SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 1996
Regent Bancshares Corp.
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(Exact name of registrant as specified in its charter)
New Jersey 0-17753 23-2440805
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1430 Walnut Street, Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 546-6500
N/A
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(Former name or former address, if changed since last report)
Page 1 of 44 pages
Exhibit index on page 6
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Item 5. Other Events.
On October 2, 1996, Registrant and Registrant's wholly owned subsidiary,
Regent National Bank (the "Bank"), executed an amendment (the "Amendment") to
the Amended and Restated Agreement and Plan of Merger (the "Merger Agreement")
with Carnegie Bancorp ("Carnegie") and Carnegie Bank, N.A. ("CBN"), dated as of
August 30, 1995, pursuant to which Registrant will merge (the "Merger") with and
into Carnegie with Carnegie as the surviving corporation and the Bank will merge
(the "Bank Merger") with and into CBN with CBN as the surviving bank under the
name "Carnegie Bank, N.A." The Merger and the Bank Merger are subject to
approval by the stockholders of Carnegie and Registrant as well as various
regulatory approvals, including approval by the Office of the Comptroller of the
Currency and the Board of Governors of the Federal Reserve System. For further
information regarding the terms and conditions of the Amendment, reference is
made to the Amendment filed as Exhibit 1 hereto and incorporated herein by
reference.
As amended by the Amendment, the Merger Agreement includes as a
condition precedent to the obligations of Carnegie that the Bank charge-off,
prior to the Effective Time (as defined in the Merger Agreement) of the Merger,
all of the Bank's automobile insurance premium finance loans (the "IPF Loans").
In connection with such requirement, Registrant, on behalf of the holders of its
Common Stock and Preferred Stock (the "Beneficiaries"), the Bank and John J.
Lyons, Frederick W. Dreher and Abraham Bettinger, as Trustees, entered into a
Liquidating Trust Agreement (the "Liquidating Trust Agreement"), dated as of
October 2, 1996, pursuant to which the Bank will transfer to a liquidation trust
(the "Liquidation Trust") as of the Effective Time all of its IPF Loan
receivables, and all interests relating thereto, and certain other charged-off
loan receivables and claims or recoveries not reflected as assets on the Bank's
balance sheet, among other items (the "Receivables"). For a period of
approximately three years, the trustees of the Liquidation Trust will actively
seek to collect any outstanding Receivables, whereupon the trustees will
distribute to the Beneficiaries their pro rata portion of the net proceeds of
the Liquidation Trust. Under the terms of the Liquidating Trust Agreement, prior
to making any distributions to the Beneficiaries, the Liquidation Trust must
indemnify Carnegie and CBN for all expenses incurred in connection with any
claims against Registrant or the Bank for actions taken prior to the Effective
Time to the extent of the net proceeds of the Liquidation Trust. For further
information regarding the terms and conditions of the Liquidating Trust
Agreement, reference is made to the form of the Liquidating Trust Agreement
filed as Exhibit 2 hereto and incorporated herein by reference.
As amended by the Amendment, the Merger Agreement also provides that,
upon consummation of the Merger, the outstanding Common Stock and Preferred
Stock of Registrant will be converted into the right to receive Common Stock of
Carnegie and an interest in the Liquidating Trust as follows:
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(i) each share of Registrant's Common Stock will be converted into the
right to receive (a) from Carnegie that fraction of a share of Carnegie Common
Stock equal to the quotient (the "Conversion Ratio") obtained from dividing the
adjusted book value per share of Registrant (as defined in the Amendment) by the
adjusted book value per share of Carnegie (as defined in the Amendment) and
(b) from Registrant one uncertificated unit of beneficial interest in the
Liquidation Trust (a "Unit"). In determining adjusted book value per share, the
Amendment requires that Registrant subtract from or add to, as the case may be,
its total shareholders' equity unrealized holding gains or losses on available
for sale securities held by the Bank, and subtract all IPF Loans made by the
Bank and $410,000 for Merger-related expenses incurred by Carnegie, and requires
that Carnegie subtract from or add to, as the case may be, its total
shareholders' equity unrealized holding gains or losses on available for sale
securities held by CBN; and
(ii) each share of Registrant's Series A, Series B, Series C, Series D
and Series E Convertible Preferred Stock will be converted into the right to
receive (a) that fraction of a share of Carnegie Common Stock as is equal to the
Conversion Ratio and (b) one Unit in the Liquidation Trust.
The Merger Agreement as amended by the Amendment does not provide for
the purchase or exchange by Carnegie of Registrant's outstanding warrants and
options. Instead, the expiration date of all outstanding options and warrants of
Registrant will be extended to the earlier of November 30, 1996, during which
period such options and warrants will be exercisable in accordance with their
respective terms, or 30 days after the termination of the Merger Agreement,
during which period such warrants and options will be exercisable in accordance
with their respective terms. The Amendment provides that Registrant's organizers
will agree not to exercise the options and warrants held by them.
The Effective Time of the Merger, which is subject to the maintenance by
Registrant of a specified net worth and to other conditions specified in the
Merger Agreement as amended by the Amendment, is expected to take place on or
about April 30, 1997.
Exhibit 3 to this Form 8-K Report is the press release regarding the
Amendment issued by Registrant on October 3, 1996.
On October 10, 1996, the Bank, acting by and through its Board of
Directors, entered into a written agreement pursuant to 12 U.S.C. section
1818(b)(1) (the "Regulatory Agreement") with the Office of the Comptroller of
the Currency (the "OCC"). The Bank believes that it is currently in compliance
with all of the provisions of the Regulatory Agreement in all material respects
and anticipates that, absent unforeseen circumstances, it will be able to remain
in compliance with the Regulatory Agreement in all material respects. Under the
Regulatory Agreement, the Bank is required, subject to OCC review or approval,
to (i) adopt and implement within 30 days an action plan to improve the Bank,
(ii) achieve capital levels specified in the Regulatory Agreement at October 31,
1996 and December 31, 1996, (iii) within 30
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days develop a three-year capital program aimed at identifying means for the
Bank to maintain adequate capital levels and establishing restrictions on the
payment of dividends, (iv) continue the liquidation of the Bank's IPF Loans in
accordance with specified procedures, (v) review the adequacy of the Bank's
allowance for loan and lease losses and establish a program for the maintenance
of adequate allowances by the Bank for loan and lease losses in compliance with
OCC requirements, (vi) review the Bank's liquidity on a weekly basis and take
appropriate action to ensure adequate sources of liquidity in relation to the
Bank's needs, and (vii) appoint a committee of directors responsible for
monitoring the Bank's compliance with the terms of the Regulatory Agreement and
reporting thereon to the OCC. For further information regarding the terms and
conditions of the Regulatory Agreement, reference is made to the Regulatory
Agreement filed as Exhibit 4 hereto and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired:
Not applicable.
(b) Pro forma financial information:
Not applicable.
(c) Exhibits:
1. Amendment, dated as of October 2, 1996, to the Amended and
Restated Agreement and Plan of Merger dated as of August 30,
1995 among Carnegie Bancorp, Carnegie Bank, N.A., Regent
Bancshares Corp. and Regent National Bank.
2. Form of Liquidating Trust Agreement, dated as of October 2,
1996, by and among Regent Bancshares Corp., on behalf of the
holders of its securities, Regent National Bank and John J.
Lyons, Frederick W. Dreher and Abraham Bettinger, as Trustees.
3. October 3, 1996 press release issued by Regent Bancshares
Corp.
4. Agreement By And Between Regent National Bank Philadelphia,
Pennsylvania and The Office Of The Comptroller Of The Currency
and Addendum thereto dated October 10, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REGENT BANCSHARES CORP.
Date: October 16, 1996 By: /s/ David W. Ring
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David W. Ring, Chairman and
Chief Executive Officer
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EXHIBIT INDEX
Sequentially numbered
Exhibit Number Description page
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1 Amendment, dated as of 7
October 2, 1996, to the
Amended and Restated
Agreement and Plan of
Merger dated as of
August 30, 1995 among
Carnegie Bancorp,
Carnegie Bank, N.A.,
Regent Bancshares Corp.
and Regent National
Bank
2 Form of Liquidating Trust 22
Agreement, dated as of
October 2, 1996, by and
among Regent Bancshares
Corp., on behalf of the
holders of its securi-
ties, Regent National
Bank and John J. Lyons,
Frederick W. Dreher and
Abraham Bettinger, as
Trustees
3 October 3, 1996 Press 32
Release issued by
Regent Bancshares Corp.
4 Agreement By And 33
Between Regent National
Bank Philadelphia,
Pennsylvania and The
Office Of The Comptroller
Of The Currency
and Addendum thereto
dated October 10, 1996.
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Exhibit 1
AMENDMENT TO AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT (this "Amendment") dated as of October 2, 1996 is made to
the AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as
of August 30, 1995 by and among Carnegie Bancorp, a New Jersey corporation and
registered bank holding company ("Carnegie"), Carnegie Bank, N.A., a national
banking association ("CBN"), Regent Bancshares Corp., a New Jersey corporation
and registered bank holding company ("Regent") and Regent National Bank, a
national banking association ("Bank"). All capitalized terms used herein but not
defined herein shall have the respective meanings assigned to them in the
Agreement.
Carnegie desires to merge with Regent (the "Merger") and Carnegie's and
Regent's Boards of Directors have respectively determined, based upon the terms
and conditions hereinafter set forth, that the Merger is in the best interests
of Carnegie and Regent and their respective stockholders. The Merger will be
accomplished by merging Regent with and into Carnegie with Carnegie as the
surviving corporation and, at the same time, merging the Bank with and into CBN
with CBN as the surviving bank, and holders of Regent securities receiving the
consideration hereinafter set forth. The Boards of Directors of Regent,
Carnegie, the Bank and CBN have duly approved and adopted this Amendment and the
Boards of Directors of Carnegie and Regent have directed that the Agreement as
amended by this Amendment be submitted to their respective stockholders for
approval and adoption. Except as expressly amended by this Amendment, the terms
and conditions of the Agreement shall remain in full force and effect and are
hereby ratified and confirmed.
Accordingly, the parties hereto agree as follows:
1. Section 1.5 of the Agreement is hereby amended so that as amended
Section 1.5 shall read in its entirety as follows:
"1.5 Directors and Officers. As of the Effective Time, the
Surviving Corporation shall have eleven (11) directors, which shall
consist of nine (9) directors designated by the Board of Directors of
Carnegie from the current members of the Board of Directors of Carnegie
and two (2) directors designated by the Board of Directors of Regent
from the current members of the Board of Directors of Regent or the
Bank, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation and until his or
her successor is duly elected or appointed or his or her earlier death,
resignation or removal. The directors of the Surviving Corporation to be
designated by Regent shall be named by the Board of Directors of Regent
before the filing of the Form S-4 Registration Statement contemplated by
Section 5.6(e) of the Agreement from among Messrs. Bettinger, Biondi,
Dwares, Porter and Ring and Mrs. Teaford. Each director of the Surviving
Corporation designated by Regent shall be granted options to
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purchase shares of Carnegie Common Stock at an exercise price equal to
the closing price of Carnegie Common Stock on the date of the Effective
Time, which options shall be for a number of shares consistent with
Carnegie's standard director compensation policy (approximately 13,000
shares) and which options shall have a term of 10 years. The Board of
Directors of the Surviving Corporation agrees, subject to satisfaction
of its fiduciary duties, to (i) nominate for reelection as directors of
the Surviving Corporation at its 1997 Annual Meeting of Stockholders
each of Carnegie's and Regent's designees as the initial directors of
the Surviving Corporation as specified herein and (ii) recommend to the
stockholders of the Surviving Corporation and otherwise use its best
efforts to cause the election of such nominees."
2. Section 1.7 of the Agreement is hereby amended so that as amended
Section 1.7 shall read in its entirety as follows:
"1.7 The Bank Merger. Immediately following the Effective Time,
the Bank shall be merged with and into CBN (the "Bank Merger") in
accordance with the provisions of the National Bank Act, as amended, and
CBN shall be the surviving bank (the "Surviving Bank"). Upon the
consummation of the Bank Merger, the separate corporate existence of the
Bank and CBN shall be merged into and continued in the Surviving Bank
and such Surviving Bank shall be deemed to be the same corporation as
each bank participating in the Bank Merger. All rights, franchises and
interests of the Bank and CBN in and to every type of property and
choses in action shall be transferred to and vested in the Surviving
Bank by virtue of the Bank Merger, and the Surviving Bank shall hold and
enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and
interests in every fiduciary capacity, in the same manner and to the
same extent as such rights, franchises and interests were held or
enjoyed by any one of the merging banks at the time of the Bank Merger.
Upon the consummation of the Bank Merger, the Articles of Association of
CBN shall become the Articles of Association of the Surviving Bank and
the Bylaws of CBN immediately prior to the Effective Time shall become
the By-laws of the Surviving Bank. The Surviving Bank shall have eleven
(11) directors, which shall consist of nine (9) directors appointed by
Carnegie from among the current members of the Board of Directors of
Carnegie and two (2) directors appointed by Regent, each to hold office
for a one year term in accordance with the Articles of Association and
By-laws of the Surviving Bank and until his or her successor is elected
or appointed or his or her earlier death, resignation or removal. The
directors of the Surviving Bank appointed by Regent shall be the persons
named by Regent's Board of Directors as directors of the Surviving
Corporation pursuant to Section 1.5 hereof. In connection with the
execution of this Amendment, the Bank and CBN shall execute and deliver
a separate merger agreement (the "Bank Merger Agreement") in the form of
Schedule 1.7(b), annexed hereto, for delivery to the OCC (as hereinafter
defined) for approval of the Bank Merger."
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3. Section 2.1 of the Agreement is hereby amended so that as amended
Section 2.1 shall read in its entirety as follows:
"2.1 Extension of Certain Regent Securities. Promptly after the
date hereof, Regent shall take all necessary steps to extend the
expiration date of all outstanding Regent Options and Regent Warrants
(in each case as hereinafter defined) to the extent required from their
current expiration date, so that, as extended, the expiration date of
such options and warrants shall be the earlier of November 30, 1996,
during which period such options and warrants shall be exercisable for
the purchase of Regent Common Stock in accordance with their respective
terms, or thirty (30) days after the termination of this Agreement,
during which period (i.e., the thirty (30) days commencing on the
termination of this Agreement) such warrants and options may be
exercised for the purchase of Regent Common Stock in accordance with
their respective terms."
4. Section 2.2 of the Agreement is hereby amended so that as amended
Section 2.2 shall read in its entirety as follows:
"2.2 Regent Securities. Each share of Regent Common Stock and
Regent Preferred Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on
the part of Carnegie, Regent or the holder thereof, be cancelled and
extinguished and be converted into the right to receive, upon the
surrender of the certificate or other instrument representing such
security, shares of Carnegie Common Stock, no par value ("Carnegie
Common Stock"), and an interest in the Regent Liquidation Trust (as
hereinafter defined) as follows:
"(a) Regent Common Stock. Each outstanding share of
the Common Stock, $0.10 par value, of Regent (the "Regent Common
Stock") (other than Dissenting Shares as hereinafter defined) shall by
virtue of the Merger and without any action on the part of Carnegie,
Regent or the holder thereof, be cancelled and extinguished and be
converted into the right to receive upon the surrender of the
certificate representing such share (i) from Carnegie that fraction of
a share of Carnegie Common Stock equal to the quotient (the "Conversion
Ratio") obtained from dividing the Regent Book Value Per Share (as
hereinafter defined) by the Carnegie Book Value Per Share (as
hereinafter defined) and (ii) from Regent one uncertificated unit of
beneficial interest (a "Unit") in the Regent Liquidation Trust. The
"Regent Book Value Per Share" shall mean the quotient obtained by
dividing (x) the total shareholders' equity of Regent as reflected on
the Regent Financial Statements as of the last day of the month ended
immediately preceding the Effective Time, as determined in accordance
with generally accepted accounting principles consistently applied,
except that the following adjustments shall be made to the total
shareholders' equity of Regent: (A) no effect shall be given to
unrealized holding gains or losses on available for sale securities
held by the Bank, (B) all automobile insurance premium finance loans
(the "IPF Loans") made by the
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Bank and not charged off pursuant to the Bank's policy or pursuant to
Section 6.2(k) of the Agreement shall be deducted from the total
shareholders' equity of Regent and (C) such shareholders' equity shall
be reduced by $410,000 in recognition of Merger-related expenses
incurred by Carnegie by (y) the number of issued and outstanding shares
of Regent Common Stock and Regent Preferred Stock (as hereinafter
defined) as of the Effective Time less the number of shares of Regent
Common Stock and Regent Preferred Stock held by Regent and any of its
subsidiaries. The "Carnegie Book Value Per Share" shall mean the
quotient obtained by dividing (x) the total shareholders' equity of
Carnegie as reflected on the Carnegie Financial Statements as of the
last day of the month ended immediately preceding the Effective Time, as
determined in accordance with generally accepted accounting principles
consistently applied, except that no effect shall be given to unrealized
holding gains or losses on available for sale securities held by CBN by
(y) the number of issued and outstanding shares of Carnegie Common
Stock, less the number of shares of Carnegie Common Stock held by
Carnegie and any of its subsidiaries. The "Regent Liquidation Trust"
means the Liquidation Trust created by the Liquidating Trust Agreement
(the "Trust Agreement") dated as of October 2, 1996 by and among Regent,
on behalf of the holders of Regent's capital stock, and John J. Lyons,
Frederick W. Dreher and Abraham Bettinger as Trustees, pursuant to which
the Bank will transfer the Receivables to the Regent Liquidation Trust
upon the Effective Time.
"(b) Regent Convertible Preferred Stock. Each
outstanding share of Regent's Series A Preferred Stock, par value $0.10
per share, Regent Series B Convertible Preferred Stock, par value $.10
per share, Regent Series C Convertible Preferred Stock, par value $.10
per share, Regent Series D Convertible Preferred Stock, par value $.10
per share, and Regent Series E Convertible Preferred Stock, par value
$.10 per share (collectively, the "Regent Preferred Stock") (other than
Dissenting Shares as hereinafter defined) shall, by virtue of the
Merger and without any action on the part of Carnegie, Regent or the
holder thereof, be cancelled and extinguished and be converted into the
right to receive, upon surrender of the certificate representing such
share, (i) that fraction of a share of Carnegie Common Stock equal to
the Conversion Ratio and (ii) one Unit in the Regent Liquidation Trust.
"(c) Fractional Shares. No fractional shares of
Carnegie Common Stock will be issued, and in lieu thereof, each holder
of a Regent security who would otherwise be entitled to a fractional
interest in a share of Carnegie Common Stock will receive an amount in
cash determined by multiplying such fractional interest in a share of
Carnegie Common Stock by the average closing price of Carnegie Common
Stock on the Nasdaq National Market System on the first ten (10)
trading days of the fifteen (15) days preceding the Effective Time. All
shares of Carnegie Common Stock to which any holder of a Regent
security would otherwise be entitled will be aggregated for purposes of
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determining whether or not such security holder is entitled to a
fractional share interest.
"(d) Adjustments. In case Carnegie shall at any time
or times between the date of this Agreement and the Effective Time
either (i) pay a dividend or make any other distribution payable on
Carnegie Common Stock in capital stock of Carnegie or (ii) subdivide or
combine the outstanding shares of Carnegie Common Stock, by
reclassification or otherwise, or issue by reclassification of Carnegie
Common Stock, any shares of capital stock of Carnegie, then in each
such case, the Conversion Ratio shall be proportionately increased or
decreased, as the case may be, effective upon the record date for any
such dividend or distribution or effective immediately after the
effective date of such subdivision, combination or reclassification."
5. Section 2.3 of the Agreement is hereby amended so that as amended the
new Section 2.3 shall read in its entirety as follows:
"2.3 Exchange of Securities.
"(a) Regent and Carnegie shall hereafter appoint a
mutually acceptable party to act as the exchange agent for purposes of
effecting the conversion of Regent securities as set forth above (the
"Exchange Agent"). As soon as practicable after the Effective Time, the
Exchange Agent shall mail to each holder of record (a "Record Holder")
of Regent Common Stock or Regent Preferred Stock, a mutually agreed
upon letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates or other
instruments representing any Regent security (a "Certificate") shall
pass, only upon delivery of the Certificates to the Exchange Agent),
and instructions for use in effecting the surrender of the Certificates
in exchange for Carnegie Common Stock (and cash in lieu of fractional
shares) as provided in Section 2.2 hereof. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, the Record
Holder shall be entitled to receive promptly in exchange for such
Certificate the Carnegie Common Stock, as provided in Section 2.2
hereof and the Certificates so surrendered shall be cancelled. The
Exchange Agent shall not be obligated to deliver or cause to be
delivered to any Record Holder of the Carnegie Common Stock to which
such Record Holder would otherwise be entitled until such Record Holder
surrenders the Certificate for exchange or, in default thereof, an
appropriate Affidavit of Loss and Indemnity Agreement and/or a bond as
may be reasonably required in each case by Carnegie. Notwithstanding
the time of surrender of the Certificates, Record Holders shall be
deemed stockholders of Carnegie for all purposes from the Effective
Time, except that Carnegie shall withhold the payment of dividends to
any Record Holder until such Record Holder effects the exchange of
Certificates for Carnegie Common Stock. Such Record Holder shall
receive such withheld dividends, without interest, upon effecting such
exchange.
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"(b) After the Effective Time, there shall be no transfers
on the stock transfer books of Regent of the shares of Regent Common
Stock or Regent Preferred Stock which were outstanding immediately prior
to the Effective Time and, if any Certificates representing such shares
are presented for transfer, they shall be cancelled and exchanged for
Carnegie Common Stock.
"(c) If issuance of the Carnegie Common Stock, pursuant to
this Section 2.3 is to be made in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be
a condition of such payment that the Certificate so surrendered shall be
properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such payment shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the payment to a person
other than the registered holder of the Certificate surrendered, or
required for any other reason, or shall establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not payable."
6. The introductory paragraph to Article III of the Agreement is hereby
amended so that as amended the introductory paragraph to Article III of the
Agreement shall read in its entirety as follows:
"References herein to the "Regent Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article III, dated
as of the date of this Amendment and referenced in the Agreement as
amended by this Amendment, which have been delivered on the date of this
Amendment by Regent to Carnegie. Regent hereby represents and warrants
to Carnegie as follows:"
7. The introductory paragraph to Article IV of the Agreement is hereby
amended so that as amended the introductory paragraph to Article IV of the
Agreement shall read in its entirety as follows:
"References herein to the "Carnegie Disclosure Schedule" shall
mean all of the disclosure schedules required by this Article IV, dated
as of the date of this Amendment and referenced in the Agreement as
amended by this Amendment, which have been delivered on the date of this
Amendment by Carnegie to Regent. Carnegie hereby represents and warrants
to Regent as follows:"
8. Section 5.2(b) of the Agreement is hereby amended so that as amended
Section 5.2(b) shall read in its entirety as follows:
"5.2 (b) except for (i) the issuance of Regent Common Stock or
Carnegie Common Stock pursuant to the present terms of the outstanding
Regent Options or Carnegie Options, as the case may be, and the Regent
Warrants or upon the conversion of outstanding shares of Regent
Preferred Stock or the Carnegie Warrants, as the case may be, (ii) the
issuance of Regent Common
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Stock to those principals of Regent who contributed capital to Regent in
the aggregate amount of $1 million in September 1996 in an amount not in
excess of 250,000 shares of Regent Common Stock and (iii) the issuance
of Regent Common Stock, if any, the aggregate value of which shall not
exceed $1 million, resulting from any regulatory order or action
requiring the principals of Regent to make further capital contributions
to Regent, change the number of shares of its authorized or issued
common or preferred stock or issue or grant any option, warrant, call,
commitment, subscription, right to purchase or agreement of any
character relating to the authorized or issued capital stock of Regent
or any Regent Subsidiary or Carnegie or any Carnegie Subsidiary, as the
case may be, or any securities convertible into shares of such stock, or
split, combine or reclassify any shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock, other than Regent's regular dividends as set forth in the
Regent Disclosure Schedule and other than Carnegie's regular dividends
as set forth in the Carnegie Disclosure Schedule, or redeem or otherwise
acquire any shares of such capital stock."
9. Sections 5.6(a), 5.6(d) and 5.6(e) of the Agreement are hereby
amended so that as amended Sections 5.6(a), 5.6(d) and 5.6(e) shall read in
their entirety as follows:
"5.6 Regulatory Matters.
"(a) For the purposes of holding the meetings of
Carnegie and Regent stockholders referred to in Section 5.7 hereof and
registering or otherwise qualifying under applicable federal and state
securities laws the Carnegie Common Stock to be issued to the holders
of Regent Common Stock and Regent Preferred Stock in connection with
the Merger, the parties hereto shall cooperate in the preparation and
filing by Carnegie of a Registration Statement with the SEC on Form S-4
which shall include an appropriate proxy statement and prospectus
satisfying all applicable requirements of applicable state and federal
laws, including the Securities Act of 1933, as amended (the "1933
Act"), the 1934 Act and applicable state securities laws and the rules
and regulations thereunder. (Such proxy statement and prospectus in the
form mailed by Carnegie and Regent to their respective stockholders
together with any and all amendments thereof or supplements thereto, is
herein referred to as the "Proxy Statement/Prospectus" and the various
documents to be filed by Carnegie under the 1933 Act with the SEC to
register for sale the Carnegie Common Stock to be issued to the holders
of Regent Common Stock and Regent Preferred Stock, including the Proxy
Statement/Prospectus, are referred to herein as the "Registration
Statement").
"(d) Carnegie and Regent shall as promptly as
practicable make such filings as are necessary in connection with the
offering of the Carnegie Common Stock with applicable state securities
agencies and shall use all reasonable efforts
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to qualify the offering of the Carnegie Common Stock under applicable
state securities laws at the earliest practicable date. Regent shall
promptly furnish Carnegie with such information regarding the Regent
stockholders as Carnegie requires to enable it to determine what
filings are required hereunder. Regent authorizes Carnegie to utilize
in such filings the information concerning Regent and the Bank provided
to Carnegie in connection with, or contained in, the Proxy
Statement/Prospectus. Carnegie shall furnish Regent with copies of all
such filings and keep Regent advised of the status thereof. Carnegie
shall as promptly as practicable file the Registration Statement
containing the Proxy Statement/Prospectus with the SEC, and shall
promptly furnish copies to Regent of all communications, oral or
written, with the SEC concerning the Registration Statement and the
Proxy Statement/Prospectus.
"(e) Carnegie shall cause the Carnegie Common Stock
to be issued in connection with the Merger to be included for quotation
on the National Association of Securities Dealers National Market
System."
10. Section 5.7 of the Agreement is hereby amended so that as amended
Section 5.7 shall read in its entirety as follows:
"5.7 Approval of Stockholders. Each of Carnegie and Regent will
(a) take all steps necessary duly to call, give notice of, convene and
hold meetings of their respective stockholders as soon as reasonably
practicable for the purpose of securing the approval by such
stockholders of this Agreement and the transactions contemplated hereby
(b) subject to the right of the Board of Directors of Regent or Carnegie
to withdraw or modify such recommendations if such Board of Directors
determines that it is required to do so in its exercise of its fiduciary
duties and other legal obligations after consultation with counsel,
recommend to their respective stockholders approval of this Agreement
and the transactions contemplated hereby and use their best efforts to
obtain, as promptly as practicable, such approvals and (c) cooperate and
consult with each other with respect to each of the foregoing matters.
In connection therewith, (a) each director of Regent and Carnegie
agrees, subject to the exercise of his or her fiduciary duties after
consultation with counsel, (i) to vote in favor of the Merger and
(ii) take such action as is necessary or is reasonably required by
Carnegie, in the case of Regent, or Regent, in the case of Carnegie, to
consummate the Merger, and (b) each stockholder of Regent who is also a
director of Regent agrees, in his or her capacity as a stockholder of
Regent, to vote all Regent Common Stock and Regent Preferred Stock he or
she owns of record in favor of the Merger. Each director of Carnegie and
Regent, as the case may be, shall furnish a certificate to Regent and
Carnegie, as the case may be, evidencing his or her agreement to the
provisions of the immediately preceding sentence of this Section 5.7.
Regent agrees that, if requested by Carnegie, Regent will retain a proxy
solicitor to assist in the obtaining of proxies from Regent's
stockholders."
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<PAGE>
11. Section 5.10 of the Agreement is hereby amended so that as amended
Section 5.10 shall read in its entirety as follows:
5.10 Failure to Fulfill Conditions. In the event that Carnegie
or Regent determines that a material condition to its obligation to
consummate the transactions contemplated hereby cannot be fulfilled on
or prior to April 30, 1997 and that it will not waive that condition, it
will promptly notify the other party. Except for any acquisition or
merger discussions Carnegie or Regent may enter into with other parties,
unless the Board of Directors of Regent or Carnegie determines in good
faith, after consultation with outside legal counsel, that taking such
action would create a reasonable possibility of a breach of the
fiduciary duties of such Board of Directors in connection with seeking
an Acquisition Transaction that is more favorable to the stockholders of
that party than the Merger, Regent and Carnegie will promptly inform the
other of any facts applicable to Regent or Carnegie, respectively, or
their respective directors or officers, that would be likely to prevent
or materially delay approval of the Merger by any governmental authority
or which would otherwise prevent or materially delay completion of the
Merger."
12. Section 5.12 of the Agreement is hereby amended so that as amended
Section 5.12 of the Agreement shall read in its entirety as follows:
"5.12 Transaction Expenses. Regent shall advise Carnegie and
Carnegie shall advise Regent monthly of all out-of-pocket expenses which
Regent or Carnegie, as the case may be, has incurred in connection with
the transactions contemplated by this Agreement. From and after the date
of this Amendment, Carnegie agrees to reimburse Regent, and Regent
agrees to reimburse Carnegie, on a current, ongoing basis, for any
out-of-pocket expenses reasonably incurred by Carnegie or Regent, as the
case may be, because of actions taken or actions not taken by Carnegie
or Regent, as the case may be, which result in the substantial delay of
the consummation of the transactions contemplated by this Agreement."
13. Section 5.13 of the Agreement is hereby amended so that as amended
Section 5.13 of the Agreement shall read in its entirety as follows:
"5.13 Closing. The parties hereto shall cooperate and use their
reasonable efforts to try to cause the Effective Time to occur on or
before April 30, 1997."
14. Section 5.14 of the Agreement is hereby amended so that as amended
Section 5.14 shall read in its entirety as follows:
"5.14 Employment Matters. Carnegie shall enter into employment
agreements, effective upon the Effective Time, with Mr. Thomas L. Gray
to serve as President of the Surviving Corporation and the Surviving
Bank for a period of three (3)
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<PAGE>
years, with Ms. Barbara H. Teaford to serve as an executive vice
president of the Surviving Bank for a period of three (3) years and with
Mr. Mark Wolters to serve as an executive vice president of the
Surviving Bank for a period of three (3) years. Such employment
agreements shall provide for compensation of not less than $200,000 in
the case of Mr. Gray, not less than $110,000 in the case of Ms. Teaford
and not less than $110,000 in the case of Mr. Wolters, and shall have
such other terms as shall be mutually agreeable to the parties."
15. Section 5.17 of the Agreement is hereby amended so that as amended
Section 5.17 shall read in its entirety as follows:
"5.17 Agreement of Certain Regent Holders. Within 14 days of the
date of this Amendment, Regent shall: (a) deliver to Carnegie a written
agreement executed by each organizer of Regent and (b) use its best
efforts to cause each other Director and executive officer of Regent to
execute and deliver to Carnegie a written agreement, in each case to the
effect that, each such party agrees with Regent and Carnegie that prior
to the expiration date of any Regent Options or Regent Warrants as
extended hereby, such party will not exercise any Regent Warrants or
Regent Options held by such party. Such agreement shall be in form
reasonably satisfactory to counsel for Carnegie and Regent."
16. Section 5.18(c) of the Agreement is hereby amended so that as
amended Section 5.18(c) shall read in its entirety as follows:
"(c) Carnegie shall maintain in effect for not less than six
years from the Effective Time the policies of directors' and officers'
liability insurance most recently maintained by Regent, provided that
Carnegie may substitute therefor policies with reputable and financially
sound carriers of at least the same coverage containing terms and
conditions which are no less advantageous for so long as such
substitution does not result in gaps or lapses in coverage, with respect
to claims arising from or relating to matters occurring prior to the
Effective Time; provided that in no event shall Carnegie be required to
expend more than an amount per year equal to 250% of the current annual
premiums paid by Regent (the "Premium Amount") to maintain or procure
insurance coverage pursuant hereto and further provided, that if
Carnegie is unable to obtain for the Premium Amount the insurance called
for by this Section 5.18(c), Carnegie shall obtain as much comparable
insurance as is available for the Premium Amount per year and the former
officers and directors of Regent who are covered by such insurance shall
pay any premiums in excess of the Premium Amount as is necessary to
maintain the amount of such insurance as maintained by Regent at the
Effective Time. Such officers and directors shall pay such premiums pro
rata in accordance with their annual rate of compensation from Regent or
the Bank at the date of this Amendment. Carnegie shall pay all expenses
(including attorneys' fees) that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided for in
this Section 5.18."
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<PAGE>
17. A new Section 5.20 is hereby added to the Agreement which Section
5.20 shall read in its entirety as follows:
"5.20 Loan Participations. Regent and the Bank agree that the
Bank will not reduce the amount of any loan loss reserves specifically
allocated on its books to any loan in which the Bank has sold a
participation to CBN pursuant to the Loan Participation Agreement dated
as of September 13, 1996 between the Bank and CBN until the earlier to
occur of the repayment of such loan in full or the Bank's repurchase in
full of such loan from CBN."
18. Sections 6.1(a) and 6.1(d) of the Agreement are hereby amended so
that as amended Sections 6.1(a) and 6.1(d) shall read in their entirety as
follows:
"(a) Approval of Stockholders; SEC Registration. This
Agreement and the transactions contemplated hereby shall have been
approved by the requisite vote of the stockholders of each of Carnegie
and Regent. The Registration Statement shall have been declared
effective by the SEC and shall not be subject to a stop order or any
threatened stop order, and the issuance of the Carnegie Common Stock
shall have been qualified in every state where such qualification is
required under the applicable state securities laws. The Carnegie
Common Stock to be issued in connection with the Merger shall have
received approval to be included for quotation on the National
Association of Securities Dealers National Market System."
"(d) Tax-Free Exchange. Carnegie and Regent shall
have received an opinion, satisfactory to Carnegie and Regent, of
McCarter & English, counsel for Carnegie, to the effect that the
transactions contemplated hereby will result in a reorganization (as
defined in Section 368(a) of the Code), and accordingly (i) no gain or
loss will be recognized for federal income tax purposes by Carnegie,
Regent, CBN or the Bank to the extent such entities receive and/or
distribute property (including stock and/or securities) which may be
received or distributed on a tax-free basis in a reorganization under
Section 368(a) or the Code and (ii) no gain or loss will be recognized
for federal income tax purposes by the stockholders of Regent who
exchange their shares of Regent Common Stock or Regent Preferred Stock
for Carnegie Common Stock (except to the extent that cash is received
in lieu of fractional shares of Carnegie Common Stock or is paid to
holders of Dissenting Shares), (iii) the basis of any Carnegie Common
Stock received by the holders of Regent Common Stock and Regent
Preferred Stock will be, in each instance, the same as the basis of the
Regent Common Stock and Regent Preferred Stock surrendered in exchange
therefor and (iv) the holding period of any Carnegie Common Stock
received by the holders of Regent Common Stock or Regent Preferred
Stock surrendered in exchange therefor will include the holding period
for the Regent Common Stock and Regent Preferred Stock surrendered
therefor."
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<PAGE>
19. New Section 6.1(e) is hereby added to the Agreement, which Section
6.1(e) shall read in its entirety as follows:
"(e) As of the date of the Closing, Regent shall have a
minimum of $6.5 million in stockholders' equity as determined in
accordance with generally accepted accounting principles, except that
no adjustment will have been made for changes in the market value of
available-for-sale securities in calculating such amount."
20. Sections 6.2(g) and 6.2(h) are hereby amended so that as amended
Sections 6.2(g) and 6.2(h) shall read in their entirety as follows:
"(g) Regulatory Action. No regulatory agency having
jurisdiction over the Merger or the Bank Merger shall have imposed any
condition upon their approval of the Merger or the Bank Merger, or have
taken any action against Regent or the Bank which will be binding upon
the Surviving Bank or the Surviving Corporation, which, in the
reasonable opinion of Carnegie, will materially impair the value of
Regent and/or the Bank to Carnegie or materially impair or restrict the
operations of the Surviving Bank or the Surviving Corporation after the
Merger."
"(h) Legal Proceedings Against Regent. No legal proceedings
shall be pending or threatened against Regent or the Bank, whether
brought by a stockholder of Regent, an insurance agent or insurance
company in connection with the IPF loans or any other party which, in
the reasonable determination of Carnegie based upon and in accordance
with the advice of Carnegie's counsel, could reasonably be expected to
result in a material adverse impact upon Regent or the Bank or the
Surviving Corporation or the Surviving Bank."
21. Sections 6.2(i) and 6.2(j) are hereby amended so that as amended
Sections 6.2(i) and 6.2(j) shall read in their entirety as follows:
"(i) Exercise of Dissenters Rights. In the aggregate, not more
than 10% of the holders of Carnegie Common Stock, Regent Common Stock,
Regent Series A Preferred Stock, Regent Series B Convertible Preferred
Stock, Regent Series C Convertible Preferred Stock, Regent Series D
Convertible Preferred Stock and Regent Series E Convertible Preferred
Stock combined shall have exercised their dissenters rights of appraisal
pursuant to N.J.S.A. 14A:11-1 et seq.
"(j) Regent shall have delivered to Carnegie copies of Regent's
audited consolidated financial statements for the year ending December
31, 1996. Such Regent Financial Statements for the year ending December
31, 1996 shall (i) be accompanied by the unqualified audit opinion of
Arthur Andersen, LLP and (ii) not reflect a material adverse change from
the consolidated financial condition and the consolidated results of
operations of Regent as reflected in the unaudited Regent Financial
State-
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<PAGE>
ments for the nine months ended September 30, 1996 included in the
Registration Statement."
22. New Sections 6.2(k) and 6.2(l) are hereby added to the Agreement
which Sections 6.2(k) and 6.2(l) shall read in their entirety as follows:
"(k) As of the last day of the month ended immediately preceding
the Effective Time, the Bank shall have charged-off all IPF Loans.
"(l) Carnegie shall have received a letter addressed to it,
dated the date of the Closing, in form and substance reasonably
satisfactory to Carnegie, from each director of Regent to the effect
that the representations and warranties of Regent contained in this
Agreement are, to the best of such director's personal knowledge, true
and correct in all material respects.
23. Section 6.3(f) of the Agreement is hereby deleted.
24. Sections 7.1(b) and 7.1(c) of the Agreement are hereby amended so
that as amended Sections 7.1(b) and 7.1(c) shall read in their entirety as
follows:
"(b) By Carnegie or Regent (i) if the Effective Time shall not
have occurred on or prior to April 30, 1997 or (ii) if a vote of the
stockholders of Carnegie or Regent is taken and either the Carnegie or
Regent stockholders fail to approve this Agreement at their respective
meetings (or any adjournment thereof) held for such purpose, unless in
each case the failure of such occurrence shall be due to the failure of
the party seeking to terminate this Agreement to perform or observe its
agreements set forth herein to be performed or observed by such party
(or the directors of Regent or Carnegie) at or before the Effective
Time.
"(c) By Carnegie or Regent upon written notice to the other if
any application for regulatory or governmental approval necessary to
consummate the Merger and the Bank Merger and the other transactions
contemplated hereby shall have been denied or withdrawn at the request
or recommendation of the applicable regulatory agency or governmental
authority or by Carnegie upon written notice to Regent if any such
application is approved with conditions which materially impair the
value of Regent and the Bank, taken as a whole, to Carnegie, or which
would materially impair the value of the shares of Carnegie Common Stock
to be issued to the holders of Regent Common Stock and Preferred Stock
and who will receive Carnegie Securities pursuant to Article II hereof."
25. Sections 8.1(a) and 8.1(c) of the Agreement are hereby amended so
that as amended Sections 8.1(a) and 8.1(c) shall read in their entirety as
follows:
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<PAGE>
"(a) Whether or not the Merger is consummated and except as
otherwise provided in Section 5.12 hereof or in this Section 8.1, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated by this Agreement shall be paid by the party
incurring the cost or expense, provided that in the event the Merger is
not consummated for any reason other than the termination of the
Agreement by Regent pursuant to Section 7.1(e)(ii) of this Agreement,
Regent shall pay to Carnegie all costs and expenses incurred by Carnegie
in connection with the transactions contemplated by this Agreement,
including all fees and expenses of Carnegie's auditors, attorneys and
investment banker, all printing costs in connection with the
Registration Statement contemplated by Section 5.6 hereof and all filing
fees, less $250,000 and less any payment made by Regent to Carnegie
pursuant to Section 5.12 of this Agreement. Such payment shall be made
by Regent in next day funds within five business days after receipt by
Regent of a demand therefor by Carnegie accompanied by an accounting in
reasonable detail of all such expenses. Regent agrees to secure the
payment of such expenses, in a manner satisfactory to both parties, by
October 15, 1996."
"(c) Regent agrees to pay Carnegie a fee in immediately
available funds equal to $1,000,000 upon the termination of the
Agreement by Carnegie pursuant to Section 7.1(i) hereof or by Regent
pursuant to Section 7.1(h) hereof."
26. In all other respects, the Agreement shall remain in full force and
effect and is hereby ratified and confirmed.
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<PAGE>
IN WITNESS WHEREOF, Carnegie, CBN, Regent and the Bank have caused this
Amendment to be executed by their duly authorized officers as of the day and
year first above written.
CARNEGIE BANCORP
By: /s/ Thomas L. Gray, Jr.
------------------------------
Thomas L. Gray, Jr., President
and Chief Executive Officer
CARNEGIE BANK, N.A.
By: /s/ Thomas L. Gray, Jr.
------------------------------
Thomas L. Gray, Jr., President
and Chief Executive Officer
REGENT BANCSHARES CORP.
By: /s/ David W. Ring
------------------------------
David W. Ring, Chairman
of the Board
REGENT NATIONAL BANK
By: /s/ David W. Ring
------------------------------
David W. Ring, Chairman
of the Board
-21-
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 John J. Lyons, Abraham
Bettinger and Frederick W. Dreher, 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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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
1530 Walnut Street
Philadelphia, PA 19103
with a copy to:
Duane, Morris & Heckscher
1650 Market Street
4200 One Liberty Place
Philadelphia, PA 19103-7396
Attention: Frederick W. Dreher, 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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<PAGE>
(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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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
REGENT BANCSHARES CORP.
By:
-----------------------------
David W. Ring,
Chairman of the Board and
Chief Executive Officer
REGENT NATIONAL BANK
By:
-----------------------------
John J. Lyons, President
TRUSTEES:
--------------------------------
John J. Lyons
--------------------------------
Abraham Bettinger
--------------------------------
Frederick W. Dreher
Carnegie Bancorp hereby joins in this Agreement for the sole purpose of
evidencing its agreement to Section 8 hereof.
CARNEGIE BANCORP
By:
-----------------------------
Thomas L. Gray, Jr.,
President and Chief
Executive Officer
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EXHIBIT 3
REGENT BANCSHARES CORP
PRESS RELEASE
*FOR IMMEDIATE RELEASE*
PHILADELPHIA, PA OCTOBER 3, 1996: Regent Bancshares Corp. (NASDAQ symbol -
RBNK), the parent of Regent National Bank, and Carnegie Bancorp of Princeton,
NJ, the parent of Carnegie Bank, N.A. (NASDAQ symbol -CBNJ) have announced an
amendment to the merger agreement signed on August 30, 1995. Under the terms of
the amendment, Regent will be acquired by Carnegie through an exchange of
Regent's common stock and preferred shares for Carnegie common stock. The
exchange rate is to be based on the ratio of Regent's book value to Carnegie's
book value determined on the last day of the month immediately preceding the
closing date. The amendment does not provide for the purchase or exchange of
Regent's outstanding warrants and options by Carnegie.
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EXHIBIT 4
AGREEMENT BY AND BETWEEN
REGENT NATIONAL BANK
PHILADELPHIA, PENNSYLVANIA
AND
THE OFFICE OF THE COMPTROLLER OF THE CURRENCY
Regent National Bank (Bank), and the Comptroller of the Currency of the
United States of America (Comptroller) wish to protect the interests of the
depositors, other customers, and shareholders of the Bank, and, toward that end,
wish the Bank to operate safely and soundly and in accordance with all
applicable laws, rules and regulations.
The Comptroller, through his National bank Examiner, has examined the
Bank through a continuing onsite review, the findings of which were communicated
to the Board on August 9, and August 29, 1996.
In consideration of the above premises, it is agreed, between the Bank,
by and through its duly elected and acting Board of Directors (Board), and the
Comptroller, through his authorized representative, that the Bank shall operate
at all times in compliance with the articles of this Agreement.
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<PAGE>
ARTICLE I
DEFINITIONS
(1) This Agreement shall be construed to be a "written agreement entered into
with the agency" within the meaning of 12 U.S.C. section 1818(b)(1).
(2) This Agreement shall be construed to be a "written agreement between such
depository institution and such agency" within the meaning of 12 U.S.C.
section 1818(e)(1) and 12 U.S.C. section 1818(i)(2).
Article II
ACTION PLAN
(1) Within thirty (30) days, the Board shall adopt and implement an action plan
detailing the Board's perception of what needs to be done to improve the Bank,
specifying how the Board will implement the plan, and setting forth a timetable
for the implementation of this plan.
(2) Upon completion of the plan, the Bank shall submit the plan to the Field
Office Director for review. The Board shall establish appropriate procedures for
the implementation of the plan.
(3) In the event the Field Office Director recommends changes to the action
plan, the Board shall immediately incorporate those changes into the plan.
(4) The Board shall ensure that capable, competent and adequate staff are
maintained at the Bank to fulfill the plan and the Board's rehabilitative
efforts.
(5) The plan shall be implemented pursuant to the timeframes set forth within
the plan unless events dictate modifications to the plan are required. Where the
Board considers modifications appropriate, those modifications shall be
submitted to the Field Office Director for approval.
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<PAGE>
Article III
CAPITAL AND DIVIDENDS
(1) The Bank shall achieve on or before October 31, 1996, the following capital
levels (as defined in 12 C.F.R. Part 3):
(a) Total capital at least equal to nine and one half percent (9.5%) of
risk weighted-assets;
(b) Tier 1 capital at least equal to eight percent (8%) of risk-weighted
assets;
(c) Tier 1 capital at least equal to five percent (5%) of adjusted total
assets(1).
(2) The Bank shall achieve by December 31, 1996, and thereafter maintain the
following capital levels:
(a) Total capital at least equal to ten percent (10%) of risk-weighted
assets;
(b) Tier 1 capital at least equal to eight percent (8%) of risk-weighted
assets;
(c) Tier 1 capital at least equal to six and one half percent (6.5%) of
adjusted total assets.
(3) Within thirty (30) days, the Board shall develop a three year capital
program. The program shall include:
(a) specific plans for the maintenance of adequate capital which may in no
event be less than the requirements of paragraph (2);
(b) projections for growth and capital requirements based upon a detailed
analysis of the Bank's assets, liabilities, earnings, fixed assets,
and off-balance sheet activities;
(c) projections of the sources and timing of additional capital to meet
the Bank's current and future needs;
(d) the primary source(s) from which the Bank will strengthen its capital
structure to meet the Bank's needs;
-------- 1 Adjusted total assets is defined in 12 C.F.R. section 3.2(a) as
the average total asset figure used for Call Report purposes minus
end-of-quarter intangible assets.
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<PAGE>
(e) contingency plans which identify alternative methods should the
primary source(s) under (d) above not be available; and
(f) a dividend policy which permits the declaration of a dividend only
when in accordance with paragraph (4).
(4) The Board shall declare to pay dividends only:
(a) when the Bank is in compliance with 12 U.S.C. sections 56 and 60;
(b) when the Bank is in compliance with its approved capital program;
(c) with the prior written approval of the Field Office Director; and
(d) when such dividend payment is consistent with the capital levels
required in paragraph (2).
(5) Upon completion, the Bank's capital program shall be submitted to the Field
Office Director for approval. Upon approval by the Field Office Director, the
Bank shall implement and adhere to the capital program. The Board shall review
and update the Bank's capital program on an annual basis, or more frequently if
necessary. Copies of the reviews and updates shall be submitted to the Field
Office Director.
Article IV
AUTO INSURANCE PREMIUM FINANCE PORTFOLIO
(1) The Bank will continue the process of liquidating the Auto Insurance Premium
Finance (AIPF) portfolio. The Board shall ensure that the liquidation and
collection of the portfolio, including accounts which have been charged-off, is
progressing in an orderly and timely manner. Monthly progress reports on the
status of the portfolio's liquidation and collection shall be forwarded to the
Field Office Director for review.
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<PAGE>
(2) Within thirty (30) days, the Board shall ensure the establishment and
implementation of adequate procedures for the proper management of programming,
computer operations and data entry activities related to the AIPF portfolio.
These procedures shall, at a minimum, address the following:
(a) maintaining the integrity of production data, application programs,
the operating system and related system resources, including the need
for both physical and logical security;
(b) providing contingency/disaster recovery plans for data processing and
operational support at an offsite location, including the appropriate
back-up of both application programs and data files; and
(c) ensuring that program changes are documented, tested and implemented
in a controlled manner.
(3) The Board shall immediately provide a report to the Field Office Director on
the scope and status of the investigation being performed by the forensic
accounting firm of Nihill & Riedley, P.C. Within thirty (30) days, a detailed
report outlining the conclusions and recommendations of Nihill & Reidley, P.C.
shall be forwarded to the Field Office Director for review. The Field Office
Director shall have the right to determine the adequacy of the investigation and
whether any further investigation shall be required.
Article V
ALLOWANCE FOR LOAN AND LEASE LOSSES
(1) The Board shall review the adequacy of the Bank's Allowance for Loan and
Lease Losses and shall establish a program for the maintenance of an adequate
Allowance. This review and program shall be designed in light of the comments on
maintaining a proper Allowance for Loan and Lease Losses found in the Allowance
for Loan and Lease Losses section of the Comptroller's Handbook, June 1996, and
shall focus particular attention on the following factors:
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<PAGE>
(a) a monthly analysis of the historical loss migration in the Bank's Auto
Insurance Premium Finance (AIPF) portfolio.
(b) results of the Bank's internal and/or external loan review;
(c) an estimate of inherent loss exposure on each significant credit;
(d) an estimate of potential loss exposure on each credit in excess of two
hundred thousand dollars ($200,000);
(e) loan loss experience;
(f) trends of delinquent and nonaccrual loans;
(g) concentrations of credit in the Bank; and
(h) present and prospective economic conditions.
(2) The monthly loss migration analysis required in paragraph (1)(a) above
should provide the basis for a specific allocation to the ALLL to cover
potential losses in the Auto Insurance Premium Finance (AIPF) portfolio. Upon
completion, a copy of each monthly analysis shall be submitted to the Field
Office Director for review and approval prior to determining the amount of such
specific allocation. In the event the Board recommends an alternative
methodology to determine an appropriate allocation amount for the AIPF
portfolio, the Board shall submit adequate documentation of such methodology to
the Field Office Director for review. The Board shall not substitute the
alternative methodology for the loss migration analysis required in paragraph
(1) without the prior approval of the Field Office Director. If the Field Office
Director approves the alternative methodology, the specific allocation amount to
the ALLL to cover potential losses in the AIPF portfolio remains subject to the
approval of the Field Office Director.
(3) The program shall provide for a review of the Allowance by the Board at
least once each calendar quarter. Any deficiency in the Allowance shall be
remedied in the quarter it is discovered, prior to the filing of the Report of
Condition, by additional provisions from earnings. Written documen-
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<PAGE>
tation shall be maintained indicating the factors considered and conclusions
reached by the Board in determining the adequacy of the Allowance.
(4) A copy of the Board's program shall be submitted to the Field Office
Director for review and approval.
Article VI
LIQUIDITY
(1) The Board shall immediately increase the liquidity of the Bank to a level
which is sufficient to sustain the Bank's current operations and to withstand
any anticipated or extraordinary demand against its funding base. Such actions
may include, but are not necessarily limited to:
(a) selling assets;
(b) obtaining lines of credit from the Federal Reserve Bank;
(c) obtaining lines of credit from correspondent banks;
(d) recovering charged-off assets; and
(e) injecting additional equity capital.
(2) The Board shall review the Bank's liquidity on a weekly basis. Such
reviews shall consider:
(a) a maturity schedule of certificates of deposit, including large
uninsured deposits;
(b) the volatility of demand and interest bearing deposits, including
escrow deposits;
(c) the amount and type of loan commitments and standby letters of credit;
(d) an analysis of the continuing availability and volatility of present
funding sources;
(e) an analysis of the impact of decreased cash flow from the Bank's loan
portfolio resulting from delinquent and non-performing loans;
(f) an analysis of the impact of decreased cash flow from the sale of
loans or loan participations; and
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<PAGE>
(g) an analysis of the structure of the Bank's balance sheet and any
attendant impact on interest rate risk.
(3) The Board shall take appropriate action to ensure adequate sources of
liquidity in relation to the Bank's needs. Monthly reports shall set forth
liquidity requirements and sources. Copies of these reports shall be forwarded
to the Field Office Director.
Article VII
COMPLIANCE COMMITTEE
(1) Within ten (10) days, the Board shall appoint a Compliance Committee of at
least three (3) directors, of which no more than 1 shall be employees of the
Bank or any of its affiliates (as the term "affiliate" is defined in 12 U.S.C.
section 371c(b)(1)), or a family member of any such person. The Compliance
Committee shall be responsible for monitoring and coordinating the Bank's
adherence to the provisions of this Agreement.
(2) Within twenty (20) days of the appointment of the Committee and
(quarterly) thereafter, the Compliance Committee shall submit a written progress
report to the Board setting forth in detail:
(a) actions taken to comply with each Article of this Agreement; and
(b) the results of those actions.
(3) The Board shall forward a copy of the Compliance Committee's report, with
any additional comments by the Board, to the Field Office Director.
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<PAGE>
Article VIII
CLOSING
(1) Although the Board has agreed to submit certain programs and reports to
the Field Office Director for review or approval, the Board has the ultimate
responsibility for proper and sound management of the Bank.
(2) It is expressly and clearly understood that if, at any time, the Comptroller
deems it appropriate in fulfilling the responsibilities placed upon him by
the several laws of the United States of America to undertake any action
affecting the Bank, nothing in this Agreement shall in any way inhibit, estop,
bar, or otherwise prevent the Comptroller from so doing.
(3) Any time limitations imposed by this Agreement shall begin to run from
the effective date of this Agreement. Such time requirements may be extended by
the Field Office Director for good cause upon written application by the Board.
(4) Copies of any and all materials or reports referred to in this Agreement
which are required to be forwarded to the Field Office Director shall also be
forwarded to the attention of the National Bank Examiners at 4 Greenwood
Square, Suite 120, 3325 Street Road, Bensalem, Pennsylvania, 19020-2025.
(5) The provisions of this Agreement shall continue in full force and effect
unless or until such provisions are amended by mutual consent of the parties to
the Agreement or excepted, waived, or terminated by the Comptroller.
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<PAGE>
IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller,
has hereunto set her hand on behalf of the Comptroller.
/s/ Theresa A. Pote October 10, 1996
- --------------------------------- ------------------
THERESA A. POTE DATE
Field Office Director
Northeastern District
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<PAGE>
IN TESTIMONY WHEREOF, the undersigned, as the duly elected and acting
Board of Directors of the Bank, have hereunto set their hands on behalf of the
Bank.
/s/ Abraham Bettinger October 10, 1996
- ------------------------------- -----------------------------
Abraham Bettinger Date
/s/ Leonard Dwares October 10, 1996
- ------------------------------- -----------------------------
Leonard Dwares Date
/s/ John Lyons October 10, 1996
- ------------------------------- -----------------------------
John Lyons Date
/s/ Nelson Mishkin October 10, 1996
- ------------------------------- -----------------------------
Nelson Mishkin Date
/s/ Harvey Porter October 10, 1996
- ------------------------------- -----------------------------
Harvey Porter Date
/s/ David Ring October 10, 1996
- ------------------------------- -----------------------------
David Ring Date
/s/ Barbara Teaford October 10, 1996
- ------------------------------- -----------------------------
Barbara Teaford Date
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<PAGE>
ADDENDUM TO AGREEMENT BY AND BETWEEN
REGENT NATIONAL BANK
PHILADELPHIA, PENNSYLVANIA
AND
THE OFFICE OF THE COMPTROLLER OF THE CURRENCY
WHEREAS, Regent National Bank (the "Bank") and the Office of the
Comptroller of the Currency of the United States of America (the "Comptroller")
are entering into an agreement (the "Agreement") this 10th day of October 1996;
and
WHEREAS, Paragraphs 1 and 2 of Article III of the Agreement require
that the Bank achieve specified capital levels by October 31, 1996 and December
31, 1996, respectively; and
WHEREAS, John J. Lyons became President and Chief Executive Officer of
the Bank subsequent to September 13, 1996 when the Comptroller notified the Bank
that the Comptroller deemed the Bank undercapitalized as of June 30, 1996; and
WHEREAS, John J. Lyons is serving as President and Chief Executive
Officer of the Bank on an interim basis pending the Bank's merger with Carnegie
Bank, N.A.;
IT IS HEREBY ACKNOWLEDGED AND AGREED THAT:
1. In the event the Bank does not achieve the capital levels required
by Paragraphs 1 and 2 of Article III of the Agreement by the dates specified
therein, the Comptroller will not seek to impose or impose personal liability on
John J. Lyons because of the Bank's failure to achieve the capital levels
specified in the aforesaid paragraphs.
2. In all other respects, John J. Lyons joins in the Agreement and
shall be bound by the provisions thereof.
IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller,
has hereunto set her hand on behalf of the Comptroller.
/s/ Theresa A. Pote October 10, 1996
- ---------------------------- ----------------------
THERESA A. POTE Date
Field Office Director
Northeastern District
IN TESTIMONY WHEREOF, the undersigned, a duly elected and acting member
of the Board of Directors of this Bank, has hereunto set his hand on behalf of
the Bank.
/s/ John J. Lyons October 10, 1996
- ---------------------------- ----------------------
John J. Lyons Date
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