STOCK REDEMPTION AGREEMENT
AGREEMENT made as of this 7th day of August, 1998, by and between VESTEX
CAPITAL CORPORATION, a closely held corporation having its principal place of
business at 000 Xxxxx Xxxxxx, Xxxxxx, XX 00000 ("Vestex" or the "Shareholder")
and CHANCELLOR CORPORATION (the "Corporation"), a publicly traded corporation
with its principal place of business at 000 Xxxxx Xxxxxx, Xxxxxx, XX 00000.
Shareholder and Corporation may be referred to collectively as the "Parties".
1. Statement of Intent. Shareholder is the present owner of
eighty-seven percent (87%) of the issued and outstanding shares of the common
stock of the Corporation. Shareholder also owns both Series A and Series AA
preferred stock of the Corporation. (See Exhibit A for the specific holdings of
Shareholder in the Corporation.)
Shareholder is a closely held corporation wholly owned by Xxxxx X. Xxxxx
("Shareholder's Owner").
The Corporation desires to provide for the orderly continuation of the
business and affairs of the Corporation if Shareholder's Owner dies.
Shareholder's Owner desires to assure liquidity for his family if and when
he dies owning stock in the Corporation.
THEREFORE, in consideration of the mutual covenants herein contained, the
Parties enter into this Agreement on the terms set forth below.
2. Disposition of Shares Upon Death. At the death of Shareholder's
Owner, the Corporation shall purchase, and the personal representative of the
estate of the deceased Shareholder's Owner shall join with Shareholder and sell,
all the shares of stock of the Corporation owned by Shareholder at the price and
upon the terms and limitations set forth in paragraph 3 of this Agreement. Such
transaction shall take place as soon as practicable after Shareholder's Owner's
death, but no later than three (3) months after such date.
3. Price and Terms for Purchase and Sale of Shares.
3.1 Price. The price per share to be paid upon the purchase and
sale of shares of the common stock of the Corporation (including any converted
preferred) shall be its market value at the closing of the market on the date of
death of Shareholder's Owner, and if such date falls on a weekend day or
holiday, the market value on the next business day closest to such date. Any
unconverted preferred stock in the Corporation then owned by Shareholder shall
be valued as follows, unless the then market value on conversion is greater, in
which case the greater value shall prevail: (a) Preferred Series A at $1.90 per
share; (b) Preferred Series AA at 50 per share. The Corporation agrees to
purchase all of the stock of Shareholder's Owner, provided, however, that such
obligation to purchase shall not exceed Ten Million Dollars ($10,000,000).
3.2 Terms. The purchase price to be paid for any purchase of
shares pursuant to this Agreement shall, except as expressly provided otherwise
by mutual agreement of the Parties, be paid by the Corporation to the
Shareholder in cash or certified check at the closing of the sale.
4. Insurance Policies. The Corporation agrees to purchase and maintain
a policy or policies of life insurance on the life of Shareholder's Owner to
fund its obligations under this Agreement. Neither Shareholder nor Shareholder's
Owner shall possess any incidents of ownership in any such policy insuring his
life. Such policy or policies will be the sole property of the Corporation. No
Shareholder nor any successor, transferee, assignee, or personal repre-sentative
of Shareholder or Shareholder's Owner shall have any collateral interest in any
such policy insuring his own life.
5. Termination of Agreement. This Agreement shall terminate upon the
first to occur of the following events:
5.1 The execution of an agreement to revoke this Agreement, signed
by the duly authorized representatives of the Parties and Shareholder's Owner;
or
5.2 The adoption of a plan of sale or liquidation by the
Corporation, or the bankruptcy, receivership, or dissolution of the Corporation
(but such termination shall not extinguish the rights or obligations of the
Parties arising out of any event occurring before such termination); or
5.3 The complete termination of all ownership of shares in the
Corporation by the Shareholder, and the satisfaction of all obligations
respecting such termination, if any, as provided in this Agreement; or
5.4 The death of Shareholder's Owner and the satisfaction of all
obligations here-under by the Parties.
6. Amendment. This Agreement is the entire understanding among the
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Parties and may be altered, amended or revoked only by subsequent written
instrument executed by all the living parties.
7. Persons Bound. This Agreement is binding upon the Corporation and
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the Share-holder and their heirs, legal representatives, transferees, successors
and assigns. The Corporation and Shareholder agree to execute any and all
additional documents necessary to effectuate the purposes of this Agreement.
8. Benefit. This Agreement is for the benefit of the Parties, their
heirs, executors, administrators, successors, assigns and transferees.
9. Notices. Shareholder and the Corporation, through their Presidents
or other authorized officers, shall give prompt notice to each other of all
offers, acceptances, refusals, and exercise of options made pursuant to this
Agreement. All notices, writings, offers, acceptances, refusals, payments, or
agreements given or required to be given under this Agreement shall be made in
writing and sent by registered or certified mail, return receipt requested, to
the principal business office of the Corporation and to the last known address
of Shareholder appearing on the books of the Corporation, with like notice to:
Attorney Xxxxxx X. Xxxxxx, 000 Xxxxxx Xxxxxx, Xxxxxxx, XX 00000 if intended for
Shareholder; and to: Attorney Xxxx X. Xxxxxxx, 000 Xxxxxxxx Xxxxxx, Xxxxx 000X,
Xxxxxxx, XX 00000 if intended for the Corporation. Any such notice or other
writing shall be deemed given and received upon the expiration of three days
following such mailing with proper postage affixed.
10. Execution of Other Documents. The parties agree to execute and
deliver all proxies, stock transfer agent agreements, authorizations, documents
and instruments which are necessary to carry out the terms and conditions of
this Agreement.
11. Massachusetts Law. This Agreement shall be construed and enforced
in accordance with the laws of the Commonwealth of Massachusetts.
12. Heading and Gender Neutral. Any headings are inserted solely for
the convenience of reference and are not a part of this Agreement, nor shall
they affect its meaning, construction or effect. Any pronoun reference to "he"
or "she" shall be read as to accommodate the gender of the Parties.
13. Prior Agreement. This Agreement revokes all previous agreements
among the parties to the extent they are inconsistent herewith.
IN WITNESS WHEREOF, the Parties have hereunto set their hands and seals,
the Corporation by its duly authorized officers, the day and year first above
written.
CHANCELLOR CORPORATION VESTEX CAPITAL CORPORATION
By: /s/ Xxxxxxxx X. Xxxxx By: /s/ Xxxxx X. Adley____________
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Xxxxxxxx X. Xxxxx, Treasurer Xxxxx Xxxxx, President
