EXHIBIT A
REGENCY SERVICE CORP.
DEFERRED FEE AGREEMENT
THIS AGREEMENT is made as of the ____________ day of ___________, 19__, by
and between Regency Service Corp. (the "Company"), and ___________ (the
"Director").
To encourage the Director to remain a member of the Company's Board of
Directors, the Company is willing to provide to the Director a deferred fee
opportunity. The Company will pay the benefits from its general assets.
AGREEMENT
The Director and the Company agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. Whenever used in this Agreement, the following words
and phrases shall have the meanings specified:
1.1.1 "CHANGE OF CONTROL" means (i) a change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or in response to any other form or
report to the regulatory agencies or governmental authorities having
jurisdiction over the Employer or any stock exchange on which the Employer's
shares are listed which requires the reporting of a change in control;
(ii) any merger, consolidation or reorganization of the Employer in which the
Employer does not survive; (iii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or a series of
transactions) of any assets of the Employer having an aggregate fair market
value of fifty percent (50%) of the total value of the assets of the
Employer, reflected in the most recent balance sheet of the Employer; (iv) a
transaction whereby any "person" (as such term is used in the Exchange Act or
any individual, corporation, partnership, trust or any other entity) becomes
the beneficial owner, directly or indirectly, of securities of the Employer
representing twenty-five percent (25%) or more of the combined voting power
of the Employer's then outstanding securities; or (v) a situation where, in
any one-year period, individuals who at the beginning of such period
constitute the Board of Directors of the Employer cease for any reason to
constitute at least a majority thereof, unless the election, or the
nomination for election by the Employer's shareholders, of each new director
is approved by a vote of at least three-quarters (3/4) of the directors then
still in office who were directors at the beginning of the period.
Notwithstanding the foregoing or anything else contained herein to the
contrary, there shall not be a "change of control" for purposes of this
Agreement if the event which
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would otherwise come within the meaning of the term "change of control"
involves the Employer's Employee Stock Ownership Plan (the "ESOP") and the
ESOP is the party which acquires "control" or is the principal participant in
the transaction constituting a "change in control," as described above.
1.1.2 "CODE" means the Internal Revenue Code of 1986, as
amended. References to a Code section shall be deemed to be to that section as
it now exists and to any successor provision.
1.1.3 "DISABILITY" means, if the Director is covered by a
Company-sponsored disability insurance policy, total disability as defined in
such policy without regard to any waiting period. If the Director is not
covered by such a policy, Disability means the Director suffering a sickness,
accident or injury which, in the judgment of a physician satisfactory to the
Company, prevents the Director from performing substantially all of the
normal duties of a director. As a condition to any benefits, the Company may
require the Director to submit to such physical or mental evaluations and
tests as the Company's Board of Directors deems appropriate.
1.1.4 "DISTRIBUTION DATE" means the earlier of five (5) years
after the date of this Agreement or the Normal Termination Date as defined
below.
1.1.5 "DEFERRAL PERIOD" means the period of time beginning with
the date of this Agreement and ending with the earlier of the Distribution Date
or the Director's Termination of Service.
1.1.6 "BENEFIT PERIOD" means the period of time beginning with
the earlier of the Distribution Date or the Director's Termination of Service
and ending with payment in full of the Director's Deferral Account balance.
1.1.7 "ELECTION FORM" means the Form attached as Exhibit A.
1.1.8 "FEES" means the total directors fees payable to the
Director.
1.1.9 "NORMAL TERMINATION DATE" means the Director attaining
age seventy (70) years.
1.1.10 "TERMINATION OF SERVICE" means the Director's ceasing to
be a member of the Company's Board of Directors for any reason whatsoever.
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ARTICLE 2
DEFERRAL ELECTION
2.1 INITIAL ELECTION. The Director has made an initial deferral election
under this Agreement, as set forth in the Election Form attached hereto as
Exhibit A. The Election Form shall set forth the amount of Fees to be
deferred and the form of benefit payment. The Election Form shall be
effective to defer only Fees earned after the date as of which the Election
Form is received by the Company.
2.2 ELECTION CHANGES.
2.2.1 GENERALLY. The Director may modify the amount of Fees to
be deferred by filing a subsequent signed Election Form with the Company and
obtaining written approval of the Board of Directors of the Company. The
modified deferral shall not be effective until the calendar year following
the year in which the subsequent Election Form is received by the Company.
The Director may not change the form of benefit payment initially elected
under Section 2.1 without the written approval of the Board of Directors of
the Company.
2.2.2 HARDSHIP. If an unforeseeable financial emergency arising
from the death of a family member, divorce, sickness, injury, catastrophe or
similar event outside the control of the Director occurs, the Director, by
written instructions to the Company may reduce and/or cease future deferrals
under this Agreement.
ARTICLE 3
DEFERRAL ACCOUNT
3.1 ESTABLISHING AND CREDITING. The Company shall establish a Deferral
Account on its books for the Director, and shall credit to the Deferral Account
the following amounts:
3.1.1 DEFERRALS. The Fees deferred by the Director on the first
day of the month following the month in which the Fees were earned.
3.1.2 INTEREST. On the last day of each calendar month during
the Deferral Period only, and immediately prior to the payment of any
benefits, the Deferral Account will be credited with interest earned during
that month. The applicable interest rate shall be eight percent (8%) per
annum through December 31, 1994, and, thereafter, at the rate determined by
the Company's Board of Directors, in its sole discretion. Interest earned
will be calculated by taking the applicable rate of interest multiplied by
the principal balance on the last day of each month, divided by 365 days,
multiplied by the number of days in the month. At the end of each calendar
year, the interest earned during the year will be posted to the account and
only then become principal and entitled to future interest.
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3.2 STATEMENT OF ACCOUNTS. The Company shall provide to the Director at
each regularly scheduled Board of Directors meeting, a monthly statement
setting forth the Deferral Account balance.
3.3 ACCOUNTING DEVICE ONLY. The Deferral Account is solely a device for
measuring amounts to be paid under this Agreement. The Deferral Account is
not a trust fund of any kind. The Director is a general unsecured creditor
of the Company for the payment of benefits. The benefits represent the mere
Company promise to pay such benefits. The Director's rights are not subject
in any manner to the anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by the Director or Director's
creditors.
ARTICLE 4
LIFETIME BENEFITS
4.1 NORMAL TERMINATION BENEFIT. Upon the earlier of the Director's
Termination of Service at the Normal Termination Date or the Distribution
Date, the Company shall pay to the Director the benefit described in this
Section 4.1.
4.1.1 AMOUNT OF BENEFIT. The benefit under this Section 4.1 is
the Deferral Account balance at the earlier of the Director's Termination of
Service on the Normal Termination Date or the Distribution Date.
4.1.2 PAYMENT OF BENEFIT. The Company shall pay the benefit to
the Director in the form elected by the Director on the Election Form.
4.2 EARLY TERMINATION BENEFIT. If the Director terminates service as a
director before the earlier of the Normal Termination Date or the Distribution
Date and for reasons other than death or Disability, the Company shall pay to
the Director the benefit described in this Section 4.2.
4.2.1 AMOUNT OF BENEFIT. The benefit under this Section 4.2.1 is
the Deferral Account balance.
4.2.2 PAYMENT OF BENEFIT. The Company shall pay the benefit to
the Director in the form elected by the Director on the Election Form.
4.3 DISABILITY BENEFIT. If the Director terminates service as a director
for Disability prior to the earlier of the Distribution Date or the Normal
Retirement Date, the Company shall pay to the Director the benefit described in
this Section 4.3.
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4.3.1 AMOUNT OF BENEFIT. The benefit under this Section 4.3 is
the Deferral Account balance at the Director's Termination of Service.
4.3.2 PAYMENT OF BENEFIT. The Company shall pay the benefit to
the Director in the form elected by the Director on the Election Form.
4.4 CHANGE OF CONTROL BENEFIT. Upon a Change of Control while the
Director is in the active service of the Company, the Company shall pay to
the Director the benefit described in this Section 4.4 in lieu of any other
benefit under this Agreement.
4.4.1 AMOUNT OF BENEFIT. The benefit under this Section 4.4 is
the Deferral Account balance at the date of the Director's Termination of
Service.
4.4.2 PAYMENT OF BENEFIT. The Company shall pay the benefit to
the Director in a single lump sum within thirty (30) days' of the date a change
of control, as defined in Section 1.1.1, occurs.
4.5 HARDSHIP DISTRIBUTION. Upon the Company's determination (following
petition by the Director) that the Director has suffered an unforeseeable
financial emergency as described in Section 2.2.2, the Company shall distribute
to the Director all or a portion of the Deferral Account balance as determined
by the Company, but in no event shall the distribution be greater than is
necessary to relieve the financial hardship.
ARTICLE 5
DEATH BENEFITS
5.1 DEATH DURING DEFERRAL PERIOD. If the Director dies during the
Deferral Period, the Company shall pay to the Director's beneficiary the
benefit described in this Section 5.1.
5.1.1 AMOUNT OF BENEFIT. The benefit under Section 5.1 shall be
equal to the amount which has been deferred by the Director as of the date of
the Director's death, reduced by any distributions previously made to said
Director prior to his death.
5.1.2 PAYMENT OF BENEFIT. The Company shall pay the benefit to
the beneficiary in one hundred twenty (120) equal monthly installments
commencing on the first day of the month following the Director's Death.
5.2 DEATH DURING BENEFIT PERIOD. If the Director dies after benefit
payments have commenced under this Agreement but before receiving all such
payments, the Company shall pay the remaining benefits to the Director's
beneficiary at the same time and in the same amounts they would have been paid
to the Director had the Director survived.
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ARTICLE 6
BENEFICIARIES
6.1 BENEFICIARY DESIGNATIONS. The Director shall designate a beneficiary
by filing a written designation with the Company. The Director may revoke or
modify the designation at any time by filing a new designation. However,
designations will only be effective if signed by the Director and accepted by
the Company during the Director's lifetime. The Director's beneficiary
designation shall be deemed automatically revoked if the beneficiary
predeceases the Director, or if the Director names a spouse as beneficiary
and the marriage is subsequently dissolved. If the Director dies without a
valid beneficiary designation, all payments shall be made to the Director's
surviving spouse, if any, and if none, to the Director's surviving children
and the descendants of any deceased child by right of representation, and if
no children or descendants survive, to the Director's estate.
6.2 FACILITY OF PAYMENT. If a benefit is payable to a minor, to a person
declared incompetent, or to a person incapable of handling the disposition of
his or her property, the Company may pay such benefit to the guardian, legal
representative or person having the care or custody of such minor, incompetent
person or incapable person. The Company may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the
benefit. Such distribution shall completely discharge the Company from all
liability with respect to such benefit.
ARTICLE 7
CLAIMS AND REVIEW PROCEDURES
7.1 CLAIMS PROCEDURE. The Company shall notify the Director's
beneficiary in writing, within ninety (90) days of his or her written
application for benefits, of his or her eligibility or non-eligibility for
benefits under the Agreement. If the Company determines that the beneficiary
is not eligible for benefits or full benefits, the notice shall set forth (1)
the specific reasons for such denial, (2) a specific reference to the
provisions of the Agreement on which the denial is based, (3) a description
of any additional information or material necessary for the claimant to
perfect his or her claim, and a description of why it is needed, and (4) an
explanation of the Agreement's claims review procedure and other appropriate
information as to the steps to be taken if the beneficiary wishes to have the
claim reviewed. If the Company determines that there are special
circumstances requiring additional time to make a decision, the Company shall
notify the beneficiary of the special circumstances and the date by which a
decision is expected to be made, and may extend the time for up to an
additional ninety-day period.
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7.2 REVIEW PROCEDURE. If the beneficiary is determined by the Company
not to be eligible for benefits, or if the beneficiary believes that he or
she is entitled to greater or different benefits, the beneficiary shall have
the opportunity to have such claim reviewed by the Company by filing a
petition for review with the Company within sixty (60) days after receipt of
the notice issued by the Company. Said petition shall state the specific
reasons which the beneficiary believes entitle him or her to benefits or to
greater or different benefits. Within sixty (60) days after receipt by the
Company of the petition, the Company shall afford the beneficiary (and
counsel, if any) an opportunity to present his or her position to the Company
orally or in writing, and the beneficiary (or counsel) shall have the right
to review the pertinent documents. The Company shall notify the beneficiary
of its decision in writing within the sixty-day period, stating specifically
the basis of its decision, written in a manner calculated to be understood by
the beneficiary and the specific provisions of the Agreement on which the
decision is based. If, because of the need for a hearing, the sixty-day
period is not sufficient, the decision may be deferred for up to another
sixty-day period at the election of the Company, but notice of this deferral
shall be given to the beneficiary.
ARTICLE 8
AMENDMENTS AND TERMINATION
The Company may amend or terminate this Agreement at any time prior to the
Director's Termination of Service by written notice to the Director. In no
event shall this Agreement be terminated without payment to the Director of
the Deferral Account balance attributable to the Director's deferrals and
interest credited on such amounts.
ARTICLE 9
MISCELLANEOUS
9.1 BINDING EFFECT. This Agreement shall bind the Director and the
Company, and their beneficiaries, survivors, executors, administrators and
transferees.
9.2 NO GUARANTY OF EMPLOYMENT. This Agreement is not a contract for
services. It does not give the Director the right to remain a director of the
Company, nor does it interfere with the shareholders' rights to replace the
Director. It also does not require the Director to remain a director nor
interfere with the Director's right to terminate services at any time.
9.3 NON-TRANSFERABILITY. Benefits under this Agreement cannot be sold,
transferred, assigned, pledged, attached or encumbered in any manner.
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9.4 TAX WITHHOLDING. The Company shall withhold any taxes that are
required to be withheld from the benefits provided under this Agreement.
9.5 APPLICABLE LAW. The Agreement and all rights hereunder shall be
governed by the laws of California, except to the extent preempted by the laws
of the United States of America.
9.6 UNFUNDED ARRANGEMENT. The Director and beneficiary are general
unsecured creditors of the Company for the payment of benefits under this
Agreement. The benefits represent the mere promise by the Company to pay
such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors. Any insurance on the Director's
life is a general asset of the Company to which the Director and beneficiary
have no preferred or secured claim.
IN WITNESS WHEREOF, the Director and a duly authorized Company officer
have signed this Agreement.
DIRECTOR: COMPANY:
REGENCY SERVICE CORP.
---------------------------- By
----------------------------
Title
------------------------
and
By
---------------------------
Title
------------------------
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EXHIBIT A - PAGE 1
TO
DEFERRED FEE AGREEMENT
DEFERRAL ELECTION
I elect to defer fees under my Deferred Fee Agreement with the Company, as
follows:
Amount of Deferral Frequency of Duration
Deferral
----------------------------------------------------------------------------
[Initial and Complete one] [Initial One] [Initial One]
___ I elect to defer ___% of Fees ___ Beginning of Year ___ This Year Only
___ I elect to defer ____ of Fees ___ Each fee period ___ For five (5)
___ I elect not to defer Fees ___ End of Year years from
the date of
the Agreement
I understand that I may change the amount, frequency and duration of my
deferrals by filing a new election form with the Company and obtaining
written approval of the Board of Directors of the Company; provided, however,
that any subsequent election will not be effective until the calendar year
following the year in which the new election is received by the Company.
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EXHIBIT A - PAGE 2
FORM OF BENEFIT
I elect to receive benefits under the Agreement in the following form:
[Initial One]
____ Lump sum
____ Equal monthly installments for One Hundred Twenty (120) months
I understand that I may not change the form of benefit elected, even if I later
change the amount of my deferrals under the Agreement without written approval
of the Board of Directors of the Company.
BENEFICIARY DESIGNATION
I designate the following as beneficiary of benefits under the Deferred Fee
Agreement payable following my death:
Primary:
-------------------------------------------------
Contingent:
-------------------------------------------------
NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE
TRUSTEE AND THE EXACT DATE OF THE TRUST AGREEMENT.
I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me,
or, if I have named my spouse as beneficiary, in the event of the dissolution
of our marriage.
Signature:
-------------------
As of , 19
----------------- ---
Accepted by the Company as of , 19 .
------------ ---
By:
-------------------------
Title:
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