SUPPLEMENTAL AGREEMENT

 

 

                                                                    Exhibit 2(b)

 

                             SUPPLEMENTAL AGREEMENT

 

      THIS SUPPLEMENTAL AGREEMENT (this "Agreement") is made as of July 20,

2004, among OAK HILL FINANCIAL, INC., an Ohio corporation ("Oak Hill

Financial"), OAK HILL BANKS, a banking corporation chartered under the law of

Ohio ("Oak Hill Banks"), and THE RIPLEY NATIONAL BANK, a national bank

association chartered under the law of the United States ("Ripley National").

 

                                     RECITALS

 

      A. Oak Hill Financial, Inc. is a registered bank holding company under the

Bank Holding Company Act of 1956, as amended. Oak Hill Banks is a wholly owned

subsidiary of Oak Hill Financial.

 

      B. Ripley National is a national bank association chartered under the law

of the United States.

 

      C. Concurrently with the execution and delivery of this Agreement, Ripley

National and Oak Hill Banks are entering into an Agreement and Plan of Merger

(the "Merger Agreement"), which provides for the merger of Oak Hill Banks into

Ripley National in accordance with the terms and conditions contained in the

Merger Agreement and in this Agreement (the "Merger").

 

      D. The parties hereto desire to enter into this Agreement for the purpose

of setting forth certain representations, warranties, and covenants made by each

party as an inducement to the other parties to execute and deliver the Merger

Agreement and to consummate the Merger and to set forth certain additional terms

and conditions applicable to the Merger.

 

                                    AGREEMENT

 

      In consideration of the foregoing and of the mutual promises contained

herein, the parties agree as follows:

 

SECTION 1. DEFINITIONS

 

      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) "Ripley National";

 

            (c) "Oak Hill Banks";

 

            (d) "Oak Hill Financial";

 

            (e) the "Merger"; and

 

            (f) the "Merger Agreement".

 

      1.02 Definitions Contained in the Merger Agreement. For the purposes of

this Agreement, the following terms shall have the meanings assigned to them in

the Merger Agreement:

 

            (a) the "Effective Date";

 

            (b) the "Effective Time";

 

            (c) the "Dissenters' Rights Law";

 

            (d) "Ripley National Common";

 

             (e) "Ripley Preferred"; and

 

            (f) "Dissenting Share."

 

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      1.03 Other Definitions. For the purposes of this Agreement, certain other

terms shall be defined as follows:

 

            (a) 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 Ripley National,

including, but not limited to, an exchange or tender offer therefor, (ii) the

possible acquisition of a majority of the assets of Ripley National, (iii) a

merger or consolidation involving Ripley National, other than a transaction in

which Ripley National will be the owner of all of the stock of the surviving

corporation following the transaction, or (iv) a merger or consolidation

involving Ripley National, other than a transaction in which Ripley National

will be the surviving corporation and the current shareholders of Ripley

National will be the owners of a majority of the stock of the surviving

corporation following the transaction;

 

            (b) an "Affiliate" of a party means a director, officer, employee,

agent, or adviser of such party;

 

            (c) "BIF" means the Bank Insurance Fund of the FDIC;

 

            (d) "CERCLA" means the Comprehensive Environmental Response,

Compensation and Liability Act of 1980, as amended;

 

            (e) the "Code" means the Internal Revenue Code of 1986;

 

            (f) the "Financial Statements" mean the consolidated financial

statements of Ripley National, consisting of a balance sheet as of June 30,

2004, and statements of income, cash flows, and changes in stockholders' equity

for the six-month period beginning January 1, 2004, and ending June 30, 2004,

prepared in accordance with generally accepted accounting standards consistently

applied in the United States by a certified public accountant holding a valid

permit to practice accounting in Ohio;

 

            (g) "Confidential Information" of or relating to a party means any

and all information received from or on behalf of such party or their Affiliates

concerning the Merger, the terms of this Agreement or the Merger Agreement, or

the assets, business, operations, or financial condition of such party or their

Affiliates, unless and to the extent that any such information is in the public

domain;

 

            (h) "CRA" means the Community Reinvestment Act of 1977, as amended;

 

            (i) the "Division of Financial Institutions " means the Division of

Financial Institutions, Ohio Department of Commerce;

 

            (j) "Employee Benefit Plans" means any and all "employee benefit

plans" or "welfare benefit plans" as defined in ERISA;

 

            (k) "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;

 

            (l) "ERISA" means the Employee Retirement Income Security Act of

1974, as amended;

 

            (m) "FDIC" means the Federal Deposit Insurance Corporation;

 

            (n) the "Federal Reserve Board" means the Board of Governors of the

Federal Reserve System, or its delegate;

 

            (o) "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;

 

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            (p) "Knowledge" as used herein shall mean those facts that are known

or should reasonably have been known after due inquiry by the President, or any

Senior or Executive Vice President of any party hereto;

 

             (q) "Litigation Reserve" means the fund established pursuant to

Section 8.10 hereof.

 

            (r) "Oak Hill Financial's Reimbursed Expenses" means certain

expenses to be reimbursed to Oak Hill Financial by reducing the Merger proceeds

as provided in this Agreement and in the Merger Agreement.

 

            (s) "OCC" means the Office of the Comptroller of the Currency;

 

            (t) a "Principal Shareholder" of a party means a person who owns

five percent or more of the outstanding shares of any class of the capital stock

of such party;

 

            (u) the "Real Property" means any and all real property owned or

leased by Ripley National, 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;

 

            (v) the "Ripley Disclosure Memoranda" means those memoranda

delivered to representatives of Oak Hill Financial as of the date of this

Agreement as the same has been amended and supplemented in writings delivered to

Oak Hill Financial through the date of this Agreement, and as the same may

subsequently be amended prior to the Effective Date;

 

            (w) the "SEC" means the Securities and Exchange Commission;

 

             (x) "Starting Date" shall mean the date of this Agreement; and

 

            (y) an "Unsolicited Acquisition Proposal" means a written

Acquisition Proposal that is received by Ripley National or made public by or on

behalf of the proponent of such Acquisition Proposal without any solicitation of

such proposal by any director, officer, Principal Shareholder, employee, agent,

or other person acting on behalf of Ripley National.

 

SECTION 2. REPRESENTATIONS AND WARRANTIES OF RIPLEY NATIONAL

 

      Ripley National represents and warrants to Oak Hill Financial and Oak Hill

Banks that, except as set forth in the Ripley Disclosure Memoranda:

 

      2.01 Organization and Authority. Ripley National is a national bank

association duly organized, validly existing, and in good standing under the

laws of the United States, 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 power and

authority to own its properties and assets, to carry on its business as it is

presently being conducted, and, subject to the approval of its shareholders, and

to the filing of all requisite regulatory applications and notices and the

receipt of all requisite regulatory approvals, to enter into and carry out its

obligations under this Agreement and under the Merger Agreement.

 

      2.02 Capitalization. The authorized capital stock of Ripley National

consists of 10,000 shares of Ripley National Common, of which 10,000 shares were

issued and outstanding as of the date of this Agreement and 20,500 shares of

Ripley National Preferred, of which 20,500 shares were issued and outstanding as

of the date of this Agreement. All of the outstanding shares of Ripley National

Common and Ripley National Preferred are duly and validly authorized, issued,

and outstanding and are fully paid and nonassessable. There are no existing

options, warrants, or commitments of any kind which might require the issuance

by Ripley National of any additional shares of Ripley National Common, Ripley

National Preferred or other equity securities of Ripley National.

 

      2.03 Subsidiaries. The Ripley Disclosure Memoranda lists all corporations

in which Ripley National owns, directly or indirectly, five percent or more of

any class of capital stock as of the date of this Agreement, and indicates, with

respect to the equity securities of each such corporation as of such date, the

number of shares of each class authorized, the number of shares outstanding, and

the number of shares owned or controlled directly or indirectly by Ripley

National, Ripley National does not own, directly or indirectly, more than fifty

percent (50%) of the capital stock of any other corporation. There are no

options, contracts, commitments, understandings, or arrangements by which Ripley

National is bound to issue additional shares of its equity securities. Ripley

National is a national banking association and its deposits are insured up to

the applicable limits by the BIF.

 

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      2.04 Directors, Officers, and Principal Shareholders. The Ripley

Disclosure Memoranda contains a true and complete list of all directors,

executive officers, and Principal Shareholders of Ripley National.

 

      2.05 Authorization. The execution, delivery, and performance of this

Agreement and the Merger Agreement by Ripley National, and the consummation of

the transactions contemplated hereby and thereby have been duly approved by the

Board of Directors of Ripley National, subject to the adoption of the Merger

Agreement and this Agreement by the shareholders of Ripley National; and subject

to applicable regulatory approvals and expiration of waiting periods, if any.

 

      2.06 Absence of Defaults. Neither the execution and delivery of this

Agreement or the Merger Agreement, nor the consummation of the Merger, nor

compliance by Ripley National with any provisions hereof or thereof will

conflict with or result in a breach of any provisions of the articles or

certificate of incorporation, regulations, bylaws, or other charter documents of

Ripley National or result in a material breach or termination of, or accelerate

the performance required by, any note, bond, mortgage, lease, agreement, or

other instrument to which Ripley National is a party or by which Ripley National

may be bound.

 

      2.07 Financial Statements. Ripley National has delivered its Financial

Statements to Oak Hill Financial. The Financial Statements fairly present the

financial position, results of operations, and cash flows of Ripley National 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

Ripley National which are required in conformity with generally accepted

accounting principles to be reflected or disclosed in the Financial Statements

which have not been or will not be so reflected or disclosed.

 

      2.08 Title to Properties.

 

            (a) The Ripley Disclosure Memoranda sets forth a complete and

correct list of all of the Real Property. Ripley National has good and

marketable title to all of the Real Property listed as owned by it in the Ripley

Disclosure Memoranda and valid leasehold interests in all of the Real Property

listed as leased by it in the Ripley Disclosure Memoranda, 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 Ripley National do not violate any local zoning or similar land use laws, any

governmental regulations, or any restrictive covenants. To the knowledge of

Ripley National, after reasonable investigation, (i) the Real Property and the

use thereof by Ripley National do not encroach upon any property owned by any

other person, and (ii) no property owned by any other person encroaches upon any

of the Real Property.

 

            (b) Complete and correct copies of all deeds and leases relating to

the Real Property are included in the Ripley Disclosure Memoranda.

 

            (c) Each item of the personal property owned by Ripley National,

including without limitation all contractual rights and assets reflected in the

Financial Statements or acquired after June 30, 2004 (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 Ripley National), is owned by Ripley

National, free and clear of any lien or encumbrance, except for portions of the

investment portfolio pledged for public deposits.

 

      2.09 Absence of Undisclosed Liabilities. Except to the extent reflected or

reserved against on the Financial Statements, Ripley National has no

liabilities, whether absolute, accrued, contingent, or otherwise, due or to

become due, including without limitation any liabilities as guarantor under any

guaranty or liabilities for taxes, except liabilities and taxes incurred in the

ordinary course of business, which have had or will have a material adverse

effect on the business, financial condition, or results of operations of Ripley

National.

 

      2.10 Absence of Certain Changes. Since June 30, 2004, without the consent

of Oak Hill Financial or except as otherwise shown on the Ripley Disclosure

Memoranda Ripley National 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 charter documents;

 

            (b) merged with any other corporation or bank, or permitted any

other corporation or bank to merge into or consolidate with either of them;

acquired control over any other firm, bank, corporation, or organization; or

created any subsidiaries;

 

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             (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 Ripley National with respect to the capital stock or

other securities), other than in the ordinary course of business;

 

            (e) incurred any indebtedness, obligations, or liabilities, whether

absolute, accrued, contingent, or otherwise, including, without limitation,

liabilities as guarantor under any guaranty, other than indebtedness,

obligations, and liabilities incurred in the ordinary course of its business or

incurred under the contracts and commitments referred to in Section 2.18 hereof;

 

            (f) issued as borrower any promissory notes, guarantees, or other

evidences of indebtedness, other than in the ordinary course of business;

 

            (g) forgiven or cancelled any indebtedness or contractual

obligation, other than in the ordinary course of business;

 

            (h) mortgaged, pledged, or subjected to any lien or lease any of its

assets, tangible or intangible, or permitted or suffered any such asset to be

subjected to any lien or lease, other than in the ordinary course of business;

 

            (i) purchased, sold, transferred, liquidated, or otherwise acquired

or disposed of any assets or properties, or entered into any contract for any

such purchase, sale, transfer, liquidation, acquisition, or disposition, other

than in the ordinary course of business;

 

             (j) entered into any lease of real or personal property, other than

in the ordinary course of business;

 

            (k) declared, paid, made, or set apart any sum or property for, any

dividend or other distribution, or otherwise paid or transferred any funds or

property to its shareholders, except as contemplated in this Agreement or in the

Merger Agreement;

 

            (l) increased the wages, salaries, compensation, pension or other

fringe benefits, or perquisites payable to any executive officer in effect as of

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 Ripley National,

without cause and without penalty, upon notice of 30 days or less;

 

            (m) made any loans or loan commitments, other than in the ordinary

course of business, to any director, officer, or Principal Shareholder (or any

person or business entity controlled by or affiliated with such director,

officer, or Principal Shareholder);

 

            (n) modified, altered, amended, terminated, or withdrawn from

participation in any Employee Benefit Plan or any other plan or benefit provided

to one or more employees, or paid or distributed any sum from any such plan

except to participants in the ordinary course of the operation of the plan, or

made any payment or contribution to any such plan except as required by the

terms of such plan or consistent with past practices;

 

            (o) entered into any transaction involving the expenditure of more

than $50,000, other than in the ordinary course of business, except pursuant to

and in accordance with the terms of the contracts and commitments referred to in

Section 2.18 hereof;

 

            (p) adopted any change in any accounting policy or method;

 

            (q) revalued any asset or adjusted any reserve other than in the

ordinary course of business;

 

            (r) failed to keep in full force and effect insurance and bonds at

least equal in amount and scope of coverage to the insurance and bonds carried

on June 30, 2004;

 

<PAGE>

 

            (s) suffered any material adverse change in its business, financial

condition, income, assets, or liabilities;

 

            (t) suffered any damage, destruction, or loss (whether or not

covered by insurance) which has had a material adverse effect, in any case or in

the aggregate, on its business, financial condition, operations, projects,

properties, or assets;

 

            (u) suffered any strike, work stoppage, slow-down, or other labor

disturbance; or

 

            (v) suffered any loss of employees or customers which has had a

material adverse effect on its business, operations, or prospects.

 

      2.11 Taxes. Ripley National has filed or caused to be filed all federal

and other tax returns which are required to be filed and have paid or made

provision for payment of all taxes shown as due on such returns. No deficiencies

for any tax, assessment, or governmental charge have been proposed, asserted, or

assessed against Ripley National that have not been settled and paid. The

federal income tax returns of Ripley National have not been examined by the

Internal Revenue Service for any of the ten years preceding the date of this

Agreement.

 

      2.12 Labor Matters. Ripley National is not a party to any collective

bargaining or other union agreement with any of its employees, or is involved in

any labor dispute.

 

      2.13 Litigation. There is no action, suit, proceeding, or claim by any

governmental agency or other person or entity nor any investigation by any

governmental agency pending or, to the Knowledge of Ripley National, threatened

against (i) Ripley National, (ii) the assets, business, or goodwill of Ripley

National, or (iii) any director, officer, or Principal Shareholder of Ripley

National, in relation to the business of Ripley National or any such person's

capacity as a director, officer, or Principal Shareholder of Ripley National.

Ripley National knows of no basis or grounds for any such action, suit,

proceeding, claim, or investigation. Ripley National is not subject to any

supervisory agreement, consent order or decree, cease and desist order, or other

restriction on the business or assets of Ripley National, except a consent order

issued by the OCC on April 20, 2004 (the "Consent Order").

 

      2.14 Environmental Matters.

 

            (a) To the Knowledge of Ripley National, Ripley National is and has

been at all times in substantial compliance with all applicable Environmental

Laws and Ripley National has not engaged in any activity resulting in a material

violation of any applicable Environmental Law. No orders, hearings, actions, or

other proceedings by or before any court or governmental agency in which Ripley

National is a party are pending or, to the Knowledge of Ripley National,

threatened in connection with any alleged violation of any applicable

Environmental Law (i) by Ripley National or (ii) in relation to any part of the

Real Property and Ripley National 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 Ripley National, threatened at any time by any third

party against Ripley National relating to damage, contribution, cost recovery,

compensation, loss, or injury resulting from any Hazardous Substance. To the

Knowledge of Ripley National, Ripley National 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 Ripley National for the storage or disposal

of Hazardous Substances nor to the Knowledge of Ripley National, is any of the

Real Property contaminated by any Hazardous Substance. To the Knowledge of

Ripley National, none of the Real Property has in the past contained or

presently contains any underground storage tanks. To the Knowledge of Ripley

National, Ripley National has no interest, direct or indirect, in any property

owned by a third party which has been contaminated by Hazardous Substances

(excluding any property as to which the sole interest of Ripley National is that

of a lien holder or mortgagee, but including any property as to which title has

been taken by Ripley National pursuant to mortgage foreclosure or similar

proceeding and any property as to which Ripley National has participated in the

financial management to a degree sufficient to influence the property's

treatment of Hazardous Substances).

 

            (b) To the Knowledge of Ripley National, the representations set

forth in paragraph (a) above are also true and correct in relation to any and

all real property owned or leased by it at any time prior to the date of this

Agreement, together with any improvements located thereon.

 

      2.15 Community Reinvestment Act Compliance. Ripley National is in

compliance with the applicable provisions of the CRA and the regulations

promulgated thereunder, and has received a CRA rating of satisfactory or better

from the OCC. Ripley National knows of no fact or circumstance or set of facts

or circumstances which

 

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would cause Ripley National to fail to comply with such provisions or to cause

the CRA rating of Ripley National to fall below satisfactory, except as

described in the Consent Order.

 

      2.16 Compliance with Laws. Ripley National holds 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 it to carry on its respective businesses as they

are presently conducted. To the Knowledge of Ripley National, Ripley National

has conducted its businesses so as to comply in all material respects with all

applicable statutes, regulations, rules, and orders, except as described in the

Consent Order.

 

      2.17 Information Provided by Ripley National. None of the information

supplied or to be supplied by Ripley National for inclusion in the application

for approval, or any other document to be filed with the FDIC, the OCC, the

Federal Reserve Board, the Division of Financial Institutions, the SEC, or any

other federal or state regulatory authority in connection with the transactions

contemplated herein or in the Merger Agreement is or will be false or misleading

with respect to any material fact, or omits or will omit any material fact

necessary in order to make the statements therein not misleading.

 

      2.18 Material Contracts.

 

            (a) The Ripley Disclosure Memoranda contains a complete and correct

list of all written or oral agreements, leases, and other obligations and

commitments of the following types, to which either Ripley National is a party,

by which Ripley National or any of its property is bound, or which has been

authorized by Ripley National:

 

                  (i) promissory notes, guaranties, mortgages, security

      agreements, or other evidences of indebtedness of Ripley National;

 

                  (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 Ripley National 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 Ripley

      National and used in connection with the business of such entity;

 

                  (x) all policies of insurance and fidelity bonds of Ripley

      National;

 

                  (xi) all direct or indirect loans or guaranties of loans to

      any director, officer, or Principal Shareholder of Ripley National or

      their spouses or children o