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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: June 13, 1997
REGENCY AFFILIATES, INC.
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(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
Delaware 1-7949 72-0888772
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(State or Other Jurisdiction of Incor- (Commission File No.) (IRS Employer
poration or Organization) Identification Number)
</TABLE>
3340 S.E. Federal Hwy., Ste. 210, Stuart, FL 34997
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(Address of Principal Executive Offices) (Zip Code)
10842 Old Mill Rd., #5B, Omaha, NB 68154
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(Address of Administrative Offices) (Zip Code)
<TABLE>
<S> <C>
Registrant's Telephone Number (executive office), including Area Code: (561) 398-8448
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Registrant's Telephone Number (administrative office), including Area Code: (402) 330-8750
-----------------
</TABLE>
Not applicable
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(Former name or former address, if changed since last report)
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FORM 8-K
Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in the Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
William R. Ponsoldt, Sr. has been appointed President of the
Registrant. See attached press release.
Item 6. Resignations of Registrant's Directors.
Not Applicable.
Item 7. Financial Statements and Exhibits.
Attached are copies of an Employment Agreement dated June 3, 1997,
between William R. Ponsoldt, Sr. and Regency Affiliates, Inc., and an
Agreement dated June 3, 1997, between The Statesman Group, Inc. and Regency
Affiliates, Inc.
EXHIBITS FILED HEREWITH:
Exhibit No. Description of Document
----------- -----------------------
10(a) Agreement dated June 3, 1997, between Regency
Affiliates, Inc., and William R. Ponsoldt, Sr.
10(b) Agreement dated June 3, 1997, between Regency
Affiliates, Inc. and Statesman Group, Inc.
99(a) Press release of Regency Affiliates, Inc. dated
June 6, 1997
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 duly authorized officer.
REGENCY AFFILIATES, INC.
June 13, 1997 By: /s/ William R. Ponsoldt, Sr.
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William R. Ponsoldt, Sr.
President
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Exhibit 10(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of the 3rd day of June, 1997, by and between
William R. Ponsoldt, Sr. (the "Executive") and Regency Affiliates, Inc. (the
"Company").
W I T N E S S E T H:
WHEREAS, the Company wishes to obtain the future services of the
Executive for the Company; and
WHEREAS, the Executive is willing, upon the terms and conditions herein
set forth, to provide services hereunder; and
WHEREAS, the Executive and the Company desire to enter into an
Employment Agreement which recognizes fully the contributions of the Executive;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. NATURE OF EMPLOYMENT
--------------------
The Company hereby employs the Executive, and the Executive agrees to
accept such employment, as the President and Chief Executive Office of the
Company. Executive shall undertake such duties and responsibilities as may be
reasonably assigned to Executive from time to time by the Board of Directors of
the Company.
2. EXTENT OF EMPLOYMENT
--------------------
(a) During the term of employment, the Executive shall perform
his obligations hereunder faithfully, diligently and to the best of his ability,
under the direction of the Board of Directors of the Company (the "Board").
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(b) During the term of employment (except for vacation periods,
holidays and reasonable periods of illness or other incapacity), the Executive
shall perform services for the Company hereunder on a full-time basis. The
Executive shall not be required to keep detailed time sheets or records of the
time spent on the Company's affairs, but shall be accountable to the Board in
respect thereof.
3. LOCATION, FACILITIES AND PERSONNEL
----------------------------------
(a) Location. During the Term of employment, the Executive shall
perform his duties hereunder at his home or such other place as shall be agreed
upon by the Executive and the Board. The Executive shall, however, also travel
to other locations at such times as may be appropriate in the performance of his
duties; provided however, Executive shall not be required to relocate to any
other office of the Company outside of Martin County, Florida.
(b) Facilities and Personnel. The Company shall provide all
necessary facilities, equipment, and supplies that are required for the
performance of Executive's services pursuant to this Agreement. The Company
shall also provide all necessary technical, clerical, and other support
personnel required for the providing of services by Executive to the Company.
4. TERM OF EMPLOYMENT
------------------
The "Term of Employment" shall commence upon execution of this
Agreement and continue until the earlier of (i) the date on which the Executive
attains Retirement Age (as hereinafter defined), or (ii) the thirtieth (30) day
after the Executive notifies the Board of his decision not to continue his
employment with the Company.
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Notwithstanding the foregoing, the Term of Employment may be terminated at any
time by the Company as follows:
(a) If the Executive becomes disabled, within the meaning of
Section 10(b), this Agreement shall terminate on the date the Executive becomes
disabled. In addition, if the Executive fails to perform his duties under this
Agreement on account of illness or other incapacity which continues for a period
of six consecutive calendar months, the Company may give notice to the Executive
to terminate this Agreement on a date not less than 30 days thereafter (the
"Notice Period"); and if the Executive has not resumed full performance of his
duties under this Agreement within such Notice Period, then the Executive's
employment under this Agreement will terminate 30 days after the date provided
in the notice ("Termination Date"). Except as agreed to the contrary in writing
in connection with the grant of any such rights, the Executive's right to
exercise warrants granted by this Agreement, or any subsequent award of
warrants, options or the like shall not be affected by termination of employment
pursuant to this paragraph, and such warrants and options shall in such event
continue to be exercisable at the sole discretion of the Executive.
(b) If the Executive dies, the Term of Employment shall be
deemed to terminate as of the date of death, but the estate of the Executive
shall, in such event, be entitled to receive the Executive's base and increased
salary for a ninety-day (90) period after the date of death. In such event, the
estate of the Executive shall be obligated to refund to the Company, the portion
of the base compensation previously paid to Executive which relates to the
period after expiration of the aforesaid ninety-day period. Executive's rights
to exercise warrants and options shall not terminate upon
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death of the Executive, but such warrants and options shall remain exercisable
by the Executive's estate until the earlier of (i) the expiration date of any
such rights pursuant to the terms of such rights, or (ii) five (5) years after
the date of death of Executive.
(c) The Company may terminate the Executive's employment for
just cause at any time by giving written notice to the Executive. Within thirty
(30) days after the Termination Date, the Company shall pay to the Executive any
unpaid base or increased salary which relates to the period prior to the
Termination Date, and Executive shall repay to the Company any portion of base
salary previously paid by the Company which relates to the period after the
Termination Date. In such event, Executive shall nonetheless have the right to
exercise any warrants and options available to him until the expiration dates
established when such warrants or options were issued. For the purposes of this
paragraph, "just cause" shall mean willful and deliberate misconduct by the
Executive or a breach by the Executive of the provisions of this Agreement
which, in either case, is detrimental in a significant way to the interests of
the Company.
(d) Termination of the Executive's employment by the Company for
any reason not specified in paragraphs (a), (b), or (c), of this Section 4 shall
constitute a breach by the Company of this Agreement. In such event the
Executive shall continue to receive the base salary and other increased salary,
compensation and benefits (as detailed under Sections 5, 6, 7, and 8 below) then
in effect hereunder until 60 months following the termination of the Executive's
employment, as severance pay. If these payments are all made by the Company,
Executive agrees to waive all claims against the Company for wrongful
termination.
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5. COMPENSATION
------------
(a) BASE COMPENSATION. During the Term of Employment, the
Company shall pay the Executive base compensation (salary) for his services in
equal advance annual installments of $250,000.00 each, such amount to be
adjusted on January 1 of every year by any increase since the previous January 1
in the Consumer Price Index ("CPI") for All Urban Consumers, U.S. city average,
as published by the U.S. Department of Labor Bureau of Labor Statistics.
(b) SALARY INCREASE FROM BASE COMPENSATION. The Executive will
be paid additional salary, as increased compensation, based on a formula tied to
the enhancement of the overall net worth of the Company. The Executive shall be
entitled to additional salary equal to 20% of the sum of the Company's increase
in quarterly "common stock net worth" (as hereinafter defined) as reported in
the financial statements of the Company. The additional salary shall be paid
quarterly based on the unaudited financial statements of the Company. For
purposes of this Agreement, "common stock net worth" shall be deemed to mean the
difference between (i) total shareholders' equity, and (ii) any shareholders'
equity accounts relating to preferred stock, which difference as of March 31,
1997, amounted to $6,306,800. At the option of the Executive, sums paid as
salary or increased salary may be deposited in a pension or profit sharing plan,
or IRA, or wage compensation trust.
(c) FORM OF PAYMENT. The Executive may elect to receive some
portion (to the extent allowable by law) of the Executive salary or increased
salary in the form of: (i) qualified pension plan; (ii) qualified profit sharing
plan; or (iii) life insurance with a beneficiary of Executive's choosing.
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(d) WARRANTS. The Company may elect at the end of each quarter
to pay up to 50% of the increased salary through issuance of "Warrants" to
purchase the stock of the Company at a price equal to 50% of the average bid
price for the Company's stock for the calendar quarter for which such increased
salary is payable (the "Warrant Price"). At the option of the Executive, payment
may be made by the Executive for exercise of the warrants to purchase shares of
the Company granted hereunder, in whole or in part, in the form of a promissory
note executed by Executive secured only by a pledge of the shares purchased,
which promissory note will accrue interest for any quarter at the prime rate in
effect on the last day of the quarter at Chase Manhattan Bank, with interest and
principal payable in a balloon payment five years after the date of execution of
the note.
If the Company elects to pay the Executive a portion of any
increased salary in the form of Warrants, the number of Warrants issued shall be
equal to the amount of the increased salary to be paid by the issuance of
Warrants, divided by the Warrant Price.
If the per share Warrant Price is less than the par value of the
common stock the amount of the difference between the numbers is referred to
hereinafter as the "Stock Spread". If in such case the Executive exercises
Warrants and thereby purchases the stock, then at the option of the Executive,
the Company shall either:
(i) declare such Stock Spread multiplied by the
number of shares purchased (the "Warrant Spread") to be
additional compensation paid to the Executive; or
(ii) allow the Executive to issue a nonrecourse note
to the Company in the amount of the Warrant Spread (the
"Note"), which Note shall accrue interest at the prime
rate, be secured only by the stock received by the
Executive and become due and payable upon
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the earlier of sale of the stock acquired by the exercise
of the Warrant or the termination of the Executive's
employment hereunder.
The Executive may elect to finance the Warrant Spread partly
under 5(d)(i) and partly under 5(d)(ii) above, and may elect to convert any
portion of the financing provided under alternative 5(d)(ii) above and the
accrued interest on the Note, into compensation under 5(d)(i) above at any time
after the initial election by the Executive.
If the Company elects to pay Executive through the issuance of
warrants, then, at the option of the Executive, such warrants shall be paid in
whole or in part to the Executive's Wage Compensation Irrevocable Trust.
(e) If at any time the Company shall be obligated to Executive for
accrued increased salary, Executive agrees not to initiate any legal proceeding
to collect such increased salary for one (1) year, or so long as he shall remain
an employee of the Company, whichever shall first occur. Furthermore, upon
termination of the employment of Executive hereunder for any reason, the Company
shall have one year to pay Executive any previously accrued increased salary,
which amount shall not incur interest during such one year period. After the
expiration of such one year period, Executive may initiate any legal proceeding
against the Company to collect the increased salary, which shall thereafter
accrue interest at the prime rate until paid. The Executive agrees that interest
shall not accrue until such time as a legal proceeding is commenced by him to
collect such increased salary, but after initiation of such legal proceeding,
interest shall thereafter accrue at the rate of 12% per annum until paid.
6. BENEFITS
--------
Executive will receive health insurance, disability insurance, travel
and entertainment allowance and other fringe benefits as follows:
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(a) VACATION. The Executive shall be entitled to such reasonable
number of weeks of vacation annually as shall be mutually determined between
Executive and the Company. For all vacations exceeding two (2) weeks in length,
the Executive shall provide sufficient advance notice to the Board as to the
vacation dates, in accordance with Company's policy. The time and length of such
vacations will be subject to the reasonable approval of the Board.
(b) ILLNESS. The Executive may be absent from employment with
the Company because of illness for a period aggregating thirty (30) days in any
twelve (12) month period, without any reduction to his salary with the Company,
but such sick leave shall not be cumulative from year to year. Any additional
absences from employment because of illness in a twelve (12) month period shall
result in a prorata reduction in the amount of salary and increased salary which
would otherwise be payable to Executive hereunder during such twelve (12) month
period, with reductions being charged against the respective quarters in which
the absences occurred.
(c) MEDICAL INSURANCE. During the Term of Employment, and the
extent reasonably available, the Executive and his wife shall receive medical
insurance coverage, with such reasonable limitations and deductibles as the
Company and Executive shall agree.
(d) DISABILITY INSURANCE. The Company shall maintain disability
insurance that will entitle the Executive to receive $100,000 per year in the
event he suffers a long-term mental or physical disability that prevents him
from remaining an employee of the Company.
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(e) OTHER BENEFITS. The Company shall provide such other
appropriate benefits to him as are reasonably acceptable to the Board
7. VEHICLE ALLOWANCE
-----------------
During the Term of Employment, the Company shall pay the Executive a
vehicle allowance of $600 per month, in advance, which allowance shall increase
each January 1, by any increase in the CPI since the prior January 1, as
described above. The Executive shall not be required to account for the
expenditure of this allowance.
8. REIMBURSEMENT OF EXPENSES
-------------------------
During the Term of Employment, the Company shall reimburse the
Executive for documented travel, entertainment and other expenses reasonably
incurred by the Executive in connection with the performance of his duties. The
Executive may also incur expense directly on behalf of Regency. The Executive
shall be reimbursed for the reasonable fees and expenses of legal and tax
advisors to review this Agreement, subject to a cap of $2,000.
9. PARTICIPATION IN OTHER EMPLOYEE BENEFITS
----------------------------------------
Nothing contained in this Agreement shall limit the right of Executive
to participate or to continue to participate in any Company retirement, pension,
or profit-sharing plan, or supplemental compensation arrangements which
constitute a part of the Company's regular benefit program.
10. DEFINITION OF CERTAIN PHRASES
-----------------------------
The following definitions shall apply in construing this Agreement:
(a) "Retirement age" shall mean the date upon which Executive
attains the age which constitutes the earliest mandatory retirement age then
imposed by the
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Company, which shall not be less than sixty-five years of age; provided if no
such mandatory retirement age is imposed by the Company, the term "retirement
age" shall mean the date on which the Executive reaches seventy years of age.
(b) The word "disabled" shall mean the following: If Executive
is unable to properly perform the normal duties of his employment for a
continual ninety-one (91) day period because of illness, injury or incapacity
and it is determined that in all probability Executive would not be able to so
properly perform such duties on a regular basis within the next twelve (12)
month period, then Employee shall be deemed disabled.
In determining disability, the decision of a qualified physician
selected by the Company and the Executive shall govern. The physician shall be
bound by and shall follow the definition of disability stated above in
determining the existence of such disability.
If Employee is not determined to be disabled under the above
criteria, but is in fact unable to properly perform the substantial and material
duties of Executive's employment for a continual one year period, then Executive
shall be deemed disabled after such period.
Notwithstanding the above, if Executive is determined to be
"totally disabled" by the insurer of any disability income insurance policy on
which the Company pays the premiums then such determination shall be dispositive
of the Employee's disability for purposes of this Agreement.
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11. NON-COMPETE AGREEMENT
---------------------
(a) SCOPE. Executive agrees that, during the term of his
employment with the Company, he will not engage in, or own or control any
interest in, or act as principal, director, officer, or employee of, or
consultant to, any firm or corporation which is in competition with the Company
or any subsidiary of the Company without the express permission of the Board of
Directors of the Company, except that Executive may own less than ten percent
(10%) of the shares of any publicly held company regardless of the scope of such
company's activities.
Executive agrees that for a period of two (2) years following
the termination of his employment with the Company he will not, either directly
or indirectly, whether for himself or a third party, without the express written
permission of the Employer, pursue any business opportunity that was actively
pursued by the Company during his tenure of employment and not abandoned by the
Company.
(b) CONFIDENTIAL INFORMATION. Executive agrees that he will not
at any time during or after his employment, without the Company's express
written permission, reveal or use for his own benefit or the benefit of a third
party, any trade secret, customer list or information, sales data, business
plans, or other confidential information related to the Company's business. The
foregoing shall not preclude Executive from revealing or using confidential
information for the benefit of the Company in the ordinary course of the
Company's business.
(c) REMEDIES. The parties agree that the violation or threatened
violation by the Executive of his undertakings hereunder, will cause the Company
irreparable harm for which damages will be inadequate or unascertainable.
Accordingly, in such
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case the Company shall be entitled to appropriate temporary and permanent
injunctive relief.
12. INDEMNIFICATION OF EXECUTIVE
----------------------------
The Executive shall not be liable, responsible or accountable in
damages or otherwise to the Company or any Shareholder of the Company for any
loss or damage incurred by reason of any act or omission performed or omitted by
the Executive in good faith either on behalf of the Company or in furtherance of
the interests of the Company and in a manner reasonably believed by him to be
within the scope of authority granted to him by the Company or by law, provided
that the Executive was not guilty of gross negligence, fraud or bad faith, or
willful misconduct with respect to such acts or omissions. The Company shall
indemnify and hold harmless the Executive if the Executive is a party or is
threatened to be made a party to any threatened, or pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
(including any action by or in the right of the Company), by reason of any acts
or omissions or alleged acts or omissions arising out of his activities as an
employee of the Company, if such activities were performed in good faith either
on behalf of the Company or in furtherance of the interests of the Company, and
in a manner reasonably believed by the Executive to be within the scope of the
authority conferred by the Company or by law, against losses, damages or
expenses for which he has not otherwise been reimbursed (including attorneys'
fees, judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the Executive in connection with such action, suit or proceeding, so
long as the Executive was not guilty of gross negligence, fraud, bad faith, or
willful misconduct with respect to such acts or
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omissions. The Company shall pay expenses as and when incurred by the Executive
in defending a civil or criminal action, suit or proceeding in advance of the
final disposition of such action, suit or proceeding, upon receipt of an
undertaking by the Executive to repay such payment if there shall be
adjudication or determination that indemnification should not be provided
hereunder.
13. ASSIGNMENT
----------
This Agreement shall be binding upon the parties and their respective
successors and assigns, provided that neither party may assign this Agreement
without the express written consent of the other. For purposes of this
Agreement, the term "assignment" shall be deemed to include the sale of all or
substantially all of the assets or business of the Company.
14. NOTICES
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Any notice, request, demand or other communication required or
permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to the Executive: William R. Ponsoldt, Sr.
P.O. Box 2998
Stuart, Fl 34995
If to the Company: Regency Affiliates, Inc.
10842 Old Mill Road, Suite #5
Omaha, Nebraska 68154
Any such notices shall be deemed to be given on the date personally
delivered or such return receipt is issued.
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15. ARBITRATION
-----------
It is agreed that in the event that any disagreement, dispute,
controversy or claim arises out of or in relation to or in connection with this
Agreement or breach thereof, the parties shall seek to solve the matter amicably
through discussions between parties. Each party agree to consider in good faith
any reasonable request by the other party to engage in mediation or any other
means of alternative dispute resolution short of arbitration. Only if the
parties fails to resolve such disagreement, dispute, controversy, claim or
breach by amicable agreement and compromise within 60 days, may the aggrieved
party seek arbitration as set forth herein. Any disagreement, dispute,
controversy or claim with respect to the validity of this Agreement or arising
out of or in relation to the construction or interpretation of this Agreement or
arising out of or in relation to the construction or interpretation of this
Agreement, or breach hereof, shall be finally settled by binding arbitration.
The arbitration shall take place in Fort Lauderdale, Florida in accordance with
the rules of the American Arbitration Association or as the parties shall
otherwise agree. The arbitration shall be brought before three (3) arbitrators,
one (1) each appointed by the respective parties and one (1) additional
arbitrator selected by the two (2) appointed arbitrators. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrators shall have the power, in addition to the power of
determining the merits of the arbitration, to determine the scope and limits of
discovery and to enforce the rights, remedies, procedures, duties, liabilities,
and obligations of discovery by the imposition of the same terms, conditions,
consequences, liabilities, sanctions, and penalties as can be or may be imposed
on the like circumstances in a civil action by a State Court of the
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State of Florida under the provisions of Florida Rules of Civil Procedure,
except the power to order the arrest or imprisonment of a person. Each party
shall absorb its own costs of arbitration, including attorney's fees, and the
parties shall split equally any arbitrators' fees.
Notwithstanding the section above, the parties shall have recourse to
the courts of Florida for the purpose of obtaining any injunctive relief remedy
as permitted by the laws of the State of Florida.
16. SEVERABILITY
------------
If any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
17. WAIVER OF BREACH
----------------
The waiver by the Company or the Executive of a breach of any provision
of this Agreement by the other party shall not operate, or be construed, as a
waiver of any other breach of such other party. Each of the parties (and third
party beneficiaries) to this Agreement will be entitled to enforce its rights
under this Agreement specifically, to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor.
18. AMENDMENT; ENTIRE AGREEMENT
---------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification,
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extension or discharge is sought. This Agreement embodies the entire agreement
and understanding of the parties hereto in respect of the subject matter of this
Agreement, and supersedes and replaces all prior Agreements, understandings and
commitments with respect to such subject matter.
19. GOVERNING LAW
-------------
This Agreement shall be governed by, construed, applied and enforced in
accordance with the Laws of the State of Florida, and no doctrine of choice of
law shall be used to apply to any law other than that of Florida, and no
defense, counterclaim or right of set-off given or allowed by the laws of any
other state or jurisdiction, or arising out of the enactment, modification or
repeal of any law, regulation, or ordinance or decree of any foreign
jurisdiction, shall be interposed in any action hereon.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first above written.
WILLIAM R. PONSOLDT, SR. REGENCY AFFILIATES, INC.
/s/ William R. Ponsoldt, Sr. BY: /s/ Eunice M. Antosh
- ----------------------------- ----------------------------
ITS: Secretary
---------------------------
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Exhibit 10(b)
AGREEMENT
---------
THIS AGREEMENT, dated as of the 3rd day of June, 1997 by and between
The Statesman Group, Inc. (the "Group") and Regency Affiliates, Inc. (the
"Company").
W I T N E S S E T H:
--------------------
WHEREAS, the Company wishes to obtain the future services of William R.
Ponsoldt, Sr. ("Ponsoldt"), for the Company; and
WHEREAS, Ponsoldt is willing, upon the terms and conditions herein set
forth, to provide such services;
WHEREAS, Ponsoldt has contracted to exclusively provide services and
labor for the Group, and,
WHEREAS, the Group is willing to forbear from competing with the
Company, NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. RELEASE
-------
The Group hereby releases Ponsoldt from all of his employment
obligations with the Group.
2. EMPLOYMENT OF PONSOLDT.
-----------------------
Simultaneously with the execution of this Agreement, the Company
proposes to enter into an Employment Agreement with Ponsoldt on terms acceptable
to the Company and Ponsoldt. The execution of this Agreement by the Company is
<PAGE> 2
conditioned upon the execution of such Employment Agreement by both the Company
and Ponsoldt.
3. COMPENSATION.
-------------
As an inducement for the Group to enter into this Agreement, and
release Ponsoldt from his conflicting obligations to the Group, the Company
shall issue 466,667 shares of its common stock to the Group upon execution of
this Agreement.
4. STOCK OPTIONS.
--------------
(a) The Group will be granted options to purchase Six Million
One Hundred Thousand (6,100,000) common shares of the Company at the greater of
the Fair Market Value of the Company's common stock or the par value of the
common stock at date of execution of this Agreement. The Company agrees to
reserve sufficient shares to meet the requirements of this paragraph. The
options shall become exercisable immediately and shall remain exercisable until
April 15, 2007. At the option of the Group, payment may be made by the Group for
exercise of the option to purchase shares of the Company granted hereunder, in
whole or in part, in the form of a promissory note executed by the Group,
secured only by a pledge of the shares purchased, which promissory note will
accrue interest for any quarter at the prime rate in effect on the last day of
the quarter at Chase Manhattan Bank, with interest and principal payable in a
balloon payment five years after the date of execution of the note.
(b) With regard to any shares purchased by the Group as a
result of the foregoing options (such shares referred to in this subparagraph as
the "Stock"), Statesman acknowledges that the Stock is acquired for the purposes
of investment and
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not for distribution and will not, at the time of issuance, be registered with
the Securities and Exchange Commission (the "SEC"). Statesman acknowledges that
the shares received by it may not be resold or distributed except in a
registered offering or pursuant to an exemption under the federal securities
laws. If Regency determines to file a registration statement to register for
public offering any of its securities, it shall so notify Statesman. At the
request of Statesman, Regency shall include, to the extent then permissible
under the Securities Act of 1933, as amended (the "Act") and the rules and
regulations of the SEC, the Stock in the registration. Prior to the effective
date of each registration statement relating to any of the shares of the Stock,
Regency and Statesman shall enter into an agreement providing for reciprocal
indemnification against any losses, claims, damages, or liabilities to which
Statesman or Regency may become subject under the Act or otherwise. The form of
the reciprocal indemnification provisions shall be the form customarily
appearing in underwriting agreements used by reputable investment bankers.
5. AGREEMENT NOT TO COMPETE.
-------------------------
(a) SCOPE. For so long as Ponsoldt shall be employed by the
Company, the Group agrees that it will not engage in any business or activity in
competition with the Company within the United States of America, either
directly or indirectly, whether for itself or a third party, without the express
written permission of the Company.
The Group promises that for a period of two (2) years
following the termination of Ponsoldt employment with the Company, it will not,
either directly or indirectly, whether for itself or a third party, without the
express written permission of the
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Company, pursue any business opportunity that was actively pursued by the
Company during William Ponsoldt's tenure of employment and not abandoned by the
Company.
(B) REMEDIES. The parties agree that the violation or
threatened violation by the Group of its non-compete obligation hereunder, will
cause the Company irreparable harm for which damages will be inadequate or
unascertainable. Accordingly, in such case the Company shall be entitled to
appropriate temporary and permanent injunctive relief.
6. NOTICES.
--------
Any notice, request, demand or other communication required or
permitted to be given under this Agreement shall be given in writing and if
delivered personally, or sent by certified or registered mail, return receipt
requested, as follows (or to such other addressee or address as shall be set
forth in a notice given in the same manner):
If to the Group: Statesman Group, Inc.
P.O. Box EE17757
Nassau N.P. Bahamas
If to the Company: Regency Affiliates, Inc.
10842 Old Mill Road, Suite #5
Omaha, Nebraska 68154
Any such notices shall be deemed to be given on the date personally
delivered or such return receipt is issued.
7. ARBITRATION.
------------
It is agreed that in the event that any disagreement, dispute,
controversy or claim arises out of or in relation to or in connection with this
Agreement or breach thereof, the parties shall seek to solve the matter amicably
through discussions between parties.
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<PAGE> 5
Each party agree to consider in good faith any reasonable request by the other
party to engage in mediation or any other means of alternative dispute
resolution short of arbitration. Only if the parties fails to resolve such
disagreement, dispute, controversy, claim or breach by amicable agreement and
compromise within 60 days, may the aggrieved party seek arbitration as set forth
herein. Any disagreement, dispute, controversy or claim with respect to the
validity of this Agreement or arising out of or in relation to the construction
or interpretation of this Agreement or arising out of or in relation to the
construction or interpretation of this Agreement, or breach hereof, shall be
finally settled by binding arbitration. The arbitration shall take place in Fort
Lauderdale, Florida in accordance with the rules of the American Arbitration
Association or as the parties shall otherwise agree. The arbitration shall be
brought before three (3) arbitrators, one (1) each appointed by the respective
parties and one (1) additional arbitrator selected by the two (2) appointed
arbitrators. Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The arbitrators shall have the power,
in addition to the power of determining the merits of the arbitration, to
determine the scope and limits of discovery and to enforce the rights, remedies,
including specific performance, if requested, procedures, duties, liabilities,
and obligations of discovery by the imposition of the same terms, conditions,
consequences, liabilities, sanctions, and penalties as can be or may be imposed
on the like circumstances in a civil action by a State Court of the State of
Florida under the provisions of Florida Rules of Civil Procedure, except the
power to order the arrest or imprisonment of a person. Each party shall absorb
its own costs of arbitration, including attorney's fees, and the parties shall
split equally any arbitrators' fees.
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<PAGE> 6
Notwithstanding the section above, the parties shall have recourse to
the courts of Florida for the purpose of obtaining any injunctive relief remedy
as permitted by the laws of the State of Florida.
8. SEVERABILITY.
-------------
Whenever possible, each provision of this Agreement will be interpreted
in such manner so effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
9. WAIVER OF BREACH.
-----------------
The waiver by the Company or the Group of a breach of any provision of
this Agreement by the other party shall not operate, or be construed, as a
waiver of any other breach of such other party. Each of the parties to this
Agreement will be entitled to enforce its rights under this Agreement
specifically, to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights existing in its favor.
10. AMENDMENT; ENTIRE AGREEMENT.
----------------------------
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter of this Agreement, and supersedes and replaces all prior
Agreements, understandings and commitments
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<PAGE> 7
with respect to such subject matter.
11. GOVERNING LAW.
--------------
This Agreement shall be governed by, construed, applied and enforced in
accordance with the Laws of the State of Florida, and no doctrine of choice of
law shall be used to apply to any law other than that of Florida, and no
defense, counterclaim or right of set-off given or allowed by the laws of any
other state or jurisdiction, or arising out of the enactment, modification or
repeal of any law, regulation, or ordinance or decree of any foreign
jurisdiction, shall be interposed in any action hereon.
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
day and year first above written.
STATESMAN GROUP, INC. REGENCY AFFILIATES, INC.
BY: /s/ Robert Marceca BY: /s/ Eunice M. Antosh
------------------------ -----------------------------
ITS: President ITS: Secretary
----------------------- ----------------------------
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<PAGE> 1
Exhibit 99(a)
PRESS RELEASE FROM REGENCY AFFILIATES, INC. (NASDAQ:RAFF)
---------------------------------------------------------
Release Date: June 6, 1997
Subject: William R. Ponsoldt Becomes President
Contact: Eunice Antosh - 402 330-7460
Regency Affiliates, Inc. (RAFF) announced Friday, June 6, 1997, the
appointment of William R. Ponsoldt, Sr. as President. Mr. Ponsoldt, 55, had
previously served as a Director and Chairman of the Board.
Pamlyn Kelly, Ph.D., served as interim President of Regency for the
past year, while a search was conducted for a new President. When the Company
was unable to identify a suitable candidate, the Directors asked Mr. Ponsoldt to
take the position.
Mr. Ponsoldt has been active for many years as a developer and investor
in real estate projects, and as the owner or operator of manufacturing and
distribution businesses in North America and Europe. He has also been active as
a private investor in securities, and most recently as a portfolio manager for
several hedge funds.
As a result of the appointment of Mr. Ponsoldt, Regency will move its
executive offices to Stuart, Florida, where Mr. Ponsoldt lives.
Regency recently purchased the assets of Rustic Crafts, Inc., the
world's largest manufacturer of specialty electric fireplaces. Further
acquisitions of complementary businesses are planned for the future. Regency
also has investments in commercial real estate.
