EXHIBIT 2
LIQUIDATING TRUST AGREEMENT
THIS LIQUIDATING TRUST AGREEMENT (this "Agreement") is made as of the
2nd day of October, 1996 by and among Regent Bancshares Corp., a New Jersey
corporation and a registered bank holding company ("Regent"), on behalf of the
holders of its securities at the Effective Time other than Dissenting Shares
(the "Beneficiaries"), Regent National Bank, a national banking association and
a wholly owned subsidiary of Regent (the "Bank") and Xxxx X. Xxxxx, Xxxxxxx
Xxxxxxxxx and Xxxxxxxxx X. Xxxxxx, as Trustees (collectively, the "Trustees" or
individually, a "Trustee"). All capitalized terms used herein but not otherwise
defined herein shall have the respective meanings assigned to them in the Merger
Agreement (as defined herein).
Background
WHEREAS, the Bank maintains a portfolio of automobile insurance premium
finance loans (the "IPF Loans"), has charged off various other loans in
connection with the Bank's other loan portfolios (the "Additional Loans") and
has or may have other claims or recoveries that are not reflected as assets on
the Bank's balance sheet (the "Other Assets");
WHEREAS, the Bank, Regent, Carnegie Bancorp ("Carnegie") and Carnegie
Bank, N.A. ("CBN") contemporaneously with the execution of this Agreement are
entering into an amendment (the "Amendment") to the Amended and Restated
Agreement and Plan of Merger dated as of August 30, 1995 (the "Merger
Agreement"), pursuant to which Regent will merge (the "Merger") with and into
Carnegie and the Bank will merge with and into CBN (the "Bank Merger") and the
holders of securities of Regent at the Effective Time other than Dissenting
Shares shall receive consideration in accordance with the Merger Agreement;
WHEREAS, the Amendment provides that at the Effective Time of the Bank
Merger the Bank will not have any IPF Loans;
WHEREAS, the Merger Agreement provides that at the Effective Time of the
Bank Merger, (i) the Bank's IPF Loan receivables and charged-off IPF Loan
receivables, all collateral with respect thereto, all claims, actions, rights,
recoveries under insurance policies and bonds and all other interests accruing
as a result thereof and all proceeds thereof, plus (ii) the Bank's Additional
Loan receivables, all collateral with respect thereto, all claims, actions,
rights, recoveries under insurance policies and bonds and all other interests
accruing as a result thereof and all proceeds thereof, plus (iii) the Bank's
claims, actions, rights, recoveries under insurance policies and bonds and all
other interests accruing as a result of the Other Assets and all proceeds
thereof, (collectively, the "Receivables"), will be transferred to a liquidating
trust (the "Trust") for the benefit of the Beneficiaries as provided herein and
in the Merger Agreement and that the Trustees of said Trust will continue to
collect actively any outstanding Receivables until the termination of
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the Trust, whereupon the Trustees will distribute to the Beneficiaries the funds
collected on account of the Receivables (the "Proceeds"), plus any interest
earned upon such Proceeds, less any costs and expenses paid by the Trustees
under the terms of this Agreement;
WHEREAS, it is not now known, nor can it be foreseen at this time,
whether any, and if so, what amount of Receivables will be collected prior to
the termination of the Trust as provided for herein and the parties hereto
recognize the uncertainties recited herein, and agree to provide, in all
circumstances, for the termination of the Trust created hereby as provided for
herein;
WHEREAS, Regent, on behalf of the Beneficiaries, and the Trustees
believe it is in their respective best interests to enter into this Agreement
and Carnegie has consented to the terms and conditions of this Agreement; and
WHEREAS, the Trustees have agreed to serve as trustees of the Trust
under the terms and conditions set forth in this Agreement and to distribute the
balance of the Proceeds, with any interest earned thereon, only in accordance
with the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and covenants contained
herein and in the Merger Agreement, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
1. Conveyance of Trust Property. The Bank hereby agrees to transfer,
convey, assign, set over and deliver to the Trustees, and their successors and
assigns, effective as of the Effective Time of the Merger Agreement, in the same
manner as and to the same extent that the Receivables were held or enjoyed by
the Bank prior to such Effective Time, all of the Receivables to have and to
hold full and legal title thereto, pursuant to the terms hereof, and the
Trustees hereby agree to accept such Receivables in trust on behalf of the
Beneficiaries and to manage and administer such Receivables and to attempt to
collect any Receivables outstanding or that become outstanding during the
duration of this Trust, for the benefit of the Beneficiaries in accordance with
the terms and conditions set forth in this Agreement. All Proceeds collected
during the term of this Trust, other than partial distributions permitted by
Section 4 of this Agreement, shall remain in the Trust until the termination
thereof pursuant to Section 5 of this Agreement.
2. Duties of Trustees. The duties of the Trustees shall be limited to
managing and administering the Receivables and collecting and holding the
Proceeds and enforcing the rights of the Beneficiaries with respect to the
Receivables, including receiving, compromising and settling Receivables, and,
after the satisfaction of any indemnification obligations of the Trust pursuant
to Section 8 and Section 13 hereof, distributing the Proceeds to the
Beneficiaries upon termination of the Trust. The Trustees shall have no other
responsibility or obligation of any kind other than as expressly set
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forth in this Agreement, and shall not be required to take any action not
expressly set forth in this Agreement. For these purposes, the Trustees shall
engage in all activities and perform all acts that they deem necessary in order
to collect, with respect to IPF Loans, from individual borrowers of IPF Loans
all overdue premium amounts and from insurance companies all prepaid premium
amounts held by such companies on cancelled IPF Loans, and all collateral, other
rights and causes of action with respect thereto whether now existing or
hereafter created, and, with respect to the Additional Loans or Other Assets,
from the borrowers thereof all overdue payments and all collateral, other rights
and causes of action with respect thereto whether now existing or hereafter
created.
3. Powers of Trustees.
(a) The Trustees shall have absolute, continuing and exclusive power
and authority to manage the Receivables and the Proceeds and to conduct
the business of the Trust, limited only as specifically set forth in this
Agreement. Any determination made in good faith by the Trustees of the purposes
of the Trust or the existence of any power or authority hereunder shall be
conclusive. In construing the provisions of this Agreement, presumption shall be
in favor of the grant of powers and authority to the Trustees. The enumeration
of any specific power or authority herein shall not be construed as limiting the
general powers or authority or any other specified power or authority conferred
herein upon the Trustees. The Trustees shall have authority to delegate their
powers over the day-to-day management of the Trust to such officers, agents
and/or employees as the Trustees shall deem appropriate. The signature of no
more than one Trustee or officer, as the Trustees may appoint from time to time,
shall be sufficient to bind the Trust. The concurrence of a majority of the
Trustees shall be necessary to the validity of any action taken by them. The
Trustees' powers shall include, but shall not be limited to or by, the
following:
(i) to prosecute and defend all actions affecting the Trust, the
Receivables or the Proceeds, and to compromise or settle any suits, claims or
demands, or waive or release any rights relating to the Trust;
(ii) to employ officers, agents, attorneys, independent
contractors, consultants, experts, employees or such other persons as such
Trustees may deem necessary or advisable;
(iii) to enter into such contracts, agreements or
understandings, written or oral, as the Trustees shall deem appropriate in the
exercise of their powers hereunder;
(iv) to do any lawful act in relation to the Trust, the
Receivables or the Proceeds that any individual owning the same absolutely might
do under the laws of the Commonwealth of Pennsylvania; and
(v) to incur and pay from the Proceeds all reasonable expenses
relating to the foregoing.
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4. Maintenance of Proceeds. All Proceeds received by the Trustees during
the duration of the Trust, as a result of the collection efforts of the Trustees
or otherwise, shall be deposited into an interest-bearing account maintained at
CoreStates Bank, N.A. in the name of the Trustees for the benefit of the
Beneficiaries and shall be held in such account until the termination of the
Trust. Notwithstanding the foregoing, the Trustees shall have the power to make
partial distributions of the Trust Proceeds from time to time in their
discretion.
5. Term. The Trustees shall continue to manage, administer and collect
the Receivables for a period of three years from the Closing Date of the Merger
Agreement and for such longer period, if any, as is necessary for the final
resolution of any litigation with respect to collection of the Receivables,
subject, however, to the discretion of the Trustees to terminate the Trust at an
earlier date if they determine that it is more likely than not that the cost of
continuing the Trust would exceed the amount of any future recoveries from the
Receivables. Thereafter, subject to Section 8 and Section 13 hereof, the
Proceeds collected by the Trustees from the outstanding Receivables plus any
interest earned on such Proceeds, less any expenses incurred by the Trustees
deducted in accordance with Section 7 hereof and less any prior distributions of
Trust Proceeds made in accordance with Section 4 hereof (the "Trust Balance"),
shall be distributed to the Beneficiaries as provided in Section 6(b) hereof.
6. Dissolution and Liquidation.
(a) On the date of the termination of the Trust as provided in
Section 5 hereof (the "Valuation Date"), the Trust shall be dissolved, but in no
event shall the Trust terminate until the assets of the Trust shall have been
distributed as provided in Section 6(b) hereof. Prior to the termination of the
Trust, the business of the Trust shall continue to be governed by this
Agreement.
(b) On the Valuation Date, subject to prior satisfaction in full of
any indemnification obligations of the Trust pursuant to Sections 8 and 13
hereof, the Trustees shall distribute to each Beneficiary his or her pro rata
portion of the Trust Balance (a "Beneficial Interest").
7. Expenses. The Trustees shall have the right to deduct and pay from
the Proceeds all of the costs, expenses, charges, liabilities and obligations,
including reasonable attorneys' fees, incurred by the Trustees in connection
with or growing out of the execution or administration of the Trust or the
performance of the Trustees' duties under this Agreement, the amount, if any,
needed for the indemnification of Carnegie in compliance with Section 8 hereof
and indemnification of the Trustees in compliance with Section 13 hereof and
such other payments and disbursements as are provided for in this Agreement or
which may be determined by the Trustees to be proper charges against the
Proceeds; provided, however, that the Trustees shall not be reimbursed for any
such costs and expenses incurred as a result of the Trustees, or any individual
Trustee, acting outside the scope of their responsibilities and duties hereunder
or as a result
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of the gross negligence or willful misconduct of the Trustees or any individual
Trustee. The Trustees shall keep current a record of all costs and expenses
incurred in performing their duties hereunder and such record shall be available
for inspection by any Beneficiary upon written request to the Trustees.
8. Indemnification of Carnegie. Prior to any distribution of the Trust
Balance in accordance with Section 6 hereof, the Trust shall have indemnified
Carnegie, CBN, and their officers, directors, employees and agents
(collectively, the "Indemnitees") against and hold the Indemnitees harmless from
any and all loss, liability, expenses including reasonable attorneys' fees,
claims, judgments, fines and amounts paid in settlement thereof, actually
suffered or incurred by the Indemnitees as a result of, in connection with or
arising from or out of any claim, action, judgment or proceeding against Regent,
the Bank or their respective directors, officers, employees or agents for any
actions or omissions performed, or failed to be performed, by Regent, the Bank
or any of their respective directors, officers, employees or agents prior to the
Effective Time of the Merger Agreement; provided, however, that the amount of
indemnification provided to the Indemnitees under this Section 8 shall be
limited to the amount of the Trust Balance as of the Valuation Date. In no event
shall the Trustees be personally liable for the indemnification provided under
this Section 8.
9. Compensation. The Trustees shall be entitled to reasonable
compensation for the performance of their duties hereunder.
10. Consultation with Legal Counsel. The Trustees may consult with legal
counsel satisfactory to them in respect of any question relating to their duties
or responsibilities hereunder or otherwise in connection herewith and shall not
be liable for any action taken, suffered or omitted by the Trustees in good
faith upon the advice of such counsel.
11. Removal of Trustees. A Trustee may resign and be discharged from the
Trust created herein by giving written notice thereof to the Beneficiaries and
the remaining Trustees, subject to the appointment of a successor Trustee and
the successor Trustee's acceptance of such appointment, or may be removed at any
time, with or without cause, by the affirmative vote given at a meeting or the
written consent of the Beneficiaries holding at least two-thirds of the total
Beneficial Interests.
12. Actions of Remaining Trustee(s). In the event of the death,
incapacity, resignation or removal of any Trustee, the remaining Trustee(s)
shall have full legal capacity to act on behalf of this Trust and the actions of
the remaining Trustee(s), even if only one in number, shall constitute valid
legal action on behalf of this Trust.
13. Indemnification of Trustees. Prior to any distribution of the Trust
Balance in accordance with Section 6 hereof, the Trust shall have indemnified
and held harmless its present and future Trustees and all officers, employees
and agents appointed by such
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Trustees, from and against any and all loss, liability, expenses including
reasonable attorneys' fees, claims, judgments, fines and amounts paid in
settlement thereof, actually suffered or incurred by such person as a result of,
in connection with or arising from or out of any acts or any omissions in the
exercise and performance of any of such person's rights, powers, authority and
duties under this Agreement. Notwithstanding the foregoing, nothing contained in
this Section 13 shall authorize the Trust to provide, or entitle any officer,
Trustee or other person to receive, indemnification for any action taken or
failure to act which action or failure to act is determined by the final
judgment of a court of competent jurisdiction, in any action, suit or proceeding
to have constituted willful misconduct or gross negligence. The right of
indemnification shall inure whether or not the claim asserted is based on
matters which antedate the organization of the Trust. All protections and
indemnities granted under this Section 13 to a Trustee or any officer, employee
or agent of the Trustees are cumulative of any other rights arising under
operation of law or otherwise, and shall survive the termination of this
Agreement or the resignation or removal of the such Trustee, officer, employee
or agent and shall inure to the benefit of the heirs and personal
representatives of such person. In no event shall the Trustees' liabilities
hereunder include any special, consequential, punitive or indirect loss or
damage.
14. Discretion and Judgment of Trustees. The Trustees, within the
limitations and restrictions expressed and imposed herein, may act freely under
all or any of the rights, powers and authority conferred hereby, in all matters
concerning the Receivables and the Proceeds, after forming their best judgment
based upon the circumstances of any particular question or situation as to the
best course to pursue, without the necessity of obtaining the consent or
permission or authorization of the Beneficiaries, or of any court, official or
officer, notwithstanding the fact that the Trustees may be acting for themselves
in their own interests or business, or as agent for another person or other
persons or of a corporation or corporations interested in the same matters, or
may be interested in the same matters as a Beneficiary or otherwise, and the
rights, powers and authority conferred on the Trustees by this Agreement are
conferred in contemplation of such freedom of judgment and action, within the
limitations and restrictions so expressed and imposed; provided that the
Trustees shall exercise such rights, powers and authority at all times in a
fiduciary capacity in the interests of the Beneficiaries. The duties and
responsibilities of the Trustees hereunder shall be determined solely by the
express provisions of this Agreement and no other or further duties or
responsibilities shall be implied, including, but not limited to, any obligation
under or imposed by any laws of the Commonwealth of Pennsylvania relating to
fiduciaries.
The Trustees shall not be liable for errors of judgment either in
managing the Receivables originally conveyed to them or in acquiring and
afterwards holding the Proceeds collected in connection with the Receivables,
nor for any act, or omission to act, performed or omitted by them, in the
execution of this Trust in good faith; nor shall they or any of them, be liable
for the acts or omissions of each other, or of any officer, agent, or servant
appointed by or
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acting for them, and they shall not be obliged to give any bond to secure the
due performance of this Trust by them.
15. Beneficial Interests.
(a) The Beneficial Interests of the Beneficiaries in the Trust
shall not be represented by certificates. Each share of Regent Common Stock or
Regent Preferred Stock owned by a Beneficiary at the Effective Time of the
Merger shall entitle such Beneficiary to one unit of Beneficial Interest (a
"Unit") in the Trust. The number of Units owned by each Beneficiary in relation
to the total number of Units owned by all Beneficiaries as of the Valuation Date
shall determine the proportion of any distribution from the Proceeds to which
such Beneficiary will be entitled upon termination of the Trust.
(b) Units may be transferred only by will, descent or
operation of law.
16. Annual Reports. Until the Trust is terminated in accordance with
Section 5 hereof, the Trustees shall issue annual reports to the Beneficiaries
showing the assets and liabilities of the Trust at the end of each calendar year
and the receipts and disbursements of the Trustees during that period. The
Trustees shall also issue interim reports to the Beneficiaries whenever, in the
opinion of the Trustees, a significant event relating to the assets of the Trust
occurs.
17. Beneficiaries As Grantors. For federal tax purposes, the
Beneficiaries shall be treated as the grantors of the Trust and deemed the
owners of the Receivables and the Bank will treat the transfer of the
Receivables to the Trust as a deemed transfer of the Receivables by the
Beneficiaries to the Trust. The Trustees will file federal income tax returns
for the Trust as a grantor trust.
18. Miscellaneous.
(a) Notices. Any and all notices, requests, instructions and other
communications required or permitted to be given under this Agreement
after the date hereof by any party hereto to any other party may be delivered
personally or by nationally recognized overnight courier service or sent by
certified or registered mail, postage prepaid, return receipt requested, or by
telex or facsimile transmission, at the respective addresses or transmission
numbers set forth below and shall be effective (a) in the case of personal
delivery, telex or facsimile transmission, when received; (b) in the case of
mail, upon the earlier of actual receipt or five business days after deposit in
the United States Postal Service, first class certified or registered mail,
postage prepaid, return receipt requested and (c) in the case of
nationally-recognized overnight courier service, one business day after delivery
to such courier service together with all appropriate fees or charges and
instructions for such overnight delivery. Notwithstanding the foregoing, no
notice to the Trustees shall be effective until received by one of the Trustees.
The parties may change their respective addresses and
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transmission numbers by written notice to all other parties, sent as provided in
this Section 14. All communications to the Trust or any Trustee must be in
writing and addressed as follows:
Regent Liquidating Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
with a copy to:
Duane, Morris & Heckscher
0000 Xxxxxx Xxxxxx
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
(b) Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
personal representatives and assigns.
(c) Attorneys' Fees. If any action at law or in equity, including
an action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees from the other party, which fees may be set by the
court in the trial of such action or may be enforced in a separate action
brought for that purpose, and which fees shall be in addition to any other
relief that may be awarded.
(d) Assignment. This Agreement shall not be assigned by operation of
law or otherwise and no such assignment shall relieve any party hereto of its
respective obligations hereunder. No portion of the IPF Proceeds shall be
subject to interference or control by any creditor of any Beneficiary or any
other party hereto, or be subject to being taken or reached by any legal or
equitable process in satisfaction of any debt or other liability of any such
party hereto prior to the disbursement thereof to such party hereto in
accordance with the provisions of this Agreement. This Agreement and the Merger
Agreement constitute the entire agreement among the parties hereto and there are
no agreements, understandings, representations or warranties among the parties
hereto on the subject matter hereof other than those set forth herein and
therein.
(e) Headings. The headings contained herein are for the purposes of
convenience only and are not intended to define or limit the contents of said
sections.
(f) Further Cooperation. Each party hereto shall cooperate, shall
take such further action and shall execute and deliver such further documents as
may be reasonably requested by any other party in order to carry out the
provisions and purposes of this Agreement.
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(g) Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
(h) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to contracts made and to be performed therein.
(i) Amendment. This Agreement may be amended only by a written
instrument executed by Regent, or if after the Closing Date, the Surviving
Corporation, and the Trustees; provided, however that, no amendment shall be
made to change the relative beneficial interest of any Beneficiary in the
Proceeds without the consent of such Beneficiary.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
REGENT BANCSHARES CORP.
By:
-----------------------------
Xxxxx X. Ring,
Chairman of the Board and
Chief Executive Officer
REGENT NATIONAL BANK
By:
-----------------------------
Xxxx X. Xxxxx, President
TRUSTEES:
--------------------------------
Xxxx X. Xxxxx
--------------------------------
Xxxxxxx Xxxxxxxxx
--------------------------------
Xxxxxxxxx X. Xxxxxx
Carnegie Bancorp hereby joins in this Agreement for the sole purpose of
evidencing its agreement to Section 8 hereof.
CARNEGIE BANCORP
By:
-----------------------------
Xxxxxx X. Xxxx, Xx.,
President and Chief
Executive Officer
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