-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HsQ1QtGAV5AWSp+zJYPBET0gDWBHFfVstmuQcDB+0PKhpB9YD9cKJKxnNlUbPL2g QXi6RPlZXM9XJGsU29UyPw== 0000927016-96-000128.txt : 19960423 0000927016-96-000128.hdr.sgml : 19960423 ACCESSION NUMBER: 0000927016-96-000128 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960412 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960422 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHANCELLOR CORP CENTRAL INDEX KEY: 0000724051 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 042626079 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11663 FILM NUMBER: 96549229 BUSINESS ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6177288500 MAIL ADDRESS: STREET 1: 745 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02111 8-K 1 FORM 8-K FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 ------------------------------- Date of Report April 12, 1996 ----------------------------------------------------------- CHANCELLOR CORPORATION ---------------------- (Exact Name of Registrant as specified in its charter) Massachusetts 0-11663 04-2626079 - -------------------------------------------------------------------------------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 745 Atlantic Avenue, Boston, Massachusetts 02111 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 728-8500 ----------------------------- N/A - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 1. Changes in Control of Registrant. - ------ -------------------------------- On April 12, 1996, the Registrant, Vestex Corporation and Vestex Capital Corporation entered into Amendment No. 4 (the "Amendment") to a Recapitalization and Stock Purchase Agreement dated as of September 20, 1994. Effective April 12, 1996, pursuant to the Amendment, the Registrant issued and sold to Vestex Capital Corporation 5,000,000 shares of its Series AA Convertible Preferred Stock for $1,350,000 in cash, less reimbursement of $312,500 of due diligence and other transactional costs to Vestex Capital Corporation by the Registrant (the "Preferred Stock Placement"). On April 12, 1996, the Registrant also announced that it had commenced a private offering of up to 4,000,000 shares of its Common Stock (the "Common Stock Offering") to a select group of investors. The beneficial ownership table which appears at the end of this Item 1 sets forth the voting power at April 12, 1996, after giving effect to the stock purchase described above, of all persons known to the Registrant to own beneficially 5% or more of the Registrant's outstanding stock and of all members of the Registrant's management. Effects of the Preferred Stock Placement and the Common Stock Offering on the - ----------------------------------------------------------------------------- Company's Governance. - -------------------- On July 25, 1995, the Registrant, Vestex Corporation, Stephen G. Morison (the Registrant's President and Chief Executive Officer) and certain of the Registrant's employees entered into an Interim Voting Agreement (the "Interim Voting Agreement"). Pursuant to the Interim Voting Agreement, the employees agreed for so long as Mr. Morison was an officer or director of the Registrant and until the closing of a preferred stock placement, (a) to vote for the election of four directors, three of whom would be continuing directors (initially, Bruce M. Dayton, Thomas W. Killilea and Mr. Morison) or their designees (hereinafter, "Continuing Directors") and one of whom would be designated by Vestex Corporation (initially, Brian M. Adley) and (b) in regard to other matters, to vote as directed by Mr. Morison. Vestex Corporation agreed that, in the event that it defaulted in its obligation to purchase preferred stock of the Company pursuant to the terms of the Recapitalization Agreement, as then in effect, Mr. Morison would assume voting control over the Common Stock owned by Vestex Corporation. In September 1995, Vestex Corporation so defaulted and Mr. Morison assumed such voting control. Because a majority of the Registrant's outstanding shares has been subject to the Interim Voting Agreement, all directors have been subject to election in accordance with the terms of such Agreement for so long as it has been in effect. Following its purchase of preferred stock through the Preferred Stock Placement, Vestex Capital Corporation holds sufficient capital stock of the Registrant to be able to cast between 46.7% and 65.1% of all votes that may be cast by all stockholders, depending on whether all or any or none of the 4,000,000 shares of Common Stock Page 2 of 11 Pages being offered pursuant to the Common Stock Offering are eventually issued. This voting power would ordinarily be sufficient, as a practical matter, to elect the entire Board of Directors and to approve all matters requiring stockholder approval. Currently, and for a period of five years following the Preferred Stock Placement, however, another voting agreement (the "Long-Term Voting Agreement") will be in effect, providing for the election of a Board of seven Directors, two of whom will be nominated by Vestex Capital Corporation and five of whom will be Continuing Directors subject to election by the stockholders other than Vestex ("Minority Stockholders"). The Long-Term Voting Agreement also requires that, for a period of two years following the closing of the Preferred Stock Placement, certain issuances of stock, mergers, charter and by- law amendments and other transactions, in which Vestex Capital Corporation has an interest which conflicts with or is distinct from that of the Registrant, will be subject to approval by the Continuing Directors or the Minority Stockholders ("Minority Approval"). The Long-Term Voting Agreement also provides that Richard D. Rizzo, a new Minority Director (or a successor jointly appointed by Vestex Capital Corporation and the Registrant, or, failing such appointment, a successor selected by the Board of Directors of the Registrant) will be authorized to vote, in accordance with all applicable requirements of the Long-Term Voting Agreement and otherwise at his discretion, that number of shares owned by Vestex Capital Corporation which from time to time exceed 39.6% of all shares of capital stock of the Registrant then outstanding. The Interim Voting Agreement has been superseded in its entirety by the Long-Term Voting Agreement. Continuing Directors. Stephen G. Morison, Bruce M. Dayton, Thomas W. -------------------- Killilea and Richard D. Rizzo will be the four initial Continuing Directors. Mr. Morison will be subject to re-election in 1996 and 1998, Mr. Rizzo in 1997 and 2000 and Messrs. Dayton and Killilea in 1996 and 1999. The Long-Term Voting Agreement provides that, at all elections of directors prior to the Annual Meeting of Stockholders to be held in the year 2001, the Registrant will nominate each of the initial Continuing Directors for re-election or, if any such Continuing Director does not choose to stand for re-election, a nominee designated by a majority of the Continuing Directors then in office. Vestex Capital 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 Capital Corporation will vote all of its outstanding stock in favor of the candidate who receives a plurality of the votes cast by the Minority Stockholders. Vacancies which occur among the Continuing Directors will be filled as designated by the remaining Continuing Directors. Minority Approval. For a period of two years following ----------------- Page 3 of 11 Pages consummation of the Preferred Stock Placement, the following types of transactions will be subject to approval by either a majority of the Continuing Directors then in office or the holders of a majority of the shares of common stock held by Minority Stockholders: (i) any issuance or transfer by the Registrant of any stock or other securities of the Registrant to Vestex Capital Corporation (other than the issuance of common stock pursuant to the conversion of Series AA Convertible Preferred Stock), (ii) any merger, consolidation or sale of assets involving the Registrant and Vestex Capital Corporation, (iii) any action taken by the Registrant 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 Capital Corporation of any fee or other similar type of benefit (other than as contemplated in the Recapitalization Agreement, as amended by the Amendment and a related consulting agreement). Vestex Capital 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 Capital Corporation does not have a conflict of interest, such as the issuance of securities to an unrelated purchaser (notwithstanding that Vestex Capital Corporation would be entitled to receive a fee in connection with such transaction). The foregoing summary is qualified by reference to the Long-Term Voting Agreement, a copy of which is set forth as Exhibit 3 hereto. BENEFICIAL OWNERSHIP TABLE -------------------------- The following table sets forth the number of shares of Common Stock beneficially owned by the persons or entities known by the Registrant's management to be the beneficial owners of more than 5% of the outstanding shares, the number of shares beneficially owned by each director and each executive officer, and the number of shares beneficially owned by all directors and officers as a group, as "beneficial ownership" has been defined under rules promulgated by the Securities and Exchange Commission, at April 12, 1996 after giving effect to the issuance and sale of 5,000,000 shares of Series AA Convertible Preferred Stock and 400,000 shares of Common Stock. Appropriate additional columns have been added to reflect the pro forma effects of the issuance and sale of an additional 4,000,000 shares of Common Stock, as if such sales of Common Stock (which may occur in connection with the Common Stock Offering at any time prior to May 15, 1996) had occurred on such date. Page 4 of 11 Pages
Voting Power(1) ---------------------------------------------- Common Stock Percentage of Name and Address of Beneficially Shares Outstanding Percentage -------------------------- ---------------------- Beneficial Owner Owned Actual Pro Forma(2) Shares Actual Pro Forma(2) - ---------------- ----- ------ ------------ ------ ------ ----------- Vestex Capital Corporation (3) 6,000,000 (4) 65.1% 46.7% 6,600,000(4)(5)(6) 62.6% 46.7% Brian M. Adley (3) 6,637,500 (4)(7)(8) 65.2% 47.0% 6,600,000(4)(5)(6)(7) 62.6% 46.7% Stephen G. Morison (9) 984,812 (8)(10) 9.3% 6.8% 546,812(5) 5.2%(10) 3.9% Bruce M. Dayton (9) 46,321 (8) * * 38,821(5) * * Thomas W. Killilea (12) 175,375 (8) 1.7% 1.2% 125,375(5) 1.2% * Michael DeSantis, Jr.(9) 361,595 (8) 3.5% 2.5% 186,595 1.7% 1.3% William J. Guthlein (9) 70,325 * * 70,325 * * Gregory S. Harper (9) 219,867 (8) 2.1% 1.5% 109,867 1.0% * David W. Parr (9) 119,750 1.2% * 119,750 1.1% * Richard D. Rizzo (9) 27,000 (8)(11) * * 0(5)(11) * * Directors and Executive Officers as a group (9 persons) 8,641,733 (4)(7)(8) 75.9% 57.7% 7,797,545(4)(7)(8) 77.0% 55.2%
____________________ * Less than one percent (1.0%) THE NOTES TO THIS TABLE APPEAR ON PAGE 6. Page 5 of 11 Pages Notes to Beneficial Ownership Table ----------------------------------- (1) Number of votes which each person is entitled to cast expressed as a number and as a percentage of all votes which all stockholders are (or, in the case of the pro forma column, would be) entitled to cast; assumes no exercise of stock options. (2) Pro forma as if the additional 4,000,000 shares of Common Stock being offered in the Common Stock Offering had been issued and outstanding at April 12, 1996; assumes no exercise of stock options. (3) This stockholder's address is 12 Waltham Street, Lexington, MA 02173. (4) Assumes conversion of 5,000,000 shares of Series AA Convertible Preferred Stock into a like number of shares of Common Stock. (5) All shares owned by this stockholder must be voted for the election of directors as required by the provisions of the Long-Term Voting Agreement. (6) Between 1,001,989 of these shares (if an additional 4,000,000 shares are sold by the Company in the Common Stock Offering) and 2,585,989 of these shares (if no additional shares are sold by the Company in the Common Stock Offering) will be voted, as to all matters other than the election of directors, as specified by Richard D. Rizzo or his successor pursuant to the provisions of the Voting Agreement. (7) Includes all shares owned by Vestex Capital Corporation reported above. Mr. Adley has sole or shared voting power as to all such shares. (8) Includes 37,500, 435,500, 7,500, 50,000, 175,000, 110,000 and 27,000 shares which Messrs. Adley, Morison, Dayton, Killilea, DeSantis, Harper and Rizzo are entitled to acquire, respectively, through the exercise of outstanding stock options within the next 60 days. (9) Each of these persons maintains a business address c/o the Registrant. (10) Does not include 647,739 shares owned by certain other employees as to which Mr. Morison formerly had voting power or 1,600,000 shares as to which Mr. Morison formerly had voting power due to a default in Vestex Corporation's obligation to purchase 5,000,000 shares of Series A Convertible Preferred Stock in the fall of 1995. Page 6 of 11 Pages (11) Excludes up to 2,585,989 shares owned by Vestex Capital Corporation as to which this person will have voting power with respect to all matters other than the election of directors pursuant to the Long-Term Voting Agreement. (12) This person maintain a business address at Oppenheimer & Co., Inc., One Federal Street, Boston, MA 02110. The foregoing table assumes between 10,136,391 and 14,136,391 shares of Common Stock to be outstanding, on the assumptions set forth above, depending on whether all or any or none of the 4,000,000 additional shares being offered in the Common Stock Offering are sold. Terms of the Preferred Stock - ---------------------------- Subject to the powers, preferences, rights, qualifications, limitations and restrictions of any other class or series of preferred stock that may be issued, the holder of each of the 5 million shares of Series AA Convertible Preferred Stock ("Series AA Preferred") is entitled to the following preferences and rights: Dividends; Special Payment Upon Conversion: The Series AA Preferred ------------------------------------------ will be entitled to receive dividends (if any) paid from time to time on the Common Stock, on a pari passu basis. If, within five years after the issuance of the Series AA Preferred, the Registrant issues additional equity securities (other than upon the exercise of certain warrants or options) or debt convertible into equity securities of the Registrant for cash consideration in excess of $7,500,000 ("Additional Equity Investment"), then there shall be paid to the holders of any Series AA Preferred which is thereafter converted an amount per share at a rate of (i) $.035 per annum, if the Additional Equity Investment is consummated and the shares are converted within one year after their issuance; (ii) $.03 per annum, if the Additional Equity Investment is consummated and the shares are converted within two years after their issuance; (iii) $.025 per annum, if the Additional Equity Investment is consummated and the shares are converted within three years after their issuance; (iv) $.02 per annum, if the Additional Equity Investment is consummated and the shares are converted within four years after their issuance; or (v) $.015 per annum, if the Additional Equity Investment is consummated and the shares are converted within five years after the issuance. After April 11, 1998, such dividends may, at the Company's election, be paid in the form of shares of Common Stock of the Registrant, valued for this purpose at one-half their then prevailing trading price determined under a formula. Page 7 of 11 Pages Liquidation Preference: a payment of $.50 per share plus any ---------------------- accumulated and unpaid dividends thereon, and no more, upon any voluntary or involuntary liquidation, dissolution or winding up of the Registrant, payable out of funds legally available for the purpose, after payment of debts and expenses and subject to the rights of any senior class or series (as defined) of preferred stock, but in preference to the payment of any amounts to the holders of junior stock (as defined) including Common Stock. In any event of any consolidation or merger of the Registrant with or into another entity, any sale or transfer to another entity of all or substantially all of its assets or the voluntary or involuntary dissolution and winding up of the Registrant, the holder of each share of Series AA Preferred then outstanding will have the right to elect to receive its liquidation preference or to convert each such share into the kind and amount of securities and property receivable upon or deemed to be held following such consolidation, merger, sale, transfer or dissolution by a holder of the number of shares of Common Stock into which such Series AA Preferred shares might have been converted immediately prior to such consolidation, merger, sale, transfer or dissolution. Conversion Rights: each share of Series AA Preferred will be ----------------- convertible at any time into shares of Common Stock at an initial conversion rate of one share of Common Stock per share of Series AA Preferred (equivalent to a conversion price of $.50 per share). The conversion rate is subject to adjustment in certain events, including stock dividends, stock splits, reverse stock splits, subdivisions, combinations and reclassifications of Common Stock, but is not subject to adjustment upon the issuance of Common Stock or options, rights or warrants to purchase Common Stock at a price lower than the conversion price as in effect from time to time. Fractional Common Shares will not be issued upon conversion but, in lieu thereof, the Registrant will pay a cash adjustment based on the conversion price of the Common Stock. Retirement: at any time after April 11, 1999, the Registrant may ---------- elect to cause all outstanding shares of Series AA Preferred to be retired by paying any amounts that would be due upon conversion and converting such shares into Common Stock at the then effective conversion rate. Voting Rights: as may votes per share of Series AA Preferred as the ------------- number of shares of Common Stock into which each such share of Series AA Preferred is convertible (initially, one vote per share), with the Common Stock and all outstanding preferred stock voting together as a single class on all matters except as otherwise expressly provided in the Registrant's Articles of Organization or prescribed by law. Page 8 of 11 Pages Without the favorable vote or consent of the holders of a majority of the issued and outstanding Series AA Preferred, voting as a class, the Registrant is not authorized to amend, alter or repeal any of the preferences or rights of the Series AA Preferred so as to materially adversely affect such preferences and rights, increase the authorized number of shares of preferred stock, create any new class of shares having preference over or ranking on a parity with the Series AA Preferred, cause any purchase of stock other than from employees, cause a dividend to be paid on the Common Stock, effect a merger to which the Company is a party or a sale of the Registrant's assets, or amend the Company's Articles of Organization or By-Laws. Registration Rights. The holders of at least 1,000,000 shares ------------------- (subject to anti-dilution provisions, and including any Common Stock which is issued upon conversion of Series AA Preferred) of Series AA Preferred, will have the right on one occasion (and on two additional occasions during any twelve-month period in which the Registrant does not qualify to register shares in a public offering on Form S-3) to require the Registrant to use its best efforts to cause the shares, and those of other Series A Preferred stockholders wishing to participate on a pro rata basis, to be registered for sale to the public through an underwriting firm which is approved by the Registrant. Less than 20% of the outstanding Series AA Preferred can be registered provided the anticipated aggregate offering price to the public would exceed $2,000,000. The maximum number of shares to be so registered will be subject to limitation, at the underwriter's discretion, on a pro rata basis among the selling stockholders, in order to accommodate public demand for such shares or for newly issued shares of the Registrant if the Board of Directors should elect to have the Registrant include newly issued shares in such offering. Underwriters' discounts, commissions and related costs will be borne by the Registrant and the participating stockholders in proportion to the respective numbers of shares sold by each. Legal, accounting and other expenses of such offering will be borne entirely by the Registrant. In addition, the holders of Series AA Preferred will have (a) certain "piggy-back" registration rights, subject to limitation at underwriters' discretion to an amount which is not less than 10% of the shares requested, if the Registrant registers any shares in a public offering (other than in connection with a business combination or employee incentive plan) and (b) an unlimited number of demand registrations on Form S-3 or any successor Form at any time that the Registrant qualifies for the use of such Form, subject to certain exceptions. Legal, accounting and other offering expenses will be borne as described above. Page 9 of 11 Pages The Registrant does not at present have any undesignated series preferred stock, but will consider soliciting stockholder approval to amending 5 million shares of Series A Convertible Preferred Stock, none of which is outstanding, so that it becomes undesignated series preferred stock. Item 5. Other Events. - ------ ------------ On April 16, 1996, the Registrant issued a press release announcing the closing of the Preferred Stock Placement described hereinabove. The press release also announ ced the commencement of the Common Stock Offering described hereinabove and the Registrant's financial results for the twelve months and three months ended December 31, 1995. Reference is made to the press release, which is filed as an exhibit to this Form 8-K. Item 7. Financial Statements, Pro Forma Financial - ------ Information and Exhibits. ----------------------------------------- (c) Exhibits 1. Amendment No. 4 to Recapitalization and Stock Purchase Agreement dated as of April 12, 1996 among the Registrant, Vestex Corporation and Vestex Capital Corporation. 2. Registration Rights Agreement dated as of April 12, 1996 between the Registrant and Vestex Corporation. 3. Voting Agreement among the Registrant, Vestex Corporation, Vestex Capital Corporation, Steven G. Morison, Bruce M. Dayton, Thomas W. Killilea, Brian M. Adley, and Richard D. Rizzo. 4. Certificate of Designation of a Class or Series of Preferred Stock, in substance as filed with the Secretary of State of the Commonwealth of Massachusetts. 5. Press release dated April 16, 1996. Page 10 of 11 Pages SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CHANCELLOR CORPORATION By: /s/ William J. Guthlein ----------------------------- William J. Guthlein Vice President, Treasurer and Chief Financial Officer Page 11 of 11 Pages EX-1 2 AMENDMENT #4 TO RECAPITALIZATION Exhibit 1 ------- - AMENDMENT NO. 4 TO RECAPITALIZATION AND STOCK PURCHASE AGREEMENT THIS AMENDMENT NO. 4 TO RECAPITALIZATION AND STOCK PURCHASE AGREEMENT (this "Amendment"), dated as of this 11th day of April, 1996, by and between CHANCELLOR CORPORATION, a Massachusetts corporation (the "Company"), VESTEX CORPORATION, a Massachusetts corporation (the "Purchaser"), and VESTEX CAPITAL CORPORATION, a Massachusetts corporation (the "Assignee" and, together with the Purchaser, "Vestex"), amends, modifies and supplements that certain Recapitalization and Stock Purchase Agreement dated as of September 20, 1994 among the Company, the Purchaser and Bruncor Inc., a New Brunswick corporation ("Bruncor") (as amended by Amendment No. 1 to Recapitalization and Stock Purchase Agreement dated as of November 18, 1994, that certain letter agreement dated as of February 28, 1995 ("Amendment No. 2"), and Amendment No. 3 to Recapitalization and Stock Purchase Agreement dated as of July 14, 1995, each among the Company, the Purchaser and Bruncor, the "Agreement") as the Agreement relates to the Company and the Purchaser, but not as it relates to Bruncor. Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings ascribed to them in the Agreement. WHEREAS, the parties hereto wish to amend, modify and supplement the Agreement upon the terms and conditions set forth hereinbelow; - 2 - NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Preferred Stock; Purchase Price; Expenses; Closing Date. The ------------------------------------------------------- Assignee hereby agrees to pay to the Company, by bank check or wire transfer, and in addition to amounts previously paid by the Purchaser to the Company pursuant to the Agreement, $1,350,000.00 (the "Purchase Price"). Upon receipt of the Purchase Price, the Company shall issue and deliver to the Assignee 5,000,000 shares of Series AA Convertible Preferred Stock (the "Preferred Stock") having the terms and conditions set forth on Exhibit A hereto. --------- Immediately upon receipt of the Purchase Price, the Company shall reimburse to the Purchaser, by wire transfer, its costs and expenses in connection with due diligence, negotiation and closing the transactions contemplated hereby stipulated to be in the amount of $312,500.00. The payment by the Assignee to the Company of the Purchase Price, the reimbursement by the Company to the Purchaser of its costs and expenses, and the issuance by the Company to the Assignee of the Preferred Stock, shall take place at a closing (the "Preferred Stock Closing") to be held on the date of this Amendment (the "Closing Date"), or such later date - 3 - to which the parties may agree (the "Delayed Closing Date"), but in no event later than May 14, 1996 (the "Final Closing Date"), in any case, at 10:00 a.m. at the offices of the Company. If the Preferred Stock Closing does not occur on or before the Final Closing Date, the Agreement, as amended hereby, shall be null and void. 2. Common Stock Offering; Modification of Preferred Stock Closing. -------------------------------------------------------------- Vestex acknowledges that the Company is currently conducting an offering of up to 9,000,000 shares of its Common Stock (the "Common Stock Offering"). Notwithstanding anything contained herein to the contrary, the number of shares of Preferred Stock to be issued to the Assignee shall be reduced from 5,000,000 by that number of shares of Common Stock (if any) in excess of 4,000,000 for which subscriptions have been received by the Company on or before the Preferred Stock Closing, and the Purchase Price shall be reduced by $.27 per share for each share of Preferred Stock (if any) less than 5,000,000 issued to the Assignee at the Preferred Stock Closing. Upon the Preferred Stock Closing, the Common Stock Offering shall be terminated if subscriptions for 4,000,000 or more shares of Common Stock have then been subscribed for, or if fewer than 4,000,000 shares of Common Stock have then been subscribed for, the Common Stock - 4 - Offering shall be reduced to a maximum of 4,000,000 shares of Common Stock. 3. Other Closing Matters. At the Preferred Stock Closing, the --------------------- Company, the Assignee and/or the Purchaser (as the case may be) shall execute and deliver (a) a Registration Rights Agreement in the form attached hereto as Exhibit B, (b) a Voting Agreement in the form attached hereto as Exhibit C, (c) - --------- --------- Releases in the forms attached hereto as Exhibit D, and (d) an Amendment to --------- Consulting Agreement in the form attached hereto as Exhibit E. --------- 4. Further Amendments to Agreement. The Agreement is hereby further ------------------------------- amended by eliminating the Escrow Agreement and any references thereto, it being agreed that the Purchase Price shall be immediately available to the Company for working capital purposes. The date by which the Company's current severance policies shall be terminated pursuant to Article V(n)(iv) of the Agreement is hereby amended to be the anniversary of the Preferred Stock Closing. 5. Revised Schedules. The Schedules to the Agreement are hereby ----------------- revised and restated in the forms attached hereto. - 5 - 6. Affirmation of Agreement. Except as modified, amended and supplemented ------------------------ hereby, the Agreement is hereby affirmed, ratified and approved as the legal, valid and binding agreement of the parties thereto, enforceable in accordance with its terms. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date and year first above written. CHANCELLOR CORPORATION VESTEX CORPORATION By: /s/ Stephen G. Morison By: /s/ Brian M. Adley --------------------------- --------------------------- Title: CEO Title: CEO ------------------------- ------------------------ VESTEX CAPITAL CORPORATION By: /s/ Brian M. Adley --------------------------- Title: CEO ------------------------ [SCHEDULES AND EXHIBITS OMITTED] EX-2 3 REGISTRATION RIGHTS AGREEMENT EXHIBIT 2 --------- 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 Masachusetts 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 September 20, 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 Section 5. --------------------- "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 Rule 144 under the Securities Act or (ii) upon any sale in any manner to a person or entity which, by virtue of Section 14 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. "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 Section 14 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 Form S-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 -2- 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 Form S-1 or Form S-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 Form S-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 Form S-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 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 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 Form S-3 or any successor form relating to secondary offerings) within six months after the effective date of any other Registration Statement of the Company. (d) If at the time of any request to register Registrable Shares pursuant to this Section 2, 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 -3- Stockholders may include Registrable Shares pursuant to Section 3 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 Section 2) 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 Section 3 without obligation to any Stockholder. (b) In connection with any registration under this Section 3 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 Section 10 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 -4- 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 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. -5- 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 Section 2 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 Section 2, 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 Section 5, 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 -6- 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 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. -7- (c) Each party entitled to indemnification under this Section 6 (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 Section 6. 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 Section 6 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 Section 6 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 Section 6; then, in each such case, the Company and such Stockholder will contribute to the aggregate losses, 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, -------- ------- -8- (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 Section 11(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 Section 2, 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 -9- result in such registration statement being declared effective prior to December 31, 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 Section 12 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 Rule 144(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 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 Section 12 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 90 days of completion of the transaction for resale to the public pursuant to the Securities Act. -10- 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, ------- 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 Section 15(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 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. -11- (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 ---------------------------- -12- EX-3 4 VOTING AGREEMENT AMONG THE REGISTRANT EXHIBIT 3 --------- VOTING AGREEMENT VOTING AGREEMENT, dated as of April 11, 1996 (the "Agreement"), is made by and among Chancellor Corporation, a Massachusetts corporation (the "Company"), Vestex Corporation and Vestex Capital Corporation, each a Massachusetts corporation (collectively, "Vestex"), each of those persons who are directors of the Company and who have entered into this Agreement (individually referred to as a "Director" and collectively referred to as the "Directors") and each of those persons who are employees of the Company and who have entered into this Agreement (individually referred to as an "Employee" and collectively referred to as the "Employees"). W I T N E S S E T H: ------------------- WHEREAS, the Company, Bruncor Inc., a New Brunswick corporation and an affiliate of the Company ("Bruncor"), and Vestex have entered into a Recapitalization and Stock Purchase Agreement dated as of September 20, 1994, as successively amended by four amendments (the "Recapitalization Agreement"), providing for, among other things, the purchase by Vestex of 1,600,000 shares of the Company's Common Stock (the "Common Shares") from Bruncor and the subsequent purchase by Vestex of 5,000,000 shares of the Company's Series AA Convertible Preferred Stock (the "Preferred Shares") from the Company (such transactions referred to as the "Purchases"); WHEREAS, it is the intention of the parties that, following the consummation of both the Purchases, the Board of Directors of the Company will consist of up to seven members, up to two of whom will be nominees of Vestex; and WHEREAS, it is the intention of the parties that upon consummation of the Purchases the business of the Company and its subsidiaries will continue to be conducted in the ordinary and usual course of its business with such changes as are determined by the Board of Directors of the Company; and WHEREAS, it is the intention of Vestex to preserve the goodwill of the Company and to allow the Company to maintain and expand the valuable business relationships established by it; and WHEREAS, the Company intends, subject to the continuing review of the Company's Board of Directors, to continue the Company's efforts to expand its business, and to permit the Company to operate its business under its current management and from its existing location and under its current corporate name; and WHEREAS, the parties understand the importance and desirability of maintaining an active public trading market for the Company's common stock; and WHEREAS, Vestex has no present intention of taking any action which would cause (a) the Company's common stock to cease to be quoted in the over- the-counter market by member firms of the National Association of Securities Dealers Inc. or (b) the Company to no longer be subject to Sections 12 or 13 of the Securities Exchange Act of 1934, as amended; and -2- WHEREAS, the parties intend that certain types of corporate transactions proposed to occur within two years following the consummation of the Purchases will require the approval of either (i) the holders of a majority of the outstanding shares of the Company's common stock not held by Vestex or its affiliates or (ii) a majority of those directors then in office who are not affiliates of Vestex and who either were directors of the Company prior to the Purchases or subsequently were elected as successor directors (A) with a plurality of the votes cast by the holders of the outstanding shares of the Company's common stock not held by Vestex or its affiliates or (B) by designation of a majority of the Continuing Directors then in office ("Continuing Directors"); and WHEREAS, the parties hereto wish to agree on certain other matters relating to the voting of certain shares of the Company's common stock and preferred stock held by Vestex and to the operation of the business of the Company following the consummation of the Purchases; NOW, THEREFORE in consideration of the mutual covenants and agreements set forth herein, the parties hereto hereby agree as follows: ARTICLE I --------- 1.1. Voting of Shares. ---------------- (a) In any and all elections of directors of the Company (whether at a meeting or by written consent in lieu of a -3- meeting) prior to the Company's 2001 Annual Meeting of Stockholders, Vestex, the Directors and the Employees shall vote or cause to be voted ("Vote") any and all Shares (as defined in Section 1.2 below) owned by it or its affiliates, or over which it or its affiliates have voting control, and otherwise use their respective best efforts, so as to fix the number of directors of the Company at seven and to elect directors as provided herein. Upon consummation of Vestex's purchase of the Preferred Shares, the Board shall consist of up to two members designated by Vestex (one of whom shall be subject to ratification by a majority of the directors theretofore in office ("Ratification")) and five members who shall be Continuing Directors (one of whom shall be subject to Ratification). The directors initially designated by Vestex are Brian M. Adley and another person yet to be designated (the "New Vestex Nominee"), and the directors initially designated by the Continuing Directors are Bruce M. Dayton, Thomas W. Killilea, Richard D. Rizzo, Stephen G. Morison and another person yet to be designated (the "New Non-Vestex Nominee"). The designation of the New Vestex Nominee and the New Non-Vestex Nominee and the designation of their respective successors shall require Ratification. Messrs. Dayton and Killilea and the New Vestex Nominee shall be subject to re-election at the Company's 1996 Annual Meeting of Stockholders (and, if re-elected in 1996) at the 1999 Annual Meeting of Stockholders, Messrs. Adley and Rizzo shall be subject to re-election at the Company's 1997 Annual Meeting of Stockholders (and, if re-elected in 1997) at the 2000 Annual -4- Meeting of Stockholders, and Mr. Morison (who would have been subject to re- election at the 1995 Annual Meeting of Stockholders, had such a meeting been held) and the New Non-Vestex Nominee shall be subject to re-election at the Company's 1996 Annual Meeting of Stockholders (and, if re-elected in 1996) at the 1998 Annual Meeting of Stockholders. All Shares subject to this Agreement shall be voted (i) at the 1996 Annual Meeting for the re-election of Messrs. Dayton, Killilea and Morison and, if they have by then been nominated and received Ratification, the New Vestex Nominee and the New Non-Vestex Nominee, for the respective terms specified above, (ii) at the 1997 and 2000 Annual Meetings for the re-election of Messrs. Adley (or other nominee of Vestex) and Rizzo, (iii) at the 1998 Annual Meeting for the re-election of Mr. Morison and for the election of one other nominee designed by a majority of the directors then in office (who may, but need not, be the New Non-Vestex Nominee, (or up to two Continuing Directors in substitution for them), and (iv) at the 1999 Annual Meeting for the re-election of Messrs. Dayton and Killilea (or up to two other Continuing Directors in substitution for them) and for one other nominee designated by a majority of the directors then in office (who may, but need not, be the New Vestex Nominee. At any re-election of a Continuing Director, the parties shall cast all of their votes in favor of such Continuing Director if he chooses to stand for re-election and is unopposed; in favor of the designee of a majority of the Continuing Directors then in office if such Continuing Director chooses not to stand for re-election and such -5- designee is unopposed; or, in the case of a contested election, in favor of the candidate who receives a plurality of the votes cast by the holders of the outstanding shares of the Company's common stock not held by Vestex or its affiliates. (b) The Company shall provide the Continuing Directors and Vestex with 30 days' prior written notice of any intended mailing of a notice to stockholders for a meeting at which directors are to be elected (except that only 10 days' prior notice shall be required prior to the 1996 Annual Meeting). Vestex, the Continuing Directors and the Board of Directors shall give written notice to all other parties to this Agreement, no later than 20 days prior to such mailing (3 days in the case of the 1996 Annual Meeting), of the persons designated by Vestex, by the Continuing Directors and by the entire Board, respectively, as nominees for election as directors. The Company agrees to nominate as directors the individuals designated, or to be designated, pursuant to Section 1(a). If Vestex or the Continuing Directors shall fail to give notice to the Company as provided above, it shall be deemed that the designees of Vestex or the Continuing Directors, as the case may be, then serving as directors shall be their designees for reelection. (c) Vestex shall not vote to remove any director designated by the Continuing Directors or by the entire Board, and the Continuing Directors shall not vote to remove any director designated by Vestex or by the entire Board, except upon (i) the written instruction of the party or parties who designated such -6- director or (ii) demonstration by clear and convincing evidence of bad faith or willful misconduct that has caused the Company substantial injury. In the event of any such removal, the vacancy shall be filled by a designee of Vestex, if the director whose removal occasioned the vacancy was a designee of Vestex, by a designee of the remaining Continuing Directors, if the director whose removal occasioned the vacancy was a Continuing Director, or by a designee of the entire Board, if the director whose removal occasioned the vacancy was a designee of the entire Board. 1.2. Shares. "Shares" shall mean and include any and all Preferred ------ Shares, Common Shares and other shares of capital stock of the Company, by whatever name called, which carry voting rights (including voting rights which arise by reason of default) and shall include any shares now owned or subsequently acquired by any party, however acquired, including without limitation stock splits and stock dividends. 1.3. Termination. This Agreement shall terminate in its entirety on ----------- the fifth anniversary of the date of this Agreement or on the day immediately prior to the date of the Company's 2001 Annual Meeting of Stockholders, whichever occurs first. 1.4. No Revocation. The voting agreements contained herein are ------------- coupled with an interest and may not be revoked, except by written consent of the Continuing Directors and Vestex. Each of the Continuing Directors and Vestex agrees not to take any action to amend any provisions of the Articles of Organization or the By-Laws of the Company relating to the election, removal or -7- indemnification of directors, or any other matter pertaining to the subject matter of this Agreement, as in effect upon consummation of the Purchases as contemplated by the Recapitalization Agreement, without the prior written consent of the Continuing Directors and Vestex. 1.5. Indemnification. In the event that any director elected --------------- pursuant to Section 1 of this Agreement shall be made or threatened to be made a part to any action, suit or proceeding with respect to which he may be entitled to indemnification by the Company pursuant to its Articles of Organization or By-Laws, or otherwise, he shall be entitled to be represented in such action, suit or proceeding by counsel of his choice and the reasonable expenses of such representation shall be reimbursed by the Company to the extent provided in or authorized by said Articles of Organization or By-Laws. The Company agrees that it shall comply with the provisions of Sections 7.04, 7.07 and 7.10 of the Recapitalization Agreement in regard to indemnification and directors' and officers' liability insurance. In consideration of entering into this Agreement, each party hereto acknowledges and agrees that, to the maximum extent permitted by applicable law, neither Mr. Rizzo, as the person entitled to direct the voting of the Shares to be Voted under Section 2.1, nor, should the entire Board succeed to the right to vote such Shares, any director, have any liability for monetary damages to Vestex or any other party based upon his acts or omissions or alleged acts or omissions in connection with the -8- voting of such Shares; and each such party, including without limitation Vestex, hereby irrevocably waives any right, claim or cause of action for money damages based upon the same. 1.6. Restrictive Legend. All certificates representing Shares owned ------------------ or hereafter acquired by Vestex or any transferee of Vestex bound by this Agreement shall have affixed thereto a legend substantially in the following form: "The shares of stock represented by this certificate are subject to certain voting agreements as set forth in a Voting Agreement by and among the registered owner of this certificate, the Company and certain other stockholders of the Company, a copy of which is available for inspection at the offices of the Clerk of the Company." 1.7. Transfers of Rights. Any transferee to whom Shares are ------------------- transferred by Vestex, whether voluntarily or by operation of law, shall be bound by the voting obligations imposed upon the transferor under this Agreement, and, subject to the provisions of Section 3.1 below, shall be entitled to the rights granted to the transferor under this Agreement, to the same extent as if such transferee were Vestex hereunder. ARTICLE II ---------- 2.1. Voting of Certain Shares Owned by Vestex. Commencing on the ---------------------------------------- date of this Agreement, the number of Preferred Shares specified herein (the "Shares to be Voted") shall be Voted as specified by Richard D. Rizzo (or, in the event Mr. Rizzo ceases to be a director of the Company or declines to Vote the Shares to -9- be Voted, as specified by a successor jointly appointed by Vestex and the Board of Directors or, in the absence of such an appointment, as specified by a majority of the entire Board of Directors). The number of Shares to be Voted shall be equal to the amount by which (a) all Shares owned of record or beneficially by Vestex and its affiliates shall exceed (b) 39.6% of the total number of shares of common stock and preferred stock of the Company then outstanding, without deeming shares underlying unexercised stock options or warrants to be outstanding. The Shares to be Voted shall be Voted for the election of directors in the manner provided in Section 1 and in respect of all other matters which may be presented for action by the Company's stockholders, whether at an Annual or Special Meeting or by written action, as designated by Mr. Rizzo (or by a successor or by a majority of the entire Board of Directors, as the case may be). The provisions of this Section 2.1 shall continue in effect for 18 months following the date of this Agreement, provided that they shall terminate if at any time during such 18-month period the number of shares referred to in clause (b) above exceeds the number of shares referred to in clause (a) above, so that there are no longer any Shares to be Voted. The number of Shares to be Voted shall increase or decrease automatically to the extent that changes in the number of shares referred to in clause (a) or (b) above shall occur from time to time. 2.2 Special Approval. Prior to April 11, 1998, any of the following ---------------- transactions: -10- (a) any issuance or transfer by the Company of capital stock or other securities of the Company to an interested stockholder, considering Vestex or any of its affiliates or associates (as defined in Mass. Gen. Laws c.110F, (S)3) as being interested stockholders for the purposes hereof, other than the issuance of common stock pursuant to the conversion of Preferred Shares; or (b) any merger, consolidation or sale of assets described in Mass. Gen. Laws c.110F, (S)3(c)(2), involving the Company and any interested stockholder, considering Vestex and each of its respective affiliates and associates as being an interested stockholder for the purposes hereof; or (c) any action taken by the Company which results in a going private transaction subject to Rule 13e-3 under the Securities Exchange Act of 1934; or (d) the payment to any interested stockholder of any fee or other benefit described in Mass. Gen. Laws c.110F, (S)3(c)(5), considering Vestex and each of its affiliates and associates as being an interested stockholder for purposes hereof, other than fees contemplated by the Recapitalization Agreement and the exhibits thereto; shall require the approval of either (i) a majority of the Continuing Directors then in office or (ii) the holders of a majority of the outstanding shares of the Company's Common Stock not held by Vestex or its respective affiliates; and the Company or Vestex shall not attempt to commence or effect any of such transactions without obtaining such approval. The -11- foregoing provisions do not apply to any transaction (such as the issuance of shares of capital stock to non-affiliates of Vestex or mergers with non- affiliates of Vestex) in which Vestex and its affiliates are not in a conflict of interest position. ARTICLE III ----------- 3.1. Assignment. The rights of Vestex hereunder may from time to ---------- time be assigned as a whole, but only if assigned together with any rights of Vestex under the Recapitalization Agreement, to any direct or indirect wholly- owned subsidiary of Vestex; provided, however, that any such assignment shall -------- ------- not relieve Vestex of its obligations hereunder. Vestex may also assign a portion of its rights hereunder to any purchaser of Shares which undertakes in writing to be bound by the obligations of Vestex hereunder, in which case all decisions to be made by Vestex and such other purchaser shall be made by the holders of a majority of the Shares outstanding from time to time. Notwithstanding any provision of this Agreement to the contrary, Vestex may, in its discretion, sell Shares, free and clear of the obligations imposed under this Agreement and without any benefit of the rights conferred under this Agreement: (a) in a public offering or in the public securities markets; or (b) in a private transaction to one or more purchasers which are not "affiliates" or "associates" (as defined in Mass. Gen. Laws c. 110F (S)3) of Vestex in an amount not exceeding 1,000,000 Shares to any one purchaser or "group" of purchasers (within the meaning -12- of Rule 13d-1 under the Securities Exchange Act of 1934, as amended); provided, -------- however, that Shares sold by Vestex in any transaction which is primarily - ------- intended as a device or artifice to avoid the obligations imposed by this Agreement, shall remain subject to such obligations and the benefits conferred by this Agreement. Other than as permitted by this Section 3.1, this Agreement shall not be assignable by any party hereto without the prior written consent of the other parties. 3.2. Notices. All notices and other communications hereunder shall ------- be in writing and shall be deemed to have been duly given (and shall be deemed to have been duly received if so given) if personally delivered or sent by telegram, cable, or telex, or by registered or certified mail, postage prepaid, addressed to the respective parties as follows: If to any Continuing Director, to him at the address listed below, with a copy to the Company and to Hale and Dorr, 60 State Street, Boston, Massachusetts 02109, Attention: Edward Young, Esq. Brian M. Adley c/o Vestex Corporation 12 Waltham Street Lexington, Massachusetts 02173 Bruce M. Dayton 10 Dover Lane Lexington, Massachusetts 02173 Thomas W. Killilea 14 Union Wharf Boston, Massachusetts 02109 Stephen G. Morison Gingerbread Hill Marblehead, Massachusetts 01945 -13- Richard D. Rizzo 12 Algonquin Avenue Andover, Massachusetts 01810 If to the Company: Chancellor Corporation 745 Atlantic Avenue Boston, Massachusetts 02021 Attention: President With copies to Hale and Dorr, as provided above. If to Vestex: Vestex Corporation 12 Waltham Street Lexington, Massachusetts 02173 With copies to: Hinckley, Allen & Snyder One Financial Center Boston, Massachusetts 02111 Attention: Richard C. Arrighi, Esq. or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall only be effective upon receipt. 3.3. Amendment; Modification. This Agreement may only be amended or ----------------------- modified by an instrument in writing signed by Vestex and the Continuing Directors then in office. 3.4. No Waiver of Rights. No failure or delay on the part of either ------------------- party in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercises thereof or of any other right, power or privilege. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. -14- 3.5. Counterparts. This Agreement may be executed in any number of ------------ counterparts, and by separate parties on separate counterparts, each of which shall be deemed an original but all of which together shall constitute but one and the same instrument. 3.6. Agreement Binding on Successors and Assigns. Subject to the ------------------------------------------- provisions of Section 3.1 hereof, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Upon election, any additional persons besides the Directors who serve as Continuing Directors shall be added as parties to this Agreement. Each Director or other Continuing Director who ceases to serve as a director in accordance with the terms of this Agreement shall thereupon automatically cease to be a party to this Agreement. 3.7. Specific Performance. The parties hereto agree that irreparable -------------------- damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. 3.8. Benefit of Recapitalization Agreement. Vestex agrees that each ------------------------------------- Continuing Director shall have the benefit of the terms and conditions of the Recapitalization Agreement that relate to -15- the future conduct of the business of the Company and the agreement of Vestex to use their best efforts to locate and obtain capital for the Company as though such terms and conditions were set forth herein as running from Vestex to each of the Continuing Directors. Each Continuing Director shall have the right to enforce such terms and conditions on his own behalf or on behalf of the Company against Vestex. 3.9. Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the Commonwealth of Massachusetts. 3.10. Entire Agreement, Assignability, Etc. This Agreement, together ------------------------------------ with the Recapitalization Agreement, including all exhibits and schedules thereto, (i) constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof (including, without limitation, insofar as it relates to agreements among the parties hereto as distinct from agreements between such parties and other persons not parties hereto, the Interim Voting Agreement dated as of July 25, 1995), (ii) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder, and (iii) shall not be assignable by operation of law or otherwise. IN WITNESS WHEREOF, the parties hereto have duly executed or caused this Agreement to be duly executed under seal on the day and year first above written. /s/ Brian M. Adley ------------------------------- Brian M. Adley -16- /s/ Bruce M. Dayton ------------------------------- Bruce M. Dayton /s/ Thomas W. Killilea ------------------------------- Thomas W. Killilea /s/ Stephen G. Morison ------------------------------- Stephen G. Morison /s/ Richard D. Rizzo ------------------------------- Richard D. Rizzo CHANCELLOR CORPORATION By:/s/ Stephen G. Morison ---------------------------- President VESTEX CAPITAL CORPORATION VESTEX CORPORATION By: /s/ Brian M. Adley By: /s/ Brian M. Adley -------------------- ------------------------- Title: President President The following persons have become additional parties to the foregoing Agreement as of the respective dates set forth below: ____________________________ date ____________________________ date _______________________________ [New Vestex Nominee] _______________________________ [New Non-Vestex Nominee] -17- EX-4 5 CERTIFICATE OF DESIGNATION EXHIBIT 4 --------- 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: SERIES AA CONVERTIBLE PREFERRED STOCK. - ------------------------------------- Five million (5,000,000) shares of the authorized and unissued Preferred Stock of the Corporation are hereby designated "Series AA Convertible Preferred Stock" (the "Series AA Preferred Stock") with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. 1. Dividends. --------- (a) The holders of shares of Series AA 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 Series AA 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 Series AA 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 Series AA Preferred Stock (such Common Stock and other stock being collectively referred to as "Junior Stock") by reason of their ownership thereof, an amount - 1 - 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 Section 4 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 Series AA Preferred Stock the full amount to which they shall be entitled, the holders of shares of Series AA Preferred Stock and any class or series of stock ranking on liquidation on a parity with the Series AA 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, Series AA Preferred Stock and any other class or series of stock of the Corporation ranking on liquidation on a parity with the Series AA Preferred Stock, upon the dissolution, liquidation or winding up of the 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 Series AA 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 Subsections 2(a) and 2(b) above. The Corporation shall promptly provide to the holders of shares of Series AA Preferred Stock such information concerning the - 2 - 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 Series AA Preferred Stock in order to assist them in determining whether to make such an election. If the holders of the Series AA 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 Series AA 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 Subsection 4(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 Series AA Preferred Stock the full amount to which they shall be entitled upon such liquidation, dissolution or winding up under this Section 2, without the prior written approval of the holders of a majority of the then outstanding shares of Series AA Preferred Stock. 3. Voting. ------ (a) Each holder of outstanding shares of Series AA 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 Series AA Preferred Stock held by such holder are then convertible (as adjusted from time to time pursuant to Section 4 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 Subsection 3(b), 3(c), 3(d) or 3(e) below or by the provisions establishing any other series of Series Preferred Stock, holders of Series AA Preferred Stock and of any other outstanding series of Series Preferred 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: - 3 - (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, (S)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, (S)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, (S)3(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 Series AA Preferred Stock ------------------- shall have conversion rights as follows (the "Conversion Rights"): (a) Right to Convert. Each share of Series AA 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 - 4 - Conversion Price, and the rate at which shares of Series AA 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 Series AA Preferred Stock. (b) Fractional Shares. No fractional shares of Common Stock shall be ----------------- issued upon conversion of the Series AA 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 Series AA Preferred Stock to convert shares of Series AA Preferred Stock into shares of Common Stock, such holder shall surrender the certificate or certificates for such shares of Series AA Preferred Stock, at the office of the transfer agent for the Series AA 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 Series AA 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 Series AA Preferred Stock, or to his or its nominees, a certificate or certificates for the number of 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 Series AA 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 Series AA Preferred Stock, such number of its duly authorized shares of Common Stock - 5 - as shall from time to time be sufficient to effect the conversion of all outstanding Series AA 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 Series AA 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 Series AA Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion. (iv) All shares of Series AA 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 Series AA 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 Series AA 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 Series AA Preferred Stock pursuant to this Section 4. 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 Series AA 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 - 6 - time after the Original Issue Date effect a subdivision of the Series AA 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 Series AA 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 Series AA 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 close of business on such record date, by multiplying the Conversion Price for the Series AA 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 Series AA Preferred Stock shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price for the Series AA 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 Series AA Preferred Stock simultaneously receive a dividend or - 7 - 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 Series AA 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 Series AA 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 Series AA 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 Series AA 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 Series AA Preferred Stock; and provided further, however, that no such adjustment shall be made if the holders of Series AA 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 Series AA 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 Series AA 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 Series AA 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 Series AA 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 - 8 - 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 Subsection 2(c)), each share of Series AA 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 Series AA 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 Section 4 set forth with respect to the rights and interest thereafter of the holders of the Series AA Preferred Stock, to the end that the provisions set forth in this Section 4 (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 Series AA 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 Section 4 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 Series AA Preferred Stock against impairment. (j) Certificate as to Adjustments. Upon the occurrence of each ----------------------------- adjustment or readjustment of the Conversion Price pursuant to this Section 4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series AA 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 Series AA 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 Series AA Preferred Stock. (k) Notice of Record Date. In the event: --------------------- - 9 - (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 Series AA Preferred Stock, and shall cause to be mailed to the holders of the Series AA 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 - 10 - holder of 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 - 11 - 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 Series AA 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 Series AA Preferred Stock pursuant to this Section 5. 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 Series AA Preferred Stock at such holder's address last shown on the records of the transfer agent for the Series AA 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 Series AA 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 Section 5. On the Mandatory Conversion Date, all rights with respect to the Series AA 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 Series AA 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 Series AA 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 Subsection 4(b) in respect of any fraction of a share of Common Stock otherwise issuable upon such conversion. - 12 - (c) All certificates evidencing shares of Series AA 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 Series AA 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 Series AA 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 - 13 - EX-5 6 PRESS RELEASE DATED APRIL 16, 1996 EXHIBIT 5 --------- CHANCELLOR 745 ATLANTIC AVENUE, BOSTON, MA NEWS RELEASE 02111 (617) 728-8500 FOR IMMEDIATE RELEASE CONTACT: Stephen G. Morison William J. Guthlein President and Chief Vice President, Treasurer Executive Officer and Chief Financial Officer (617)728-8500 (617)728-8500 CHANCELLOR ANNOUNCES $1.35 MILLION PREFERRED STOCK PURCHASE, PRIVATE COMMON --------------------------------------------------------------------------- STOCK OFFERING, AND FOURTH QUARTER AND FISCAL 1995 RESULTS ---------------------------------------------------------- BOSTON, Massachusetts, April 16, 1996, Chancellor Corporation, a Boston- based equipment lessor, announced today that it has issued shares of a newly authorized Series AA Convertible Preferred Stock to Vestex Capital Corporation ("Vestex") in exchange for the infusion of $1.35 million of new capital into the Company, less reimbursement of $312,500 of due diligence and other transactional costs. Following the capital infusion, Vestex owns approximately 63% of Chancellor's outstanding stock subject to a voting agreement which, among other things, limits Vestex's voting control to approximately 40% of Chancellor's outstanding stock for a period of up to 18 months. Vestex has stated that its goal is to raise additional equity capital and replace certain of the Company's borrowing facilities with new borrowing facilities. The new capital and financing will enable the Company to improve its operations, to pursue opportunities to develop its remarketing capabilities, and to improve the terms under which it acquires and manages lease transactions. Chancellor Corporation also announced today that it had commenced a private offering of up to 4,000,000 shares of its Common Stock to a select group of investors. Chancellor Corporation further announced today that it has reported a net loss of $1.2 million or $.22 per share for the year ended December 31, 1995. For its fiscal year ended December 31, 1994, the Company had reported a net loss of $3.3 million or $.52 per share. For the quarter ended December 31, 1995, the Company reported a net profit of $154,000 or $.03 per share, representing the Company's second consecutive quarterly profit. Stephen G. Morison, the Company's President and Chief Executive Officer, commented on these developments. He said "The recapitalization of the Company, together with its second consecutive quarterly profit and recently announced normalization of its lending relationships, represent essential steps in our long-standing efforts to restore Chancellor's financial viability as a leading independent transportation leasing and management company. The current capital infusion, together with the potential for additional equity capital through the Common Stock offering and [LETTERHEAD OF CHANCELLOR APPEARS HERE] CHANCELLOR CORPORATION NEWS RELEASE (Continued) April 16, 1996 Vestex's future efforts, will enable the Company to pursue opportunities to develop its operations, particularly in regard to its remarketing capabilities, and to resume the growth of its lease origination activity." Founded in 1977, Chancellor Corporation has in recent years concentrated on the leasing of transportation equipment. It is also involved in the leasing of aircraft, communications, materials handling and other equipment. Chancellor Corporation's common stock is listed on the OTC Electronic Bulletin Board (symbol "CHCR").
CONSOLIDATED SUMMARY OF OPERATIONS ---------------------------------- (In Thousands Except Per Share Amounts) YEAR ENDED 3 MONTHS ENDED ------------------ ------------------- 12/31/95 12/31/94 12/31/95 2/31/94 -------- -------- -------- --------- Revenues $ 8,491 $10,587 $ 2,102 $ 2,579 Net Profit (Loss) ($ 1,221) ($ 3,343) $ 154 ($ 447) Net Profit (Loss) Per Share ($ .22) ($ .52) $ .03 ($ .07) Average Shares Outstanding 5,634 6,373 5,136 6,382
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