<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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) November 1, 1996
--------------------------------
Transworld Bancorp
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
California 0-10692 95-3730637
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) file number) Identification No.)
15233 Ventura Boulevard, Sherman Oaks, CA 91403
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (818) 783-7501
--------------------------
<PAGE> 2
Item 5. Other Events.
TransWorld Bancorp announced on November 4, 1996 that it had entered
into an Agreement and Plan of Merger with Glendale Federal Bank. Under the
Agreement, Glendale is to pay $18.25 in cash for each share of TransWorld
Bancorp common stock. Completion of the merger is subject to regulatory approval
and the approval of stockholders of TransWorld Bancorp.
Stockholders of TransWorld owning in excess of 37% of the currently
outstanding Common Stock have agreed to vote their shares in favor of the
merger. In addition, the merger agreement provides for payment by TransWorld
Bancorp of a break-up fee under certain conditions described in the agreement.
2
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
1. Press Release Dated November 4, 1996.
2. Agreement and Plan of Merger between Glendale Federal Bank,
Federal Savings Bank and TransWorld Bancorp and TransWorld
Bank, dated as of November 1, 1996.
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.
TransWorld Bancorp
Registrant
Date: November 15, 1996
By: /s/ Howard Stanke
__________________________
Howard Stanke
Chief Financial Officer
3
<PAGE> 1
EXHIBIT 1
PRESS RELEASE
GLENDALE, CALIFORNIA, November 4, 1996 -- Glendale Federal Bank
(NYSE:GLN) and TransWorld Bancorp (NASDAQ/OTC:TWBC: announced today they have
entered into an agreement whereby Glendale Federal will acquire TransWorld and
its principal subsidiary, TransWorld Bank, in a cash transaction valued at $63.0
million.
Under the terms of the agreement, Glendale Federal will pay $18.25 per
share for the outstanding common shares of TransWorld, equivalent to 1.96 times
TransWorld's book value on September 30, 1996. The agreement is subject to
regulatory and other approvals and is expected to close early in the second
calendar quarter of 1997. When completed, TransWorld's operations will be merged
into Glendale Federal.
"Business banking is a high priority at Glendale Federal. The
TransWorld acquisition brings significant business banking capabilities,
including small business relationship building experience and Small Business
Administration (SBA) lending expertise," said Glendale Federal Chairman and
Chief Executive Officer Stephen J. Trafton. "We can use these capabilities to
more rapidly develop and grow both business banking products and relationships
throughout the state. In addition, TransWorld is a strong generator of
business-related deposits and Glendale Federal will benefit from the addition of
branches which are located in communities where we would like to have a stronger
presence."
David H. Hender, vice chairman and chief executive officer of
TransWorld, stated: "We are delighted to be joining Glendale Federal Bank. We
believe they share our strong customer service orientation and that their focus
on building a strong business and consumer banking presence will result in
enhanced products and services for our customers. Glendale Federal has expressed
to us their commitment to maintaining TransWorld's customer relationships,
including retention of key TransWorld personnel familiar with our customers'
requirements, to avoid any disruption in service from the merger of our banks."
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
BETWEEN
GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK
AND
TRANSWORLD BANCORP
and
TRANSWORLD BANK
---------------------------------------------
Dated as of November 1, 1996
----------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS .............................................................................1
ARTICLE I. THE MERGER...........................................................2
1.1. Structure of Merger..................................................2
1.2. Effect on Outstanding Shares.........................................2
1.3. Exchange Procedures..................................................3
1.4. Dissenters' Rights...................................................5
1.5. Options..............................................................5
1.6. Alternative Structure................................................6
ARTICLE II. CONDUCT PENDING THE MERGER ..........................................6
2.1. Conduct of Business Prior to the Effective
Time.................................................................6
2.2. Forbearance by the TW Entities.......................................7
2.3. Cooperation..........................................................9
ARTICLE III. REPRESENTATIONS AND WARRANTIES......................................10
3.1. Disclosure Letter...................................................10
3.2. Standards...........................................................10
3.3. Representations and Warranties of the TW
Entities............................................................10
3.4. Representations and Warranties of the
Acquiror............................................................23
ARTICLE IV. COVENANTS...........................................................25
4.1. Acquisition Proposals...............................................25
4.2. Certain Policies of the TW Entities.................................26
4.3. Employees...........................................................26
4.4. Access to Information...............................................28
4.5. Regulatory Matters..................................................28
4.6. Actions.............................................................29
4.7. Publicity...........................................................30
4.8. Proxy Statement.....................................................30
4.9. Shareholder Action..................................................30
4.10. Notification of Certain Matters.....................................31
4.11. Tax Matters.........................................................31
4.12. Merger Sub..........................................................31
4.13. Updated Disclosure Letter...........................................32
4.14. D&O Insurance.......................................................32
ARTICLE V. CONDITIONS TO CONSUMMATION..........................................32
5.1. Conditions to All Parties' Obligations..............................32
5.2. Conditions to Obligations of the Acquiror...........................33
5.3. Conditions to Obligations of the TW Entities........................34
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI. TERMINATION.........................................................34
6.1. Termination.........................................................34
6.2. Effect of Termination...............................................35
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME...................................37
7.1. Effective Date and Effective Time...................................37
ARTICLE VIII. OTHER MATTERS.......................................................37
8.1. Certain Definitions: Interpretation.................................37
8.2. Survival............................................................38
8.3. Waiver..............................................................39
8.4. Counterparts........................................................39
8.5. Governing Law.......................................................39
8.6. Expenses............................................................39
8.7. Notices.............................................................39
8.8. Entire Agreement; No Third Party
Beneficiaries.......................................................40
8.9. Parties Bound; Assignment...........................................40
8.10. Severability........................................................40
8.11. Captions............................................................41
</TABLE>
Exhibits
Exhibit A - Agreement of Merger
Exhibit B - TransWorld Retention Bonus Plan
Exhibit C - Legal Opinion of TW Entities' Counsel
-ii-
<PAGE> 4
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of November 1, 1996 between GLENDALE FEDERAL BANK, FEDERAL SAVINGS BANK (the
"Acquiror"), on the one hand, and TRANSWORLD BANCORP ("TW Holding") and its
wholly-owned subsidiary, TRANSWORLD BANK ("TW Bank" and, together with TW
Holding, the "TW Entities"), on the other, with respect to the following facts:
RECITALS
A. The Acquiror is a federal savings bank regulated by the Office of
Thrift Supervision of the Department of the Treasury (the "OTS"). Its customer
deposit accounts are insured by the Savings Association Insurance Fund (the
"SAIF") of the Federal Deposit Insurance Corporation (the "FDIC").
B. TW Holding is a corporation organized under the laws of the State of
California that owns all of the issued and outstanding stock of TW Bank. TW
Holding is registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended (the "BHCA"), and is regulated as such by the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). TW Bank
is a commercial bank organized under the laws of the State of California that is
not a member bank of the Federal Reserve System. TW Bank is regulated by the
California State Banking Department and the FDIC. Its customer deposit accounts
are insured by the Bank Insurance Fund (the "BIF") of the FDIC.
C. The respective boards of directors of the Acquiror and the TW
Entities have determined that it is desirable and in the best interests of their
respective shareholders and depositors that a newly created, wholly-owned
interim subsidiary corporation of the Acquiror organized under California law
("Merger Sub") be merged with and into TW Holding in a merger transaction in
which the shareholders of TW Holding will receive solely cash in the amount
provided for herein in exchange for their shares, all on the terms and subject
to the conditions set forth in this Agreement and such boards of directors have
approved this Agreement and the execution, delivery and performance hereof by
the officers of their respective companies.
D. As a condition and inducement to the Acquiror's willingness to enter
into this Agreement, certain shareholders of TW Holding are concurrently
herewith entering into a Shareholder Agreements dated as of the date hereof (the
"Shareholder Agreements") pursuant to which such signatory shareholders agree to
vote all shares of Holding Common Stock owned or controlled by
-1-
<PAGE> 5
them to approve this Agreement and the transactions provided for herein.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I. THE MERGER
Section 1.1. Structure of Merger. At the Effective Time (as defined in
Section 7.1), Merger Sub will be merged (the "Merger") with and into TW Holding
pursuant to the Agreement of Merger (the "Merger Agreement") attached as Exhibit
A hereto and applicable law and regulations. TW Holding shall be the surviving
corporation in the Merger (the "Surviving Corporation"). The separate corporate
existence of Merger Sub shall thereupon cease and the Surviving Corporation
shall succeed to all of the assets, rights, properties, obligations and
liabilities of Merger Sub, and shall retain all of the assets, rights,
properties, obligations and liabilities that TW Holding held or to which TW
Holding was subject immediately prior to the Effective Time, all as provided in
the applicable provisions of the California General Corporation Law. At the
Effective Time, the articles of incorporation and by-laws of TW Holding, as in
effect immediately prior to the Effective Time, shall become the articles of
incorporation and by-laws of the Surviving Corporation. Also at the Effective
Time, the directors and officers of Merger Sub immediately prior thereto shall
become the directors and officers of the Surviving Corporation.
Section 1.2. Effect on Outstanding Shares. (a) By virtue of the Merger,
automatically and without necessity of any action on the part of the holders of
the outstanding shares of Holding Common Stock, each share of the common stock,
without par value, of TW Holding ("Holding Common Stock") issued and outstanding
at the Effective Time (other than "Excluded Shares," as defined below) shall be
converted into the right solely to receive $18.25 in cash, without interest (the
"Merger Consideration").
(b) By virtue of the Merger, the shares of common stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall at the
Effective Time, automatically and without necessity of any action on the part of
the Acquiror, be converted into shares of the Surviving Corporation and shall
thereafter constitute all of the issued and outstanding shares of the capital
stock of the Surviving Corporation.
-2-
<PAGE> 6
(c) "Excluded Shares" shall mean (i) shares of Holding Common Stock
held by any holder (a "Dissenting Shareholder") who shall have taken the
necessary steps to seek appraisal of and to demand payment for such shares of
Holding Common Stock pursuant to the dissenters rights provisions of California
law (the "Dissenting Shares"), and (ii) shares of Holding Common Stock held as
treasury stock by TW Holding or TW Bank.
(d) Dissenting Shares shall be treated as provided in Section 1.4. All
other Excluded Shares shall be canceled and retired and no payment shall be made
with respect thereto.
Section 1.3. Exchange Procedures. (a) At and after the Effective Time,
the certificates that previously represented shares of Holding Common Stock
outstanding immediately prior to the Effective Time (each, a "Certificate")
shall represent only the right to receive the Merger Consideration, without
interest.
(b) At or prior to the Effective Time, the Acquiror shall deposit cash
in the amount equal to the aggregate Merger Consideration to be paid to the
holders of shares of Holding Common Stock pursuant to Section 1.2 with a bank,
savings and loan association or trust company to be selected by the Acquiror
located, or with an office, in Los Angeles County, California and reasonably
acceptable to TW Holding (the "Exchange Agent").
(c) As soon as practicable, but in no event later than five business
days, after the Effective Time the Acquiror shall cause the Exchange Agent to
mail to each holder of a Certificate or Certificates of record as of the close
of business on the Effective Date, the following: (i) a letter of transmittal
specifying that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent, which shall be in such form and contain such reasonable provisions as the
Acquiror shall determine; and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. The
Acquiror shall also make appropriate provisions with the Exchange Agent to
enable such holders of a Certificate or Certificates to deliver such Certificate
or Certificates to the Exchange Agent in person commencing on or not later than
the business day following the Effective Time. Upon the proper surrender of a
Certificate to the Exchange Agent, together with a properly completed and duly
executed letter of transmittal, the holder of such Certificate shall be entitled
to receive in exchange therefor a check (or in the case of a shareholder owning
20,000 or more shares of Holding Common Stock, a wire transfer to an account
specified by such shareholder) representing the Merger Consideration which such
holder has the right to receive in respect of the Certificate or Certificates
surrendered pursuant to the provisions hereof, and the
-3-
<PAGE> 7
Certificate or Certificates so surrendered shall forthwith be canceled. The
Exchange Agent shall as soon as practicable upon receipt of each Certificate
make payment of the Merger Consideration to such holder. No interest shall be
paid or accrued on the Merger Consideration. In the case of a transfer of
ownership of any shares of Holding Common Stock not registered in the transfer
records of TW Holding, a check for the Merger Consideration may only be issued
(or wire transfer sent) to the transferee if each Certificate representing such
Holding Common Stock is presented to the Exchange Agent, accompanied by
documents sufficient, in the judgment of the Acquiror, (i) to evidence and
effect such transfer and (ii) to evidence that all applicable stock transfer
taxes have been paid.
(d) From and after the Effective Time, there shall be no transfers on
the stock transfer records of TW Holding of any shares of Holding Common Stock
that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Acquiror or the Surviving
Corporation, they shall only be canceled and exchanged for the Merger
Consideration deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Section 1.3.
(e) Any portion of the aggregate Merger Consideration or the proceeds
of any investments thereof that remains unclaimed by the shareholders of TW
Holding for twelve months after the Effective Time shall be repaid by the
Exchange Agent to the Acquiror. Any shareholders of TW Holding who have not
thereto- fore complied with this Section 1.3 shall thereafter only be entitled
to look to the Acquiror for payment of the Merger Consideration deliverable to
them in respect of each share of Holding Common Stock such shareholder holds of
record as determined pursuant to this Agreement. If outstanding Certificates are
not surrendered or the payment for the Holding Common Stock represented thereby
is not claimed prior to the date on which such payments would otherwise escheat
to or become the property of any governmental unit or agency, the unclaimed
Certificates and the funds payable in respect thereof shall, to the extent
permitted by applicable abandoned property, escheat or other applicable law,
become the property of the Acquiror (and to the extent not in its possession
shall be paid over to it), free and clear of all claims or interest of any
person previously entitled thereto. Notwithstanding the foregoing, none of the
Acquiror, the Surviving Corporation, the Exchange Agent or any other person
shall be liable to any former holder of Holding Common Stock for any amount
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
-4-
<PAGE> 8
(f) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to have been lost, stolen or destroyed and, if required by the
Exchange Agent or the Acquiror, the posting by such person of a bond in such
amount as the Exchange Agent or the Acquiror, as the case may be, may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration deliverable in respect
thereof pursuant to this Agreement.
Section 1.4. Dissenters' Rights. Dissenting Shares shall not be
converted into the right to receive the Merger Consideration at or after the
Effective Time unless and until the holder of such Dissenting Shares withdraws
his or her demand for appraisal and payment with respect to such Dissenting
Shares with the consent of the Acquiror or TW Holding, if such consent is
required, or becomes ineligible for such appraisal and payment. If a holder of
Dissenting Shares shall withdraw in writing his or her demand for such appraisal
and payment with the consent of the Acquiror or TW Holding, if such consent is
required, or shall become ineligible for such appraisal and payment (through
failure to comply with the requirements of applicable law therefor or
otherwise), then, as of the later of the Effective Time or the occurrence of
such event, such holder's Dissenting Shares shall automatically be converted
into and represent the right to receive the Merger Consideration (without
interest thereon). TW Holding shall give the Acquiror prompt notice of any
demands for such appraisal, withdrawals of demands for such appraisal and any
other instruments served pursuant to applicable law that are received by TW
Holding or its representatives. TW Holding shall not voluntarily make any
payment with respect to any such demands for appraisal and shall not, except
with the prior written consent of the Acquiror, settle or offer to settle any
such demands. Each holder of Dissenting Shares shall have only such rights and
remedies as are granted to such holder under the provisions of applicable law
and regulations. Dissenting Shares shall not, after the Effective Time, be
entitled to vote for any purpose or be entitled to the payment of dividends or
other distributions (except any such dividends or other distributions as may
have been payable to the shareholders of TW Holding of record prior to the
Effective Time).
Section 1.5. Options. TW Holding shall offer to purchase each option
granted by TW Holding to purchase shares of Holding Common Stock pursuant to
employee stock options theretofore granted pursuant to employee stock option
plans of TW Holding described in the TW Disclosure Letter (as defined
in Section 3.1) that has not theretofore been exercised or terminated, whether
or not then otherwise fully vested or fully exercisable, at a price
-5-
<PAGE> 9
equal to (i) the difference between (x) the per share amount of the Merger
Consideration and (y) the per share exercise price applicable to such option
multiplied by (ii) the number of such shares of Holding Common Stock then
subject to such option. TW Holding will make the payments required to be made to
holders of options under this Section 1.5 immediately prior to the Effective
Time. Any such option not purchased by TW Holding pursuant to such offer and not
exercised prior to the Effective Time shall expire at the Effective Time.
Section 1.6. Alternative Structure. Notwithstanding anything in this
Agreement to the contrary, the Acquiror may specify that the TW Entities, the
Acquiror and any subsidiary or affiliate of the Acquiror shall enter into
transactions other than those described in Article I hereof in order to effect
the acquisition of the TW Entities by the Acquiror, and the TW Entities and the
Acquiror shall take all action necessary and appropriate to effect, or cause to
be effected, such transactions; provided, however, that no such transaction,
regardless of whether it is structured as a merger or otherwise, may (i) alter
or change the amount or kind of the Merger Consideration as defined by Section
1.2(a), (ii) materially and adversely affect the economic benefits of the Merger
to the holders of Holding Common Stock, or (iii) materially increase the
possibility that the amount of time required to complete the acquisition of the
TW Entities by the Acquiror will extend beyond the Termination Date (as defined
in Section 6.1(d)).
ARTICLE II. CONDUCT PENDING THE MERGER
Section 2.1. Conduct of Business Prior to the Effective Time. Except as
required by applicable law, rule or regulation, as expressly provided in this
Agreement, as agreed to by the Acquiror in writing during the period from the
date of this Agreement to the Effective Time or as set forth in the TW
Disclosure Letter, the TW Entities shall each (i) conduct its business and
maintain its books and records in the usual, regular and ordinary course, and in
a manner consistent with past practice, (ii) use all commercially reasonable
efforts to maintain and preserve intact its business organization, properties,
leases, and advantageous business relationships and to retain the services of
its officers and employees, (iii) take no action which could reasonably be
expected to adversely affect or delay the ability of the TW Entities, the
Acquiror or Merger Sub to obtain any necessary approvals, consents or waivers of
any governmental authority or other person required for the transactions
contemplated hereby or to perform its covenants and agreements on a timely basis
under this Agreement, and (iv) take no action that could reasonably be expected
to have a material adverse effect on the TW Entities.
-6-
<PAGE> 10
Section 2.2. Forbearance by the TW Entities. During the period from the
date of this Agreement to the Effective Time, and except as contemplated by this
Agreement, the TW Entities shall not, without the prior written consent of the
Acquiror:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other person; provided, however, that neither of the TW Entities shall in
any event incur any indebtedness for borrowed money, including reverse
repurchase agreements and whether or not in the ordinary course of business,
with a maturity exceeding thirty days (it being agreed that any reverse
repurchase agreements permitted by this Section 2.2(a) may be renewed for
additional thirty-day periods, provided that no advance commitment to so renew
may be given to the customer);
(b) issue, redeem or purchase any shares of its capital stock, except
pursuant to existing options to purchase shares of Holding Common Stock that are
listed in the TW Disclosure Letter; adjust, split, combine or reclassify any
shares of capital stock; make, declare or pay any dividend or make any other
distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock, or any securities or obligations
convertible into or exchangeable for any shares of its capital stock; or grant
any stock appreciation rights or grant, sell or issue to any individual,
corporation or other person any right or option to acquire, or securities
evidencing a right to convert into or acquire, any shares of its capital stock;
(c) other than in the ordinary course of business consistent with past
practice and with the other terms, covenants and conditions of this Agreement,
sell, transfer, mortgage, encumber or otherwise dispose of any of its
properties, leases or assets to any person (it being agreed that sales in
accordance with TW Bank's past practice of real estate acquired through
foreclosure or by transfer in lieu of foreclosure shall be considered to be in
the ordinary course of business), or cancel, release or assign any indebtedness
of any such person, except pursuant to contracts or agreements requiring the
same that are in force at the date of this Agreement and have been disclosed to
the Acquiror in the TW Disclosure Letter;
(d) hire any replacement employee above the level of Assistant Vice
President, enter into, renew, amend or modify any employment agreement with any
employee or director, increase in any manner the compensation or fringe benefits
of any of its employees or directors, or create or institute, or make any
payments pursuant to, any severance plan or package, or pay any
-7-
<PAGE> 11
pension or retirement allowance not required by any existing plan or agreement
to any such employees or directors, or become a party to, amend, commit itself
to, or otherwise establish any trust or account related to, any Employee
Agreement (as defined in Section 3.3(n)), with or for the benefit of any
employee, other than general increases in compensation in the ordinary course of
business consistent with past practice, or voluntarily accelerate the vesting of
any stock options or other compensation or benefit or declare or pay any bonus
(except that the TW Entities shall be permitted to pay annual bonuses previously
accrued for and payable in accordance with the TW Entities' existing
compensation policies);
(e) other than in the ordinary course of business consistent with past
practice (it being agreed that credit bids for collateral shall be considered to
be in the ordinary course of business), make any investment in any person or
entity, whether by purchase of stock or other securities or contributions to the
capital of such entity, make any property transfers to any person or entity, or
purchase any property or assets of any person or entity; provided, that no such
investment or series of related investments, whether or not made in the ordinary
course of business, shall be made in excess of $50,000 except in (i) securities
which would be reported under the caption "Cash and Cash Equivalents" on the TW
Entities' balance sheets or statements of financial condition, and (ii) United
States Treasury securities and securities of agencies and instrumentalities of
the federal government that represent full faith and credit obligations of such
agencies and instrumentalities (collectively, "Federal Government Securities")
with a maturity of not more than six months; provided, further, that (iii) TW
Bank may invest the proceeds received by it at the maturity of its securities
investments at the date of this Agreement in Federal Government Securities
having remaining terms to maturity as of the date of investment not exceeding
one year; and (iv) in no event shall the TW Entities make any acquisition of
equity securities or business operations;
(f) enter into, renew or terminate any contract or agreement requiring
payment by any TW Entity of more than $36,000 in any year, of more than six
months in duration, or that is not cancelable without penalty on not more than
sixty days notice (except for any contract to sell real estate by foreclosure or
by deed or other transfer in lieu of foreclosure entered into in the ordinary
course of business) or amend, modify or terminate any material leases or
contracts of any TW Entity;
(g) settle any claim, action or proceeding involving any liability of
any TW Entity for money damages in excess of $25,000 or that would have a
material adverse effect on any TW Entity or
-8-
<PAGE> 12
that would involve material restrictions upon the operations of any TW Entity;
(h) except in the ordinary course of business, waive or release any
material right or collateral or cancel or compromise any extension of credit or
other debt or claim;
(i) except in the ordinary course of business, make, renegotiate,
renew, increase, modify, extend or purchase any loan, lease, advance, credit
enhancement or other extension of credit, or make any commitment in respect of
any of the foregoing;
(j) except as contemplated by Section 4.2, change any of its methods of
accounting as the same were in effect at December 31, 1995, except as required
by changes in generally accepted accounting principles, as concurred in by the
independent auditors of TW Holding, or as required by regulatory accounting
principles or other regulatory requirements;
(k) enter into any new activities or lines of business, solicit or
accept brokered deposits, or cease to conduct any material activities or lines
of business that it conducts on the date hereof, materially change its deposit
pricing policy or mix of deposits, or conduct any material business activity not
consistent with past practice;
(l) amend its articles of incorporation or its by-laws or adopt any
plan of liquidation, whether formal or informal;
(m) make any capital expenditure other than in the ordinary course of
business or as necessary to maintain its assets, and in any event, whether or
not in the ordinary course of business, not exceeding $50,000; or
(n) agree, or make any commitment, to take any of the actions
prohibited by this Section 2.2.
Section 2.3. Cooperation. The TW Entities, the Acquiror and Merger Sub
shall each cooperate with one another in completing the transactions
contemplated hereby and shall not take, cause to be taken or agree, or make any
commitment, to take any action: (i) that is intended or may reasonably be
expected to cause any of their respective representations or warranties set
forth in this Agreement not to be true and correct, or (ii) that is inconsistent
with or prohibited by the provisions of this Agreement.
-9-
<PAGE> 13
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Section 3.1. Disclosure Letter. On or prior to the date of the
execution and delivery hereof, the TW Entities have delivered a letter (the "TW
Disclosure Letter") to the Acquiror setting forth, among other things, facts,
circumstances and events the disclosure of which is required or appropriate in
relation to its representations and warranties set forth in Section 3.3 (and
making specific reference to the Section or Sections of this Agreement to which
they relate). The inclusion of a fact, circumstance or event in the TW
Disclosure Letter, however, shall not be deemed an admission that such item
represents a material exception or that the absence of such item would cause the
representation or warranty to which it relates to be untrue or incorrect.
Section 3.2. Standards. No representation or warranty of the TW
Entities or the Acquiror contained in Sections 3.3 or 3.4, respectively, shall
be deemed untrue or incorrect, and no party hereto shall be deemed to have
breached a representation or warranty, on account of the existence of any fact,
circumstance or event unless such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Sections 3.3 or 3.4, as applicable, (A) is material and adverse
to the business, financial condition or results of operations of the TW Entities
or the Acquiror, as applicable, and their respective subsidiaries taken as a
whole, (B) significantly and adversely affects the ability of the TW Entities or
the Acquiror, as applicable, to consummate the Merger by the Termination Date or
to perform its material obligations hereunder or (C) enables any person to
prevent the consummation of the Merger by the Termination Date.
Section 3.3. Representations and Warranties of the TW Entities. Except
as set forth in the TW Disclosure Letter, each of the TW Entities represents and
warrants to the Acquiror that:
(a) Organization. (i) TW Holding has been duly organized and is validly
existing and in good standing as a corporation under the laws of the State of
California. TW Holding has all requisite corporate and other power and authority
(including all federal, state and local administrative and other governmental
and regulatory authorizations) to carry on its business as it is now being
conducted and to own its properties and assets. Without limiting the generality
of the foregoing, TW Holding is registered as a bank holding company under the
BHCA and is not subject to any special restrictions, conditions or other
limitations, not applicable to bank holding companies under the BHCA generally;
-10-
<PAGE> 14
(ii) TW Bank has been duly organized and is validly existing
and in good standing as a state-chartered commercial bank under the laws of the
State of California. The customer deposit accounts of TW Bank are insured by the
BIF to the extent provided for commercial banks generally in the Federal Deposit
Insurance Act, without any special limitation or restriction. TW Bank has all
requisite corporate and other power and authority (including all federal, state
and local administrative and other governmental and regulatory authorizations)
to carry on its business as it is now being conducted and to own its properties
and assets.
(b) Qualifications. Each of the TW Entities is duly qualified and in
good standing in all jurisdictions where such qualification is required to carry
on its business as it is now being conducted and to own all its properties and
assets.
(c) Capital Stock. The authorized capital stock of TW Holding consists
solely of 6,000,000 shares of common stock, without par value, of which
3,451,715 shares are issued and outstanding as of the date of this Agreement. TW
Holding has no outstanding voting securities other than the outstanding shares
of Holding Common Stock referred to in the first sentence of this paragraph.
Except for shares of Holding Common Stock that are issuable pursuant to the
employee stock options granted pursuant to duly adopted stock option plans that
are listed in the TW Disclosure Letter, no shares of capital stock of TW Holding
are reserved for issuance upon the exercise of outstanding options, warrants or
other rights of any kind or upon conversion of or in exchange for any other
securities or pursuant to any other contractual arrangement or understanding.
All outstanding shares of capital stock of the TW Entities are duly authorized,
validly issued and outstanding, fully paid and, subject (with respect to TW Bank
only) to Section 662 of the California Financial Code, non-assessable. None of
the shares of authorized capital stock of the TW Entities is subject to any
statutory or contractual preemptive or similar rights.
(d) TW Bank; Significant Investments. All of the outstanding shares of
capital stock of TW Bank are owned of record and beneficially, and not subject
to any lien, charge, encumbrance, restriction on transfer or adverse ownership
or other claim of any third party, solely by TW Holding. TW Holding has no
subsidiaries (as defined in Section 8.1) other than TW Bank. Except as stated in
the preceding sentence, neither of the TW Entities owns any equity securities,
any security convertible or exchangeable into an equity security or any rights
to acquire any equity security, other than any equity securities held as
collateral for loans.
-11-
<PAGE> 15
(e) Authority and Shareholder Approvals. (i) This Agreement is a valid
and binding agreement of the TW Entities enforceable against them in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
Upon the receipt of the shareholder approval of this Agreement by the holders of
Holding Common Stock, the completion of the transactions contemplated by this
Agreement will have been authorized by all necessary corporate action of TW
Holding.
(ii) The only shareholder vote required for approval of this
Agreement and consummation of the Merger and the other transactions contemplated
hereby on the part of the TW Entities is the vote of the outstanding shares of
Holding Common Stock required under applicable California law.
(f) No Violations. The execution, delivery and performance of this
Agreement by the TW Entities do not, and the consummation of the transactions
contemplated hereby by the TW Entities will not, constitute (i) a breach or
violation of, or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture or
instrument of the TW Entities or to which the TW Entities (or any of their
respective properties) is subject, or enable any person to enjoin the Merger or
the other transactions contemplated hereby, (ii) a breach or violation of, or a
default under, the articles of incorporation or by-laws or similar
organizational documents of the TW Entities or (iii) a breach or violation of,
or a default under (or an event which with due notice or lapse of time or both
would constitute a default under), or result in the termination of, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the properties or
assets of the TW Entities under, any of the terms, conditions or provisions of
any note, bond, indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which either of the TW Entities is a party, or to
which any of their respective properties or assets may be bound or affected; and
the consummation of the transactions contemplated hereby will not require the TW
Entities to obtain any approval, consent or waiver under any such law, rule,
regulation, judgment, decree, order, governmental permit or license or the
approval, consent or waiver of any other party to any such agreement, indenture
or instrument, other than (i) the required approvals, consents and waivers of
governmental authorities or other persons referred to in Section 5.1(b), (ii)
the approval of the shareholders of the TW Entities referred to in Section
3.3(e), and (iii) such approvals, consents or waivers, if any, as are required
under
-12-
<PAGE> 16
federal and state securities laws in connection with the transactions
contemplated by this Agreement.
(g) Reports. (i) As of their respective dates, neither the annual
report on Form 10-K filed by TW Holding with the Securities and Exchange
Commission ("SEC") nor the audited financial statements of the TW Entities for
the fiscal year ended December 31, 1995, and no other document filed by the TW
Entities subsequent to December 31, 1993 (including, without limitation, annual
or quarterly reports on Forms 10-K and 10-Q or other reports, unaudited or
subsequent audited financial statements filed with the SEC, the Federal Reserve
Board, the FDIC, or the California State Banking Department (all of the
financial statements and other documents referred to in this clause (i) being
collectively referred to in this Agreement as, the "Reports"), contained or will
contain any untrue statement of a material fact or omitted or will omit to state
a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. True and complete copies of all such Reports filed on or
after December 31, 1993 have been delivered to the Acquiror, and the TW Entities
shall provide the Acquiror with true and complete copies of all Reports filed
subsequent to the date hereof immediately after such Reports are filed. Each of
the statements of financial condition or balance sheets contained or
incorporated by reference in the Reports (including in each case any related
notes and schedules) fairly presented or will fairly present, as the case may
be, the financial position of the entity or entities to which it relates as of
its date and each of the statements of operations or income, statements of cash
flows and statements of shareholders' equity, contained or incorporated by
reference in the Reports (including in each case any related notes and
schedules), fairly presented or will fairly present, as the case may be, the
results of operations, shareholders' equity and cash flows, as the case may be,
of the entity or entities to which it relates for the periods set forth therein
(subject, in the case of unaudited interim statements, to normal year-end audit
adjustments that are not material in amount or effect and to the lack of
complete footnotes), in each case in accordance with generally accepted
accounting principles and applicable regulatory accounting principles and
instructions consistently applied throughout the periods involved, except as may
be stated therein. Consistent with the foregoing, the allowances for possible
loan and lease losses reflected in the Reports were or, in the case of Reports
dated after the date hereof, will be in the opinion of the TW Entities'
management (based on the facts known to them at the time of filing of such
Reports and their review of applicable law and regulations) adequate as of the
respective dates thereof under generally accepted accounting principles and
regulatory accounting
-13-
<PAGE> 17
principles as applicable to commercial banks and their holding companies.
(ii) The TW Entities have timely filed all material reports
and statements, together with any amendments required to be made with respect
thereto, with the SEC, the Federal Reserve Board, the FDIC, the California State
Banking Department and any other applicable Government Regulators (as defined in
Section 3.3(k)), and all other material reports and statements required to be
filed by them and have paid all fees and assessments due and payable in
connection therewith.
(h) Absence of Certain Changes or Events. Except as disclosed in the
Reports and except as contemplated by this Agreement or disclosed in the TW
Disclosure Letter, since December 31, 1995: (i) the TW Entities have not
incurred any liability, except in the ordinary course of their businesses
consistent with past practice; (ii) the TW Entities have conducted their
respective businesses only in the ordinary and usual course of such businesses;
and (iii) there has not been any change in the financial condition, properties,
business, or results of operations of the TW Entities which, individually or in
the aggregate, is reasonably likely to have a material adverse effect on the TW
Entities taken as a whole.
(i) Taxes. All federal, state, local, and foreign tax returns required
to be filed by or on behalf of the TW Entities have been timely filed or
requests for extensions have been timely filed, any such requested extensions
have been granted and have not expired, and all such filed returns are complete
and accurate in all material respects. All taxes shown on such returns to be due
have been paid in full or adequate provision has been made for any such taxes in
the financial statements of the TW Entities in accordance with generally
accepted accounting principles. There is no audit, examination, deficiency
assessment, or refund litigation currently pending with respect to any taxes of
the TW Entities. All taxes, interest, additions and penalties due with respect
to completed and settled examinations or concluded litigation relating to the TW
Entities have been paid in full or adequate provision has been made for any such
taxes in the financial statements of the TW Entities in accordance with
generally accepted accounting principles. No extensions or waivers of statutes
of limitations have been given by or requested with respect to any taxes of the
TW Entities. Neither TW Holding nor TW Bank has within the past three years
adopted any plan, whether formal or informal, of liquidation of TW Holding or TW
Bank. No shares of stock of TW Holding and no shares of stock of TW Bank have
been redeemed within the past three years. During the three-year period ending
at the Effective Time, no assets of TW Holding or TW Bank will have been
disposed of otherwise than in the ordinary course of business.
-14-
<PAGE> 18
Neither TW Holding nor TW Bank has or will have acquired assets in any
nontaxable transaction occurring within the three-year period ending at the
Effective Time. Any other transactions undertaken by TW Holding or TW Bank
contemporaneously with, in anticipation of, in conjunction with, or in any way
related to the Merger have been fully disclosed to the Acquiror.
(j) Absence of Claims. No litigation, proceeding or controversy before
any court or governmental agency is pending, and there is no pending claim,
action or proceeding against the TW Entities, and, to the best knowledge of the
TW Entities, no such litigation, proceeding, controversy, claim or action has
been threatened, nor, to the best knowledge of the TW Entities, is there any
basis therefor. No claim (statutory or otherwise), demand, proceeding or other
action is pending against the TW Entities by (i) any of their present or former
employees or (ii) any person who sought to become employed by the TW Entities,
and, to the best knowledge of the TW Entities, no such claim, demand,
proceeding, or other action has been threatened, nor, to the best knowledge of
the TW Entities, is there any basis therefor.
(k) Absence of Regulatory Actions. Neither of the TW Entities is a
party to any cease and desist order, written agreement or memorandum of
understanding with, or a party to any commitment letter or similar undertaking
to, or is subject to any order or directive by, or is a recipient of any
extraordinary supervisory letter from, or has adopted any board resolutions
relating to the foregoing at the request of, federal or state governmental
authorities, including without limitation the SEC and regulatory agencies
charged with the supervision or regulation of depository institutions or
depository institution holding companies or engaged in the insurance of bank
and/or savings and loan deposits, (collectively, "Government Regulators") nor
has it been advised by any Government Regulator that it is contemplating issuing
or requesting (or is considering the appropriateness of issuing or requesting)
any such order, directive, written agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar undertaking. The TW Entities are not aware of any special facts or
circumstances relating to the TW Entities that have not been disclosed to the
Acquiror that would cause any of the Government Regulators or any other person
or entity to fail to give any of the approvals, consents or waivers referred to
in Section 5.1(b).
(l) Contracts. (i) Except for arrangements made in the ordinary course
of business, neither of the TW Entities is bound by any material contract to be
performed after the date hereof that is not listed in the TW Disclosure Letter.
Neither of the TW Entities is a party to an oral or written (A) consulting
agreement involving the payment of more than $25,000 per annum,
-15-
<PAGE> 19
in the case of any such agreement with an individual, or $75,000 per annum, in
the case of any other such agreement, (B) agreement with any executive officer
or other key employee of the TW Entities, the benefits of which are contingent,
or the terms of which are materially altered or any payments or rights pursuant
to which are accelerated, upon the occurrence of a transaction involving the TW
Entities of the nature contemplated by this Agreement and which provides for the
payment of in excess of $25,000, (C) agreement with respect to any executive
officer of the TW Entities providing any term of employment or compensation
guarantee, (D) agreement or plan, including without limitation any stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement, (E) agreement containing covenants that limit the ability of
the TW Entities to compete in any line of business or with any person, or that
involve any restriction on the geographic area in which, or method by which, the
TW Entities (including any successor thereof) may carry on its business (other
than as may be required by law or any regulatory agency), or (F) agreement not
referred to in any of the preceding clauses and providing for the payment by the
TW Entities of $50,000 or more per annum.
(ii) Neither of the TW Entities is in default under or in
violation of any provision of the contracts or any material note, bond,
indenture, mortgage, deed of trust, loan agreement, lease or other agreement to
which it is a party or by which it is bound or to which any of its respective
properties or assets is subject, and, to the knowledge of the TW Entities, there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default.
(m) Labor Matters. Neither of the TW Entities is a party to, or is
bound by, any collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor are the TW Entities
the subject of any proceeding asserting that it has committed an unfair labor
practice or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment, nor is any strike, other labor dispute or
organizational effort involving either of the TW Entities pending or, to the
best knowledge of the TW Entities, threatened.
(n) Employee Agreements. The TW Disclosure Letter contains a complete
list of all employee agreements and all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred
-16-
<PAGE> 20
compensation, consulting, bonus, group insurance, employment, termination,
severance, medical, health and other benefit plans, contracts, agreements,
arrangements, including, but not limited to, "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), incentive and welfare policies, contracts, plans and
arrangements and all trust agreements related thereto in respect of any present
or former directors, officers, or other employees of the TW Entities or with
respect to which any of the TW Entities or any entity that would be treated as a
single employer with the TW Entities under section 414(b) or (c) of the Code
(which entities are referred to herein as "ERISA Affiliates") may have any
liability (all of the foregoing being hereinafter collectively referred to as
the "Employee Agreements"). Except as set forth on the TW Disclosure Letter, (i)
all of the Employee Agreements comply, and have been administered, in all
material respects with all applicable requirements of ERISA, the Internal
Revenue Code of 1986, as amended (the "Code"), and all other applicable laws and
regulations and no event has occurred which will or could cause any such
Employee Agreement to fail to comply with such requirements and no notice has
been issued by any governmental authority questioning or challenging such
compliance; (ii) none of the TW Entities, or any of their ERISA Affiliates has
the right or obligation to accelerate the time of payment or vesting of any
benefit or compensation payable under any Employee Agreement; (iii) a true and
correct copy of each of the Employee Agreements and all contracts relating
thereto, or to the funding thereof, including, without limitation, all trust
agreements, insurance contracts, administration contracts, investment management
agreements, subscription and participation agreements, and recordkeeping
agreements, each as in effect on the date hereof, has been supplied or made
available to the Acquiror; (iv) to the extent applicable, a true and correct
copy of the most recent annual report, actuarial report, accountant's opinion of
the plan's financial statements, summary plan description and Internal Revenue
Service determination letter with respect to each Employee Agreement has been
supplied to the Acquiror and there have been no material changes in the
financial condition in the respective plans from that stated in the annual
reports and actuarial reports supplied; (v) all Employee Agreements which are
employee pension benefit plans (as defined in section 3(2) of ERISA) comply in
form and in operation with all applicable requirements of sections 401(a) and
501(a) of the Code, there have been no amendments to such plans which are not
the subject of a favorable determination letter issued with respect thereto by
the Internal Revenue Service and no event has occurred which will or could give
rise to disqualification of any such plan under such sections or to a tax under
section 511 of the Code; (vi) there have been no "prohibited transactions" (as
described in section 406 of ERISA or section 4975 of the Code) with respect to
any Employee Agreement and none of the TW
-17-
<PAGE> 21
Entities or any ERISA Affiliate has engaged in any prohibited transaction; (vii)
there have been no acts or omissions by the TW Entities or any of their ERISA
Affiliates which have given rise to or may give rise to fines, penalties, taxes
or related charges under section 502 of ERISA or Chapters 43, 47 or 68 of the
Code for which the TW Entities or any of their ERISA Affiliates may be liable;
(viii) there are no actions, suits or claims (other than routine claims for
benefits) pending or threatened involving any Employee Agreement or the assets
thereof and to the best knowledge of the TW Entities no facts exist which could
give rise to any such actions, suits or claims (other than routine claims for
benefits); (ix) no Employee Agreement is subject to Title IV of ERISA and no
Employee Agreement is a multiemployer plan (as defined in section 3(37) or
ERISA); and (x) none of the TW Entities or any of their ERISA Affiliates has any
liability or contingent liability for providing, under any Employee Agreement or
otherwise, any post-retirement medical or life insurance benefits, other than
statutory liability for providing group health plan continuation coverage under
Part 6 of Title I of ERISA and section 4980B of the Code.
(o) Title to Assets. Neither of the TW Entities owns any real estate or
interest therein (other than real property security interests) that is not
described in the TW Disclosure Letter. Each of the TW Entities has good title to
its properties and assets (including any intellectual property asset, such as,
without limitation, any trademark, service mark, trade name or copyright, used
in its business), other than (i) as reflected in the Reports, (ii) property as
to which it is lessee (as listed in the TW Disclosure Letter) and (iii) real
estate owned as a result of foreclosure, transfer in lieu of foreclosure or
other transfer in satisfaction of a debtor's obligation previously contracted.
(p) Compliance with Law. Each of the TW Entities:
(i) has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are required in order to permit it to carry on its business as it is
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the knowledge of the
TW Entities, no suspension or cancellation of any of them is threatened; and
(ii) is in compliance in the conduct of its business with all
applicable federal, state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable thereto or to the
employees conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment
-18-
<PAGE> 22
Act, the Home Mortgage Disclosure Act, the Americans With Disabilities Act, and
all other fair lending laws or other laws relating to discrimination, and the
Bank Secrecy Act.
(q) Fees. Other than financial advisory services performed for TW
Holding by Wedbush Morgan Securities, Inc. in an amount and pursuant to the
agreement both disclosed to the Acquiror prior to the execution and delivery of
this Agreement, neither the TW Entities, nor any of their respective officers,
directors, employees or agents, has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions, or
finder's fees. No broker or finder has acted directly or indirectly for either
of the TW Entities in connection with this Agreement or the transactions
contemplated hereby.
(r) Environmental Matters.
(i) With respect to the TW Entities:
A. Each of the TW Entities is, and has been, in
compliance with all Environmental Laws (as defined below);
B. Neither of the TW Entities has any knowledge of
any noncompliance with any Environmental Laws with respect to the Loan
Properties (as defined below);
C. There is no suit, claim, action, demand, executive
or administrative order, directive, investigation or proceeding pending
or, to the best knowledge of the TW Entities, threatened, before any
court, governmental agency or board or other forum against the TW
Entities (x) for alleged noncompliance (including by any predecessor)
with, or liability under, any Environmental Law or (y) relating to the
presence of or release into the environment of any Hazardous Material
(as defined below), whether or not occurring at or on a site owned,
leased or operated by the TW Entities;
D. To the best knowledge of the TW Entities, there is
no suit, claim, action, demand, executive or administrative order,
directive, investigation or proceeding pending or threatened before any
court, governmental agency or board or other forum relating to or
against any Loan Property (or the TW Entities in respect of such Loan
Property) (x) relating to alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release into the environment of any
Hazardous Material whether or not occurring at or on a site owned,
leased or operated by a Loan Property;
-19-
<PAGE> 23
E. To the best knowledge of the TW Entities, there
are no existing facts or circumstances that could reasonably be
expected to give rise to any suit, claim, action, demand, executive or
administrative order, directive or proceeding of a type described in
Section 3.3(r)(i)(B) or (C) above;
F. The properties currently or formerly owned or
operated by the TW Entities (including, without limitation, soil,
groundwater or surface water on, under or adjacent to the properties,
and buildings thereon) are not contaminated with and, with the
exception of commercially available office and cleaning supplies, do
not otherwise contain any Hazardous Material that could reasonably be
expected to give rise to liability to the TW Entities;
G. The TW Entities have not received any notice,
demand letter, executive or administrative order, directive or request
for information from any federal, state, local or foreign governmental
entity or any third party indicating that it may be in violation of, or
liable under, any Environmental Law;
H. During the period of the TW Entities' ownership or
operation of any of their respective current properties, there has been
no contamination by or release of Hazardous Material in, on, under or
affecting such properties which constituted a violation of any
Environmental Laws. Prior to the period of the TW Entities' ownership
or operation of any of their respective current properties, there was
no contamination by or release of Hazardous Material or oil in, on,
under or affecting any such property which constituted a violation of
any Environmental Laws and as to which the TW Entities may have
liability; and
I. Neither of the TW Entities participates in
the management of a Loan Property to an extent that it would
be deemed an "owner or operator" as defined in 42 U.S.C.
Section 9601 or any similar Environmental Law.
(ii) The following definitions apply for purposes of this
Section 3.3(r): (w) "Loan Property" means any property in which either of the TW
Entities holds a security interest, and, where required by the context, includes
the owner or operator of such property, but only with respect to such property;
(x) "Environmental Law" means (i) any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, directive, executive or administrative order, judgment, decree,
injunction, requirement or agreement with any governmental entity, relating to
(A) the protection, preservation or restoration of the environment (which
-20-
<PAGE> 24
includes, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, structures, soil, surface land, subsurface land, plant
and animal life or any other natural resource), or (B) the exposure to, or the
use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of, Hazardous Materials, in
each case as amended and as now or hereafter in effect, including all current
Environmental Laws, all future interpretations of current Environmental Laws and
all future Environmental Laws and subsequent interpretations thereof. The term
"Environmental Law" includes (i) all federal, state and local laws, rules,
regulations or requirements relating to the protection of the environment
including, without limitation, the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the federal Water Pollution Control Act of 1972,
the federal Clean Air Act, the federal Clean Water Act, the federal Resource
Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste
Amendments thereto), the federal Solid Waste Disposal Act and the federal Toxic
Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act,
the Federal Occupational Safety and Health Act of 1970, the Federal Hazardous
Materials Transportation Act, or any so-called "Superfund" or "Superlien" law,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of or exposure to any Hazardous Material; and (y)
"Hazardous Material" means any substance in any concentration which is or could
be detrimental to human health or safety or to the environment, currently or
hereafter listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any Environmental Law,
whether by type or by quantity, including any substance containing any such
substance as a component. The term "Hazardous Material" includes, without
limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic
substance, hazardous waste, special waste, industrial substance, oil or
petroleum or any derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos-containing material, urea formaldehyde foam insulation, lead,
lead-based paint and polychlorinated biphenyl.
(s) Allowance. The TW Entities have disclosed to the Acquiror in
writing prior to the date hereof the amounts of all loans, leases, advances,
credit enhancements, other extensions of credit, commitments and
interest-bearing assets of the TW Entities with an original principal amount in
excess of $100,000 that, as of September 30, 1996, have been criticized or
-21-
<PAGE> 25
classified by it as "Other Loans Specially Mentioned," "Special Mention,"
"Substandard," "Doubtful," "Loss," "Classified," "Criticized," "Credit Risk
Assets," "Concerned Loans" or words or concepts of similar import.
(t) Material Interests of Certain Persons. No officer or director of
the TW Entities, or any "associate" (as such term is defined in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of any
such officer or director, has any material interest in any material contract or
property (real or personal), tangible or intangible, used in or pertaining to
the business of the TW Entities.
(u) Insurance. The TW Entities are insured for such reasonable amounts
with financially sound and reputable insurance companies, and against such risks
as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured. All of the insurance policies and
bonds maintained by the TW Entities are in full force and effect, the TW
Entities are not in default thereunder and all material claims thereunder have
been filed in due and timely fashion. No claim by the TW Entities on or in
respect of an insurance policy or bond has been declined or refused by the
relevant insurer or insurers. Between the date hereof and the Effective Time,
the TW Entities will use commercially reasonable efforts to maintain the levels
of insurance coverage in effect on the date hereof.
(v) Books and Records. The books and records of the TW Entities have
been, and are being, maintained in accordance with all applicable legal,
regulatory and accounting requirements and reflect in all material respects the
substance of events and transactions that are required to and should be included
therein.
(w) Corporate Documents. Each of the TW Entities has delivered to the
Acquiror true and complete copies of its articles of incorporation and by-laws,
as each of them is in effect on the date hereof.
(x) Company Action. The Board of Directors of each of the TW Entities
(at a meeting duly called and held) has by the requisite vote of all directors
present (i) determined that the Merger is advisable and in the best interests of
the TW Entities and their shareholders, (ii) approved this Agreement, and the
transactions contemplated hereby, and (iii) directed that, subject to the
provisions of applicable law, this Agreement be submitted for approval by the
respective shareholders of the TW Entities.
(y) Indemnification. Other than the indemnification agreements listed
in the TW Disclosure Letter (true and complete
-22-
<PAGE> 26
copies of which have been delivered to the Acquiror with the TW Disclosure
Letter) and pursuant to the provisions of its articles of incorporation and
by-laws, neither of the TW Entities is a party to any indemnification agreement
with any of its present or former directors, officers, employees, agents or
other persons who serve or served in any other capacity with any other
enterprise at the request of TW Holding (a "Covered Person").
(z) Loans. Each loan reflected as an asset on the TW Entities' balance
sheets as of December 31, 1995 and each balance sheet date subsequent thereto
(i) is evidenced by notes, agreements or other evidences of indebtedness which
are true, genuine and what they purport to be, and (ii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other
laws of general applicability relating to or affecting creditors' rights and to
general equity principles.
(aa) Derivatives Contracts; Structured Notes; Etc. Neither of the TW
Entities is a party to or has agreed to enter into an exchange traded or
over-the-counter equity, interest rate, foreign exchange or other swap, forward,
future, option, cap, floor or collar or any other contract that is not fully
disclosed in its most current Reports and financial statements, and is a
derivative contract (including various combinations thereof) (each a
"Derivatives Contract") or owns securities that (i) are referred to generically
as "structured notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives" or (ii) are likely to have
changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or
exchange rate changes, except for those Derivatives Contracts and other
instruments legally purchased or entered into in the ordinary course of
business, consistent with safe and sound banking practices and regulatory
guidance, and listed (as of the date hereof) in the TW Disclosure Letter or
disclosed in its Reports filed on or prior to the date hereof.
(ab) Disclosure. No written statement, certificate, schedule, list or
other written information furnished by or on behalf of the TW Entities to the
Acquiror pursuant to this Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Section 3.4. Representations and Warranties of the Acquiror. The
Acquiror represents and warrants to TW Holding that:
-23-
<PAGE> 27
(a) Organization. The Acquiror has been duly organized and is validly
existing in good standing as a federal savings bank under the laws of the United
States. All of the shares of the capital stock of Merger Sub, when issued, will
be owned directly by the Acquiror. The Acquiror has the requisite corporate and
other power and authority to carry on its respective businesses as they are now
being conducted and to own its properties and assets.
(b) Qualifications. The Acquiror is in good standing as a foreign
corporation in each jurisdiction in which the business conducted by it requires
such qualification.
(c) Corporate Authority. The Acquiror has the requisite corporate or
other power and authority and has taken all corporate or other action necessary
in order to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and binding
agreement of the Acquiror enforceable against the Acquiror in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting the rights of creditors of federal savings banks and to
general equitable principles regardless of whether such enforcement is sought at
law or in equity.
(d) No Violations. The Acquiror is not in breach or violation or
default under (and no event has occurred which with due notice or lapse of time
or both would constitute a default under) any agreement, indenture or instrument
which breach, violation or default would materially and adversely affect or
delay the ability of the Acquiror to obtain any necessary approvals, consents or
waivers of any governmental authority required for the transactions contemplated
hereby or to perform its covenants and agreements on a timely basis under this
Agreement.
(e) Access to Funds. The Acquiror has, or on the Effective Date will
have, all funds necessary to consummate the Merger and pay the aggregate Merger
Consideration.
(f) Absence of Regulatory Actions. Neither the Acquiror nor any of its
subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any extraordinary supervisory letter from, or has adopted any board resolutions
related thereto at the request of any Government Regulator nor has it been
advised by any Government Regulator that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such order,
-24-
<PAGE> 28
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions or similar undertaking.
The Acquiror is not aware of any special facts or circumstances relating to the
Acquiror that have not been disclosed to TW Holding that would cause any of the
Government Regulators or any other person or entity to fail to give any of the
approvals, consents or waivers referred to in Section 5.1(b).
ARTICLE IV. COVENANTS
Section 4.1. Acquisition Proposals. TW Holding and TW Bank each agrees
that neither it nor any of its officers or directors shall, and each of TW
Holding and TW Bank shall direct and use its best efforts to cause its
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, initiate, solicit, or encourage,
subject to fiduciary duties, any inquiries or the making of any proposal or
offer (including, without limitation, any proposal or offer to shareholders of
TW Holding) with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the consolidated
assets, deposits or any equity securities of, the TW Entities (any such proposal
or offer being hereinafter referred to as an "Acquisition Proposal") or, except
to the extent legally required for the discharge by the directors of TW Holding
of their fiduciary duties as advised by legal counsel with respect to an
unsolicited offer from a third party, engage in any negotiations concerning or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal. TW Holding shall
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties (other than the Acquiror) conducted
heretofore with respect to any of the foregoing. TW Holding will take the
necessary steps to inform promptly the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 4.1. TW Holding agrees that it will notify the Acquiror immediately if
any such inquiries, proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with TW Holding. TW Holding also agrees that it promptly
shall request each other person (other than the Acquiror) that has heretofore
executed a confidentiality agreement in connection with its consideration of
acquiring TW Holding or TW Bank to return all confidential information
heretofore furnished to such person by or on behalf of TW Holding or TW Bank and
enforce any such confidentiality agreements.
-25-
<PAGE> 29
Section 4.2. Certain Policies of the TW Entities. At the request of the
Acquiror, TW Holding shall, to the extent consistent with generally accepted
accounting principles, modify and change its loan, litigation and real estate
valuation policies and practices (including loan classifications and levels of
reserves) after the date on which all required regulatory approvals are received
and not earlier than 15 days prior to nor later than the day prior to, the
Effective Time so as to be consistent with those of the Acquiror, taking into
account the Acquiror's intended operations after the closing; provided, however,
that TW Holding shall not be required to take such action unless the Acquiror
agrees in writing that, based on the information provided to it by TW Holding or
otherwise known to the Acquiror at such time, all conditions to the Acquiror's
obligation to consummate the Merger shall have been satisfied. The TW Entities'
representations, warranties and covenants contained in this Agreement shall not
be deemed to be untrue or breached in any respect for any purpose as a
consequence of any modifications or changes undertaken solely on account of this
Section 4.2.
Section 4.3. Employees. (a) Prior to the Effective Time and as soon as
practicable after the date hereof, the Acquiror shall evaluate the employees and
existing operations of the TW Entities to determine which positions in and
employees of the TW Entities will be required for the continuing operations of
the Surviving Corporation and the Acquiror as of and after the Effective Time.
The TW Entities shall cooperate in good faith with the Acquiror in assisting the
Acquiror's investigation by, among other things, making available to the
Acquiror employee evaluations and other records to the extent permitted by law,
and facilitating interviews with TW Entities employees.
(b) Prior to the Effective Time and as soon as practicable after the
receipt of all necessary regulatory approvals to the transactions contemplated
herein, the Acquiror shall identify to the TW Entities those employees of the TW
Entities to whom the Acquiror desires to offer employment as of and after the
Effective Time. Those employees whose positions will be eliminated and to whom
the Acquiror determines not to offer employment shall be given notice prior to
the Effective Date by the TW Entities and the Acquiror of their termination
effective as of the Effective Time. The Acquiror shall endeavor in good faith to
identify employment opportunities for any such employees with the Acquiror. Such
efforts shall include posting of employment opportunities with the Acquiror and
interviewing any such employee of the TW Entities who desires to be considered
for such a position with the Acquiror.
(c) It is the intention of the Acquiror to train all employees of the
TW Entities that the Acquiror expects to employ
-26-
<PAGE> 30
with the Acquiror in the Acquiror's procedures prior to the Effective Date. The
TW Entities shall cooperate in good faith with the Acquiror in facilitating such
training, including, without limitation by making such employees available for
such training for reasonable periods during normal business hours.
(d) Any employee accepting employment with the Acquiror will not
receive a guarantee of any minimum period of employment, it being the intention
and understanding of the parties that such employment shall be solely at the
will of the Acquiror. Employees who are employed by the Acquiror after the
Effective Time will receive credit for their prior service with the TW Entities
for purposes of eligibility and vesting only, and not for purposes of
determining the amount of benefits payable, under the Acquiror's existing
employee benefit plans and programs other than the Acquiror's defined benefit
retirement plan, as to which such employees shall be treated for all purposes as
new employees, and except that such employees shall receive prior service credit
for purposes of determining eligibility for annual amounts of permitted vacation
time and for determining amounts of accrued sick days.
(e) Full time and part time employees of the TW Entities on the date
hereof who are involuntarily terminated other than for cause after the Effective
Time and within one year after the Effective Date shall be eligible for benefits
to the extent and as provided under the TW Retention Bonus Plan attached as
Exhibit B hereto (the "Retention Bonus Plan"). Those employees of the TW
Entities that are terminated as of the Effective Time pursuant to paragraph (b)
above shall also be entitled to benefits under the Retention Bonus Plan.
(f) This Agreement is intended to result solely in the acquisition by
the Acquiror of the TW Entities and is not intended to confer any continuing
rights to employment on the part of the employees of the TW Entities after the
Effective Time. The TW Entities shall make no representations to their employees
regarding employment by the Acquiror. The TW Entities shall remain solely
responsible for their employees, representatives and agents during their
employment with the TW Entities prior to the Effective Time and with respect to
all matters arising during or from such employment with the TW Entities during
such period, including, without limitation, the payment of any accrued vacation
pay, sick pay, severance payments or other payments to which such employees may
be entitled. Such payments and the TW Entities' obligations to make such
payments shall be fully and fairly reflected in the TW Entities' financial
statements prior to and as of the Effective Time to the extent required by
generally accepted accounting principles.
-27-
<PAGE> 31
Section 4.4. Access to Information. (a) Upon reasonable notice during
the period prior to the Effective Time, each of the TW Entities shall afford
access to the officers, employees, accountants, counsel and other
representatives of the Acquiror, during normal business hours (provided such
access does not unreasonably interfere with the operations of TW Bank), to all
its properties, books, contracts, commitments, records, officers, employees,
accountants, counsel and other representatives and, during such period, the TW
Entities shall make available to the Acquiror (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal or state securities
laws or federal or state banking laws (other than any reports or documents which
the TW Entities are not permitted to disclose under applicable law) and (ii) all
other information concerning its business, properties and personnel as the
Acquiror may reasonably request. The TW Entities shall not be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of the TW Entities' customers, jeopardize
any attorney-client privilege or contravene any law, rule, regulations, order,
judgment, decree, fiduciary duty or binding agreement entered into prior to the
date of this Agreement; provided, that the TW Entities shall make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply that will provide all information to the
Acquiror that may be material to its consideration of the TW Entities. The
Acquiror will hold all such information in confidence in accordance with the
provisions of the confidentiality agreement, dated May 1, 1996, between the
Acquiror and TW Holding (the "Confidentiality Agreement").
(b) No investigation by the Acquiror hereunder shall affect the
representations, warranties, covenants or agreements of the TW Entities herein.
(c) Each of the TW Entities shall promptly after the end of each month
inform the Acquiror of any new criticism or classification of its assets (as
referred to in Section 3.3(s)) that is determined or modified at any time after
the date hereof and of any changes in the TW Entities' allowance for loan and
lease losses from the prior month-end, including an explanation of the reasons
therefor.
Section 4.5. Regulatory Matters. (a) The parties hereto shall cooperate
with each other and use their best efforts promptly to prepare and file within
thirty days of the date hereof all necessary applications, and thereafter to
effect all documentation, notices, petitions and filings, and to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and governmental authorities
-28-
<PAGE> 32
which are necessary or advisable to consummate the transactions contemplated by
this Agreement. The TW Entities and the Acquiror shall have the right to review
in advance, and to the extent practicable each will consult the other on, in
each case subject to applicable laws relating to the exchange of information,
all the information relating to the TW Entities or the Acquiror, as the case may
be, and any of their respective subsidiaries, which appear in any filing made
with, or written materials submitted to, any third party or any governmental
authority in connection with the transactions contemplated by this Agreement.
The Acquiror shall provide copies of all non-confidential portions of
applications made by it with the OTS and shall periodically update the TW
Entities on the status of such applications. The parties hereto agree that they
will consult with each other with respect to the obtaining of all permits,
consents, approvals and authorizations of all third parties and governmental
authorities necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other apprised of the status of
matters relating to completion of the transactions contemplated herein.
(b) The Acquiror and the TW Entities shall, upon request, furnish each
other with all information concerning themselves, their subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with the Proxy Statement (as defined in Section 4.8)
or any other statement, filing, notice or application made by or on behalf of
the Acquiror or the TW Entities to any governmental authority in connection with
the Merger and the other transactions contemplated by this Agreement.
(c) The Acquiror and the TW Entities shall promptly furnish each other
with copies of written communications received by the Acquiror or the TW
Entities, as the case may be, or any of their "affiliates" or "associates" (as
such terms are defined in Rule 12b-2 under the Exchange Act as in effect on the
date of this Agreement) from, or delivered by any of the foregoing to, any
governmental authority in respect of the transactions contemplated hereby.
Section 4.6. Actions. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its reasonable best efforts
to take promptly, or cause to be taken promptly, all actions and to do promptly,
or cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable, including
using efforts to obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals from all applicable governmental entities,
effecting all necessary registrations, applications and filings (including,
-29-
<PAGE> 33
without limitation, filings under federal and any applicable state securities
laws) and obtaining any required contractual consents and approvals (which shall
be the obligation of the party hereto bound by the contract in question), and
cause the closing of the transactions contemplated hereby to occur as soon as
practicable after the receipt of all approvals, consents and waivers required by
Section 5.1(b). The TW Entities shall also use their best efforts to enable the
Acquiror to succeed to TW Bank's Preferred Lender status under applicable
programs of the United States Small Business Administration (it being understood
that such status is determined solely by the Small Business Administration). In
addition, each of the Acquiror and the TW Entities shall appoint a person who
shall be responsible for coordinating with the other party in order to consider
and respond to any requests for consents hereunder and otherwise to complete the
transactions contemplated hereby as soon as practicable.
Section 4.7. Publicity. The initial press release announcing this
Agreement shall be mutually agreed and, thereafter, subject to the provisions of
applicable law, the TW Entities and the Acquiror shall mutually agree with each
other prior to issuing any press releases or otherwise making any statements,
public or otherwise, with respect to the other or the transactions contemplated
hereby and in making any filings with any governmental entity or with any
national securities exchange with respect thereto.
Section 4.8. Proxy Statement. Within thirty days of the date hereof TW
Holding shall prepare a proxy statement in such form as shall be necessary to
obtain all required shareholder action with respect to the Merger and this
Agreement (the "Proxy Statement"), shall file the same with the SEC, and
thereafter shall use its best efforts to (i) timely respond to comments of the
staff of the SEC with respect thereto and (ii) promptly mail the Proxy Statement
to all holders of record (as of the applicable record date) of shares of Holding
Common Stock. TW Holding represents and covenants that the Proxy Statement and
any amendment or supplement thereto, at the date of mailing to shareholders of
TW Holding and at all relevant times thereafter, will be in compliance with all
applicable rules and regulations and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Acquiror and TW Holding shall
cooperate with each other in the preparation of the Proxy Statement.
Section 4.9. Shareholder Action. TW Holding shall take all action
necessary, in accordance with applicable law and regula- tions, and its articles
of incorporation and by-laws, to obtain,
-30-
<PAGE> 34
as promptly as practicable, approval of this Agreement and the transactions
contemplated hereby by the vote of shareholders of TW Holding required under
applicable law and regulations. Except to the extent legally required for the
discharge by such board of directors of its fiduciary duties as advised in
writing by legal counsel, the board of directors of TW Holding shall recommend
to the holders of the Holding Common Stock that they vote in favor of and
approve the Merger and adopt and approve this Agreement and the transactions
contemplated hereby.
Section 4.10. Notification of Certain Matters. The TW Entities shall
give prompt notice to the Acquiror of: (a) any notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by them subsequent to the date of this
Agreement and prior to the Effective Time, under any contract material to the
financial condition, properties, businesses or results of operations of the TW
Entities taken as a whole to which either of them is a party or is subject; (b)
any material adverse change in the financial condition, properties, business or
results of operations of the TW Entities taken as a whole or the occurrence of
any event which, so far as reasonably can be foreseen at the time of its
occurrence, is reasonably likely to result in any such change; and (c) any event
or occurrence which may adversely affect the likelihood that a condition set
forth in Article V will be satisfied. The TW Entities shall give prompt notice
to the Acquiror of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with the transactions contemplated by this Agreement.
Section 4.11. Tax Matters. The TW Entities shall keep the Acquiror
fully apprised of their progress in the preparation of its or their tax returns
and shall provide to the Acquiror copies of draft returns prior to filing. In
addition, the TW Entities agree that they shall consult with the Acquiror prior
to making any significant decisions with respect to tax reporting or other tax
matters, in order to ensure to the extent possible that such decisions are
consistent with the consummation of the transactions contemplated hereby.
Section 4.12. Merger Sub. The Acquiror shall cause Merger Sub to be
duly organized and shall vote its shares of Merger Sub in favor of, and
otherwise cause Merger Sub to take all necessary action to consummate, the
transactions contemplated hereby; provided, however, that the organization of
Merger Sub pursuant to this Section 4.12 shall not be required in the event that
the Acquiror acts to effectuate the transactions contemplated in this Agreement
in an alternative fashion as permitted pursuant to the provisions of Section
1.6.
-31-
<PAGE> 35
Section 4.13. Updated Disclosure Letter. The TW Entities shall provide
the Acquiror with an updated TW Disclosure Letter within two days prior to the
Effective Date.
Section 4.14. D&O Insurance. Notwithstanding anything to the contrary
set forth in Section 2.2(f), TW Holding may, prior to the Effective Time, obtain
an extension of coverage commonly referred to as "tail coverage" under its
existing directors and officers liability insurance, within the range of cost
and scope of coverage previously disclosed to the Acquiror, for a period of five
years following the Effective Date. The Acquiror shall not seek an early
termination of such coverage after the Effective Time.
ARTICLE V. CONDITIONS TO CONSUMMATION
Section 5.1. Conditions to All Parties' Obligations. The respective
obligations of the Acquiror, Merger Sub and TW Holdings to effect the Merger
shall be subject to the satisfaction or waiver prior to the Effective Time of
the following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the requisite vote of the shareholders of TW Holding, by the
Acquiror as the sole shareholder of Merger Sub and by the board of directors of
Merger Sub, all in accordance with applicable law.
(b) All necessary regulatory approvals, consents and waivers with
respect to this Agreement and the transactions contemplated hereby shall have
been received and all applicable statutory waiting periods shall have expired;
provided, however, that no approval, consent or waiver referred to in this
Section 5.1(b) shall be deemed to have been received if it shall include any
condition or requirement that, individually or in the aggregate, would
materially and adversely impact the economic and business benefits of the
transactions contemplated hereby to the Acquiror so as to render it inadvisable
in the judgment of the Acquiror to proceed with the transactions contemplated
hereby.
(c) All other requirements prescribed by law which are necessary to the
consummation of the transactions contemplated by this Agreement shall have been
satisfied.
(d) No party hereto shall be subject to any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or prohibits the
consummation of the Merger or any other transaction contemplated by this
Agreement, and no litigation or proceeding shall be pending against the Acquiror
or the TW Entities or any of their subsidiaries brought by any
-32-
<PAGE> 36
governmental agency seeking to prevent consummation of the transactions
contemplated hereby.
(e) No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated, interpreted, applied or enforced by any
governmental authority which prohibits, or makes illegal consummation of the
Merger or any other transaction contemplated by this Agreement.
Section 5.2. Conditions to Obligations of the Acquiror. The obligations
of the Acquiror and, when duly incorporated, Merger Sub, to effect the Merger
shall be subject to the satisfaction or waiver prior to the Effective Time of
the following additional conditions:
(a) Each of the representations and warranties of the TW Entities
contained in this Agreement shall have been true and correct in all material
respects on the date hereof and shall be true and correct on the Effective Date
as if made on such date (or on the date when made in the case of any
representation or warranty which specifically relates to an earlier date), with
only such exceptions as are fairly and accurately described in the updated TW
Disclosure Letter provided pursuant to Section 4.14 and are not, individually or
in the aggregate, materially adverse; the TW Entities shall each have performed,
in all material respects, each of its covenants and agreements contained in this
Agreement; there shall have been no material adverse change in the financial
condition, business or assets of the TW Entities taken as a whole since December
31, 1995, it being agreed that a decline in the investment income of the TW
Entities arising solely from the limitations on permitted investments set forth
in Section 2.2(a) shall not in and of itself be deemed to constitute such a
material adverse change; the Acquiror shall have received a certificate signed
by the Chief Executive Officer and the Chief Financial Officer of each of the TW
Entities, dated the Effective Date, to the foregoing effect; that certain
Noncompetition Consulting Agreement.
(b) The Acquiror shall have received an opinion, dated the Effective
Date, from counsel to the TW Entities, substantially in the form attached as
Exhibit C hereto, and containing such qualifications and exceptions as are
customary in transactions of this type, and such other documents and
certificates as the Acquiror shall reasonably request or that are customary in
transactions of this type.
(c) The Acquiror shall have received the updated TW Disclosure Letter
from the TW Entities required by Section 4.14.
-33-
<PAGE> 37
(d) Dissenting Shareholders shall have exercised their dissenters
rights with respect to no more than ten percent of the outstanding Holding
Common Stock.
(e) The Shareholder Agreements referred to in the Recitals hereto shall
be in full force and effect and the shareholders of TW Holding signatory thereto
shall be in full compliance with the terms thereof.
Section 5.3. Conditions to Obligations of the TW Entities. The
obligation of the TW Entities to effect the Merger shall be subject to the
satisfaction or waiver prior to the Effective Time of the following additional
conditions:
(a) Each of the representations, warranties and covenants of the
Acquiror contained in this Agreement shall have been true and correct on the
date hereof and shall be true and correct on the Effective Date as if made on
such date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date), with only such
exceptions as are not, individually or in the aggregate, materially adverse; the
Acquiror shall have performed, in all material respects, each of its covenants
and agreements contained in this Agreement; and TW Holding shall have received
certificates signed by the Chief Executive Officer and the Chief Financial
Officer of the Acquiror, dated the Effective Date, to the foregoing effect.
(b) TW Holding shall have received an opinion, dated the Effective
Date, from counsel to the Acquiror, to the effect that all regulatory approvals,
consents or waivers of governmental authorities that are required to be obtained
by the Acquiror under federal law in order to permit the consummation by it of
the transactions contemplated by this Agreement have been obtained, and all
filings required to be made by the Acquiror under federal law in order to permit
the consummation by it of the transactions contemplated by this Agreement have
been made.
(c) TW Holding shall have received an updated letter from Wedbush
Morgan Securities Inc., dated as of a date within five days of the date of the
Proxy Statement, confirming that in the opinion of such firm the consideration
to be paid to the shareholders of TW Holding in the Merger in exchange for their
shares of TW Common Stock is fair to such shareholders from a financial point of
view.
ARTICLE VI. TERMINATION
Section 6.1. Termination. This Agreement may be terminated, and the
Merger abandoned, prior to the Effective
-34-
<PAGE> 38
Time, either before or after its approval by the shareholders of TW Holding:
(a) by the mutual consent of the Acquiror and TW Holding;
(b) by the Acquiror or TW Holding, if its board of directors so
determines by vote of a majority of the members of its entire board, in the
event of (i) the failure of the shareholders of TW Holding to approve this
Agreement, or (ii) a material breach by the other party hereto of any material
representation, warranty, covenant or agreement contained herein which is not
cured or not curable within 30 days after written notice of such breach is given
to the party committing such breach by the other party; provided, however, that
neither party shall have the right to terminate this Agreement pursuant to this
Section 6.1(b) unless any breach of representation or warranty asserted as the
basis for such termination, together with all other such breaches, would entitle
the party receiving such representation or warranty not to consummate the
transactions contemplated hereby under Section 5.2(a) (in the case of a breach
of representation or warranty by the TW Entities) or Section 5.3(a) (in the case
of a breach of representation or warranty by the Acquiror);
(c) by the Acquiror or TW Holding by written notice to the other party
if either (i) the condition set forth in Section 5.1(b) shall not have been
satisfied by the Termination Date; or (ii) any governmental authority of
competent jurisdiction shall have issued a final, unappealable order enjoining
or otherwise prohibiting consummation of the transactions contemplated by this
Agreement; or
(d) by the Acquiror or TW Holding, if its board of directors so
determines by vote of a majority of the members of its entire board, in the
event that the Merger is not consummated by the Termination Date, unless the
failure to so consummate by such time is due to the breach of any material
representation, warranty or covenant contained in this Agreement by the party
seeking to terminate. The term "Termination Date" shall mean April 30, 1997;
provided, however, that either party hereto shall have the right to extend such
Termination Date for up to an additional 45 days if, prior to the Termination
Date, such party notifies the other party in writing that such party believes
that the approvals, consents or waivers to be obtained by such party are
imminent and a reasonable factual basis for such party's belief that such
approvals, consents or waivers are imminent is set forth in such written notice.
Section 6.2. Effect of Termination. In the event of the termination of
this Agreement by either the Acquiror or TW Holding, as provided above, this
Agreement shall thereafter
-35-
<PAGE> 39
become void and, subject to the last sentence of Section 8.2, there shall be no
liability on the part of any party hereto or their respective officers or
directors, except that any such termination shall be without prejudice to the
rights of any party hereto arising out of the willful breach by any other party
of any covenant or willful misrepresentation contained in this Agreement
including, without limitation, rights to recover any out of pocket or
transaction-related expenses arising from the transactions contemplated by this
Agreement.
Section 6.3. Termination Payment. If this Agreement is terminated
pursuant to its terms (other than termination by mutual agreement of the parties
pursuant to Section 6.1(a), termination by either party pursuant to Section
6.1(b)(i) if there was no Acquisition Proposal and the stockholders signatory to
the Shareholder Agreements referred to in the Recitals hereto have voted for
approval of the Merger, termination solely by TW Holding pursuant to Section
6.1(b)(ii) because of a material breach of this Agreement by the Acquiror, or
termination by either party pursuant to Section 6.1(c) in the event the
governmental or regulatory approvals referred to therein are not given or
received for reasons not relating to an Acquisition Event (as defined below))
and an Acquisition Event shall occur within 12 months after the date of such
termination, TW Holding shall pay the sum of $1,900,000 to the Acquiror
promptly, but in no event later than two business days after the occurrence of
such Acquisition Event, by wire transfer of immediately available Federal Funds
to such account as the Acquiror shall designate. For purposes of this Section
6.3, the term Acquisition Event shall mean any of the following: (i) any person
or entity (other than the Acquiror) shall have acquired, whether pursuant to a
tender offer or otherwise, beneficial ownership of 20% or more of the
outstanding shares of Holding Common Stock; (ii) the Board of Directors of TW
Holding shall fail to recommend, or shall have withdrawn its recommendation, to
the TW stockholders that they vote to approve this Agreement and the Merger; or
(iii) either of the TW Entities shall have recommended or proposed, or shall
have publicly announced an intention to recommend or propose, or shall have
entered into or approved through action of its Board of Directors, an agreement
with any person or entity (other than the Acquiror) to (A) effect a merger,
consolidation or similar transaction involving either of the TW Entities, (B)
sell, lease or otherwise dispose of assets of either of the TW Entities
representing 15% or more of the consolidated assets of either of the TW
Entities, or (C) issue, sell or otherwise dispose of (including by way of
merger, consolidation, share exchange or any similar transaction) securities
representing 20% or more of the voting power of either of the TW Entities. For
purposes of this Agreement, the mere inclusion in the Proxy Statement referred
to in Section 4.8 of a description of an Acquisition Proposal, without
endorsement or recommendation thereof by TW Holding, shall not be deemed a
recommendation or proposal thereof within the meaning of clause (iii) of the
preceding sentence.
-36-
<PAGE> 40
ARTICLE VII. EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.1. Effective Date and Effective Time. The Merger shall become
effective when the Merger Agreement is properly filed with the California
Secretary of State in accordance with the applicable provisions of the
California General Corporation Law; provided that, the Articles of Combination
may provide that the Merger shall become effective at a later date or time
designated by the Acquiror and TW Holding. When used in this Agreement, the term
"Effective Date" shall mean the date on which, and the term "Effective Time"
shall mean the date and time at which, the Merger Agreement is filed with the
California Secretary of State (or such later date and time as may be specified
therein).
ARTICLE VIII. OTHER MATTERS
Section 8.1. Certain Definitions: Interpretation.
(a) As used in this Agreement, the following terms shall have the
meanings indicated:
"person" includes an individual, corporation, partnership,
limited liability company, association, trust or
unincorporated organization; and
"subsidiary," with respect to a person, means any other person
controlled by such person.
(b) The following terms used in this Agreement are defined in the
respective Sections of this Agreement indicated opposite each such term below:
<TABLE>
<CAPTION>
SECTIONS
--------
<S> <C>
Acquiror Preamble
Acquisition Event 6.3
Acquisition Proposal 4.1
affiliate 1.6 and 4.5(c)
Agreement Preamble
associate 3.3(t)
BHCA Recitals
BIF Recitals
Certificate 1.3(a)
Code 3.3(n)
Confidentiality Agreement 4.4(a)
Covered Person 3.3(y)
Derivatives Contract 3.3(aa)
Dissenting Shareholder 1.2(c)
Dissenting Shares 1.2(c)
Effective Date 7.1
Effective Time 7.1
Employee Agreements 3.3(n)
</TABLE>
-37-
<PAGE> 41
<TABLE>
<S> <C>
employee benefit plans 3.3(n)
Environmental Law 3.3(r)(ii)
ERISA 3.3(n)
ERISA Affiliates 3.3(n)
Exchange Act 3.3(t)
Exchange Agent 1.3(b)
Excluded Shares 1.2(c)
FDIA 3.3(a)(ii)
FDIC Recitals
Federal Reserve Board Recitals
Government Regulators 3.3(k)
Hazardous Material 3.3(r)(ii)
Holding Common Stock Recitals
Loan Property 3.3(r)(ii)
Merger 1.1
Merger Agreement 1.1
Merger Consideration 1.2(a)
Merger Sub Recitals
OTS Recitals
owner or operator 3.3(r)(i)(I)
person 8.1
Proxy Statement 4.8
Reports 3.3(g)(i)
Retention Bonus Plan 4.3(d)
SAIF Recitals
SEC 3.3(g)
Shareholders Agreement Recitals
Stock Option Agreement Recitals
subsidiary 8.1
Surviving Corporation 1.1
Termination Date 6.1(d)
TW Bank Preamble
TW Disclosure Letter 3.1
TW Entities Preamble
TW Holding Preamble
</TABLE>
(c) When a reference is made in this Agreement to Articles or Sections
such reference shall be to an Article or a Section of this Agreement unless
otherwise indicated. The table of contents and headings, contained in this
Agreement are for ease of reference only and shall not affect the meaning or
interpretation of this Agreement. Whenever the words "include," "includes," or
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation", whether or not so stated. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular.
Section 8.2. Survival. Only those agreements and covenants of the
parties that are by their terms applicable in whole or in part after the
Effective Time shall survive the Effective Time. All representations and
warranties, and all other agreements and covenants shall be deemed to be
conditions of this Agreement and shall not survive the Effective Time. If this
Agreement shall be
-38-
<PAGE> 42
terminated, the agreements of the parties in the last sentence of Sections
4.4(a) and 8.6 shall survive such termination.
Section 8.3. Waiver. Any provision of this Agreement may be: (i) waived
by the party benefited by the provision, or (ii) as permitted by applicable law,
amended or modified (including the structure of the transaction), either prior
to or after this Agreement and the transactions contemplated hereby are approved
by the shareholders of TW Holding; provided, that any such waiver, amendment or
modification shall be effective only if given or made by an agreement in writing
between the parties hereto approved by their respective boards of directors.
Section 8.4. Counterparts. This Agreement may be executed in
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
Section 8.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the United States and the State of
California without regard to the conflict of laws principles thereof.
Section 8.6. Expenses. Each party hereto will pay all expenses incurred
by it in connection with this Agreement and the transactions contemplated
hereby. TW Holding shall be liable for all fees and expenses of Wedbush Morgan
Securities, Inc. but shall not be liable for any financial services advisory
fees incurred by the Acquiror. The Acquiror shall not be liable for any
financial services advisory fees incurred by TW Holding, including the fees and
expenses of Wedbush Morgan Securities, Inc.
Section 8.7. Notices. All notices, requests, acknowledgments and other
communications hereunder to a party, or changes to this notice provision, shall
be in writing and shall be deemed to have been duly given when delivered by hand
or private courier, or when transmitted by telecopy or telegram to such party at
its address set forth below or such other address as such party may specify by
notice to the other party hereto.
If to the TW Entities, to:
David H. Hender
President and Chief Executive Officer
TransWorld Bancorp
15233 Ventura Boulevard
Sherman Oaks, California 91403
Facsimile: (818) 905-7294
-39-
<PAGE> 43
With copies to:
Ellen R. Marshall
Morrison & Foerster
19900 MacArthur Boulevard, Suite 1200
Irvine, California 92715
Facsimile: (714) 251-0900
If to the Acquiror or Merger Sub:
Richard A. Fink,
Senior Executive Vice President
Glendale Federal Bank, Federal Savings Bank
414 North Central Avenue
Glendale, California 91203
Facsimile: (818) 409-3151
With copies to:
James R. Walther, Esq.
Mayer, Brown & Platt
350 South Grand Avenue
25th Floor
Los Angeles, California 90071
Facsimile: (213) 625-0248
Section 8.8. Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Shareholder Agreements referred to in the Recitals hereto and the
Confidentiality Agreement referenced in Section 4.4(a) represent the entire
agreement and understanding of the parties hereto with reference to the
transactions contemplated hereby and supersedes any and all other oral or
written agreements heretofore made. Nothing in this Agreement is intended to
confer upon any person other than the Acquiror and the TW Entities any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 8.9. Parties Bound; Assignment. All terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. This Agreement may
not be assigned by any party hereto without the written prior consent of the
other parties hereto.
Section 8.10. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or any
circumstance, is invalid or unenforceable, the remainder of this Agreement and
the application of such provision
-40-
<PAGE> 44
to other persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction.
Section 8.11. Captions. The Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
GLENDALE FEDERAL BANK,
FEDERAL SAVINGS BANK TRANSWORLD BANCORP
By: /s/ Richard A. Fink By: /s/ Louis J. Galen
----------------------------- -------------------------------
Richard A. Fink Louis J. Galen
Senior Executive Vice Chairman of the Board of
President Directors
By: /s/ David H. Hender
-------------------------------
David H. Hender
President and Chief
Executive Officer
TRANSWORLD BANK
By: /s/ Louis J. Galen
-------------------------------
Louis J. Galen
Chairman of the Board of
Directors
By: /s/ David H. Hender
-------------------------------
David H. Hender
Vice Chairman and Chief
Executive Officer
-41-
<PAGE> 45
EXHIBIT A
AGREEMENT OF MERGER
between
[MERGER SUB]
and
TRANSWORLD BANCORP
THIS AGREEMENT OF MERGER ("Agreement") is dated as of ________________,
19__ and is entered into between [Merger Sub] ("Merger Sub"), a California
corporation, and TransWorld Bancorp, a California corporation ("TW Holding"),
which corporations are sometimes hereinafter collectively referred to as the
"Constituent Corporations" and, individually as a "Constituent Corporation", on
the basis of the following facts:
A. TW Holding is a corporation duly organized and existing under
the laws of the State of California. TW Holding has authorized capital stock of
6,000,000 shares of common stock, without par value (the "Holding Common
Stock"), of which 3,451,715 shares are issued and outstanding at the date
hereof.
B. Merger Sub is a corporation duly organized and existing under
the laws of the State of California. Merger Sub has authorized capital stock of
______ shares of common stock, par value $0.01 per share (the "Merger Sub
Common Stock"), of which ______ shares are issued and outstanding at the date
hereof.
C. Merger Sub is a wholly owned subsidiary of Glendale Federal
Bank, Federal Savings Bank ("Acquiror"). Acquiror, TW Holding and TW Holding's
wholly owned subsidiary, TransWorld Bank, a commercial bank organized under the
laws of the State of California (TW Holding and TransWorld Bank being
collectively referred to herein as the "TW Entities"), are parties to that
certain Agreement and Plan of Merger, dated as of November 1, 1996 (the "Plan
of Merger") providing for the acquisition of the TW Entities by Acquiror.
D. The Plan of Merger requires Merger Sub and TW Holding to
execute and file this Agreement with the California Secretary of State.
E. The Board of Directors of Acquiror and the respective
shareholders and Boards of Directors of Merger Sub and the TW Entities have
each approved the Plan of Merger, this Agreement and the transactions
contemplated thereby and hereby in accordance with applicable law.
<PAGE> 46
NOW, THEREFORE, the Constituent Corporations hereby agree as follows:
1. Merger. At the Effective Time (as defined below) Merger Sub
shall be merged with and into TW Holding (the "Merger") in accordance with the
applicable provisions of the California General Corporation Law, and on the
terms and conditions set forth herein. TW Holding shall be the surviving
corporation in the Merger and is referred to in this Agreement in such capacity
as the "Surviving Corporation".
2. Effective Time. The Merger shall be effective at the time (the
"Effective Time") when a copy of this Agreement is filed with the California
Secretary of State in accordance with Section 1103 of the California General
Corporation Law.
3. Effect of Merger. At the Effective Time (i) the separate
corporate existence of Merger Sub shall cease, and (ii) the Surviving
Corporation shall succeed, without other transfer, to all of the assets,
rights, properties, obligations and liabilities of each of the Constituent
Corporations and shall be subject to all the debts and liabilities of each of
the Constituent Corporations in the same manner as if the Surviving Corporation
had itself incurred them, all as provided in the applicable provisions of the
California General Corporation Law. All rights of creditors and all liens upon
the property of each of the Constituent Corporations shall be preserved
unimpaired after the Merger, provided that such liens upon property of a
disappearing corporation shall be limited to the property affected thereby
immediately prior to the Effective Time of the Merger.
4. Conversion of Stock. The manner of converting the shares of the
capital stock of the Constituent Corporations upon the Merger shall, by virtue
of the Merger and without the need of any action on the part of any one thereof
or their respective shareholders, be as follows:
(a) Each share of the Holding Common Stock issued and
outstanding immediately prior to the Effective Time (other than (i) shares of
Holding Common Stock held by any holder (a "Dissenting Shareholder") who shall
have taken the necessary steps to seek appraisal of and to demand payment for
such shares of Holding Common Stock pursuant to the dissenters' rights
provisions of California law ("Dissenting Shares"), and (ii) shares of Holding
Common Stock held as treasury stock by either of the TW Entities (collectively,
the "Excluded Shares")), shall be converted into the right solely to receive
$18.25 in cash, without interest (the "Merger Consideration"). Dissenting
Shares shall be treated as provided in Section 4(c) below. All other Excluded
-2-
<PAGE> 47
Shares shall be canceled and retired and no payment shall be made with
respect thereto.
(b) Each share of the Merger Sub Common Stock issued and
outstanding immediately prior to the Effective Time shall at the
Effective Time be converted into one share of the common stock of the
Surviving Corporation and shall thereafter constitute all of the issued
and outstanding shares of the capital stock of the Surviving
Corporation.
(c) Dissenting Shares shall not be converted into the right to
receive the Merger Consideration at or after the Effective Time unless
and until the holder of such Dissenting Shares withdraws his or her
demand for appraisal and payment with respect to such Dissenting Shares
with the consent of the Acquiror or TW Holding, if such consent is
required, or becomes ineligible for such appraisal and payment. If a
holder of Dissenting Shares shall withdraw in writing his or her demand
for such appraisal and payment with the consent of the Acquiror or TW
Holding, if such consent is required, or shall become ineligible for
such appraisal and payment (through failure to comply with the
requirements of applicable law therefor or otherwise), then, as of the
later of the Effective Time or the occurrence of such event, such
holder's Dissenting Shares shall automatically be converted into and
represent the right to receive the Merger Consideration (without
interest thereon). TW Holding shall give the Acquiror prompt notice of
any demands for such appraisal, withdrawals of demands for such
appraisal and any other instruments served pursuant to applicable law
that are received by TW Holding or its representatives. TW Holding
shall not voluntarily make any payment with respect to any such demands
for appraisal and shall not, except with the prior written consent of
the Acquiror, settle or offer to settle any such demands. Each holder
of Dissenting Shares shall have only such rights and remedies as are
granted to such holder under the provisions of applicable law and
regulations. Dissenting Shares shall not, after the Effective Time, be
entitled to vote for any purpose or be entitled to the payment of
dividends or other distributions (except any such dividends or other
distributions as may have been payable to the shareholders of TW
Holding of record prior to the Effective Time).
5. Articles and By-Laws of the Surviving Corporation. At the
Effective Time, the articles of incorporation and by-laws of TW Holding, as in
effect immediately prior to the Effective Time, shall become the articles of
incorporation and by-laws of the Surviving Corporation in accordance with
Section 1103 of the California General Corporation Law.
-3-
<PAGE> 48
6. Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors and officers of Merger Sub immediately prior
thereto shall become the directors and officers of the Surviving Corporation.
7. Name of the Surviving Corporation. The name of the Surviving
Corporation shall be TransWorld Bancorp.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers pursuant to the approval and authority
duly given by resolutions of their respective Boards of Directors, all as of
the date set forth above.
[MERGER SUB]
By
----------------------------------
President
Attest:
------------------------
Secretary
TRANSWORLD BANCORP
By
----------------------------------
President
Attest:
------------------------
Secretary
-4-
<PAGE> 49
EXHIBIT B
RETENTION BONUS PLAN
PURPOSE
TransWorld Bancorp and TransWorld Bank (collectively "TransWorld") have entered
into an agreement to be acquired by and to merge into Glendale Federal Bank
("Glendale"). The closing of the transaction is subject to a number of
conditions, including regulatory approvals, which will take several months to
accomplish. Between now and the closing, management of both TransWorld and
Glendale want to continue operations at TransWorld as they have historically
been conducted. Management of both companies realize what an important part the
employees of TransWorld have played in its success, and what an important part
TransWorld's employees will play in the future success of these operations.
To the extent that positions are eliminated as a result of the acquisition,
Glendale has agreed to identify potential employment opportunities for those
affected that may be available in other Glendale operations. Employees for whom
other positions are not found, and who are involuntarily terminated during the
12-month period after the closing, will be eligible for benefits under this
Retention Bonus Plan.
As an incentive for TransWorld employees to remain with TransWorld and to
continue their efforts in support of its business, TransWorld has adopted this
Retention Bonus Plan to provide certain benefits for employees whose positions
may be eliminated as a result of the acquisition. Between now and the closing
of the transaction, management of Glendale and TransWorld will be working
together to more clearly define how their operations will be combined. These
decisions will be communicated to employees as promptly as practicable.
ELIGIBILITY
For a TransWorld employee to be eligible for the Retention Bonus Program:
1) The proposed acquisition of TransWorld by Glendale must be
completed; and
<PAGE> 50
2) The employee must be a full time or part time active employee
of TransWorld or on an approved leave of absence from TransWorld
at the time of the adoption of this Retention Bonus Plan and at
the consummation of the proposed acquisition; and
3) The employee must be involuntarily terminated, other than for
cause, within one year after completion of the acquisition of
TransWorld by Glendale.
Any TransWorld employee who has an employment contract with separate or
different severance provisions is not eligible to participate in this Retention
Bonus Plan but shall instead be compensated as provided in such employee's
employment contract.
BENEFITS
This Retention Bonus Plan is comprised of 2 components: Retention Bonus and
COBRA.
RETENTION BONUS PAYMENT:
Will be provided as specified in the following attached Schedules:
Schedule Covered Employees
-------- -----------------
A Designated Officers
B Designated Officers
C Designated Officers
D All other employees
COBRA BENEFITS:
TransWorld will pay the employer portion of the COBRA medical and dental
premiums for the length of the retention bonus period shown in the Schedules.
ADDITIONAL INFORMATION
- - Employees who resign, who do not accept employment offered by Glendale
or who are involuntarily terminated for cause will not be eligible to
receive any benefits under this Retention Bonus Plan.
-2-
<PAGE> 51
- - The retention bonus payment will be paid to eligible employees as a
lump-sum payment, less applicable taxes, following termination.
- - The retention bonus payment will be available to eligible employees on
an approved leave of absence from TransWorld if they return to active
status and are involuntarily terminated within one year following the
consummation of the proposed acquisition of TransWorld by Glendale.
- - None of the information contained in this Retention Bonus Plan
constitutes a contract for or promise of future employment or supersedes
any TransWorld or Glendale policies which provide that employees are
terminable at will, with or without cause.
- - Except as provided above, benefits under this Retention Bonus Plan are
in lieu of any severance benefits for which the employee may otherwise
be deemed eligible.
- - For purposes of calculating the retention bonus payment provided for
herein, "Base Salary" shall be determined as of the effective date of
the employee's termination and shall not include any amounts
attributable to automobile allowance, deferred compensation or any
additional bonus or incentive compensation.
-3-
<PAGE> 52
Schedule A
TransWorld Retention Bonus Plan
RETENTION BONUS PAYMENT:
Designated Officers Base Salary
------------------- -----------
EVP - Branch Administration Twelve (12) months
EVP - Chief Credit Officer Twelve (12) months
EVP - Chief Financial Officer Twelve (12) months
EVP - Credit Administration Twelve (12) months
VP - Manager of Corporate Facilities Twelve (12) months
COBRA BENEFIT REIMBURSEMENT PERIOD:
Twelve (12) months
-4-
<PAGE> 53
Schedule B
TransWorld Retention Bonus Plan
RETENTION BONUS PAYMENT:
Designated Officers Base Salary
------------------- -----------
SVP - Auditor Nine (9) months
SVP - Compliance/Loan Review Nine (9) months
SVP - Human Resources Nine (9) months
SVP - Information Services Nine (9) months
SVP - Retirement Benefits/Marketing Nine (9) months
SVP - SBA Loans/Leasing Nine (9) months
VP and Division Head - Operations Nine (9) months
COBRA BENEFIT REIMBURSEMENT PERIOD:
Nine (9) months
-5-
<PAGE> 54
Schedule C
TransWorld Retention Bonus Plan
RETENTION BONUS PAYMENT:
Designated Officers Base Salary
------------------- -----------
VP - Accounts Receivable Audit/
Loan Review Six (6) months
VP - Branch Operations/Security Six (6) months
VP - Cash Management Services Six (6) months
VP - Controller Six (6) months
VP - Loan Adjustments Six (6) months
VP - Service Center Six (6) months
COBRA BENEFIT REIMBURSEMENT PERIOD:
Six (6) months
-6-
<PAGE> 55
Schedule D
TransWorld Retention Bonus Plan
ELIGIBILITY:
All other eligible employees not included in Schedules A, B and C
RETENTION BONUS PAYMENT:
Ten (10 days of base salary (2 weeks), plus five (5) days of
base salary (1 week) per full year of service
Subject to:
Minimum payment: twenty (20) days of base salary (4 weeks)
Maximum payment: one hundred thirty (130) days of base salary (26 weeks)
COBRA BENEFIT REIMBURSEMENT PERIOD:
0 - 60 months of service - one (1) month
61 - 120 months of service - two (2) months
121 months plus of service - three (3) months
-7-
<PAGE> 56
EXHIBIT C
FORM OF LEGAL OPINION OF COUNSEL TO TW ENTITIES
Morrison & Foerster, or other counsel to the TW Entities acceptable to
the Acquiror for purposes of rendering such opinion, shall deliver its opinion
to the effect that (all terms defined in the Plan to which this Exhibit C is
attached being used below as so defined):
1. TW Holding is duly organized, validly existing and in good
standing as a corporation under the laws of the State of California. TW Bank is
duly organized, validly existing and in good standing as a state-chartered
commercial bank under the laws of the State of California. Each of the TW
Entities has the corporate power and authority to carry on its business as it
is now being conducted and to own its properties and assets.
2. The authorized capital stock of the TW Entities is as set forth
in Section 3.3(c) of the Plan. All outstanding shares of capital stock of the
TW Entities are duly authorized, validly issued and outstanding, fully paid
and, subject to Section 662 of the California Financial Code in the case of TW
Bank, non-assessable, and subject to no preemptive rights arising under
California law. Such counsel is not aware of any agreement, conversion rights or
other commitments to issue capital stock of the TW Entities in addition to that
currently issued and outstanding or to reacquire any capital stock of the TW
Entities, other than the stock options granted to employees of TW Holding that
are described in the TW Entities' Disclosure Letter.
3. The TW Entities have the requisite corporate power and
authority to enter into the Plan. All corporate and stockholder action required
by law to be taken by them to authorize the execution and delivery of the Plan
and the Merger Agreement, and the consummation of the Merger and the other
transactions contemplated by the Plan has been taken. The Proxy Statement sent
to the shareholders of TW Holding in connection with obtaining their approval
of the Plan and the Merger complied as to form in all material respects with
the requirements of the Exchange Act and the regulations of the SEC thereunder,
and such counsel has no reason to believe that such Proxy Statement contained
any false or misleading statement with respect to any material fact or omitted
to state any material fact necessary in order to make the statements therein
not false or misleading as of the time of the meeting of the shareholders of TW
Holding at which such approval was obtained. The Plan is a valid and binding
agreement of the TW Entities, enforceable against them in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency fraudulent transfer,
reorganization,
C-1
<PAGE> 57
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equitable principles.
4. No regulatory approval, consent or waiver of any governmental
authority is required to be obtained by either of the TW Entities in order to
permit the consummation by it of the transactions contemplated by the Plan and
the Merger Agreement, other than such as have been obtained by Glendale.
5. The execution, delivery and performance of the Plan and the
Merger Agreement by the TW Entities do not, and the consummation of the
transactions contemplated thereby by the TW Entities will not, (i) conflict with
or violate any law, regulation, judgment, decree or order, or conflict with or
constitute a material breach of any agreement, indenture or instrument of the
TW Entities identified to such counsel by senior executives of the TW Entities
as a material agreement or to which the TW Entities (or any of their
respective properties) is subject, or enable any person to enjoin the Merger or
the other transactions contemplated hereby, (ii) conflict with or result in a
violation of the charter or articles of incorporation or by-laws or similar
organizational documents of the TW Entities or (iii) constitute a breach of or
a default under (or an event which with due notice or lapse of time or both
would constitute a default under) or result in the creation of any lien,
pledge, security interest, charge or other encumbrance upon any of the
properties or assets of the TW Entities under, any of the terms, conditions or
provisions of any material note, bond, indenture, deed of trust, loan agreement
or other agreement, instrument or obligation to which the TW Entities is a
party, or to which any of their respective properties or assets may be bound or
affected, in each case which have been identified to such counsel after due
inquiry of senior executives of the TW Entities.
6. Upon the filing of the Merger Agreement in accordance with the
provisions thereof, the Merger will be validly consummated in accordance with
the Merger Agreement and California and federal law, and each outstanding share
of Bank Common Stock will be converted as provided in the Merger Agreement.
C-2
