Exhibit 10.4
PROMISSORY NOTE
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$150,000 January 29, 1999
I. Indebtedness.
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FOR VALUE RECEIVED, the undersigned, M. REA BROOKINGS of McDonough, Georgia
("Maker"), promises to pay to the order of CHANCELLOR ASSET MANAGEMENT, INC., a
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Delaware corporation (the "Payee"), the principal amount of ONE HUNDRED FIFTY
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THOUSAND DOLLARS ($150,000), without interest, payable in one installment on
January 29, 2004 (the "Maturity Date"), at the Payee's principal address at 210
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South Street, 10th Floor, Boston, Massachusetts 02110 or at such other place as
the Payee shall have designated to the Maker in writing, (i) in lawful money of
the United States of America and in immediately available funds, or (ii) in the
form of common stock, $.01 par value per share (the "Common Stock"), of
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Chancellor Corporation, a Massachusetts corporation and the corporate parent of
the Payee ("Chancellor"), in accordance with the terms set forth in Section V of
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this Note.
II. Loan Obligations.
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This is a "Seller Closing Note" delivered by the Maker to the Payee
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pursuant to Section 4.2 of the Stock Purchase Agreement, dated as of December
31, 1998 (the "Stock Purchase Agreement"), by and among the Payee, the Maker and
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David F. Herring, as evidence of the obligation of the Maker to repay to the
Payee a Seller Closing Loan (as defined in Section 4.2 of the Stock Purchase
Agreement).
III. Default.
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If an Event of Default (as hereinafter defined) shall occur and be
continuing under the provisions of this Note, the Payee may accelerate the
entire unpaid principal balance outstanding under this Note, by written notice
to the Maker, and the entire unpaid principal balance outstanding under this
Note shall become immediately due and payable within five (5) days after receipt
by the Maker of said notice. At such time the Payee shall be entitled to
exercise any remedies that it may have at law, or in equity, in order to collect
its debt hereunder including, without limitation, the commencement of legal
proceedings against the Maker.
As used herein, an "Event of Default" means the occurrence of any of the
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following:
(i) the failure of the Maker to make any payment of principal or other
sums due under this Note within twenty (20) days after the due date thereof;
(ii) if the Maker shall make an assignment for the benefit of
creditors, or if a receiver of the property of the Maker shall be appointed, or
if a petition in any bankruptcy or other similar proceeding under any law for
relief of debtors shall be filed by or against the Maker, and, if against the
Maker, is not dismissed or discharged within sixty (60) days;
(iii) any breach or default by the Maker of the terms and conditions of
that certain Stock Pledge Agreement, of even date herewith, between the Maker
and the Payee, securing the obligation of the Maker under this Note, which
continues unremedied after notice and a cure period as specifically provided
therein; or
(iv) the death of the Maker.
IV. Prepayment
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All or any portion of this Note may be prepaid (herein, a "Prepayment") at
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any time without premium or penalty by the Maker furnishing a written notice to
the Payee of the Maker's election to effect such a prepayment (a "Prepayment
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Notice"), which Prepayment Notice shall include the date on which the Maker
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desires to make the Prepayment (the "Prepayment Date"); provided, however, that
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if the Maker desires to pay all (or any portion) of the Prepayment in the manner
described in Section V hereof, then the Prepayment Date shall be the fifteenth
(15th) day following the Prepayment Notice (or the first (1st) business day
thereafter if such fifteenth (15th) day is not a business day).
V. Payment in the Form of Common Stock
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A. Exchange. On the Maturity Date or earlier upon the a Prepayment
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Date, as the case may be, the Maker may, but shall not be obligated to, pay all
(or any portion) of the outstanding principal balance owed under this Note by
delivery to the Payee of such whole number of shares of Common Stock held by the
Maker determined by dividing (a) the outstanding principal amount of this Note
to be so paid, by (b) the Exchange Price (as hereinafter defined). In order to
pay all (or any portion) of the outstanding principal balance owed under this
Note by delivering shares of Common Stock as hereinabove provided, the Maker
shall be required to:
(i) in the case of any such payment on the Maturity Date, furnish an
Exchange Notice (as hereinafter defined) to the Payee not less than fifteen (15)
days prior to the Maturity Date, notifying Payee of the Maker's desire to
exercise the Maker's rights to pay in such manner; and
(ii) in the case of any such payment constituting a Prepayment, furnish
an Exchange Notice to the Payee contemporaneously with the applicable Prepayment
Notice (which Exchange Notice may be incorporated into the applicable Prepayment
Notice), notifying the Payee of the Maker's desire to exercise the Maker's
rights to pay in such manner.
B. Exchange Mechanism. Payment of all (or any portion) of the
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outstanding principal balance owed under this Note in the manner hereinabove
described shall be made by the Maker's surrender of the stock certificate(s)
representing the number of shares of Common Stock to be exchanged by the Maker
determined as hereinabove provided, duly endorsed or accompanied by a written
instrument of transfer duly executed by the Maker, to the Payee at its principal
place of business (or at such other office as the Payee shall designate by
notice in writing to the Maker from time to time), accompanied by a copy of the
applicable Exchange Notice previously furnished.
C. Certain Definitions. For all purposes of this Section V, the
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following terms shall have the respective meanings set forth below:
(a) "Exchange Notice" shall mean written notice by the Maker to the
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Payee of the Maker's election to effect a payment with shares of Common Stock
held by the Maker of all (or any portion) of the outstanding principal balance
owed under the Note on the Maturity Date or on a Prepayment Date, as the case
may be; and
(b) "Exchange Price" shall mean (i) the last reported sales price per
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share of the Common Stock on any national securities exchange or the NASDAQ
National Market System or the over-the-counter market which is then the
principal market for the Common Stock on the trading day immediately before the
Maturity Date or a Prepayment Date, as the case may be, or (ii) if the Common
Stock is not quoted or listed in any national securities exchange or the NASDAQ
National Market System or the over-the-counter market, the fair market value of
a share of Common Stock, as promptly determined in good faith by the Board of
Directors of Chancellor.
VI. Miscellaneous.
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A. Waiver. The Payee hereby waives, to the extent not prohibited by
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provisions of applicable law, presentment, demand, protest and notice thereof or
dishonor, and waives any right to be released by reason of any extension of time
or change in the terms of payment or any change, alteration or release of any
security given for the payment hereof. No course of dealing between Payee on
the one hand, and the Payee hereof on the other hand, shall operate as a waiver
of any of its rights under this Note. No delay or omission in exercising any
right under this Note shall operate as a waiver of such right or any other
right. A waiver on any one occasion shall not be construed as a waiver of or
bar to any right or remedy on any other occasion.
B. Expenses. The Maker hereby agrees to pay on demand all costs of
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collection, including reasonable attorneys fees and disbursements, paid or
incurred by the Payee in connection with enforcing the Maker's obligations
hereunder.
C. Notices. All notices hereunder shall be given in the manner
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provided in the Stock Purchase Agreement.
D. Severability. In the event that any one more of the provisions
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contained in this Note shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Note shall not in any way be impaired.
E. Assignment. The Maker may not assign or pledge this Note or
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delegate its obligation to make payment hereunder without the prior written
consent of the Payee.
THIS NOTE AND THE OBLIGATIONS OF THE MAKER HEREUNDER SHALL FOR ALL PURPOSES
BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
MAKER
CONSENTS TO SERVICE OF PROCESS IN ANY SUIT WITH RESPECT TO THE ENFORCEMENT OF
THIS NOTE BEING MADE UPON THE MAKER BY MAIL AT THE ADDRESS OF THE MAKER AT 1285
IRIS LAKE ROAD, MCDONOUGH, GEORGIA 30252, WITH A COPY TO FRANK L. WILSON, III,
ESQ., 2849 PACES FERRY ROAD, SUITE 700, ATLANTA, GEORGIA 30339. THE MAKER
HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
IN WITNESS WHEREOF, the Maker has caused this Note to be signed as an
instrument under seal as of the day and year first above written.
By: /s/ M. Rea Brookings
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M. Rea Brookings