Exhibit 10.8
STOCK PLEDGE AGREEMENT
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This STOCK PLEDGE AGREEMENT is made as of January 29, 1999, by and between
Chancellor Asset Management, Inc., a Delaware corporation (the "Pledgee"), and
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David F. Herring, an individual residing in the State of Georgia (the
"Pledgor").
WHEREAS, the Pledgee, the Pledgor and M. Rea Brookings ("Brookings") are
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parties to a certain Stock Purchase Agreement, dated as of January 29, 1999 (the
"Stock Purchase Agreement"), pursuant to which, among other things, the Pledgor
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and Brookings have sold to the Pledgee, effective as of the date hereof, all of
the issued and outstanding capital stock of various entities previously owned by
the Pledgor and Brookings;
WHEREAS, in connection with the transactions contemplated under the Stock
Purchase Agreement, (a) the Pledgee has loaned the Pledgor on the date hereof
the principal amount of $150,000 (the "Closing Loan"), and (b) the Pledgee will
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loan the Pledgor on April 15, 1999 the additional principal amount of $100,000
(the "Post-Closing Loan"), and the Pledgor has evidenced, or will evidence, the
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Pledgor's obligation to repay (i) the Closing Loan by executing and delivering
to the Pledgee on the date hereof a Promissory Note in the principal amount of
$150,000 (the "Closing Note"), and (ii) the Post-Closing Loan by executing and
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delivering to the Pledgee on April 15, 1999 a Promissory Note in the principal
amount of $100,000 (the "Post-Closing Note"; which together with the Closing
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Note, the "Notes"); and
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WHEREAS, the Pledgor owns 2,250,000 shares of the common stock, $.01 par
Value per share (the "Common Stock"), of Chancellor Corporation, a Massachusetts
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corporation and the corporate parent of the Pledgee ("Chancellor"), and has
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agreed to pledge certain of those shares to the Pledgee to secure the Pledgor's
obligations under the Notes and this Agreement (the "Obligations"), upon the
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terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises contained herein and for
Other good and valuable consideration, the receipt and sufficiency of which are
Hereby acknowledged, the parties hereto agree as follows:
1. PLEDGE OF STOCK, ETC. The Pledgor hereby pledges, assigns, grants a
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security interest in, and delivers to the Pledgee, to secure the Obligations,
all of the Pledgor's right, title and interest in and to 471,698 shares of
Common Stock held by the Pledgor (the "Pledged Shares"), to be held by the
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Pledgee subject to the terms and conditions hereinafter set forth. The
certificate(s) for the Pledged Shares, accompanied by a stock power or other
appropriate instrument of assignment thereof duly executed in blank by the
Pledgor, are being delivered to the Pledgee contemporaneously herewith.
Notwithstanding anything to the contrary set forth herein, if for any reason the
Pledgee fails or refuses to make the Post-Closing Loan to the Pledgor on or
before April 15, 1999, the Pledgee will immediately thereafter return to the
Pledgor forty percent (40%) of the Pledged Shares (the "Returned Pledged
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Shares"); provided, however, that if the Pledgee subsequently makes the
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Post-Closing Loan to the Pledgee, then the Pledgor will contemporaneously
therewith re-pledge the Returned Pledged Shares to the Pledgee to secure the
Post-Closing Loan.
2. DEFINITIONS. Event of Default shall mean any of the following (a) an
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Event of Default under either or both of the Notes, or (b) a breach of any
obligation of the Pledgor under this Agreement which remains unredmedies by the
Pledgor after receipt of written notice thereof from the Pledgee and a ten (10)
day period to cure same.
Stock Collateral shall mean the property at any time pledged to the Pledgee
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hereunder (whether described herein or not) and all income therefrom, increases
therein and proceeds thereof, including without limitation, any additional stock
of Chancellor issued to the Pledgor on account of any stock split,
reorganization, recapitalization, reclassification or similar event affecting
the Pledged Shares, but excluding from the definition of "Stock Collateral" any
income, increases or proceeds received by the Pledgee to the extent expressly
permitted by 6.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest in
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and pledge of the Stock Collateral hereunder are made with and granted to the
Pledgee as security for the prompt payment and performance in full of all the
Obligations.
4. DISTRIBUTIONS PAID TO PLEDGEE. Any sums or other property paid or
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distributed upon or with respect to any of the Pledged Shares, whether by
dividend or redemption or upon the liquidation or dissolution of Chancellor or
otherwise, shall, except to the limited extent provided in 6, be paid over and
delivered to the Pledgee to be held by the Pledgee pursuant to the terms of this
Agreement, as security for the payment and performance in full of all the
Obligations. In the event that, pursuant to the recapitalization or
reclassification of the capital of Chancellor or pursuant to the reorganization
thereof, any distribution of capital shall be made on or in respect of any of
the Pledged Shares or any property shall be distributed upon or with respect to
any of the Pledged Shares, the property so distributed shall be delivered to the
Pledgee to be held by it as security for the Obligations. Except to the limited
extent provided in 6, all sums of money and property paid or distributed in
respect of the Pledged Shares, whether as a dividend or upon such a liquidation,
dissolution, recapitalization or reclassification or otherwise, that are
received by the Pledgee shall, until paid or delivered to the Pledgee, be held
in trust for the Pledgee as security for the prompt payment and performance in
full of all of the Obligations.
5. WARRANTY OF TITLE; AUTHORITY. The Pledgor hereby represents and warrants
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that: (i) the Pledgor has good and marketable title to the Pledged Shares
described in 1, subject to no pledges, liens, security interests, charges,
options, restrictions or other encumbrances claimed by, through or under the
Pledgor, except the pledge and security interest created by this Agreement, and
(ii) the Pledgor has full power, authority and legal right to execute, deliver
and perform the Pledgor's obligations under this Agreement and to pledge and
grant a security interest in all of the Stock Collateral pursuant to this
Agreement. The Pledgor covenants that the Pledgor will defend the Pledgee's
rights and security interest in such Pledged Shares against the claims and
demands of all persons whomsoever. The Pledgor further covenants that the
Pledgor will have the like title to, and right to pledge and grant a security
interest, in the Stock Collateral hereafter pledged or in which a
security interest is granted to the Pledgee hereunder and will likewise defend
the Pledgee's rights, pledge and security interest thereof and therein.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Event of
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Default shall have occurred and be continuing, the Pledgor shall be entitled to
receive all cash and stock dividends paid in respect of the Pledged Shares, to
vote the Pledged Shares and to give consents, waivers and ratifications in
respect of the Pledged Shares; provided, however, that no vote shall be cast or
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consent waiver or ratification given by the Pledgor if the effect thereof would
in the reasonable judgment of the Pledgee impair any of the Stock Collateral or
be inconsistent with or result in any violation of any of the provisions of the
Stock Purchase Agreement or any of the Transaction Documents (as defined in the
Stock Purchase Agreement). All such rights of the Pledgor to receive cash and
stock dividends, and all such rights of the Pledgor to vote and give consents,
waivers and ratifications with respect to the Pledged Shares, shall immediately
cease in the event an Event of Default shall have occurred and be continuing.
7. REMEDIES.
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7.1. IN GENERAL. If an Event of Default shall have occurred and be
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continuing, the Pledgee shall thereafter have the following rights and
remedies (to the extent permitted by applicable law) in addition to the
rights and remedies of a secured party under the Uniform Commercial Code as
enacted in the Commonwealth of Massachusetts, all such rights and remedies
being cumulative, not exclusive, and enforceable alternatively,
successively or concurrently, at such time or times as the Pledgee deems
expedient:
(a) if the Pledgee so elects and gives notice of such election to
the Pledgor, the Pledgee may vote any or all of the Pledged Shares
(whether or not the same shall have been transferred into its name or
the name of its nominee or nominees) for any lawful purpose,
including, without limitation, if the Pledgee so elects, for the
liquidation of the assets of Chancellor, and give all consents,
waivers and ratifications in respect of the Pledged Shares and
otherwise act with respect thereto as though it were the outright
owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Pledgee the proxy and attorney-in-fact of the Pledgor,
with full power of substitution, to do so);
(b) the Pledgee may demand, sue for, collect or make any
compromise or settlement the Pledgee deems suitable in respect of any
Stock Collateral;
(c) the Pledgee may sell, resell, assign and deliver, or
otherwise dispose of any or all of the Stock Collateral, for cash or
credit or both and upon such terms at such place or places, at such
time or times and to such entities or other persons as the Pledgee
thinks expedient, all without demand for performance by the Pledgee or
any notice or advertisement whatsoever except as expressly provided
herein or as may otherwise be required by law; and
(d) the Pledgee may cause all or any part of the Pledged Shares
held by it to be transferred into its name or the name of its nominee
or nominees.
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition of the
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Stock Collateral as provided in clause (c) of 7.1, the Pledgee shall give
to the Pledgor at least five business days prior written notice of the time
and place of any public sale of the Stock Collateral or of the time after
which any private sale or any other intended disposition is to be made. The
Pledgor hereby acknowledges that five business days prior written notice of
such sale or sales shall be reasonable notice. The Pledgee may enforce its
rights hereunder without any other notice and without compliance with any
other condition precedent now or hereunder imposed by statute, rule of law
or otherwise (all of which are hereby expressly waived by the Pledgor, to
the fullest extent permitted by law). The Pledgee may buy any part or all
of the Stock Collateral at any public sale and if any part or all of the
Stock Collateral is of a type customarily sold in a recognized market or is
of the type which is the subject of widely-distributed standard price
quotations, the Pledgee may buy at private sale and may make payments
thereof by any means. The Pledgee may apply the cash proceeds actually
received from any sale or other disposition to the reasonable expenses of
retaking, holding, preparing for sale, selling and the like, to reasonable
attorneys' fees, travel and all other expenses which may be incurred by the
Pledgee in attempting to collect the Obligations or to enforce this
Agreement or in the prosecution or defense of any action or proceeding
related to the subject matter of this Agreement, and then to the
Obligations in the order set forth in such order or preference as the
Pledgee may determine after proper allowance for Obligations not then due.
Only after such applications, and after payment by the Pledgee of any
amount required by 9-504(1)(c) of the Uniform Commercial Code as enacted in
the Commonwealth of Massachusetts, need the Pledgee account to the Pledgor
for any surplus.
7.3. PLEDGOR'S AGREEMENTS, ETC. The Pledgor further agrees to do or
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cause to be done all such other acts and things as may be reasonably
necessary to make any sales of any portion or all of the Pledged Shares
pursuant to this 7 valid and binding and in compliance with any and all
applicable laws (including, without limitation, the United States
Securities Act of 1993, as amended, the United States Securities Exchange
Act of 1934, as amended, the rules and regulations of the Securities and
Exchange Commission applicable thereto, and all applicable state securities
or "Blue Sky" laws), regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over any such
sale or sales, all at the Pledgor's expense. The Pledgor further agrees
that a breach of any of the covenants contained in this 7 will cause
irreparable injury to the Pledgee, that the Pledgee has no adequate remedy
at law in respect of such breach and, as a consequence, agrees that each
and every covenant contained in this 7 shall be specifically enforceable
against the Pledgor and the Pledgor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants.
8. MARSHALLING. The Pledgee shall not be required to marshal any
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present or future security for (including, but not limited to, this
Agreement and the Stock Collateral), or other assurances of payment of, the
Obligations or any of them, or to resort to such security or other
assurances of payment in any particular order. All of the Pledgee's rights
hereunder and in respect of such security and other assurances of payment
shall be cumulative and in addition to all other rights, however existing
or arising. To the extent that it lawfully may, the Pledgor hereby agrees
that it will not invoke any law relating to the marshalling of collateral
that might cause delay in or impede the enforcement of the Pledgee's rights
under this Agreement, or under any other instrument evidencing any of the
Obligations or under which any of the Obligations is outstanding, or by
which any of the Obligations is secured or payment thereof is otherwise
assured, and to the extent that it lawfully may, the Pledgor hereby
irrevocably waives the benefits of all such laws.
9. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of the Pledgor
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hereunder shall remain full force and effect without regard to, and shall
not be impaired by (i) any exercise or nonexercise, or any waiver, by the
Pledgee of any right, remedy, power or privilege under or in respect of any
of the Obligations or any security thereof (including this Agreement); (ii)
any amendment to or modification of the Stock Purchase Agreement, the Notes
or any of the Transaction Documents (as defined in the Stock Purchase
Agreement); (iii) any amendment or modification of any of the Obligations;
or (iv) the taking of additional security for, or any other assurances of
payment of, any of the Obligations or the release or discharge or
termination of any security or other assurances of payment or performance
for any of the Obligations, whether or not the Pledgor shall have notice or
knowledge of any of the foregoing.
10. TRANSFER, ETC., BY THE PLEDGOR. Without the prior written consent
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of the Pledgee, the Pledgor will not sell, assign, transfer or otherwise
dispose of, grant any option with respect to, or pledge or grant any
security interest in or otherwise encumber or restrict any of the Stock
Collateral or any interest therein, except for the pledge thereof and
security interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Pledgor will do all such acts, and will
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furnish to the Pledgee all such financing statements, certificates, legal
opinions and other documents, will obtain all such governmental consents
and corporate approvals, and will do or cause to be done all such other
things as the Pledgee may reasonably request from time to time in order to
give full effect to this Agreement and to secure the rights of the Pledgee
hereunder, all without any cost or expense to the Pledgee. If the Pledgee
so elects, a photocopy of this Agreement may at any time and from time to
time be filed by the Pledgee as a financing statement in any recording
office in any jurisdiction.
12. PLEDGEE'S EXONERATION. Under no circumstances shall the Pledgee be
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deemed to assume any responsibility for or obligation or duty with respect
to any part or all of the Stock Collateral of any nature or kind or any
matter or proceedings arising out of or relating thereto, other than (i) to
exercise reasonable
care in the physical custody of the Stock Collateral, and (ii) after an
Event of Default shall have occurred and be continuing, to act in a
commercially reasonable manner. The Pledgee shall not be required to take
any action of any kind to collect, preserve or protect its or the Pledgor's
rights in the Stock Collateral or against other parties thereto. The
Pledgee's prior recourse to any part or all of the Stock Collateral shall
not constitute a condition of any demand, suit or proceeding for payment or
collection of any of the Obligations.
13. NO WAIVER, ETC. No act, failure or delay by the Pledgee or the
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Pledgor shall constitute a waiver of the other's rights and remedies
hereunder or otherwise. No single or partial waiver by the Pledgee or the
Pledgor of any default or right or remedy that it may have against the
other shall operate as a waiver of any other default, right or remedy or of
the same default, right or remedy on a future occasion. The Pledgor hereby
waives presentment, notice of dishonor and protect of all instruments,
included in or evidencing any of the Obligations or the Stock Collateral,
and any and all other notices and demands whatsoever (except as expressly
provided herein or in the Notes).
14. NOTICE, ETC. All notices, requests and other communications
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hereunder shall be made in the manner set forth in the Stock Purchase
Agreement.
15. TERMINATION. Upon final payment and performance in full of the
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Obligations, this Agreement shall terminate and the Pledgee shall, at the
Pledgee's request and expense, promptly return such Stock Collateral in the
possession or control of the Pledgee as has not theretofore been disposed
of pursuant to the provisions hereof, together with any moneys and other
property at the time held by the Pledgee hereunder.
16. NO WAIVER. Neither this Agreement nor any term hereof may be
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changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the party to be charged.
17. ASSIGNMENT; SUCCESSORS AND ASSIGNS. The Pledgor may not assign any
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of its rights or obligations under this Agreement without the prior written
consent of the Pledgee. Subject to the foregoing, this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns.
18. GOVERNING LAW. THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS AN
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INSTRUMENT UNDER SEAL AND THIS AGREEMENT AND THE OBLIGATIONS OF THE PLEDGOR
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS.
19. HEADINGS. The descriptive section headings have been inserted for
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convenience of reference only and do not define or limit the provisions
hereof.
20. SEVERABILITY, ETC. If any term of this Agreement shall be held to
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be invalid, illegal or unenforceable, the validity of all other terms
hereof shall be in no way affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable
term had not been included herein. The Pledgor acknowledges receipt of a
copy of this Agreement.
IN WITNESS WHEREOF, intending to be legally bound, the Pledgor and the
Pledgee have caused this Agreement to be executed as of the date first above
written.
PLEDGEE:
CHANCELLOR ASSET MANAGEMENT, INC.
By: /s/ Franklyn E. Churchill
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Franklyn E. Churchill
President
PLEDGOR:
/s/ David F. Herring
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David F. Herring