CUSIP No. 1588 28 10 3 Schedule 13D
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Amendment No. 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
CHANCELLOR CORPORATION
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
1588 28 10 3
(CUSIP Number)
Brian M. Adley, Chairman of Vestex Corporation, 12 Waltham Street, Lexington, MA
02173 (617) 861-0777 (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 persons (1) has a 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 13(d)-1(a) for other parties to whom copies are to be
sent.
"The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior coverage 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).
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1. Name of Reporting Person: Brian M. Adley
SS or IRS Identification Number of the Above Person:
2. Check the Appropriate Box if a Member of a Group: (a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): / /
6. Citizenship or Place of Organization: United States
7. Sole Voting Power: 6,675,000 shares
8. Shared Voting Power: 0 shares
9. Sole Dispositive Power: 6,675,000 shares
10. Shared Dispositive Power: 0 shares
11. Aggregate Amount Beneficially Owned by
Each Reporting Person: 6,675,000 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares / /
13. Percent of Class Represented by Amount in Row (11): 65.6%
14. Type of Reporting Person: IN
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1. Name of Reporting Person: Vestex Corporation
SS or IRS Identification Number of the Above Person: 04-3244860
2. Check the Appropriate Box if a Member of a Group: (a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: NA
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Massachusetts
7. Sole Voting Power: 0 shares
8. Shared Voting Power: 0 shares
9. Sole Dispositive Power: 0 shares
10. Shared Dispositive Power: 0 shares
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 0 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares / /
13. Percent of Class Represented by Amount in Row (11): 0%
14. Type of Reporting Person: CO
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1. Name of Reporting Person: Vestex Capital Corporation
SS or IRS Identification Number of the Above Person: 04-3303651
2. Check the Appropriate Box if a Member of a Group: (a) / /
(b) /X/
3. SEC Use Only
4. Source of Funds: BK
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e): / /
6. Citizenship or Place of Organization: Massachusetts
7. Sole Voting Power: 6,600,000 shares
8. Shared Voting Power: 0 shares
9. Sole Dispositive Power: 6,600,000 shares
10. Shared Dispositive Power: 0 shares
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
6,600,000 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares / /
13. Percent of Class Represented by Amount in Row (11): 65.1%
14. Type of Reporting Person: CO
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The joint statement of Brian M. Adley ("Adley") and Vestex Corporation
("VC") on Schedule 13D dated August 7, 1995, (a copy of which is filed herewith
as Exhibit 1 and hereby made a part hereof) which relates to the common stock,
par value $.01 per share ("Common Stock"), of Chancellor Corporation (the
"Issuer"), whose principal executive offices are located at 745 Atlantic Avenue,
Boston, Massachusetts 02111, is hereby joined by Vestex Capital Corporation
("Vestex" and collectively with Adley and VC, hereinafter the "Purchaser") and
is hereby amended and supplemented as follows:
Item 2. Identity and Background.
The following additional information is added to the end of Item 2:
(a) Vestex Corporation.
(b) 12 Waltham Street, Lexington, MA 02173.
(c) Engaged in the investment business.
(d) During the last five years, Vestex Corporation has not been
convicted in any criminal proceeding.
(e) During the last five years Vestex Corporation has not been a
party to any civil proceedings the
result of which was a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Vestex Corporation is a corporation formed under the laws of the
Commonwealth of Massachusetts and is wholly-owned by Brian M.
Adley.
(a) Vestex Capital Corporation.
(b) 12 Waltham Street, Lexington, MA 02173.
(c) Engaged in the investment business.
(d) During the last five years, Vestex Capital Corporation has not
been convicted in any criminal proceeding.
(e) During the last five years Vestex Capital Corporation has not
been a party to any civil proceedings the result of which was a
judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to
such laws.
(f) Vestex Capital Corporation is a corporation formed under the
laws of the Commonwealth of Massachusetts and is wholly-owned by
Brian M. Adley.
Item 3. Source and Amount of Funds or Other Consideration.
The following is added as the second paragraph of Item 3:
On April 12, 1996, VC transferred 1,600,000 shares of Common
Stock (the "Common Stock") to Vestex for no consideration.
On April 12, 1996, Vestex acquired directly from the Issuer
5,000,000 shares of Series AA Convertible Preferred Stock (the
"Preferred Shares") for which Vestex paid a total of $1,350,000 in
cash. In connection with said purchase, Vestex received $312,500 from
the Issuer as reimbursement of expenses incurred in the transaction.
The purchase price for said Preferred Shares came from working capital,
which working capital was provided, in part, by the proceeds of the
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loan agreement (the "Loan Agreement") effective March 28, 1996, among
Vestex, Adley (as co-borrower) and First Capital, Inc. ("FCI"). This
loan is secured, in part, by a pledge of said Preferred Shares to FCI.
The Loan Agreement is attached hereto as Exhibit 2 and hereby made a
part hereof. The rights and preferences of the Preferred Shares are as
set forth in the Certificate of Designation filed as Exhibit 3 hereto
and hereby made a part hereof.
Item 4. Purpose of Transaction.
The following is added as the third, fourth and fifth paragraphs of
item 4:
The Preferred Shares and the Shares of Common Stock acquired by
Vestex on April 12, 1996 were acquired for investment purposes.
Effective April 12, 1996,the Shares of Common Stock acquired by Vestex
from VC were released from the terms of the "Interim Voting Agreement"
dated as of July 25, 1995 filed on August 7, 1995 as Exhibit 2. The
Preferred Shares and the Common Stock acquired by Vestex are subject to
the "Long-Term Voting Agreement" dated as of April 12, 1996, a copy of
which is filed herewith as Exhibit 4 and hereby made a part hereof.
As of April 11, 1996, the Issuer, VC, and Vestex entered into
the Registration Rights Agreement filed herewith as Exhibit 5 and
hereby made a part hereof, pursuant to which Vestex and transferees of
the Preferred Shares and shares of Common Stock held by Vestex are
entitled to require the Issuer to file a registration statement with
the Securities Exchange Commission with respect to such shares.
Vestex and Adley, in accordance with the terms of the Long-Term
Voting Agreement, presently intend to nominate and elect Mr. Gerald
Brauser and Mr. Lawrence LaChance to the Issuer's Board of Directors.
Except as described above, the Reporting Person has 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, (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, (e) any material change in the
present capitalization 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 interdealer 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.
Item 5. Interest in Securities of the Issuer.
The following is added to the end of part (a) of Item 5:
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As a result of the transactions completed on April 12, 1996, as
of April 12, 1996 Vestex beneficially owns 6,600,000 shares of Common
Stock of the Issuer (65.1%) of the outstanding common stock (assuming
the conversion of the 5,000,000 Preferred Shares on a one-for-one
basis); Adley beneficially owns 6,675,000 shares of Common Stock of the
Issuer (65.6%) of the outstanding common stock (6,600,000 shares
indirectly through his control of Vestex and 75,000 directly, assuming
the exercise of his stock purchase options relating to 75,000 shares).
The following is added to the end of part (b) of Item 5 as paragraphs 2
and 3:
As of April 12, 1996, Vestex has the sole power to vote, dispose of, or
direct the disposition of 6,600,000 shares of Common Stock (including 5,000,000
Preferred Shares as converted into Common Stock); and Adley has the sole power
to vote, dispose of, or direct the disposition of 6,675,000 shares (comprised of
75,000 shares of Common Stock to which Adley holds stock purchase options
exercisable within the next sixty (60) days, and 6,600,000 Shares of Common
Stock beneficially owned by Vestex).
The following is added to the end of part (c) of Item 5:
VC and Vestex effected the following transactions in the
Issuer's common stock during the past 60 days:
On April 12, 1996 Vestex acquired 1,600,000 Shares of Common
Stock from VC for no consideration, and 5,000,000 Preferred
Shares directly from the Issuer, for a total purchase price of
$1,350,000 ($.27 per share).
The following is added to the end of part (e) of Item 5:
Not applicable as to Adley or Vestex. VC ceased to be a
beneficial owner of any shares of the Common Stock on April 12,
1996.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The following is added to the end of Item 6 as paragraphs 5, 6 and 7:
Effective April 12, 1996, the 1,600,000 shares of
Common Stock transferred from VC to Vestex were released from
the terms and conditions of the Interim Voting Agreement, as the
Interim Voting Agreement was superseded in its entirety by
another voting agreement (the "Long-Term Voting Agreement")
entered that date among the Issuer, Vestex, Stephen G. Morison,
Bruce M. Dayton, Thomas W. Killilea, Richard D. Rizzo, and the
Issuer's employees.
The Long-Term Voting Agreement, which is filed herewith
as Exhibit 4 and hereby made a part hereof, provides for the
election of a Board of seven Directors, two of whom will be
nominated by Vestex and five of whom will be the nominees of the
Company's continuing directors other than nominees of Vestex
("Continuing Directors") subject to
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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 Issuer, will be subject to approval by the
Continuing Directors or the Minority Stockholders ("Minority
Approval").
In connection with the closing of the sale of the
Preferred Stock, the Issuer, VC, and Vestex entered into the
Registration Rights Agreement filed herewith as Exhibit 5 and
hereby made a part hereof, pursuant to which Vestex and
transferees of the Preferred Shares and shares of Common Stock
held by Vestex are entitled to require the Issuer to file a
registration statement with the Securities and Exchange
Commission with respect to such shares.
Effective March 28, 1996, Vestex and Adley, as
co-borrowers, entered into a loan agreement (the "Loan
Agreement") with First Capital, Inc. ("FCI"), a Virginia
corporation, pursuant to which FCI loaned to Vestex $1,800,000
(the "Loan") a portion of which Vestex used to purchase the
5,000,000 Preferred Shares. The Loan is secured, in part, by a
pledge to FCI of the 5,000,000 Preferred Shares. The Loan
Agreement is attached hereto as Exhibit 2 and incorporated
herein by reference.
Item 7. Material to be Filed as Exhibits.
The following documents are hereby filed as Exhibits to this Amendment
No. 1 and hereby incorporated by reference:
Exhibit Description
1. Original Schedule 13D filed August 7, 1995 by
Adley and VC.
2. Loan Agreement effective March 28, 1996, between Vestex
and First Capital, Inc., regarding pledge of 5,000,000
Series AA Convertible Preferred Shares.
3. Certificate of Designation
4. Long-Term Voting Agreement dated as of April 11, 1996,
among the Issuer and Vestex.
5. Registration Rights Agreement dated as of April 11, 1996,
between Vestex, VC, and the Issuer.
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Signatures
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned each hereby certify that the information set forth in this
statement is true, complete and correct.
Dated: August 14, 1996 Brian M. Adley
-----------------------------
Brian M. Adley
VESTEX CAPITAL CORPORATION
Dated: August 14, 1996 By: Brian M. Adley
-------------------------
Brian M. Adley, Chairman
VESTEX CORPORATION
Dated: August 14, 1996 By: Brian M. Adley
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Brian M. Adley, Chairman
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CUSIP No. 1588 28 10 3 Schedule 13D
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Amendment No. 1
Exhibit 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____________)
CHANCELLOR CORPORATION
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
1588 28 103
(CUSIP Number )
Brian M. Adley, Chairman of Vestex Corporation, 12 Waltham Street, Lexington, MA
02173 (617) 861-0777 (Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Vestex Corporation, 12 Waltham Street, Lexington, MA 02173 (617) 861-0777 (Name,
Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 25, 1995
(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 persons (1) has a 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 13(d)-1(a) for other parties to whom copies are to be
sent.
"The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior coverage 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).
Exhibit 1- Page 1
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 the person who is filing this statement
(the "Reporting Person"), together with his title with the Company (which
employment constitutes his principal occupation) are as follows:
Name Address Title
- ---- ------- -----
Brian M. Adley c/o Vestex Corporation
12 Waltham Street
Lexington, MA 02173
(d)-(e) The Reporting Person, during the last five years, has not 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 subject to, federal or
state securities laws or finding any violation with respect to such laws.
(f) The Reporting Person is a U.S. citizen.
Item 3. Source and Amount of Funds or Other Consideration.
For a total of 1,600,000 shares owned outright by Vestex Corporation,
Vestex Corporation paid a total of $475,000 in cash. Such amounts came from
corporate funds. If and when Brian M. Adley exercises outstanding stock options,
he would expect to use personal funds.
Item 4. Purpose of Transaction.
Vestex Corporation's transaction was for investment pending making a
larger, controlling investment as described herein. With respect to Brian M.
Adley's stock options, the company has awarded stock options to Mr. Adley in his
capacity as a Director of the Company. Pursuant to its 1994 Directors Stock
Option Plan.
As heretofore reported by the Company, Vestex Corporation has subscribed
to purchase from the Company 5,000,000 shares of Series A Convertible Preferred
Stock for $2,500,000 in December 1995, following which purchase Vestex
Corporation will hold a majority of the Company's outstanding shares. The voting
of such shares, together with those beneficially owned by the Reporting Person,
will thereafter be governed ;by a new voting agreement whose terms are
summarized in Item 6. Among other things, for a period of approximately five
years thereafter Vestex Corporation will be entitled to designate only a
majority of the Company's directors and the two incumbent outside directors and
Stephen G. Morison (or their designated successors) will be entitled to serve on
the Board with certain powers of veto, described in Item 6 below, for the first
two years of such period. Prior to the issuance of such preferred stock, the
Company's Articles of Organization will be amended to provide that (i) the
Company may at any time following the second anniversary of the issuance of such
preferred stock, redeem all or any part of the preferred stock, by paying the
holder, in cash, all accrued but unpaid dividends thereon and converting the
preferred stock to be redeemed into common stock and (ii) special payments upon
conversion thereof as set forth in Section C(3)(1) of the Company's Articles of
Organization, as amended, may be payable, in the sole discretion of the Minority
Directors (as that term is defined in Item 6), at any time following the second
Exhibit 1- Page 2
anniversary of the issuance of such stock, in common stock of the Company, at a
conversion rate equal to the common stock's fair market value (determined on the
basis of average bid and asked prices over a specified period) divided by two.
Except as described above, the Reporting Person has 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, (b) an extraordinary corporation
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, (e) any material change in the present capitalization 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 interdealer 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.
Item 5. Interests in Securities of the Issuer.
(a) Vestex Corporation beneficially owns the following numbers of shares:
Number Nature of Percentage
of Shares Beneficial Ownership Class (1)
- --------- -------------------- ---------
1,600,000 Owned outright 31.2%
Brian M. Adley beneficially owns the following number of shares:
Number Nature of Percentage
of Shares Beneficial Ownership Class (1)
- --------- -------------------- ---------
37,500 Stock options exercisable .05%
within 60 days hereafter
1,600,000 Shares over which the 31.2%
Reporting Person has
voting power
- ------------------- ------------
1,637,000 31.7%
- ---------------
(1) the number of shares outstanding is deemed to include shares which
the Reporting Person can acquire by exercise of stock options.
(b) Vestex corporation has sole power to vote and to dispose of
1,600,000 shares set forth opposite its name. At August 7, 1995, Vestex
Corporation has the power to vote a total of 1,600,000 of the Company's
outstanding shares (31.2).
(c) Vestex Corporation has effected the following transactions in
the Company's Common Stock during the past 60 days:
Exhibit 1- Page 3
(i) On July 25, 1995, Vestex Corporation acquired 1,600,000 shares.
Brian M. Adley has effected the following transactions in the Company's
Common Stock during the past 60 days:
(i) On July 26, 1995, the Company awarded Brian M. Adley 375,000 shares
of stock under its 1994 Directors Stock Award Plan.
(ii) On July 25, 1995 Vestex corporation acquired 1,600,000 shares.
Brian M. Adley has voting power over such shares.
(d) The Reporting Person doe 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.
In connection with the stock purchase and sale described above, the
Company, Stephen G. Morison and the Company's employees have entered into (or,
in the case of certain of such employees, will enter into as a condition to
receiving shares of Common Stock) an Interim Voting Agreement dated as of July
25, 1995 (the "Interim Voting Agreement"). Pursuant to the Interim Voting
Agreement, for so long as Mr. Morison is an officer or director of the Company
and until the closing of the preferred stock purchase described in Item 4 above,
the employees have agreed (a) to vote the subject Shares for the election of
four directors, three of whom shall be continuing directors (currently, Bruce M.
Dayton, Thomas W. Killilea and Mr. Morison) or their designees (hereinafter,
"Minority Directors") and one of whom shall be designated by Vestex Corporation
(initially, Brian M. Adley) and (b) in other matters, to vote the subject shares
as directed by mr. Morison. Vestex Corporation has agreed that, in the event
that it defaults in its obligation to purchase the Preferred Stock, Mr. Morison
will assume voting control over Vestex corporation's common stock. Because a
majority of the Company's outstanding shares are subject to the Interim Voting
Agreement, all directors will be elected in accordance with the terms of such
agreement for so long as it is in effect.
Following its purchase of preferred stock, Vestex Corporation will hold
sufficient capital stock of the Company to be able to cast 65.1% of all votes
that may be cast by all stockholders. This voting power will ordinarily be
sufficient to elect the entire Board of Directors and to approve all matters
requiring stockholder approval. For a period of five years following the
preferred stock purchase, however, another voting agreement (the "Long-Term
Voting Agreement") will be in effect, providing for the election of a board of
Directors, a majority of whom will be nominated by Vestex Corporation and one
less than a majority of whom will be Minority Directors subject to election by
the stockholders other than Vestex ("Minority Stockholders"). The Long-Term
Voting Agreement will also require that, for a period of two years following the
preferred stock closing, certain issuances of stock, mergers, charter and by-law
amendments and other transactions, in which Vestex Corporation has an interest
which conflicts with or is distinct from that of the Company, will be subject to
approval by the Minority Directors or the Minority Stockholders ("Minority
Approval").
Minority Directors. Stephen G. Morison, Bruce M. Dayton and Thomas W.
Killilea will be the three initial Minority Directors. Mr. Morison will be
subject to re-election in 1995 and Messrs. Dayton and Killilea in 1996. The
Long-Term Voting Agreement provides that, at all elections of directors prior to
the Annual Meeting of Stockholders held in the year 2000, the company will
nominate each of the initial Minority Directors for re-election or, if any such
Minority Director does not choose to stand for re-election, a nominee designated
by a majority of the Minority Directors then in office. Vestex Corporation 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 Corporation will vote all
of its outstanding stock in favor of the candidate who receives a plurality of
the votes cast by the Minority
Exhibit 1- Page 4
Stockholders. Vacancies which occur among the Minority Directors will be filled
as designated by the remaining Minority Directors.
Minority Approval. For a period of two years following the issuance of
the Preferred Stock, the following types of transactions will be subject to
approval by either a majority of the Minority 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 corporation (other than the issuance of
Common Stock pursuant to the conversion of Series A Preferred Stock), (ii) any
merger, consolidation or sale of assets involving the Company and Vestex
corporation, (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 Corporation of any fee or other similar type
of benefit (other than as contemplated in the Recapitalization Agreement, as
amended by the Amendment). Vestex Corporation 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 corporation does not have a conflict of interest, such as the issuance of
securities to an unrelated purchaser (notwithstanding that Vestex corporation
would be entitled to receive a fee in connection with such transaction).
Item 7. Material to be Filed as Exhibits.
The following documents are hereby filed as Exhibits to this statement:
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
1. Amendment No. 3 to Recapitalization and Stock Purchase Agreement dated as of July 14,
1995 among the Registrant, Bruncor, Inc. and Vestex Corporation.
2. Interim Voting Agreement dated as of July 25 among the Registrant, Vestex Corporation,
Stephen G. Morison and the Company's other Employees.
3. Form of Voting Agreement among the Registrant, Vestex Corporation, Steven G. Morison,
Bruce M. Dayton and Thomas W. Killilea.
</TABLE>
Signature
After reasonable inquiry and to the best of my knowledge and behalf, I
certify that the information set forth in this statement is true, complete and
correct.
Date: August 7, 1995 Brian M. Adley
--------------------
Brian M. Adley
--------------------
Print Name
Exhibit 1- Page 5
Exhibit 2 to Exhibit 1
SCHEDULE 13D AGREEMENT
Pursuant to Rule 13d-1(f)(1)(ii) 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 7th day of August, 1995.
Brian M. Adley
--------------------
Brian M. Adley
Brian M. Adley, Chairman
------------------------
Vestex Corporation
Exhibit 1- Page 6
CUSIP No. 1588 28 10 3 Schedule 13D
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Amendment No. 1
Exhibit 2
Exhibit 2
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LOAN AGREEMENT
This Loan Agreement is made this day of , 1996, in the City of Vienna,
Fairfax County, Virginia between FIRST CAPITAL, INC., a Virginia corporation,
("FCI") and VESTEX CAPITAL CORP., a Massachusetts corporation, and BRIAN ADLEY,
an individual (collectively referred to as "Borrowers").
RECITALS
A. The Borrowers have requested the Loan from FCI for the purpose of
closing on the acquisition of five million (5,000,000) shares of the preferred
stock, of Chancellor Corp., a Delaware corporation.
B. FCI has agreed to make, and the Borrowers have agreed to accept, the
Loan, subject to the terms, covenants, and conditions set forth in this
Agreement.
TERMS, COVENANTS, AND CONDITIONS
The Borrowers and FCI agree as follows:
1. RECITALS AND DEFINITIONS
1.1 Recitals. The foregoing recitals are true and correct and
are incorporated into this Agreement. All defined terms are set forth in the
Recitals shall have the meanings as set forth in Section 1.2.
1.2 Definitions. As used in this Agreement the following terms
shall have the following meanings:
1.2.1 "Advance" means a disbursement of the Loan pursuant
to this Agreement.
1.2.2 "Agreement" means this Loan Agreement.
1.2.3 "Borrowers" means Vestex Capital Corp., a
Massachusetts corporation and Brian Adley, an individual.
1.2.4 "Borrowers Counsel" means the law firm of Hinckley,
Allen & Snyder.
1.2.5 "FCI" means First Capital, Inc., a Virginia
corporation, its successors, and assigns.
1.2.6 "FCI Counsel" means the law firms of Lee C. Summers,
PA. and Hazel & Thomas.
1.2.7 "Closing" means the time of the execution and
delivery of this Agreement by the Borrowers and FCI.
1.2.8 "Closing Date" means the date of Closing which is
March 28, 1996.
1.2.9 "Event of Default" means any event described in
Section 7 of this Agreement.
1.2.10 "Governmental Authority" means any (domestic or
foreign) federal, state, county, municipal, or other government, governmental
department, district commission, board, bureau, court, agency, or any
instrumentality of any of them having Jurisdiction and/or authority of or over
the Borrowers.
Exhibit 2- Page 1
1.2.11 "Governmental Requirement" means any law, statute,
code, ordinance, order, rule, regulation, judgment, decree, writ, injunction,
franchise, permit, certificate, license, authorization, or other direction or
requirement of any Governmental Authority, whether now existing or in the future
enacted, adopted, promulgated, entered, or issued, applicable to the Borrowers.
1.2.12 "Loan or Loan Amount" means a loan in the principal
amount of $1,800,000.00.
1.2.13 "Loan Documents" means any document or instrument
executed, submitted or to be submitted by the Borrowers or others in connection
with the Loan. Such documents may include, but shall not be limited to, this
Agreement, the Note, financing statements, the Borrower's affidavit(s),
certificates or corporate resolutions, and other certificates of the Borrowers,
opinions of counsel, security agreements, and financial statements.
1.2.14 "Note" means the Promissory Note of even date with
this Agreement from the Borrowers to FCI in the amount of $1,800,000.00 and any
other note given to FCI.
1.2.15 "Person" means and shall include, without
limitation, any manner of association, Governmental Authority, business trust,
company, corporation, estate, joint venture, natural person, partnership, trust
or other entity.
1.2.16 "Personal Property" means all of the following
property of the Borrowers whether now owned and existing, or in the future
acquired or arising.
1.2.16.1 all personal property
1.2.16.2 all accounts, accounts receivables, other
receivables, contract rights, chattel paper, instruments and documents; any
other obligations or indebtedness owed to the Borrowers from whichever source
arising, all rights of the Borrowers to receive any performance or any payments
in money or kind; all guaranties of the foregoing and security therefor; all of
the right, title, and interest of the Borrowers in and with respect to the
goods, services, or other property that gave rise to or that secure any of the
foregoing, and all rights of the Borrowers as an unpaid seller of goods and
services, including, but not limited to, the rights to stoppage in transit,
replevin, reclamation, and resale;
1.2.16.3 all goods, including, but not limited to, all
machinery, equipment, furniture, furnishings, building supplies and materials,
business machines, tools, aircraft, and motor vehicles of every kind and
description, and all warranties and guaranties for any of the foregoing;
1.2.16.4 all inventory, merchandise, raw materials, parts,
supplies, work-in-process and finished products intended for sale, of every kind
and description, in the custody or possession, actual or constructive, of the
Borrower, including such inventory as is temporarily out of the custody or
possession of the Borrower, and any returns upon any accounts and other proceeds
resulting from the sale or disposition of any of the foregoing including,
without limitation, raw materials, work-in- process, and finished goods;
1.2.16.5 all general intangibles, including, without
limitation, corporate or other business records and books, trademarks, trade
names, goodwill, licenses, governmental approvals, franchises, tax refund
claims, and agreements with utility companies, together with any deposits,
prepaid fees and charges paid thereon;
1.2.16.6 all judgments, awards of damages and settlements;
1.2.16.7 all proceeds, products, replacements, additions,
betterments, extensions, improvements. substitutions, renewals, and accessions
of any of the foregoing.
Exhibit 2- Page 2
2. THE LOAN AND COLLATERAL
2.1 Description of Loan. Subject to all the terms, representations,
warranties, covenants, and conditions of this Agreement, FCI agrees to lend to
the Borrowers, and the Borrowers agree to borrow from FCI, an amount not in
excess of the Loan Amount to be used to close the acquisition of the preferred
stock of Chancellor Corp., costs incident to closing, commitment fees and other
related costs.
2.2 Evidence of and Security for the Loan. The Loan shall be evidenced
by the Note, which shall be secured by five million (5,000,000) shares of the
preferred stock of Chancellor Corp., a life insurance policy with a death
benefit of $2,500,000.00 on the life of Brian Adley, a security interest in the
Personal Property of the Borrowers and by such other security instruments and
documents as may be reasonably required by FCI, including those set forth in
this Agreement.
3.1 Representations and Warranties of the Borrowers. The Borrowers
represent and warrant to FCI as follows:
3.1.1 Organization and Good Standing. Vestex Capital Corp. is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Massachusetts.
3.1.2 Power. The Borrowers have the power and capacity to enter into,
perform and deliver the Loan Documents executed by them.
3.1.3 Authorization. The execution and delivery of the Loan Documents
and the performance by the Borrowers of their obligations under the Loan
Documents have been duly authorized by all necessary corporate action. The Loan
Documents will, when executed and delivered, constitute the legal, valid,
binding, and enforceable obligations of the Borrowers to the extent called for
in the Loan Documents.
3.1.4 Adverse Litigation. The Borrowers have disclosed to FCI and FCl's
counsel all material adverse litigation (in process, threatened, or pending)
against the Borrowers.
3.1.5 Other Financing. The Borrower has not received any other
financing for the purchase of the preferred stock of Chancellor Corp.
3.1.6 Claims and Change of Condition. The Borrowers acknowledge that no
events have transpired and no claims (including, without limitation, claims in
litigation) have been made, and no litigation is in process, threatened or
pending, against the Borrowers or Chancellor Corp. which (i) would constitute a
material adverse change in the financial condition of the Borrowers or
Chancellor Corp. from that financial information provided to FCI and relied upon
by FCI in deciding to make the Loan, or (ii) may materially and adversely affect
the Borrowers;
3.1.7 Stock Ownership. Simultaneously with the Closing of the Loan,
Borrowers shall acquire ownership of Five Million (5,000,000) shares of the
preferred capital stock of Chancellor Corp., a Delaware corporation, which
shares shall have been duly authorized and issued, shall be non-assessable and
shall not be subject to any lien, encumbrance, hypothecation or pledge.
Immediately after the Closing, Borrowers shall control more than fifty percent
(50%) of the voting stock of Chancellor Corp.
3.1.8 Reliance on Representations. The Borrowers acknowledge that FCI
has relied upon the Borrowers' representations, has made no independent
Investigation of the truth of such representations, and is not charged with any
knowledge contrary to such representations that may be received by an
examination of the public records or that may have been received by any ofFicer,
director, agent, employee, or shareholder of FCl
Exhibit 2- Page 3
3.1.9 Due Diligence. To the extent that any of the representations and
warranties in this Agreement are stated as being to the best of the Borrowers'
knowledge, those representations and warranties are being made after diligent
and reasonable investigation by the Borrowers regarding the subject matter of
such representations.
3.2. Representations and Warranties of FCI. FCI represents and warrants
to Borrowers as follows:
3.2.1 Organization and Good Standing. FCI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Virginia.
3.2.2 Power. FCI has the power and capacity to enter into, perform and
deliver the Loan Documents executed by it.
3.2.3 Authorization. The execution and delivery of the Loan Documents
and the performance by FCI of its obligation under the Loan Documents have been
duly authorized by all necessary corporate action.
4. CONDITIONS PRECEDENT TO CLOSING. As conditions precedent to the
Closing, the Borrowers shall satisfy the following:
4.1 The Loan Documents, each inform and substance satisfactory to FCI
and FCl's Counsel, shall have been executed and delivered to FCI and, as
necessary to perfect FCl's first lien on the Collateral, recorded or filed in
the appropriate Public Records.
4.2 FCI shall have received possession of five million (5,000,000)
shares of the preferred stock of Chancellor Corp endorsed in blank or shall have
received a letter from Hinckley, Allen 8 Snyder, Attorneys at Law, that such
shares have been presented to the transfer agent for Chancellor Corp. and will
be forwarded to FCI immediately upon issuance by that transfer agent and receipt
by Borrowers.
4.3 FCI shall have received certified copies of the Articles of
Incorporation and Bylaws of Vestex Capital Corp. and a current Certificate of
Good Standing for Vestex Capital Corp.
4.4 FCI shall have received an assignment of a policy on the life of
Brian Adley with a death benefit of Two Million Five Hundred Thousand Dollars
($2,500,000.00) with premium paid for one (1) year naming FCI as the beneficiary
which beneficiary designation cannot be changed without the consent of FCI. FCI
shall accept a binder on such insurance at closing in the amount of
$2,800,000.00. The policy in the amount of $2,500,000.00 and the assignment
thereof shall be delivered to FCI within sixty (60) days of the Closing Date.
Failure to deliver the policy and assignment within this time period shall be a
default hereunder and under the Note.
4.5 FCI shall have received such further documents and opinions as FCI
may reasonably request.
4.6 The Borrowers shall have satisfied all other conditions precedent
to the Advance set forth elsewhere in this Agreement and in any other Loan
Document.
Any waiver of these conditions precedent shall be in writing, specify
the condition and be signed by Larry Schwark as Vice President of FCI. Any
waiver shall waive only the specified condition and no other and shall not be
deemed or construed to be a subsequent waiver of the same condition or to
prohibit FCI from requiring subsequent compliance with such previously waived
condition. Neither the Closing of the Loan or the disbursement of proceeds of
the Loan for the payment of costs and expenses of the Closing shall be deemed a
waiver of any of the foregoing conditions precedent.
5. AFFIRMATIVE COVENANTS.
Exhibit 2- Page 4
5.1 Use of Proceeds. The Borrowers shall use the proceeds of the Loan
only for the acquisition of the preferred stock of Chancellor Corp., costs of
Closing, and other costs related thereto.
5.2 Notices. The Borrowers shall give prompt written notice to FCI of
(i) any action or proceeding instituted by or against the Borrowers in any court
or by any Governmental Authority, or of any such proceedings threatened against
the Borrowers which might result in a judgment or judgments which might have a
material adverse effect upon the business, operations, properties, assets, or
condition (financial or otherwise) of the Borrowers, and (ii) any other action,
event, or condition of any nature known to the Borrowers which constitutes an
Event of DEFAULT or a default of the Borrowers under any contract, instrument,
or agreement to which it is a party or by which it or any of its properties or
assets may be bound or to which nay may be subject, which default might have a
material adverse effect upon the business, operations, properties, assets, or
condition (financial or otherwise) of the Borrowers.
5.3 Financial Instruments. The Borrowers shall furnish (or case to be
furnished) to FCI, the following financial statements of the Borrowers prepared
in accordance with generally accepted accounting principles (to the extent such
statements are for a corporation and are prepared by an accountant) (all annual
financial statements of the Borrower shall be certified by the Chief Financial
Officer of the Borrowers):
5.3.1 Within 90 days after the end of each fiscal year of the corporate
Borrower, statements of profit and loss and of surplus, for each fiscal year,
and balance sheets as of the end of each such year of the Borrowers, in
reasonable detail; and
5.3.2 within 30 days after the end of each quarter, financial
statements, statements of profits and losses and of surplus, and balance sheets
of the corporate Borrower certified by the Chief Financial Officer of the
corporate Borrower, as applicable, in accordance with generally accepted
accounting principles, consistently applied.
5.4 Chancellor Corp. Portfolio. During the term of the loan neither
Borrowers nor any of their nominees to the Board of Directors of Chancellor
Corp. shall vote to pledge, encumber or hypothecate the set amount of the
chancellor corp. equipment lease portfolio without the prior written consent of
FCI.
6. NEGATIVE COVENANTS
6.1 Change in Control. Without FCI's prior written consent, there shall
be (i) no change in the ownership, interest or control of the corporate
Borrower, and (ii) no sale, transfer, assignment or encumbrance of any shares of
stock of the corporate Borrower.
6.2 Liens or Encumbrances. The Borrowers shall not cause, permit, or
allow to remain any liens or encumbrance upon the Collateral without the prior
written consent of FCI which consent shall not be unreasonably withheld.
6.3 Publicity. The Borrowers shall not publicize or advertise in any
signs, advertising materials, sales brochures, or other sales offering materials
the name of FCI as a source of financing without the prior express written
permission of FCI.
6.4 Other Financing. The Borrowers shall not procure, obtain or
guarantee any other financing without obtaining the prior written consent of FCI
which consent shall not be reasonably withheld.
6.5 No Assignment. The Borrowers shall not assign the Loan or any
rights under this Agreement
7. EVENTS OF DEFAULT AND REMEDIES.
Exhibit 2- Page 5
7.1 Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" under this Agreement:
7.1.1 A default in the payment of interest or principal under
the Note;
7.1.2 The occurrence of an Event of Default under the Security
Agreement, as that term is defined in the Security Agreement:
7.1.3 The making by the Borrowers of any representation or
warranty, in this Agreement or in any other Loan Document, which shall be found
to be inaccurate, untrue, or breached in any material respect;
7.1.4 A sale, transfer, pledge, conveyance, or encumbrance of
any of the Collateral, or a sale, transfer, pledge, conveyance, or encumbrance
of any interest in, or of any stock ownership of, the Borrowers, whether by
operation of law or otherwise, without FCl's prior written consent unless the
proceeds therefrom are used to pay the principal and accrued interest due on the
Note;
7.1.5 The failure by any Borrowers to perform any other
covenant, term, or condition of this Agreement;
7.1.6 The issuance at the request of any Person, of an order or
decree in any court of competent jurisdiction, enjoining or prohibiting the
Borrowers or FCI from carrying out the provisions of this Agreement, if any such
order or decree is not vacated within thirty (30) days after issuance.
7.2 Cure. With regard to the defaults referred to in Section 7.1
other than default in the payment of money (a "Non-Monetary Default"),
notwithstanding anything to the contrary contained in this Agreement, an "Event
of Default" shall not be deemed to have occurred under this Agreement unless the
Non-Monetary Default shall not have been cured ~thin ten (10) days after written
notice of such default has been sent by FCI to the Borrowers or the Borrowers
shall not have diligently commenced to prosecute to completion the cure of the
Non-Monetary Default within such ten (10) day period. Notwithstanding the
foregoing, an Event of Default shall be deemed to have occurred if total cure of
the Non-Monetary Default is not completed within ninety (90) days after written
notice of default is sent by FCI to the Borrower.
7.3 Remedies.
7.3.1 Upon the occurrence of an Event of Default, FCI may:
7.3.1.1 declare immediately due and payable,
with interest, all monies advanced under this Agreement, and accordingly
accelerate payment of the Note: and/or
7.3.1.2 commence a foreclosure of the security
interest or take any other action permitted by law, notwithstanding anything
contrary in the Security Agreement.
7.3.2 The remedies provided in this Agreement shall be in
addition to and not in substitution for the rights and remedies which would
otherwise be vested in FCI in law or equity under the Note or the Security
Agreement and any other Loan Documents, all of which rights and remedies are
specifically reserved by FCI. The failure by FCI to exercise any of the remedies
provided in this Agreement shall not preclude resort to any other remedy or
remedies, nor shall the exercise of any of the remedies provided in this
Agreement prevent the subsequent or concurrent resort to any other remedy or
remedies which by law or equity shall be vested in FCI for the recovery of
damages or otherwise, in the event of an Event of Default shall occur under this
Agreement. No delay or omission by FCI in exercising any right or remedy
accruing upon the happening of an Event of Default shall impair any such right
or remedy, nor shall any such delay or omission be construed as a waiver of any
such Event of Default. Every right and remedy hereby conferred upon FCI may be
exercised from time to time and as
Exhibit 2- Page 6
often as shall be deemed expedient or advisable by FCI. No waiver of any Event
of Default shall extend to or affect any other Event of Default.
8. ADDITIONAL DOCUMENTS. The Borrower shall execute and deliver to
FCI such additional documents as FCI shall require in its reasonable discretion.
9. MISCELLANEOUS.
9.1 FCI Not Partner of the Borrowers. Notwithstanding anything to the
contrary contained in or implied in this Agreement, FCI, by this Agreement or by
any action pursuant to this Agreement, shall not be deemed a partner or, or
joint venturer with, the Borrowers.
9.2 Notices. All notices required or allowed to by given under this
Agreement shall be delivered by hand or sent by a recognized overnight delivery
service or by Certified Mail, Return Receipt Requested, addressed as set forth
below, provided that additional or other addresses within the United States of
America for the giving of notices may be designated in the future by the giving
of written notice thereof to the other party. In the case of notice by certified
mail or overnight courier, notice shall be deemed effectively made when the
receipt is signed or when the attempted initial delivery is refused or cannot be
made because of a change of address of which the sending par~ has not been
notified. All notices shall be addressed as follows:
If to FCl: First Capital, Inc.
407 Church Street, N.E., Suite L
Vienna, VA 22180
With a copy to:
Lee C. Summers, Esq.
Lee C. Summers, P.A
2300 Glades Road, Suite 460W
Boca Raton, FL 33431
If to Borrowers:
Brian Adley
12 Waltham Street
Lexington, MA 02173
With a copy to:
Richard Arrighi, Esq.
Hinckley, Allen & Snyder
One Financial Center
Boston, MA 02111
9.3 Attorneys' Fees and Expenses.In the event of a dispute arising out
of this Agreement, the prevailing party shall be entitled to reasonable
attorneys' fees and all expenses and costs incurred by the prevailing par~. In
such event and wherever provision is otherwise made in this Agreement for
payment of attorneys fees or counsel's fees or expenses incurred by a party,
such provision shall include, but not be limited to, reasonable attorneys's or
counsel's (including paralegals' and similar persons') fees and all expenses and
costs incurred in any and all judicial, bankruptcy, reorganization,
administrative, or other proceedings, including appellate proceedings, whether
such fees or expenses arise before proceedings are commenced or after entry of a
final judgment.
Exhibit 2- Page 7
9.4 Rules of Construction.
9.4.1 A capitalized term shall have the meaning assigned to it in
Section 1.2, or as specifically defined in any other Section or Subsection of
this Agreement;
9.4.2 An accounting term not otherwise defined shall have the meaning
assigned to it in accordance with generally accepted accounting principles;
9.4.3 Use of any gender shall include all other genders;
9.4.4 "or" is not exclusive;
9.4.5 "and" may be conjunctive or distinctive in the sole and absolute
discretion of FCI;
9.4.6 Captions of Sections and Subsections are for convenient reference
only, and shall not affect the construction or interpretation of any of the
terms or provisions of this Agreement; and
9.4.7 Reasonableness is not implied in any requirement of consent,
approval, or satisfaction and unless specifically stated otherwise, all
consents, approvals or satisfactions under this Agreement shall be in FCI's sole
and absolute discretion.
9.5 Modification, Waiver, Consent. Any modification or waiver of any
provision of this Agreement or any consent to any departure by any Borrowers
therefrom shall not be effective unless the same is in writing and signed by an
authorized officer of PCI, and then such modification, waiver, or consent shall
be effective only in the specific purpose given any notice to or demand on any
Borrower not specifically required of FCI under this Agreement shall not entitle
the Borrowers to any other or further notice or demand in the same, or other
circumstances unless specifically required under this Agreement.
9.6 Entire Agreement. The Loan Documents contain the entire agreement
between the parties to this Agreement and there are no promises, agreements,
conditions, undertakings, warranties and representations, whether written or
oral, express or implied, between the parties to this Agreement other than set
forth in the Loan Documents.
9.7 Assignment. Any of the rights and obligations of FCI under the Loan
Documents may be assigned by FCI to another lender, including, but not limited
to, a related affiliate corporation of FCI, provided that FCI shall remain the
lead lender and shall not assign all of its interest in the Loan. Any such
assignment by FCI shall not be done prior to June 1, 1996. In such event, the
Borrowers agree to attorn to such assignee and to execute such consents and
documentation do not add to the obligations of the Borrowers. FCI shall also
have the right to participate the Loan with other lenders, including but not
limited to, related affiliate corporations of FCI. The Borrowers shall not
assign this Agreement, the proceeds of the Loan advanced under this Agreement,
or its rights under this Agreement.
9.8 Time. Time is of the essence as to all matters provided for in this
Agreement. If any inconsistency may exist between the applicable time periods or
dates set forth in this Agreement, and those contained in any other Loan
Document, the time periods and dates set forth in this Agreement shall control.
9.9 Strict Performance. Strict performance of all conditions contained
in this Agreement is required as to all matters provided for in this Agreement.
9.10 Accrual of Interest Under the Note. Interest under the Note shall
commence to accrue as of the date of disbursal or wire transfer by FCI
notwithstanding whether the Borrowers shall receive the benefit of such monies
as of such date and even if such monies are held in escrow pursuant to the terms
of any escrow agreement or
Exhibit 2- Page 8
arrangement. When monies are disbursed by wire transfer, then such monies shall
be considered advanced at the time of the transmission of the wire rather than
the time of receipt thereof by the receiving bank.
9.11 Virginia Law. The terms and conditions of this Agreement shall be
governed by the laws of the State of Virginia and the laws of the United States
of America, without application of conflicts of law principles.
9.12 Invalidity. If any one or more of the provisions contained in this
Agreement is declared or found by a court of competent jurisdiction to be
invalid, illegal or unenforceable, such provision or portion thereof shall be
deemed stricken and severed and the remaining provisions of this Agreement shall
continue in full force and effect; provided, however, that should any obligation
of the Borrowers be determined to be unenforceable, then thereafter FCI shall
have no further obligations hereunder.
9.13 Binding Effect. This Agreement, subject to the provisions of
Section 9.7 of this Agreement, shall be binding upon and inure to the benefit of
the respective permitted successors and assigns of the Borrowers and FCI
9.14 Monies. All references to monies in this Agreement shall be deemed
to mean lawful monies of the United States of America.
9.15 Counterparts. This Agreement may be executed in counterparts and
each shall be considered an original, but together all counterparts shall
comprise only one agreement.
This Agreement was delivered in Vienna, Fairfax County, Virginia, on
the day and year set forth in the first paragraph of this Agreement.
VESTEX CAPITAL CORP.
a Massachusetts corporation
By: Brian M. Adley, Chairman
--------------------------------
FIRST CAPITAL, INC.
a Virginia Corporation
By: /S/
--------------------------------
Brian M. Adley
-----------------------------------
Brian Adley
Exhibit 2- Page 9
Addendum to 4.2
Until closing and receipt of the preferred shares of Chancellor
Corporation ("Chancellor") has been issued by chancellor's Trust Agent or by
Chancellor, or until closing has occurred whereby counsel of Vestex Capital
Corporation ("VCC"), Hinckley, Allen & Snyder, cannot warrant or represent the
terms of this Section, the following shall be deemed sufficient regarding
compliance with this Agreement.
Under the pains and penalties of perjury, I, Brian M. Adley,
individually and as Chairman of VCC do hereby represent and warrant that these
shares will not be pledged or assigned in any manner whatsoever, and immediately
upon receipt of the preferred shares or closing of Chancellor (currently
scheduled for March 28 or 29, 1996) whichever occurs first shall cause legal
letter to be presented and comply with the terms and conditions of this
Agreement.
By: Brian M. Adley
-------------------
Brian M. Adley, Individually
By: Brian M. Adley
-------------------
Brian M. Adley, Chairman of
Vestex Capital Corporation
COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, ss. _______________, 1996
The personally appeared the above named, Brian M. Adley, and
acknowledged the foregoing instrument to be his free act and deed before me.
/s/________________________
Notary Public
My Commission Expires: ______________
Exhibit 2- Page 10
CUSIP No. 1588 28 10 3 Schedule 13D
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Amendment No. 1
Exhibit 3
EXHIBIT 3
CHANCELLOR CORPORATION
Clerk's Certificate
The undersigned hereby certifies that he is the duly elected Clerk of
Chancellor Corporation (hereinafter called the "Corporation"), organized and
existing under and by virtue of the Massachusetts Business Corporation Law, and
does hereby further certify as follows:
At a meeting of the Board of Directors of the Corporation held on March
21, 1996, the following resolution was duly adopted, pursuant to Chapter 156B,
Section 71 of the Massachusetts General Laws:
SERIESAA CONVERTIBLE PREFERRED STOCK.
Five million (5,000,000) shares of the authorized and unissued
Preferred Stock of the Corporation are hereby designated "SeriesAA Convertible
Preferred Stock" (the "SeriesAA Preferred Stock") with the following rights,
preferences, powers, privileges and restrictions, qualifications and
limitations.
1. Dividends.
(a) The holders of shares of SeriesAA Preferred Stock shall be
entitled to receive cash dividends only to the same extent and in the same
amounts as dividends are declared and paid with respect to common stock as if
the Preferred Stock had been converted to Common Stock in accordance with
Section 4 hereof on the date such dividends are declared.
2. Liquidation, Dissolution or Winding Up; Certain Mergers,
Consolidations and Asset Sales.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of shares of SeriesAA
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders, after and
subject to the payment in full of all amounts required to be distributed to the
holders of any other class or series of stock of the Corporation ranking on
liquidation prior and in preference to the SeriesAA Preferred Stock
(collectively referred to as "Senior Preferred Stock"), but before any payment
shall be made to the holders of Common Stock or any other class or series of
stock ranking on liquidation junior to the SeriesAA Preferred Stock (such Common
Stock and other stock being collectively referred to as "Junior Stock") by
reason of their ownership thereof, an equal to the greater of (i)$.50 per share
(subject to amount appropriate adjustment in the event of any stock dividend,
stock split, combination or other similar recapitalization affecting such
shares), plus any dividends declared or accrued but unpaid thereon, or (ii)such
amount per share as would have been payable had each such share been converted
into Common Stock pursuant to Section4 immediately prior to such liquidation,
dissolution or winding up. If upon any such liquidation, dissolution or winding
up of the Corporation the remaining assets of the Corporation available for
distribution to its stockholders shall be insufficient to pay the holders of
shares of SeriesAA Preferred Stock the full amount to which they shall be
entitled, the holders of shares of SeriesAA Preferred Stock and any class or
series of stock ranking on liquidation on a parity with the SeriesAA Preferred
Stock shall share ratably in any distribution of the remaining assets and funds
of the Corporation in proportion to the respective amounts which would otherwise
be payable in respect of the shares held by them upon such distribution if all
amounts payable on or with respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to be
paid to the holders of Senior Preferred Stock, SeriesAA Preferred Stock and any
other class or series of stock ofthe Corporation ranking on liquidation on a
parity with the SeriesAA Preferred Stock, upon the dissolution, liquidation or
winding up of the
Exhibit 3- Page 1
Corporation, the holders of shares of Junior Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) In the event of any merger or consolidation of the
Corporation into or with another corporation (except one in which the holders of
capital stock of the Corporation immediately prior to such merger or
consolidation continue to hold at least 80% by voting power of the capital stock
of the surviving corporation), or the sale of all or substantially all the
assets of the Corporation, if the holders of at least a majority of the then
outstanding shares of SeriesAA Preferred Stock so elect by giving written notice
thereof to the Corporation at least three days before the effective date of such
event, then such merger, consolidation or asset sale shall be deemed to be a
liquidation of the Corporation, and all consideration payable to the
stockholders of the Corporation (in the case of a merger or consolidation), or
all consideration payable to the Corporation, together with all other available
assets of the Corporation (in the case of an asset sale), shall be distributed
to the holders of capital stock of the Corporation in accordance with
Subsections2(a) and 2(b) above. The Corporation shall promptly provide to the
holders of shares of SeriesAA Preferred Stock such information concerning the
terms of such merger, consolidation or asset sale and the value of the assets of
the Corporation as may reasonably be requested by the holders of SeriesAA
Preferred Stock in order to assist them in determining whether to make such an
election. If the holders of the SeriesAA Preferred Stock make such an election,
the Corporation shall use its best efforts to amend the agreement or plan of
merger or consolidation to adjust the rate at which the shares of capital stock
of the Corporation are converted into or exchanged for cash, new securities or
other property to give effect to such election. The amount deemed distributed to
the holders of SeriesAA Preferred Stock upon any such merger or consolidation
shall be the cash or the value of the property, rights or securities distributed
to such holders by the acquiring person, firm or other entity. The value of such
property, rights or other securities shall be determined in good faith by the
Board of Directors of the Corporation. If no notice of the election permitted by
this Subsection(c) is given, the provisions of Subsection4(h) shall apply.
(d) The Corporation may not liquidate, dissolve or wind up if
the assets of the Corporation then available for distribu tion to its
stockholders shall be insufficient to pay the holders of shares of SeriesAA
Preferred Stock the full amount to which they shall be entitled upon such
liquidation, dissolution or winding up under this Section2, without the prior
written approval of the holders of a majority of the then outstanding shares of
SeriesAA Preferred Stock.
3. Voting.
(a) Each holder of outstanding shares of SeriesAA Preferred
Stock shall be entitled to the number of votes equal to the number of whole
shares of Common Stock into which the shares of SeriesAA Preferred Stock held by
such holder are then convertible (as adjusted from time to time pursuant to
Section4 hereof), at each meeting of stockholders of the Corporation (and
written actions of stockholders in lieu of meetings) with respect to any and all
matters presented to the stockholders of the Corporation for their action or
consideration. Except as provided by law, by the provisions of Subsection3(b),
3(c), 3(d) or 3(e) below or by the provisions establishing any other series of
SeriesPreferred Stock, holders of SeriesAA Preferred Stock and of any other
outstanding series of SeriesPreferred Stock shall vote together with the holders
of Common Stock as a single class.
(b) Prior to April 11, 1998, any of the following transactions:
Exhibit 3- Page 2
(i) any issuance or transfer by the Corporation of
capital stock or other securities of the Corporation to an interested
stockholder, considering Vestex Corporation or any of their respective
affiliates or associates (as defined in Mass. Gen. Laws c.110F, (3) as being
interested stockholders for the purposes hereof, other than the issuance of
common stock pursuant to the conversion of preferred stock; or
(ii) any merger, consolidation or sale of assets
described in Mass. Gen. Laws c.110F, (3(c)(2), involving the Corporation and any
interested stockholder, considering Vestex, the Purchaser, and each of their
respective affiliates and associates as being an interested stockholder for the
purposes hereof; or
(iii) any action taken by the Corporation which
results in a going private transaction subject to Rule 13e-3 under the
Securities Exchange Act of 1934; or
(iv) the payment to any interested stockholder of
any fee or other benefit described in Mass. Gen. laws c.110F, (c)(5),
considering the above-named parties and each of their respective affiliates and
associates as being an interested stockholder for purposes hereof; shall require
the approval of the holders of a majority of the outstanding shares of the
Corporation's Common Stock not held by the above-named or their respective
affiliates, unless approved in writing by a majority of the Continuing Directors
then in office.
For this purpose, the term "Continuing Directors" shall mean those
directors of the Corporation who either were directors of the Corporation prior
to April 11, 1996 or were subsequently nominated for election as successor
directors by a majority of such persons or their designated successors.
4. Optional Conversion. The holders of the SeriesAA Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of SeriesAA Preferred Stock
shall be convertible, at the option of the holder thereof, at any time and from
time to time, and without the payment of additional consideration by the holder
thereof, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing $.50 by the Conversion Price (as defined below) in
effect at the time of conversion. The "Conversion Price" shall initially be
$.50. Such initial Conversion Price, and the rate at which shares of SeriesAA
Preferred Stock may be converted into shares of Common Stock, shall be subject
to adjustment as provided below.
In the event of a liquidation of the Corporation, the Conversion Rights
shall terminate at the close of business on the first full day preceding the
date fixed for the payment of any amounts distributable on liquidation to the
holders of SeriesAA Preferred Stock.
(b) Fractional Shares. No fractional shares of Common Stock
shall be issued upon conversion of the SeriesAA Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of SeriesAA Preferred Stock to
convert shares of SeriesAA Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares of
SeriesAA Preferred Stock, at the office of the transfer agent for the SeriesAA
Preferred Stock (or at the principal office of the Corporation if the
Corporation serves as its own transfer agent), together with written notice that
such holder elects to convert all or any number of the shares of the SeriesAA
Preferred Stock represented by such certificate or certificates. Such notice
shall state such holder's name or the names of the nominees in which such holder
wishes the certificate or certificates for shares of Common Stock to be issued.
If required by the Corporation, certificates surrendered for conversion shall be
endorsed or accompanied by a written instrument or instruments of transfer, in
form satisfactory to the Corporation, duly executed by the registered holder or
his or its attorney duly authorized in writing. The date of receipt of such
certificates and notice by the transfer agent (or by the Corporation if the
Corporation serves as its own transfer agent) shall be the conversion date
("Conversion Date"). The Corporation shall, as soon as practicable after the
Conversion Date, issue and deliver at such office to such holder of SeriesAA
Preferred Stock, or to his or its nominees, a certificate or certificates for
the number of
Exhibit 3- Page 3
shares of Common Stock to which such holder shall be entitled, together with
cash in lieu of any fraction of a share.
(ii) The Corporation shall at all times when the SeriesAA
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
the SeriesAA Preferred Stock, such number of its duly authorized shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding SeriesAA Preferred Stock. Before taking any action which
would cause an adjustment reducing the Conversion Price below the then par value
of the shares of Common Stock issuable upon conversion of the SeriesAA Preferred
Stock, the Corporation will take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of Common Stock at such
adjusted Conversion Price.
(iii) Upon any such conversion, no adjustment to the
Conversion Price shall be made for any declared or accrued but unpaid dividends
on the SeriesAA Preferred Stock surrendered for conversion or on the Common
Stock delivered upon conversion.
(iv) All shares of SeriesAA Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be deemed to
be outstanding and all rights with respect to such shares, including the rights,
if any, to receive notices and to vote, shall immediately cease and terminate on
the Conversion Date, except only the right of the holders thereof to receive
shares of Common Stock in exchange therefor and payment of any dividends
declared or accrued but unpaid thereon. Any shares of SeriesAA Preferred Stock
so converted shall be retired and cancelled and shall not be reissued, and the
Corporation (without the need for stockholder action) may from time to time take
such appropriate action as may be necessary to reduce the authorized SeriesAA
Preferred Stock accordingly.
(v) The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issuance or delivery of shares of
Common Stock upon conversion of shares of SeriesAA Preferred Stock pursuant to
this Section4. The Corporation shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of shares of Common Stock in a name other than that in which the shares
of SeriesAA Preferred Stock so converted were registered, and no such issuance
or delivery shall be made unless and until the person or entity requesting such
issuance has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
(d)Adjustment for Stock Splits and Combinations. If the
Corporation shall at any time or from time to time after the date on which a
share of Series AA Preferred Stock was first issued (the "Original Issue Date")
effect a subdivision of the outstanding Common Stock, the Conversion Price then
in effect immediately before that subdivision shall be proportionately
decreased. If the Corporation shall at any time or from time to time after the
Original Issue Date effect a subdivision of the SeriesAA Preferred Stock, the
Conversion Price then in effect immediately before that subdivision shall be
proportionately increased. If the Corporation shall at any time or from time to
time after the Original Issue Date combine the outstanding shares of Common
Stock, the Conversion Price then in effect immediately before the combination
shall be proportionately increased. If the Corporation shall at any time or from
time to time after the Original Issue Date combine the outstanding shares of
SeriesAA Preferred Stock, the Conversion Price then in effect immediately before
the combination shall be proportionately decreased. Any adjustment under this
paragraph shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(e)Adjustment for Certain Dividends and Distributions. In the
event the Corporation at any time, or from time to time after the Original Issue
Date shall make or issue, or fix a record date for the determination of holders
of Common Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Conversion
Price for the SeriesAA Preferred Stock then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall have been
fixed, as of the
Exhibit 3- Page 4
close of business on such record date, by multiplying the Conversion Price for
the SeriesAA Preferred Stock then in effect by a fraction:
(1) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution;
provided, however, if such record date shall have been fixed and such dividend
is not fully paid or if such distribution is not fully made on the date fixed
therefor, the Conversion Price for the SeriesAA Preferred Stock shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Conversion Price for the SeriesAA Preferred Stock shall be
adjusted pursuant to this paragraph as of the time of actual payment of such
dividends or distributions; and provided further, however, that no such
adjustment shall be made if the holders of SeriesAA Preferred Stock
simultaneously receive a dividend or other distribution of shares of Common
Stock in a number equal to the number of shares of Common Stock as they would
have received if all outstanding shares of SeriesAA Preferred Stock had been
converted into Common Stock on the date of such event.
(f)Adjustments for Other Dividends and Distributions. In the
event the Corporation at any time or from time to time after the Original Issue
Date for the SeriesAA Preferred Stock shall make or issue, or fix a record date
for the determination of holders of Common Stock entitled to receive, a dividend
or other distribution payable in securities of the Corporation other than shares
of Common Stock, then and in each such event provision shall be made so that the
holders of the SeriesAA Preferred Stock shall receive upon conversion thereof in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Corporation that they would have received had the
SeriesAA Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such event to
and including the conversion date, retained such securities receivable by them
as aforesaid during such period, giving application to all adjustments called
for during such period under this paragraph with respect to the rights of the
holders of the SeriesAA Preferred Stock; and provided further, however, that no
such adjustment shall be made if the holders of SeriesAA Preferred Stock
simultaneously receive a dividend or other distribution of such securities in an
amount equal to the amount of such securities as they would have received if all
outstanding shares of SeriesAA Preferred Stock had been converted into Common
Stock on the date of such event.
(g)Adjustment for Reclassification, Exchange, or Substitution.
If the Common Stock issuable upon the conversion of the SeriesAA Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation, or sale of
assets provided for below), then and in each such event the holder of each such
share of SeriesAA Preferred Stock shall have the right thereafter to convert
such share into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, or other change,
by holders of the number of shares of Common Stock into which such shares of
SeriesAA Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(h)Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Corporation with or into another corporation or
the sale of all or substantially all of the assets of the Corporation to another
corporation (other than a consolidation, merger or sale which is covered by
Subsection2(c)), each share of SeriesAA Preferred Stock shall thereafter be
convertible (or shall be converted into a security which shall be convertible)
into the kind and amount of shares of stock or other securities or property to
which a holder of the number of shares of Common Stock of the Corporation
deliverable upon conversion of such SeriesAA Preferred Stock would have been
entitled upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board of Directors) shall be made
in the application of the provisions in this
Exhibit 3- Page 5
Section4 set forth with respect to the rights and interest thereafter of the
holders of the SeriesAA Preferred Stock, to the end that the provisions set
forth in this Section4 (including provisions with respect to changes in and
other adjustments of the Conversion Price) shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the SeriesAA Preferred
Stock.
(i)No Impairment. The Corporation will not, by amendment of its
Articles of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the provisions of this
Section4 and in the taking of all such action as may be necessary or appropriate
in order to protect the Conversion Rights of the holders of the SeriesAA
Preferred Stock against impairment.
(j)Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section4,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
SeriesAA Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of SeriesAA Preferred Stock, furnish or cause to be furnished
to such holder a similar certificate setting forth (i)such adjustments and
readjustments, (ii)the Conversion Price then in effect, and (iii)the number of
shares of Common Stock and the amount, if any, of other property which then
would be received upon the conversion of SeriesAA Preferred Stock.
(k)Notice of Record Date. In the event:
(i) that the Corporation declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other securities of
the Corporation;
(ii) that the Corporation subdivides or combines its
outstanding shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Corporation (other than a subdivision or combination of its outstanding shares
of Common Stock or a stock dividend or stock distribution thereon), or of any
consolidation or merger of the Corporation into or with another corporation, or
of the sale of all or substantially all of the assets of the Corporation; or
(iv) of the involuntary or voluntary dissolution,
liquidation or winding up of the Corporation then the Corporation shall cause to
be filed at its principal office or at the office of the transfer agent of the
SeriesAA Preferred Stock, and shall cause to be mailed to the holders of the
SeriesAA Preferred Stock at their last addresses as shown on the records of the
Corporation or such transfer agent, at least ten days prior to the date
specified in (A) below or twenty days before the date specified in (B) below, a
notice stating
(A) the record date of such dividend, distribution, subdivision
or combination, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, dissolution or winding up.
(l) Special Payment Upon Conversion. Upon the conversion of any
shares of Series AA Preferred Stock within five years after their Original Issue
Date, an amount of cash (or shares of Common Stock of the Corporation, in the
circumstances contemplated herein) shall be paid at the following rates to the
holder of
Exhibit 3- Page 6
such shares if (but only if) the Corporation has, prior to such conversion,
issued additional equity securities of the Corporation (other than upon the
exercise of warrants outstanding on the Original Issue Date or options then or
thereafter granted to employees of the Corporation) or debt securities
convertible into equity securities of the Corporation and, in connection with
the issuance of such additional equity securities or convertible debt, the
Corporation has received aggregate cash consideration in excess of $7,500,000
(the final such issuance which causes such aggregate cash consideration to
exceed $7,500,000 being hereinafter referred to as the "Additional Equity
Investment"):
If the Additional Equity Amount per share
Investment occurs and the (as a rate per
conversion takes place within annum from Original
the following period after the Issue Date through
date of original issuance: date of conversion)
within one year $.035
within two years but not
within one year .03
within three years but not
within two years .025
within four years but not
within three years .02
within five years but not
within four years .015
If the Corporation shall have received an Additional Equity Investment,
then, at any time after April 11, 1998, the foregoing amounts may, at the
Corporation's election, be paid to the holder of Series AA Preferred Stock by
delivery of a number of shares of Common Stock equal to the quotient obtained by
dividing (x) the aggregate amount due by (y) 50% of the value per share of the
Common Stock. For purposes of this paragraph, the value of each share of Common
Stock shall be deemed to be the average of the last reported sales price for
Common Stock admitted to trading on a national securities exchange or quoted on
the Nasdaq National Market, or the average of the closing bid and market prices
for such stock quoted on the Nasdaq Small Cap Market, the Electronic Bulletin
Board or other quotations publication medium during the forty (40) trading days
immediately prior to the date of such payment so paid may be either authorized
or unissued shares or treasury shares.
5. Mandatory Retirement.
(a) At any time after April 11, 1999, the Corporation shall be
authorized, at its sole discretion to cause all outstanding shares of Series AA
Preferred Stock to automatically be retired by (i) paying each holder of such
shares any amounts owing under Section 4(l) above and (ii) converting such
shares of Series AA Preferred Stock into shares of Common Stock, at the then
effective conversion rate. The number of authorized shares of Preferred Stock
shall be automatically reduced by the number of shares of Preferred Stock that
had been designated as Series AA Preferred Stock, and all provisions included
under the caption "Series AA Convertible Preferred Stock", and all references to
the Series AA Preferred Stock, shall be deleted and shall be of no further force
or effect.
(b) All holders of record of shares of SeriesAA Preferred Stock
shall be given written notice of effective date of such retirement (the
"Mandatory Date") and the place designated for mandatory retirement of all such
shares of SeriesAA Preferred Stock pursuant to this Section5. Such notice need
not be given in advance of the occurrence of the Mandatory Conversion Date. Such
notice shall be sent by first class or registered mail, postage prepaid, to each
record holder of SeriesAA Preferred Stock at such holder's address last shown on
the
Exhibit 3- Page 7
records of the transfer agent for the SeriesAA Preferred Stock (or the records
of the Corporation, if it serves as its own transfer agent). Upon receipt of
such notice, each holder of shares of SeriesAA Preferred Stock shall surrender
his or its certificate or certificates for all such shares to the Corporation at
the place designated in such notice, and shall thereafter receive certificates
for the number of shares of Common Stock to which such holder is entitled
pursuant to this Section5. On the Mandatory Conversion Date, all rights with
respect to the SeriesAA Preferred Stock so converted, including the rights, if
any, to receive notices and vote (other than as a holder of Common Stock) will
terminate, except only the rights of the holders thereof, upon surrender of
their certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which such SeriesAA Preferred Stock has
been converted. If so required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by written instrument or instruments
of transfer, in form satisfactory to the Corporation, duly executed by the
registered holder or by his or its attorney duly authorized in writing. As soon
as practicable after the Mandatory Conversion Date and the surrender of the
certificate or certificates for SeriesAA Preferred Stock, the Corporation shall
cause to be issued and delivered to such holder, or on his or its written order,
a certificate or certificates for the number of full shares of Common Stock
issuable on such retirement and conversion in accordance with the provisions
hereof and cash as provided in Subsection4(b) in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion.
(c) All certificates evidencing shares of SeriesAA Preferred
Stock which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the Mandatory Conversion Date, be deemed
to have been retired and cancelled and the shares of SeriesAA Preferred Stock
represented thereby converted into Common Stock for all purposes,
notwithstanding the failure of the holder or holders thereof to surrender such
certificates on or prior to such date. The Corporation may thereafter take such
appropriate action (without the need for stockholder action) as may be necessary
to reduce the authorized SeriesAA Preferred Stock accordingly.
IN WITNESS WHEREOF, the undersigned has signed this Certificate this
12th day of April, 1996.
/s/ David W. Parr
-------------------------
David W. Parr, Clerk
Exhibit 3- Page 8
CUSIP No. 1588 28 10 3 Schedule 13D
---------------------- ------------
Amendment No. 1
Exhibit 4
EXHIBIT 4
- ---------
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 September20, 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 SeriesAA 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 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
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
Exhibit 4 - Page 1
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 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, StephenG. 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 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 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
Exhibit 4 - Page 2
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 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
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 Section1 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 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.
Exhibit 4 - Page 3
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 Section3.1 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 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 Section1 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 Section2.1 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:
(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,
(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, 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, 3(c)(5), considering Vestex
and each of its affiliates and associates as being an interested
Exhibit 4 - Page 4
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 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 ) of Vestex in an amount not
exceeding 1,000,000 Shares to any one purchaser or "group" of purchasers (within
the meaning 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
Exhibit 4 - Page 5
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.
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 Section3.1 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.
Exhibit 4 - Page 6
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 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
/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
Exhibit 4 - Page 7
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 New Vestex Nominee
Exhibit 4 - Page 8
CUSIP No. 1588 28 10 3 Schedule 13D
---------------------- ------------
Amendment No. 1
Exhibit 5
EXHIBIT 5
REGISTRATION RIGHTS AGREEMENT
This Agreement dated as of April 11, 1996 is entered into by and among
Chancellor Corporation, a Massachusetts corporation (the "Company"), Vestex
Corporation, a Massachusetts corporation ("Vestex"), and Vestex Capital
Corporation, a Massachusetts corporation ("Capital") and, together with Vestex,
the ("Purchaser").
WHEREAS, the Company, the Purchaser and Bruncor, Inc. have entered into
a Recapitalization and Stock Purchase Agreement dated as of September20, 1994
(as subsequently amended, the "Purchase Agreement"); and
WHEREAS, the Company and the Purchaser desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or
any other Federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.01 par value per share,
of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Registration Statement" means a registration statement filed by
the Company with the Commission for a public offering and sale of Common Stock
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in
Section5.
"Registrable Shares" means (i)the Common Shares and the
Preferred Shares, as those terms are defined in the Purchase Agreement, (ii)the
shares of Common Stock issued or issuable upon conversion of the Preferred
Shares and (iii)any other shares of Common Stock issued in respect of such
shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events); provided, however, that shares of Common
Stock which are Registrable Shares shall cease to be Registrable Shares (i)upon
any sale pursuant to a Registration Statement or Rule144 under the Securities
Act or (ii)upon any sale in any manner to a person or entity which, by virtue of
Section14 of this Agreement, is not entitled to the rights provided by this
Agreement. Wherever reference is made in this Agreement to a request or consent
of holders of a certain percentage of Registrable Shares, the determination of
such percentage shall include shares of Common Stock issuable upon conversion of
the Preferred Shares even if such conversion has not yet been effected.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
Exhibit 5 - Page 1
"Shares" shall have the meanings assigned in the preamble of the
Purchase Agreement to the terms "Preferred Shares" and "Common Shares."
"Stockholders" means the Purchaser and any persons or entities
to whom the rights granted under this Agreement are transferred by the
Purchaser, its successors or assigns pursuant to Section14 hereof.
2. Required Registrations.
(a) At any time after April 11, 1996, a Stockholder or
Stockholders holding in the aggregate at least 20% of the Registrable Shares may
request, in writing, that the Company effect the registration on FormS-1 or Form
S-2 (or any successor form) of Registrable Shares owned by such Stockholder or
Stockholders that either (i)constitute at least 20% of the Registrable Shares or
(ii)have an aggregate offering price of at least $2,000,000 (based on the then
current market price or fair value). If the holders initiating the registration
intend to distribute the Registrable Shares by means of an underwriting, they
shall so advise the Company in their request. In the event such registration is
underwritten, the right of other Stockholders to participate shall be
conditioned on such Stockholders' participation in such underwriting. Upon
receipt of any such request, the Company shall promptly give written notice of
such proposed registration to all Stockholders. Such Stockholders shall have the
right, by giving written notice to the Company within 30 days after the Company
provides its notice, to elect to have included in such registration such of
their Registrable Shares as such Stockholders may request in such notice of
election; provided that if the underwriter (if any) managing the offering
determines that, because of marketing factors, all of the Registrable Shares
requested to be registered by all Stockholders may not be included in the
offering, then all Stockholders who have requested registration shall
participate in the registration pro rata based upon the number of Registrable
Shares which they have requested to be so registered. Thereupon, the Company
shall, as expeditiously as possible, use its best efforts to effect the
registration on FormS-1 or FormS-2 (or any successor form) of all Registrable
Shares which the Company has been requested to so register (provided, that the
Company may in its discretion delay the filing of any registration statement for
a period of up to 90 days from the date of the giving of written notice of such
delay).
(b) At any time that the Company is eligible to file a
Registration Statement on FormS-3 with respect to offerings by its stockholders
(or any successor form relating to secondary offerings), a Stockholder or
Stockholders holding in the aggregate at least 25% of the Registrable Shares may
request the Company, in writing, to effect the registration on FormS-3 (or such
successor form), of Registrable Shares owned by such Stockholder or
Stockholders. Upon receipt of any such request, the Company shall promptly give
written notice of such proposed registration to all Stockholders. Such
Stockholders shall have the right, by giving written notice to the Company
within 30 days after the Company provides its notice, to elect to have included
in such registration such of their Registrable Shares as such Stockholders may
request in such notice of election; provided that if the underwriter (if any)
managing the offering determines that, because of marketing factors, all of the
Registrable Shares requested to be registered by all Stockholders may not be
included in the offering, then all Stockholders who have requested registration
shall participate in the registration prorata based upon the number of
Registrable Shares which they have requested to be so registered. Thereupon, the
Company shall, as expeditiously as possible, use its best efforts to effect the
registration on Form S-3 (or such successor form) of all Registrable Shares
which the Company has been requested to so register.
(c) The Company shall not be required to effect more than one
registration pursuant to paragraph (a) above, except that it shall be required
to effect up to two additional registrations pursuant to paragraph (a)above
during any twelve-month period if, at the time of such registration, the Company
is not eligible to use Form S-3. In addition, the Company shall not be required
to effect any registration (other than on FormS-3 or any successor form relating
to secondary offerings) within six months after the effective date of any other
Registration Statement of the Company.
Exhibit 5 - Page 2
(d) If at the time of any request to register Registrable Shares
pursuant to this Section2, the Company is engaged or has fixed plans to engage
within 30 days of the time of the request in a registered public offering as to
which the Stockholders may include Registrable Shares pursuant to Section3 or is
engaged in any other activity which, in the good faith determination of the
Company's Board of Directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the Company may at
its option direct that such request be delayed for a period not in excess of six
months from the effective date of such offering or the date of commencement of
such other material activity, as the case may be, such right to delay a request
to be exercised by the Company not more than once in any two-year period.
3. Incidental Registration.
(a) Whenever the Company proposes to file a Registration
Statement (other than pursuant to Section2) at any time and from time to time,
it will, prior to such filing, give written notice to all Stockholders of its
intention to do so and, upon the written request of a Stockholder or
Stockholders given within 20 days after the Company provides such notice (which
request shall state the intended method of disposition of such Registrable
Shares), the Company shall use its best efforts to cause all Registrable Shares
which the Company has been requested by such Stockholder or Stockholders to
register to be registered under the Securities Act to the extent necessary to
permit their sale or other disposition in accordance with the intended methods
of distribution specified in the request of such Stockholder or Stockholders;
provided that the Company shall have the right to postpone or withdraw any
registration effected pursuant to this Section3 without obligation to any
Stockholder.
(b) In connection with any registration under this Section3
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such registration unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (provided that such terms must be consistent with
this Agreement). If in the opinion of the managing underwriter it is appropriate
because of marketing factors to limit the number of Registrable Shares to be
included in the offering, then the Company shall be required to include in the
registration only that number of Registrable Shares, if any, which the managing
underwriter believes should be included therein; provided that (i)in no event
shall the number of Registrable Shares included in the offering be reduced below
10% of the total number of Registerable Shares of Common Stock requested to be
included in the offering, and (ii)no persons or entities other than the Company,
the Stockholders and persons or entities holding registration rights granted in
accordance with Section10 hereof shall be permitted to include securities in the
offering. If the number of Registrable Shares to be included in the offering in
accordance with the foregoing is less than the total number of shares which the
holders of Registrable Shares have requested to be included, then the holders of
Registrable Shares who have requested registration and other holders of
securities entitled to include them in such registration shall participate in
the registration pro rata based upon their total ownership of shares of Common
Stock (giving effect to the conversion into Common Stock of all securities
convertible thereinto). If any holder would thus be entitled to include more
securities than such holder requested to be registered, the excess shall be
allocated among other requesting holders pro rata in the manner described in the
preceding sentence.
4. Registration Procedures. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall:
(a) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective;
(b) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of
Exhibit 5 - Page 3
any other offering, until the earlier of the sale of all Registrable Shares
covered thereby or 120 days after the effective date thereof;
(c) as expeditiously as possible furnish to each selling
Stockholder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the selling Stockholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by the selling Stockholder; and
(d) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the selling Stockholders
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the selling Stockholder; provided, however, that the Company shall not be
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling Stockholders and, if requested, the selling Stockholders
shall immediately cease making offers of Registrable Shares and return all
prospectuses to the Company. The Company shall promptly provide the selling
Stockholders with revised prospectuses and, following receipt of the revised
prospectuses, the selling Stockholders shall be free to resume making offers of
the Registrable Shares.
5. Allocation of Expenses. The Company will pay all Registration
Expenses of all registrations under this Agreement; provided, however, that if a
registration under Section2 is withdrawn at the request of the Stockholders
requesting such registration (other than as a result of information concerning
the business or financial condition of the Company which is made known to the
Stockholders after the date on which such registration was requested) and if the
requesting Stockholders elect not to have such registration counted as a
registration requested under Section2, the requesting Stockholders shall pay the
Registration Expenses of such registration pro rata in accordance with the
number of their Registrable Shares included in such registration. For purposes
of this Section5, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Agreement, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Company and the fees and expenses
of one counsel selected by the selling Stockholders to represent the selling
Stockholders, state Blue Sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of selling
Stockholders' own counsel (other than the counsel selected to represent all
selling Stockholders).
6. Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each
Exhibit 5 - Page 4
such controlling person for any legal or any other expenses reasonably incurred
by such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus or final prospectus, or any such amendment or supplement,
in reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such seller, underwriter or controlling person
specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of such Stockholders
hereunder shall be limited to an amount equal to the proceeds to each
Stockholder of Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section6. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall pay such expense if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section6 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section6 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling
Stockholder or any such controlling person in circumstances for which
indemnification is provided under this Section6; then, in each such case, the
Company and such Stockholder will contribute to the aggregate losses,
Exhibit 5 - Page 5
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportions so that such holder is responsible for the
portion represented by the percentage that the public offering price of its
Registrable Shares offered by the Registration Statement bears to the public
offering price of all securities offered by such Registration Statement, and the
Company is responsible for the remaining portion; provided, however, that, in
any such case, (A)no such holder will be required to contribute any amount in
excess of the proceeds to it of all Registrable Shares sold by it pursuant to
such Registration Statement, and (B)no person or entity guilty of fraudulent
misrepresentation, within the meaning of Section11(f) of the Securities Act,
shall be entitled to contribution from any person or entity who is not guilty of
such fraudulent misrepresentation.
7. Indemnification with Respect to Underwritten Offering. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section2, the Company agrees to enter into an
underwriting agreement containing customary representations and warranties with
respect to the business and operations of an issuer of the securities being
registered and customary covenants and agreements to be performed by such
issuer, including without limitation customary provisions with respect to
indemnification by the Company of the underwriters of such offering.
8. Information by Holder. Each Stockholder including Registrable Shares
in any registration shall furnish to the Company such information regarding such
Stockholder and the distribution proposed by such Stockholder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
9. "Stand-Off" Agreement. Each Stockholder, if requested by the Company
and the managing underwriter of an offering by the Company of Common Stock or
other securities of the Company pursuant to a Registration Statement, shall
agree not to sell publicly or otherwise transfer or dispose of any Registrable
Shares or other securities of the Company held by such Stockholder for a
specified period of time (not to exceed 90 days) following the effective date of
such Registration Statement.
10. Limitations on Subsequent Registration Rights. The Company shall
not, without the prior written consent of Stockholders holding at least a
majority of the Registrable Shares, enter into any agreement (other than this
Agreement) with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder (a)to include
securities of the Company in any Registration Statement, unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only on terms substantially similar to the terms on
which holders of Registrable Shares may include shares in such registration, or
(b)except in the case of Bruncor Inc. as the holder of warrants to purchase
250,000 shares of Common Stock and certain lenders to the Company as holders of
warrants to purchase a total of 449,439 shares of Common Stock to make a demand
registration which could result in such registration statement being declared
effective prior to December31, 2004.
11. Rule 144 Requirements. After the earliest of (i)the closing of the
sale of securities of the Company pursuant to a Registration Statement, (ii)the
registration by the Company of a class of securities under Section12 of the
Exchange Act, or (iii)the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:
(a) comply with the requirements of Rule144(c) under the
Securities Act with respect to current public information about the Company;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon request (i)
a written statement by the Company as to its compliance with the requirements of
said Rule 144(c), and the reporting requirements of the
Exhibit 5 - Page 6
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), (ii) a copy of the most recent annual or quarterly
report of the Company, and (iii) such other reports and documents of the Company
as such holder may reasonably request to avail itself of any similar rule or
regulation of the Commission allowing it to sell any such securities without
registration.
12. Mergers, Etc. The Company shall not, directly or indirectly, enter
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under this Agreement, and for that purpose
references hereunder to "Registrable Shares" shall be deemed to be references to
the securities which the Stockholders would be entitled to receive in exchange
for Registrable Shares under any such merger, consolidation or reorganization;
provided, however, that the provisions of this Section12 shall not apply in the
event of any merger, consolidation or reorganization in which the Company is not
the surviving corporation if all Stockholders are entitled to receive in
exchange for their Registrable Shares consideration consisting solely of
(i)cash, (ii)securities of the acquiring corporation which may be immediately
sold to the public without registration under the Securities Act, or
(iii)securities of the acquiring corporation which the acquiring corporation has
agreed to register within 90days of completion of the transaction for resale to
the public pursuant to the Securities Act.
13. Termination. All of the Company's obligations to register
Registrable Shares under this Agreement shall terminate on the tenth anniversary
of this Agreement.
14. Transfers of Rights. This Agreement, and the rights and obligations
of each Purchaser hereunder, may be assigned by such Purchaser to any person or
entity to which Shares are transferred by such Purchaser, and such a permitted
transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company.
15. General.
(a) Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Company, at 745 Atlantic Avenue, Boston, Massachusetts 02110,
Attention: President, or at such other address or addresses as may have been
furnished in writing by the Company to the Purchaser, with a copy to Edward
Young, Esq., Hale and Dorr, 60 State Street, Boston, Massachusetts 02109; or
If to a Stockholder, c/o Vestex Corporation at 12 Waltham Street,
Lexington, Massachusetts 02173, or at such other address or addresses as may
have been furnished to the Company in writing by such Stockholder, with a copy
to Richard Arrighi, Esq., Hinckley, Allen & Snyder, One Financial Center,
Boston, Massachusetts 02111.
Notices provided in accordance with this Section15(a) shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(b) Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter.
(c) Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least a majority of the Registrable Shares; provided, that this Agreement may be
amended with the consent of the holders of less
Exhibit 5 - Page 7
than all Registrable Shares only in a manner which affects all Registrable
Shares in the same fashion. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
Executed as of the date first written above.
COMPANY:
CHANCELLOR CORPORATION
By:/s/ Stephen G. Morison
--------------------------------
Title: CEO
-----------------------------
PURCHASER:
VESTEX CORPORATION
By:/s/ Brian M. Adley
--------------------------------
Title: CEO
-----------------------------
VESTEX CAPITAL CORPORATION
By:/s/ Brian M.Adley
--------------------------------
Title: CEO
-----------------------------
Exhibit 5 - Page 8
