Exhibit 2
AGREEMENT AND PLAN OF MERGER
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This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of October
12, 2004, by and between OAK HILL FINANCIAL, INC., an Ohio corporation ("Oak
Hill Financial"), and LAWRENCE FINANCIAL HOLDINGS, INC., a Maryland corporation
("Lawrence Financial").
RECITALS
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A. Oak Hill Financial is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended. Oak Hill Banks, an Ohio-chartered
commercial bank ("Oak Hill Banks"), is a wholly owned subsidiary of Oak Hill
Financial. Oak Hill Financial is a corporation organized and existing under the
laws of Ohio and is authorized to issue 15,000,000 shares of common stock,
without par value ("Oak Hill Common"), of which 5,544,514 shares were issued and
outstanding as of the date hereof, 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. Lawrence Financial is a registered savings and loan holding company
under the Home Owners' Loan Act, as amended. Lawrence Federal Savings Bank
("Lawrence Federal") and Lawrence Financial Services Corp., are wholly owned
subsidiaries of Lawrence Financial. Lawrence Financial is a corporation
organized and existing under the laws of Maryland and is authorized to issue
4,000,000 shares of common stock with a par value of one cent ($.01) per share
("Lawrence Financial Common"), of which 650,110 shares were issued and
outstanding as of the date hereof and 1,000,000 shares of preferred stock with a
par value of one cent ($.01), of which there are no shares issued and
outstanding as of the date hereof.
C. The respective Boards of Directors of Oak Hill Financial and Lawrence
Financial have approved the merger of Lawrence Financial with and into Oak Hill
Financial (the "Merger") substantially on the terms and conditions contained in
this Agreement.
D. Immediately following the consummation of the Merger, it is anticipated
Oak Hill Banks will merge with and into Lawrence Federal under the terms of the
Agreement and Plan of Merger by and between Oak Hill Banks and Lawrence Federal
(or its successor as an Ohio state-charted banking organization), attached
hereto as Exhibit A.
E. The parties intend that the Merger shall qualify as a reorganization
under the revisions of Section 368(a) of the Code and the parties intend, by
executing this Agreement, to adopt a plan of reorganization within the meaning
of Treasury Regulation Section 1.368-2(g).
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) "Lawrence Financial";
(c) "Lawrence Financial Common";
(d) "Oak Hill Banks";
(e) "Oak Hill Financial";
(f) the "Merger"; and
(g) "Oak Hill Common"
1.02 Other Definitions. For the purposes of this Agreement, certain other
terms shall be defined as follows:
(a) the "1933 Act" means the Securities Act of 1933, as amended;
(b) the "1934 Act" means the Securities Exchange Act of 1934, as
amended;
(c) 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 Lawrence Financial,
including, but not limited to, an exchange or tender offer therefor, (ii) the
possible acquisition of a majority of the assets of Lawrence Financial, (iii) a
merger or consolidation involving Lawrence Financial, other than a transaction
in which Lawrence Financial will be the owner of all of the stock of the
surviving corporation following the transaction, or (iv) a merger or
consolidation involving Lawrence Financial, other than a transaction in which
Lawrence Financial will be the surviving corporation and the current
stockholders of Lawrence Financial will be the owners of a majority of the stock
of the surviving corporation following the transaction;
(d) an "Affiliate" of a party means a director, officer, employee,
agent, or adviser of such party;
(e) the "Audited Financial Statements" mean the consolidated,
audited financial statements of Lawrence Financial, consisting of balance sheets
as of December 31, 2003, and statements of income, cash flows, and changes in
stockholders' equity for the fiscal years ended December 31, 2003, with the
report thereon of Crowe Chizek and Company LLC, a registered public accounting
firm. If a set of consolidated, audited financial statements of Lawrence Federal
for a fiscal period ended as of a date after December 31, 2003, are subsequently
audited by any registered public accounting firm, such later statements shall be
the statements to which reference is made;
(f) "Average Closing Price" shall mean the average of the last sales
prices of Oak Hill Common during the primary trading session of 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 four business days prior to the Closing Date.
(g) "BIF" means the Bank Insurance Fund of the FDIC;
(h) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended;
(i) the "Code" means the Internal Revenue Code of 1986, as amended;
(j) "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 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;
(k) "CRA" means the Community Reinvestment Act of 1977, as amended;
(l) the "Division of Financial Institutions" means the Division of
Financial Institutions, Ohio Department of Commerce;
(m) "Employee Benefit Plans" means any and all "employee benefit
plans" or "welfare benefit plans" as defined in ERISA;
(n) "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.
(o) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended;
(p) "Exempt Lawrence Financial Employees" means Mr. Jack L. Blair
and Mr. RobRoy Walters;
(q) "FDIC" means the Federal Deposit Insurance Corporation;
(r) the "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or its delegate;
(s) "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;
(t) "Knowledge" as used herein shall mean those facts that are
actually known or should reasonably have been known after due inquiry by the
President, or any Senior or Executive Vice President of any party hereto;
(u) the "Lawrence Financial Disclosure Memorandum" means a certain
Disclosure Memorandum, dated October 8, 2004, which has been previously
delivered by Lawrence Financial to Oak Hill Financial, as the same has been
amended and supplemented through the date of this Agreement, and as the same may
subsequently be amended or supplemented prior to the Effective Date;
(v) "Material Adverse Effect" means a material adverse change in the
consolidated results of operations, financial condition, properties, or business
of Lawrence Financial or Oak Hill Financial, as the case may be, 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, (iii) any matter or matters relating to Lawrence Financial or
Oak Hill Financial which have been disclosed in the Lawrence Financial
Disclosure Memorandum or the Oak Hill Financial Disclosure Memorandum as of the
date of this Agreement, (iv) actions and omissions of Oak Hill Financial or
Lawrence Financial taken with the prior written consent of the other in
contemplation of the transactions contemplated hereby or (v) direct effects of
compliance with this Agreement on the operating performance of the parties,
including expenses incurred by the parties in consummating the transactions
contemplated by this Agreement.
(w) the "Oak Hill Disclosure Memorandum" means a certain Disclosure
Memorandum, dated October 11, 2004, which has been previously delivered by Oak
Hill Financial to Lawrence Financial, as the same has been amended and
supplemented through the date of this Agreement, and as the same may
subsequently be amended or supplemented prior to the Effective Date;
(x) "Oak Hill Financial Rights" means rights to purchase shares of
Oak Hill Common and Oak Hill Financial preferred stock under the Oak Hill Rights
Agreement.
(y) "Oak Hill Financial Rights Agreement" means the Rights
Agreement, dated as of January 23, 1998, as amended as of December 26, 2000,
between Oak Hill Financial and Registrar and Transfer Company, as Rights Agent.
(z) a "Principal Shareholder" or a "Principal Stockholder" 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;
(aa) "Proxy Statement" means the proxy statement used by Lawrence
Financial to solicit the approval of its shareholders of the transactions
contemplated by the Agreement, which shall include the prospectus of Oak Hill
Financial relating to the issuance of shares of Oak Hill Common to certain
holders of Lawrence Financial Common.
(bb) the "Real Property" means any and all real property owned or
leased by Lawrence Financial or Oak Hill Banks, 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;
(cc) the "Registration Statement" means the Registration Statement
on Form S-4, or other appropriate forms, 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 Common to be issued by Oak Hill Financial
pursuant to the terms of this Agreement, including, but not limited to, the
prospectus and Proxy Statement to be included therein as a part thereof;
(dd) "SAIF" means the Savings Association Insurance Fund;
(ee) the "SEC" means the Securities and Exchange Commission;
(ff) the term "Tax" or "Taxes" means (i) all federal, state, local,
and foreign income, excise, gross receipts, gross income, ad valorem, profits,
gains, property, use, capital, sales, transfer, use, payroll, employment,
severance, occupancy, withholding, duties, intangibles, franchise, backup
withholding, and other taxes, charges, duties, levies or like assessments
together with all penalties and additions to tax and interest thereon and (ii)
any liability for Taxes described in clause (i) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign law and
liability for any taxes as a result of being a party to any tax sharing or
obligations to indemnify any party);
(gg) "Tax Returns" means all federal, state, local and foreign Tax
returns, reports, estimates, declarations, schedules, information returns,
reports and forms, and any amendments to any of the foregoing relating to Taxes,
required to be filed with any governmental authority; and
(hh) an "Unsolicited Acquisition Proposal" means a written
Acquisition Proposal that is received by Lawrence 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 Lawrence Financial.
SECTION 2. AGREEMENT AND PLAN OF MERGER
2.01. Merger Transaction. Subject to the terms and conditions hereof,
Lawrence Financial shall be merged with and into Oak Hill Financial (the
"Merger") at the "Effective Time" (as such term is defined in Section 2.02
hereof). Oak Hill Financial shall be the surviving corporation following the
consummation of the Merger (the "Surviving Corporation"), which shall continue
its corporate existence under the laws of Ohio. Lawrence Financial and Oak Hill
Financial are hereinafter sometimes referred to as the "Constituent
Corporations." At the Effective Time and following the Merger the separate
existence and corporate organization of Lawrence Financial shall cease.
2.02 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").
2.03. Name. The name of the Surviving Corporation shall be "Oak Hill
Financial, Inc."
2.04. 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.
2.05. Directors. The directors of the Surviving Corporation shall be R.
Eugene Coffman, Jr.; 250 Summerhill, Chillicothe, Ohio 45601; Evan E. Davis,
1114 Moriah Road, Oak Hill, Ohio 45656; Barry M. Dorsey, 505 W. College Avenue,
Rio Grande, Ohio 45674; John D. Kidd, 2500 Five Points Road, Jackson, Ohio
45640; D. Bruce Knox, 450 N. Boundary Avenue, McArthur, Ohio 45651; Candice D.
Peace, 7430 Amy Beth Court, West Chester, Ohio 45069; Donald R. Seigneur, 46
Fruit Hill Drive, Chillicothe, Ohio 45601; William S. Siders, 10149 Sleepy Ridge
Dr., Loveland, Ohio 45140; H. Grant Stephenson, 5363 Godown Road, Columbus, Ohio
43235; Neil S. Strawser, 10721 Weatherstone Ct., Loveland, Ohio 45140; and
Donald P. Wood, 900 East State Street, Athens, Ohio 45701, 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.
2.06. 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.
2.07. 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.
2.08. Treatment of Shares.
(a) All shares of Oak Hill Common that are issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding shares of Oak Hill Common at and after the Effective Time and shall
not be affected by the Merger.
(b) Subject to the provisions of Section 2.11 hereof, by virtue of
the Merger, automatically and without any action on the part of the holder
thereof, each share of Lawrence Financial Common issued and outstanding at the
Effective Time (other than treasury shares, if any, which shall be cancelled,
and any shares as to which statutory dissenters' rights are properly sought,
which shall be treated as provided in subparagraph (c) of this Section 2.08)
shall become and be converted into, at the election of the holder as provided in
and subject to the limitations set forth in this Agreement, either (i) the right
to receive $23.75 in cash without interest (the "Cash Consideration"), or (ii)
the number of shares (the "Exchange Ratio") of Oak Hill Common equal to $23.75
divided by the Average Closing Price rounded to the nearest ten-thousandth (the
"Stock Consideration"). The Cash Consideration and the Stock Consideration are
sometimes referred to herein collectively as the "Consideration."
If, between the date of this Agreement and the Effective Time, the
outstanding shares of Oak Hill Common shall have been changed into a different
number of shares or into a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, the Exchange Ratio shall be adjusted appropriately to provide the
holders of Lawrence Financial Common the same economic effect as contemplated by
this Agreement prior to such event.
(c) Each outstanding share of Lawrence Financial Common held by a
person who has demanded and perfected a right to relief as a dissenting
stockholder under Section 3-202 of the Maryland General Corporation Law (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 the Consideration pursuant to subsection 2.08(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 stockholder under the Dissenters' Rights Law with respect to such
holder's shares of Lawrence Financial Common shall receive payment therefor from
Oak Hill Financial in accordance with the provisions of the Dissenters' Rights
Law. If any holder of Lawrence Financial Common who demands relief as a
dissenting stockholder under the Dissenters' Rights Law with respect to such
holder's shares of Lawrence Financial Common shall effectively withdraw or lose
(through failure to perfect or otherwise), the right to such relief, each share
of Lawrence Financial Common held by such holder shall automatically be
converted into the right to receive the Consideration.
(d) No Lawrence Financial stock options shall be assumed by Oak Hill
Financial. At the Effective Time, each option to acquire shares of Lawrence
Financial Common (a "Lawrence Financial Option") granted pursuant to Lawrence
Financial's 2001 Stock-Based Incentive Plan (the "Lawrence Financial Option
Plan") that is then outstanding and unexercised, whether or not then vested,
shall be canceled, and in lieu thereof the holders of such options shall be paid
in cash an amount equal to the product of (i) the number of shares of Lawrence
Financial Common subject to such option at the Effective Time and (ii) the
amount by which the Cash Consideration exceeds the exercise price per share of
such option, net of any cash which must be withheld under federal and state
income and employment tax requirements. In the event that the exercise price of
a Lawrence Financial Option is greater than the Cash Consideration, then at the
Effective Time such Lawrence Financial Option shall be canceled without any
payment made in exchange therefor. At the Effective Time the Lawrence Financial
Option Plan shall be deemed terminated. From the date of execution of this
Agreement, Lawrence Financial will use its best efforts to not permit the
exercise of Lawrence Financial Options in transactions other than transactions
to which Oak Hill Financial has consented.
(e) At the Effective Time, each share of restricted stock
outstanding as of the Effective Time and issued pursuant to Lawrence Financial's
2001 Stock-Based Incentive Plan, to the extent not already vested, shall vest
and shall represent a right to receive the same rights provided to other holders
of Lawrence Financial Common pursuant to subparagraph (b) of this Section 2.08.
2.09. 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 Lawrence Financial shall cease and 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 Lawrence
Financial 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 Lawrence Financial and otherwise to carry out the purposes of this
Agreement.
2.10. Offices. The principal executive offices of the Surviving
Corporation shall be located at 14621 State Route 93, Jackson, Ohio 45640.
2.11 Election Procedures. Oak Hill Financial will cause to be sent to all
record holders of Lawrence Financial Common as of a record date fixed for such
purpose by Lawrence Financial, with the concurrence of Oak Hill Financial, not
later than 30 days prior to the expected Closing Date, and Oak Hill Financial
will use its best efforts to cause to be sent to each holder of Lawrence
Financial Common who first becomes a holder after such date, an election form in
such form as Oak Hill Financial and Lawrence Financial shall mutually agree (the
"Election Form") and other appropriate materials to effect the surrender of
certificates representing shares of Lawrence Financial Common in exchange for
either cash or stock as provided herein. The Election Form will allow each such
holder (i) to elect to receive the Stock Consideration with respect to all of
such holder's shares of Lawrence Financial Common, (ii) to elect to receive the
Cash Consideration with respect to all of such holder's shares of Lawrence
Financial Common, (iii) to elect to receive the Cash Consideration with respect
to some of such holder's shares of Lawrence Financial Common and the Stock
Consideration with respect to such holder's remaining shares of Lawrence
Financial Common or (iv) to indicate no election (the "No-Election Shares").
Shares of Lawrence Financial Common as to which an election to receive the Stock
Consideration has been made, including pursuant to a mixed election, are
referred to herein as "Stock Election Shares." Shares of Lawrence Financial
Common as to
which an election to receive the Cash Consideration has been made, including
pursuant to a mixed election, are referred to herein as "Cash Election Shares."
As of the Election Deadline, as defined below, any shares of Lawrence Financial
Common with respect to which the holder thereof shall not have made such
election by submission to Registrar and Transfer Co., as Exchange Agent (the
"Exchange Agent"), of an effective, properly completed Election Form shall be
deemed to be No-Election Shares.
Any election to receive the Stock Consideration or the Cash Consideration
shall have been properly made only if the Exchange Agent shall have received by
5:00 p.m., New Jersey time, three business days prior to the Closing Date (or
such other time as Oak Hill Financial and Lawrence Financial may mutually agree)
(the "Election Deadline"), a properly completed Election Form. An Election Form
will be properly completed only if accompanied by certificates representing all
shares of Lawrence Financial covered thereby (or customary affidavits and, if
required by Oak Hill Financial, indemnification regarding the loss or
destruction of such certificates or the guaranteed delivery of such
certificates) together with all other documents required by the Election Form
with respect to such shares. Any Election Form may be revoked or changed by the
person submitting such Election Form to the Exchange Agent by written notice to
the Exchange Agent if, but only if, such notice is received by the Exchange
Agent at or prior to the Election Deadline. All elections shall automatically be
revoked if the Merger is abandoned for any reason, whereupon all certificates
for shares of Lawrence Financial Common to which each such election relates
shall be promptly returned to the holder submitting the same to the Exchange
Agent. The Exchange Agent shall have reasonable discretion to determine when any
election, modification or revocation is received and whether any such election,
modification or revocation has been properly made, consistent with the duty of
the Exchange Agent to give effect to such elections, modifications or
revocations to the extent possible.
For the purpose of this Section 2.11, the number of shares of Lawrence
Financial held of record by each holder of Lawrence Financial immediately prior
to the Effective Time shall be determined with reference to a complete list of
the holders of Lawrence Financial prepared and certified as correctly reflecting
its stock records by Lawrence Financial as of the Election Deadline (the "Stock
List"). Each entry on the Stock List shall be presumed to represent a different
holder of Lawrence Financial unless it appears from the face of the Stock List
that several entries are only variations in the spelling or presentation of the
same name or names. Any questions concerning the Stock List shall be determined
by the Exchange Agent, the decision of which shall be final and binding on all
parties involved.
Holders of record of shares of Lawrence Financial Common who hold such
shares as nominees, trustees or in other representative capacities (a
"Representative") may submit multiple Election Forms, provided that such
Representative certifies that each such Election Form covers all of the shares
of Lawrence Financial Common held by that Representative for a particular
beneficial owner.
Oak Hill Financial may establish such other rules and procedures relating
to the elections herein provided, not inconsistent with the terms of this
Agreement, as may be necessary to facilitate the prompt and orderly receipt and
processing of elections and the prompt distribution of the Stock Consideration
and the Cash Consideration to which the former holders of Lawrence Financial
become entitled by virtue of this Agreement, including procedures governing the
issuance and delivery of certificates of Oak Hill Common into which shares of
Lawrence Financial Common are converted in the Merger and the payment for
Lawrence Financial Common converted into the right to receive the Cash
Consideration in the Merger, provided that no such rule or procedure shall have
the effect of impairing the continuity of proprietary interest needed to qualify
the Merger as a tax-free reorganization under the Code.
No transfer taxes shall be payable by any shareholder of Lawrence
Financial with respect to the issuance of certificates for Oak Hill Common and
no expenses shall be imposed on any shareholder of Lawrence Financial in
connection with the conversion of shares of Lawrence Financial Common into cash
or shares of Oak Hill Common and the delivery of such cash or shares to the
former holder of Lawrence Financial Common entitled thereto, except that (i) if
any certificate of Oak Hill Common is to be issued in a name other than that in
which a certificate or certificates for shares of Lawrence Financial surrendered
shall have been registered, it shall be a condition to such issuance that the
person requesting such issuance shall pay to Oak Hill Financial any transfer
taxes payable by
reason thereof or of any prior transfer of such surrendered certificate or
certificates or establish to the satisfaction of Oak Hill Financial that such
taxes have been paid or are not payable, and (ii) nothing herein shall relieve a
shareholder of Lawrence Financial Common of any expenses associated with
surrendering such holder's certificates of Lawrence Financial Common to the
Exchange Agent.
2.12. Allocation of Shares and Cash. The parties hereto intend for the
Merger to qualify as a reorganization within the meaning of Sections 368(a) and
related sections of the Code.
As soon as practicable but in any event within three business days after
the Election Deadline, the Exchange Agent shall effectuate the allocation among
holders of Lawrence Financial Common of rights to receive the Stock
Consideration and the Cash Consideration as follows:
(a) If the number of Stock Election Shares is less than 325,055 (the
amount by which 325,055 exceeds the number of Stock Election Shares being
referred to herein as the "Shortfall Number"), then
(i) all Stock Election Shares will be converted into the right
to receive the Stock Consideration,
(ii) if the Shortfall Number is less than or equal to the
number of No-Election Shares, then all Cash Election Shares shall be
converted into the right to receive the Cash Consideration and each holder
of No-Election Shares shall receive (A) the number of shares of Oak Hill
Common equal to the product obtained by multiplying (1) the number of
No-Election shares held by such holder by (2) the Exchange Ratio by (3) a
fraction the numerator of which is the Shortfall Number and the
denominator of which is the total number of No-Election Shares (the
"No-Election Proration Factor") and (B) cash in an amount equal to the
product obtained by multiplying (1) the number of No-Election Shares held
by such holder by (2) the Cash Consideration by (3) one minus the
No-Election Proration Factor, and
(iii) if the Shortfall Number exceeds the number of
No-Election Shares, then all No-Election Shares shall be converted into
the right to receive the Stock Consideration, and each holder of Cash
Election Shares shall receive (1) the number of shares of Oak Hill Common
equal to the product obtained by multiplying (x) the number of Cash
Election Shares held by such holder by (y) the Exchange Ratio by (z) a
fraction the numerator of which is the amount by which the Shortfall
Number exceeds the number of No-Election Shares and the denominator of
which is the total number of Cash Election Shares (the "Cash Proration
Factor") and (B) cash in an amount equal to the product obtained by
multiplying (x) the number of Cash Election Shares held by such holder by
(y) the Cash Consideration by (z) one minus the Cash Proration Factor.
(b) If the number of Stock Election Shares is greater than 338,057,
then
(i) all Cash Election Shares will be converted into the right
to receive the Cash Consideration,
(ii) all No-Election Shares will be converted into the right
to receive the Cash Consideration, and
(iii) each holder of Stock Election Shares will be entitled to
receive (A) the number of shares of Oak Hill Common equal to the product
obtained by multiplying (1) the number of Stock Election Shares held by
such holder by (2) the Exchange Ratio by (3) a fraction, the numerator of
which is 338,057 and the denominator of which is the number of Stock
Election Shares (the "Stock Proration Factor") and (B) cash in an amount
equal to the product obtained by multiplying (1) the number of Stock
Election Shares held by such holder by (2) the Cash Consideration by (3)
one minus the Stock Proration Factor.
(c) If the number of Stock Election Shares is equal to or greater
than 325,055 and less than or equal to 338,057, then
(i) all Stock Election Shares will be converted into the right
to receive the Stock Consideration,
(ii) all Cash Election Shares will be converted into the right
to receive the Cash Consideration, and
(iii) all No-Election Shares will be converted into the right
to receive the Cash Consideration.
For purposes of the foregoing calculations, Dissenters' Shares shall be
deemed to be Cash Election Shares.
2.13. Distribution Procedures.
(a) As soon as practicable after the Effective Time and the
completion of the allocation procedure described above, Oak Hill Financial shall
cause the Exchange Agent to distribute the Stock Consideration and the Cash
Consideration as provided herein (the "Distribution Date"). Not later than the
Distribution Date, Oak Hill Financial will deliver to the Exchange Agent the
number of shares of Oak Hill Common issuable and the aggregate Cash
Consideration payable in the Merger in order for the Exchange Agent to make such
distribution.
(b) Appropriate transmittal materials ("Letter of Transmittal") in a
form satisfactory to Oak Hill Financial and Lawrence Financial shall be mailed
as soon as practicable after the Effective Time to each holder of record of
Lawrence Financial Common as of the Effective Time who did not previously submit
a completed Election Form. A Letter of Transmittal will be deemed properly
completed only if accompanied by certificates representing all shares of
Lawrence Financial Common to be exchanged thereby.
(c) Neither Oak Hill Financial, the Surviving Corporation, nor the
Exchange Agent, shall be obligated to deliver certificates for Oak Hill Common
or cash to a former shareholder of Lawrence Financial until the later of the
Distribution Date or the date on which such former shareholder surrenders his
certificate or certificates representing shares of Lawrence Financial or, in
default thereof, an appropriate affidavit of loss and indemnity agreement and
bond as may be required by Oak Hill Financial. Until so surrendered, each
outstanding certificate representing shares of Lawrence Financial which have
been converted into shares of Oak Hill Common shall be deemed for all corporate
purposes (except the payment of dividends or other distributions) to evidence
ownership of the number of whole shares of Oak Hill Common into which the shares
of Lawrence Financial represented thereby shall have been converted. Adoption of
this Agreement by the shareholders of Lawrence Financial shall constitute
ratification of the appointment of such Exchange Agent.
(d) No dividends or other distributions payable to holders of record
of Oak Hill Common after the Effective Date shall be paid to a holder of
Lawrence Financial whose shares have been converted into Oak Hill Common until
the latter of the Distribution Date or the date such holder surrenders his
certificates formerly representing shares of Lawrence Financial. Promptly upon
surrender of such outstanding certificates there shall be paid to the holder of
the certificates for Oak Hill 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 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 (including cash payable in lieu of any fractional share of Oak
Hill Common) unclaimed at the end of one year from the Effective Date shall be
repaid by the Exchange Agent to Oak Hill Financial, and thereafter the holders
of such outstanding certificates for Lawrence Financial shall look, subject to
applicable escheat, unclaimed funds and other laws, as general creditors only to
Oak Hill Financial for payment thereof.
(e) The stock transfer books of Lawrence Financial shall be closed
immediately upon the Effective Time.
(f) Oak Hill Financial is empowered to adopt additional reasonable
rules and regulations with respect to the matters referred to in this Section
2.13 not inconsistent with the provisions of this Agreement.
2.14. Fractional Shares. No fractional shares of Oak Hill Common shall be
issued. Each former holder of Lawrence Financial who would otherwise be entitled
to receive a fractional share of Oak Hill Common shall receive from the Exchange
Agent cash in an amount equal to the product resulting from multiplying such
fraction by $23.75. Such payment with respect to fractional shares is intended
to avoid the expense and inconvenience of issuing fractional shares and to
provide a mechanical rounding off of shares, and is not a separately bargained
for consideration. On the Effective Date, Oak Hill Financial shall deliver cash
sufficient to permit the payment in respect of such fractional shares to the
Exchange Agent for distribution in accordance with this Section 2.14. No
interest shall be payable with respect to such cash payment.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF LAWRENCE FINANCIAL
----------------------------------------------------
Lawrence Financial represents and warrants to Oak Hill Financial that,
except as set forth in the Lawrence Financial Disclosure Memorandum:
3.01 Organization and Authority. Lawrence Financial is a corporation duly
organized, validly existing, and in good standing under the laws of Maryland, is
registered with the Office of Thrift Supervision as a savings and loan holding
company, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, and has the corporate power and
authority to own its properties and assets, to carry on its business as it is
presently being conducted, and, subject to the approval of its stockholders, and
to the filing of all requisite regulatory applications and notices and the
receipt of all requisite regulatory approvals, to enter into and carry out its
obligations under this Agreement.
3.02 Capitalization. The authorized capital stock of Lawrence Financial
consists of 4,000,000 shares of Lawrence Financial Common, of which 650,110
shares were issued and outstanding as of the date of this Agreement, and
1,000,000 shares of preferred stock with a par value of one cent ($.01), of
which there are no shares issued and outstanding as of the date of this
Agreement. All of the outstanding shares of Lawrence Financial Common are duly
authorized, validly issued, fully paid and nonassessable. Other than Lawrence
Financial Options to acquire 58,187 shares of Lawrence Financial Common, there
are no existing options, warrants, or commitments of any kind which might
require the issuance by Lawrence Financial of any additional shares of Lawrence
Financial Common or other equity securities of Lawrence Financial.
3.03 Subsidiaries. The Lawrence Financial Disclosure Memorandum lists all
corporations in which Lawrence Federal owns, directly or indirectly, five
percent or more of any class of capital stock of any corporation 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 Lawrence Financial. There are no options, contracts,
commitments, understandings, or arrangements by which any subsidiary of Lawrence
Financial is bound to issue additional shares of its equity securities. Lawrence
Federal is a member of the Federal Home Loan Bank System and its deposits are
insured up to the applicable limits by the SAIF.
3.04 Directors, Officers, and Principal Stockholders. No person is known
by Lawrence Financial to own more than 5% of the outstanding shares of Lawrence
Financial Common.
3.05 Authorization. The execution, delivery, and performance of this
Agreement by Lawrence Financial, and the consummation of the transactions
contemplated hereby have been duly approved by the Board of Directors of
Lawrence Financial, subject to the adoption of this Agreement by the
stockholders of Lawrence Financial.
3.06 Absence of Defaults. Neither the execution and delivery of this
Agreement, nor the consummation of the Merger, nor compliance by Lawrence
Financial with any provisions hereof will violate any provisions of the articles
or incorporation or bylaws, or other charter documents of Lawrence Financial or
result in a breach or termination of, or accelerate the performance required by,
any note, bond, mortgage, lease, agreement, or other instrument to which
Lawrence Financial is a party or by which Lawrence Financial may be bound,
except for such violations or breaches that would not, individually or in the
aggregate, have a Material Adverse Effect on Lawrence Financial.
3.07 Financial Statements. Lawrence 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
Lawrence 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 Lawrence Financial 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.
3.08 Title to Properties.
(a) Lawrence Financial owns no Real Property, provided however,
Lawrence Financial has good and marketable title to the Real Property listed as
owned by it in the Lawrence Financial Disclosure Memorandum and valid leasehold
interests in all of the Real Property listed as leased by it in the Lawrence
Financial 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 by Lawrence Financial do
not violate any local zoning or similar land use laws, any governmental
regulations, or any restrictive covenants. To the Knowledge of Lawrence
Financial, (i) the Real Property and the use thereof by Lawrence Financial 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. 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. The Real Property is not located in any flood hazard area.
(b) Each item of the personal property owned by Lawrence Financial,
including without limitation all contractual rights and assets reflected in the
Audited Financial Statements or acquired after the date hereof 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 Lawrence Financial), is owned by
Lawrence Financial, 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.
3.09 Absence of Undisclosed Liabilities. Except to the extent reflected or
reserved against on the consolidated balance sheet of Lawrence Financial as of
June 30, 2004 as included in Lawrence Financial's Quarterly Report on Form
10-QSB for the period ended June 30, 2004, Lawrence Financial 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 would reasonably be expected to
have a Material Adverse Effect on Lawrence Financial.
3.10 Absence of Certain Changes. Since June 30, 2004, Lawrence Financial
has not:
(a) made or permitted to be made any changes in its capital or
corporate structure, certificate or articles of incorporation, regulations,
bylaws, or other incorporation documents;
(b) merged with any other corporation or bank, or permitted any
other corporation or bank to merge into or consolidate with it or it subsidiary;
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 either Lawrence Financial or any of its subsidiaries with
respect to the capital stock or other securities of Lawrence Financial or its
subsidiaries), 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 3.18 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;
(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 stockholders, except for regularly scheduled dividends;
(l) increased the wages, salaries, compensation, pension or other
fringe benefits, or perquisites payable to any executive officer after June 30,
2004, 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 Lawrence Financial,
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 Stockholder (or any
person or business entity controlled by or affiliated with such director,
officer, or Principal Stockholder);
(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 four percent (4%) of eligible salaries, in the aggregate, on an annual
basis;
(o) entered into any transaction involving the expenditure of more
than $25,000, 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 3.18 hereof;
(p) adopted any change in any accounting policy or method unless
required by accounting principles generally accepted in the United States,
provided however that if a change in accounting policy or method is required by
accounting principles generally accepted in the United States, Lawrence
Financial shall give written advance notice of such change of Oak Hill
Financial;
(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 June 30, 2004;
(s) suffered any Material Adverse Effect;
(t) suffered any damage, destruction, or loss (whether or not
covered by insurance) which, individually or in the aggregate, has had a
Material Adverse Effect;
(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.
3.11 Taxes and Tax Returns. Each of Lawrence Financial and its
subsidiaries has duly filed all federal, state, foreign and local information
returns and Tax Returns required to be filed by it on or prior to the date of
this Agreement (all such returns being accurate and complete) and has duly paid
or made adequate provision according to generally accepted accounting principles
for the payment of all Taxes that have been incurred or are due or claimed to be
due from it by federal, state, foreign or local taxing authorities. The federal
income Tax Returns of Lawrence Financial and its subsidiaries have been filed
for all years to and including 2002 and any liability with respect thereto has
been satisfied. There are no material disputes pending, or claims asserted, for
Taxes or assessments upon Lawrence Financial of its subsidiaries. Lawrence
Financial and its subsidiaries have not waived any statute of limitations in
respect of Taxes or agreed to an extension of time with respect to a Tax
assessment or deficiency. There are no liens with respect to Taxes upon any of
the properties or assets of Lawrence Financial or its subsidiaries, tangible or
intangible. Neither Lawrence Financial nor any of its subsidiaries is a party to
or is bound by any Tax sharing, allocation or indemnification agreement or
arrangement (other than such an agreement or arrangement exclusively between or
among Lawrence Financial and its subsidiaries). Within the past five years,
neither Lawrence Financial nor any of its subsidiaries has been a "distributing
corporation" or a "controlled corporation" in a distribution intended to qualify
under Section 355(a) of the Code. There is and will be no disallowance of a
deduction under Section 162(m) of the Code on any Tax Return filed or to be
filed by Lawrence Financial or its subsidiaries for employee remuneration of any
amount paid or payable by Lawrence Financial or any of its subsidiaries under
any contract, plan, program or arrangement or understanding. Lawrence Financial
and its subsidiaries have no net operating loses or other tax attributes
presently subject to limitations under the Code or regulations thereunder.
3.12 Labor Matters. Lawrence Financial is not a party to any collective
bargaining or other union agreement with any of its employees, or is involved in
any labor dispute.
3.13 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 Lawrence Financial,
threatened against (i) Lawrence Financial, (ii) any subsidiary of Lawrence
Federal, (iii) the assets, business, or goodwill of Lawrence Financial or any of
its subsidiaries, or (iv) any director, officer or Principal Stockholder of
Lawrence Financial or any of its subsidiaries, in relation to the business of
Lawrence Financial or any of its subsidiaries, or any such person's capacity as
a director, officer or Principal Stockholder of Lawrence Financial or any of its
subsidiaries. Neither Lawrence Financial nor any of its subsidiaries is subject
to any supervisory agreement, consent order or decree, cease and desist order,
or other restriction on their business or assets.
3.14 Environmental Matters.
(a) To the Knowledge of Lawrence Financial, Lawrence Financial and
its subsidiaries are and have been at all times in substantial compliance with
all applicable Environmental Laws and neither Lawrence Financial nor any of its
subsidiaries has 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 Lawrence
Financial or any of its subsidiaries is a party are pending or, to the Knowledge
of Lawrence Financial, threatened in connection with any alleged violation of
any applicable Environmental Law (i) by Lawrence Financial or any of its
subsidiaries or (ii) in relation to any part of the Real Property and Lawrence
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
Lawrence Financial, threatened at any time by any third party against Lawrence
Financial or any of its subsidiaries relating to damage, contribution, cost
recovery, compensation, loss, or injury resulting from any Hazardous Substance.
To the Knowledge of Lawrence Financial, neither Lawrence Financial nor any of
its subsidiaries 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 Lawrence Financial or any of its subsidiaries for the storage or
disposal of Hazardous Substances nor to the Knowledge of Lawrence Financial, is
any of the Real Property contaminated by any Hazardous Substance. To the
Knowledge of Lawrence Financial, none of the Real Property has in the past
contained or presently contains any underground storage tanks. To the Knowledge
of Lawrence Financial, neither Lawrence Financial nor any of its subsidiaries
has any 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 Lawrence Financial or any of its subsidiaries is
that of a lien holder or mortgagee, but including any property as to which title
has been taken by Lawrence Financial or any of its subsidiaries pursuant to
mortgage foreclosure or similar proceeding and any property as to which Lawrence
Financial or any of its subsidiaries has participated in the financial
management to a degree sufficient to influence the property's treatment of
Hazardous Substances).
(b) To the Knowledge of Lawrence 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 or any of its subsidiaries at any time
prior to the date of this Agreement, together with any improvements located
thereon.
3.15 Community Reinvestment Act Compliance. Lawrence Federal is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and currently has a CRA rating of
satisfactory or better from the Office of Thrift Supervision. Lawrence Financial
knows of no fact or circumstance or set of facts or circumstances which would
cause Lawrence Financial to fail to comply with such provisions or to cause the
CRA rating of Lawrence Federal to fall below satisfactory.
3.16 Compliance with Laws. Lawrence Financial and its subsidiaries 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
Lawrence Financial, Lawrence Financial and its subsidiaries have conducted their
businesses so as to comply in all material respects with all applicable
statutes, regulations, rules, and orders.
3.17 Information Provided by Lawrence Financial. None of the information
supplied or to be supplied by Lawrence Financial for inclusion in the
Registration Statement, the Proxy 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 this
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.
3.18 Material Contracts.
(a) Lawrence Financial has no written or oral agreements, leases,
and other obligations and commitments of the following types, to which either
Lawrence Financial is a party, by which Lawrence Financial or any subsidiary or
any of their property is bound, or which has been authorized by Lawrence
Financial (the "Material Contracts"):
(i) promissory notes, guaranties, mortgages, security
agreements, or other evidences of indebtedness of Lawrence Financial;
(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 Lawrence Financial 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 Lawrence
Financial and used in connection with the business of such entity with
annual payments in excess of $25,000;
(x) all policies of insurance and fidelity bonds of Lawrence
Financial;
(xi) all direct or indirect loans or guaranties of loans to
any director, officer, or Principal Stockholder of Lawrence Financial or
their spouses or children or any partnership, corporation, or other entity
in which any such director, officer, or Principal Stockholder 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 Lawrence Financial 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, that
constitute the Material Contracts (or Lawrence Financial has previously provided
copies thereof to Oak Hill Financial) and includes a complete and correct
written description of all oral agreements that constitute Material Contracts.
(c) As of and through the date of this Agreement: (i) each Material
Contract is valid and subsisting and in full force and effect in all material
respects; (ii) Lawrence Financial has in all material respects performed all
obligations required to be performed by it to date under the Material Contracts;
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 Lawrence
Financial under any Material Contract.
3.19 Employee Benefit Plans.
(a) All Employee Benefit Plans maintained by Lawrence Financial or
any subsidiary are listed on the Lawrence Financial Disclosure Memorandum and
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. If required, shares of Lawrence Financial owned by any Employee Benefit
Plan have been registered pursuant to applicable securities law. 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 Lawrence Financial or a subsidiary has
obtained current favorable determination letters with respect to all such plans.
As of the date hereof, neither Lawrence Financial nor a subsidiary 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 Lawrence Financial or a subsidiary 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 Lawrence Financial nor a
subsidiary 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 Lawrence Financial or any subsidiary,
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 Lawrence Financial nor any
subsidiary is required to contribute to an Employee Benefit Plan that is a
"multiemployer plan" within the meaning of Section 3(37) of ERISA. Lawrence
Federal and its subsidiaries have complied with all reporting and disclosure
obligations to all governmental entities and all participants and beneficiaries
with respect to each Employee Benefit Plan required by the terms of such
Employee Benefit Plan, any statutes, orders, rules or regulations, including but
not limited to ERISA, the Code and the Sarbanes-Oxley Act of 2002, to the extent
that the failure to do so would have an adverse effect on the Company.
(b) Lawrence Financial has no Employee Benefit Plans or any other
benefit plans or programs currently in effect for employees, former employees,
and retired employees of Lawrence Financial or any subsidiary 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. If any plans are listed
on the Lawrence Financial Disclosure Memorandum, then the 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, or copies
of such material has been previously provided to Oak Hill Financial. If any of
the Employee Benefit Plans listed in the Lawrence Financial Disclosure
Memorandum has not been amended to comply with the Tax Reform Act of 1986 and
subsequent legislation, Lawrence 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.
(c) The Lawrence Financial Disclosure Memorandum sets forth (i) an
accurate list of any plan or employment agreement under which the execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby could (either alone or in conjunction with any other event) result in,
cause the accelerated vesting, funding or delivery of, or increase the amount or
value of, any payment or benefit to any employee, officer or director of
Lawrence Financial or any of its subsidiaries, and (ii) the financial
calculations and assumptions whereby Lawrence Financial determined that $815,000
is a reasonable estimate of the amount required to be paid in calendar year 2004
such that payments made to employees in connection with the transactions
contemplated hereby will not constitute "excess parachute payments" within the
meaning of Section 280G of the Code, provided any outstanding employment
agreements are terminated prior to December 31, 2004 and all
payments and benefits are made or provided in accordance with the agreements
entered into by and between Jack L. Blair, RobRoy Walters and Lawrence
Financial, Lawrence Federal and Oak Hill Financial; and (iii) the financial
calculations and assumptions whereby Lawrence Financial determined that $295,000
is a reasonable estimate of the amount required to be paid in calendar year 2004
for the termination of obligations to directors under any outstanding director
retirement plan such that payments made in the termination of the director
retirement plan obligations will not constitute "excess parachute payments"
within the meaning of Section 280G of the Code, provided the obligations to
directors are terminated prior to December 31, 2004 and all payments and
benefits are made or provided in accordance with the agreements entered into by
and between each director and Lawrence Financial, Lawrence Federal and Oak Hill
Financial.
3.20 Insurance Policies. Except as shown on the Lawrence Financial
Disclosure Memorandum, neither Lawrence Financial not any subsidiary maintains
insurance policies and fidelity bonds. A complete and correct list of the
insurance policies and fidelity bonds currently maintained by Lawrence Financial
or any subsidiary is listed on the Lawrence Financial Disclosure Memorandum and
the Lawrence Financial Disclosure Memorandum includes complete and correct
copies of all such policies and bonds currently in effect together with all
riders and amendments thereto or copies of such policies, bonds, riders and
amendment have been previously provided to Oak Hill Financial. All premiums due
thereon have been paid and Lawrence Financial has complied in all respects with
the provisions of such policies and bonds. Lawrence Financial has not failed to
give any notice or present any claim under any insurance policy or fidelity bond
in due and timely fashion.
3.21 Capital Requirements. Lawrence Financial is in compliance with all
currently applicable capital requirements and guidelines prescribed by all
appropriate federal regulatory agencies.
3.22 Loan Loss Reserves. Since June 30, 2004 Lawrence Financial has not
incurred any unusual or extraordinary loan losses. The allowance for loan losses
reflected on the financial statements of Lawrence Financial 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 accounting principles
generally accepted in the United States to provide for reasonably anticipated
losses on outstanding loans. Lawrence Financial has no knowledge of any
potential losses that have not been considered in establishing the current
allowance for loan losses.
3.23 Brokers; Certain Fees. Neither Lawrence Financial, nor any of its
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 transactions
contemplated herein or therein.
3.24 Material Facts. Neither this Agreement, the Lawrence Financial
Disclosure Memorandum, nor any list, schedule, or certificate furnished to Oak
Hill Financial by or on behalf of Lawrence Financial 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.
3.25 Tax Treatment of the Merger. Neither Lawrence Financial nor 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 Code.
3.26 Filing of Reports. Lawrence Financial Common is registered pursuant
to Section 12 of the 1934 Act. Lawrence 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,
2001, Lawrence 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 Lawrence 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.
3.27. Termination of Benefits. Based on its Knowledge, Lawrence Financial
can terminate prior to December 31, 2004, its and any subsidiary's obligations
(i) under any outstanding employment agreements of its Chief Executive Officer
and its Chief Financial Officer, for payments aggregating no more than $815,000
and such payments shall not result in any amounts or benefits expended under
such agreements or plans constituting "excess parachute payments" within the
meaning of Section 280G of the Code and (ii) to directors under any outstanding
retirement plan for payments aggregating no more than $295,000 and such payments
shall not result in any amounts or benefits expended under such agreements or
plans constituting "excess parachute payments" within the meaning of Section
280G of the Code.
3.28. Fairness Opinion. Lawrence Financial has received a fairness opinion
from Keefe, Bruyette & Woods, Inc. relating to the Merger stating that the
Consideration to be paid to the stockholders of Lawrence Financial is fair to
the stockholders of Lawrence Financial from a financial point of view.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF OAK HILL FINANCIAL
----------------------------------------------------
Oak Hill Financial represents and warrants to Lawrence Financial that,
except as set forth in the Oak Hill Disclosure Memorandum:
4.01 Organization and Authority. Oak Hill Financial is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Ohio, is registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended, 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.
4.02 Capitalization. The authorized capital stock of Oak Hill Financial
consists of (i) 15,000,000 shares of Oak Hill Common, of which 5,544,514 shares
were issued and outstanding as of the date hereof (excluding treasury shares)
and 1,200,000 reserved for issuance upon exercise of existing stock options, 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 Common are duly authorized, validly issued, fully
paid and nonassessable. All of the shares of Oak Hill Common to be issued
pursuant to this Agreement will, when so issued, be duly authorized, validly
issued, fully paid and nonassessable, and the issuance of such shares will not
be subject to any preemptive or similar rights.
4.03 Authorization. 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.
4.04 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 violate any provision of the
certificate of incorporation or code of regulations of Oak Hill Financial or
result in a breach or termination of, or accelerate the performance required by,
any 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, except
for such violations or breaches that would not, individually or in the
aggregate, have a Material Adverse Effect on Oak Hill Financial.
4.05 Financial Statements. Oak Hill Financial has previously made
available to Lawrence Financial copies of (i) the consolidated balance sheets of
Oak Hill Financial and its subsidiaries as of December 31, 2003 and 2002 and
related consolidated statements of income, cash flows and changes in
stockholders' equity for each of the three years in the three-year period ended
December 31, 2003, together with the notes thereto, accompanied by the
audit report of Oak Hill Financial's independent public auditors, as reported in
Oak Hill Financial's Annual Report on Form 10-K for the year ended December 31,
2003 filed with the SEC and (ii) the unaudited consolidated balance sheet of Oak
Hill Financial and its subsidiaries as of June 30, 2004 and the related
consolidated statements of income, cash flows and changes in stockholders'
equity for the six months ended June 30, 2004 and 2003, as reported in Oak Hill
Financial's Quarterly Report on Form 10-Q for the period ended June 30, 2004
filed with the SEC. Such financial statements fairly present the financial
position, results of operations, and cash flows of Oak Hill 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 Oak Hill
Financial which are required in conformity with generally accepted accounting
principles to be reflected or disclosed in such financial statements which have
not been so reflected or disclosed.
4.06 Material Facts. Neither this Agreement nor this 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
Lawrence Financial.
4.07 Absence of Undisclosed Liabilities. Except to the extent reflected or
reserved against on the consolidated balance sheet of Oak Hill Financial as of
June 30, 2004 as included in Oak Hill Financial's Quarterly Report on Form 10-Q
for the period ended June 30, 2004, Oak Hill Financial 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 would reasonably be expected to have a
Material Adverse Effect on Oak Hill Financial.
4.08 Absence of Certain Changes. Except as provided in the Oak Hill
Disclosure Memorandum, since June 30, 2004, Oak Hill Financial has not:
(a) made or permitted to be made any changes in its 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 it; 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, 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;
(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 June 30, 2004;
(i) suffered any Material Adverse Effect; and
(j) made any material increase in dividends until the Effective Date
of this Agreement.
4.09 Taxes. Oak Hill Financial has filed or caused to be filed all federal
and other tax returns which are required to be filed and has 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.
4.10 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. Neither Oak Hill Financial nor any of
its subsidiaries is subject to any supervisory agreement, consent order or
decree, cease and desist order, or other restriction on its business or assets.
4.11 Environmental Matters.
(a) To the Knowledge of Oak Hill Financial, Oak Hill Financial and
its subsidiaries are and have been at all times in substantial compliance with
all applicable Environmental, and Oak Hill Financial nor any of its subsidiaries
has 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 Financial or any of
its subsidiaries 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 Financial or any of its subsidiaries 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 Financial or any of
its subsidiaries relating to damage, contribution, cost recovery, compensation,
loss, or injury resulting from any Hazardous Substance. To the Knowledge of Oak
Hill Financial, neither Oak Hill Financial or any of its subsidiaries 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 Financial
or any of its subsidiaries 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
Financial or any of its subsidiaries has any 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
Financial or any of its subsidiaries is that of a lien holder or mortgagee, but
including any property as to which title has been taken by Oak Hill Financial or
any of its subsidiaries pursuant to mortgage foreclosure or similar proceeding
and any property as to which Oak Hill Financial or any of its subsidiaries 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 or any of its subsidiaries at any time
prior to the date of this Agreement, together with any improvements located
thereon.
4.12 Community Reinvestment Act Compliance. Oak Hill Banks is in material
compliance with the applicable provisions of the CRA and the regulations
promulgated thereunder, and currently has a CRA rating of satisfactory or better
from the FDIC. Oak Hill Financial knows of no fact or circumstance or set of
facts or circumstances which would cause Oak Hill Financial to fail to comply
with such provisions or to cause the CRA rating of Oak Hill Banks to fall below
satisfactory.
4.13 Compliance with Laws. 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.
4.14 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 this 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.
4.15 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.
4.16 Capital Requirements. Neither Oak Hill Financial nor any Affiliate
thereof is not in compliance with all currently applicable capital requirements
and guidelines prescribed by all appropriate federal regulatory agencies.
4.17 Tax Treatment of the Merger. Neither Oak Hill Financial nor any
Affiliate thereof 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 Code.
4.18 Filing of Reports. Oak Hill 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.
4.19 Insurance of Accounts. The deposits of Oak Hill Banks are insured up
to the applicable limits by the BIF.
4.20 Availability of Funds. Oak Hill Financial will have available to it
at the Effective Time sources of capital sufficient to pay the aggregate Cash
Consideration and to pay any other amounts payable pursuant to this Agreement
and to effect the transactions contemplated hereby.
SECTION 5. COVENANTS OF LAWRENCE FINANCIAL
-------------------------------
Lawrence Financial covenants and agrees as follows:
5.01 Applications for Regulatory Approvals; Registration Statement.
Lawrence Financial 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 6.02 hereof and shall
furnish all information concerning it and the holders of its capital stock as
Oak Hill Financial may reasonably request in connection with such action.
Lawrence Financial shall assist Oak Hill Financial in the preparation of the
Proxy Statement, as part of the Registration Statement filed with the SEC, and
shall mail such Proxy Statement to Lawrence Financial Shareholders in accordance
with Section 5.03 hereof.
5.02 Applications for Charter Conversion. As soon as reasonably
practicable after the execution of this Agreement, at the sole expense and with
the assistance of Oak Hill Financial, Lawrence Financial shall prepare and file
such applications with the Ohio Division of Financial Institutions, and any
other regulatory authorities having jurisdiction as may be required to secure
all necessary regulatory approvals for conversion of Lawrence Federal to a bank
chartered by the State of Ohio, which conversion shall occur immediately prior
to the Effective Time, and to immediately after the Effective Time consummate a
merger of Oak Hill Banks with and into Lawrence Federal as an Ohio state
chartered bank, and shall use its best efforts to secure such approvals.
5.03 Stockholders' Meeting. As soon as practicable and, in any event,
within ten business days after the SEC has declared the Registration Statement
effective, Lawrence Financial will call and mail notice of a meeting of its
stockholders for the purpose of adopting this Agreement along with the Proxy
Statement, which meeting shall be held not more than 45 days from the date the
notice is mailed, and the Board of Directors of Lawrence Financial will to the
extent consistent with their fiduciary duty recommend to the stockholders that
they vote their shares in favor of the Merger.
5.04 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, Lawrence Financial will conduct its respective operations
only, and shall not take any action except, in the ordinary and usual course of
business, and Lawrence Financial will use its best efforts to preserve intact
its business organization, assets, prospects, and business relationships, to
keep available the services of its 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,
Lawrence Financial will not except as provided herein:
(a) enter into any agreement or commitment of the character referred
to in subsections 3.18(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 3.10 hereof; provided, however,
that, after prior consultation with Oak Hill Financial, Lawrence 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.
5.05 Access to Information. Lawrence Financial 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 Lawrence Financial, provided that such access shall not
unreasonably interfere with the operations of Lawrence Financial, 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 5.05 or otherwise shall affect any representation or warranty made
herein.
5.06 Press Releases. Lawrence Financial shall consult in advance with Oak
Hill Financial as to the form and substance of any press release, written
communication with its stockholders, or other public disclosure of matters
related to 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 Lawrence Financial from making any disclosure (after consultation
with Oak Hill Financial with respect thereto) which its counsel deems necessary
under applicable law.
5.07 Best Efforts. Lawrence Financial shall use its 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.
5.08 Acquisition Proposals. Unless and until this Agreement shall have
been terminated by either party pursuant to Section 12 hereof, Lawrence
Financial shall not (i) directly or indirectly, through any of its officers,
directors, agents, or affiliates, solicit, encourage, initiate 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 Lawrence Financial shall be entitled to participate in
negotiations and discussions regarding an Unsolicited Acquisition Proposal, and
to disclose such information and provide such access in connection with an
Unsolicited Acquisition Proposal, to the extent that the Board of Directors of
Lawrence 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 its legal counsel, that failure to
take such action would be inconsistent with the fiduciary obligations of the
directors of Lawrence Financial to the stockholders of Lawrence Financial.
Lawrence Financial shall give Oak Hill Financial immediate notice of any
Acquisition Proposals.
5.09 Advice of Changes. Between the date hereof and the Effective Date,
Lawrence Financial shall advise Oak Hill Financial promptly, in writing, of any
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, Lawrence
Financial shall deliver to Oak Hill Financial a supplement to the Lawrence
Financial Disclosure Memorandum, which shall contain a description of any and
all such matters.
5.10 Confidentiality. From and after the date of this Agreement, Lawrence
Financial shall, and shall cause its respective Affiliates to, treat all
Confidential Information of Oak Hill Financial and Oak Hill Banks, as
confidential, and Lawrence Financial 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 12 hereof, Lawrence Financial shall,
and shall cause its 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 Lawrence Financial contained in this Section 5.09 are of the
essence and shall survive any termination of this Agreement and the closing of
the transactions contemplated hereby.
5.11 Coordination of Dividends. Lawrence Financial agrees to cooperate
with Oak Hill Financial to ensure that the stockholders of Lawrence Financial
receive a regular quarterly dividend from either Lawrence Financial or Oak Hill
Financial during the quarter in which the Effective Date occurs, but that they
do not receive dividends from both Lawrence Financial and Oak Hill Financial
during such quarter.
5.12 Tax Representations. Lawrence Financial will use its 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 Code for federal income tax purposes.
5.13 Form 13D or 13G Filings. Lawrence Financial shall promptly advise Oak
Hill Financial of the filing of a Form 13D or 13G under the 1934 Act with
respect to Lawrence Financial Common and shall provide Oak Hill Financial with a
copy of any such Form 13D or 13G promptly after receipt thereof.
5.14 ESOP Termination. As soon as practicable following the date hereof
but, in any event, prior to the Effective Time, Lawrence Federal shall take any
and all action necessary to terminate its employee stock ownership plan (the
"Lawrence Federal ESOP") as of the Effective Time. The trustee of the Lawrence
Federal ESOP shall repay the existing loan of the Lawrence Federal ESOP and
allocate any unallocated assets remaining after the loan is repaid in accordance
with the terms of the Lawrence Federal ESOP and applicable law.
5.15 Accounting Changes. Lawrence Financial agrees that, immediately prior
to the Effective Time, it will conform its and its subsidiaries accounting
measures and procedures to the accounting measures and procedures of Oak Hill
Financial and its subsidiaries, provided that such measures and procedures are
not prohibited by generally accepted accounting principles or applicable laws
and regulations.
5.16 Agreements of Affiliates. Lawrence Financial will use its best
efforts to obtain from each director of Lawrence Financial and their
"affiliates," for purposes of Rule 145 under the 1933 Act, and to 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 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.
5.17 Termination of Executive Benefits. Lawrence Financial shall terminate
its and any subsidiary's obligations, under any outstanding employment
agreements with its Chief Executive Officer and its Chief Financial Officer, for
payments aggregating no more than $815,000 in calendar year 2004 and in a manner
which will not result in any amounts or benefits expended under such agreements
or plans constituting "excess parachute payments" within the meaning of Section
280G of the Code. Lawrence Financial, together with Lawrence Federal and Oak
Hill Financial, will enter into agreements with its Chief Executive Officer and
Chief Financial Officer concurrently with the execution of this Agreement
setting forth all payments and benefits to be made or provided to such persons
and all obligations related thereto.
5.18 Termination of Director Benefits. Lawrence Financial shall terminate
its and any subsidiary's obligations to directors under any outstanding
retirement plan for payments aggregating no more than $295,000 in calendar year
2004 and in a manner which will not result in any amounts or benefits expended
under such agreements or plans constituting "excess parachute payments" within
the meaning of Section 280G of the Code. Lawrence Financial, together with
Lawrence Federal and Oak Hill Financial, will enter into agreements with each
director concurrently with the execution of this Agreement setting forth all
payments and benefits to be made or provided to such persons and all obligations
related thereto.
5.19 Tax Returns. Lawrence Financial and its subsidiaries shall prepare
and timely file all tax returns reasonably requested by Oak Hill Financial to be
filed by them on or before the Closing Date. Oak Hill Financial shall have a
reasonable opportunity to review such Tax Returns and approve any material
elections. Lawrence Financial and its subsidiaries shall pay all Taxes shown on
such Tax Returns.
5.20. Real Property Matters. For each parcel of the Real Property
described in the Lawrence Financial Disclosure Memorandum as being owned by
Lawrence Financial, Lawrence Financial shall permit Oak Hill Financial to
obtain, at the sole expense of Oak Hill Financial, (a) a title insurance
commitment (ALTA 1966 form or its equivalent) for a fee owner's title insurance
policy in an amount equal to the carrying cost of the premises to be insured
(including all improvements thereon), on the books of Lawrence Financial as of
December 31, 2003 on such form as may be acceptable to Oak Hill Financial, (b)
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 and (c) a "Phase I" environmental site
assessment prepared by a licensed environmental engineering firm, in each case
for the purpose of verifying the representations and warranties made by Lawrence
Financial regarding the Real Property.
5.21. Sale of Mobile Home Loans. Lawrence Federal shall complete the sale
of its indirect mobile loan portfolio and related accounts, if any, pursuant to
the agreements from purchase and sale between Lawrence Federal and Morgan Keegan
Mortgage Company, Inc. dated as of October 12, 2004, and shall not enter into
any amendment thereof without the written consent of Oak Hill Financial.
SECTION 6. COVENANTS OF OAK HILL FINANCIAL
-------------------------------
Oak Hill Financial covenants and agrees as follows:
6.01 Issuance of Oak Hill Common. At the Effective Time, Oak Hill
Financial shall issue all of the shares of Oak Hill Common into which shares of
Lawrence 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.
6.02 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
FDIC, 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 shall deliver a draft or
drafts of such regulatory applications to Lawrence Financial and provide
Lawrence Financial a reasonable opportunity to review such draft or drafts prior
to filing the same.
6.03 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 reasonable efforts to cause
the Registration Statement to become effective under the 1933 Act, 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 Lawrence Financial and provide
Lawrence Financial a reasonable opportunity to review such draft or
drafts prior to filing the same. Oak Hill Financial will advise Lawrence
Financial, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective, the issuance of any stop order, the
suspension of the qualification of the Oak Hill Common issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Registration Statement. If at any time prior to the
Effective Time any information relating to Oak Hill Financial should be
discovered by Oak Hill Financial which should be set forth in an amendment or
supplement to any of the Registration Statement or the prospectus contained
therein so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, Oak Hill Financial shall promptly notify Lawrence Financial and,
to the extent required by law, rules or regulations, an appropriate amendment or
supplement describing such information shall be promptly filed with the SEC and
disseminated to the stockholders of Lawrence Financial.
6.04 Press Releases. Oak Hill Financial shall consult in advance with
Lawrence 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 or the Merger.
6.05 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.
6.06 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 Lawrence Financial 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 12 hereof, Oak Hill
Financial and Oak Hill Banks shall, and shall cause their respective Affiliates
to, promptly return to Lawrence Financial all documents and workpapers, and all
copies thereof, containing any such Confidential Information of Lawrence
Financial. The covenants of Oak Hill Financial and Oak Hill Banks contained in
this Section 6.06 are of the essence and shall survive any termination of this
Agreement, but shall terminate as of the closing of the transactions
contemplated hereby.
6.07 Coordination of Dividends. Oak Hill Financial agrees to cooperate
with Lawrence Financial to ensure that the stockholders of Lawrence Financial
receive a regular quarterly dividend from either Lawrence Financial or Oak Hill
Financial during the quarter in which the Effective Date occurs, but that they
do not receive dividends from both Lawrence Financial and Oak Hill Financial
during such quarter.
6.08 Employment Contracts; Employees of Lawrence Financial; Severance.
(a) Oak Hill Financial agrees to honor in accordance with their terms all vested
benefits or other vested amounts earned or accrued through the Effective Time
under the employment contracts, supplemental executive retirement plan, director
deferral fee agreements and director retirement agreements described in the
Lawrence Financial Disclosure Memorandum, including benefits that vest or are
otherwise accrued as a result of the consummation of the transactions
contemplated by this Agreement, in each case except to the extent terminated by
actions contemplated in this Agreement or superseded by agreements entered into
in connection with this Agreement.
(b) All persons who are employees of Lawrence Federal immediately prior to the
Effective Time and whose employment is not specifically terminated at or prior
to the Effective Time (a "Continuing Employee") shall, at the Effective Time,
become employees of Oak Hill Banks. All of the Continuing Employees shall be
employed at the will of Oak Hill Banks and no contractual right to employment
shall inure to such employees because of this Agreement.
(c) All persons who are employees of Lawrence Federal immediately prior to the
Effective Time and whose employment is terminated at the Effective Time and all
Continuing Employees whose employment is involuntarily terminated without cause
within one year of the Effective Time shall be entitled to receive a severance
payment pursuant to the terms of Lawrence Federal's Employee Severance
Compensation Plan.
6.09 Employee Benefit Plans.
(a) Oak Hill Financial agrees to use its reasonable best efforts to
coordinate the conversion of any pension Employee Benefit Plans, practices, or
policies of Lawrence Financial into similar plans of Oak Hill Financial, to the
extent that such plans may exist, and to give credit to any and all employees of
Lawrence Financial and its subsidiaries who immediately following the Effective
Date become employees of Oak Hill Financial and its subsidiaries following the
consummation of the Merger for all service with Lawrence Financial prior to the
Effective Time for purposes of eligibility, vesting, and all other purposes for
which such service is taken into account or recognized, to the extent feasible
and permissible under all applicable laws and regulations and the applicable
terms of Oak Hill Financial's pension Employee Benefit Plans.
(b) Oak Hill Financial agrees to use its reasonable best efforts,
including when permitted by law the amendment of existing plans, to coordinate
the maintenance of or conversion into similar plans of Oak Hill Financial of any
welfare Employee Benefit Plan, practice, or policy of Lawrence Financial, to the
extent feasible and permissible under all applicable laws and regulations and
the applicable terms of Oak Hill Financial's plans. Furthermore, the former
officers and employees of Lawrence Financial (and their spouses and dependents,
if applicable) who are under a Lawrence Financial plan on the Effective Date,
may, upon the cessation of their participation in a Lawrence Financial plan
being maintained by Oak Hill Financial after the Effective Date, immediately
participate in the corresponding benefit plan maintain by Oak Hill Financial
without regard to pre-existing conditions or waiting periods to the extent
then-permitted by law and the existing plans of Oak Hill Financial.
6.10 Indemnification of Directors and Officers.
(a) 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 Lawrence Financial to indemnify and defend, and
advance expenses to, the directors and officers of Lawrence Financial pursuant
to, to the extent of, and in accordance with the terms and conditions of any
such obligations that Lawrence Financial had to indemnify and defend, and
advance expenses to, such persons in effect immediately prior to the Effective
Time, in connection with such persons' status or services as directors and
officers of Lawrence Financial, whether by contractual right or by any provision
of the articles of incorporation or bylaws of Lawrence Financial, with respect
to any claim asserted or made prior to or at any time after the Effective Time.
All such rights to indemnification and advancement of expenses 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
Lawrence Financial would have been subject had the Merger not been consummated.
(b) For a period of five years following the Effective Time, Oak
Hill Financial will use its best efforts to provide directors' and officers'
liability insurance that serves to reimburse the present and former directors
and officers of Lawrence Financial or any of its subsidiaries with respect to
claims against such directors and officers arising from facts or events
occurring before the Effective Time (including the transactions contemplated
hereby), which insurance will contain at least the same coverage and amounts,
and contain terms and conditions no less advantageous to the person entitled to
indemnified, as that coverage currently provided by Oak Hill Financial for its
directors and officials; provided, however, that if Oak Hill Financial is unable
to maintain or obtain the insurance called for by this Section 6.10(b), Oak Hill
Financial will use its best efforts to obtain as much comparable insurance as is
reasonably available.
SECTION 7. 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:
7.01 Shareholder Approval. This Agreement shall have been approved by the
affirmative vote of the holders of at least a majority of the issued and
outstanding shares of Lawrence Financial Common.
7.02 Regulatory Approvals. The Merger shall have been approved by the
Federal Reserve Board, 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
Lawrence Financial, Lawrence Federal, Oak Hill Financial or Oak Hill Banks,
either prior to or subsequent to the proposed merger of Lawrence Financial and
Oak Hill Financial.
7.03 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 this 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.
7.04 Tax Opinion. Oak Hill Financial and Lawrence Financial shall have
received an opinion of Porter, Wright, Morris & Arthur LLP on the basis of
facts, representations and assumptions referenced in such opinions substantially
to the effect that the Merger will be treated as a reorganization within the
meaning of Section 368(a).
In rendering such tax opinion, Porter, Wright, Morris & Arthur LLP
may request and shall be entitled to rely upon representations contained in
certificates of officers, directors and others of Lawrence Financial and Oak
Hill Financial reasonably satisfactory in form and substance to Porter, Wright,
Morris & Arthur LLP and Lawrence Financial and Oak Hill Financial shall use
their best efforts to make available such certificates.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF LAWRENCE FINANCIAL
---------------------------------------------------------
The obligations of Lawrence Financial to consummate the Merger are subject
to the fulfillment on or before the Closing Date of the following additional
conditions precedent:
8.01 Representations and Warranties. The representations and warranties
made by Oak Hill Financial herein shall be true and correct as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on and as of such date; provided that no representation
or warranty (other than the representations and warranties contained in Section
4.02, which shall be true in all material respects) will be deemed untrue, and
Oak Hill Financial will not be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, event or circumstance
unless such fact, event or circumstance, individually or taken together with all
other facts, events or circumstances inconsistent with any representation or
warranty contained in Section 4 hereof, has had or is reasonably likely to have
a Material Adverse Effect with respect to Oak Hill Financial; Oak Hill Financial
shall have performed in all material respects its obligations hereunder and
under this Agreement to be performed on or before the Closing Date; and an
executive officer of Oak Hill Financial shall have executed and delivered to
Lawrence 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
Lawrence Financial shall reasonably request.
8.02 Effectiveness of the Registration Statement; NASD Listing. Lawrence
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 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 Common to be issued to Lawrence Financial stockholders
pursuant to this Agreement shall have been authorized for listing on the NASDAQ
National Market upon official notice of issuance.
8.03 Material Adverse Change. Since June 30, 2004, there shall not have
occurred any event which has had a Material Adverse Effect on Oak Hill
Financial.
SECTION 9. 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:
9.01 Regulatory Approval of the Subsidiary Merger. The merger of Lawrence
Federal and Oak Hill Banks 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.
9.02 Representations and Warranties. The representations and warranties
made by Lawrence Financial herein shall be true and correct as of the Closing
Date with the same force and effect as though such representations and
warranties had been made on and as of such date, provided that no representation
or warranty (other than the representations and warranties contained in Section
3.02, which shall be true in all material respects) will be deemed untrue, and
Lawrence Financial will not be deemed to have breached a representation or
warranty, as a consequence of the existence of any fact, event or circumstance
unless such fact, event or circumstance, individually or taken together with all
other facts, events or circumstances inconsistent with any representation or
warranty contained in Section 3 hereof, has had or is reasonably likely to have
a Material Adverse Effect with respect to Lawrence Financial; and the chief
executive officer and principal financial officer of Lawrence 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.
9.03 Dissenting Stockholders. The total number of shares of Lawrence
Financial Common, if any, as to which the right to dissent has been asserted
under Section 3-202 of the Maryland Corporations and Associations Code shall not
exceed ten percent (10%) of the total number of outstanding shares of Lawrence
Financial Common.
9.04 Material Adverse Change. Since June 30, 2004, there shall not have
occurred any event which has had a Material Adverse Effect on Lawrence
Financial.
9.05 Title Insurance. Within 90 days of the date of this Agreement, 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, for each parcel of the Real Property
described in the Lawrence Financial Disclosure Memorandum as being owned by
Lawrence Financial, and for each lease for any parcel of the Real Property
described in the Lawrence Financial Disclosure Memorandum as being leased by
Lawrence Financial, 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 Lawrence Financial as of December 31, 2003. 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 Lawrence Financial, and that it is 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; provided however that any defect noted that is
correctable, in Oak Hill Financial's reasonable discretion, for less than
$100,000 shall be deemed to have been corrected 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.
9.06 Survey. Within 90 days of the date of this Agreement, 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, provided however that any defect noted that is
correctable, in Oak Hill Financial's reasonable discretion, for less than
$100,000 shall be deemed to have been corrected.
9.07 Phase I. Within 90 days of the date of this Agreement, for each
parcel of the Real Property described in the Lawrence Financial Disclosure
Memorandum as being leased or owned by Lawrence Financial, 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, provided however that any defect noted that is correctable, in Oak
Hill Financial's reasonable discretion, for less than $100,000 shall be deemed
to have been corrected.
9.08 Consents and Approvals. Lawrence Financial 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 3.18 hereof, to which either
Lawrence Financial or Lawrence Federal is a party or by which either Lawrence
Financial or Lawrence Federal or any of their property or assets is bound, or
(ii) any license or permit of Lawrence Financial or Lawrence Federal, 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 after giving effect to the consummation of the transactions
contemplated hereby.
9.09 Stockholders' Equity. The consolidated total stockholders' equity of
Lawrence Financial, calculated as set forth in the following sentence, as of the
end of the month prior to the month in which the Closing Date shall occur shall
not be less than the $13,715,612. For purposes of this Section 9.09, the
consolidated total stockholders' equity of Lawrence Financial shall be as
determined in accordance with accounting principles generally accepted in the
United States, but shall be exclusive of (a) any change in accumulated other
comprehensive income, net of tax, since June 30, 2004; (b) financial advisory
fees and legal and other expenses related to the transactions contemplated by
this Agreement; (c) accounting adjustments relating to the Merger as requested
by Oak Hill Financial, (d) the effect of the sale by Lawrence Federal of its
indirect mobile home loan portfolio, and (e) other payments and expenses
contemplated by this Agreement and agreed to by the parties.
9.10 Termination of Executive Benefits. Lawrence Financial shall have
terminated its and any subsidiary's obligations under any outstanding employment
agreements with its Chief Executive Officer and its Chief Financial Officer for
payments aggregating $815,000 or less in calendar year 2004 in accordance with
the agreements entered into pursuant to Section 5.17 hereof.
9.11 Termination of Director Benefits. Lawrence Financial shall have
terminated its and any subsidiary's obligations to its directors under any
outstanding director retirement plan for payments aggregating $295,000 or less
in calendar year 2004 in accordance with the agreements entered into pursuant to
Section 5.18 hereof.
9.12 Sale of Mobile Home Loans. Lawrence Federal shall have completed the
sale of its indirect mobile loan portfolio and related accounts, if any, and
purchaser pursuant to agreements for purchase and sale between Lawrence Federal
and Morgan Keegan Company, Inc. dated as of October 12, 2004.
9.13 Effectiveness of the Registration Statement; NASD Listing; Blue Sky.
The Registration Statement shall have been declared effective by an order of the
SEC, there shall be 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 Common to be issued to Lawrence Financial stockholders pursuant to
this Agreement shall have been authorized for listing on the NASDAQ National
Market upon official notice of issuance. The Oak Hill Common to be exchanged in
the Merger shall have been qualified or is exempt from registration under all
applicable state securities laws.
SECTION 10. CLOSING DATE
------------
The closing of the transactions contemplated by this Agreement ("Closing
Date") shall be held at 11:00 a.m. at the offices of Porter, Wright, Morris &
Arthur LLP in Columbus, Ohio, on a date on which the parties agree after the
conditions specified in Sections 7.01 and 7.02 hereof have been satisfied.
SECTION 11. AMENDMENT
---------
At any time prior to the Closing Date, the parties, subject to Section 12
of this 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 stockholders of Lawrence Financial have adopted this
Agreement.
SECTION 12. TERMINATION
-----------
12.01 Termination. This Agreement shall terminate on September 1, 2005,
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 Lawrence Financial;
(b) by the board of directors of Oak Hill Financial, by giving
written notice thereof to Lawrence 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 (other than those conditions that by their terms are intended to be
satisfied on the Closing Date); (ii) if Lawrence Financial has not fully
performed its obligations and agreements hereunder and under this Agreement; or
(iii) if any of the
representations of Lawrence Financial set forth herein are untrue or incorrect
in any material respect subject to the standard set forth in Section 9.02 and
such untrue or incorrect representation is not cured within 30 days following
written notice to Lawrence Financial or such untrue or incorrect representation,
by its nature, cannot be cured prior to the Effective Time; or
(c) by the board of directors of Lawrence 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 Lawrence Financial has not been satisfied or waived (other than
those conditions that by their terms are intended to be satisfied on the Closing
Date); (ii) if Oak Hill Financial and Oak Hill Banks have not fully performed
their obligations and agreements hereunder and under this Agreement; or (iii) if
any of the representations of Oak Hill Financial set forth herein are untrue or
incorrect in any material respect subject to the standard set forth in Section
9.02; or and such untrue or incorrect representation is not cured within 30 days
following written notice to Oak Hill Financial or such untrue or incorrect
representation, by its nature, cannot be cured prior to the Effective Time.
12.02 Survival of Certain Provisions upon Termination; Nonsurvival of
Representations, Warranties and Agreements. Upon a termination of this Agreement
as provided herein, this 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 pursuant to Sections
5.10, 6.06, 12.03, and 13 hereof, which shall survive a termination of this
Agreement in accordance with the express terms of such Sections. None of the
representations, warranties covenants and agreements in this Agreement shall
survive the Effective Time, except for those covenants and agreements contained
herein that by their terms apply in whole or in part after the Effective Time.
12.03 Termination Fee. During the term of this Agreement, if (i) an
Unsolicited Acquisition Proposal is submitted to and approved by the
stockholders of Lawrence Financial at any time prior to the Effective Time, or
(ii) an Unsolicited Acquisition Proposal is received by Lawrence Financial or is
made directly to the stockholders of Lawrence Financial at any time prior to the
holding of the meeting of the stockholders of Lawrence Financial to be called
pursuant to Section 5.03 hereof, the board of directors of Lawrence Financial
fails to recommend to the stockholders of Lawrence Financial approval of this
Agreement or this Agreement, withdraws such recommendation previously made to
the stockholders of Lawrence Financial, or fails to solicit proxies of
stockholders of Lawrence Financial to approve the Merger and this Agreement are
subsequently rejected by the stockholders of Lawrence Financial at such meeting,
then, in either such event, Lawrence Financial shall pay to Oak Hill Financial,
within five business days after a termination of 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, Lawrence Financial
shall have no further liability under this Agreement. The obligations of
Lawrence Financial under this Section 12.03 shall survive a termination of this
Agreement, provided that, at the time of such termination, (1) an event
described in Section 8.03 hereof has not occurred, and (2) Lawrence Financial
does not have the right to terminate this Agreement by virtue of a material
breach of this Agreement by Oak Hill Financial or Oak Hill Banks.
SECTION 13. 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, 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 13 shall survive a termination of this
Agreement for any reason.
SECTION 14. 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 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 Lawrence Financial or Lawrence Federal, to:
Jack L. Blair
President and CEO
Lawrence Financial Holdings, Inc.
311 South Fifth Street
Ironton, Ohio 45638
(b) If to Oak Hill Financial or Oak Hill Banks, to:
Ralph E. Coffman Jr.
President and CEO
Oak Hill Financial, Inc.
14621 State Route 93
Jackson, Ohio 45640
SECTION 15. GENERAL PROVISIONS
------------------
15.01 Entire Agreement. This Agreement, together with 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.
15.02 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 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.
15.03 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; provided that following the Effective Time this Agreement shall be
binding upon the successors and assigns of the Surviving Corporation.
15.04 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.
15.05 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.
15.06 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.
15.07 Incorporation by Reference. The Disclosure Memoranda, and all
Exhibits attached hereto are hereby incorporated by reference herein.
[Left intentionally blank. Signature pages follow.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
OAK HILL FINANCIAL, INC.
By: /s/ Ralph E. Coffman Jr.
---------------------------------------
Ralph E. Coffman Jr., President and CEO
LAWRENCE FINANCIAL HOLDINGS, INC.
By: /s/ Jack L. Blair
---------------------------------------
Jack L. Blair, President and CEO
EXHIBIT A
---------
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made as of
_________ __, 200_, between OAK HILL BANKS, a banking corporation chartered
under the law of Ohio ("Oak Hill Banks") and LAWRENCE BANK formerly known as
LAWRENCE FEDERAL SAVINGS BANK, a banking corporation chartered under the law of
Ohio ("Lawrence Federal") Lawrence Federal and Oak Hill Banks are collectively
referred to herein as the "Constituent Corporations".
RECITALS
--------
A. Oak Hill Banks is a banking corporation organized and existing under
the laws of Ohio and is authorized to issue 1300 shares of common stock,
$1,000.00 par value ("Oak Hill Banks Common"), all of which are issued and
outstanding as of the date hereof and owned by Oak Hill Financial, Inc., an Ohio
corporation ("Oak Hill Financial").
B. Lawrence Federal is a banking corporation organized and existing under
the laws of Ohio and is authorized to issue ______ shares of common stock,
______ par value ("Lawrence Federal Common"), of which _______ shares are issued
and outstanding as of the date hereof and owned by Oak Hill Financial.
C. The respective boards of directors of the Constituent Corporations have
approved the merger of Oak Hill Banks with and into Lawrence Federal
substantially on the terms and conditions contained in this Agreement.
Furthermore, the board of directors and the parties hereto intend for this
transaction to be a tax-free reorganization pursuant to Section 368(a) of the
Internal Revenue Code of 1986, as amended.
AGREEMENT
---------
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, at the "Effective
Time" (as such term is defined in Section 2 hereof), Oak Hill Banks shall be
merged with and into Lawrence Federal (the "Merger"). Lawrence Federal shall be
the surviving corporation in the Merger (the "Surviving Corporation"), and 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 Oak Hill Financial shall cease.
2. Effective Date and Time. The Merger shall be effective 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
and time as may be specified in such Certificate of Merger (the "Effective
Time").
3. Name. The name of the Surviving Corporation shall be "Oak Hill Banks."
4. Charter. The Articles of Incorporation attached hereto as Exhibit A
shall be the articles of incorporation of the Surviving Corporation, until
amended in accordance with law.
5. Directors. The directors of the Surviving Corporation shall be Ralph E.
Coffman, Jr., 250 Summerhill Drive, Chillicothe, OH 45601; Evan E. Davis, 225 S.
Front Street, Oak Hill, OH 45656; John D. Kidd, 2500 Five Points Rd., Jackson,
OH 45640; David Ratz, 493 Abbey Lane, Jackson, OH 45640; Ron J. Copher, 5841
Franklin Valley, Jackson, OH 45640; Scott J. Hinsch, Jr., 535 Aaron Avenue,
Jackson, OH 45640; Darrell D. Boggs, 13683 State Route 279, Oak Hill, OH 45656;
and Miles R. Armentrout, 45 Brandon Court, Springboro, OH 45066 to serve until
their successors are duly elected and qualified in accordance with the
regulations of the Surviving Corporation and the laws of Ohio.
6. Regulations. The Code of Regulations attached hereto as Exhibit B 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. All shares of Oak Hill Banks that are issued and
outstanding immediately prior to the Effective Time shall continue to be issued
and outstanding shares of Oak Hill Banks Common at and after the Effective Time.
At the Effective Time, the shares of Lawrence Federal Common issued and
outstanding immediately prior to the Effective Time shall be cancelled.
9. 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 Oak Hill Banks shall cease; all assets and property (real,
personal, and mixed, tangible and intangible, choses in action, rights, and
credits) then owned by Oak Hill Banks, or which would inure to Oak Hill Banks,
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 Oak Hill Banks 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 respective officers and directors of
Lawrence Federal 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 Lawrence Federal, as the case may be, and otherwise to carry out
the purposes of this Agreement.
10. Offices. The principal executive offices of the Surviving Corporation
shall be located at 120 Twin Oaks Drive, Jackson, Ohio 45640.
11. Additional Agreements. 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 Lawrence Federal and Oak Hill Banks and
the receipt of all required regulatory approvals.
12. 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 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.
13. Termination. This Agreement may be terminated only by the mutual
agreement of the parties hereto.
14. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter thereof and supersedes 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
OAK HILL BANKS
By:
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Scott J. Hinsch, President
LAWRENCE BANK
By:
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Jack E. Blair, President