REDEMPTION AGREEMENT
REDEMPTION AGREEMENT, dated as of October 16, 2002 by and between
Regency Affiliates, Inc., a Delaware corporation (the "Corporation"), and
Statesman Group, Inc., an international business corporation organized under the
laws of the Bahamas ("Statesman").
W I T N E S S E T H:
WHEREAS, Statesman is the owner of 754,950 shares (the "Shares") of
the Corporation's common stock, par value $ .01 per share ("Common Stock"); and
WHEREAS, Statesman wishes to sell the Shares to the Corporation, and
the Corporation wishes to purchase the Shares from Statesman.
NOW, THEREFORE, for the consideration stated herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Redemption of Shares. Subject to the terms set forth in
this Agreement, Statesman hereby sells, transfers, conveys and assigns the
Shares to the Corporation, and the Corporation hereby redeems the Shares for an
aggregate purchase price of $1,020,000 ($1.35 per share), payable in cash on the
date hereof. Contemporaneous with the execution of this Agreement, Statesman
shall deliver to the Corporation certificates evidencing all of the Shares
together with duly executed, medallion-guaranteed, stock powers transferring
such Shares to the Corporation, or proof of book-entry transfer of such Shares
to a brokerage account designated by the Corporation.
Section 2. Representations and Warranties of Statesman. Statesman
hereby represents and warrants to the Corporation as follows:
(a) Statesman is an international business corporation duly
organized, validly existing and in good standing under the laws of
the Bahamas, and has all requisite power and authority to own, lease
and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to do business
in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the
failure so to qualify would not have a material adverse effect on
Statesman.
(b) Statesman has full power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
The execution, delivery and performance by Statesman of this
Agreement have been duly and validly approved by the directors of
Statesman and no other actions or proceedings on the part of
Statesman or its shareholders are necessary to authorize this
Agreement and the transactions contemplated hereby. Statesman has
duly and validly executed and delivered this Agreement. This
Agreement constitutes a legal, valid and binding obligation of
Statesman, enforceable in accordance with its terms.
(c) No consent, authorization or approval of, filing or registration
with, or cooperation from, any governmental or regulatory body,
commission, agency or other foreign, Federal, state or local
authority or any third party is necessary in connection with the
execution, delivery and performance by Statesman of this Agreement
or the consummation of the transactions contemplated hereby.
(d) The execution, delivery and performance by Statesman of this
Agreement and any actions contemplated herein to be taken by
Statesman, do not and will not, and the consummation of the
transactions contemplated hereby does not and will not, (i) violate
any law, rule or regulation applicable to it; (ii) violate or
conflict with, result in a breach or termination of, constitute a
default or give any third party any additional right (including a
termination right) under, permit cancellation of, result in the
creation of any liens, claims, security interests, escrows, rights
of first refusal or other encumbrances or restrictions of any kind
(collectively, a "Lien") upon any of the assets or properties of
Statesman under, or result in or constitute a circumstance which,
with or without notice or lapse of time or both, would constitute
any of the foregoing under, any contract to which Statesman is a
party or by which Statesman or any of its assets or properties are
bound; (iii) permit the acceleration of the maturity of any
indebtedness of Statesman or indebtedness secured by its assets or
properties; or (iv) violate or conflict with any provision of any of
the certificate, memorandum or articles of incorporation or
association, charter, bylaws or similar organizational instruments
of Statesman.
(e) Except for the Lien relating to the $2.44 million 5-year note
issued by Statesman to the Corporation, Statesman is the record and
beneficial owner of, and has good and marketable title to, all of
the Shares, free and clear of any Lien, and Statesman does not own
any Common Stock of the Corporation other than the Shares, or have
any right to acquire any Common Stock or other shares of the capital
stock of the Corporation.
(f) The assignments, endorsements, stock powers and other
instruments of transfer delivered by Statesman to the Corporation
contemporaneous with the execution of this Agreement will be
sufficient to transfer Statesman's entire interest, legal and
beneficial, in the Shares.
(g) Other than the action entitled ▇▇▇▇▇▇ ▇. ▇▇▇▇ et. al. v. ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇., et. al., there is no litigation, action,
complaint, claim or suit, judicial or administrative action, audit,
proceeding or governmental investigation pending or, to the best of
Statesman's knowledge, threatened, that asserts any claims with
respect to Statesman's title to the Shares or ownership thereof free
and clear of Liens.
2
Section 3. Withholding. The purchase price payable hereunder shall
be reduced by such amount as the Corporation reasonably determines is required
to be withheld and submitted to any taxing authority pursuant to the provisions
of any Federal, state, local or foreign law.
Section 4. Conditions to Redemption. The Corporation's obligations
under Section 1 hereof shall be subject to the satisfaction of each of the
following conditions:
(a) The Letter Agreement between Statesman Group, Inc. and the
Corporation in the form of Exhibit A shall have been executed;
(b) The Contingent Payment Agreement attached as Exhibit B shall
have been executed by the parties thereto;
(c) Statesman shall have executed and delivered to the Corporation a
Secretary's Certificate in the form of Exhibit C;
(d) The Corporation shall have received a resignation executed by
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. and each other officer and director of the
Corporation and its subsidiaries, in the form of Exhibits D-1 and
D-2 hereto, respectively; and
(e) The Call Option Agreement attached as Exhibit E shall have been
executed by the parties thereto.
Section 5. Indemnification. (a) Statesman agrees to indemnify and
hold the Corporation, its officers, directors, employees and agents (each a
"Corporation Indemnified Party") harmless against and in respect of any loss,
cost, expense, liability or damage (including, without limitation, attorneys'
fees, costs and disbursements) suffered or incurred by a Corporation Indemnified
Party which arise from (i) any failure by Statesman to perform any of its
covenants, agreements or other obligations hereunder and (ii) any breach of any
representation or warranty of Statesman contained herein.
(b) The Corporation agrees to indemnify and hold Statesman, its
officers, directors, employees and agents (each a "Statesman Indemnified Party")
harmless against and in respect of any loss, cost, expense, liability or damage
(including, without limitation, attorneys' fees, costs and disbursements)
suffered or incurred by a Statesman Indemnified Party which arise from (i) any
failure by the Corporation to perform any of its covenants, agreements or other
obligations hereunder and (ii) any breach of any representation or warranty of
the Corporation contained herein.
Section 6. Miscellaneous. (a) This Agreement and the rights and
obligations of the parties hereunder shall be construed, interpreted and
enforced in accordance with the laws of the State of Delaware, exclusive of its
choice of law provisions.
3
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and assigns.
(c) The provisions of this Agreement shall be severable and the
illegality, unenforceability or invalidity of any provision of this
Agreement shall not affect or impair the remaining provisions
hereof, and each provision of this Agreement shall be construed to
be valid and enforceable to the fullest extent permitted by law.
(d) This Agreement cannot be amended orally, or by any course of
conduct or dealing, but only by a written agreement signed by the
parties hereto.
(e) The waiver by any party of a breach or violation of any
provision of this Agreement shall not operate as, or be construed to
be, a waiver of any subsequent breach.
(f) Statesman shall execute, or cause to be executed, such documents
and further assignments, agreements and instruments, or cause to be
taken, such further actions as may be reasonably requested by the
Corporation in order to carry out the provisions hereof and the
transactions contemplated hereby in the manner set forth herein.
(g) This Agreement may be executed in one or more counterparts, each
of which shall constitute an original, but all of which together
shall constitute one and the same agreement.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
REGENCY AFFILIATES, INC.
By:
-----------------------------------
Name:
Title:
STATESMAN GROUP, INC.
By:
-----------------------------------
Name:
Title:
5
The exhibits to this document are attached as separate exhibits to this Form 8-K
or omitted.
6