subject to re-election at the
Company's 1996 Annual Meeting of Stockholders (and, if re-elected in 1996) at
the 1998 Annual Meeting of Stockholders. All Shares subject to this Agreement
shall be voted (i) at the 1996 Annual Meeting for the re-election of Messrs.
Dayton, Killilea and Morison and, if they have by then been nominated and
received Ratification, the New Vestex Nominee and the New Non-Vestex Nominee,
for the respective terms specified above, (ii) at the 1997 and 2000 Annual
Meetings for the re-election of Messrs. Adley (or other nominee of Vestex) and
Rizzo, (iii) at the 1998 Annual Meeting for the re-election of Mr. Morison and
for the election of one other nominee designed by a majority of the directors
then in office (who may, but need not, be the New Non-Vestex Nominee, (or up to
two Continuing Directors in substitution for them), and (iv) at the 1999 Annual
Meeting for the re-election of Messrs. Dayton and Killilea (or up to two other
Continuing Directors in substitution for them) and for one other nominee
designated by a majority of the directors then in office (who may, but need not,
be the New Vestex Nominee. At any re-election of a Continuing Director, the
parties shall cast all of their votes in favor of such Continuing Director if he
chooses to stand for re-election and is unopposed; in favor of the designee of a
majority of the Continuing Directors then in office if such Continuing Director
chooses not to stand for re-election and such
- 5 -
<PAGE>
designee is unopposed; or, in the case of a contested election, in favor of the
candidate who receives a plurality of the votes cast by the holders of the
outstanding shares of the Company's common stock not held by Vestex or its
affiliates.
(b) The Company shall provide the Continuing Directors and Vestex
with 30 days' prior written notice of any intended mailing of a notice to
stockholders for a meeting at which directors are to be elected (except that
only 10 days' prior notice shall be required prior to the 1996 Annual Meeting).
Vestex, the Continuing Directors and the Board of Directors shall give written
notice to all other parties to this Agreement, no later than 20 days prior to
such mailing (3 days in the case of the 1996 Annual Meeting), of the persons
designated by Vestex, by the Continuing Directors and by the entire Board,
respectively, as nominees for election as directors. The Company agrees to
nominate as directors the individuals designated, or to be designated, pursuant
to Section 1(a). If Vestex or the Continuing Directors shall fail to give
notice to the Company as provided above, it shall be deemed that the designees
of Vestex or the Continuing Directors, as the case may be, then serving as
directors shall be their designees for reelection.
(c) Vestex shall not vote to remove any director designated by the
Continuing Directors or by the entire Board, and the Continuing Directors shall
not vote to remove any director designated by Vestex or by the entire Board,
except upon (i) the written instruction of the party or parties who designated
such
- 6 -
<PAGE>
director or (ii) demonstration by clear and convincing evidence of bad faith or
willful misconduct that has caused the Company substantial injury. In the event
of any such removal, the vacancy shall be filled by a designee of Vestex, if the
director whose removal occasioned the vacancy was a designee of Vestex, by a
designee of the remaining Continuing Directors, if the director whose removal
occasioned the vacancy was a Continuing Director, or by a designee of the entire
Board, if the director whose removal occasioned the vacancy was a designee of
the entire Board.
1.2. Shares. "Shares" shall mean and include any and all Preferred
------
Shares, Common Shares and other shares of capital stock of the Company, by
whatever name called, which carry voting rights (including voting rights which
arise by reason of default) and shall include any shares now owned or
subsequently acquired by any party, however acquired, including without
limitation stock splits and stock dividends.
1.3. Termination. This Agreement shall terminate in its entirety on
-----------
the fifth anniversary of the date of this Agreement or on the day immediately
prior to the date of the Company's 2001 Annual Meeting of Stockholders,
whichever occurs first.
1.4. No Revocation. The voting agreements contained herein are
-------------
coupled with an interest and may not be revoked, except by written consent of
the Continuing Directors and Vestex. Each of the Continuing Directors and
Vestex agrees not to take any action to amend any provisions of the Articles of
Organization or the By-Laws of the Company relating to the election, removal or
- 7 -
<PAGE>
indemnification of directors, or any other matter pertaining to the subject
matter of this Agreement, as in effect upon consummation of the Purchases as
contemplated by the Recapitalization Agreement, without the prior written
consent of the Continuing Directors and Vestex.
1.5. Indemnification. In the event that any director elected
---------------
pursuant to Section 1 of this Agreement shall be made or threatened to be made a
part to any action, suit or proceeding with respect to which he may be entitled
to indemnification by the Company pursuant to its Articles of Organization or
By-Laws, or otherwise, he shall be entitled to be represented in such action,
suit or proceeding by counsel of his choice and the reasonable expenses of such
representation shall be reimbursed by the Company to the extent provided in or
authorized by said Articles of Organization or By-Laws. The Company agrees that
it shall comply with the provisions of Sections 7.04, 7.07 and 7.10 of the
Recapitalization Agreement in regard to indemnification and directors' and
officers' liability insurance.
In consideration of entering into this Agreement, each party hereto
acknowledges and agrees that, to the maximum extent permitted by applicable law,
neither Mr. Rizzo, as the person entitled to direct the voting of the Shares to
be Voted under Section 2.1, nor, should the entire Board succeed to the right to
vote such Shares, any director, have any liability for monetary damages to
Vestex or any other party based upon his acts or omissions or alleged acts or
omissions in connection with the
- 8 -
<PAGE>
voting of such Shares; and each such party, including without limitation
Vestex, hereby irrevocably waives any right, claim or cause of action for money
damages based upon the same.
1.6. Restrictive Legend. All certificates representing Shares owned
------------------
or hereafter acquired by Vestex or any transferee of Vestex bound by this
Agreement shall have affixed thereto a legend substantially in the following
form:
"The shares of stock represented by this
certificate are subject to certain voting
agreements as set forth in a Voting
Agreement by and among the registered
owner of this certificate, the Company and
certain other stockholders of the Company,
a copy of which is available for inspection
at the offices of the Clerk of the Company."
1.7. Transfers of Rights. Any transferee to whom Shares are
-------------------
transferred by Vestex, whether voluntarily or by operation of law, shall be
bound by the voting obligations imposed upon the transferor under this
Agreement, and, subject to the provisions of Section 3.1 below, shall be
entitled to the rights granted to the transferor under this Agreement, to the
same extent as if such transferee were Vestex hereunder.
ARTICLE II
----------
2.1. Voting of Certain Shares Owned by Vestex. Commencing on the
----------------------------------------
date of this Agreement, the number of Preferred Shares specified herein (the
"Shares to be Voted") shall be Voted as specified by Richard D. Rizzo (or, in
the event Mr. Rizzo ceases to be a director of the Company or declines to Vote
the Shares to
- 9 -
<PAGE>
be Voted, as specified by a successor jointly appointed by Vestex and the Board
of Directors or, in the absence of such an appointment, as specified by a
majority of the entire Board of Directors). The number of Shares to be Voted
shall be equal to the amount by which (a) all Shares owned of record or
beneficially by Vestex and its affiliates shall exceed (b) 39.6% of the total
number of shares of common stock and preferred stock of the Company then
outstanding, without deeming shares underlying unexercised stock options or
warrants to be outstanding. The Shares to be Voted shall be Voted for the
election of directors in the manner provided in Section 1 and in respect of all
other matters which may be presented for action by the Company's stockholders,
whether at an Annual or Special Meeting or by written action, as designated by
Mr. Rizzo (or by a successor or by a majority of the entire Board of Directors,
as the case may be). The provisions of this Section 2.1 shall continue in
effect for 18 months following the date of this Agreement, provided that they
shall terminate if at any time during such 18-month period the number of shares
referred to in clause (b) above exceeds the number of shares referred to in
clause (a) above, so that there are no longer any Shares to be Voted. The
number of Shares to be Voted shall increase or decrease automatically to the
extent that changes in the number of shares referred to in clause (a) or (b)
above shall occur from time to time.
2.2 Special Approval. Prior to April 11, 1998, any of the following
----------------
transactions:
- 10 -
<PAGE>
(a) any issuance or transfer by the Company of capital stock or other
securities of the Company to an interested stockholder, considering Vestex or
any of its affiliates or associates (as defined in Mass. Gen. Laws c.110F, (S)3)
as being interested stockholders for the purposes hereof, other than the
issuance of common stock pursuant to the conversion of Preferred Shares; or
(b) any merger, consolidation or sale of assets described in Mass.
Gen. Laws c.110F, (S)3(c)(2), involving the Company and any interested
stockholder, considering Vestex and each of its respective affiliates and
associates as being an interested stockholder for the purposes hereof; or
(c) any action taken by the Company which results in a going private
transaction subject to Rule 13e-3 under the Securities Exchange Act of 1934; or
(d) the payment to any interested stockholder of any fee or other
benefit described in Mass. Gen. Laws c.110F, (S)3(c)(5), considering Vestex and
each of its affiliates and associates as being an interested stockholder for
purposes hereof, other than fees contemplated by the Recapitalization Agreement
and the exhibits thereto; shall require the approval of either (i) a majority of
the Continuing Directors then in office or (ii) the holders of a majority of the
outstanding shares of the Company's Common Stock not held by Vestex or its
respective affiliates; and the Company or Vestex shall not attempt to commence
or effect any of such transactions without obtaining such approval. The
- 11 -
<PAGE>
foregoing provisions do not apply to any transaction (such as the issuance of
shares of capital stock to non-affiliates of Vestex or mergers with non-
affiliates of Vestex) in which Vestex and its affiliates are not in a conflict
of interest position.
ARTICLE III
-----------
3.1. Assignment. The rights of Vestex hereunder may from time to
----------
time be assigned as a whole, but only if assigned together with any rights of
Vestex under the Recapitalization Agreement, to any direct or indirect wholly-
owned subsidiary of Vestex; provided, however, that any such assignment shall
-------- -------
not relieve Vestex of its obligations hereunder. Vestex may also assign a
portion of its rights hereunder to any purchaser of Shares which undertakes in
writing to be bound by the obligations of Vestex hereunder, in which case all
decisions to be made by Vestex and such other purchaser shall be made by the
holders of a majority of the Shares outstanding from time to time.
Notwithstanding any provision of this Agreement to the contrary, Vestex
may, in its discretion, sell Shares, free and clear of the obligations imposed
under this Agreement and without any benefit of the rights conferred under this
Agreement: (a) in a public offering or in the public securities markets; or (b)
in a private transaction to one or more purchasers which are not "affiliates" or
"associates" (as defined in Mass. Gen. Laws c. 110F (S)3) of Vestex in an amount
not exceeding 1,000,000 Shares to any one purchaser or "group" of purchasers
(within the meaning
- 12 -
<PAGE>
of Rule 13d-1 under the Securities Exchange Act of 1934, as amended); provided,
--------
however, that Shares sold by Vestex in any transaction which is primarily
- -------
intended as a device or artifice to avoid the obligations imposed by this
Agreement, shall remain subject to such obligations and the benefits conferred
by this Agreement. Other than as permitted by this Section 3.1, this Agreement
shall not be assignable by any party hereto without the prior written consent of
the other parties.
3.2. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given (and shall be deemed to have
been duly received if so given) if personally delivered or sent by telegram,
cable, or telex, or by registered or certified mail, postage prepaid, addressed
to the respective parties as follows:
If to any Continuing Director, to him at the address listed below, with a copy
to the Company and to Hale and Dorr, 60 State Street, Boston, Massachusetts
02109, Attention: Edward Young, Esq.
Brian M. Adley
c/o Vestex Corporation
12 Waltham Street
Lexington, Massachusetts 02173
Bruce M. Dayton
10 Dover Lane
Lexington, Massachusetts 02173
Thomas W. Killilea
14 Union Wharf
Boston, Massachusetts 02109
Stephen G. Morison
Gingerbread Hill
Marblehead, Massachusetts 01945
- 13 -
<PAGE>
Richard D. Rizzo
12 Algonquin Avenue
Andover, Massachusetts 01810
If to the Company:
Chancellor Corporation
745 Atlantic Avenue
Boston, Massachusetts 02021
Attention: President
With copies to Hale and Dorr, as provided above.
If to Vestex:
Vestex Corporation
12 Waltham Street
Lexington, Massachusetts 02173
With copies to:
Hinckley, Allen & Snyder
One Financial Center
Boston, Massachusetts 02111
Attention: Richard C. Arrighi, Esq.
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
3.3. Amendment; Modification. This Agreement may only be amended or
-----------------------
modified by an instrument in writing signed by Vestex and the Continuing
Directors then in office.
3.4. No Waiver of Rights. No failure or delay on the part of either party
-------------------
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercises thereof or of any other
right, power or privilege. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
- 14 -
<PAGE>
3.5. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by separate parties on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
3.6. Agreement Binding on Successors and Assigns. Subject to the
-------------------------------------------
provisions of Section 3.1 hereof, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns. Upon election, any additional persons besides the Directors who serve
as Continuing Directors shall be added as parties to this Agreement. Each
Director or other Continuing Director who ceases to serve as a director in
accordance with the terms of this Agreement shall thereupon automatically cease
to be a party to this Agreement.
3.7. Specific Performance. The parties hereto agree that irreparable
--------------------
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state thereof having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
3.8. Benefit of Recapitalization Agreement. Vestex agrees that each
-------------------------------------
Continuing Director shall have the benefit of the terms and conditions of the
Recapitalization Agreement that relate to
- 15 -
<PAGE>
the future conduct of the business of the Company and the agreement of Vestex
to use their best efforts to locate and obtain capital for the Company as though
such terms and conditions were set forth herein as running from Vestex to each
of the Continuing Directors. Each Continuing Director shall have the right to
enforce such terms and conditions on his own behalf or on behalf of the Company
against Vestex.
3.9. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Massachusetts.
3.10. Entire Agreement, Assignability, Etc. This Agreement, together with
------------------------------------
the Recapitalization Agreement, including all exhibits and schedules thereto,
(i) constitutes the entire agreement, and supersedes all other prior agreements
and understandings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof (including, without limitation,
insofar as it relates to agreements among the parties hereto as distinct from
agreements between such parties and other persons not parties hereto, the
Interim Voting Agreement dated as of July 25, 1995), (ii) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder, and (iii) shall not be assignable by operation of law or otherwise.
IN WITNESS WHEREOF, the parties hereto have duly executed or caused this
Agreement to be duly executed under seal on the day and year first above
written.
/s/ Brian M. Adley
-------------------------------
Brian M. Adley
- 16 -
<PAGE>
/s/ Bruce M. Dayton
-------------------------------
Bruce M. Dayton
/s/ Thomas W. Killilea
-------------------------------
Thomas W. Killilea
/s/ Stephen G. Morison
-------------------------------
Stephen G. Morison
/s/ Richard D. Rizzo
-------------------------------
Richard D. Rizzo
CHANCELLOR CORPORATION
By:/s/ Stephen G. Morison
----------------------------
President
VESTEX CAPITAL CORPORATION VESTEX CORPORATION
By: /s/ Brian M. Adley By: /s/ Brian M. Adley
-------------------- -----------------------------
Title: President President
The following persons have become additional parties to the foregoing
Agreement as of the respective dates set forth below:
- ----------------------------
date
- ----------------------------
date
-------------------------------
[New Vestex Nominee]
-------------------------------
[New Non-Vestex Nominee]
- 17 -
<PAGE>
Exhibit 7
---------
AMENDED SCHEDULE 13D AGREEMENT
------------------------------
Pursuant to Rule 13d-1(f)(1)(iii) of the Securities and Exchange
Commission, the undersigned* hereby agree to file a statement on Schedule 13D on
behalf of each of them with respect to their interest in the common stock, $.01
par value, of Chancellor Corporation, a Massachusetts corporation.**
EXECUTED as of this 12th day of April, 1996.
/s/ Stephen G. Morison
------------------------------
Stephen G. Morison
/s/ Bruce M. Dayton
------------------------------
Bruce M. Dayton
/s/ Thomas W. Killilea
------------------------------
Thomas W. Killilea
/s/ Richard D. Rizzo
------------------------------
Richard D. Rizzo
__________________________
*: (including Richard D. Rizzo)
**: Effective with the filing of the Amendment, Bruce M. Dayton and Thomas W.
Killilea will cease to be Reporting Persons since they are no longer the
beneficial owners of 5% or more of Chancellor Corporation's outstanding common
stock.
