SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE DEF14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as
permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule.14a-12
Regency Affiliates, Inc.
------------------------
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant):
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies: N/A
2) Aggregate number of securities to which transaction applies: N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: N/A
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: N/A
2) Form, Schedule, or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
REGENCY AFFILIATES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 18, 2005
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Regency Affiliates, Inc. (the "Company"), a Delaware corporation,
will be held in the 11th Floor Conference Center in the offices of Katten Muchin
Zavis Rosenman, 575 Madison Avenue, New York, New York on Monday, January 18,
2005 at 10:00 A.M., to consider and act upon the following:
1. To elect four Directors;
2. To ratify the selection of Rosenberg Rich Baker Berman & Company as
independent auditors of the Company for the fiscal year ended
December 31, 2004; and
3. To consider and act upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Only stockholders of record at the close of business on December 2, 2004
shall be entitled to receive notice of, and to vote at, the Meeting, and at any
adjournment or adjournments thereof.
All stockholders are cordially invited to attend the Meeting. Whether or
not you plan to attend the Meeting, please complete, date and sign the enclosed
proxy, which is solicited by the Board of Directors of the Company, and mail it
promptly in the enclosed envelope to make sure that your shares are represented
at the Meeting. In the event you decide to attend the Meeting in person, you
may, if you desire, revoke your proxy and vote your shares in person.
By order of the Board of Directors,
/s/ Laurence S. Levy
----------------------------------------
Laurence S. Levy
President and CEO
Jensen Beach, Florida
December 6, 2004
---------------------------------------------------------------------
IMPORTANT: The prompt return of proxies will ensure that your shares
will be voted. A self-addressed envelope is enclosed for your
convenience. No postage is required if mailed within the United
States.
---------------------------------------------------------------------
REGENCY AFFILIATES, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 18, 2005
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of REGENCY AFFILIATES, INC. (the
"Company"), a Delaware corporation, to be voted at the Annual Meeting of
Stockholders (the "Meeting") of the Company which will be held in the 11th Floor
Conference Center in the offices of Katten Muchin Zavis Rosenman, 575 Madison
Avenue, New York, New York, on Tuesday, January 18, 2005 at 10:00 A.M., and at
any adjournment or adjournments thereof for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders and in this Proxy
Statement.
A Proxy, in the accompanying form, which is properly executed, duly
returned to the Company and not revoked, will be voted in accordance with the
instructions contained therein and, in the absence of specific instructions,
will be voted (i) FOR the election as directors of the persons named herein who
have been nominated by the Board, (ii) FOR the ratification of the selection of
Rosenberg Rich Baker Berman & Company ("Rich Baker") as independent auditors to
audit and report upon the consolidated financial statements of the Company for
the fiscal year ended December 31, 2004, and (iii) in accordance with the
judgment of the person or persons voting the proxies on any other matter that
may be properly brought before the Meeting. Each such Proxy granted may be
revoked at any time thereafter by writing to the Secretary of the Company prior
to the Meeting, or by execution and delivery of a subsequent Proxy or by
attendance and voting in person at the Meeting, except as to any matter or
matters upon which, prior to such revocation, a vote shall have been cast
pursuant to the authority conferred by such Proxy.
The principal executive offices of the Company are located at 610 N.E.
Jensen Beach Blvd., Jensen Beach, Florida 34957. The approximate date on which
this Proxy Statement and the accompanying Proxy will be first sent or given to
stockholders is December 13, 2004.
Stockholders of record of the common stock, par value $0.01 per share (the
"Common Stock"), of the Company at the close of business on December 2, 2004
(the "Record Date") will be entitled to notice of, and to vote at, the Meeting
or any adjournments thereof. On the Record Date, there were issued and
outstanding 3,020,412 shares of Common Stock. There was no other class of voting
securities outstanding at the Record Date. Each holder of Common Stock is
entitled to one vote for each share held by such holder. The presence, in person
or by proxy, of the holders of a majority of the outstanding shares of Common
Stock is necessary to constitute a quorum at the Meeting. Votes cast by proxy or
in person at the Meeting will be counted by the person appointed by the Company
to act as inspector of election for the Meeting. The four nominees for election
as directors at the Meeting who receive the greatest number of votes properly
cast for the election of directors shall be elected directors. The affirmative
vote of a majority of the votes in attendance at the Meeting (at which a quorum
is present), present in person or represented by proxy, that are properly cast
is necessary to approve the actions described in Proposal No. 2 of the
accompanying Notice of Annual Meeting. Abstentions and broker "non-votes" are
included in the determination of the number of shares present at the Meeting for
quorum purposes but broker "non-votes" are not counted in the tabulations of the
votes cast on proposals presented to stockholders. A broker "non-vote" occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner. There are no proposals planned at the Meeting which involve a broker
"non-vote."
2
PROPOSAL 1 - ELECTION OF DIRECTORS
At the meeting, four directors are to be elected. All directors of the
Company hold office until the next annual meeting of stockholders or until their
respective successors are duly elected and qualified or their earlier
resignation or removal.
It is the intention of the persons named in the proxies for the holders of
Common Stock to vote the proxies for the election of the nominees named below,
unless otherwise specified in any particular proxy. The management of the
Company does not contemplate that the nominees will become unavailable for any
reason, but if that should occur before the meeting, proxies will be voted for
another nominee, or other nominees, to be selected by the Board of Directors. In
accordance with the Company's by-laws and the General Corporation Law of the
State of Delaware, a stockholder entitled to vote for the election of directors
may withhold authority to vote for certain nominees for directors or may
withhold authority to vote for all nominees for directors. The director nominees
receiving a plurality of the votes of the holders of shares of Common Stock
present in person or by proxy at the meeting and entitled to vote, will be
elected directors.
The name, principal occupation of and certain other information about each
of the nominees is set forth below.
Name Age
----------------- ---
Laurence S. Levy 48
Neil N. Hasson 39
Stanley Fleishman 53
Errol Glasser 50
Mr. Levy is the President and Chief Executive Officer of the Company. Mr.
Levy is also the co-founder of Hyde Park Holdings, Inc., an investment firm
specializing in leveraged buyouts. There, Mr. Levy acts as a principal investor
and is involved in identifying, financing, acquiring and managing companies
operating in real estate, industrial manufacturing, infrastructure and
sub-assembly. Mr. Levy is also the chairman of the board and chief executive
officer of Rand Acquisition Corporation, an OTC Bulletin Board-listed blank
check company formed in June 2004.
Mr. Hasson is the Chief Financial Officer of the Company. Mr. Hasson is
also a private real estate investor. Previously, Mr. Hasson was the head of
European Real Estate for DLJ Real Estate Capital Partners, a $660 million real
estate fund managed by Donaldson, Lufkin and Jenrette ("DLJ"), where he was
involved with the acquisition of real estate throughout the world. Mr. Hasson
joined DLJ as a Managing Director in New York in January 1995. Mr. Hasson
currently serves as a non-executive director of Sterling Centrecorp, a real
estate company listed on the Toronto Stock Exchange.
Mr. Fleishman has been President and CEO of Jetro Holdings Inc., a
wholesale distributor of dry and perishable retail groceries and food service
items, since 1992. From 1987 to 1992, he served as Jetro's Vice President and
CFO. Prior to Jetro, Mr. Fleishman was CEO of Dion Stores, a non-food discount
chain in South Africa.
Mr. Glasser is President of East End Capital Management, Inc., a private
investment and advisory company based in New York City. Previously, Mr. Glasser
was a Managing Director at Kidder, Peabody & Co., with responsibility for its
West Coast investment banking activity. While there, he worked on numerous
mergers and acquisitions as well as private equity financings, IPO's, high yield
debt offerings and securitizations. He also headed the firm's Retail Finance
Group, served on the firm's Banking Operating Committee and was instrumental in
developing the strategy for and organizing sections of the firm's international
operations. For several years prior to working for Kidder, Mr. Glasser was a
principal in the Trump Group, a privately-held New York-based investment
company.
3
Committees
The Board of Directors has established an Audit Committee, a Compensation
Committee and a Nominating Committee.
The Audit Committee recommends the independent auditors to the Board of
Directors and meets with the independent auditors to discuss matters pertaining
to the audit and any other matters which the auditors may wish to discuss as to
the scope of their audit and their report. The Audit Committee met two times and
acted by written consent three times during the 2003 fiscal year. The Board of
Directors has adopted an Audit Committee Charter which is attached as Appendix A
to last year's annual proxy statement filed with the Securities and Exchange
Commission on October 27, 2003. The Audit Committee has been established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 and
consists of Errol Glasser and Stanley Fleishman. Each of the current members of
the Company's Audit Committee is an "independent director" as determined
pursuant to Rule 4200(a)(15) of the National Association of Securities Dealers'
(NASD) listing standards.
The Compensation Committee is responsible for compensation matters as well
as the issuance of stock options related to the Company's executive officers.
The Compensation Committee met once and acted by written consent once during
fiscal year 2003. The Compensation Committee consists of Mr. Fleishman and Mr.
Glasser.
The Nominating Committee is responsible for considering suggestions for
nominations from shareholders properly made in accordance with the Company's
by-laws and identifying and recommending to the Board of Directors individuals
qualified to become members of the Board. The Nominating Committee did not meet
during the 2003 fiscal year. The Nominating Committee consists of Mr. Glasser
and Mr. Fleishman. Each of the current members of the Company's Nominating
Committee is an "independent director" as determined pursuant to Rule
4200(a)(15) of the NASD listing standards. The Nominating Committee does not
have a charter. The Nominating Committee has not received any nominees for
director from a stockholder who owns more than 5% of the Company's voting stock.
Board Meetings; Nominations
The business of the Company is managed under the direction of the Board of
Directors. There were four meetings of the Board of Directors held in the year
ended December 31, 2003. In addition, the Board acted by written consent seven
times during such period. During such year, no directors attended fewer than 75%
of all of the meetings of the Board of Directors and committee meetings on which
such director served.
Nominations for Board of Directors
The Nominating Committee of the Board of Directors considers director
candidates based upon a number of qualifications, including their independence,
knowledge, judgment, integrity, character, leadership, skills, education,
experience, financial literacy, standing in the community and ability to foster
a diversity of backgrounds and views and to complement the Board's existing
strengths. There are no specific, minimum or absolute criteria for Board
membership. The Nominating Committee seeks directors who have demonstrated an
ethical and successful career. This may include experience as a senior executive
of a publicly traded corporation, management consultant, investment banker,
partner at a law firm or registered public accounting firm, professor at an
accredited law or business school, experience in the management or leadership of
a substantial private business enterprise, educational, religious or
not-for-profit organization, or such other professional experience as the
Committee shall determine shall qualify an individual for Board service.
The Nominating Committee has not in the past relied upon third-party
search firms to identify director candidates, but may employ such firms if so
desired. The Nominating Committee generally relies upon, receives and reviews
recommendations from a wide variety of contacts, including current executive
4
officers, directors, community leaders, and stockholders as a source for
potential director candidates. The Board retains complete independence in making
nominations for election as a member of the Board.
The Nominating Committee will consider qualified director candidates
recommended by stockholders in compliance with the Company's procedures and
subject to applicable inquiries. The Nominating Committee's evaluation of
candidates recommended by stockholders does not differ materially from its
evaluation of candidates recommended from other sources.
Stockholder Communications with the Board of Directors
Any stockholder or other interested party who desires to communicate with
the Company's Board of Directors may do so by writing to: Board of Directors,
c/o Laurence S. Levy, Regency Affiliates, Inc., 610 N.E. Jensen Beach Blvd.,
Jensen Beach, Florida 34957. Communications may be addressed to an individual
director, a Board Committee, the non-management directors or the full Board.
Communications received by Mr. Levy will then be distributed to the appropriate
directors unless Mr. Levy determines that the information submitted constitutes
"spam," pornographic material and/or communications offering to buy or sell
products or services.
Under the Company's by-laws, any shareholder entitled to vote in the
election of directors generally may nominate one or more persons for election as
directors at a meeting only if written notice of such shareholder's intent to
make such nomination or nominations has been received by the Secretary of the
Company not less than 80 days in advance of such meeting; provided, however,
that in the event that the date of the meeting was not publicly announced by the
Company by mail, press release or otherwise more than 90 days' prior to the
meeting, notice by the shareholder must be delivered to the Secretary of the
Company no later than the close of business on the tenth day following the day
on which such announcement of the date of the meeting was communicated to
shareholders. Each such notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the shareholder is a holder of record of
stock of the Company entitled to vote for the election of directors on the date
of such notice and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of all
arrangements or understanding between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; (d) such other
information regarding each nominee proposed by such shareholders as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission ("SEC"), had the nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e) the
consent of each nominee to serve as a director of the Company if so elected.
5
Executive Officers
Set forth below is certain information regarding the executive officers of
the Company:
Name Age Current Position
---------------- --- -------------------------------------
Laurence S. Levy 48 President and Chief Executive Officer
Neil N. Hasson 39 Chief Financial Officer
Carol Zelinski 40 Secretary
Officers serve at the discretion of the Board.
Ms. Zelinski is the Corporate Secretary of the Company. Ms. Zelinski has
been an analyst at Hyde Park Holdings, Inc., a private investment company, since
1997. Previously, Ms. Zelinski worked in the advertising industry with such
clients as R.J. Reynolds, Brown & Williamson, Minolta Corporation and Texaco.
Ms. Zelinski is not a Director.
Information regarding Messrs. Levy and Hasson is included herein in the
section entitled "Proposal 1 -- Election of Directors."
6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of December 6, 2004
regarding the ownership of Common Stock by (i) each person who is known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock, (ii) each director and nominee for director, (iii) each individual
named in the Summary Compensation Table contained herein, and (iv) all current
executive officers and directors of the Company as a group. Except as otherwise
indicated, each such stockholder has sole voting and investment power with
respect to the shares beneficially owned by such stockholder.
Amount
Beneficially
Name and Address of Beneficial Owner Owned Percent of Class
------------------------------------ ----- ----------------
Royalty Holdings LLC and Royalty 1,823,738 60.4%
Management, Inc. (1)
Laurence S. Levy (1) 1,948,738 (2) 61.96%
Neil N. Hasson (1) 125,000 (3) 3.97%
Errol Glasser 18,250 (4) Less than 1%
280 Madison Avenue
Suite 600
New York, NY 10016
Stanley Fleishman 14,250 (4) Less than 1%
c/o Jetro
15-24 132rd Street
College Point, New York 11356
Raffles Affiliates, Inc. 161,467 (5) 5.35%
450 Seventh Avenue
Suite 509
New York, New York 10123
All current Directors and Executive Officers 2,106,238 63.91%
as a group
----------
(1) The address of such beneficial owner is c/o Hyde Park Holdings, 450 Park
Avenue, New York, New York 10022.
(2) Comprised of (i) the shares that are beneficially owned by Royalty
Management, Inc., of which Mr. Levy is the President, sole director and
sole stockholder and (ii) 125,000 shares underlying currently exercisable
options granted to Mr. Levy under the Company's 2003 Stock Incentive Plan,
as amended.
(3) Comprised of 125,000 shares of Common Stock underlying options currently
exercisable granted to Mr. Hasson under the Company's 2003 Stock Incentive
Plan, as amended.
(4) Includes 12,500 shares of Common Stock underlying stock options currently
exercisable or exercisable within sixty days issued to such individual
under the Company's 2003 Stock Incentive Plan, as amended.
7
(5) This information is based on the latest Schedule 13G ownership report
filed by Raffles Associates, Inc. in respect of Common Stock of the
Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's executive officers, directors and persons
who beneficially own greater than 10% of a registered class of the Company's
equity securities to file certain reports ("Section 16 Reports") with the
Securities and Exchange Commission with respect to ownership and changes in
ownership of the Common Stock and other equity securities of the Company. Based
solely on the Company's review of the Section 16 Reports filed electronically
with the Securities and Exchange Commission, all Section 16(a) requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with during the fiscal year ended December 31, 2003, except that,
the Statement of Changes in Beneficial Ownership on Form 4 that was filed by
Royalty Holdings LLC, Royalty Management, Inc. and Laurence S. Levy on July 9,
2003, was filed one day late. The Form 4 had reported the conversion of a
convertible promissory note held by Royalty Holdings LLC into shares of Common
Stock.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------------------------------------------ ----------------------------------------
Restricted Securities
Other Annual Stock Underlying All other
Name and Principal Salary Bonus Compensation Award(s) Options Compensation
Position Year ($) ($) ($) (#) (#) ($)
-------- ---- --- --- --- --- --- ---
Laurence S. Levy 2003 181,250 0 0 0 75,000 0
President/CEO 2002 31,643 0 0 0 0 0
2001 N/A N/A N/A N/A N/A N/A
Neil N. Hasson 2003 56,250 0 0 0 75,000 0
CFO 2002 10,547 0 0 0 0 0
2001 N/A N/A N/A N/A N/A N/A
2000 N/A N/A N/A N/A N/A N/A
OPTION/SAR GRANTS
The Option/SAR Grants Table below shows the individual grants of stock
options (whether or not in tandem with SARS) and freestanding SARS made during
the last completed fiscal year to any of the named executive officers.
9
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF TOTAL MARKET PRICE
SECURITIES OPTIONS GRANTED EXERCISE ON DATE OF
UNDERLYING OPTIONS TO EMPLOYEES IN PRICE GRANT
NAME GRANTED FISCAL YEAR PER SHARE ($) ($) EXPIRATION DATE
---- ------- ----------- ------------- --- ---------------
Laurence S. Levy 25,000 16% 1.35 4.20 4/3/13
Neil N. Hasson 25,000 16% 1.35 4.20 4/3/13
Laurence S. Levy 50,000 34% 1.53 6.10 9/30/13
Neil N. Hasson 50,000 34% 1.53 6.10 9/30/13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUE
The Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values table shows there were no exercises of stock options (nor
tandem SARS) nor freestanding SARS during the last completed fiscal year by any
of the named executive officers.
OPTION VALUES AT DECEMBER 31, 2002
EXERCISABLE NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTIONS AT VALUE OF IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2002 DECEMBER 31, 2002
ACQUIRED ON (# OF SHARES) (# OF SHARES)
EXERCISE VALUE --------------------------------- --------------------------------
NAME (# SHARES) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- -------- ----------- ------------- ----------- -------------
Laurence S. Levy -0- -0- 75,000 -0- $369,750 N/A
Neil N. Hasson -0- -0- 75,000 -0- $369,750 N/A
INCENTIVE STOCK OPTION PLANS
Non Qualified Stock Options.
In April 2003, Messrs. Levy and Hasson were each granted options to
purchase 25,000 shares of our common stock at an exercise price of $1.35 per
shares in accordance with employment agreements entered into in October 2002 .
In October 2003, Messrs. Levy and Hasson were each granted options to purchase
50,000 shares of our common stock at an exercise price of $1.53 under the 2003
Stock Incentive Plan, as amended.
LTIP Awards.
There have been no awards under any long-term Incentive Plan during the
last completed fiscal year.
Defined Benefit Plans.
We have no defined benefit or actuarial plans.
10
COMPENSATION OF DIRECTORS
Pursuant to our 2003 Stock Incentive Plan adopted in March 2003,
non-management directors receive 250 shares of our common stock for every
quarter of a year of service completed. In April 2003, each existing
non-management director (Stanley Fleishman and Errol Glasser) was granted
options to purchase 15,000 shares of our common stock at an exercise price of
$2.40 per share (the approximate market price of the common stock as of the date
the aforementioned non-management directors began their service). One-third of
the options vest on each of December 31, 2003, 2004 and 2005. In April 2003
Messrs. Levy and Hasson were each granted options to purchase 25,000 shares of
our common stock at an exercise price of $1.35 per shares under the 2003 Stock
Incentive Plan in accordance with employment agreements entered into in October
2002. On October 1, 2003, Messrs. Levy and Hasson were each granted options to
purchase 50,000 shares of our common stock at an exercise price of $1.53 per
share under the 2003 Stock Incentive Plan, as amended. Also on October 1, 2003,
Messrs. Fleishman and Glasser were each granted options to purchase 2,500 shares
of our common stock at an exercise price of $1.53 under the 2003 Stock Incentive
Plan, as amended.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
In connection with our October 2002 restructuring transactions, we entered
into an Employment Agreement with Laurence S. Levy, our current President and
Chief Executive Officer, and with Neil Hasson, our current Chief Financial
Officer. Under each employment agreement, the executive's employment commenced
on October 16, 2002 and terminates upon the date on which the executive attains
retirement age, provided that the executive may terminate his employment upon 30
days notice to the Company and he may be removed from office upon death or
disability or for just cause. The employment agreements provides for a base
annual salary of no less than $150,000 for Mr. Levy and no less than $50,000 for
Mr. Hasson, a discretionary bonus and other customary benefits. The employment
agreements also provide for the issuance to each of Messrs. Levy and Hasson, of
options to purchase 25,000 shares of our common stock for $1.35 per share. Those
options were issued in April 2003 pursuant to the Company's 2003 Stock Incentive
Plan.
11
AUDIT COMMITTEE REPORT
The Company's management has the primary responsibility for the financial
statements and the reporting process, including the Company's system of internal
controls and disclosure controls and procedures. The outside auditors audit the
Company's financial statements and express an opinion on the financial
statements based on the audit. The Audit Committee oversees (i) the accounting
and financial reporting processes of the Company and (ii) the audits of the
financial statements of the Company on behalf of the Board of Directors. The
Audit Committee operates under a written charter adopted by the Board.
The Audit Committee met and held discussions with management and Rosenberg
Rich Baker Berman & Company, the Company's independent auditors. Management
represented to us that the Company's financial statements for the year ended
December 31, 2003 were prepared in accordance with generally accepted accounting
principles. We discussed the financial statements with both management and the
independent auditors. We also discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees).
The Audit Committee discussed with the independent auditors the overall
scope and plans for the audit. We met with the independent auditors, with and
without management, to discuss the results of their examination, the evaluation
of the Company's internal controls, and the overall quality of the Company's
financial reporting.
We discussed with the independent auditors the auditor's independence from
the Company and management, including the independent auditors written
disclosures required by Independent Standards Board Standard No. 1 (Independence
Discussions With Audit Committees).
Based on the foregoing, we have recommended to the Board of Directors, and
the Board approved, that the audited financial statements be included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2003, for
filing with the Securities and Exchange Commission.
Audit Committee
Errol Glasser
Stanley Fleishman
12
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Loan Facility
In order to satisfy the Company's working capital needs, in April 2003 the
Company obtained a loan facility from Royalty Holdings LLC ("Royalty"), an
affiliate of Messrs. Levy and Hasson, pursuant to which the Company could have
borrowed up to an aggregate of $300,000 from Royalty. Amounts borrowed were
evidenced by a demand note bearing interest of 8% per annum. On July 3, 2003,
the Company repaid all amounts outstanding under the $300,000 working capital
loan facility from Royalty, and terminated the facility. The payment amount
consisted of $180,000 of principal and $2,910 of accrued and unpaid interest.
License Agreement
Pursuant to a License Agreement entered into in March 2003, Royalty
Management, Inc., which is wholly-owned by Laurence Levy, the Company's
President and a director, provides New York City office space, office supplies
and office services to the Company for $100,000 per year.
Note Conversion
On July 3, 2003 Royalty converted the remaining $2,004,098 outstanding
principal amount of its Convertible Promissory Note plus accrued interest into
1,037,738 shares of Common Stock. The note had been issued to Royalty as part of
the Company's October 2002 recapitalization transactions.
Note Repayment
On July 3, 2003 the Company repaid the full $1,250,000 principal amount
of, and all accrued and unpaid interest under, the 9% Promissory Note of the
Company held by Royalty. The note had been issued to Royalty as part of the
Company's October 2002 recapitalization transactions.
13
PROPOSAL 2 - SELECTION OF INDEPENDENT AUDITORS
At the recommendation of the Audit Committee, the Board has selected
Rosenberg Rich Baker Berman & Company to serve as independent auditors of the
Company for its fiscal year ending December 31, 2004 Although stockholder
ratification of the Board's action in this respect is not required, the Board
considers it desirable for stockholders to pass upon the selection of
independent auditors and, if the stockholders disapprove of the selection,
intends to consider the selection of other independent auditors for the current
fiscal year.
A representative of Rosenberg Rich Baker Berman & Company is expected to
be present at the Meeting, will have an opportunity to make a statement if such
representative desires and will be available to respond to appropriate questions
from stockholders.
Audit Fees. The Company incurred fees charged by Rosenberg Rich Baker
Berman & Company for the fiscal year ended December 31, 2003 for the audit of
its annual financial statements and for the review of financial statements
included in its Forms 10-QSB for fiscal 2003 in the amount of $64,896.
All Other Fees. The aggregate fees billed for services rendered by
Rosenberg Rich Baker Berman & Company, other than services referred to above,
for the fiscal year ended December 31, 2003 were approximately $9,655.
All of the work performed by Rosenberg Rich Baker Berman & Company on the
audit of annual financial statements for fiscal year 2003 was performed by
persons employed by Rosenberg Rich Baker Berman & Company on a full-time basis.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's next annual meeting of Stockholders after the Meeting
(the "Next Meeting"), consistent with regulations adopted by the Securities and
Exchange Commission. Under SEC rules, proposals to be considered for inclusion
in the Proxy Statement for the Next Meeting must be received by the Company on
or before August 9, 2005. Proposals should be directed to the attention of
Corporate Secretary, 610 N.E. Jensen Beach Blvd., Jensen Beach, Florida 34957.
In addition, according to the by-laws of the Company, at any annual
meeting of stockholders, only such business shall be conducted as shall have
been properly brought before the meeting. For business to be properly brought
before an annual meeting of stockholders by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the Company. To
be timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company not less than 80 days nor more
than 180 days prior to the meeting; provided, however, that if the date of the
public meeting was not announced more than 90 days prior to the meeting, notice
to be timely delivered must be delivered to the Secretary of the Company not
later than the close of business on the 10th day following the date on which the
meeting date was communicated to stockholders. The by-laws contain provisions
for the content of a proper notice.
14
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 2003 ACCOMPANIES THIS PROXY STATEMENT. THE ANNUAL REPORT IS NOT TO
BE REGARDED AS PROXY SOLICITING MATERIAL OR AS A COMMUNICATION BY MEANS OF WHICH
ANY SOLICITATION IS TO BE MADE. ADDITIONAL COPIES OF THE FORM 10-KSB FOR THE
YEAR ENDED DECEMBER 31, 2003 WILL BE PROVIDED, WITHOUT CHARGE, UPON WRITTEN
REQUEST FROM ANY STOCKHOLDER TO: REGENCY AFFILIATES, INC., ATTENTION: CORPORATE
SECRETARY, 610 JENSEN BEACH BLVD., JENSEN BEACH, FLORIDA 34957.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board does not know of any
other matter to be brought before the Meeting. However, if any other matters not
mentioned in the Proxy Statement are brought before the Meeting or any
adjournments thereof, the persons named in the enclosed Proxy or their
substitutes will have discretionary authority to vote proxies given in said form
or otherwise act, in respect of such matters, in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Laurence S. Levy
----------------------------------------
Laurence S. Levy
President and Chief Executive Officer
December 6, 2004
15
REGENCY AFFILIATES, INC.
ANNUAL MEETING OF STOCKHOLDERS - JANUARY 18, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints each of Laurence S. Levy and Neil N.
Hasson as the undersigned's proxy, with full power of substitution, to vote all
shares of Common Stock, par value $0.01 per share of Regency Affiliates, Inc.
(the "Company") which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders of the Company to be held on
Monday, January 18, 2005 at 10:00 A.M. local time, in the 11th Floor Conference
Center in the offices of Katten Muchin Zavis Rosenman, at 575 Madison Avenue,
New York, New York 10022, and at any adjournments or postponements thereof and,
without limiting the generality of the power hereby conferred, the proxy
nominees named above and each of them are specifically directed to vote as
indicated below.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED AS SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE BOARD OF DIRECTORS' NOMINEES
FOR DIRECTOR AND FOR THE RATIFICATION OF ROSENBERG RICH BAKER BERMAN & COMPANY
AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE 2004 FISCAL YEAR.
(Continued, and to be signed and dated on the reverse side.)
|X| PLEASE MARK YOUR VOTES AS IN
THIS EXAMPLE
1. Election of Directors
FOR WITHHOLD AUTHORITY
all nominees listed at
right (except as marked to to vote for all nominees
the contrary below) listed at right
|_| |_|
Nominees:
Laurence S. Levy
Neil N. Hasson
Stanley Fleishman
Errol Glasser
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
_______________________________________________________________
2. Ratification of Rosenberg Rich Baker Berman & Company as the Company's
independent auditors.
FOR AGAINST ABSTAIN
|_| |_| |_|
If there are any amendments or variations to the matters proposed at the
meeting or at any adjournments or postponements thereof, or if any other
business properly comes before the meeting, this proxy confers discretionary
authority on the proxy nominees named herein and each of them to vote on such
amendments, variations or other business.
The undersigned acknowledges receipt of the accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement for the January 18, 2005 meeting.
REGENCY AFFILIATES, INC.
610 Jensen Beach Blvd.
Jensen Beach, Florida 34957
PLEASE PROMPTLY COMPLETE DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
ENVELOPE.
---------------------------- ------------------------- -----------------
Signature of Shareholder Print Name Dated
---------------------------- ------------------------- -----------------
Signature of Shareholder Print Name Dated
(Please sign exactly as name or names appear hereon. Full title of one signing
in representative capacity should be clearly designated after signature. If a
corporation, please sign in full corporate name by President or the authorized
officer(s). If a partnership, please sign in partnership name by authorized
person. If stock is in the name of two or more persons, each should sign. Joint
owners should each sign. Names of all joint holders should be written even if
signed by only one).