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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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DATE OF REPORT: MARCH 11, 1999
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OAK HILL FINANCIAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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Ohio 0-26876 31-1010517
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(STATE OR OTHER (COMMISSION FILE NO.) (IRS EMPLOYER
JURISDICTION OF IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
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14621 State Route 93
Jackson, Ohio 44640
(614) 286-3283
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE OF REGISTRANT'S
PRINCIPAL EXECUTIVE OFFICES)
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Not Applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
On March 11, 1999, Oak Hill Financial, Inc., a corporation chartered
under the laws of Ohio ("Oak Hill Financial"), and Towne Financial Corp., a
corporation chartered under the laws of Ohio ("Towne"), entered into an
Agreement and Plan of Merger, dated as of March 11, 1999 (the "Merger
Agreement"), whereby Towne will be merged with and into Oak Hill Financial (the
"Merger").
Oak Hill Financial will exchange 4.125 shares of its common stock for
each share of Towne stock. Towne has 210,500 shares of common stock outstanding.
The exchange ratio is subject to change if the value of Oak Hill Financial's
stock is above $21.71 per share prior to closing. Towne will have the right to
terminate the Merger Agreement if the average price of Oak Hill Financial's
common stock falls below $16.05 per share, unless Oak Hill Financial increases
the exchange ratio to compensate for the difference between the price of Oak
Hill Financial stock at closing and $16.05. Based on the average of Oak Hill
Financial's closing bid and ask price of $19.22 on March 10, 1999, the
transaction is valued at $17.6 million.
The Merger will be accounted for as a pooling of interest, and is
subject to shareholder approval, regulatory approval, and other customary
conditions to closing.
The Merger Agreement, the Supplemental Agreement executed in connection
with the Merger Agreement, and Oak Hill Financial's press release issued March
11, 1999, regarding the Merger are attached as exhibits to this report and are
incorporated herein by reference. The foregoing summary of the Merger Agreement
and the Supplemental Agreement do not purport to be complete and are qualified
in their entirety by reference to such exhibits.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
2(a) Agreement and Plan of Merger, dated as of March
11, 1999, between Oak Hill Financial, Inc. and
Towne Financial Corp.
2(b) Supplemental Agreement, dated as of March 11,
1999, between Oak Hill Financial, Inc. and Towne
Financial Corp.
99 Press release of Oak Hill Financial, Inc., issued
March 11, 1999, regarding the Merger.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OAK HILL FINANCIAL, INC.
Date: March 12, 1999 By: /s/ H. Tim Bichsel
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H. Tim Bichsel, Secretary
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EXHIBIT INDEX
Exhibit No. Description
2(a) Agreement and Plan of Merger, dated as of March
11, 1999, between Oak Hill Financial, Inc. and
Towne Financial Corp.
2(b) Supplemental Agreement, dated as of March 11,
1999, between Oak Hill Financial, Inc. and Towne
Financial Corp.
99 Press release of Oak Hill Financial, Inc., issued
March 11, 1999, regarding the Merger.
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EXHIBIT 2(a)
AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
March 11, 1999, between OAK HILL FINANCIAL, INC., a corporation chartered under
the law of Ohio ("Oak Hill Financial"), and Towne Financial Corporation, a
corporation that is chartered under the law of Ohio ("Towne"). (Oak Hill
Financial and Towne are collectively referred to herein as the "Constituent
Corporations.")
RECITALS
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A. Oak Hill Financial is a corporation organized and existing under
the laws of Ohio and is authorized to issue 5,000,000 shares of common stock,
without par value ("Oak Hill Financial Common"), of which 4,367,765 shares were
issued and outstanding as of December 31, 1998 (excluding treasury shares) and
200,000 reserved for issuance upon exercise of existing stock option, and (ii)
1,500,000 voting shares of preferred stock, without par value, and 1,500,000
non-voting shares of preferred stock, without par value, of which there are no
shares issued and outstanding as of the date hereof.
B. Towne is a corporation organized and existing under the laws of
Ohio and is authorized to issue 2,250,000 shares of common stock, with $1 par
value ("Towne Common"), of which 210,500 shares are issued and outstanding as of
the date hereof, exclusive of treasury shares, and is authorized to issue
250,000 shares of preferred stock, with $1 par value, of which there are no
shares issued and outstanding as of the date hereof. An additional 36,500 shares
may be issued pursuant to outstanding stock options previously granted
(collectively, the "Towne Stock Options" and individually, a "Towne Stock
Option") under the 1992 Stock Option Plan and 1997 Stock Option Plans (the
"Towne Stock Option Plans").
C. The respective Boards of Directors of Oak Hill Financial and Towne
have approved the merger of Towne into Oak Hill Financial substantially on the
terms and conditions contained in this Agreement.
AGREEMENT
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In consideration of the foregoing and the mutual promises contained
herein, the parties agree as follows:
1. MERGER. Subject to the terms and conditions hereof, and the terms
and conditions contained in a certain Supplemental Agreement, of even date
herewith, between Oak Hill Financial, and Towne (the "Supplemental Agreement"),
which is incorporated herein by reference, at the "Effective Time" (as such term
is defined in Section 2 hereof), Towne shall be merged into Oak Hill Financial
(the "Merger"). Oak Hill Financial shall be the surviving corporation in the
Merger (the "Surviving Corporation"), which shall continue its corporate
existence under the laws of Ohio following the consummation of the Merger. At
the Effective Time, the separate existence and corporate organization of Towne
shall cease.
2. EFFECTIVE TIME; EFFECTIVE DATE. The Merger shall be effective at
11:59 p.m., local Ohio time (the "Effective Time"), on (i) the day on which this
Agreement and the related Certificate of Merger have been filed in accordance
with the requirements of the laws of Ohio, or (ii) such later date as may be
specified in such Certificate of Merger (the "Effective Date").
3. NAME. The name of the Surviving Corporation shall be "Oak Hill
Financial, Inc.".
4. CHARTER. The Articles of Incorporation of Oak Hill Financial in
effect at the Effective Time shall be the articles of incorporation of the
Surviving Corporation, until amended in accordance with law.
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5. DIRECTORS. The directors of the Surviving Corporation shall Evan E.
Davis, 1114 Moriah Road, Oak Hill, Ohio 45656; John D. Kidd, 2500 Five Points
Road, Jackson, Ohio 45640; D. Bruce Knox, 301 N. Market Street, McArthur, Ohio
45651; Richard P. LeGrand, 533 Aaron Avenue, Jackson, Ohio 45640; Barry M.
Dorsey, 505 W. College Avenue, Rio Grande, Ohio 45674; Rick A. McNelly, 1815
Kessinger School Road, Jackson, Ohio 45640; Donald R. Seigneur, 46 Fruit Hill
Drive, Chillicothe, Ohio 45601; C. Clayton Johnson, 701 Sixth Street,
Portsmouth, Ohio 45662; and H. Grant Stephenson, 5363 Godown Road, Columbus,
Ohio 43235; to serve until their successors are duly elected and qualified in
accordance with the Code of Regulations of the Surviving Corporation and the
laws of Ohio.
6. REGULATIONS. The Code of Regulations of Oak Hill Financial in
effect at the Effective Time shall be the regulations of the Surviving
Corporation, until amended in accordance with law.
7. STATUTORY AGENT. The name and address of the agent upon whom any
process, notice, or demand against any Constituent Corporation or the Surviving
Corporation may be served is H. Grant Stephenson, 41 South High Street, Suite
3100, Columbus, Ohio 43215.
8. CONVERSION OF SHARES.
(a) All shares of Oak Hill Financial Common that are issued and
outstanding immediately prior to the Effective Time shall continue to be issued
and outstanding shares of Oak Hill Financial Common at and after the Effective
Time.
(b) At the Effective Time, the shares of Towne Common issued and
outstanding immediately prior to the Effective Time (exclusive of treasury
shares, if any, which shall be cancelled, and any shares as to which statutory
dissenters' rights are properly sought) shall be converted, by virtue of the
Merger and without further action on the part of the holders thereof, into the
right to receive shares of the common stock, without par value, of Oak Hill
Financial ("Oak Hill Financial Common"), as follows:
(i) Each outstanding share of Towne Common shall be
converted into the right to receive 4.125 shares of Oak Hill Financial
Common (the "Exchange Ratio"), provided, that if the Average Closing
Price is greater than 115% of the Starting Price, then each
outstanding share shall be converted into the right to receive such
number of shares as is equal to the product of multiplying 4.125 by a
fraction, the numerator of which is 115% of the Starting Price and the
denominator of which is the Average Closing Price. The Exchange Ratio
set forth in the preceding sentence shall be adjusted to reflect any
non-cash distribution, stock splits or stock dividends on Oak Hill
Financial Common occurring or having a record date after the date
hereof and prior to the Effective Time. Provided however that if prior
to the Effective Time of the merger, Oak Hill Financial publicly
announces that it has agreed to a transaction in which Oak Hill
Financial will be acquired by another company, the Exchange Ratio
shall be 4.125.
(ii) If the Average Closing Price of Oak Hill Financial
Common shall be less than 85% of the Starting Price, Towne Financial
shall have no obligation to consummate this Merger; provided however,
that this condition precedent to the obligation of Towne Financial to
consummate the Merger shall be satisfied if, when the Average Closing
Price of Oak Hill Financial Common shall be less than 85% of the
Starting Price, Oak Hill Financial, in conjunction with the Closing,
shall add to the number of shares of Oak Hill Financial Common in to
which Towne Financial Common shall be converted as otherwise
determined by application of Section 8(b)(i) above the number of
shares required to make the total dollar value of all of the shares of
Oak Hill Financial Common into which shares of Towne Financial are to
be converted, equal to the total dollar value of the shares of Oak
Hill Financial computed by multiplying the number of outstanding
shares of Towne Financial times the Exchange Ratio times 85% of the
Starting Price.
(iii) No fractional shares of Oak Hill Financial Common
shall be issued. Each holder of Towne Common who would otherwise be
entitled to receive a fractional part of a share of Oak Hill Financial
Common shall instead be entitled to receive cash in an amount equal to
the
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product resulting from multiplying such fraction by the Average
Closing Price Per Share of Oak Hill Financial Common. No interest
shall be payable with respect to such cash payment.
(c) Each outstanding share of Towne Common held by a person who has
demanded and perfected a right to relief as a dissenting shareholder under
Section 1701.85 of the Ohio Revised Code (the "Dissenters' Rights Law") and who
has not effectively withdrawn or lost such right ("Dissenting Shares") shall not
be converted into or represent a right to receive shares of Oak Hill Financial
Common pursuant to subsection 8(b) hereof, but the holder thereof shall be
entitled only to such rights as are granted by the Dissenters' Rights Law. Each
holder of Dissenting Shares who becomes entitled to relief as a dissenting
shareholder under the Dissenters' Rights Law with respect to such holder's
shares of Towne Common shall receive payment therefor from Oak Hill Financial in
accordance with the provisions of the Dissenters' Rights Law. If any holder of
Towne Common who demands relief as a dissenting shareholder under the
Dissenters' Rights Law with respect to such holder's shares of Towne Common
shall effectively withdraw or lose (through failure to perfect or otherwise),
the right to such relief, each share of Towne Common held by such holder shall
automatically be converted into the right to receive shares of Oak Hill
Financial Common pursuant to subsection 8(b) hereof.
(d) Each unexercised Towne Stock Option that is outstanding
immediately prior to the Effective Time shall be converted automatically at the
Effective Time into an option to purchase shares of Oak Hill Financial Common
under the Oak Hill Financial 1995 Stock Option Plan or similar Oak Hill
Financial plan (a "Oak Hill Financial Stock Option"), with the number of shares
of Oak Hill Financial Common to be subject to a particular Oak Hill Financial
Stock Option to be determined by converting the number of shares of Towne Common
subject to the Towne Stock Option into a number of Oak Hill Financial Common
shares in accordance with the procedure for converting outstanding Towne Common
shares into Oak Hill Financial Common shares as set forth in subsection 8(b)
hereof, except that all fractional shares will be rounded to the nearest whole
share, and with the exercise price for each share of Oak Hill Financial Common
subject to a particular Oak Hill Financial Stock Option to be equal to the
exercise price per Towne Common share under the Towne Stock Option divided by
the Exchange Ratio determined in accordance with subsection 8(b)(i) above;
provided, however, that, in the case of any Towne Stock Option to which Section
421 of the Internal Revenue Code of 1986, as amended (the "Code"), applies by
reason of its qualification under Section 422 of the Code, the terms of the Oak
Hill Financial Stock Option into which such Towne Stock Option is to be
converted, including the option price, the number of shares of Oak Hill
Financial Common purchasable pursuant to such option, and the terms and
conditions of exercise of such option, shall be determined so as to comply with
Section 424(a) of the Code. Upon such conversion, all rights under any and all
stock options and stock option plans previously granted or adopted by Towne
shall terminate.
9. EXCHANGE OF CERTIFICATES; PAYMENT FOR FRACTIONAL SHARES.
(a) On the Effective Date, Oak Hill Financial shall deliver to The
Fifth Third Bank (the "Exchange Agent") the amount of cash necessary to pay for
all fractional shares of Oak Hill Financial Common in accordance with subsection
8(b)(ii) hereof.
(b) As promptly as practicable after the Effective Date, Oak Hill
Financial shall cause the Exchange Agent to prepare and mail to each holder of
record on the Effective Date of any shares of Towne Common a letter of
transmittal containing instructions for the surrender of all certificates for
shares of Towne Common. Upon the surrender by such holder of a certificate or
certificates for shares of Towne Common standing in such holder's name to the
Exchange Agent in accordance with the instructions set forth in the letter of
transmittal, such holder shall be entitled to receive in exchange therefor a
certificate representing the number of whole shares of Oak Hill Financial Common
into which the shares represented by the certificate or certificates so
surrendered shall have been converted and, if applicable, a check payable to
such holder in the amount necessary to pay for any fractional shares of Oak Hill
Financial Common which such holder would otherwise have been entitled to
receive, in accordance with subsection 8(b)(ii) hereof. No interest shall be
payable with respect to either the whole shares of Oak Hill Financial Common or
the cash payable in lieu of fractional shares. Immediately after the third
anniversary of the Effective Date, the Exchange Agent shall deliver to the
Surviving
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Corporation any unclaimed balance of cash owing with respect to fractional
shares and such cash shall be retained by, and become the property of the
Surviving Corporation, free and clear of any claims whatsoever.
(c) Neither Oak Hill Financial, the Surviving Corporation, nor the
Exchange Agent, shall be obligated to deliver a certificate for Oak Hill
Financial Common or a check for cash in lieu of fractional shares to a former
shareholder of Towne until such former shareholder surrenders the certificate or
certificates representing shares of Towne Common standing in such former
shareholder's name or, if such former shareholder is unable to locate such
certificate or certificates, an appropriate affidavit of loss and indemnity
agreement and bond as may be required by Oak Hill Financial. Until so
surrendered, each outstanding certificate for shares of Towne Common shall be
deemed for all corporate purposes (except the payment of dividends) to evidence
ownership of the number of whole shares of Oak Hill Financial Common into which
the shares of Towne Common represented thereby shall have been converted.
(d) After the Effective Date and until the outstanding certificates
formerly representing shares of Towne Common are so surrendered, no dividends or
distributions payable to holders of record of Oak Hill Financial Common shall be
paid to the holders of such outstanding Towne certificates in respect thereof.
Promptly upon surrender of such outstanding certificates there shall be paid to
the holders of the certificates for Oak Hill Financial Common issued in exchange
therefor the amount of dividends and other distributions, if any, which
theretofore became payable with respect to such full shares of Oak Hill
Financial Common, but which have not theretofore been paid on such stock. No
interest shall be payable with respect to the payment of any dividends or other
distributions. All such dividends or other distributions unclaimed at the end of
one year from the Effective Date shall, to the extent such dividends have been
previously paid to the Exchange Agent, be repaid by the Exchange Agent to Oak
Hill Financial, and thereafter the holders of such outstanding certificates for
Towne Common shall look, subject to applicable escheat, unclaimed funds, and
other laws, only to Oak Hill Financial as general creditors for payment thereof.
(e) The stock transfer books of Towne shall be closed as of the
close of business on the day that is two business days prior to the Effective
Date.
(f) Oak Hill Financial is empowered to adopt additional reasonable
rules and regulations with respect to the matters referred to in this Section 9
not inconsistent with the provisions of this Agreement.
(g) Adoption of this Agreement by the shareholders of Towne shall
constitute ratification of the appointment of the Exchange Agent.
10. EFFECT OF THE MERGER.
(a) At the Effective Time, the effect of the Merger shall be as
provided by the applicable provisions of the laws of Ohio. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, the
separate existence of Towne shall cease; all assets and property (real,
personal, and mixed, tangible and intangible, choses in action, rights, and
credits) then owned by each Constituent Corporation, or which would inure to
either of them, shall immediately, by operation of law and without any
conveyance, transfer, or further action, become the assets and property of the
Surviving Corporation. All rights and obligations of the Constituent
Corporations shall remain unimpaired and the Surviving Corporation shall succeed
to all such rights and obligations.
(b) From time to time, as and when requested by the Surviving
Corporation or by its successors, the officers and directors of Towne in office
at the Effective Time shall execute and deliver such instruments and shall take
or cause to be taken such further or other action as shall be necessary in order
to vest or perfect in the Surviving Corporation, or to confirm of record or
otherwise, title to, and possession of, all the assets, property, interests,
rights, privileges, immunities, powers, franchises, and authority of Towne and
otherwise to carry out the purposes of this Agreement.
11. OFFICES. The principal executive offices of the Surviving
Corporation shall be located at 14621 State Route 93, Jackson, Ohio 45640.
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12. SHAREHOLDER APPROVAL. This Agreement shall be submitted to the
shareholders of Towne and of Oak Hill Financial for adoption as soon as
reasonably practicable following the execution of this Agreement.
13. ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions provided in this Agreement,
the parties hereto shall use their reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper, or advisable under applicable laws and regulations to consummate and
make effective, as soon as reasonably practicable, the transactions contemplated
by this Agreement, subject, however, to the adoption of this Agreement by the
shareholders of Towne and the receipt of all required regulatory approvals.
(b) Towne shall issue a warrant or warrants to Oak Hill Financial,
pursuant to the terms of a certain Warrant Purchase Agreement entered into or to
be entered into between Oak Hill Financial and Towne in accordance with the
terms of the Supplemental Agreement, granting to Oak Hill Financial or its
nominee the right to purchase certain shares of Towne Common under certain
conditions.
14. AMENDMENT. At any time prior to the Effective Time, the parties
hereto may amend, modify, or supplement this Agreement by mutual agreement
authorized by their respective boards of directors, whether before or after the
shareholders of Towne have adopted this Agreement, provided that the number of
shares of Oak Hill Financial Common into which shares of Towne Common are to be
converted as determined in Section 8 hereof shall not be changed after the
shareholders of Towne have adopted this Agreement without the approval of such
shareholders in the same manner as required for the adoption of this Agreement;
and provided, further, that this Agreement may not be amended, modified, or
supplemented, except by an instrument in writing executed and delivered by each
of the parties hereto.
15. TERMINATION. Unless extended by the mutual agreement of the
parties hereto, this Agreement may be terminated, notwithstanding the adoption
thereof by the shareholders of Towne, in the manner and under the circumstances
set forth in the Supplemental Agreement.
16. ENTIRE AGREEMENT. This Agreement, the Supplemental Agreement, and
any exhibits hereto or thereto constitute the entire agreement among the parties
with respect to the subject matter thereof and supersede all prior agreements
and understandings, oral or written, among the parties with respect to such
subject matter and no party shall be liable or bound to the others in any manner
by any covenants, representations, or warranties except as specifically set
forth herein or therein.
17. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
18. ASSIGNMENT. Neither this Agreement nor any rights, interests, or
obligations hereunder shall be assigned or transferred by operation of law or
otherwise by any of the parties hereto without the prior written consent of the
other parties.
19. BENEFIT. Nothing in this Agreement, express or implied, is
intended to confer upon any person or entity other than the parties hereto and
their successors in interest any rights or remedies under or by reason of this
Agreement.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original for all purposes, but
such counterparts taken together shall constitute one and the same instrument.
21. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio without regard to its conflict of
laws principles.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OAK HILL FINANCIAL, INC. TOWNE FINANCIAL CORPORATION
By: /s/ John D. Kidd By: /s/ Neil S. Strawser
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John D. Kidd, President Neil S. Strawser, Chairman of the
Board
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EXHIBIT 2(b)
SUPPLEMENTAL AGREEMENT
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THIS SUPPLEMENTAL AGREEMENT (this "Agreement") is made as of March 11,
1999, between OAK HILL FINANCIAL, INC., an Ohio corporation ("Oak Hill
Financial"), and TOWNE FINANCIAL CORPORATION, an Ohio corporation ("Towne
Financial").
RECITALS
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A. Oak Hill Financial, Inc. is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended. Oak Hill Banks ("Oak Hill
Banks"), a banking corporation chartered under the law of Ohio, is a wholly
owned subsidiary of Oak Hill Financial.
B. Towne Financial is an Ohio corporation. Blue Ash Building & Loan
Company ("Blue Ash"), a building and loan association chartered under the law of
Ohio, is a wholly owned subsidiary of Towne Financial.
C. Concurrently with the execution and delivery of this Agreement, Oak
Hill Financial and Towne Financial are entering into an Agreement and Plan of
Merger (the "Merger Agreement"), which provides for the merger of Towne
Financial into Oak Hill Financial in accordance with the terms and conditions
contained in the Merger Agreement and in this Agreement (the "Merger").
D. The parties hereto desire to enter into this Agreement for the
purpose of setting forth certain representations, warranties, and covenants made
by each party as an inducement to the other parties to execute and deliver the
Merger Agreement and to consummate the Merger and to set forth certain
additional terms and conditions applicable to the Merger.
E. The Merger is intended to be a tax-free merger of Town Financial
with and into Oak Hill Financial pursuant to section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended.
AGREEMENT
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In consideration of the foregoing and of the mutual promises contained
herein, the parties agree as follows:
SECTION 1. DEFINITIONS
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1.01 Definitions Contained Elsewhere in this Agreement. For the
purposes of this Agreement, the following terms shall have the meanings assigned
to them in the preamble and Recitals of this Agreement:
(a) this "Agreement";
(b) "Towne Financial";
(c) "Oak Hill Banks";
(d) "Oak Hill Financial";
(e) the "Merger"; and
(f) the "Merger Agreement".
1.02 Definitions Contained in the Merger Agreement. For the purposes
of this Agreement, the following terms shall have the meanings assigned to them
in the Merger Agreement:
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(a) the "Effective Date";
(b) the "Effective Time";
(c) the "Exchange Agent";
(d) the "Dissenters' Rights Law";
(e) "Towne Financial Common";
(f) "Dissenting Share"; and
(g) "Oak Hill Financial Common".
1.03 Other Definitions. For the purposes of this Agreement, certain
other terms shall be defined as follows:
(a) the "Accord" means the Legal Opinion Accord of the
American Bar Association Section of Business Law (1991);
(b) an "Acquisition Proposal" means an inquiry received from,
or an offer or proposal made by or on behalf of, any other corporation, firm,
association, person, or other entity relating to (i) the possible acquisition of
more than 25 percent of the shares of the capital stock of Towne Financial,
including, but not limited to, an exchange or tender offer therefor, (ii) the
possible acquisition of a majority of the assets of Towne Financial, (iii) a
merger or consolidation involving Towne Financial, other than a transaction in
which Towne Financial will be the owner of all of the stock of the surviving
corporation following the transaction, or (iv) a merger or consolidation
involving Towne Financial, other than a transaction in which Towne Financial
will be the surviving corporation and the current shareholders of Towne
Financial will be the owners of a majority of the stock of the surviving
corporation following the transaction;
(c) an "Affiliate" of a party means a director, officer,
employee, agent, or adviser of such party;
(d) the "Audited Financial Statements" mean the consolidated
financial statements of Towne Financial, consisting of balance sheets as of June
30, 1998, and statements of income, cash flows, and changes in shareholder's
equity for the fiscal years ended June 30, 1998, with the report thereon of
Grant Thornton LLP, certified public accountants;
(e) "Average Closing Price" shall mean the average of the
daily average of the closing bid and asked prices of Oak Hill Financial Common
as reported on the Nasdaq National Market System (as reported in a mutually
agreed upon authoritative source) for the twenty most recent full trading days
in which such shares are traded on the Nasdaq National Market System ending at
the closing of trading on the date three trading days prior to the Closing Date.
(f) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended;
(g) the "Code" means the Internal Revenue Code of 1986;
(h) "CRA" means the Community Reinvestment Act of 1977, as
amended;
(i) "Confidential Information" of or relating to a party
means any and all information received from or on behalf of such party or their
Affiliates concerning the Merger, the terms of this Agreement or the Merger
Agreement, or the assets, business, operations, or financial condition of such
party or their Affiliates, unless and to the extent that any such information is
in the public domain;
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(j) the "Division of Financial Institutions " means the
Division of Financial Institutions, Ohio Department of Commerce;
(k) "Employee Benefit Plans" means any and all "employee
benefit plans" or "welfare benefit plans" as defined in ERISA;
(l) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended;
(m) "Environmental Law" means CERCLA, the Resource
Conservation and Recovery Act, the Hazardous Materials Transportation Act, the
Toxic Substances Control Act, the Federal Water Pollution Control Act, the Clean
Water Act, the Clean Air Act, regulations promulgated thereunder, and any other
federal, state, county, municipal, local, foreign, provincial, or other statute,
law, ordinance, or regulation which may relate to or deal with human health or
the environment, all as may be amended from time to time;
(n) "FDIC" means the Federal Deposit Insurance Corporation;
(o) the "Federal Reserve Board" means the Board of Governors
of the Federal Reserve System, or its delegate;
(p) "Hazardous Substances" means (i) any "hazardous
substance" as defined in Section 101(14) of CERCLA or regulations promulgated
thereunder; (ii) any "solid waste," "hazardous waste," or "infectious waste," as
such terms are defined in any other Environmental Law; (iii) asbestos,
urea-formaldehyde, polychlorinated biphenyls (PCBs), nuclear fuel or material,
chemical waste, radioactive material, explosives, known carcinogens, petroleum
products and by-products, and other dangerous, toxic, or hazardous pollutants,
contaminants, chemicals, materials, or substances listed or identified in, or
regulated by, any Environmental Law; and (iv) any other substances or materials
which are classified or considered to be hazardous or toxic under any
Environmental Law;
(q) the "1934 Act" means the Securities Exchange Act of 1934,
as amended;
(r) the "1933 Act" means the Securities Act of 1933, as
amended;
(s) "Knowledge" as used herein shall mean those facts that
are known or should reasonably have been known after due inquiry by the
President, or any Senior or Executive Vice President of any party hereto;
(t) the "Oak Hill Disclosure Memorandum" means a certain
Disclosure Memorandum, which is to be delivered by Oak Hill Financial to Towne
Financial within forty-five (45) days after the date of this Agreement, as the
same has been amended and supplemented through the date of this Agreement, and
as the same may subsequently be amended prior to the Effective Date;
(u) "Oak Hill Financial Stock Option Plan" means the Oak Hill
Financial 1995 Stock Option Plan as presently existing or hereafter amended;
(v) a "Principal Shareholder" of a party means a person who
owns five percent or more of the outstanding shares of any class of the capital
stock of such party;
(w) the "Real Property" means any and all real property owned
or leased by Towne Financial or Blue Ash, as appropriate, as of the date of this
Agreement or acquired at any time after the date of this Agreement and prior to
the Effective Time, together with any and all improvements thereon;
(x) the "Registration Statement" means the registration
statement on the appropriate form filed or to be filed by Oak Hill Financial
with the SEC under the provisions of the 1933 Act for the purpose of registering
the shares of Oak Hill Financial Common to be issued by Oak Hill Financial
pursuant to the terms of the Merger Agreement, including, but not limited to,
the prospectus and proxy statement to be included therein as a part thereof;
(y) "SAIF" means the Savings Association Insurance Fund of
the FDIC;
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(z) the "SEC" means the Securities and Exchange Commission;
(aa) "Starting Date" shall mean the date of this Agreement;
(bb) "Starting Price" shall mean the average of the daily
average of bid and asked closing prices of Oak Hill Financial Common as reported
on the Nasdaq National Market System (as reported in a mutually agreed upon
authoritative source) for the twenty most recent full trading days in which such
shares are traded on the Nasdaq National Market System ending on the day before
the Starting Date;
(cc) "Tax" or "Taxes shall mean any federal, state, county,
local, or foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes
assessments, charges, fares, or impositions, including interest, penalties, and
additions imposed thereon or with respect thereto.
(dd) the "Towne Disclosure Memorandum" means a certain
Disclosure Memorandum, to be delivered by Towne Financial to Oak Hill Financial
within forty-five (45) days after the date of this Agreement, as the same has
been amended and supplemented through the date of this Agreement, and as the
same may subsequently be amended prior to the Effective Date; and
(ee) an "Unsolicited Acquisition Proposal" means a written
Acquisition Proposal that is received by Towne Financial or made public by or on
behalf of the proponent of such Acquisition Proposal without any solicitation of
such proposal by any director, officer, employee, agent, or other person acting
on behalf of Towne Financial.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF TOWNE FINANCIAL
-------------------------------------------------
Towne Financial represents and warrants to Oak Hill Financial that,
except as set forth in the Towne Disclosure Memorandum:
2.01 Organization and Authority. Towne Financial is a unitary savings
and loan holding company duly organized, validly existing, and in good standing
under the laws of the State of Ohio, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified, and has the
corporate power and authority to own its properties and assets, to carry on its
business as it is presently being conducted, and, subject to the approval of its
shareholders, and to the filing of all requisite regulatory applications and
notices and the receipt of all requisite regulatory approvals, to enter into and
carry out its obligations under this Agreement and under the Merger Agreement.
2.02 Capitalization. The authorized capital stock of Towne Financial
consists of 2,250,000 shares of Towne Financial Common, of which 210,500 shares
were issued and outstanding as of the date of this Agreement. All of the
outstanding shares of Towne Financial Common are duly and validly authorized,
issued, and outstanding and are fully paid and nonassessable. There are no
existing options, warrants, or commitments of any kind which might require the
issuance by Towne Financial of any additional shares of Towne Financial Common
or other equity securities of Towne Financial, except, the Warrants, the Towne
1997 Stock Option Plan and the Towne 1992 Stock Option Plan. The Disclosure
Memorandum includes a true and correct copy of each of Towne's Stock Option
Plans and a list of all option holders under such plans, the number of shares
subject to options held by each, the exercise price or prices of such options,
and the dates each option was granted, becomes exercisable, and terminates.
2.03 Subsidiaries. The Towne Disclosure Memorandum lists all
corporations in which Towne Financial owns, directly or indirectly, five percent
or more of any class of capital stock as of the date of this Agreement, and
indicates, with respect to the equity securities of each such corporation as of
such date, the number of shares of each class authorized, the number of shares
outstanding, and the number of shares owned or controlled directly or indirectly
by Towne Financial. Towne Financial owns all of the capital stock of Blue Ash.
Other than Blue Ash, Towne Financial does not own, directly or indirectly, more
than fifty percent (50%) of the capital stock of
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any other corporation. Other than the Warrants, the Towne 1997 Stock Option Plan
and the Towne 1992 Stock Option Plan, there are no options, contracts,
commitments, understandings, or arrangements by which Towne Financial is bound
to issue additional shares of its equity securities. All of the shares of the
capital stock of Blue Ash held by Towne Financial are duly and validly
authorized, issued, and outstanding, fully paid and nonassessable, and owned by
Towne Financial free and clear of any claim, lien, encumbrance, or agreement
with respect thereto. Blue Ash is a state building and loan association duly
organized, validly existing, and in good standing under the laws of Ohio, is
duly qualified to do business and is in good standing in all jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to so qualified, and has the corporate power and authority, as well as any and
all necessary governmental authorization to own its properties and assets and to
carry on its business as it is presently being conducted. Blue Ash is a member
of the Federal Home Loan Bank System and its deposits are insured up to the
applicable limits by the SAIF.
2.04 Directors, Officers, and Principal Shareholders. The Towne
Disclosure Memorandum contains a true and complete list of all directors,
executive officers, and Principal Shareholders of Towne Financial and Blue Ash.
2.05 Authorization. The execution, delivery, and performance of this
Agreement and the Merger Agreement by Towne Financial, and the consummation of
the transactions contemplated hereby and thereby have been duly approved by the
Board of Directors of Towne Financial, subject to the adoption of the Merger
Agreement and this Agreement by the shareholders of Towne Financial; and subject
to the adoption of the Merger Agreement and this Agreement by the shareholders
of Oak Hill Financial, and subject to applicable regulatory approvals for both
Oak Hill Financial and Towne Financial, and the expiration of waiting periods,
if any.
2.06 Absence of Defaults. Neither the execution and delivery of this
Agreement or the Merger Agreement, nor the consummation of the Merger, nor
compliance by Towne Financial with any provisions hereof or thereof will
conflict with or result in a breach of any provisions of the articles or
certificate of incorporation, regulations, bylaws, or other charter documents of
Towne Financial or Blue Ash or result in a material breach or termination of, or
accelerate the performance required by, any note, bond, mortgage, lease,
agreement, or other instrument to which Towne Financial or Blue Ash is a party
or by which Towne Financial or Blue Ash may be bound.
2.07 Financial Statements. Towne Financial has delivered the Audited
Financial Statements to Oak Hill Financial. The Audited Financial Statements
fairly present the financial position, results of operations, and cash flows of
Towne Financial at the dates shown and for the periods indicated in conformity
with generally accepted accounting principles applied on a consistent basis.
There are no obligations or liabilities, whether absolute, accrued, or
contingent (including, without limiting the generality of the foregoing,
liabilities for taxes), of Towne Financial or Blue Ash which are required in
conformity with generally accepted accounting principles to be reflected or
disclosed in the Audited Financial Statements which have not been or will not be
so reflected or disclosed.
2.08 Title to Properties.
(a) The Towne Disclosure Memorandum sets forth a complete and
correct list of all of the Real Property. Towne Financial or Blue Ash have good
and marketable title to all of the Real Property listed as owned by it in the
Towne Disclosure Memorandum and valid leasehold interests in all of the Real
Property listed as leased by it in the Towne Disclosure Memorandum, free and
clear of any liens and encumbrances except taxes and assessments not delinquent
and utility and other easements that do not interfere with the use of the
property for the business being conducted thereon. The Real Property and the
present use thereof do not violate any local zoning or similar land use laws,
any governmental regulations, or any restrictive covenants. To the Knowledge of
Towne Financial or Blue Ash, after reasonable investigation, (i) the Real
Property and the use thereof by Towne Financial or Blue Ash do not encroach upon
any property owned by any other person, and (ii) no property owned by any other
person encroaches upon any of the Real Property.
(b) Complete and correct copies of all deeds and leases
relating to the Real Property are included in the Towne Disclosure Memorandum.
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(c) Each item of the personal property owned by Towne
Financial or Blue Ash, including without limitation all contractual rights and
assets reflected in the Audited Financial Statements or acquired after December
31, 1998 (except for assets sold or otherwise disposed of in the ordinary course
of business since such date or assets which, either individually or in the
aggregate, are not material to the operations or financial condition of Towne
Financial or Blue Ash), is owned by Towne Financial or Blue Ash, free and clear
of any lien or encumbrance, except for assets securing loans from the Federal
Home Loan Bank of Cincinnati and assets pledged for public deposits, if any.
2.09 Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against on the Audited Financial Statements, Towne
Financial and Blue Ash have no liabilities, whether absolute, accrued,
contingent, or otherwise, due or to become due, including without limitation any
liabilities as guarantor under any guaranty or liabilities for taxes, except
liabilities and taxes incurred in the ordinary course of business, which have
had or will have a material adverse effect on the business, financial condition,
or results of operations of Towne Financial or Blue Ash.
2.10 Absence of Certain Changes. Since December 31, 1998, neither
Towne Financial nor Blue Ash has:
(a) made or permitted to be made any changes in its capital
or corporate structure, certificate or articles of incorporation, regulations,
bylaws, or other charter documents;
(b) merged with any other corporation or bank, or permitted
any other corporation or bank to merge into or consolidate with either of them;
acquired control over any other firm, bank, corporation, or organization; or
created any subsidiaries;
(c) issued, sold, delivered, or agreed to issue, sell, or
deliver any additional shares of its capital stock or any options, warrants, or
rights to acquire any such capital stock, or securities convertible into or
exchangeable for such capital stock, except for capital stock issued pursuant to
the exercise of stock options previously issued, in accordance with their
respective terms;
(d) purchased, sold, transferred, or otherwise acquired or
disposed of, or agreed to purchase, sell, transfer, acquire, or dispose of, any
capital stock or other securities of any kind, or options or other rights to
acquire any such securities, of any other entity (including, but not limited to,
any such transactions involving Towne Financial or Blue Ash with respect to the
capital stock or other securities), other than in the ordinary course of
business;
(e) incurred any indebtedness, obligations, or liabilities,
whether absolute, accrued, contingent, or otherwise, including, without
limitation, liabilities as guarantor under any guaranty, other than
indebtedness, obligations, and liabilities incurred in the ordinary course of
its business or incurred under the contracts and commitments referred to in
Section 2.18 hereof;
(f) issued as borrower any promissory notes, guarantees, or
other evidences of indebtedness, other than in the ordinary course of business;
(g) forgiven or cancelled any indebtedness or contractual
obligation, other than in the ordinary course of business;
(h) mortgaged, pledged, or subjected to any lien or lease any
of its assets, tangible or intangible, or permitted or suffered any such asset
to be subjected to any lien or lease, other than in the ordinary course of
business;
(i) purchased, sold, transferred, liquidated, or otherwise
acquired or disposed of any assets or properties, or entered into any contract
for any such purchase, sale, transfer, liquidation, acquisition, or disposition,
other than in the ordinary course of business;
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(j) entered into any lease of real or personal property,
other than in the ordinary course of business;
(k) declared, paid, made, or set apart any sum or property
for, any dividend or other distribution, or otherwise paid or transferred any
funds or property to its shareholders, except for a dividend plan as follows:
$.12 per share, record date March 12, 1999, payable March 30, 1999;
(l) increased the wages, salaries, compensation, pension or
other fringe benefits, or perquisites payable to any executive officer by more
than approximately five percent of the amount thereof in effect as of December
31, 1998, or granted any severance or termination pay, or entered into any
contract to make or grant any severance or termination pay, or entered into any
employment or consulting contract which is not terminable by Towne Financial or
Blue Ash, without cause and without penalty, upon notice of 30 days or less;
(m) made any loans or loan commitments, other than in the
ordinary course of business, to any director, officer, or Principal Shareholder
(or any person or business entity controlled by or affiliated with such
director, officer, or Principal Shareholder);
(n) modified, altered, amended, terminated, or withdrawn from
participation in any Employee Benefit Plan or any other plan or benefit provided
to one or more employees, or paid or distributed any sum from any such plan
except to participants in the ordinary course of the operation of the plan, or
made any payment or contribution to any such plan except as required by the
terms of such plan or consistent with past practices, but, in any event, not to
exceed eight percent (8%) of eligible salaries, in the aggregate, on an annual
basis. For the purpose of this section the distribution immediately prior to the
Closing of bonuses accrued during calendar year 1999 shall be considered to be
in the ordinary course of operation of the bonus plan, provided such accruals
shall have been made in accordance with terms of the plan and the prior practice
of Towne Financial and Blue Ash;
(o) entered into any transaction involving the expenditure of
more than $50,000, other than in the ordinary course of business, except
pursuant to and in accordance with the terms of the contracts and commitments
referred to in Section 2.18 hereof;
(p) adopted any change in any accounting policy or method;
(q) revalued any asset or adjusted any reserve other than in
the ordinary course of business;
(r) failed to keep in full force and effect insurance and
bonds at least equal in amount and scope of coverage to the insurance and bonds
carried on December 31, 1998;
(s) suffered any material adverse change in its business,
financial condition, income, assets, or liabilities;
(t) suffered any damage, destruction, or loss (whether or not
covered by insurance) which has had a material adverse effect, in any case or in
the aggregate, on its business, financial condition, operations, projects,
properties, or assets;
(u) suffered any strike, work stoppage, slow-down, or other
labor disturbance; or
(v) suffered any loss of employees or customers which has had
a material adverse effect on its business, operations, or prospects.
2.11 Taxes. Towne Financial and Blue Ash have filed or caused to be
filed all federal and other Tax returns which are required to be filed and have
paid or made provision for payment of all Taxes shown as due on such returns. No
deficiencies for any Tax, assessment, or governmental charge have been proposed,
asserted, or assessed against Towne Financial or Blue Ash that have not been
settled and paid. The Tax returns of Towne Financial or Blue Ash have not been
examined by the Internal Revenue Service for any of the six years preceding the
date of this Agreement and the statute of limitations has not been extended for
any Tax year.
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2.12 Labor Matters. Neither Towne Financial nor Blue Ash is a party to
any collective bargaining or other union agreement with any of its employees, or
is involved in any labor dispute.
2.13 Litigation. There is no action, suit, proceeding, or claim by any
governmental agency or other person or entity nor any investigation by any
governmental agency pending or, to the Knowledge of Towne Financial or Blue Ash,
threatened against (i) Towne Financial or Blue Ash, (ii) the assets, business,
or goodwill of Towne Financial or Blue Ash, or (iii) any director, officer, or
Principal Shareholder of Towne Financial, in relation to the business of Towne
Financial or Blue Ash or any such person's capacity as a director, officer, or
Principal Shareholder of Towne Financial or Blue Ash. Neither Towne Financial
nor Blue Ash knows of no basis or grounds for any such action, suit, proceeding,
claim, or investigation. Neither Towne Financial nor Blue Ash is subject to any
supervisory agreement, consent order or decree, cease and desist order, or other
restriction on the business or assets of Towne Financial or Blue Ash.
2.14 Environmental Matters.
(a) To the Knowledge of Towne Financial or Blue Ash, Towne
Financial and Blue Ash are and have been at all times in substantial compliance
with all applicable Environmental Laws and neither Towne Financial nor Blue Ash
have engaged in any activity resulting in a material violation of any applicable
Environmental Law. No orders, hearings, actions, or other proceedings by or
before any court or governmental agency in which Towne Financial or Blue Ash is
a party are pending or, to the Knowledge of Towne Financial or Blue Ash,
threatened in connection with any alleged violation of any applicable
Environmental Law (i) by Towne Financial or Blue Ash or (ii) in relation to any
part of the Real Property and neither Towne Financial nor Blue Ash has Knowledge
of any investigations or inquiries with respect to any such alleged violation.
No claims have been made or, to the Knowledge of Towne Financial or Blue Ash,
threatened at any time by any third party against Towne Financial or Blue Ash
relating to damage, contribution, cost recovery, compensation, loss, or injury
resulting from any Hazardous Substance. To the Knowledge of Towne Financial or
Blue Ash, neither Towne Financial nor Blue Ash has caused or permitted any
Hazardous Substance to be integrated into the Real Property or any component
thereof in such manner or quantity as may reasonably be expected to or in fact
would pose a threat to human health or the value of the Real Property. None of
the Real Property has been used by Towne Financial or Blue Ash for the storage
or disposal of Hazardous Substances nor to the Knowledge of Towne Financial or
Blue Ash, is any of the Real Property contaminated by any Hazardous Substance.
To the Knowledge of Towne Financial or Blue Ash, none of the Real Property has
in the past contained or presently contains any underground storage tanks. To
the Knowledge of Towne Financial or Blue Ash, neither Towne Financial nor Blue
Ash has interest, direct or indirect, in any property owned by a third party
which has been contaminated by Hazardous Substances (excluding any property as
to which the sole interest of Towne Financial or Blue Ash is that of a lien
holder or mortgagee, but including any property as to which title has been taken
by Towne Financial or Blue Ash pursuant to mortgage foreclosure or similar
proceeding and any property as to which Towne Financial or Blue Ash has
participated in the financial management to a degree sufficient to influence the
property's treatment of Hazardous Substances).
(b) To the Knowledge of Towne Financial or Blue Ash, the
representations set forth in paragraph (a) above are also true and correct in
relation to any and all real property owned or leased by it at any time prior to
the date of this Agreement, together with any improvements located thereon.
2.15 Community Reinvestment Act Compliance. Towne Financial and Blue
Ash are in compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and has received a CRA rating of
satisfactory or better from the Office of Thrift Supervision. Towne Financial
and Blue Ash know of no fact or circumstance or set of facts or circumstances
which would cause them to fail to comply with such provisions or to cause the
CRA rating of Blue Ash to fall below satisfactory.
2.16 Compliance with Laws. Towne Financial and Blue Ash hold all
permits, licenses, certificates of authority, orders, and approvals of, and have
made all filings, applications, and registrations with, all governmental or
regulatory bodies that are required in order to permit them to carry on their
respective businesses as they are presently conducted. To the Knowledge of Towne
Financial and Blue Ash, Towne Financial and Blue Ash have conducted its
businesses so as to comply in all material respects with all applicable
statutes, regulations, rules, and orders.
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2.17 Information Provided by Towne Financial and Blue Ash. None of the
information supplied or to be supplied by Towne Financial and Blue Ash for
inclusion in the Registration Statement, the application for approval, or any
other document to be filed with the Federal Reserve Board, the Division of
Financial Institutions, the SEC, or any other federal or state regulatory
authority in connection with the transactions contemplated herein or in the
Merger Agreement is or will be false or misleading with respect to any material
fact, or omits or will omit any material fact necessary in order to make the
statements therein not misleading.
2.18 Material Contracts.
(a) The Towne Disclosure Memorandum contains a complete and
correct list of all written or oral agreements, leases, and other obligations
and commitments of the following types, to which either Towne Financial or Blue
Ash is a party, by which Towne Financial or Blue Ash or any of their property is
bound, or which has been authorized by either Towne Financial or Blue Ash:
(i) promissory notes, guaranties, mortgages, security
agreements, or other evidences of indebtedness of Towne Financial or
Blue Ash;
(ii) partnership or joint venture agreements;
(iii) employment, bonus, compensation, severance, or
consulting agreements;
(iv) collective bargaining agreements;
(v) Employee Benefit Plans and any other plans,
benefits, programs of benefits, or deferred compensation
arrangements for the benefit of directors, employees, or former or
retired employees;
(vi) agreements or commitments for sale (other than in
the ordinary course of business) of assets exceeding $50,000 in the
aggregate;
(vii) agreements or commitments for capital
expenditures in excess of $50,000 in the aggregate;
(viii) agreements or other documents creating liens or
security interests relating to any real or personal property owned,
rented, or leased by Towne Financial or Blue Ash and used in
connection with the business of such entity;
(ix) leases of, commitments to lease, and other
agreements relating to the lease or rental of, real or personal
property by Towne Financial or Blue Ash and used in connection with
the business of such entity;
(x) all policies of insurance and fidelity bonds of
Towne Financial or Blue Ash;
(xi) all direct or indirect loans or guaranties of
loans to any director, officer, or Principal Shareholder of Towne
Financial or Blue Ash or their spouses or children or any
partnership, corporation, or other entity in which any such
director, officer, or Principal Shareholder or their spouses or
children, have a significant (ten percent or more) interest; and
(xii) all other contracts and commitments not made in
the ordinary course of business.
(b) The Towne Disclosure Memorandum includes complete and
correct copies of all written agreements, leases and commitments, except loan
commitments less than $500,000, together with all amendments thereto, listed in
the Towne Disclosure Memorandum and a complete and correct written description
of all oral agreements listed in the Towne Disclosure Memorandum.
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(c) As of and through the date of this Agreement: (i) each
agreement, lease, and commitment of Towne Financial or Blue Ash is valid and
subsisting and in full force and effect in all material respects; (ii) Towne
Financial and Blue Ash have in all material respects performed all obligations
required to be performed by it to date under such agreements, leases, and
commitments; and (iii) no event or condition exists which constitutes or, after
notice or lapse of time, would constitute, a material default on the part of
Towne Financial or Blue Ash under any agreement, lease, or commitment.
2.19 Employee Benefit Plans.
(a) All Employee Benefit Plans maintained by Towne Financial
or Blue Ash comply in all material respects with the requirements of ERISA and
the Code and all such plans have been administered to date in compliance with
the requirements of ERISA, the Code, and subsequent legislation regulating ERISA
plans. Each of such plans that is an employee pension benefit plan within the
meaning of Section 3(2) of ERISA that is intended to be a qualified plan under
Section 401(a) of the Code has been amended to comply in all material respects
with current law as required or the remedial amendment period for such amendment
under Section 401(b) of the Code has not expired and Towne Financial or Blue Ash
has obtained favorable determination letters with respect to all such plans. As
of the date hereof, neither Towne Financial nor Blue Ash has liability on
account of any accumulated funding deficiency (as defined in Section 412 of the
Code) or on account of any failure to make contributions to or pay benefits
under any such plan nor is Towne Financial or Blue Ash aware of any claim
pending or threatened to be brought by any party regarding such matters. No
prohibited transaction has occurred with respect to any such plan that would
result, directly or indirectly, in the imposition of any excise tax under
Section 4975 of the Code; nor has any reportable event under Section 4043 of
ERISA occurred with respect to any such plan. Neither Towne Financial nor Blue
Ash has a defendant in any lawsuit or criminal action concerning such entity's
conduct as a fiduciary, party-in-interest, or disqualified person with respect
to any plan, nor is either of them engaged in litigation or a continuing
controversy with, or, to the knowledge of Towne Financial or Blue Ash, under
investigation or examination by, the Department of Labor, Internal Revenue
Service, Justice Department, or Pension Benefit Guaranty Corporation involving
compliance with ERISA or the provisions of the Code relating to employee benefit
plans. All reporting and disclosure requirements of ERISA and the Code have been
met in all respects by all such plans. Neither Towne Financial nor Blue Ash is
required to contribute to an Employee Benefit Plan that is a "multiemployer
plan" within the meaning of Section 3(37) of ERISA.
(b) The Towne Disclosure Memorandum lists all Employee
Benefit Plans and any and all other benefit plans or programs currently in
effect for employees, former employees, and retired employees of Towne Financial
or Blue Ash including, without limitation, those providing any form of medical,
health, and dental insurance, severance pay and benefits continuation,
relocation assistance, vacation pay, tuition aid, and matching gifts for
charitable contributions to educational or cultural institutions, whether or not
subject to ERISA. The Towne Disclosure Memorandum includes complete and correct
copies of all such plans or programs, including each trust or other agreement
under which any trustee or custodian holds funds or property of the plan and all
current financial and actuarial reports, all current reporting and disclosure
documents and filings, and currently effective Internal Revenue Service rulings
or determination letters in respect thereof. If any of the Employee Benefit
Plans listed in the Towne Disclosure Memorandum has not been amended to comply
with the Tax Reform Act of 1986 and subsequent legislation, Towne Financial will
also deliver to Oak Hill Financial information and documentation regarding such
plan's operation during the remedial amendment period which is sufficient to
enable Oak Hill Financial to amend such plans to comply with the Tax Reform Act
of 1986 and subsequent legislation.
2.20 Insurance Policies. The Towne Disclosure Memorandum contains a
complete and correct list of the insurance policies and fidelity bonds currently
maintained by Towne Financial or Blue Ash. The Towne Disclosure Memorandum
includes complete and correct copies of all such policies and bonds currently in
effect together with all riders and amendments thereto. All premiums due thereon
have been paid and Towne Financial or Blue Ash has complied in all respects with
the provisions of such policies and bonds. Neither Towne Financial nor Blue Ash
has failed to give any notice or present any claim under any insurance policy or
fidelity bond in due and timely fashion.
2.21 Capital Requirements. Towne Financial and Blue Ash are in
compliance with all currently applicable capital requirements and guidelines
prescribed by all appropriate federal regulatory agencies.
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2.22 Loan Loss Reserves. Since December 31, 1998, neither Towne
Financial nor Blue Ash has incurred any unusual or extraordinary loan losses.
The allowance for loan losses reflected on the financial statements of Towne
Financial or Blue Ash has been determined in accordance with generally accepted
accounting principles and in accordance with all applicable regulations of all
appropriate regulatory agencies and is adequate in all material respects under
requirements of GAAP to provide for reasonably anticipated losses on outstanding
loans. Neither Towne Financial nor Blue Ash has Knowledge of any potential
losses that have not been considered in establishing the current allowance for
loan losses.
2.23 Brokers; Certain Fees. Neither Towne Financial nor Blue Ash, nor
any of their respective officers, directors, or employees, has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions, or finder's fees in connection with this Agreement
or the Merger Agreement, or the transactions contemplated herein or therein.
2.24 Material Facts. Neither this Agreement, the Merger Agreement, the
Towne Disclosure Memorandum, nor any list, schedule, or certificate furnished to
Oak Hill Financial by or on behalf of Towne Financial or Blue Ash contains any
untrue statement of a material fact or omits a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances in which made.
2.25 Tax Treatment of the Merger. Neither Towne Financial or Blue Ash,
or any Affiliate thereof, has taken any action or has any Knowledge of any fact
or circumstance that is reasonably likely to prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF OAK HILL FINANCIAL
----------------------------------------------------
Oak Hill Financial and Oak Hill Banks represent and warrant, as the
case may be, to Towne Financial that, except as set forth in the Oak Hill
Disclosure Memorandum:
3.01 Organization and Authority of Oak Hill Financial. Oak Hill
Financial is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Ohio, is duly qualified to do business
and is in good standing in all jurisdictions where its ownership or leasing of
property or the conduct of its business requires it to be so qualified, and has
the corporate power and authority to own its properties and assets, to carry on
its business as it is presently being conducted, and to enter into and carry out
its obligations under this Agreement.
3.02 Capitalization. The authorized capital stock of Oak Hill
Financial consists of (i) 5,000,000 shares of common stock, without par value,
of which 4,367,765 shares were issued and outstanding as of December 31, 1998
(including treasury shares) and 200,000 reserved for issuance upon exercise of
existing stock option, and (ii) 1,500,000 voting shares of preferred stock,
without par value, and 1,500,000 non-voting shares of preferred stock, without
par value, of which there are no shares issued and outstanding as of the date
hereof. All the outstanding shares of Oak Hill Financial Common are duly and
validly authorized, issued, and outstanding and are fully paid and
nonassessable. All of the shares of Oak Hill Financial Common to be issued
pursuant to the Merger Agreement will, when so issued, be duly and validly
authorized, issued, and outstanding, fully paid and nonassessable, and the
issuance of such shares will not be subject to any preemptive or similar rights.
The deposits of Oak Hill Banks are insured up to the applicable limits by the
Bank Insurance Fund ("BIF").
3.03 Authorization of Oak Hill Financial. The execution, delivery, and
performance of this Agreement by Oak Hill Financial, and the consummation of the
transactions contemplated hereby, have been duly approved by the Board of
Directors of Oak Hill Financial. As soon as practicable and, in any event,
within ten (10) business days after the SEC has declared the Registration
Statement effective, Oak Hill Financial will call and mail notice of a meeting
of its shareholders for the purpose of adopting the Merger Agreement and this
Agreement, which meeting shall be held not more than 45 days from the date the
notice is mailed, and the Board of Directors of Oak Hill Financial will
recommend to the shareholders that they vote their shares in favor of the
Merger.
3.04 Absence of Defaults. Neither the execution and delivery of this
Agreement, nor the consummation of the Merger, nor compliance by Oak Hill
Financial with any of the provisions hereof will conflict
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with or result in a breach of any provision of the charter or bylaws of Oak Hill
Financial or result in a material breach or termination of, or accelerate the
performance required by, any material note, bond, mortgage, lease, agreement, or
other instrument to which Oak Hill Financial is a party or to which Oak Hill
Financial may be bound.
3.05 Information Provided by Oak Hill Financial. None of the
information supplied or to be supplied by Oak Hill Financial for inclusion in
the Registration Statement, application for approval, or any other document to
be filed with the Federal Reserve Board, the Division of Financial Institutions,
the SEC, or any other federal or state regulatory authority in connection with
the transactions contemplated herein or in the Merger Agreement is or will be
false or misleading with respect to any material fact, or omits or will omit any
material fact necessary in order to make the statements therein not misleading.
3.06 Material Facts. Neither this Agreement nor the Merger Agreement
contains any untrue statement of a material fact or omits a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances in which made; provided, however, that the scope of
this representation does not extend to any information relating to or furnished
by Towne Financial or Blue Ash.
3.07 Filing of Reports. Oak Hill Financial Common is registered
pursuant to Section 12 of the 1934 Act. Oak Hill Financial has been subject to
the reporting requirements of Section 13 of the 1934 Act for a period of at
least 90 days prior to the date hereof and has filed all reports required to be
filed thereunder during the twelve months preceding the date hereof. Since
January 1, 1996, Oak Hill Financial has filed with the SEC all documents and
reports (including all amendments, exhibits, and schedules thereto and documents
incorporated by reference therein) required to be filed by Oak Hill Financial
under the 1934 Act and the 1933 Act, and the rules and regulations promulgated
by the SEC thereunder. None of such documents or reports, as of their respective
dates and as amended through the date hereof, contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in view of the
circumstances under which they were made, not misleading.
3.08 Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against on the Oak Hill Disclosure Memorandum, Oak Hill
Banks has no liabilities, whether absolute, accrued, contingent, or otherwise,
due or to become due, including without limitation any liabilities as guarantor
under any guaranty or liabilities for taxes, except liabilities and taxes
incurred in the ordinary course of business, which have had or will have a
material adverse effect on the business, financial condition, or results of
operations of Oak Hill Banks.
3.09 Absence of Certain Changes. Except as provided in the Oak Hill
Disclosure Memorandum, since December 31, 1998, Oak Hill Financial has not:
(a) made or permitted to be made any changes in their capital
or corporate structures, certificates or articles of incorporation, regulations,
bylaws, or other charter documents;
(b) merged with any other corporation or bank, or permitted
any other corporation or bank to merge into or consolidate with either of them;
acquired control over any other firm, bank, corporation, or organization; or
created any subsidiaries;
(c) issued, sold, delivered, or agreed to issue, sell, or
deliver any additional shares of their capital stock or any options, warrants,
or rights to acquire any such capital stock, or securities convertible into or
exchangeable for such capital stock, and except for capital stock issued
pursuant to the exercise of stock options previously issued, in accordance with
their respective terms;
(d) purchased, sold, transferred, or otherwise acquired or
disposed of, or agreed to purchase, sell, transfer, acquire, or dispose of, any
capital stock or other securities of any kind, or options or other rights to
acquire any such securities, of any other entity (including, but not limited to,
any such transactions involving either of Oak Hill Banks or Oak Hill Financial
with respect to the capital stock or other securities of the other of them),
other than in the ordinary course of business;
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(e) incurred any indebtedness, obligations, or liabilities,
whether absolute, accrued, contingent, or otherwise, including, without
limitation, liabilities as guarantor under any guaranty, other than
indebtedness, obligations, and liabilities incurred in the ordinary course of
their business;
(f) adopted any change in any accounting policy or method;
(g) revalued any asset or adjusted any reserve, other than in
the ordinary course of business;
(h) failed to keep in full force and effect insurance and
bonds at least equal in amount and scope of coverage to the insurance and bonds
carried on December 31, 1998;
(i) suffered any material adverse change in their business,
financial condition, income, assets, or liabilities; and
(j) made no material increase in dividends until the
Effective Date of this Agreement.
3.10 Taxes. Oak Hill Financial has filed or caused to be filed all
federal and other tax returns which are required to be filed and have paid or
made provision for payment of all taxes shown as due on such returns. No
deficiencies for any tax, assessment, or governmental charge have been proposed,
asserted, or assessed against Oak Hill Financial that have not been settled and
paid.
3.11 Litigation. There is no action, suit, proceeding, or claims by
any governmental agency or other person or entity nor any investigation by any
governmental agency pending or, to the Knowledge of Oak Hill Financial,
threatened against (i) Oak Hill Banks, (ii) Oak Hill Financial, (iii) the
assets, business or goodwill of Oak Hill Banks or Oak Hill Financial, or (iv)
any director, officer, or Principal Shareholder of Oak Hill Banks or Oak Hill
Financial, in relation to the business of Oak Hill Banks or Oak Hill Financial
or any such person's capacity as a director, officer, or Principal Shareholder
of Oak Hill Banks or Oak Hill Financial.
3.12 Compliance with Laws. To the knowledge of Oak Hill Financial, Oak
Hill Banks and Oak Hill Financial hold all permits, licenses, certificates of
authority, orders, and approvals of, and have made all filings, applications,
and registrations with, all governmental or regulatory bodies that are required
in order to permit them to carry on their respective businesses as they are
presently conducted. To the Knowledge of Oak Hill Financial, Oak Hill Banks and
Oak Hill Financial have conducted their businesses so as to comply in all
material respects with all applicable statutes, regulations, rules, and orders.
3.13 Environmental Matters.
(a) To the Knowledge of Oak Hill Financial, Oak Hill Banks is
and has been at all times in substantial compliance with all applicable
Environmental, and Oak Hill Banks has not engaged in any activity resulting in a
material violation of any applicable Environmental Law. No orders, hearings,
actions, or other proceedings by or before any court or governmental agency in
which Oak Hill Banks is a party are pending or, to the Knowledge of Oak Hill
Financial, threatened in connection with any alleged violation of any applicable
Environmental Law (i) by Oak Hill Banks or (ii) in relation to any part of the
Real Property, and Oak Hill Financial has no Knowledge of any investigations or
inquiries with respect to any such alleged violation. No claims have been made
or, to the Knowledge of Oak Hill Financial, threatened at any time by any third
party against Oak Hill Banks relating to damage, contribution, cost recovery,
compensation, loss, or injury resulting from any Hazardous Substance. To the
Knowledge of Oak Hill Financial, Oak Hill Banks has not caused or permitted any
Hazardous Substance to be integrated into the Real Property or any component
thereof in such manner or quantity as may reasonably be expected to or in fact
would pose a threat to human health or the value of the Real Property. None of
the Real Property has been used by Oak Hill Banks for the storage or disposal of
Hazardous Substances nor to the Knowledge of Oak Hill Financial, is any of the
Real Property contaminated by any Hazardous Substance. To the Knowledge of Oak
Hill Financial, none of the Real Property has in the past contained or presently
contains any underground storage tanks. To the Knowledge of Oak Hill Financial,
Oak Hill Banks has no interest, direct or indirect, in any property owned by a
third party which has been contaminated by Hazardous Substances (excluding any
property as to which the sole interest of Oak Hill Banks is that of a lien
holder or mortgagee, but including any property as to which title has been taken
by Oak Hill Banks pursuant to mortgage foreclosure or similar proceeding
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and any property as to which Oak Hill Banks has participated in the financial
management to a degree sufficient to influence the property's treatment of
Hazardous Substances).
(b) To the Knowledge of Oak Hill Financial, the
representations set forth in paragraph (a) above are also true and correct in
relation to any and all real property owned or leased by it at any time prior to
the date of this Agreement, together with any improvements located thereon.
3.14 Employee Benefit Plans. All Employee Benefit Plans maintained by
Oak Hill Banks or Oak Hill Financial comply in all material respects with the
requirements of ERISA and the Code and all such plans have been administered to
date in compliance with the requirements of ERISA, the Code, and subsequent
legislation regulating ERISA plans. Each of such plans that is an employee
pension benefit plan within the meaning of Section 3(2) of ERISA that is
intended to be a qualified plan under Section 401(a) of the Code has been
amended to comply in all material respects with current law as required or the
remedial amendment period for such amendment under Section 401(b) of the Code
has not expired and Oak Hill Banks or Oak Hill Financial has obtained favorable
determination letters with respect to all such plans. As of the date hereof, Oak
Hill Banks or Oak Hill Financial has no liability on account of any accumulated
funding deficiency (as defined in Section 412 of the Code) or on account of any
failure to make contributions to or pay benefits under any such plan nor is Oak
Hill Banks or Oak Hill Financial aware of any claim pending or threatened to be
brought by any party regarding such matters. No prohibited transaction has
occurred with respect to any such plan that would result, directly or
indirectly, in the imposition of any excise tax under Section 4975 of the Code;
nor has any reportable event under Section 4043 of ERISA occurred with respect
to any such plan. Neither Oak Hill Banks nor Oak Hill Financial is a defendant
in any lawsuit or criminal action concerning such entity's conduct as a
fiduciary, party-in-interest, or disqualified person with respect to any plan,
nor is either of them engaged in litigation or a continuing controversy with,
or, to the Knowledge of Oak Hill Financial, under investigation or examination
by, the Department of Labor, Internal Revenue Service, Justice Department, or
Pension Benefit Guaranty Corporation involving compliance with ERISA or the
provisions of the Code relating to employee benefit plans. All reporting and
disclosure requirements of ERISA and the Code have been met in all respects by
all such plans. Neither Oak Hill Banks nor Oak Hill Financial is required to
contribute to an Employee Benefit Plan that is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
3.15 Capital Requirements. Oak Hill Financial is in compliance with
all currently applicable capital requirements and guidelines prescribed by all
appropriate federal regulatory agencies.
3.16 Tax Treatment of the Merger. Oak Hill Financial has not taken any
action or has any knowledge of any fact or circumstance that is reasonably
likely to prevent the transactions contemplated hereby, including the Merger,
from qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
SECTION 4. COVENANTS OF TOWNE FINANCIAL AND BLUE ASH.
------------------------------------------
Towne Financial and Blue Ash covenant and agree as follows:
4.01 Applications for Regulatory Approvals; Registration Statement.
Towne Financial and Blue Ash will cooperate, and will cause its respective
directors, officers, employees, agents, and advisers to cooperate, to the extent
reasonably necessary, with Oak Hill Financial and its advisers in connection
with the preparation of the Registration Statement and the applications for
regulatory approvals described in Section 5.02 hereof.
4.02 Shareholders' Meeting. As soon as practicable and, in any event,
within ten business days after the SEC has declared the Registration Statement
effective, Towne Financial will call and mail notice of a meeting of its
shareholders for the purpose of adopting the Merger Agreement and this
Agreement, which meeting shall be held not more than 45 days from the date the
notice is mailed, and the Board of Directors of Towne Financial will to the
extent consistent with their fiduciary duty recommend to the shareholders that
they vote their shares in favor of the Merger.
4.03 Conduct of Business. From the date of this Agreement until the
Effective Time, except as provided herein or as consented to by Oak Hill
Financial in writing, Towne Financial and Blue Ash will conduct their respective
operations only, and shall not take any action except, in the ordinary and usual
course of business, and Towne Financial and Blue Ash will use its best efforts
to preserve intact its business organization, assets,
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prospects, and business relationships, to keep available the services of their
officers and employees, and to maintain existing relationships with other
entities. Without limiting the generality of the foregoing, subject to the
exceptions stated above, during such period, Towne Financial and Blue Ash will
not except as provided herein:
(a) enter into any agreement or commitment of the character
referred to in subsections 2.18(a)(i) through (xii) hereof; or
(b) take or permit to be taken any action of a character
which is listed in subsections (a) through (q) of Section 2.10 hereof; provided,
however, that, after prior consultation with Oak Hill Financial, Towne Financial
may take or permit such of those actions as may be required pursuant to any
change in applicable accounting rules or standards, or by law or any applicable
rules or regulations of any governmental authority.
4.04 Access to Information. Towne Financial and Blue Ash shall give
representatives of Oak Hill Financial full access, during normal business hours
and upon reasonable notice, to all assets, properties, books, records,
agreements, and commitments of Towne Financial and Blue Ash, provided that such
access shall not unreasonably interfere with the operations of Towne Financial
and Blue Ash, and shall furnish to representatives of Oak Hill Financial all
such information concerning its and their affairs as Oak Hill Financial may
reasonably request. It is expressly understood that no investigation by Oak Hill
Financial pursuant to this Section 4.04 or otherwise shall affect any
representation or warranty made herein.
4.05 Press Releases. Towne Financial and Blue Ash shall consult in
advance with Oak Hill Financial as to the form and substance of any press
release, written communication with its shareholders, or other public disclosure
of matters related to the Merger Agreement, this Agreement, or the Merger, and
shall not issue any such press release, written communication, or public
disclosure without the prior written consent of Oak Hill Financial; provided,
however, that nothing contained herein shall prohibit Towne Financial and Blue
Ash from making any disclosure (after consultation with Oak Hill Financial with
respect thereto) which its counsel deems necessary under applicable law.
4.06 Best Efforts. Towne Financial and Blue Ash shall use their best
efforts to take or cause to be taken all actions necessary, proper, or advisable
to consummate the Merger, including such actions as Oak Hill Financial may
reasonably request in writing, and should Oak Hill Financial so elect, to
consummate a merger of Blue Ash into an interim state-chartered commercial bank
formed by Oak Hill Financial for such purpose.
4.07 Acquisition Proposals. Unless and until this Agreement shall have
been terminated by either party pursuant to Section 11 hereof, Towne Financial
and Blue Ash shall not (i) directly or indirectly, through any of its officers,
directors, agents, or affiliates, solicit, encourage, initiate, entertain,
consider, or participate in any negotiations or discussions with respect to any
Acquisition Proposal, or (ii) disclose any information not customarily disclosed
to any person or entity or provide access to its properties, books, or records
or otherwise assist or encourage any person or entity in connection with any
Acquisition Proposal; provided, however, that Towne Financial shall be entitled
to entertain, consider, and participate in negotiations and discussions
regarding an Unsolicited Acquisition Proposal, and to disclose such information
and provide such access in connection with such an Unsolicited Acquisition
Proposal, to the extent that the Board of Directors of Towne Financial
determines in good faith, after consultation with its financial advisor with
respect to the financial aspects of the Unsolicited Acquisition Proposal and the
Merger, and with legal counsel to Towne Financial, that failure to so consider
or participate in such negotiations or discussions would be inconsistent with
the fiduciary obligations of the directors of Towne Financial to the
shareholders of Towne Financial. Towne Financial shall give Oak Hill Financial
immediate notice of any such Acquisition Proposals.
4.08 Advice of Changes. Between the date hereof and the Effective
Date, Towne Financial and Blue Ash shall advise Oak Hill Financial promptly, in
writing, of any material fact which, if existing or known on the date hereof,
would have been required to be set forth or disclosed in or pursuant to this
Agreement and any fact which, if existing or known on the date hereof, would
have made any of the representations contained herein untrue. Prior to the
Effective Date, Towne Financial and Blue Ash shall deliver to Oak Hill Financial
a supplement to the Towne Disclosure Memorandum, which shall contain a
description of any and all such matters.
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4.09 Confidentiality. From and after the date of this Agreement, Towne
Financial and Blue Ash shall, and shall cause its respective Affiliates to,
treat all Confidential Information of Oak Hill Financial and Oak Hill Banks, as
confidential, and Towne Financial and Blue Ash shall, and shall cause its
respective Affiliates to, not use any such Confidential Information for any
purpose except in furtherance of the transactions contemplated hereby. In the
event this Agreement is terminated pursuant to Section 11 hereof, Towne
Financial and Blue Ash shall, and shall cause their respective Affiliates to,
promptly return to Oak Hill Financial all documents and workpapers, and all
copies thereof, containing any such Confidential Information of Oak Hill
Financial or Oak Hill Banks. The covenants of Towne Financial and Blue Ash
contained in this Section 4.09 are of the essence and shall survive any
termination of this Agreement and the closing of the transactions contemplated
hereby.
4.10 Coordination of Dividends. Towne Financial agrees to cooperate
with Oak Hill Financial to ensure that the shareholders of Towne Financial
receive a regular quarterly dividend from either Towne Financial or Oak Hill
Financial during the quarter in which the Effective Date occurs, but that they
do not receive dividends from both Towne Financial and Oak Hill Financial during
such quarter.
4.11 Tax Representations. Towne Financial and Blue Ash will use
reasonable efforts to cause the Merger, and will take no action which would
cause the Merger not to qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes and shall make such Tax representations as shall be reasonably
requested of them.
4.12 Pooling. The accounting firm of Grant Thornton LLP has reviewed
the proposed Merger and determined that the Merger qualifies as a "pooling of
interest" for accounting purposes. Neither Towne Financial nor Blue Ash shall
intentionally take or cause to be taken any action, whether before or after the
Effective Date, which would disqualify the Merger as a "pooling of interests"
for accounting purposes or as a "reorganization" within the meaning of Section
368(a) of the Code.
4.13 Form 13D or 13G Filings. Towne Financial shall promptly advise
Oak Hill Financial of the filing of a Form 13D or 13G under the 1934 Act with
respect to Towne Financial Common and shall provide Oak Hill Financial with a
copy of any such Form 13D or 13G promptly after receipt thereof.
SECTION 5. COVENANTS OF OAK HILL FINANCIAL AND OAK HILL BANKS
--------------------------------------------------
Oak Hill Financial and Oak Hill Banks covenant and agree as follows:
5.01 Issuance of Oak Hill Financial Common; Payment for Fractional
Shares. At the Effective Time, Oak Hill Financial shall (i) issue all of the
shares of Oak Hill Financial Common into which shares of Towne Financial Common
are to be converted in the Merger and will deliver the certificates for such
shares, or cause the same to be delivered, to the Exchange Agent; and (ii)
deliver to the Exchange Agent the amount of cash to be paid in lieu of issuing
fractional shares of Oak Hill Financial Common in accordance with subsections
8(b)(ii) and 9(a) of the Merger Agreement.
5.02 Applications for Regulatory Approvals. As soon as reasonably
practicable after the execution of this Agreement, Oak Hill Financial shall
prepare and file such applications with the Office of Thrift Supervision, the
Federal Reserve Board, the Ohio Division of Financial Institutions, and any
other regulatory authorities having jurisdiction as may be required to secure
all necessary regulatory approvals of the Merger and shall use its best efforts
to secure such approvals. Oak Hill Financial may also seek regulatory approval
for the formation of a interim state-chartered commercial bank in which Blue Ash
would merged as of, or shortly after, the Effective Time. Oak Hill Financial
shall deliver a draft or drafts of such regulatory applications to Towne
Financial and provide Towne Financial a reasonable opportunity to review such
draft or drafts prior to filing the same.
5.03 Registration Statement. As soon as reasonably practicable after
the execution of this Agreement, Oak Hill Financial shall prepare and file the
Registration Statement with the SEC, shall use its best efforts to cause the
Registration Statement to become effective, and shall take such action as may be
required to register or qualify for exemption such shares under the securities
laws of the states where registration or an exemption from registration may be
required. Oak Hill Financial shall deliver a draft or drafts of the Registration
Statement to
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Towne Financial and provide Towne Financial a reasonable opportunity to review
such draft or drafts prior to filing the same.
5.04 Shareholders' Meeting. As soon as practicable and, in any event,
within ten business days after the SEC has declared the Registration Statement
effective, Oak Hill Financial will call and mail notice of a meeting of its
shareholders for the purpose of adopting the Merger Agreement and this
Agreement, which meeting shall be held not more than 45 days from the date the
notice is mailed, and the Board of Directors of Oak Hill Financial will to the
extent consistent with their fiduciary duty recommend to the shareholders that
they vote their shares in favor of the Merger.
5.05 Press Releases. Oak Hill Financial shall consult in advance with
Towne Financial as to the form and substance of any press release, written
communication with its shareholders, or other public disclosure of matters
related to this Agreement, the Merger Agreement, or the Merger.
5.06 Best Efforts. Oak Hill Financial will use its best efforts to
take or cause to be taken all actions necessary, proper, or advisable to
consummate the Merger.
5.07 Confidentiality. From and after the date of this Agreement, Oak
Hill Financial and Oak Hill Banks shall, and shall cause their respective
Affiliates to, treat all Confidential Information of Towne Financial and Blue
Ash as confidential, and Oak Hill Financial and Oak Hill Banks shall, and shall
cause their respective Affiliates to, not use any such Confidential Information
for any purpose except in furtherance of the transactions contemplated hereby.
In the event this Agreement is terminated pursuant to Section 11 hereof, Oak
Hill Financial and Oak Hill Banks shall, and shall cause their respective
Affiliates to, promptly return to Towne Financial and Blue Ash all documents and
workpapers, and all copies thereof, containing any such Confidential Information
of Towne Financial and Blue Ash. The covenants of Oak Hill Financial and Oak
Hill Banks contained in this Section 5.07 are of the essence and shall survive
any termination of this Agreement, but shall terminate as of the closing of the
transactions contemplated hereby.
5.08 Coordination of Dividends. Oak Hill Financial agrees to cooperate
with Towne Financial to ensure that the shareholders of Towne Financial receive
a regular quarterly dividend from either Towne Financial or Oak Hill Financial
during the quarter in which the Effective Date occurs, but that they do not
receive dividends from both Towne Financial and Oak Hill Financial during such
quarter.
5.09 Indemnification of Directors and Officers. Oak Hill Financial
acknowledges that, by operation of law, at the Effective Time, Oak Hill
Financial will assume any and all legally enforceable obligations of Towne
Financial and Blue Ash to indemnify and defend the directors and officers of
Towne Financial and Blue Ash pursuant to, to the extent of, and in accordance
with the terms and conditions of any such obligations that Towne Financial and
Blue Ash had to indemnify and defend such persons in effect immediately prior to
the Effective Time, in connection with such persons' status or services as
directors and officers of Towne Financial and Blue Ash, whether by contractual
right or by any provision of the articles of incorporation or code of
regulations of Towne Financial and or Blue Ash, with respect to any claim
asserted or made prior to or at any time after the Effective Time. All such
rights to indemnification with respect to any such claim shall continue until
the final disposition of such claim regardless of when such claim was made or
asserted; provided, however, that nothing contained herein shall increase or
lengthen the duration of Oak Hill Financial's obligations with respect to such
indemnification over that to which Towne Financial and Blue Ash would have been
subject had the Merger not been consummated. Oak Hill Financial agrees to use
its reasonable best efforts to cover directors and officers of Towne Financial
and Blue Ash in insurance policies.
5.10 Pooling. The accounting firm of Grant Thornton LLP has reviewed
the proposed Merger and determined that the Merger qualifies as a "pooling of
interests" for accounting purposes. Neither Oak Hill Financial nor Oak Hill
Banks shall intentionally take or cause to be taken any action, whether before
or after the Effective Date, which would disqualify the Merger as a "pooling of
interests" for accounting purposes or as a "reorganization" within the meaning
of Section 368(a) of the Code.
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SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF ALL PARTIES
--------------------------------------------------
The obligations of each of the parties hereto to consummate the Merger
are subject to the fulfillment, on or before the Closing Date, of the following
conditions precedent:
6.01 Shareholder Approval. The Merger shall have been approved by the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of Towne Financial Common, and by the affirmative vote of the
holders of a majority of the issued and outstanding shares of Oak Hill
Financial.
6.02 Regulatory Approvals. The Merger shall have been approved by the
Federal Reserve Board, the Ohio Division of Financial Institutions, and any
other governmental authority having jurisdiction, and any applicable waiting
periods shall have expired, with no such approval or authorization containing
any provision or be subject to any condition, which would be materially adverse
to the business of Towne Financial and Blue Ash, Oak Hill Financial or Oak Hill
Banks, either prior to or subsequent to the proposed merger of Towne Financial
and Oak Hill Financial.
6.03 Litigation. No suit, action, investigation by any governmental
body, or legal or administrative proceeding shall have been brought or
threatened which materially questions the validity or legality of the
transactions contemplated hereunder or under the Merger Agreement. For purposes
hereof, advisory opinions or written requests for information which could be
used in connection with such suit, investigation, or proceeding given by
governmental agencies may be deemed to constitute such a threat.
6.04 Fairness Opinions. Towne Financial shall have received a fairness
opinion from RP Financial, LC, dated as of the date of the proxy statement
relating to the Merger stating that the exchange ratio is fair to the
shareholders of Towne Financial, as of such date, from a financial point of view
and Oak Hill Financial shall have received a fairness opinion from Trident
Financial Corporation dated as of the date of the proxy statement relating to
the Merger stating that the contemplated merger of Towne Financial and Oak Hill
Financial is fair to the shareholders of Oak Hill Financial, as of such date,
from a financial standpoint.
6.05 Tax Opinion. Oak Hill Financial and Towne Financial shall have
received an opinion of Porter, Wright, Morris & Arthur substantially to the
effect that:
(a) the Merger will constitute a reorganization within the
meaning of Section 368(a)(1)(A);
(b) no gain or loss will be recognized by Oak Hill Financial
(except for the inclusion in income of amounts resulting from any required
changes in accounting methods or similar items) upon the consummation of the
Merger;
(c) no gain or loss will be recognized by Towne Financial
(except for the inclusion in income of amounts resulting from any required
changes in accounting methods or similar items) upon the consummation of the
Merger;
(d) no gain or loss will be recognized by the shareholders of
Towne Financial who exchange their shares of Towne Financial Common for shares
of Oak Hill Financial Common, except to the extent of any cash received in lieu
of a fractional share of Oak Hill Financial Common;
(e) the basis of the shares of Oak Hill Financial Common to
be received by shareholders of Towne Financial who receive solely shares of Oak
Hill Financial Common will be the same as the basis of the shares of Towne
Financial Common surrendered in exchange therefor, reduced by any amount
allocated to a fractional share of Oak Hill Financial common with respect to
which cash is received.;
(f) the holding period of the shares of Oak Hill Financial
Common received by shareholders of Towne Financial will include the holding
period of the shares of Towne Financial Common surrendered in exchange therefor,
provided that the Towne Financial Common was held as a capital asset in the
hands of the shareholder of Towne Financial on the Effective Date;
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(g) where solely cash is received by a shareholder of Towne
Financial in exchange for his or her shares of Towne Financial Common pursuant
to the exercise of dissenters' rights, the cash will be treated as having been
received by such shareholder as a distribution in redemption of his Oak Hill
Financial Common shares received in connection with this transaction, subject to
the provisions and limitations of Section 302 of the Code, and where, as a
result of such distribution, a shareholder owns no shares of Oak Hill Financial
Common either directly or through the application of Section 318(a) of the Code,
the redemption will be a complete termination of interest within the meaning of
Section 302(b)(3) of the Code and such cash will be treated as a distribution in
full payment in exchange for his or her shares of Towne Financial Common, as
provided in Section 302(a) of the Code; and under Section 1001 of the Code, gain
or (subject to the limitations of Section 267 of the Code) loss will be realized
and recognized to such shareholders in an amount equal to the difference between
the amount of such cash and the adjusted basis of the Towne Financial Common
shares surrendered, as determined under Section 1011 of the Code; and
(h) the payment of cash in lieu of fractional shares of Oak
Hill Financial Common will be treated for federal income tax purposes as if the
fractional shares were distributed as part of the exchange and then were
redeemed by Oak Hill Financial; such cash payments will be treated as having
been received as distributions in full payment in exchange for the stock
redeemed subject to the conditions and limitations of Section 302 of the Code.
In rendering such tax opinion, Porter, Wright, Morris &
Arthur shall be entitled to rely upon certain assumptions and representations of
Towne Financial's officers, directors and those shareholders of Towne Financial
who own one percent or more of the outstanding shares of Towne Financial Common,
and of officers of Oak Hill Financial reasonably satisfactory in form and
substance to Porter, Wright, Morris & Arthur.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF TOWNE FINANCIAL
------------------------------------------------------
The obligations of Towne Financial to consummate the Merger are
subject to the fulfillment on or before the Closing Date of the following
additional conditions precedent:
7.01 Representations and Warranties. The representations and
warranties made by Oak Hill Financial herein shall be true and correct in all
material respects on the Effective Date with the same force and effect as though
such representations and warranties had been made on and as of such date; Oak
Hill Financial shall have performed in all material respects its obligations
hereunder and under the Merger Agreement to be performed on or before the
Closing Date; and an executive officer of Oak Hill Financial shall have executed
and delivered to Towne Financial a certificate or certificates, dated as of the
Closing Date, in respect of the foregoing matters and in respect of such other
matters as Towne Financial shall reasonably request.
7.02 Opinion of Counsel. Towne Financial shall have received a
favorable opinion dated as of the Closing Date from Porter, Wright, Morris &
Arthur, counsel for Oak Hill Financial, to the effect that:
(a) Oak Hill Financial is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Ohio; Oak
Hill Financial has the corporate power and authority to own all of their
properties and assets and to carry on their businesses as presently conducted in
all jurisdictions in which such ownership exists or such business is conducted;
and Oak Hill Financial has the corporate power and authority to merge with Towne
Financial pursuant to this Agreement and the Merger Agreement;
(b) the execution and delivery of this Agreement and the
Merger Agreement did not, and the consummation of the Merger will not, conflict
with any provision of the articles or certificate of incorporation, regulations,
bylaws, or other charter documents of Oak Hill Financial;
(c) the execution and delivery of this Agreement and the
Merger Agreement and the consummation of the Merger have been authorized by all
necessary corporate action of Oak Hill Financial; and this Agreement and the
Merger Agreement are valid and binding agreements of Oak Hill Financial
enforceable in accordance with their terms, except as may be limited by
bankruptcy, insolvency, or other similar laws affecting enforcement of
creditors' rights generally and except that the enforceability of the
obligations of Oak Hill Financial is subject to general principles of equity;
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(d) the shares of Oak Hill Financial Common to be issued by
Oak Hill Financial in the Merger have been authorized and, upon issuance, will
be fully paid and nonassessable and will not be subject to the preemptive rights
of any shareholder of Oak Hill Financial;
(e) all necessary regulatory approvals have been received and
all applicable waiting periods have expired;
(f) Oak Hill Financial is a duly and validly registered Bank
Holding Company;
(g) Oak Hill Banks is a state-chartered bank; and
(h) Oak Hill Banks deposit accounts are insured by BIF to the
fullest extent permitted by law.
Such opinion may be governed by the Accord. In giving such opinion,
such counsel may rely as to matters of fact, without independent investigation,
to the extent such counsel deems such reliance to be customary, reasonable, and
appropriate, on certificates of federal, state, or local government officials
and on certificates of officers and directors of Oak Hill Financial or Oak Hill
Banks. Such counsel may expressly exclude any opinions as to choice of law
matters and antitrust matters and may add such other qualifications and
explanations of the basis of its opinions as are consistent with the Accord.
7.03 Effectiveness of the Registration Statement; NASD Listing. Towne
Financial shall have received a certificate from a duly authorized officer of
Oak Hill Financial to the effect that the Registration Statement has become
effective by an order of the SEC, the Oak Hill Financial Common to be exchanged
in the Merger has been qualified or is exempt under all applicable state
securities laws, and there has been no stop order issued or threatened by the
SEC that suspends or would suspend the effectiveness of the Registration
Statement, and no proceeding has been commenced or overtly threatened for such
purpose. The shares of Oak Hill Financial Common to be issued to Towne Financial
shareholders pursuant to the Merger Agreement shall have been authorized for
listing on the NASDAQ National Market upon official notice of issuance.
7.04 Material Adverse Change. Since December 31, 1998, there shall not
have occurred any material adverse change in the results of operation, financial
condition, properties, or business of Oak Hill Financial on a consolidated
basis, other than any such change attributable to or resulting from (i) changes
in law, regulation, or generally accepted accounting principles of general
application to the banking or thrift industries, (ii) changes in economic
conditions that affect the banking and thrift industries generally, including
changes in the general level of interest rates, or (iii) any matter or matters
relating to Oak Hill Financial which have been disclosed in the Oak Hill
Financial Disclosure Memorandum as of the date of this Agreement.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF OAK HILL FINANCIAL
---------------------------------------------------------
The obligations of Oak Hill Financial to consummate the Merger are
subject to the fulfillment on or before the Closing Date of the following
additional conditions precedent:
8.01 Regulatory Approval of the Merger. The Merger shall have been
approved by the Federal Reserve Board, the Division of Financial Institutions,
and any other governmental authority having jurisdiction, and any applicable
waiting periods shall have expired, with no such approval or authorization
containing any provision which would be materially adverse to the business of
Oak Hill Financial or Oak Hill Banks.
8.02 Representations and Warranties. The representations and
warranties made by Towne Financial and Blue Ash herein shall be true and correct
in all material respects on the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of such date;
Towne Financial and Blue Ash shall have performed in all material respects its
obligations hereunder and under the Merger Agreement to be performed on or
before the Closing Date; and the chief executive officer and principal financial
officer of Towne Financial shall have executed and delivered to Oak Hill
Financial certificates, dated as of the Closing Date, in respect of the
foregoing matters and in respect of such other matters as Oak Hill Financial
shall reasonably request.
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<PAGE> 21
8.03 Opinion of Counsel. Oak Hill Financial shall have received a
favorable opinion dated as of the Effective Date from Cors & Bassett, as counsel
for Towne Financial, acceptable to Oak Hill Financial, to the effect that:
(a) Towne Financial is a unitary savings and loan holding
company, duly organized, validly existing, and in good standing under the laws
Ohio; Blue Ash is a member in good standing of the FHLB of Cincinnati; all
eligible accounts of deposit in Blue Ash are insured by the FDIC to the fullest
extent permitted by law; all corporate action required to be taken by the
directors and shareholders of Towne Financial to authorize the transactions
contemplated by this Agreement and the Merger Agreement have been taken; and
Towne Financial has the corporate power to effect the Merger in accordance with
the terms of this Agreement and the Merger Agreement;
(b) the execution and delivery of this Agreement and the
Merger Agreement did not, and the consummation of the Merger will not, conflict
with any provision of the articles or certificate of incorporation, regulations,
bylaws, or other charter documents of Towne Financial; and
(c) the execution and delivery of this Agreement and the
Merger Agreement and the consummation of the Merger have been authorized by all
necessary corporate action of Towne Financial; and this Agreement and the Merger
Agreement are valid and binding agreements of Towne Financial enforceable in
accordance with their terms, except as may be limited by bankruptcy, insolvency,
reorganization, or similar laws affecting enforcement of creditors' rights
generally and except that the enforceability of the obligations of Towne
Financial may be subject to general principles of equity.
Such opinion may be governed by the Accord. In giving such opinion, such counsel
may rely as to matters of fact, without independent investigation, to the extent
such counsel deems such reliance to be customary, reasonable, and appropriate,
on certificates of federal, state, or local government officials and on
certificates of officers and directors of Towne Financial and Blue Ash. Such
counsel may expressly exclude any opinions as to choice of law matters and
antitrust matters and may add such other qualifications and explanations of the
basis of its opinions as are consistent with the Accord.
8.04 Agreements of Affiliates. Each director of Towne Financial and
their "affiliates," for purposes of Rule 145 under the 1933 Act, shall deliver
to Oak Hill Financial prior to the Effective Date a written agreement, providing
that such person will not sell the shares of Oak Hill Financial Common to be
received by such person in the Merger unless such sales are pursuant to an
effective registration statement under the 1933 Act or pursuant to Rule 145 of
the SEC or another exemption from the registration requirements under the 1933
Act.
8.05 Dissenting Shareholders. The total number of shares of Towne
Financial Common, if any, as to which the right to dissent has been asserted
under Section 1701.85 of the Ohio Revised Code shall not exceed five percent
(5%) of the total number of outstanding shares of Towne Financial Common.
8.06 Material Adverse Change. Since December 31, 1998, there shall not
have occurred any material adverse change in the consolidated results of
operations, financial condition, properties, or business of Towne Financial and
Blue Ash, other than any such change attributable to or resulting from (i)
changes in law, regulation, or generally accepted accounting principles of
general application to the banking or thrift industries, (ii) changes in
economic conditions that affect the banking and thrift industries generally,
including changes in the general level of interest rates, or (iii) any matter or
matters relating to Towne Financial and Blue Ash which have been disclosed in
the Towne Disclosure Memorandum as of the date of this Agreement.
8.07 Title Insurance. For each parcel of the Real Property described
in the Towne Disclosure Memorandum as being owned by Towne Financial and Blue
Ash, and for each lease for any parcel of the Real Property described in the
Towne Disclosure Memorandum as being leased by Towne Financial and Blue Ash, Oak
Hill Financial shall have obtained a title insurance commitment (ALTA 1966 form
or its equivalent) for a fee owner's title insurance policy or leasehold owner's
title insurance policy, as appropriate, each in an amount equal to the carrying
cost of the premises or leasehold interest to be insured (including all
improvements thereon), on the books of Towne Financial and Blue Ash as of
December 31, 1998. Each title insurance commitment shall show that marketable
fee simple title to the owned premises or that valid leasehold title to the
leased premises, as appropriate, is in the name of Towne Financial and Blue Ash,
and that it is free and clear of any liens and encumbrances except
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taxes and assessments not delinquent and utility and other easements that do not
interfere with the use of the property for the business being conducted thereon.
Each such commitment shall provide that such fee owner's policy committed for
therein shall be an ALTA 1970 form, revised in 1984, and each leasehold owner's
policy shall be an ALTA 1975 form, or other form acceptable to Oak Hill
Financial.
8.08 Survey. Oak Hill Financial Banks shall have obtained current land
surveys of those parcels of the Real Property. Each survey to be conducted and
prepared by a duly licensed land surveyor, with such survey to be a duly
certified ALTA/ACSM field survey, which confirm that the Real Property is not
subject to any easements, restrictions, set backs, encroachments, or other
limitations except utility and other easements that do not interfere with the
use of the Real Property for the business then being conducted thereon, and that
the Real Property is not located in any flood hazard area.
8.09 Phase I. For each parcel of the Real Property described in the
Towne Disclosure Memorandum as being leased or owned by Towne Financial and Blue
Ash, Oak Hill Financial shall have completed a "Phase I" environmental site
assessment prepared by a licensed environmental engineering firm indicating that
there is no evidence of contamination with Hazardous Substances or other
violations of environmental Laws and concluding that no testing or additional
investigations appears to be warranted.
8.10 Consents and Approvals. Towne Financial and Blue Ash shall have
obtained any and all consents or approvals that may be required under the terms
of (i) any contract, agreement, lease, or other obligation or commitment,
including, but not limited to, the types described in Section 2.18 hereof, to
which either Towne Financial or Blue Ash is a party or by which either Towne
Financial or Blue Ash, or any of their property or assets, is bound, or (ii) any
license or permit of Towne Financial or Blue Ash, in order to avoid the
occurrence of any breach or default which may result from the consummation of
the Merger and which, if not obtained, is reasonably likely to have,
individually or in the aggregate, a material adverse effect on Oak Hill
Financial, Oak Hill Banks, Towne Financial or Blue Ash.
8.11 Agreement to Vote. Oak Hill Financial shall have received from
each of Towne Financial' shareholders who own in excess of five percent (5%) of
the outstanding shares of Towne Financial Common an agreement, substantially in
the form attached hereto as EXHIBIT A, to vote in favor of the Merger all shares
of Towne Financial Common owned by them or over which they have the power to
vote.
8.12 Shareholders' Equity. The total shareholders' equity of Towne
Financial as of the end of the most recent calendar quarter preceding the
Closing Date and as of the Closing Date shall not be less than the total
shareholders' equity of Towne Financial as of December 31, 1998, except for
Towne Financial' expenses relating to the Merger and adjustments relating to the
Merger as requested by Oak Hill Financial.
8.13 Conversion of Stock Options.
(a) All outstanding Towne Stock Options held by persons who
are not employees of either Towne Financial or Blue Ash Building & Loan
Association on the Effective Date, including, but not limited to, non-employee
directors of either of them, shall have been exercised, or terminated prior to
the Effective Date, or such persons shall have entered into agreements with Oak
Hill Financial substantially in the form attached hereto as EXHIBIT B, providing
for the conversion on the Effective Date of all Towne Stock Options held by them
to Oak Hill Stock Options in accordance with Section 8(d) of the Merger
Agreement.
(b) All holders of outstanding Towne Stock Options who are
employees of either Towne Financial or Blue Ash Building & Loan Association on
the Effective Date shall have been exercised, or terminated prior to the
Effective Date, or shall have entered into agreements with Oak Hill Financial
substantially in the form attached hereto as EXHIBIT B, providing for the
conversion on the Effective Date of all Towne Stock Options held by them to Oak
Hill Stock Options in accordance with Section 8(d) of the Merger Agreement.
(c) Towne shall have certified to Oak Hill Financial as of
the Effective Date that the actions described in paragraph (a) and (b) of this
Section 8.13 have been taken.
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<PAGE> 23
8.14 Employment Agreements. All outstanding employment agreements
between Towne Financial and an employee or between Blue Ash and an employee
(other than the employment contract between William S. Siders and Towne
Financial), shall have been terminated or converted to employment agreements
acceptable to Oak Hill Financial and each employee shall have agreed in writing
that no termination fee is due a result of such termination or conversion.
8.15 Price of Oak Hill Financial Common. The Average Closing Price of
Oak Hill Financial Common shall be equal to, or greater than, 80% of the
Starting Price.
8.16 Pending or Threatened Litigation. There is no action, suit,
proceeding, or claim by any shareholder or former shareholder of Towne
Financial, pending or threatened, against (i) Oak Hill Financial, Towne
Financial or Blue Ash, (ii) the assets, business, or goodwill of Oak Hill
Financial, Towne Financial or Blue Ash, or (iii) any director, officer, or
Principal Shareholder of Oak Hill Financial or Towne Financial, which is arising
from or is related to the consummation of the merger of Towne Financial and Oak
Hill Financial which is contemplated by this Agreement; provided however, that
this condition precedent to the obligation of Oak Hill Financial to close the
Merger shall be satisfied if coverage for any such claim shall have acknowledged
by an insurance carrier in a writing acceptable to Oak Hill Financial.
SECTION 9. CLOSING DATE
------------
Unless the parties otherwise agree, the closing of the transactions
contemplated by this Agreement and the Merger Agreement ("Closing Date") shall
be held at 11:00 a.m. at the offices of Porter, Wright, Morris & Arthur in
Cincinnati, Ohio, on the last business day of the month in which the conditions
specified in Sections 6.01 and 6.02 hereof have been satisfied.
SECTION 10. AMENDMENT
---------
At any time prior to the Closing Date, the parties, subject to
paragraph 14 of the Merger Agreement, may modify, amend, or supplement this
Agreement by mutual agreement authorized by their respective boards of directors
and evidenced by an instrument in writing executed and delivered by the parties
hereto, whether before or after the shareholders of Towne Financial has adopted
this Agreement.
SECTION 11. TERMINATION
-----------
11.01 Termination. This Agreement and the Merger Agreement shall
terminate on December 31, 1999, unless a later date is agreed upon in writing by
the parties, and may be terminated and the Merger may be abandoned at any time
prior to the Effective Time as follows:
(a) by the mutual consent, evidenced in writing, of the
boards of directors of Oak Hill Financial and Towne Financial;
(b) by the board of directors of Oak Hill Financial, by
giving written notice thereof to Towne Financial, which notice shall specify in
reasonable detail the grounds therefor: (i) if any condition precedent to
performance by Oak Hill Financial and Oak Hill Banks has not been satisfied or
waived; (ii) if Towne Financial has not fully performed its obligations and
agreements hereunder and under the Merger Agreement; or (iii) if any of the
representations of Towne Financial set forth herein are untrue or incorrect in
any material respect; or
(c) by the board of directors of Towne Financial, by giving
written notice thereof to Oak Hill Financial, which notice shall specify in
reasonable detail the grounds therefor: (i) if any condition precedent to
performance by Towne Financial has not been satisfied or waived; (ii) if Oak
Hill Financial and Oak Hill Banks have not fully performed their obligations and
agreements hereunder and under the Merger Agreement; or (iii) if any of the
representations of Oak Hill Financial set forth herein are untrue or incorrect
in any material respect.
11.02 Survival of Certain Provisions upon Termination. Upon a
termination of this Agreement as provided herein, this Agreement and the Merger
Agreement shall become void and there shall be no further obligation or
liability on the part of any party hereto or their respective shareholders,
directors, or officers, except
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pursuant to Sections 4.09, 5.07, 11.03, and 12 hereof, which shall survive a
termination of this Agreement in accordance with the express terms of such
Sections.
11.03 Termination Fee. During the term of this Agreement, if (i) an
Unsolicited Acquisition Proposal is submitted to and approved by the
shareholders of Towne Financial at any time prior to the Effective Time, or (ii)
an Unsolicited Acquisition Proposal is received by Towne Financial or is made
directly to the shareholders of Towne Financial at any time prior to the holding
of the meeting of the shareholders of Towne Financial to be called pursuant to
Section 4.02 hereof, and the board of directors of Towne Financial fails to
recommend to the shareholders of Towne Financial approval of the Merger
Agreement or this Agreement, withdraws such recommendation previously made to
the shareholders of Towne Financial, or fails to solicit proxies of shareholders
of Towne Financial to approve the Merger, and the Merger Agreement and this
Agreement are subsequently rejected by the shareholders of Towne Financial at
such meeting, then, in either such event, Towne Financial shall pay to Oak Hill
Financial, within five business days after a termination of the Merger Agreement
and this Agreement following such an event, a cancellation fee in the amount of
$500,000, as liquidated damages, and not as a penalty, and, upon the payment in
full thereof, Towne Financial shall have no further liability under this
Agreement or the Merger Agreement. The obligations of Towne Financial under this
Section 11.03 shall survive a termination of this Agreement, provided that, at
the time of such termination, (1) an event described in Section 7.04 hereof has
not occurred, and (2) Towne Financial does not have the right to terminate this
Agreement by virtue of a material breach of this Agreement or the Merger
Agreement by Oak Hill Financial or Oak Hill Banks.
SECTION 12. EXPENSES
--------
Except as otherwise expressly provided herein, all expenses incurred
by or on behalf of the parties hereto in connection with the authorization,
preparation, execution, and consummation of this Agreement and the Merger
Agreement, including, without limitation, all fees and expenses of agents,
representatives, printers, and counsel employed by the parties hereto, and
taxes, if any, shall be borne solely by the party which has or shall have
incurred the same. The covenants of the parties contained in this Section 12
shall survive a termination of this Agreement for any reason.
SECTION 13. NOTICES
-------
All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered
personally, or by private mail or messenger service addressed as indicated
below, or at such other address as such party may designate in writing to the
other parties, or sent by facsimile and confirmed by first-class, certified
mail, postage prepaid, addressed as indicated below, or at such other address as
such party may designate in writing to the other parties:
(a) If to Towne Financial, to:
William S. Siders
Executive Vice President
4811 Cooper Road
Blue Ash, Ohio 45242
with a copy to:
Richard J. Valleau, Esq.
Cors & Bassett
537 East Pete Rose Way
Suite 400
Cincinnati, Ohio 45202-3502
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(b) If to Oak Hill Financial or Oak Hill Banks, to:
John D. Kidd
President
Oak Hill Financial, Inc.
14621 State Route 93
Jackson, Ohio 45640
with a copy to:
H. Grant Stephenson, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
SECTION 14. GENERAL PROVISIONS
------------------
14.01 Entire Agreement. This Agreement, together with the Merger
Agreement and the documents referred to or incorporated herein or therein,
reflect the entire agreement among the parties with respect to the subject
matter thereof and supersede all prior agreements and understandings, oral or
written, among the parties with respect to such subject matter, and no party
shall be liable or bound to any other party in any manner by any
representations, warranties, or covenants except as specifically set forth
herein or therein.
14.02 Waiver. At any time on or prior to the Effective Date, any party
hereto may (i) waive any inaccuracies in the representations and warranties of
the other parties contained in this Agreement and the Merger Agreement or in any
document delivered pursuant hereto or thereto, or (ii) waive compliance by the
other parties with any of the conditions, covenants, and agreements contained in
this Agreement or the Merger Agreement.
14.03 Assignment. Neither this Agreement nor any rights, interests, or
obligations hereunder shall be assigned or transferred by operation of law or
otherwise by any of the parties hereto without the prior written consent of the
other party.
14.04 Benefit. Except as specifically provided herein, nothing in this
Agreement, express or implied, is intended to confer upon any person or entity
other than the parties hereto and their successors in interest any rights or
remedies under or by reason of this Agreement.
14.05 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original for all purposes, but
such counterparts taken together shall constitute one and the same instrument.
14.06 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio without regard to its conflicts of
laws principles.
14.07 Incorporation by Reference. The Merger Agreement, the Disclosure
Memoranda, and all Exhibits attached hereto are hereby incorporated by reference
herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
OAK HILL FINANCIAL, INC. TOWNE FINANCIAL CORPORATION
By: /s/ John D. Kidd By: /s/ Neil S. Strawser
-------------------------------- -----------------------------------
John D. Kidd, President Neil S. Strawser, Chairman of the Board
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EXHIBIT A TO SUPPLEMENTAL AGREEMENT
SHAREHOLDER AGREEMENT
---------------------
The undersigned (the "Shareholder"), who is a shareholder of Towne
Financial Corporation., an Ohio corporation ("Towne Financial"), has executed
this Shareholder Agreement to be effective as of the date set forth next to such
Shareholder's signature below.
RECITALS
--------
A. The Shareholder owns or has the power to vote, either exclusive or
shared, ____________ shares of the common stock, $1.00 par value, of Towne
Financial (together with all shares of such stock which the Shareholder
subsequently acquires or obtains the power to vote, the "Shares").
B. Towne Financial has entered into (i) a certain Agreement and Plan
of Merger with Oak Hill Financial, Inc., an Ohio corporation ("Oak Hill
Financial"), dated March 11, 1999 (the "Merger Agreement"), and (ii) a certain
Supplemental Agreement with Oak Hill Financial), also dated March 11, 1999 (the
"Supplemental Agreement"), pursuant to which Towne Financial is to be merged
into Oak Hill Financial (the "Merger").
C. Under the terms of the Merger Agreement, Towne Financial has agreed
to call a meeting of its shareholders for the purpose of voting upon the
approval of the Merger (together with any adjournments thereof, the
"Shareholders' Meeting").
D. It is a condition to the obligations of Oak Hill Financial under
the Merger Agreement and the Supplemental Agreement that certain shareholders of
Towne Financial, including the Shareholder, shall have agreed to vote their
shares of Towne Financial stock in favor of the Merger.
AGREEMENT
---------
Accordingly, the parties hereto hereby agree as follows:
1. AGREEMENT TO VOTE. The Shareholder agrees to vote the Shares as
follows:
(a) in favor of the adoption of the Merger Agreement and the
Supplemental Agreement and the approval of the Merger at the Shareholders'
Meeting;
(b) against the approval of any proposal relating to a
competing merger or business combination involving an acquisition of Towne
Financial or the purchase of all or a substantial portion of the assets of Towne
Financial by any person or entity other than Oak Hill Financial; and
(c) against any other transaction which is inconsistent with
the obligation of Towne Financial to consummate the Merger in accordance with
the Merger Agreement and the Supplemental Agreement.
2. LIMITATION ON VOTING POWER. It is expressly understood and
acknowledged that nothing contained herein is intended to restrict the
Shareholder from voting on any matter, or otherwise from acting, in the
Shareholder's capacity as a director or officer of Towne Financial with respect
to any matter, including but not limited to, the management or operation of
Towne Financial.
3. TERMINATION. This Agreement shall terminate on the earlier of (a)
the first anniversary of this Agreement, (b) the date on which the Merger
Agreement and Supplemental Agreement are terminated in accordance with Section
11 of the Supplemental Agreement, (c) the date on which the Merger is
consummated, or (d) the death of the Shareholder.
4. REPRESENTATIONS, WARRANTIES, AND ADDITIONAL COVENANTS OF THE
SHAREHOLDER. The Shareholder hereby represents and warrants to Oak Hill
Financial that the Shareholder has the capacity and all necessary power
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<PAGE> 27
and authority to vote the Shares and that this Agreement constitutes a legal,
valid, and binding obligation of the Shareholder, enforceable in accordance with
its terms, except as may be limited by bankruptcy, insolvency, or similar laws
affecting enforcement of creditors rights generally. The Shareholder further
agrees that, during the term of this Agreement, the Shareholder will not sell or
otherwise voluntarily dispose of any of the Shares which are owned by the
Shareholder or take any other voluntary action which would have the effect of
removing the Shareholder's power to vote the Shares or which would be
inconsistent with this Agreement.
5. SPECIFIC PERFORMANCE. The undersigned hereby acknowledges that
damages would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the Shareholder hereunder shall be
specifically enforceable and that Oak Hill Financial shall be entitled to
injunctive or other equitable relief upon such a breach by the Shareholder. The
Shareholder further agrees to waive any bond in connection with the obtaining of
any such injunctive or equitable relief. This provision is without prejudice to
any other rights that Oak Hill Financial may have against the Shareholder for
any failure to perform his obligations under this Agreement.
6. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio, without regard to its conflicts
of laws principles.
IN WITNESS WHEREOF, the undersigned has executed this Shareholder
Agreement as of the day and year first above written.
SHAREHOLDER:
Date:
------------------- -----------------------------
Signature
-----------------------------
Print Name
ACKNOWLEDGMENT
--------------
STATE OF OHIO
COUNTY OF
----------------
The foregoing instrument was acknowledged before me this ____ day of
________________________, 1999, by _________________
Notary Public
My Commission expires: _________________________.
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EXHIBIT B TO SUPPLEMENTAL AGREEMENT
STOCK OPTION CONVERSION AGREEMENT
---------------------------------
This Agreement is entered into this day of , 1999, by and among (the
"Optionholder"), OAK HILL FINANCIAL, INC., an Ohio corporation ("Oak Hill
Financial"), and TOWNE FINANCIAL CORPORATION., an Ohio corporation ("Towne
Financial").
RECITALS
--------
A. Oak Hill Financial is a registered bank holding company.
B. Oak Hill Financial and Towne Financial have entered into a certain
Agreement and Plan of Merger, dated March 11, 1999 (the "Merger Agreement"), and
Oak Hill Financial and Towne Financial have entered into a certain Supplemental
Agreement, also dated March 11, 1999 (the "Supplemental Agreement"), pursuant to
which Towne Financial is to be merged into Oak Hill Financial (the "Merger").
Upon the consummation of the Merger, Oak Hill Financial will be the successor by
merger to Towne Financial. (All capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in the Merger Agreement
or the Supplemental Agreement.)
C. The Optionholder is currently a director, officer, employee or
former employee of Towne Financial or Blue Ash Building & Loan Association.
D. The Optionholder is also currently the holder of a Towne Stock
Option (the "Towne Option") to purchase certain shares of Towne Common, pursuant
to the either the Towne 1992 Stock Option Plan or the Towne 1997 Stock Option
Plan and a certain Stock Option Agreement executed by the Optionholder and Towne
Financial pursuant to such plan (the "Towne Stock Option Agreement"). The total
number of shares subject to the Towne Option as of the date of this Agreement,
the exercise price for the shares which may be purchased under such option (the
"Towne Exercise Price"), the dates on or after which such option is exercisable,
and the number of shares as to which such option is exercisable after each
particular exercise date are set forth on Exhibit A which is attached hereto and
incorporated by reference herein.
E. The Towne Stock Option Agreement provides that it shall be binding
upon the successors of Towne Financial.
F. Oak Hill Financial has previously established and adopted the Oak
Hill 1995 Stock Option Plan, a copy of which is attached as Exhibit B hereto and
incorporated by reference herein. The terms and conditions contained in the Oak
Hill 1995 Stock Option Plan relating to (among other things) the exercise of
options granted under that plan are different from those contained in either of
the Towne Stock Option Plans.
G. Pursuant to the terms of the Merger Agreement, upon the
consummation of the Merger, all shares of Towne Common are to be converted into
shares of Oak Hill Financial Common and all options granted under the Towne
Stock Option Plans are to be converted into options to purchase Oak Hill
Financial Common subject to the terms of the Oak Hill 1995 Stock Option Plan.
AGREEMENT
---------
In consideration of the foregoing and of the mutual promises contained
herein, the parties agree as follows:
1. Upon the consummation of the Merger, and effective as of the
Effective Time, the Towne Option shall be converted into a Oak Hill Stock Option
subject to all of the terms and conditions of the Oak Hill 1995 Stock Option
Plan (the "Oak Hill Option"), and all further rights of the Optionholder and
obligations of Towne Financial under the Towne Stock Option Plan and the Towne
Stock Option Agreement shall be extinguished.
28
<PAGE> 29
(a) The number of shares of Oak Hill Financial Common to be
subject to the Oak Hill Option shall be equal to the number of shares of Towne
Common subject to the Towne Option as of the Effective Time multiplied by the
Conversion Ratio, rounded off to the nearest whole number of shares of Oak Hill
Financial Common.
(b) The exercise price to be payable upon an exercise of the
Oak Hill Option shall be equal to the Towne Exercise Price divided by the
Conversion Ratio.
(c) The dates after which the Towne Financial Option shall be
exercisable shall be the same as those provided under the Towne Option; and the
number of shares of Oak Hill Financial Common as to which the Oak Hill Option
shall be exercisable after each particular exercise date shall be in the same
ratio to the total number of shares subject to the Oak Hill Option as the number
of shares of Towne Common exercisable after the such exercise date is to the
total number of shares of Towne Common subject to the Towne Option, rounded to
the nearest whole number of shares of Oak Hill Financial Common.
(d) The Oak Hill Option shall be evidenced by and subject to
the terms of a Stock Option Agreement to be executed by the Optionholder
pursuant to the terms of the Oak Hill 1995 Stock Option Plan at or after the
Effective Time, which shall be effective as of the Effective Time.
(e) The Optionholder acknowledges and agrees that, for the
purposes of Section 424 of the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder, he or she will not receive any
"additional benefits" (as that term is defined in said Section 424 and the
regulations promulgated thereunder) as a result of the conversion of the Towne
Option into the Oak Hill Option hereunder, and hereby disclaims and agrees to
return any such additional benefits that he or she may receive.
2. Towne Financial shall notify Oak Hill Financial promptly if the
Optionholder's employment with Towne Financial or Blue Ash Building & Loan
Association is terminated at any time prior to the Effective Time, and shall
furnish to Oak Hill Financial at the Effective Time a certificate, signed by an
officer of Towne Financial, stating (if it is true) that the Optionholder is an
employee of Towne Financial or Blue Ash Building & Loan Association as of that
date and listing the number of shares of Towne Common subject to the Towne
Option as of that date. Any notice given pursuant to this Section shall be given
in accordance with the provisions of Section 13 of the Supplemental Agreement.
3. This Agreement shall terminate automatically upon a termination of
the Merger Agreement at any time prior to the consummation of the Merger,
whereupon this Agreement shall become null and void and no party shall have any
further rights or obligations hereunder.
4. The rights of the Optionholder under this Agreement may not be
transferred or assigned to any person other than the Optionholder, except by
will or the laws of descent and distribution.
5. This Agreement shall be construed and enforced in accordance with
the laws of the State of Ohio without regard to its conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE OPTIONHOLDER: OAK HILL FINANCIAL, INC.
By:
- -------------------------------- --------------------------------
Signature Name:
------------------------------
- -------------------------------- Title:
Name (please type or print) -----------------------------
29
<PAGE> 30
TOWNE FINANCIAL CORPORATION
By
--------------------------------
Name
------------------------------
Title:
-----------------------------
30
<PAGE> 1
EXHIBIT 99
FOR IMMEDIATE RELEASE
MARCH 11, 1999
OAK HILL FINANCIAL, INC. AND TOWNE FINANCIAL CORP. SIGN MERGER AGREEMENT
JACKSON AND BLUE ASH, OHIO -- Oak Hill Financial, Inc. (Nasdaq: OAKF - news) and
Towne Financial Corp. (OTC: TOFI) jointly announced today the signing of a
definitive agreement for the acquisition of Towne Financial by Oak Hill.
Under the terms of the agreement, Oak Hill will exchange 4.125 shares (the
"Exchange Ratio") of its common stock for each of the 222,100 shares of Towne
Financial stock. Based on the average of Oak Hill's closing bid and asked price
of $19.22 on March 10, 1999, the transaction would be valued at $79.28 per share
of Towne Financial stock, or approximately $17.6 million.
The merger, which will be accounted for as a pooling of interests, is expected
to be completed by October 1, pending Oak Hill and Towne Financial shareholder
approval, regulatory approval, and other customary conditions of closing. The
transaction is expected to be a tax-free reorganization for federal income tax
purposes.
Oak Hill Financial is the holding company for Oak Hill Banks, an Ohio
state-chartered bank with 17 offices in nine counties in southern Ohio. Oak Hill
also owns Action Finance, a consumer finance company with two offices in the
same region.
Towne Financial is the holding company for The Blue Ash Building and Loan
Company, an Ohio savings and loan association with four offices in suburban
communities in the Cincinnati metropolitan area.
Regarding the proposed merger, Towne Financial Chairman Neil Strawser stated,
"We're excited about this opportunity. Oak Hill is a strong company with an
excellent history of growth. They believe in community banking, and they've been
successful by staying focused on their customers and the needs of their markets.
It's a good fit with our philosophy."
Strawser believes that the merger will provide significant benefits to Towne
Financial's shareholders, customers, and employees. "We believe the merger will
enhance liquidity for our shareholders, enable us to offer many new banking
products and services, and create more opportunities for our associates."
Strawser added that the merged entity would be filing applications with the
appropriate regulatory agencies to convert Blue Ash Building and Loan from a
savings and loan to a commercial bank. "As a commercial bank, we'll be able to
offer many new financial services, while continuing to offer all of our current
products."
<PAGE> 2
John D. Kidd, President and CEO of Oak Hill, stated, "This will be a great
partnership. We're very impressed with the way the people at Towne Financial
have operated their company. They have an excellent track record in their
communities."
Kidd indicated that Towne Financial's Blue Ash subsidiary would continue to be
operated as a separate bank. "We believe that the local communities will best be
served if Blue Ash remains independent," he stated. "They will keep their board
of directors and have their own management team." He added that no positions
would be eliminated due to the merger. "We build our performance on growth, not
cutbacks," said Kidd, "and we need all the good people we can get."
At December 31, 1998, Oak Hill had total assets of $430.0 million, deposits of
$366.1 million, and shareholders' equity of $37.5 million. Oak Hill reported
1998 net income of $6,041,000, (or $1.34 per diluted share) for 1998, with a
1998 return on assets of 1.53% and return on equity of 16.91%.
At the same date, Towne Financial had total assets of $123.2 million, deposits
of $99.6 million, and shareholders' equity of $9.1 million. Towne Financial's
net income for the 12 months ended December 31, 1998 was $999,000 (or $4.54 per
diluted share). The company's 1998 return on assets and return on equity were
0.85% and 11.53%, respectively.
RP Financial, Inc. is serving as Towne Financial's advisor and Trident Financial
Corporation is assisting Oak Hill in connection with the transaction.
<PAGE> 3
OAK HILL FINANCIAL/TOWNE FINANCIAL CORP. MERGER
SUMMARY FACT SHEET
Announcement Date: March 11, 1999
- ------------------
Deal Structure: Pooling of interests
- --------------- Expected to be a tax-free exchange
Definitive agreement signed
$500,000 break-up fee
Terms: 4.125 shares of Oak Hill common for each share of Towne
- ------ Financial, provided that the average of the bid and
asked prices of Oak Hill for the twenty days ending
three days prior to closing (the "Average Price") is
less than $21.71. If Oak Hill's Average Price is above
$21.71 prior to closing, the exchange ratio will be
adjusted downward to give an equivalent value of Towne
Financial shares of $89.56, or approximately $19.9
million. If the Average Price of Oak Hill is below
$16.05 per share, Towne Financial will have the right
to terminate the agreement, unless Oak Hill increases
the exchange ratio to compensate for the difference
between the price of Oak Hill at closing and $16.05.
Regardless, Oak Hill Financial is not obligated to
complete the merger if the Average Price is less than
$15.10.
Timing: Subject to normal regulatory approval and shareholder
- ------- approval by both companies.
Closing expected by October 1, 1999.
Pricing: Purchase price per share (a) $79.28
- -------- Price to book value (12/31/98) 183%
Price to trailing earnings (12/31/98) 17.5x
Oak Hill shares to be issued (000) 916
Estimated transaction value $17.6 million
(a) Based upon the average of the bid and asked prices
of OAKF of $19.22 on 3/10/99
Transaction Rationale:
- ----------------------
* Expansion into rapidly growing market.
* Oak Hill and Towne Financial have complementary core competencies in
mortgage origination and servicing.
<PAGE> 4
* Growth potential within Towne Financial's existing customer base,
which represents a built-in market for Oak Hill's broader product
line.
* Oak Hill will have the opportunity to enhance Towne Financial's net
interest margin.
<TABLE>
OAK HILL FINANCIAL INC./TOWNE FINANCIAL CORP. MERGER
PRO FORMA COMBINED FACT SHEET
DECEMBER 31, 1998
UNAUDITED
($ IN THOUSANDS EXCEPT PER SHARE)
<CAPTION>
Oak Hill Towne Pro Forma
------------------------------------
<S> <C> <C> <C>
Total assets $429,979 $123,167 $553,096
Loans receivable - net 340,693 70,553 409,089
Deposits 366,090 99,584 465,674
Borrowings 24,724 12,689 37,413
Shareholders' equity 37,724 9,104 46,828
Equity/assets 8.71% 7.39% 8.47%
Return on average assets (a) 1.53% 0.83% 1.37%
Return on average equity (a) 16.91% 11.53% 15.86%
Shares outstanding 4,367,765 210,000 5,236,077
Book value per share $8.58 $43.35 $8.46
Market capitalization ($ millions) (b) 83.9 -- 100.6
Number of full-service banking offices 17 4 21
</TABLE>
(a) Pro forma numbers do not include merger synergies.
(b) Based upon the average of Oak Hill's closing bid and asked price on March 10
of $19.22 per share.
