Contingent Liability

9 Months Ended

Sep. 30, 2011

Contingent Liability

Contingent Liability

NOTE 5. CONTINGENT LIABILITY

Chancellor is from time to time involved in legal proceedings arising in the

normal course of business. Other than proceedings incidental to Chancellor's

business, and a current proceeding against Gryphon (Cause no. 36433 in the 223rd

District Court in Gray County, Texas) in which Gryphon has made a counterclaim

for declaratory judgment, Chancellor is not a party to, nor is any of their

property the subject of, any material legal proceedings. Although the amount of

any ultimate liability with respect to such matters cannot be determined, in the

opinion of Chancellor's management, any such liability will not have a material

adverse effect upon Chancellor's financial condition, results of operations or

cash flows.