Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-159454
CALCULATION
OF REGISTRATION FEE
|
Proposed
|
|||||||||||||||||||
|
Maximum
|
Proposed
Maximum
|
||||||||||||||||||
|
Title
of each Class of Securities
|
Amount
to be
|
Offering
Price
|
Aggregate
Offering
|
Amount
of
|
|||||||||||||||
|
to
be Registered
|
Registered
|
Per
Unit
|
Price
|
Registration
Fee
|
|||||||||||||||
|
Common
Shares, without par value (1)
|
143,968
|
$76.41
(2)
|
$10,500,000(2)
|
$749
|
|||||||||||||||
|
Series
A Common Share Warrants (1) (3)
|
—
|
(2)
|
(2)
|
—
|
|||||||||||||||
|
Series
B Common Share Warrants (1) (3)
|
—
|
(2)
|
(2)
|
—
|
|||||||||||||||
|
Total
|
143,968
|
$76.41
|
$10,500,000
|
$749
|
|||||||||||||||
|
(1)
|
35,992
of our common shares, without par value (the “Common Shares”), being
registered are purchasable upon exercise of the Series A Common Share
Warrants (the “Series A Warrants”) being registered. An
additional 35,992 of our Common Shares being registered are purchasable
upon exercise of the Series B Common Share Warrants (the “Series B
Warrants”) (the Series A Warrants and the Series B Warrants are
collectively referred to as the “Warrants”) being registered. In addition
to the number of Common Shares stated in the table above, there are
registered, pursuant to Rule 416(a) under the Securities Act of 1933, as
amended, such number of additional Common Shares, of a currently
indeterminable number, as may from time to time become issuable by reason
of share splits, share dividends or similar transactions and certain
anti-dilution provisions set forth in the Warrants.
|
|
(2)
|
In
accordance with Rule 457(i) under the Securities Act of 1933, as amended,
the offering price per share for the 71,984 Common Shares purchasable upon
the exercise of the Warrants was calculated on the basis of the $76.41 per
share exercise price of the Warrants plus the $2.44 offering price for
one-half of a Series A Warrant and one-half of a Series B Warrant. The
offering price for the other 71,984 Common Shares being registered was
calculated on the basis of the $67.02 per share purchase price of such
Common Shares.
|
|
(3)
|
Pursuant
to Rule 457(i) under the Securities Act of 1933, as amended, no additional
fee is payable for the Series A Warrants or the Series B
Warrants.
|
$5,000,000
Common
Shares
Series
A Common Share Warrants
Series
B Common Share Warrants
We are
offering to certain investors, pursuant to this prospectus supplement and the
accompanying prospectus, up to an aggregate of 71,984 of our common shares,
without par value (the “Common Shares”), Series A Common Share Warrants, which
are exercisable within six months of the closing date, to purchase up to an
aggregate of 35,992 Common Shares (“Series A Warrants”), and Series B
Common Share Warrants, which are exercisable within 12 months of the
closing date, to purchase up to an aggregate of 35,992 Common Shares
(“Series B Warrants”) (the Series A Warrants and the Series B Warrants are
collectively referred to in this prospectus supplement as the
“Warrants”). The purchase price for each unit of a Common Share
together with one-half of a Series A Warrant and one-half of a Series B Warrant
is $69.46 (the “Per Share Purchase Price”). The Common Shares and the
Warrants will be purchased together as a unit in this offering. Each
Warrant entitles the investor to purchase one Common Share at an exercise price
of $76.41. This prospectus supplement also relates to the
offering of Common Shares issuable upon the exercise of the Warrants issued in
this offering.
The
Common Shares are listed on NYSE Amex under the symbol “PRK”. On December 7,
2010, the closing price for the Common Shares was $69.91. The Warrants will not
be listed on any national securities exchange.
Rodman &
Renshaw, LLC acted as the exclusive placement agent for this offering. The
placement agent is not purchasing or selling any of these securities and it is
not required to sell any specific number or dollar amount of
securities. The placement agent has agreed to use its reasonable best
efforts to sell the securities offered by this prospectus supplement. We have
agreed to pay the placement agent the placement agent fees set forth in the
table below. This table does not reflect the placement agent fee equal to 3% of
the aggregate cash exercise price received by Park in respect of the exercise,
if any, of the Warrants.
|
Per
Share Purchase Price
|
Total
|
||
|
Public
Offering Price for Common Shares and Warrants
|
$69.46 *
|
$5,000,000
|
|
|
Placement
Agent Fees
|
$
2.08 *
|
$ 150,000
|
|
|
Proceeds,
Before Expenses, To Us
|
$67.38 *
|
$4,850,000
|
|
* These amounts have been rounded to
the nearest cent.
Investing
in our Common Shares and the Warrants involves risks. See “RISK FACTORS”
beginning on page S-7 of this prospectus supplement and in the documents
incorporated by reference herein for a discussion of factors you should
carefully consider before buying our Common Shares and the
Warrants.
Neither
the Securities and Exchange Commission, nor any state securities commission nor
any bank regulatory agency has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus supplement or the
accompanying prospectus. Any representation to the contrary is a
criminal offense. These securities are not deposits or accounts or
other obligations of any of our bank or non-bank subsidiaries and are not
insured or guaranteed by the Federal Deposit Insurance Corporation, the Board of
Governors of the Federal Reserve System or any other governmental or regulatory
agency or instrumentality.
Rodman
& Renshaw, LLC
The date
of this prospectus supplement is December 8, 2010
TABLE
OF CONTENTS
You
should rely only on the information contained or incorporated by reference in
this prospectus supplement, the accompanying prospectus or any related free
writing prospectus that we may provide to you. We have not, and the
placement agent has not, authorized anyone to provide you with information that
is different. This document may only be used where it is legal to
sell these securities. You should not assume that any information
contained in or incorporated by reference in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the respective
dates thereof.
It
is important for you to read and consider all of the information contained in
this prospectus supplement, the accompanying prospectus and the information
incorporated by reference herein and therein before making an investment
decision. Please carefully read this prospectus supplement, the
accompanying prospectus and the information contained in the documents referred
to under the heading “WHERE YOU CAN FIND MORE
INFORMATION.”
This
document consists of two parts. The first part is this prospectus
supplement, which describes the terms of this offering. The second
part is the accompanying prospectus, which provides general information about us
and our securities, some of which may not apply to this offering. This
prospectus supplement and the accompanying prospectus are part of a Registration
Statement that we have filed with the Securities and Exchange Commission (the
“SEC”), using a “shelf” registration process.
Both this
prospectus supplement and the accompanying prospectus include important
information about us, our Common Shares, the Warrants and other information you
should know before investing in our Common Shares and the
Warrants. This prospectus supplement also adds to, updates and
changes information contained in the accompanying prospectus. To the
extent that any statement that we make in this prospectus supplement is
inconsistent with the statements made in the accompanying prospectus, the
statements made in the accompanying prospectus are deemed modified or superseded
by the statements made in this prospectus supplement. You should read
both this prospectus supplement and the accompanying prospectus as well as the
additional information described below under the captions “WHERE YOU CAN FIND MORE
INFORMATION” and “INFORMATION INCORPORATED BY
REFERENCE” before investing in our Common Shares and the Warrants. The
words “Park,” “Company,” “we,” “our,” “ours” and “us” as used herein refer to
Park National Corporation and its subsidiaries, unless otherwise
stated.
We file
annual, quarterly and current reports, proxy statements and other information
with the SEC. The reports, proxy statements and other information
that we file with the SEC are available to the public from the SEC’s Internet
site at http://www.sec.gov. Copies
of certain information filed by us with the SEC are also available through our
Internet site at http://www.parknationalcorp.com. The
information on the SEC Internet site and on our Internet site is not a part of
this prospectus supplement. You may also read and copy any document
we file with the SEC by visiting the SEC’s Public Reference Room in Washington,
D.C. The SEC’s address in Washington, D.C. is 100 F Street N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
information on the operation of the Public Reference Room. You may
also inspect our SEC reports and other information at NYSE Amex, 30 Broad
Street, 5th Floor, New York, New York 10004.
The SEC
allows us to “incorporate by reference” into this prospectus supplement
information that we file with the SEC. This means that we can
disclose important information to you by referring you to those
documents. Any information we incorporate in this manner is
considered part of this prospectus supplement except to the extent updated and
superseded by information contained in or incorporated by reference into this
prospectus supplement. Except as otherwise noted below, we incorporate by
reference the following documents that we have filed with the SEC under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”):
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·
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our
Annual Report on Form 10-K for the fiscal year ended December 31,
2009;
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·
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our
Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2010, June 30, 2010 and September 30,
2010;
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·
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our
Current Reports on Form 8-K filed/furnished on January 25, 2010, January
28, 2010, February 16, 2010, April 16, 2010, April 19, 2010, April 20,
2010, April 30, 2010, July 19, 2010, July 27, 2010, October 18, 2010,
November 1, 2010 and November 5,
2010;
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|
·
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our
definitive proxy statement for our 2010 Annual Meeting of Shareholders;
and
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|
|
·
|
the
description of our Common Shares which is contained in “ITEM 8.01 OTHER
EVENTS.” of our Current Report on Form 8-K filed on May 14, 2009,
together with any subsequent registration statement or report filed for
the purpose of updating such
description.
|
We also
incorporate by reference each of the following documents that we will file with
the SEC after the date of this prospectus supplement until this offering is
completed:
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|
·
|
any
reports filed under Section 13(a) or Section 13(c) of the
Exchange Act;
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|
|
·
|
any
document filed under Section 14 of the Exchange Act;
and
|
|
|
·
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any
reports filed under Section 15(d) of the Exchange
Act.
|
Pursuant
to General Instruction B of Form 8-K, any information furnished pursuant to
“Item 2.02. Results of Operations and Financial Condition” or “Item
7.01. Regulation FD Disclosure” of Form 8-K is not deemed to be
“filed” for purposes of Section 18 of the Exchange Act, and we are not
incorporating by reference any information furnished pursuant to Item 2.02 or
Item 7.01 (or former Item 9 or Item 12) of Form 8-K into this prospectus
supplement.
S-1
Statements
contained in this prospectus supplement as to the contents of any contract,
agreement or other document referred to in this prospectus supplement do not
purport to be complete, and, where reference is made to the particular
provisions of that contract, agreement or other document, those references are
qualified in all respects by reference to all of the provisions contained in
that contract, agreement or other document. Any statement contained
in a document incorporated by reference, or deemed to be incorporated by
reference, into this prospectus supplement will be deemed to be modified or
superseded for purposes of this prospectus supplement to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated by reference in this prospectus supplement modifies or
supersedes that statement. Any such statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus supplement.
We will
provide without charge, upon written or oral request, a copy of any or all of
the documents that are incorporated by reference into this prospectus supplement
(other than exhibits, unless they are specifically incorporated by reference in
the documents) and a copy of any or all other contracts, agreements or documents
which are referred to in this prospectus supplement. Requests should
be directed to: Park National Corporation, 50 North Third Street,
Newark, Ohio 43055, Attention: John W. Kozak, Chief
Financial Officer, telephone number (740) 349-8451.
S-2
|
You
should read the following summary in conjunction with the more detailed
information contained in this prospectus supplement and in the
accompanying prospectus, including the information incorporated by
reference in each. To the extent the following information is
inconsistent with the information in the accompanying prospectus, you
should rely on the following information. You should pay
special attention to the “RISK
FACTORS” section beginning on page S-7 of this prospectus
supplement, “Item 1A. Risk Factors” in Part I of our Annual Report on Form
10-K for the fiscal year ended December 31, 2009, which is incorporated by
reference herein, “Item 1A. Risk Factors” in Part II of our Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2010, which
is incorporated by reference herein, “Item 1A. Risk Factors” in Part II of
our Quarterly Report on Form 10-Q for the quarterly period ended June 30,
2010, which is incorporated by reference herein, “Item 1A. Risk Factors”
in Part II of our Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2010, which is incorporated by reference herein, and
the risks described in the other documents incorporated by reference
herein to determine whether an investment in our Common Shares and the
Warrants is appropriate for you.
Park
National Corporation
We
are a bank holding company headquartered in Newark, Ohio. Our
Ohio-based banking operations are conducted through 124 offices across 29
Ohio counties (Ashland, Athens, Butler, Champaign, Clark, Clermont,
Coshocton, Crawford, Darke, Fairfield, Fayette, Franklin, Greene,
Hamilton, Hocking, Holmes, Knox, Licking, Madison, Marion, Mercer, Miami,
Montgomery, Morrow, Muskingum, Perry, Richland, Tuscarawas and Warren) and
one Kentucky county (Boone) through our subsidiary The Park National Bank
and its divisions which include Fairfield National Bank, Richland Bank,
Century National Bank, First-Knox National Bank, Farmers and Savings Bank,
United Bank, Second National Bank, Security National Bank, Unity National
Bank and The Park National Bank of Southwest Ohio & Northern
Kentucky. Our Florida and Alabama-based banking operations are
conducted through 17 offices across five Florida counties (Bay, Gulf,
Okaloosa, Santa Rosa and Walton) and one Alabama county (Baldwin) through
our subsidiary Vision Bank and its divisions which include Vision Bank
headquartered in Panama City, Florida and the Vision Bank Division of Gulf
Shores, Alabama. Our banking subsidiaries engage in the
commercial banking and trust business primarily in small and medium
population Ohio communities and markets served through Vision Bank
operations in Alabama and Florida. Park’s other subsidiaries
include Scope Leasing, Inc. (d.b.a. Scope Aircraft Finance), Guardian
Financial Services Company (d.b.a. Guardian Finance Company) and Park
Title Agency, LLC, and they operate through an aggregate of eight offices
in Ohio. As of September 30, 2010, Park and our subsidiaries
had 1,996 full-time equivalent employees. We were incorporated under the
laws of the State of Ohio in 1992. Our principal executive
offices are located at 50 North Third Street, Newark, Ohio 43055, and
our telephone number is (740) 349-8451. Our Internet site
can be accessed at http://www.parknationalcorp.com. Information
contained in our Internet site does not constitute part of, and is not
incorporated into, this prospectus supplement or the accompanying
prospectus.
At
September 30, 2010, we had consolidated total assets of approximately $7.1
billion, total loans of approximately $4.7 billion, total deposits of
approximately $5.1 billion and total shareholders’ equity of approximately
$757 million.
Recent
Developments
On
November 1, 2010, Park issued a news release announcing the exercise
of outstanding Series B Common Share Warrants and the issuance of an
aggregate of 187,200 Common Shares. Park received net proceeds
from the exercise of such Series B Common Share Warrants in the aggregate
amount of $12.3 million, net of the warrant solicitation fees payable to
Rodman & Renshaw, LLC under the terms of the Letter Agreement,
dated October 26, 2009, between Park and Rodman & Renshaw,
LLC. The Common Shares issued by Park upon the exercise of the
Series B Common Share Warrants were issued pursuant to a prospectus
supplement filed on October 28, 2009 with the SEC in connection with
a takedown from Park’s Registration Statement on Form S-3 (Registration
File No. 333-159454), which was declared effective by the SEC on
May 22, 2009. Of the 250,000 Common Shares subject to the
Series B Common Share Warrants issued pursuant to the
October 28, 2009 prospectus supplement, 187,200 or 75% were acquired
upon exercise of a portion of the Series B Common Share
Warrants. The remaining portion of the Series B Common
Share Warrants issued in October 2009 (covering 62,800 common shares)
expired on October 30, 2010 and can no longer be
exercised.
On
October 18, 2010, we announced our results of operations for our third
quarter ended September 30, 2010. For the quarter, we
reported:
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|
·
|
net
income available to common shareholders of $18.1 million, or $1.19 per
diluted share, compared with net income available to common shareholders
of $17.8 million, or $1.25 per diluted share, for the third quarter of
2009; and
|
|
·
|
returns
on average common equity and average assets of 10.90% and 1.02%,
respectively, compared with 12.18% and 1.01%,
respectively, for the third quarter of 2009.
|
S-3
|
On
October 18, 2010, we also announced that our Board of Directors
declared a cash dividend of $0.94 per share in respect of our Common
Shares, payable to shareholders of record as of the close of business on
November 24, 2010. The dividend will be paid on December 10,
2010.
For
additional information, see our Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2010, which is incorporated herein by
reference.
The
Offering
|
||
|
Issuer
|
Park
National Corporation
|
|
|
Common
Shares offered
|
Up
to 71,984 Common Shares, at a purchase price of $67.02 for each Common
Share. This prospectus supplement also relates to the offering of the
Common Shares issuable upon the exercise of the Warrants. All of the
Common Shares which are the subject of the offering will be issued from
Common Shares that we hold as treasury shares.
|
|
|
Series
A Warrants offered
|
Warrants,
exercisable within six months of the closing date, to purchase up to an
aggregate of 35,992 Common Shares, for an exercise price of $76.41 per
Common Share (110% of the Per Share Purchase Price). Each Series A
Warrant will be sold with an equal number of Series B Warrants for a
purchase price of $2.44 for one-half of a Series A Warrant and one-half of
a Series B Warrant. Each Series A Warrant entitles the
investor to purchase one Common Share.
|
|
|
Series
B Warrants offered
|
Warrants,
exercisable within 12 months of the closing date, to purchase up to
an aggregate of 35,992 Common Shares for an exercise price of $76.41 per
Common Share (110% of the Per Share Purchase Price). Each Series B
Warrant will be sold with an equal number of Series A Warrants for a
purchase price of $2.44 for one-half of a Series B Warrant and one-half of
a Series A Warrant. Each Series B Warrant entitles the
investor to purchase one Common Share.
|
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Dividends
|
We
currently pay quarterly dividends on our Common Shares. We paid
a quarterly cash dividend of $0.94 per Common Share on September 10, 2010,
June 10, 2010, March 10, 2010 and December 10, 2009. On October
18, 2010, our Board of Directors declared a cash dividend of $0.94 per
Common Share payable on December 10, 2010 to holders of Common Shares of
record on November 24, 2010. The declaration and payment of
future dividends on our Common Shares will be at the discretion of our
Board of Directors. Our dividend payments may be changed,
reduced or eliminated altogether and we are currently subject to a
quarterly cap of $0.94 per Common Share as a result of our participation
in the Capital Purchase Program (the “CPP”) of the United States
Department of the Treasury (the “U.S. Treasury”). See “RISK
FACTORS”
beginning on page S-7 of this prospectus supplement, “Item 1A. Risk
Factors” in Part I of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2009, which is incorporated by reference herein, “Item
1A. Risk Factors” in Part II of our Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2010, which is incorporated by reference
herein, “Item 1A. Risk Factors” in Part II of our Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2010, which is incorporated
by reference herein, “Item 1A. Risk Factors” in Part II of our Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2010,
which is incorporated by reference herein, and other information included
or incorporated by reference in this prospectus supplement and the
accompanying prospectus for information regarding restrictions on our
ability to pay dividends on our Common Shares.
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|
|
Use
of proceeds
|
We
intend to use the net proceeds from the offerings pursuant to this
prospectus supplement for general corporate purposes, which may include
but are not limited to working capital, acquisition opportunities, capital
expenditures, investments in or loans to our subsidiaries, payment and
refinancing of debt, including outstanding short-term indebtedness, if
any, and satisfaction of other obligations. We are also
considering the possibility at some future date of seeking permission to
use a portion of the net proceeds from the offerings conducted pursuant to
this prospectus supplement to (1) repay a portion of the funding received
in connection with the Series A Preferred Shares (as defined below) and
(2) repurchase the Treasury Warrant (as defined below), if and when
applicable circumstances indicate that such repayment and repurchase are
permitted and appropriate.
|
|
S-4
|
Risk
factors
|
See
“RISK
FACTORS”
beginning on page S-7 of this prospectus supplement, “Item 1A. Risk
Factors” in Part I of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2009, which is incorporated by reference herein, “Item
1A. Risk Factors” in Part II of our Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2010, which is incorporated by reference
herein, “Item 1A. Risk Factors” in Part II of our Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2010, which is
incorporated by reference herein, “Item 1A. Risk Factors” in Part II of
our Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2010, which is incorporated by reference herein, and the risks
described in the other documents incorporated by reference herein and
other information included or incorporated by reference in this prospectus
supplement for a discussion of factors you should carefully consider
before buying our Common Shares and the Warrants.
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|
|
NYSE
Amex symbol
|
PRK
|
|
S-5
This
prospectus supplement contains or incorporates by reference forward-looking
statements that set forth anticipated results based on our management’s plans
and assumptions. From time to time, we also provide forward-looking
statements in other materials we release to the public as well as oral
forward-looking statements. Such statements give our current
expectations or forecasts of future events; they do not relate strictly to
historical or current facts. We have tried, wherever possible, to
identify such statements by using words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions
in connection with any discussion of future operating or financial
performance.
We cannot
guarantee that any forward-looking statement will be realized, although our
management believes that we have been prudent in our plans and
assumptions. Achievement of future results is subject to risks,
uncertainties and potentially inaccurate assumptions. If known or
unknown risks or uncertainties should materialize, or if underlying assumptions
should prove inaccurate, actual results could differ materially from past
results and those anticipated, estimated or projected. You should
bear this in mind in reading this prospectus supplement. Factors that
might cause such differences include, but are not limited to:
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|
·
|
deterioration
in the asset value of our loan portfolio may be worse than expected due to
a number of factors, such as adverse changes in economic conditions that
impair the ability of borrowers to repay their loans, the underlying value
of the collateral could prove less valuable than assumed and cash flows
may be worse than expected;
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·
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our
ability to execute our business plan successfully and within the expected
timeframe;
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·
|
changes
in general economic and financial market conditions, and weakening in the
economy, specifically the real estate market and credit markets, either
nationally or in the states in which we do business, may be worse than
expected which could decrease the demand for loan, deposit and other
financial services and increase loan delinquencies and
defaults;
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·
|
the
effects of the Gulf of Mexico oil
spill;
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·
|
deterioration
in the asset value of our other real estate
owned;
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·
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changes
in consumer spending, borrowing and saving
habits;
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·
|
the
effect of fiscal and governmental policies of the United States federal
government;
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·
|
changes
in market rates and prices may adversely impact the value of securities,
loans, deposits and other financial instruments and the interest rate
sensitivity of our consolidated balance
sheet;
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·
|
changes
in unemployment;
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|
·
|
asset/liability
repricing risks and liquidity
risks;
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·
|
our
liquidity requirements could be adversely affected by changes in our
assets and liabilities;
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·
|
competitive
factors among financial institutions increase significantly, including
product and pricing pressures and our ability to attract, develop and
retain qualified bank
professionals;
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·
|
the
nature, timing and effect of changes in banking regulations or other
regulatory or legislative requirements affecting our business, including
changes in laws and regulations concerning taxes, accounting, banking,
securities and other aspects of the financial services industry,
specifically the Dodd-Frank Wall Street Reform and Consumer Protection Act
of 2010;
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·
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demand
for loans in the respective market areas served by Park and our
subsidiaries; and
|
|
|
·
|
other
external developments materially affecting our operational and financial
performance.
|
We
undertake no obligation publicly to update forward-looking statements, whether
as a result of new information, future events or otherwise. You are
advised, however, to consult any further disclosures we make on related subjects
in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed with or furnished to the
SEC. Also note that we provide cautionary discussion of risks,
uncertainties and possibly inaccurate assumptions relevant to our business in
our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K incorporated by reference herein and in prospectus
supplements and other offering materials. These are factors that,
individually or in the aggregate, management believes could cause our actual
results to differ materially from expected and historical results. We
note these factors for investors as permitted by the Private Securities
Litigation Reform Act of 1995. You should understand that it is not
possible to predict or identify all such factors. Consequently, you
should not consider such disclosures to be a complete discussion of all
potential risks or uncertainties.
S-6
An
investment in our Common Shares and the Warrants involves risks. You
should carefully consider the following risk factors and other information
contained in this prospectus supplement and the accompanying prospectus,
including the information incorporated by reference in each, before making an
investment decision. Certain risks related to us and our business are
described in “Item 1A. Risk Factors” in Part I of our Annual Report
on Form 10-K for the fiscal year ended December 31, 2009, “Item 1A. Risk
Factors” in Part II of our Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2010, “Item 1A. Risk Factors” in Part II of
our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2010
and “Item 1A. Risk Factors” in Part II of our Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 2010. The risks discussed
below also include forward-looking statements, and our actual results may differ
materially from those discussed in these forward-looking
statements. Risks and uncertainties not presently known to us or that
we currently deem immaterial also may impair our business
operations.
Risks
Relating to Park and our Subsidiaries
The
impact of the oil spill in the Gulf of Mexico could adversely affect our
earnings.
Park
continues to monitor developments related to the oil spill in the Gulf of
Mexico, including the extent of the potential effects on our customers and the
areas in which they operate. Park and Vision Bank management are working very
closely with those borrowers who could potentially be impacted by the oil spill,
assisting them through the claims process. Many of Vision Bank's loan customers
that were negatively impacted by the oil spill have filed claims with BP and
have received reimbursement for these claims in the last few months. However,
management remains unsure how many loan customers, if any, will not receive
reimbursement for the claims that they have filed with BP. The future effects of
the oil spill could possibly impact Park and our earnings, but until more is
known about the impact on our borrowers, we are unable to determine whether
there will be any negative impact on their ability to repay contractual
principal and interest.
Changes
in economic and political conditions could adversely affect our earnings, as our
borrowers’ ability to repay loans and the value of the collateral securing our
loans decline.
Our
success depends, to a certain extent, upon economic and political conditions,
local and national, as well as governmental fiscal and monetary policies.
Conditions such as inflation, recession, unemployment, changes in interest
rates, money supply and other factors beyond our control may adversely affect
our asset quality, deposit levels and loan demand and, therefore, our earnings
and our capital. Because we have a significant amount of real estate loans,
additional decreases in real estate values could adversely affect the value of
property used as collateral and our ability to sell the collateral upon
foreclosure. Adverse changes in the economy may also have a negative effect on
the ability of our borrowers to make timely repayments of their loans, which
would have an adverse impact on our earnings and cash flows. The substantial
majority of the loans made by our subsidiaries are to individuals and businesses
in Ohio or in Gulf Coast communities in Alabama and the Florida panhandle.
Consequently, a significant continued decline in the economy in Ohio or in
Gulf Coast communities in Alabama or the panhandle of Florida could have a
materially adverse effect on our financial condition and results of
operations.
As
disclosed earlier within our Quarterly Report on Form 10-Q for the period ended
September 30, 2010, we continue to experience difficult credit conditions in the
Alabama and Florida markets in which we operate. For the first nine months of
2010, Vision Bank has experienced $27.2 million in net loan charge-offs, or an
annualized 5.4% of average loans. For the first nine months of 2009, net loan
charge-offs for Vision Bank were $19.1 million, or an annualized 3.68% of
average loans. The loan loss provision for Vision Bank was $27.7 million for the
nine months ended September 30, 2010. Park’s nonperforming loans, defined as
loans that are 90 days past due, nonaccrual and renegotiated loans, were $247.9
million or 5.32% of total loans at September 30, 2010, $248.5 million or 5.35%
of loans at December 31, 2009, $212.1 million or 4.59% of total loans at
September 30, 2009 and $167.8 million or 3.74% of total loans at December 31,
2008. At September 30, 2010, Vision Bank had non-performing loans of $138.8
million or 21.3% of total loans, compared to $159.6 million or 23.58% of total
loans at December 31, 2009 and $124.9 million or 18.3% of total loans at
September 30, 2009. While we continue to generate net earnings on a consolidated
basis, Vision Bank continues to generate net losses and may generate net losses
in the future. For the nine months ended September 30, 2010, Vision Bank had a
net loss of $19.5 million and Park contributed capital of $36 million to Vision
Bank. Given the current economic environment in Vision Bank’s market,
Park’s management
has agreed to maintain the leverage ratio at Vision Bank at 12% and to maintain
the total risk-based capital ratio at Vision Bank at 16%. It remains uncertain
when the negative credit trends at Vision Bank will reverse. As a result, Park’s
future earnings continue to be susceptible to further declining credit
conditions in the markets in which we operate.
S-7
Legislative
or regulatory changes or actions could adversely impact us or the businesses in
which we are engaged.
The
financial services industry is extensively regulated. We are subject to
extensive state and federal regulation, supervision and legislation that govern
almost all aspects of our operations. Laws and regulations may change from time
to time and are primarily intended for the protection of consumers, depositors,
federal deposit insurance funds and the banking system as a whole, and not to
benefit our shareholders. The impact of any changes to laws and regulations or
other actions by regulatory agencies may negatively impact us or our ability to
increase the value of our business. Regulatory authorities have extensive
discretion in connection with their supervisory and enforcement activities,
including the imposition of restrictions on the operation of an institution, the
classification of assets held by an institution and the adequacy of an
institution’s allowance for loan losses. Additionally, actions by regulatory
agencies against us could cause us to devote significant time and resources to
defending our business and may lead to penalties that materially affect us and
our shareholders.
In light
of current conditions in the global financial markets and the global economy,
regulators have increased their focus on the regulation of the financial
services industry. Most recently, Congress and the federal agencies regulating
the financial services industry have acted on an unprecedented scale in
responding to the stresses experienced in the global financial markets. Some of
the laws enacted by Congress and regulations promulgated by federal regulatory
agencies subject us and other financial institutions to which such laws and
regulations apply to additional restrictions, oversight and costs that may have
an impact on our business, results of operations or the trading price of our
Common Shares.
The
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the
“Dodd-Frank Act”) was signed into law on July 21, 2010 and although it became
generally effective in July, many of its provisions have extended implementation
periods and delayed effective dates and will require extensive rulemaking by
regulatory authorities as well as require multiple studies to be conducted over
the next one to two years. The Dodd-Frank Act, including future rules
implementing its provisions and the interpretation of those rules, could result
in a number of adverse impacts. The levels of capital and liquidity with which
Park and our subsidiaries must operate may be subject to more stringent capital
requirements. Park may be subjected to new and/or higher fees paid to various
regulatory entities, including but not limited to deposit insurance premiums to
the Federal Deposit Insurance Corporation (the “FDIC”). Revenue on interchange
fees may decrease as a result of the level of fees the Federal Reserve deems
“reasonable and proportional” when it establishes regulation standards on the
amount of interchange fees that can be charged to merchants for electronic debit
card transactions. Park may also be subject to additional regulations under the
newly established Bureau of Consumer Financial Protection which was given broad
authority to implement new consumer protection regulations. These and other
provisions of the Dodd-Frank Act may place large additional costs on Park,
impede its growth opportunities and place it at a competitive disadvantage.
A
default by another larger financial institution could adversely affect financial
markets generally.
The
commercial soundness of many financial institutions may be closely interrelated
as a result of relationships between the institutions. As a result, concerns
about, or a default or threatened default by, one institution could lead to
significant marketwide liquidity and credit problems, losses or defaults by
other institutions. This is sometimes referred to as “systemic risk” and may
adversely affect our business.
Changes
in the general economic conditions and real estate valuations in our primary
market areas could adversely impact results of operations, financial condition
and cash flows.
Our
lending and deposit gathering activities are concentrated primarily in Ohio and
in markets served through Vision Bank operations in Alabama and Florida and our
success depends on the general economic conditions of these areas, particularly
given that a significant portion of our lending relates to real estate located
in these regions. Real estate values in these Ohio and, more dramatically,
Gulf Coast communities have been negatively impacted by the ongoing
economic crisis. Additional adverse changes in the regional and general economic
conditions could reduce our growth rate, impair our ability to collect payments
on loans, increase loan delinquencies, increase problem assets and foreclosures,
increase claims and lawsuits, increase devaluations recognized within our other
real estate owned portfolio, decrease the demand for our products and services
and decrease the value of collateral for loans, especially real estate values,
which could have a material adverse effect on our financial condition, results
of operations and cash flows.
S-8
Because
of our participation in the Capital Purchase Program, we are subject to several
restrictions, including restrictions on our ability to declare or pay dividends
and repurchase our Common Shares and restrictions on compensation paid to our
executive officers and certain other most highly-compensated
employees.
We
participate in the CPP. For more information regarding our participation in the
CPP, see the discussion under the caption “Recent Developments - Participation
in Capital Purchase Program Enacted as part of Troubled Assets Relief Program”
in “Item 1 - Business” of Part I of our Annual Report on Form 10-K for the
fiscal year ended December 31, 2009.
To
finalize Park’s participation in the CPP, Park and the U.S. Treasury entered
into the Securities Purchase Agreement. Pursuant to the Securities Purchase
Agreement, Park issued and sold to the U.S. Treasury (i) 100,000 of Park’s
Fixed Rate Cumulative Perpetual Preferred Shares, Series A, each without
par value and having a liquidation preference of $1,000 per share (the
“Series A Preferred Shares”) and (ii) a warrant (the “Treasury
Warrant”) to purchase 227,376 Park Common Shares, at an exercise price of $65.97
per share (subject to certain anti-dilution and other adjustments), for an
aggregate purchase price of $100.0 million in cash. The Securities Purchase
Agreement limits our ability to declare or pay dividends on any of our shares.
Specifically, we are unable to declare dividend payments on Common Shares,
junior preferred shares or pari passu preferred shares if we are in arrears on
the payment of dividends on the Series A Preferred Shares. Further, we are
not permitted to increase dividends on our Common Shares above the amount of the
last quarterly cash dividend per Common Share declared prior to October 14, 2008
($0.94 per Common Share) without the U.S. Treasury’s approval until December 23,
2011, unless all of the Series A Preferred Shares have been redeemed or
transferred by the U.S. Treasury to unaffiliated third parties. In addition, our
ability to repurchase our shares is restricted. The consent of the U.S. Treasury
generally is required for us to make any share repurchase (other than in
connection with the administration of any employee benefit plan in the ordinary
course of business and consistent with past practice and certain other limited
circumstances specified in our Articles of Incorporation) until December 23,
2011, unless all of the Series A Preferred Shares have been redeemed or
transferred by the U.S. Treasury to unaffiliated third parties. Further, Common
Shares, junior preferred shares or pari passu preferred shares may not be
repurchased if we are in arrears on the payment of Series A Preferred Share
dividends.
As a
recipient of government funding under the CPP, we, together with our
subsidiaries, must comply with the executive compensation and corporate
governance standards imposed by the American Recovery and Reinvestment Act of
2009 (the “ARRA”) and the standards established by the Secretary of the Treasury
under the ARRA (including the interim final rule published by the U.S. Treasury
under 31 C.F.R. Part 30 on June 15, 2009 as amended by technical
amendments published by the U.S. Treasury on December 7, 2009
(collectively, the “Interim Final Rule”)) for so long as the U.S. Treasury holds
any securities acquired from us pursuant to the Securities Purchase Agreement or
upon exercise of the Warrant, excluding any period during which the U.S.
Treasury holds only the Warrant (the “Covered Period”). The ARRA and the Interim
Final Rule impose limitations on our executive compensation practices by, among
other things: (i) limiting the deductibility, for U.S. federal income tax
purposes, of compensation paid to any of our Senior Executive Officers (as
defined in the Interim Final Rule) to $500,000 per year; (ii) prohibiting the
payment or accrual of any bonus, retention award or incentive compensation to
our five most highly-compensated employees, except in the form and under the
limited circumstances permitted by the Interim Final Rule; (iii) prohibiting the
payment of golden parachute payments (as defined in the Interim Final Rule) to
our Senior Executive Officers or any of our next five most highly-compensated
employees upon a departure from Park and our subsidiaries or due to a change in
control of Park, except for payments for services performed or benefits accrued;
(iv) requiring Park or the applicable subsidiary to “claw back” any bonus,
retention award or incentive compensation paid (or under a legally binding
obligation to be paid) to a Senior Executive Officer or any of our next 20 most
highly-compensated employees if the payment was based on materially inaccurate
financial statements or any other materially inaccurate performance metric
criteria; (v) prohibiting Park and our subsidiaries from maintaining any
Employee Compensation Plan (as defined in the Interim Final Rule) that would
encourage the manipulation of our reported earnings to enhance the compensation
of any of our employees; (vi) prohibiting Park and our subsidiaries from
maintaining compensation plans and arrangements for our Senior Executive
Officers that encourage our Senior Executive Officers to take unnecessary and
excessive risks that threaten the value of Park; (vii) requiring Park and our
subsidiaries to limit any Employee Compensation Plan that unnecessarily exposes
Park to risk; (viii) prohibiting Park and our subsidiaries from providing
(formally or informally) “gross-ups” to any of our Senior Executive Officers or
our 20 next most highly-compensated employees; (ix) requiring that Park disclose
to the U.S. Treasury and Park’s primary regulator the amount, nature and
justification for offering to any of our five most highly-compensated employees
any perquisites whose total value exceeds $25,000; (x) requiring that Park
disclose to the U.S. Treasury and Park’s primary regulator whether Park, the
Park Board of Directors or the Compensation Committee engaged a compensation
consultant and the services performed by that compensation consultant and any of
its affiliates; (xi) requiring that Park disclose to the U.S. Treasury the
identity of our Senior Executive Officers and 20 next most highly-compensated
employees, identified by name and title and ranked in descending order of annual
compensation; and (xii) subjecting any bonus, retention award or other
compensation paid before February 17, 2009 to our Senior Executive Officers or
our 20 next most highly-compensated employees to retroactive review by the U.S.
Treasury to determine whether any such payments were inconsistent with the
purposes of TARP or otherwise contrary to the public interest. The ARRA and the
Interim Final Rule also required that the Park Board of Directors adopt a
Company-wide policy regarding “excessive or luxury expenditures,” which was
adopted on September 4, 2009 and is posted on Park’s Internet Web
site.
S-9
Restrictions
on compensation may make it more difficult for us to hire or retain personnel,
which might adversely affect our financial condition or results of
operations.
Changes
in interest rates could have a material adverse effect on our financial
condition, results of operations and cash flows.
Our
earnings depend substantially on our interest rate spread, which is the
difference between (i) the rates we earn on loans, investment securities and
other interest earning assets and (ii) the interest rates we pay on deposits and
our borrowings. These rates are highly sensitive to many factors beyond our
control, including general economic conditions and the policies of various
governmental and regulatory authorities. While we have taken measures intended
to manage the risks of operating in a changing interest rate environment, there
can be no assurance that such measures will be effective in avoiding undue
interest rate risk.
Information
pertaining to the impact changes in interest rates could have on our net income
is included in Table 10 in the section of Park’s 2009 Annual Report captioned
“FINANCIAL REVIEW” on page 43, which is incorporated in “Item 7 -
Management’s Discussion and Analysis of Financial Condition and Results of
Operations” of Part II of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2009, and herein by reference and in “Item 3 -
Quantitative and Qualitative Disclosures About Market Risk” in Part I of our
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2010,
which is incorporated herein by reference.
We
extend credit to a variety of customers based on internally set standards and
the judgment of our loan officers and bank division presidents. We manage the
credit risk through a program of underwriting standards, the review of certain
credit decisions and an on-going process of assessing the quality of the credit
already extended. Our credit standards and on-going process of credit assessment
might not protect us from significant credit losses.
We take
credit risk by virtue of making loans and leases, extending loan commitments and
letters of credit and, to a lesser degree, purchasing non-governmental
securities. Our exposure to credit risk is managed through the use of consistent
underwriting standards that emphasize “in-market” lending while avoiding highly
leveraged transactions as well as excessive industry and other concentrations.
Our credit administration function employs risk management techniques to ensure
that loans and leases adhere to corporate policy and problem loans and leases
are promptly identified. While these procedures are designed to provide us with
the information needed to implement policy adjustments where necessary, and to
take proactive corrective actions, there can be no assurance that such measures
will be effective in avoiding undue credit risk.
We
may elect or be compelled to seek additional capital in the future, but that
capital may not be available when it is needed.
We are
required by federal and state regulatory authorities to maintain adequate levels
of capital to support our operations. As we experience loan losses, particularly
at Vision Bank, additional capital may need to be infused. In addition, we may
elect to raise additional capital to support our business or to finance
acquisitions, if any, or we may otherwise elect or be required to raise
additional capital. Our ability to raise additional capital, if needed, will
depend on our financial performance, conditions in the capital markets, economic
conditions and a number of other factors, many of which are outside our control.
Accordingly, there can be no assurance that we can raise additional capital if
needed or on terms acceptable to us. If we cannot raise additional capital when
needed, it may have a material adverse effect on our financial condition,
results of operations and prospects.
Our
allowance for loan losses may prove to be insufficient to absorb potential
losses in our loan portfolio.
Lending
money is a substantial part of our business. However, every loan we make carries
a risk of non-payment. This risk is affected by, among other things: cash flow
of the borrower and/or the project being financed; in the case of a
collateralized loan, the changes and uncertainties as to the future value of the
collateral; the credit history of a particular borrower; changes in economic and
industry conditions; and the duration of the loan.
The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States (“GAAP”) requires management
to make significant estimates that affect the financial statements. One of our
most critical estimates is the level of the allowance for loan losses. Due to
the inherent nature of these estimates, we cannot provide absolute assurance
that we will not be required to charge earnings for significant unexpected loan
losses.
S-10
We
maintain an allowance for loan losses that we believe is a reasonable estimate
of known and inherent losses within the loan portfolio. We make various
assumptions and judgments about the collectability of our loan portfolio,
including the creditworthiness of our borrowers and the value of the real estate
and other assets serving as collateral for the repayment of loans. Through a
periodic review and consideration of the loan portfolio, management determines
the amount of the allowance for loan losses by considering general market
conditions, the credit quality of the loan portfolio, the collateral supporting
the loans and the performance of customers relative to their financial
obligations with us. The amount of future losses is susceptible to changes in
economic, operating and other conditions, including changes in interest rates,
which may be beyond our control, and these losses may exceed current estimates.
We cannot fully predict the amount or timing of losses or whether the loan loss
allowance will be adequate in the future. If our assumptions prove to be
incorrect, our allowance for loan losses may not be sufficient to cover losses
inherent in our loan portfolio, resulting in additions to the allowance.
Excessive loan losses and significant additions to our allowance for loan losses
could have a material adverse impact on our financial condition and results of
operations.
In
addition, bank regulators periodically review our allowance for loan losses and
may require us to increase our provision for loan losses or recognize further
loan charge-offs. Any increase in our allowance for loan losses or loan
charge-offs as required by these regulatory authorities might have a material
adverse effect on our financial condition and results of
operations.
If
we are unable to redeem the Series A Preferred Shares after five years, the cost
of this capital to us will increase substantially.
If we are
unable to redeem our Series A Preferred Shares prior to February 15, 2014,
the cost of this capital to us will increase substantially on that date, from
5.0% per annum to 9.0% per annum. Depending on our financial condition at the
time, this increase in the annual dividend rate on the Series A Preferred Shares
could have a material negative effect on our liquidity and cash
flows.
We
are exposed to operational risk.
Similar
to any large organization, we are exposed to many types of operational risk,
including reputational risk, legal and compliance risk, the risk of fraud or
theft by employees or outsiders, unauthorized transactions by employees or
operational errors, including clerical or record-keeping errors or those
resulting from faulty or disabled computer or telecommunications
systems.
Negative
public opinion can result from our actual or alleged conduct in any number of
activities, including lending practices, corporate governance and acquisitions,
and from actions taken by governmental regulators and community organizations in
response to those activities. Negative public opinion can adversely affect our
ability to attract and keep customers and can expose us to potential litigation
and regulatory action.
Given the
volume of transactions we process, certain errors may be repeated or compounded
before they are discovered and successfully rectified. Our necessary dependence
upon automated systems to record and process our transaction volume may further
increase the risk that technical system flaws or employee tampering or
manipulation of those systems will result in losses that are difficult to
detect. We may also be subject to disruptions of our operating systems arising
from events that are wholly or partially beyond our control (for example,
computer viruses or electrical or telecommunications outages), which may give
rise to disruption of service to customers and to financial loss or liability.
We are further exposed to the risk that our external vendors may be unable to
fulfill their contractual obligations (or will be subject to the same risk of
fraud or operational errors by their respective employees as we are) and to the
risk that our (or our vendors’) business continuity and data security systems
prove to be inadequate.
We
depend upon the accuracy and completeness of information about customers and
counterparties.
In
deciding whether to extend credit or enter into other transactions with
customers and counterparties, we may rely on information provided to us by
customers and counterparties, including financial statements and other financial
information. We may also rely on representations of customers and counterparties
as to the accuracy and completeness of that information and, with respect to
financial statements, on reports of independent auditors. For example, in
deciding whether to extend credit to a business, we may assume that the
customer’s audited financial statements conform with GAAP and present fairly, in
all material respects, the financial condition, results of operations and cash
flows of the customer. We may also rely on the audit report covering those
financial statements. Our financial condition, results of operations and cash
flows could be negatively impacted to the extent that we rely on financial
statements that do not comply with GAAP or on financial statements and other
financial information that are materially misleading.
Changes
in accounting standards could impact reported earnings.
The
accounting standard setters, including the Financial Accounting Standards Board,
the SEC and other regulatory bodies, periodically change the financial
accounting and reporting guidance that governs the preparation of our
consolidated financial statements. The pace of change continues to accelerate
and changes in accounting standards can be hard to predict and could materially
impact how we record and report our financial condition and results of
operations. In some cases, we could be required to apply new or revised guidance
retroactively, resulting in the restatement of prior period financial
statements.
S-11
We
may be a defendant from time to time in the future in a variety of litigation
and other actions, which could have a material adverse effect on our financial
condition, results of operations and cash flows.
We and
our subsidiaries may be involved from time to time in the future in a variety of
litigation arising out of our business. The risk of litigation increases in
times of increased troubled loan collection activity. Our insurance may not
cover all claims that may be asserted against us, and any claims asserted
against us, regardless of merit or eventual outcome, may harm our reputation.
Should the ultimate judgments or settlements in any litigation exceed our
insurance coverage, they could have a material adverse effect on our financial
condition, results of operations and cash flows. In addition, we may not be able
to obtain appropriate types or levels of insurance in the future, nor may we be
able to obtain adequate replacement policies with acceptable terms, if at
all.
We
are a holding company and depend on our subsidiaries for dividends,
distributions and other payments.
As a bank
holding company, we are a legal entity separate and distinct from our
subsidiaries and affiliates. Our principal source of funds to pay dividends on
our Common Shares and service our debt is dividends from these subsidiaries. In
the event our subsidiaries become unable to pay dividends to us, we may not be
able to service our debt, pay our other obligations or pay dividends on the
Series A Preferred Shares or our Common Shares. Accordingly, our inability to
receive dividends from our subsidiaries could also have a material adverse
effect on our business, financial condition and results of operations. Vision
Bank is not currently permitted to pay dividends to us and we can provide no
assurances regarding if or when Vision Bank will be permitted to begin paying
dividends to us again.
Various
federal and state statutory provisions and regulations limit the amount of
dividends that our banking and other subsidiaries may pay to us without
regulatory approval. Our banking subsidiaries generally may not, without prior
regulatory approval, pay a dividend in an amount greater than their undivided
profits. In addition, the prior approval of the Office of the Comptroller of
Currency (the “OCC”) is required for the payment of a dividend by Park National
Bank if the total of all dividends declared in a calendar year would exceed the
total of its net income for the year combined with its retained net income for
the two preceding years. The Federal Reserve Board and the OCC have issued
policy statements that provide that insured banks and bank holding companies
should generally only pay dividends out of current operating earnings. Thus, the
ability of Park National Bank to pay dividends in the future is currently
influenced, and could be further influenced, by bank regulatory policies and
capital guidelines and may restrict our ability to declare and pay
dividends.
Payment
of dividends could also be subject to regulatory limitations if Park’s banking
subsidiaries became “under-capitalized” for purposes of the applicable “prompt
corrective action” regulations. “Under-capitalized” is currently defined as
having a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based
capital ratio of less than 4.0%, or a core capital, or leverage, ratio of less
than 4.0%. Throughout 2009 and the first three quarters of 2010, Park’s banking
subsidiaries were in compliance with all regulatory capital requirements and
considered to be “well-capitalized.”
If any of
our subsidiaries becomes insolvent, the direct creditors of that subsidiary will
have a prior claim on that subsidiary’s assets. Our rights and the rights of our
creditors will be subject to that prior claim, unless we are also a direct
creditor of that subsidiary.
Unauthorized
disclosure of sensitive or confidential client or customer information, whether
through a breach of our computer systems or otherwise, could severely harm our
business.
As part
of our financial institution business, we collect, process and retain sensitive
and confidential client and customer information on behalf of our subsidiaries
and other third parties. Despite the security measures we have in place, our
facilities and systems, and those of our third-party service providers, may be
vulnerable to security breaches, acts of vandalism, computer viruses, misplaced
or lost data, programming and/or human errors or other similar events. If
information security is breached, information can be lost or misappropriated,
resulting in financial loss or costs to us. Any security breach involving
confidential customer information, whether by us or by our vendors, could
severely damage our reputation, expose us to the risks of litigation and
liability or disrupt our operations and have a material adverse effect on our
business.
S-12
Derivative
transactions may expose us to unexpected risk and potential losses.
We are
party to a number of derivative transactions. Many of these derivative
instruments are individually negotiated and non-standardized, which can make
exiting, transferring or settling the position difficult. We carry borrowings
which contain embedded derivatives. These borrowing arrangements require that we
deliver underlying securities to the counterparty as collateral. If market
interest rates were to decline, we may be required to deliver more securities to
the counterparty. We are dependent on the creditworthiness of the counterparties
and are therefore susceptible to credit and operational risk in these
situations.
Derivative
contracts and other transactions entered into with third parties are not always
confirmed by the counterparties on a timely basis. While the transaction remains
unconfirmed, we are subject to heightened credit and operational risk and, in
the event of a default, may find it more difficult to enforce the contract. In
addition, as new and more complex derivative products are created, covering a
wider array of underlying credit and other instruments, disputes about the terms
of the underlying contracts could arise, which could impair our ability to
effectively manage our risk exposures from these products and subject us to
increased costs. Any regulatory effort to create an exchange or trading platform
for credit derivatives and other over-the-counter derivative contracts, or a
market shift toward standardized derivatives, could reduce the risk associated
with such transactions, but under certain circumstances could also limit our
ability to develop derivatives that best suit the needs of our clients and
ourselves and adversely affect our profitability.
Risks
Relating to This Offering
We
have broad discretion in how we use the proceeds of this offering, and we may
use the proceeds in ways that do not enhance the value of our Common
Shares.
Although
we describe under the caption “USE OF PROCEEDS” our
currently intended use of the net proceeds from this offering, we will have
significant flexibility in using the net proceeds. We have not allocated
specific amounts of the net proceeds from this offering for any specific
purpose. You will be relying on the judgment of our management and our Board of
Directors with regard to the use of the net proceeds, and you will not have the
opportunity, before making your investment decision, to assess whether the
proceeds will be used appropriately. It is possible that our use of the net
proceeds will not benefit our business or enhance the value of our Common
Shares.
The
exercise price of the Warrants exceeds the market price of our Common
Shares.
The
Warrants will have an exercise price of $76.41 per Common Share, which exceeds
the current market price of our Common Shares. If the market price of our Common
Shares does not exceed the exercise price of the Warrants during the period in
which the Warrants are exercisable, the Warrants may not have any
value.
There
is no public market for the Warrants.
There is
no established public trading market for the Warrants being offered in this
offering and we do not expect a market to develop. In addition, we do not intend
to apply for listing of the Warrants on any securities exchange or automated
quotation system. Without an active market, investors in this offering may be
unable to readily sell the Warrants. Furthermore, each of the
Series A Warrants and the Series B Warrants is transferable only in
whole and not in part, which may limit the range of potential purchasers of the
Series A Warrants or the Series B Warrants, respectively.
Risks
Relating to Our Common Shares
Our
Common Shares represent equity interests in Park and are subordinate to all of
our existing and future indebtedness. Regulatory, statutory and
contractual restrictions may limit or prevent us from paying dividends on our
Common Shares and there is no limitation on the amount of indebtedness we and
our subsidiaries may incur in the future.
Our
Common Shares are equity interests in Park and do not constitute
indebtedness. As such, our Common Shares rank junior to all of our
indebtedness and preferred shares and to other non-equity claims with respect to
assets available to satisfy claims on Park, including in a liquidation of
Park. Additionally, unlike indebtedness, for which principal and
interest are customarily payable on specified due dates, in the case of our
Common Shares: (1) dividends are payable only when, as and if authorized
and declared by our Board of Directors and depend on, among other things, our
results of operations, financial condition, debt service requirements, other
cash needs and any other factors our Board of Directors deems relevant; and
(2) as an Ohio corporation, under Ohio law, we are subject to restrictions
on payments of dividends out of lawfully available funds. Accordingly, if the
economic downturn continues and adversely effects our results of operations or
financial condition, our ability to declare and pay dividends on our Common
Shares may be restricted. See the discussion under the caption “Description of Common Shares —
Dividends.”
S-13
Our
Common Shares do not limit the amount of debt or other obligations we or our
subsidiaries may incur in the future. Accordingly, we and our subsidiaries may
incur substantial amounts of additional debt and other obligations that will
rank senior to our Common Shares or to which the Common Shares will be
structurally subordinated.
We are
also subject to certain contractual restrictions that could prohibit us from
declaring or paying dividends or making liquidation payments on our Common
Shares. See the immediately following risk factor.
If
we defer payments of interest on our outstanding floating rate junior
subordinated notes or if certain defaults relating to those floating rate junior
subordinated notes occur, we will be prohibited from declaring or paying
dividends or distributions on, from redeeming or repurchasing, and from making
liquidation payments with respect to, our Common Shares.
As of
September 30, 2010, the aggregate outstanding principal amount of the
floating rate junior subordinated notes we assumed in connection with the
March 9, 2007 merger with Vision Bancshares, Inc. (the “Vision Merger”) was
$15,464,000. These floating rate junior subordinated notes were
issued in connection with the sale by Vision Bancshares Trust I of floating rate
preferred securities. In connection with the Vision Merger, we also
assumed the guarantee of those floating rate preferred
securities. The indenture under which the floating rate junior
subordinated notes were issued, together with the related guarantee, prohibit
us, subject to limited exceptions, from declaring or paying any dividends or
distributions on, or redeeming, repurchasing, acquiring or making any
liquidation payments with respect to, any of our capital stock (including the
Series A Preferred Shares and our Common Shares) at any time when (1) there
shall have occurred and be continuing an event of default under the indenture;
(2) we are in default with respect to any payment or other obligations under the
related guarantee; or (3) we have deferred payment of interest on the floating
rate junior subordinated notes outstanding under the indenture. In
that regard, we are entitled, at our option but subject to certain conditions,
to defer payments of interest on the floating rate junior subordinated notes
from time to time for up to 20 consecutive quarterly periods.
Events of
default under the indenture generally consist of our failure to pay interest on
the floating rate junior subordinated notes outstanding under certain
circumstances, our failure to pay any principal of or premium on such floating
rate junior subordinated notes when due, our failure to comply with certain
covenants under the indenture, and certain events of bankruptcy, insolvency or
liquidation relating to us or one of our banking subsidiaries.
As a
result of these provisions, if we were to elect to defer payments of interest on
the floating rate junior subordinated notes, or if any of the other events
described in clause (1), (2) or (3) of the first paragraph of this risk factor
were to occur, we would be prohibited from declaring or paying any dividends on
our Common Shares, from redeeming, repurchasing or otherwise acquiring any of
our Common Shares, and from making any payments to holders of our Common Shares
in the event of our liquidation, which would likely have a material adverse
effect on the trading price of our Common Shares. Moreover, without
notice to or consent from the holders of our Common Shares, we may issue
additional series of junior subordinated debt securities in the future with
terms similar to those of our existing floating rate junior subordinated notes
or enter into other financing agreements that limit our ability to purchase or
to pay dividends or distributions on our capital stock, including our Common
Shares.
The
trading price of our Common Shares may fluctuate significantly and this may make
it difficult for you to resell the Common Shares when you want or at prices you
find attractive.
The
trading price of our Common Shares will likely continue to fluctuate in response
to a number of factors, most of which are beyond our control. The trading price
of our Common Shares may also be affected by conditions that generally affect
the financial markets. These conditions may result in: (1)
fluctuations in the trading prices of shares generally and, in turn, our Common
Shares; and (2) sales of substantial amounts of our Common Shares in the market,
in each case that could be unrelated or disproportionate to changes in our
operating performance. These broad market fluctuations may adversely
affect the trading price of our Common Shares. A significant decline
in our share price could result in substantial losses for shareholders and could
lead to costly and disruptive securities litigation.
There
may be future sales of additional Common Shares or preferred shares or other
dilution of our equity, which may adversely affect the trading price of our
Common Shares.
After the
expiration of the 30-day period after the date of the securities purchase
agreement(s) that we will enter into with the investor(s) in this offering,
which period does not apply to certain exempt issuances described in the
securities purchase agreement(s), we will not be restricted from issuing
additional Common Shares or preferred shares, including any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Common Shares or preferred shares or any substantially similar
securities. The per share trading price of our Common Shares could
decline as a result of sales by us of a large number of Common Shares or
preferred shares or similar securities in the market or the perception that such
sales could occur. Our Articles of Incorporation provide preemptive
rights to holders of our Common Shares. See the discussion under the
caption “Description of Common
Shares - Preemptive
Rights.”
S-14
The
Warrants may be dilutive to holders of our Common Shares.
The
ownership interest of the existing holders of our Common Shares will be diluted
to the extent the Warrants are exercised. The Common Shares underlying the
Warrants represented approximately 0.47% of our Common Shares outstanding as of
December 7, 2010 (including in the total Common Shares outstanding, the
71,984 Common Shares offered pursuant to this prospectus supplement and the
71,984 Common Shares issuable upon exercise of the Warrants).
The
Series A Preferred Shares impact net income available to the holders of our
Common Shares and earnings per Common Share, and the Treasury Warrant may be
dilutive to holders of our Common Shares.
The
dividends declared and the accretion of discount on the Series A Preferred
Shares will reduce the net income available to holders of our Common Shares and
our earnings per Common Share. The Series A Preferred Shares will also receive
preferential treatment in the event of liquidation, dissolution or winding up of
Park. Additionally, the ownership interest of the existing holders of our Common
Shares will be diluted to the extent the Treasury Warrant is exercised. The
Common Shares underlying the Treasury Warrant represented approximately 1.46% of
our Common Shares outstanding as of December 7, 2010 (including in the
total of the Common Shares outstanding and the Common Shares issuable upon
exercise of the Treasury Warrant). Although the U.S. Treasury has agreed not to
vote any of the Common Shares it receives upon exercise of the Treasury Warrant,
a transferee of any portion of the Treasury Warrant or of any Common Shares
acquired upon exercise of the Treasury Warrant is not bound by this
restriction.
In
addition, if any of our subsidiaries becomes insolvent, the direct creditors of
that subsidiary will have a prior claim on its assets. Our rights and the rights
of our creditors will be subject to that prior claim, unless we are also a
direct creditor of that subsidiary.
Anti-takeover
provisions could negatively impact our shareholders.
Provisions
of Ohio law and our Articles of Incorporation could make it more difficult for a
third party to acquire control of us or have the effect of discouraging a third
party from attempting to acquire control of us.
We intend
to use the net proceeds from the offering pursuant to this prospectus supplement
for general corporate purposes, which may include but are not limited to working
capital, acquisition opportunities, capital expenditures, investments in or
loans to our subsidiaries, payment and refinancing of debt, including
outstanding short-term indebtedness, if any, and satisfaction of other
obligations. We believe that the additional tangible common equity
capital that would be represented by the net proceeds will provide us with
greater flexibility to utilize and deploy our capital resources. The
precise amounts and timing of the application of proceeds will depend on the
funding requirements of Park and our subsidiaries. We are also
considering the possibility at some future date of seeking permission to use a
portion of the net proceeds from the offering conducted pursuant to this
prospectus supplement to (1) repay a portion of the funding received in
connection with the Series A Preferred Shares and (2) repurchase the Treasury
Warrant, if and when applicable circumstances indicate that such repayment and
repurchase are permitted and appropriate.
S-15
Our
Common Shares are traded on NYSE Amex under the symbol “PRK”. The
following table sets forth the high and low sales prices per share of our Common
Shares as reported on NYSE Amex for the periods presented, and the dividends
declared by us with respect to each such period. The share price
information is based on data provided by NYSE Amex.
|
Sales
Price
|
Dividend
|
||
|
High
|
Low
|
||
|
Fiscal
Year 2010
|
|||
|
First
Quarter
|
$64.70
|
$52.58
|
$0.94
|
|
Second
Quarter
|
$70.25
|
$61.50
|
$0.94
|
|
Third
Quarter
|
$67.54
|
$59.35
|
$0.94
|
|
Fourth
Quarter (through December 7, 2010)
|
$70.00
|
$62.66
|
(1)
|
|
Fiscal
Year 2009
|
|||
|
First
Quarter
|
$70.10
|
$39.90
|
$0.94
|
|
Second
Quarter
|
$70.00
|
$53.88
|
$0.94
|
|
Third
Quarter
|
$66.59
|
$54.01
|
$0.94
|
|
Fourth
Quarter
|
$62.55
|
$56.35
|
$0.94
|
|
Fiscal
Year 2008
|
|||
|
First
Quarter
|
$74.87
|
$56.80
|
$0.94
|
|
Second
Quarter
|
$78.65
|
$53.90
|
$0.94
|
|
Third
Quarter
|
$82.50
|
$44.87
|
$0.94
|
|
Fourth
Quarter
|
$80.00
|
$53.55
|
$0.95
|
|
(1)
|
On
October 18, 2010, our Board of Directors declared a cash dividend of $0.94
per Common Share, payable on December 10, 2009 to holders of Common Shares
of record on November 24,
2010.
|
The
foregoing table shows only historical comparisons. These comparisons
may not provide meaningful information to you in determining whether to purchase
our Common Shares. You are urged to obtain current market quotations
for our Common Shares and to review carefully the other information contained in
or incorporated by reference into this prospectus supplement and the
accompanying prospectus.
On
December 7, 2010, the closing price of our Common Shares was $69.91 per
share. There were 15,326,955 Common Shares outstanding and 4,479
holders of our Common Shares as of December 7, 2010.
Any
future determination to pay dividends will be at the discretion of our Board of
Directors, subject to applicable limitations under Ohio law and restrictions
imposed by our regulators, and will be dependent upon our results of operations,
financial condition, contractual restrictions and other factors deemed relevant
by our Board of Directors. See the discussion under the caption “Description of Common Shares —
Dividends.”
Under our
Articles of Incorporation, as amended (the “Articles”), we are authorized to
issue up to 20,000,000 Common Shares and up to 200,000 preferred shares, no par
value per share. As of December 7, 2010, we had 15,326,955
Common Shares outstanding and 100,000 Series A Preferred Shares
outstanding. Our Board of Directors has the authority, without any
further shareholder vote or action, to issue the remaining preferred shares,
provided that the issuance and sale is made in compliance with our
Articles.
Description
of Common Shares
The
following is a brief description of the terms of our Common
Shares. This summary does not purport to be complete in all
respects. This description is subject to and qualified in its
entirety by reference to the relevant provisions of Ohio law, our Articles and
our Regulations, as amended (the “Regulations”), copies of which have been filed
with the SEC and are also available upon request from us.
S-16
Dividends
As an
Ohio corporation, Park may, in the discretion of the Park Board of Directors,
generally pay dividends to its shareholders out of surplus, however created, but
must notify the shareholders if a dividend is paid out of capital
surplus. The ability of Park to obtain funds for the payment of
dividends and for other cash requirements largely depends on the amount of
dividends which may be declared and paid by its subsidiaries. There
are a number of statutory and regulatory requirements applicable to the payment
of dividends by banks and bank holding companies, which are applicable to
Park.
Dividend
payments from our banking subsidiaries are subject to statutory and regulatory
limitations, generally based on net income and retained earnings. The
ability of our banking subsidiaries to pay dividends to us is also subject to
their profitability, financial condition, capital expenditures and other cash
flow requirements and contractual obligations. Payments of dividends
by one of our banking subsidiaries may be restricted at any time at the
discretion of the applicable regulatory authorities, if they deem such dividends
to constitute an unsafe and/or an unsound banking practice. Vision
Bank is not currently permitted to pay dividends to us and we can provide no
assurances regarding if or when Vision Bank will be permitted to begin paying
dividends to us again.
Park is
also subject to Federal Reserve Board policies that may, in certain
circumstances, limit our ability to pay dividends. These policies
require, among other things, that we maintain adequate capital above regulatory
minimums. The Federal Reserve Board may also determine, under certain
circumstances relating to our financial condition, that the payment of dividends
would be an unsafe or unsound practice and prohibit the payment
thereof. In addition, the Federal Reserve Board expects us to serve
as a source of strength to our banking subsidiaries, which may require us to
retain capital for further investments in our banking subsidiaries, rather than
use those funds for dividends for our shareholders.
The
dividend rights of holders of our Common Shares are also qualified and subject
to the dividend rights of holders of Series A Preferred
Shares. Holders of the Series A Preferred Shares are entitled to
receive if, as and when declared by the Board of Directors of Park, cumulative
cash dividends at a rate per annum of 5.0% per share on the liquidation
preference for each dividend period from December 23, 2008 to, but excluding,
February 15, 2014. From and after February 15, 2014, holders of the
Series A Preferred Shares are entitled to receive cumulative cash dividends at a
rate per annum of 9.0% per share on the liquidation preference with respect to
each dividend period. Park may pay dividends, other than a dividend
payable solely in Common Shares, on the Common Shares only if it has paid or
provided for all dividends on its outstanding Series A Preferred Shares for the
then-current period and all prior periods.
In
addition, the Securities Purchase Agreement with the U.S. Treasury contains
limitations on the payment of dividends on the Common Shares from and after
December 23, 2008 (including with respect to the payment of cash dividends
in excess of $0.94 per share, which is the amount of the last quarterly cash
dividend declared by Park prior to October 14, 2008). Prior to
the earlier of (1) December 23, 2011 and (2) the date on which
the Series A Preferred Shares have been redeemed in whole or the U.S.
Treasury has transferred the Series A Preferred Shares to unaffiliated
third parties, we may not, without the consent of the U.S. Treasury, declare or
pay any dividend or make any distribution on our Common Shares other
than:
|
|
·
|
regular
quarterly cash dividends not exceeding $0.94 per share;
and
|
|
|
·
|
dividends
payable solely in our Common
Shares.
|
In
connection with the Vision Merger, Park entered into a First Supplemental
Indenture, dated to be effective as of 6:00 p.m., Eastern Standard Time, on
March 9, 2007 (the “First Supplemental Indenture”) with Vision Bancshares, Inc.
(“Vision”) and Wilmington Trust Company, a Delaware banking corporation, as
Trustee. Under the terms of the First Supplemental Indenture, Park assumed all
of the payment and performance obligations of Vision under the Junior
Subordinated Indenture, dated as of December 5, 2005 (the “Indenture”), pursuant
to which Vision issued $15,464,000 aggregate principal amount of floating rate
junior subordinated notes to Vision Bancshares Trust I, a Delaware statutory
trust (the “Vision Trust”), the entire amount of which remained outstanding as
of September 30, 2009. The floating rate junior subordinated notes
were issued by Vision in connection with the sale by the Vision Trust of $15.0
million of floating rate preferred securities to institutional investors on
December 5, 2005. In connection with the Vision Merger, we also
assumed the guarantee of the floating rate preferred securities.
Both the
floating rate junior subordinated notes and the floating rate preferred
securities mature on December 30, 2035 (which maturity may be shortened to a
date not earlier than December 30, 2010), and carry a floating interest rate per
annum, reset quarterly, equal to the sum of three-month LIBOR plus 1.48
percent. Payment of interest on the floating rate junior subordinated
notes, and payment of cash distributions on the floating rate preferred
securities, may be deferred at any time or from time to time for a period not to
exceed 20 consecutive quarters.
S-17
Under the
terms of the Indenture and the related guarantee, Park, as successor to Vision
in accordance with the First Supplemental Indenture, is prohibited, subject to
limited exceptions, from declaring or paying dividends to the holders of Common
Shares: (1) if an event of default under the Indenture has occurred and
continues; (2) Park is in default with respect to any payment or other
obligations under the related guarantee; or (3) during any period in which the
payment of interest on the floating rate junior subordinated notes by Park (and
the payment of cash distributions on the floating rate preferred securities by
the Vision Trust) is being deferred.
Preemptive
Rights
Under
current Ohio law, shareholders of Ohio corporations do not have preemptive
rights unless a corporation’s articles of incorporation specifically provide
otherwise. However, at the time of the adoption of the Articles, Ohio
law stated that shareholders of Ohio corporations had preemptive rights unless a
corporation’s articles of incorporation provided otherwise.
The
Articles provide that the holders of Common Shares have preemptive rights unless
the Common Shares that are offered or sold are: (1) treasury shares; (2) issued
as a share dividend or distribution; (3) offered or sold in connection with any
merger or consolidation to which Park is a party or any acquisition of, or
investment in, another corporation, partnership, proprietorship or other
business entity or its assets by Park, whether directly or indirectly, by any
means; (4) offered or sold pursuant to the terms of a stock option plan or
employee benefit, compensation or incentive plan that has been approved by the
holders of three-fourths of the issued and outstanding shares of Park having the
authority to vote thereon; or (5) released from preemptive rights by the
affirmative vote or written consent of holders of two-thirds of the shares
entitled to preemptive rights. Because all of the Common Shares that are the
subject of the offerings to be conducted pursuant to this prospectus supplement
will be issued from Common Shares that we hold as treasury shares, the
preemptive rights provided by our Articles will not apply to such Common
Shares.
Liquidation
Rights
In the
event of liquidation, holders of Common Shares are entitled to share ratably in
Park’s net assets, if any, after satisfaction of the claims of creditors and the
preferences of holders of the Series A Preferred Shares, and any other class or
series of preferred shares outstanding at the time of
liquidation. Upon liquidation, holders of Series A Preferred Shares
would be entitled to receive an amount per share equal to the fixed liquidation
preference of $1,000 per share, plus any accrued and unpaid dividends, whether
or not declared, to the date of payment. Holders of the Series A
Preferred Shares would be entitled to receive the total liquidation amount out
of Park’s assets that is available for distribution to shareholders, after
payment or provision for payment of Park’s debts and other liabilities to
creditors, but before any distribution of assets is made to holders of Common
Shares.
Under the
terms of the Indenture and the related guarantee, Park, as successor to Vision
in accordance with the First Supplemental Indenture, is prohibited, subject to
limited exceptions, from making any liquidation payments with respect to any of
Park’s capital stock (including the Common Shares and the Series A
Preferred Shares): (1) if an event of default under the Indenture has
occurred and continues; (2) Park is in default with respect to any payment or
other obligations under the related guarantee; or (3) during any period in
which the payment of interest on the floating rate junior subordinated notes by
Park (and the payment of cash distributions on the floating rate preferred
securities by the Vision Trust) is being deferred.
Subscription,
Conversion and Redemption Rights
The
holders of Common Shares do not have subscription or conversion rights, and
there are no mandatory redemption provisions applicable to the Common
Shares. Pursuant to the Articles, unless the Series A Preferred
Shares have been transferred by the U.S. Treasury to unaffiliated third parties
or have been redeemed in whole, until December 23, 2011, the U.S.
Treasury’s consent will be required for Park to redeem or repurchase: (1) Common
Shares; (2) other capital stock or equity securities of Park; or (3) any trust
preferred securities issued by Park or its affiliates, other than repurchases of
Common Shares in connection with benefit plans consistent with past practice and
certain other circumstances specified in Article Fourth of the
Articles. Further, Park may not repurchase Common Shares if Park is
in arrears on the payment of Series A Preferred Share
dividends.
Under the
terms of the Indenture and the related guarantee, Park, as successor to Vision
in accordance with the First Supplemental Indenture, is prohibited, subject to
limited exceptions, from redeeming, repurchasing or otherwise acquiring any of
Park’s capital stock (including the Common Shares and the Series A
Preferred Shares): (1) if an event of default under the Indenture has
occurred and continues; (2) Park is in default with respect to any payment or
other obligations under the related guarantee; or (3) during any period in
which the payment of interest on the floating rate junior subordinated notes by
Park (and the payment of cash distributions on the floating rate preferred
securities by the Vision Trust) is being deferred.
S-18
Number
of Directors
Under
Ohio law, a corporation’s articles of incorporation or regulations determine the
number of directors, but, in most circumstances, the number may not be less than
three unless the corporation has less than three shareholders. Unless
the articles of incorporation or regulations provide otherwise, the shareholders
may fix or change the number of directors at a shareholder meeting called for
the election of directors by the affirmative vote of a majority of the shares
represented at the meeting and entitled to vote.
The
Regulations provide for the Park Board of Directors to consist of not less than
five and not more than 16 directors. The Park Board of Directors may
not increase the number of directors to a number which exceeds by more than two
the number of directors last elected by shareholders. The number of
Park directors was last fixed at 14 directors and currently consists of 14
directors. Notwithstanding the foregoing, in the event that Park
fails to pay the requisite cumulative dividends on the Series A Preferred Shares
for an aggregate of six dividend periods or more, whether or not consecutive,
the authorized number of directors of Park will automatically be increased by
two and the holders of the Series A Preferred Shares will have the right to
elect two directors (the “Preferred Directors”). Pursuant to the
terms of the Series A Preferred Shares, the right of holders to elect the
Preferred Directors ends when all accrued and unpaid dividends have been paid in
full.
Classification
of the Board of Directors
Under
Ohio law, a corporation’s articles of incorporation or regulations may provide
for the classification of directors into either two or three classes so long as:
(1) each class consists of at least three directors; and (2) no director serves
a term of office greater than three years. The Regulations provide
for the Park Board of Directors to be divided into three classes, with staggered
three-year terms.
Nomination
of Directors
Under the
Regulations, either the Park Board of Directors or any shareholder entitled to
vote in the election of directors may nominate a candidate for election to the
Park Board of Directors. Shareholder nominations must be made in
writing and must be received by the President of Park not less than 14 days and
not more than 50 days prior to the meeting of shareholders at which directors
are to be elected. If, however, notice of the meeting is mailed or
disclosed to shareholders less than 21 days before the meeting date, shareholder
nominations must be received by the close of business on the 7th day after
notice is mailed. A shareholder’s notice to Park nominating a
director must set forth:
· the
name and address of each proposed nominee;
· the
principal occupation of each proposed nominee;
· the
total number of shares of capital stock of Park that will be voted for each
proposed nominee;
· the
name and residence address of the notifying shareholder; and
· the
number of shares of capital stock of Park beneficially owned by the notifying
shareholder.
Vacancies on the Board
Under
Ohio law, unless a corporation’s articles of incorporation or regulations
provide otherwise, the remaining directors of a corporation may fill any vacancy
in the board by the affirmative vote of a majority of the remaining
directors. Directors elected to fill a vacancy serve the balance of
the unexpired term. The Regulations provide that the remaining
directors, though less than a majority of the whole authorized number of
directors, may, by the vote of a majority of their number, fill any vacancy in
the Park Board of Directors for the unexpired term.
Notwithstanding
the foregoing, in the event that holders of the Series A Preferred Shares have
elected Preferred Directors and the office of any Preferred Director becomes
vacant for any reason other than removal from office, the remaining Preferred
Director may choose a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred.
S-19
Removal of Directors
The
Regulations provide that a director or directors may be removed from office,
with or without assigning cause, only by the vote of the holders of shares
entitling them to exercise not less than a majority of the voting power of Park
to elect directors in place of those to be removed, provided that unless all of
the directors (or all of the directors of a particular class) are removed, no
individual director may be removed if the votes of a sufficient number of shares
are cast against his removal that, if cumulatively voted at an election of all
directors (or all of the directors of a particular class) would be sufficient to
elect at least one director. However, under current Ohio law, the directors of
an issuing public corporation with a classified board of directors may only be
removed for cause. Because Park is an issuing public corporation and
has a classified board of directors, the directors of Park may only be removed
for cause.
Notwithstanding
the foregoing, any Preferred Director may be removed at any time, with or
without cause, and any vacancy created thereby may be filled, only by the
affirmative vote of the holders of a majority of the Series A Preferred
Shares.
Special Meetings of
Shareholders
Pursuant
to Ohio law and the Regulations, any of the following persons may call a special
meeting of shareholders: (1) the chairman of the Park Board of Directors; (2)
Park’s president, or, in case of the president’s absence, death or disability,
the vice president authorized to exercise the authority of the president; (3)
Park’s secretary; (4) the directors by action at a meeting or a majority of the
directors acting without a meeting; or (5) the holders of at least 25% of the
outstanding shares entitled to vote at the meeting.
Voting Rights
Under Ohio law, shareholders have the
right to make a request, in accordance with applicable procedures, to cumulate
their votes in the election of directors unless a corporation’s articles of
incorporation are amended, in accordance with applicable procedures, to
eliminate that right. The Articles have not been amended to eliminate
cumulative voting in the election of directors. Accordingly, if, in
accordance with Ohio law, any Park shareholder makes a proper request and
announcement of such request is made at a meeting to elect directors, each
shareholder will have votes equal to the number of directors to be elected,
multiplied by the number of Common Shares owned by such shareholder, and will be
entitled to distribute such votes among the candidates in any manner the
shareholder wishes. Except with respect to an election of directors
for which cumulative voting has been properly requested, each Common Share
entitles the holder thereof to one vote on each matter submitted to the
shareholders of Park for consideration.
Special Voting
Requirements
The
Articles contain special voting requirements that may be deemed to have
anti-takeover effects. These special voting requirements are
described in Article Fourth and Article Eighth.
Pursuant
to Article Fourth, any consummation of a binding share exchange or
reclassification involving the Series A Preferred Shares, or of a merger or
consolidation of Park with another corporation or other entity, must be approved
by the affirmative vote of at least 66 2/3% of the Series A Preferred Shares
outstanding, voting as a separate class, unless in each case: (1) the Series A
Preferred Shares remain outstanding or, in the case of any such merger or
consolidation with respect to which Park is not the surviving or resulting
entity, are converted into or exchanged for preference securities of the
surviving or resulting entity or its ultimate parent; and (2) such shares
remaining outstanding or such preference securities, as the case may be, have
such rights, preferences, privileges and voting powers, and limitations and
restrictions thereof, taken as a whole, as are not materially less favorable to
the holders thereof than the rights, preferences, privileges and voting powers,
and limitations and restrictions thereof, of the Series A Preferred Shares
immediately prior to such consummation.
In
accordance with the provisions of Article Eighth, an enlarged majority vote is
required to approve Park’s consummation of any of the following
actions:
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any
merger or consolidation of Park with a beneficial owner of 20% or more of
the voting power of Park or an affiliate or associate of that 20%
beneficial owner;
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any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of
at least 10% of the total assets of Park to or with a 20% beneficial owner
or its affiliates or associates;
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any
merger of Park or one of its subsidiaries with a 20% beneficial owner or
its affiliates or associates;
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S-20
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any
sale, lease, exchange, mortgage, pledge, transfer or other disposition to
Park or one of its subsidiaries of all or any part of the assets of a 20%
beneficial owner (or its affiliates or associates), excluding any
disposition which, if included with all other dispositions consummated
during the fiscal year by the 20% beneficial owner or its affiliates or
associates, would not result in dispositions having an aggregate fair
value in excess of 1% of the total consolidated assets of Park, unless all
such dispositions by the 20% beneficial owner or its affiliates or
associates during the same and four preceding fiscal years would result in
disposition of assets having an aggregate fair value in excess of 2% of
the total consolidated assets of
Park;
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any
reclassification of our Common Shares or any recapitalization involving
our Common Shares consummated within five years after a 20% beneficial
owner becomes such;
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any
agreement providing for any of the previously described business
combinations; and
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any
amendment to Article Eighth of the
Articles.
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The
enlarged majority vote required when Article Eighth applies is the greater
of:
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four-fifths
of the outstanding Common Shares entitled to vote on the proposed business
combination, or
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that
fraction of the outstanding Common Shares
having:
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as
the numerator, a number equal to the sum
of:
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the
number of Common Shares beneficially owned by the 20% beneficial owner
plus
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two-thirds
of the remaining number of Common Shares
outstanding,
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and
as the denominator, a number equal to the total number of outstanding
Common Shares entitled to vote.
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Article
Eighth does not apply where: (1) the shareholders who do not vote in favor of a
transaction and whose proprietary interest will be terminated in connection with
the transaction are paid a “minimum price per share;” and (2) a proxy statement
satisfying the requirements of the Exchange Act is mailed to the Park
shareholders for the purpose of soliciting shareholder approval of the
transaction. If the price criteria and procedural requirements are
satisfied, the approval of a business combination would require only that
affirmative vote (if any) required by law or by the Articles or the
Regulations.
Amendments
to Articles
Under
Ohio law, shareholders may adopt amendments to the articles of incorporation by
the affirmative vote of two-thirds of the shares entitled to vote on the
proposal unless a corporation’s articles of incorporation provide for a
different vote requirement, which cannot be less than a majority of the shares
entitled to vote.
In
accordance with the provisions of Article Fourth, so long as the Series A
Preferred Shares are outstanding, the affirmative vote of at least 66 2/3% of
the Series A Preferred Shares outstanding, voting as a separate class, is
required to amend the Articles in order to: (1) authorize, create or increase
the authorized amount of, or any issuance of, any shares of, or any securities
convertible into or exchangeable or exercisable for shares of, any class or
series of Park capital stock ranking senior to the Series A Preferred Shares
with respect to either or both the payment of dividends and/or the distribution
of assets on any liquidation or winding up of Park; or (2) amend, alter or
repeal any provision of the Articles so as to adversely affect the rights,
preferences, privileges or voting powers of the holders of the Series A
Preferred Shares.
As
discussed above under the caption “Special Voting
Requirements,” the Articles provide that, when there is one or more
controlling persons of Park (i.e., persons who beneficially own shares of Park
entitling them to exercise at least 20% of the voting power in the election of
directors), Article Eighth cannot be altered, changed or repealed unless the
amendment is adopted by a specified proportion of Park’s
shareholders.
S-21
Amendments
to Regulations
Under
Ohio law, shareholders of an Ohio corporation may amend the corporation’s
regulations or adopt revised regulations consistent with Ohio law and the
corporation’s articles of incorporation, by the affirmative vote of a majority
of shares entitled to vote if done at a shareholder
meeting. Shareholders may amend the regulations without a meeting by
the affirmative vote of the holders of two-thirds of the shares entitled to vote
on the proposal. Ohio law provides that a corporation’s articles of
incorporation or regulations may increase or decrease the required shareholder
vote, but may not allow approval by less than a majority of the voting
power.
The
Regulations provide that they may be amended by the shareholders at a meeting by
the affirmative vote of the holders of not less than two-thirds of the voting
power of Park entitled to vote on such proposal, or without a meeting by the
written consent of the holders of not less than two-thirds of the voting power
of Park entitled to vote on such proposal.
Description
of Warrants
The
material terms and provisions of the Warrants being offered pursuant to this
prospectus supplement and the accompanying prospectus are summarized below. This
summary is subject to, and qualified in its entirety by, the form of Warrant,
which will be provided to the investors in this offering and will be filed as an
exhibit to a Current Report on Form 8-K.
Series A
Warrants
The
Series A Warrants to be issued in this offering represent the right to
purchase up to an aggregate of 35,992 Common Shares. Each Series A Warrant
entitles the investor to purchase one Common Share. The Series A Warrants
are exercisable at the option of the holder at any time for a period of six
months after the closing date of the offering of our Common Shares and the
Warrants. Each Series A Warrant has an exercise price of
$76.41.
Series B
Warrants
The
Series B Warrants to be issued in this offering represent the right to
purchase up to an aggregate of 35,992 Common Shares. Each Series B Warrant
entitles the investor to purchase one Common Share. The Series B Warrants
are exercisable at the option of the holder at any time for a period of
12 months after the closing date of the offering of our Common Shares and
the Warrants. Each Series B Warrant has an exercise price of
$76.41.
Exercise
of Warrants
The
Warrants will be exercisable, at the option of each holder, in whole or in part,
by delivering to us, on or before the termination date applicable to the
Warrants, a duly executed exercise notice and payment in full for the number of
Common Shares purchased upon such exercise (except in the case of a cashless
exercise as discussed below). A holder of Warrants will not have the right to
exercise any Warrants to the extent the holder would beneficially own in excess
of 4.99% of the number of our Common Shares outstanding immediately after the
exercise. The holder may increase or decrease the applicable beneficial
ownership limitation by delivering to us at least 61 days prior written notice
of the increase or reduction, provided, that the holder may not increase the
limitation above 4.99%.
Cashless
Exercise of Warrants
The
Warrants will be exercisable on a cashless basis, at the option of each holder,
in whole or in part, if (1) there is no effective registration statement
registering, or the prospectus contained therein is not available for, the
Common Shares issuable upon the exercise of the Warrant and (2) all of such
Common Shares are not then registered for resale by the holder into the market
at market prices from time to time on an effective registration statement for
use on a continuous basis (or the prospectus contained therein is not available
for use).
Adjustment
of Exercise Price
The
exercise price applicable to the Warrants is subject to adjustment in the
event:
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of
share splits, certain share dividends and distributions, and combinations
relating to or affecting our Common
Shares;
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we
distribute to all holders of our Common Shares (but not to the holders of
the Warrants) certain evidences of our indebtedness or assets;
or
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S-22
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we
pay a dividend or otherwise make a distribution, in each case consisting
exclusively of cash, other than dividends or distributions in connection
with fundamental transactions or regular cash dividends that do not exceed
$0.94 per Common Shares in any fiscal
quarter.
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The
adjustment to the exercise price will become effective on the effective date of
the share split or combination or, with respect to any dividend, distribution or
issuance, on the first date on which the Common Shares trade on NYSE Amex,
regular way, without the right to receive the relevant dividend, distribution or
issuance.
Fundamental
Transactions
In the
event that certain fundamental transactions (e.g., transactions involving the
merger or consolidation of the Company, the sale or other transfer or
disposition of all or substantially all of the assets of the Company or the
acquisition by any person of more than 50% of our outstanding Common Shares, the
consummation of certain purchase offers, tender offers or exchange offers
accepted by the holders of more than 50% of our outstanding Common Shares, and
certain reclassifications, reorganizations or recapitalizations of the Common
Shares) occur while the Warrants are outstanding, then, upon any subsequent
exercise of the Warrants, the holder of the Warrants will have the option to
receive the number of shares of common stock of the successor or acquiring
corporation or our Common Shares, if we are the surviving corporation, and any
additional consideration receivable as a result of such fundamental transaction,
that a holder of the number of our Common Shares for which the Warrants are
exercisable immediately prior to such fundamental transaction would have
received in connection with the fundamental transaction. If holders of our
Common Shares are given any choice as to the securities, cash or property to be
received in a fundamental transaction, then the holders of Warrants will be
given the same choice as to the consideration they are to receive upon any
exercise of the Warrants following such fundamental transaction.
Rights
of Holders of Warrants
Subject
to compliance with applicable securities laws. the Warrants do not entitle their
holders to any voting rights, dividends or other rights as a shareholder of the
Company before the exercise of the Warrants.
Transferability
Each of
the Series A Warrants and the Series B Warrants and all rights
associated therewith are transferable, in whole but not in part, at the option
of the holder, upon surrender to us of the Series A Warrants or
Series B Warrants, respectively, together with a written assignment of the
Series A Warrants or Series B Warrants, as appropriate, and all funds
necessary to pay any transfer taxes applicable to the transfer.
Reservation
of Common Shares
We will,
at all times during the period the Warrants are outstanding, reserve from our
Common Shares held in treasury and keep available, solely for issuance and
delivery upon the exercise of the Warrants, such number of our Common Shares as
from time to time are issuable upon the exercise of the Warrants.
Amendment
and Waiver
The
Warrants may be modified or amended and the provisions of the Warrants may be
waived with the written consent of the Company and the holders of Warrants
entitled to at least 50% of our Common Shares issuable upon the exercise of all
then outstanding Warrants.
Anti-Takeover
Statutes
Ohio “Anti-Greenmail”
Statute
Pursuant
to the Ohio “Anti-Greenmail” Statute (“Anti-Greenmail Statute”), a public
corporation formed in Ohio may recover profits that a shareholder makes from the
sale of the corporation’s securities within 18 months after making a
proposal to acquire control or publicly disclosing the possibility of a proposal
to acquire control. The corporation may not, however, recover from a person who
proves either: (1) that such person’s sole purpose in making the proposal
was to succeed in acquiring control of the corporation and there were reasonable
grounds to believe that such person would acquire control of the corporation; or
(2) that such person’s purpose was not to increase any profit or decrease
any loss in the stock. Also, before the corporation may obtain any recovery, the
aggregate amount of the profit realized by such person must exceed $250,000. Any
shareholder may bring an action on behalf of the corporation if a corporation
refuses to bring an action to recover these profits. The party bringing such an
action may recover such party’s attorneys’ fees if the court having jurisdiction
over such action orders recovery of any profits. An Ohio corporation may elect
not to be covered by the Anti-Greenmail Statute with an appropriate amendment to
its articles of incorporation or regulations, but we have not taken any such
corporate action to opt out of the Anti-Greenmail Statute.
S-23
Control Bid
Provisions of the Ohio Securities
Act
Ohio law
further requires that any offeror making a control bid for any securities of a
“subject company” pursuant to a tender offer must file information specified in
the Ohio Securities Act with the Ohio Division of Securities when the bid
commences. The Ohio Division of Securities must then decide whether it will
suspend the bid under the statute. If the Ohio Division of Securities
determines that the offeror’s disclosures are inadequate, the Division must act
within five calendar days from the date of the offeror’s filing to suspend the
continuation of the control bid. If a bid is suspended, a hearing
must be held within ten calendar days from the date the Ohio Division of
Securities suspended the bid. The determination of the Ohio Division
of Securities following the hearing must be made within three calendar days
after the hearing has been completed and no later than 14 calendar days after
the date on which the suspension is imposed. For this purpose, a “control bid”
is the purchase of, or an offer to purchase, any equity security of a subject
company from a resident of Ohio that would, in general, result in the offeror
acquiring 10% or more of the outstanding shares of such company. A “subject
company” includes any company with both: (1) its principal place of
business or principal executive office in Ohio or assets located in Ohio with a
fair market value of at least $1 million; and (2) more than 10% of its
record or beneficial equity security holders resident in Ohio, more than 10% of
its equity securities owned of record or beneficially by Ohio residents, or more
than 1,000 of its record or beneficial equity security holders resident in
Ohio.
Bank Holding
Company Act
The Bank
Holding Company Act requires the prior approval of the Federal Reserve Board in
any case where a bank holding company proposes to acquire direct or indirect
ownership or control of more than 5% of the voting shares of any bank that is
not already majority-owned by it, to acquire all or substantially all of the
assets of another bank or bank holding company, or to merge or consolidate with
any other bank holding company.
Transfer
Agent
Our
transfer agent is The Park National Bank, c/o First-Knox National Bank Division,
One South Main Street, P.O. Box 1270, Mount Vernon, Ohio 43050; telephone number
(800) 837-5266 Ext. 5208.
The
following is a general discussion of certain material U.S. federal income and
estate tax consequences of the exercise and disposition of the Warrants and the
acquisition, ownership and disposition of our Common Shares issued pursuant to
this offering. This discussion is limited to non-U.S. holders (as
defined below) who acquire and hold the Warrants and/or our Common Shares as a
“capital asset” within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the “Code”) (generally, property held for
investment).
As used
in this discussion, the term “non-U.S. holder” means a beneficial owner of the
Warrants and/or our Common Shares (other than a partnership or any other entity
treated as a partnership for U.S. federal income tax purposes) that, for U.S.
federal income tax purposes, is not:
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an
individual who is a citizen of the United
States;
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an
individual who is a resident of the United States, which refers generally
to a non-U.S. individual who (1) is a lawful permanent resident of
the United States, (2) is present in the United States for or in
excess of certain periods of time, or (3) makes a valid election to
be treated as a U.S. person;
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a
corporation (or any other entity treated as a corporation for U.S. federal
income tax purposes) created or organized in or under the laws of the
United States, any state or political subdivision thereof, or the District
of Columbia;
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an
estate the income of which is subject to U.S. federal income tax
regardless of its source; or
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a
trust (1) that is subject to the primary supervision of a court
within the United States and whose substantial decisions are subject to
the control of one or more U.S. persons or (2) that has a valid
election in effect under applicable U.S. Treasury regulations to be
treated as a U.S. person.
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S-24
This
discussion is based on provisions of the Code, existing and proposed U.S.
Treasury regulations issued under the Code, judicial decisions and published
rulings and administrative pronouncements of the Internal Revenue Service (the
“IRS”), all as in effect as of the date hereof. These authorities are
subject to change, possibly with retroactive effect, or to different
interpretations. No ruling has been or is expected to be sought from
the IRS with respect to the matters discussed below, and there can be no
assurance that the IRS will not take a contrary position regarding the tax
consequences of the exercise or disposition of the Warrants or the acquisition,
ownership or disposition of our Common Shares or that any such contrary position
would not be sustained by a court.
This
discussion does not address all aspects of U.S. federal income and estate taxes
(including unearned income Medicare contribution taxation under Section 1411 of
the Code). Among other matters, this discussion does not
consider:
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foreign,
state, local or other tax considerations that may be relevant to non-U.S.
holders of the Warrants and/or our Common Shares in light of their
particular circumstances; or
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U.S.
federal income and estate tax consequences that may be applicable to
certain types of holders of the Warrants and/or our Common Shares who are
subject to special tax treatment under U.S. federal tax laws, including,
without limitation, partnerships or other pass-through entities, banks and
insurance companies, dealers in securities, holders of securities held as
part of a “straddle,” “hedge,” “conversion transaction” or other
risk-reduction transaction, controlled foreign corporations, passive
foreign investment companies, foreign personal holding companies,
tax-exempt organizations, retirement plans, former U.S. citizens or
residents, holders subject to the alternative minimum tax and persons who
hold or receive the Warrants and/or our Common Shares as
compensation.
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If a
partnership (or any other entity treated as a partnership for U.S. federal
income tax purposes) holds the Warrants and/or our Common Shares, the tax
treatment of a partner in such partnership generally will depend upon the tax
status of the partner and the activities of the partnership. A
beneficial owner of the Warrants and/or our Common Shares who is a partner in a
partnership that holds the Warrants and/or our Common Shares should consult with
such beneficial owner’s tax adviser.
Prospective
investors should seek advice from their independent tax advisers concerning the
U.S. federal, state, local and non-U.S. tax consequences of an investment in the
Warrants and/or our Common Shares based on their particular
circumstances.
Exercise
of Warrants
A
non-U.S. holder will not recognize gain or loss on the exercise of a Warrant and
related receipt of our Common Shares (except if cash is received in lieu of a
fractional Common Share, in which case, the rules discussed below under “Gain on Disposition of Common Shares” would
apply). A non-U.S. holder’s initial tax basis in our Common Shares
received on the exercise of a Warrant generally will be equal to the sum of (a)
the non-U.S. holder’s initial tax basis in the Warrant plus (b) the exercise
price paid by the non-U.S. holder on the exercise of the Warrant. A
non-U.S. holder’s holding period for our Common Shares received upon the
exercise of a Warrant generally will begin on the day after the date that the
Warrant is exercised by the non-U.S. holder.
Disposition
of Warrants
A
non-U.S. holder generally will not be subject to U.S. federal income or
withholding tax with respect to gain recognized upon a sale or other disposition
of a Warrant unless one of the following applies:
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the
gain is effectively connected with the non-U.S. holder’s conduct of a
trade or business in the United States, and, if required by an applicable
income tax treaty, is attributable to a permanent establishment maintained
by the non-U.S. holder in the United States, in which case the non-U.S.
holder will be subject to U.S. federal income tax on such gain on a net
income basis at the regular graduated U.S. federal income tax rates in
much the same manner as if such holder were a resident of the United
States, unless an applicable income tax treaty provides otherwise, and a
non-U.S. holder that is a foreign corporation also may be subject to the
branch profits tax referred to
below;
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the non-U.S. holder is an
individual and is present in the United States for 183 days or more during
the taxable year of the sale or other disposition, and meets certain other
conditions, in which case such non-U.S. holder will be subject to U.S.
federal income tax on the gain at a flat rate of 30% (unless an applicable
income tax treaty provides otherwise), which may be offset by certain
U.S.-source capital losses, even though the individual is not considered
to be a resident of the United States;
or
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Park is or has been a “U.S. real
property holding corporation” (a “USRPHC”) for U.S. federal income tax
purposes at any time within the shorter of the five-year period preceding
the sale or other disposition or the period during which the non-U.S.
holder held the Warrant and certain other requirements are met. (For more
information regarding the USRPHC rules, see “Gain on
Disposition of Common Shares”
below.)
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S-25
Dividends
Any
distributions on our Common Shares will constitute dividends for U.S. federal
income tax purposes to the extent paid from our current or accumulated earnings
and profits, as determined under U.S. federal income tax
principles. To the extent these distributions exceed our current or
accumulated earnings and profits, such excess amount first will be treated as a
tax-free return of capital to the extent of the non-U.S. holder’s adjusted tax
basis in our Common Shares, which will reduce the non-U.S. holder’s adjusted tax
basis in our Common Shares (but not below zero), and any remainder will be
treated as capital gain from the sale or other disposition of our Common
Shares.
Dividends
paid to a non-U.S. holder of our Common Shares that are not effectively
connected with a non-U.S. holder’s conduct of a trade or business in the United
States generally will be subject to U.S. federal withholding tax at a rate of
30% of the gross amount of the dividend, or any lower rate specified by an
applicable income tax treaty. To receive the benefit of a reduced
treaty withholding rate, a non-U.S. holder must complete IRS Form W-8BEN
(or other applicable form), certify under penalties of perjury that such holder
is eligible for benefits under the applicable income tax treaty and provide
other additional information as required. The non-U.S. holder must
provide this certification prior to the payment of dividends and periodically
must update the information on the applicable form. A non-U.S. holder
that does not timely provide the required certification, but that qualifies for
a reduced treaty rate, may obtain a refund of any excess amount withheld by
timely filing an appropriate claim for refund with the IRS. Special
certification and other requirements apply to some non-U.S. holders that are
pass-through entities rather than corporations or individuals. In
addition, U.S. Treasury regulations provide special procedures for payments of
dividends through specified intermediaries.
If a
non-U.S. holder satisfies specified certification and disclosure requirements,
the following dividends are not subject to U.S. federal withholding
tax:
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dividends
that are effectively connected with the conduct of a trade or business by
such non-U.S. holder within the United States;
and
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if
an income tax treaty applies, dividends that are attributable to a
permanent establishment, or, in the case of an individual, a fixed base,
in the United States, as provided in the applicable income tax
treaty.
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The
non-U.S. holder would be required to provide Park with a properly executed IRS
Form W-8ECI, for effectively connected income, or IRS Form W-8BEN, for
income tax treaty benefits, or such successor form as the IRS
designates. In such cases, dividends generally are subject to U.S.
federal income tax on a net income basis at the regular graduated U.S. federal
income tax rates in much the same manner as if such holder were a resident of
the United States. A non-U.S. holder that is a foreign corporation
also may be subject to a “branch profits tax” at a rate of 30% (or any lower
rate that may be specified by an applicable income tax treaty) on dividends
received by the foreign corporation that are effectively connected with its
conduct of a trade or business in the United States.
Gain
on Disposition of Common Shares
A
non-U.S. holder generally will not be subject to U.S. federal income or
withholding tax with respect to gain recognized upon a sale or other disposition
of our Common Shares unless one of the following applies:
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the
gain is effectively connected with the non-U.S. holder’s conduct of a
trade or business in the United States, and, if required by an applicable
income tax treaty, is attributable to a permanent establishment maintained
by the non-U.S. holder in the United States, in which case the non-U.S.
holder will be subject to U.S. federal income tax on such gain
on a net income basis at the regular graduated U.S. federal income tax
rates in much the same manner as if such holder were a resident of the
United States, unless an applicable income tax treaty provides otherwise,
and a non-U.S. holder that is a foreign corporation also may be subject to
the branch profits tax referred to
above;
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the
non-U.S. holder is an individual and is present in the United States for
183 days or more during the taxable year of the sale or other disposition,
and meets certain other conditions, in which case such non-U.S. holder
will be subject to U.S. federal income tax on the gain at a flat rate of
30% (unless an applicable income tax treaty provides otherwise), which may
be offset by certain U.S.-source capital losses, even though the
individual is not considered to be a resident of the United States;
or
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S-26
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Park
is or has been a USRPHC for U.S. federal income tax purposes at any time
within the shorter of the five-year period preceding the sale or other
disposition or the period during which the non-U.S. holder held our Common
Shares, in which case only a non-U.S. holder who held, at any time during
the applicable period, more than 5% of our Common Shares will be subject
to U.S. federal income tax on the disposition of our Common Shares under
the USRPHC rules, so long as our Common Shares continue to be regularly
traded on an established securities
market.
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In
general, a corporation is a USRPHC if the fair market value of its “U.S. real
property interests” equals or exceeds 50% of the sum of the fair market value of
its worldwide real property interests plus its other assets used or held for use
in a trade or business. Park believes that it is not currently, has
not been, and will not become, a USRPHC for U.S. federal income tax
purposes.
Federal
Estate Tax
Warrants
and/or Common Shares that are owned or treated as owned by an individual who is
not a U.S. citizen or domiciled in the United States (as specially defined for
U.S. federal estate tax purposes) at the time of death will be included in the
individual’s gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise, and, therefore, may be subject
to U.S. federal estate tax.
Information
Reporting and Backup Withholding Tax
Under
U.S. Treasury regulations, we must report annually to the IRS and to each
non-U.S. holder the gross amount of dividends paid to such holder and the amount
of tax withheld, if any, with respect to such dividends. These
information reporting requirements apply regardless of whether no withholding
was required because the dividends were effectively connected with the non-U.S.
holder’s conduct of a trade or business in the United States or withholding was
reduced or eliminated by an applicable income tax treaty. Copies of
the information returns reporting such dividends and the amount of tax withheld,
if any, also may be required under an applicable income tax treaty to be made
available to the tax authorities in the country in which a non-U.S. holder
resides or is established.
A
non-U.S. holder of our Common Shares may be subject to backup withholding,
currently at a rate of 28%, on payments of dividends if the non-U.S. holder
fails to certify under penalties of perjury and in accordance with applicable
U.S. Treasury regulations that such holder is a non-U.S. holder, or the payor
has actual knowledge or reason to know that such holder is a U.S. person as
defined under the Code.
The
payment of proceeds on the sale or other disposition of our Common Shares by or
through a U.S. office of any U.S. or non-U.S. broker is subject to both
information reporting and backup withholding unless the beneficial owner
certifies under penalties of perjury that it is a non-U.S. holder (and the payor
does not have actual knowledge or reason to know that such holder is a U.S.
person as defined under the Code), or such holder otherwise establishes an
exemption. In general, information reporting and backup withholding
will not apply to a payment of proceeds on the sale or other disposition of our
Common Shares by or through a non-U.S. office of any U.S. or non-U.S.
broker. If, however, the broker is, for U.S. federal income tax
purposes:
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a
U.S. person as defined under the
Code,
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a
controlled foreign corporation as defined under the
Code,
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a
foreign broker that derives 50% or more of its gross income for specified
periods from the conduct of a trade or business in the United States,
or
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a
foreign partnership with particular U.S.
connections,
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such
payments will be subject to information reporting, but not backup withholding,
unless the broker has documentary evidence in its records that the beneficial
owner is a non-U.S. holder and other specified conditions are met, or the
beneficial owner otherwise establishes an exemption. In addition,
backup withholding may apply in such cases unless specified certification
requirements are satisfied or an exemption is otherwise established, and the
broker has no actual knowledge or reason to know that the holder is a U.S.
person as defined under the Code.
Any
amounts withheld under the backup withholding rules do not constitute a separate
U.S. federal income tax. Rather, any such withheld amounts may be
allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income
tax liability, if any, provided that the required information is timely
furnished to the IRS.
S-27
Payments
to Foreign Financial Institutions and Non-Financial Foreign
Entities
Under recently enacted legislation,
payments of any dividends on, or any gross proceeds from the sale, exchange or
other disposition of, our Common Shares made after December 31, 2012 to a
non-U.S. holder that is a “foreign financial institution” or a “non-financial
foreign entity” (to the extent such dividends or gain from such sale, exchange
or disposition is not effectively connected with the conduct of a trade or
business in the United States by such non-U.S. holder) generally will be subject
to the U.S. federal withholding tax at a rate of 30% unless such non-U.S. holder
complies with certain additional U.S. reporting requirements.
For this purpose, a foreign financial
institution includes, among others, a non-U.S. entity that (i) is a bank, (ii)
holds, as a substantial portion of its business, financial assets for the
account of others or (iii) is engaged primarily in the business of investing,
reinvesting or trading in securities, partnership interests, commodities or any
interest in securities, partnership interests or commodities. A
foreign financial institution generally will be subject to this 30% U.S. federal
withholding tax unless it (i) enters into an agreement with the IRS pursuant to
which such financial institution agrees (x) to comply with certain information,
verification, due diligence, reporting, and other procedures established by the
IRS with respect to “United States accounts” (generally financial accounts
maintained by a financial institution (as well as non-traded debt or equity
interests in such financial institution) held by one or more specified U.S.
persons or foreign entities with a specified level of U.S. ownership) and (y) to
withhold on its account holders that fail to comply with reasonable information
requests or that are foreign financial institutions that do not enter into such
an agreement with the IRS or (ii) is exempted by the IRS.
A non-financial foreign entity
generally will be subject to this 30% U.S. federal withholding tax unless such
entity provides the applicable withholding agent with either (i) a certification
that such entity does not have any substantial U.S. owners or (ii) information
regarding the name, address and taxpayer identification number of each
substantial U.S. owner of such entity. These reporting requirements
generally will not apply to a non-financial foreign entity that is a corporation
the stock of which is regularly traded on an established securities market or
certain affiliated corporations or to certain other specified types of
entities.
Non-U.S. holders should consult their
own tax advisers regarding the application of these withholding and reporting
rules to an investment in the Warrants and/or our Common Shares.
The
foregoing discussion of U.S. federal tax consequences to non-U.S. holders does
not constitute tax advice. Accordingly, each prospective non-U.S.
holder of the Warrants and/or our Common Shares should consult with such
holder’s independent tax adviser with respect to the U.S. federal, state, local
and non-U.S. tax consequences of the exercise and disposition of the Warrants
and/or the acquisition, ownership and disposition of our Common
Shares.
We
entered into an engagement agreement, dated December 7, 2010, with
Rodman & Renshaw, LLC. Subject to the terms and conditions set
forth in the engagement agreement, Rodman & Renshaw, LLC agreed to
act as the exclusive placement agent in connection with this offering. The
placement agent is not purchasing or selling any securities offered by this
prospectus supplement and the accompanying prospectus, and is not required to
arrange for the purchase or sale of any specific number or dollar amount of
securities. The placement agent agreed in the engagement agreement to use its
reasonable best efforts to arrange for the sale of all of the securities being
offered in this offering. We will enter into securities purchase agreements
directly with the investors who purchase securities in this
offering.
We
currently anticipate that the closing of this offering will take place on or
about December 10, 2010. On the closing date:
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we
will receive funds in the amount of the aggregate purchase price of the
Common Shares and Warrants sold;
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we
will irrevocably instruct the transfer agent to deliver the Common Shares,
and we will deliver the Warrants, to the investors;
and
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the
placement agent will receive the placement agent fees in accordance with
the terms of the engagement
agreement.
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We have
agreed to pay the placement agent an aggregate fee equal to 3% of the aggregate
gross proceeds from the sale of our Common Shares and the Warrants in this
offering, plus 3% of the gross proceeds we receive, if any, from the exercise of
the Warrants that are solicited by the placement agent. We have also agreed to
provide the placement agent with a non-accountable expense allowance, payable
immediately upon (but only in the event of) the closing of this offering, equal
to 1% of the aggregate gross proceeds we raise in this offering, but in any
event no more than $40,000.
S-28
The
estimated offering expenses payable by us, in addition to the aggregate fees and
expenses of approximately $190,000 due to the placement agent, are approximately
$230,000, which include legal, accounting and printing costs, and various other
fees associated with registering the securities and listing our Common Shares.
After deducting certain fees due to the placement agent and our estimated
offering expenses, we expect the net proceeds from the offering of 71,984 of our
Common Shares and the associated Warrants to be approximately $4.8
million. If the Warrants were fully exercised, excluding the maximum
warrant solicitation fee of approximately $165,000 which would be due to the
placement agent if it solicits the exercise of all of the Warrants in full, we
would receive additional proceeds of approximately $5.3 million.
The
following table shows the per share and total placement agent fee we will pay to
the placement agent in connection with the sale of our Common Shares and the
Warrants offered pursuant to this prospectus supplement and the accompanying
prospectus, assuming the purchase of all of our Common Shares and the Warrants
offered hereby and excluding proceeds that we may receive upon exercise of the
Warrants:
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Per
Common Share placement agent fee (rounded to the nearest
cent)
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$2.08
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Maximum
placement agent fees
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$150,000
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Because
there is no minimum offering amount required as a condition to closing in this
offering, the actual total placement agent fees, if any, are not presently
determinable and may be substantially less than the maximum amount set forth
above.
Rodman &
Renshaw, LLC may be deemed to be an underwriter within the meaning of
Section 2(a)(11) of the Securities Act of 1933, as amended (the “Securities
Act”), and any placement agent fees received by them might be deemed to be
underwriting discounts or commissions under the Securities Act.
We have
agreed to indemnify the placement agent and certain other persons against
certain liabilities relating to or arising out of the placement agent’s
activities under the engagement agreement. We have also agreed to contribute to
payments the placement agent may be required to make in respect of such
liabilities.
We have
agreed not to issue any Common Shares, or any securities that may be converted
into or exchanged for Common Shares, during the 30-day period after the date of
the securities purchase agreements. This restriction does not apply to the
issuance of:
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Common
Shares and Warrants to the investors in this
offering;
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Common
Shares or options to our employees, officers or directors pursuant to any
401(k), employee stock ownership, stock or option plan duly adopted for
such purpose;
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Common
Shares to the Park National Corporation Defined Benefit Pension
Plan;
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securities
exercisable or exchangeable for or convertible into Common Shares issued
and outstanding on the date of the securities purchase agreements
(including, without limitation, the Treasury
Warrant);
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securities
issued pursuant to share splits, share dividends or distributions,
recapitalizations and similar events affecting our Common Shares;
or
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securities
issued pursuant to certain acquisitions or strategic transactions approved
by a majority of our disinterested
directors.
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The
engagement agreement, the forms of securities purchase agreements we enter into
with the investors in this offering, and the form of the Warrants will be
included as exhibits to our Current Report on Form 8-K that will be filed with
the SEC in connection with the consummation of this offering.
The Per
Share Purchase Price, the purchase price of the Warrants and the exercise price
for the Warrants was determined based on negotiations with the investors and
discussions with the placement agent.
S-29
A
fiduciary of a pension, profit-sharing or other employee benefit plan governed
by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
should consider the fiduciary standards of ERISA in the context of the ERISA
plan’s particular circumstances before authorizing an investment in our Common
Shares. Among other factors, the fiduciary should consider whether
such an investment is in accordance with the documents governing the ERISA plan
and whether the investment is appropriate for the ERISA plan in view of its
overall investment policy and diversification of its portfolio.
Certain
provisions of ERISA and the Code prohibit employee benefit plans (as defined in
Section 3(3) of ERISA) that are subject to Title I of ERISA, plans described in
Section 4975(e)(1) of the Code (including, without limitation, retirement
accounts and Keogh Plans), and entities whose underlying assets include plan
assets by reason of a plan’s investment in such entities (including, without
limitation, as applicable, insurance company general accounts), from engaging in
certain transactions involving “plan assets” with parties that are “parties in
interest” under ERISA or “disqualified persons” under the Code with respect to
the plan or entity. Governmental and other plans that are not subject
to ERISA or to the Code may be subject to similar restrictions under federal,
state or local law. Any employee benefit plan or other entity, to
which such provisions of ERISA, the Code or similar law apply, proposing to
acquire our Common Shares should consult with its legal counsel.
We,
directly or through our affiliates, may be considered a “party in interest” or a
“disqualified person” as to a large number of plans. A purchase of
our Common Shares by any such plan would be likely to result in a prohibited
transaction between the plan and us. Accordingly, our Common Shares
may not be purchased, held or disposed of by any such plan or any other person
investing “plan assets” of any such plan that is subject to the prohibited
transaction rules of ERISA or Section 4975 of the Code or other similar law,
unless a Prohibited Transaction Class Exemptions (“PTCE”) issued by the U.S.
Department of Labor or a similar exemption or exception applies to such
purchase, holding and disposition.
Any
purchaser of our Common Shares or any interest therein will be deemed to have
represented and warranted on each day including the date of its purchase of our
Common Shares through and including the date of disposition of our Common Shares
that either:
·
no portion of the assets used by such purchaser to acquire and hold our Common
Shares constitutes assets of any employee benefits plan or similar arrangement;
or
· the
purchase and holding of our Common Shares by such purchaser will not constitute
a nonexempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code, or a violation under any applicable similar
laws.
Due to
the complexity of these rules and the penalties imposed upon persons involved in
prohibited transactions, it is important that any person considering the
purchase of our Common Shares with plan assets consult with its counsel
regarding the consequences under ERISA and the Code, or other similar law, of
the acquisition and ownership of our Common Shares and the availability of
exemptive relief under the class exemptions listed above.
The
consolidated financial statements of Park incorporated in this prospectus
supplement by reference to Park’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2009 have been so incorporated in reliance on the report of
Crowe Horwath LLP, independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
The
legality of the securities being offered by this prospectus supplement is being
passed upon for Park by the law firm of Vorys, Sater, Seymour and Pease LLP,
Columbus, Ohio. As of December 6, 2010, Vorys, Sater, Seymour and
Pease LLP attorneys, together with members of their immediate families, owned an
aggregate of 2,012 of our Common Shares. Certain legal matters will be
passed upon by Weinstein Smith LLP for Rodman & Renshaw, LLC.
S-30
PROSPECTUS
Park
National Corporation
Common
Shares, without par value
Preferred
Shares, without par value
Senior
Debt Securities
Subordinated
Debt Securities
Junior
Subordinated Debt Securities
Depositary
Shares
Warrants
Units
The
securities of each class may be offered and sold by Park National Corporation
(“Park”) in amounts, at prices and on other terms to be determined at the time
of the offering. Park will describe the specific terms and manner of offering of
these securities in supplements to this prospectus. You should read this
prospectus and the applicable prospectus supplement carefully before you invest
in the securities described in the applicable prospectus supplement. This
prospectus may not be used to consummate sales of securities unless accompanied
by a prospectus supplement and any applicable pricing supplement.
The
common shares, without par value (the “Common Shares”), of Park are listed on
NYSE Amex under the symbol “PRK.” On May 21, 2009, the closing
price for the Park Common Shares was $64.74.
____________________
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION, NOR ANY STATE SECURITIES COMMISSION NOR
ANY BANK REGULATORY AGENCY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
ANY
SECURITIES OFFERED BY THIS PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT
WILL BE OUR EQUITY SECURITIES OR UNSECURED OBLIGATIONS AND WILL NOT BE DEPOSITS
OR ACCOUNTS OR OTHER OBLIGATIONS OF ANY OF OUR BANK OR NON-BANK SUBSIDIARIES AND
ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM OR ANY OTHER GOVERNMENTAL OR
REGULATORY AGENCY OR INSTRUMENTALITY.
____________________
Our
principal executive offices are located at 50 North Third Street, Newark, Ohio
43055 and our telephone number is (740) 349-8451.
The date
of this prospectus is May 22, 2009.
TABLE
OF CONTENTS
Available
Information
We have
filed a registration statement on Form S-3 with the Securities and Exchange
Commission (the “SEC”) covering the securities that may be sold under this
prospectus. For further information about us and the securities that
may be sold under this prospectus, you should refer to our registration
statement and its exhibits. As permitted by the rules and regulations
of the SEC, the registration statement that contains this prospectus includes
additional information not contained in this prospectus. Statements
in this prospectus concerning any document filed as an exhibit to the
registration statement or otherwise filed with the SEC are not intended to be
comprehensive and are qualified by reference to these filings. You should review
the complete document to evaluate these statements.
We also
file annual, quarterly and current reports, proxy statements and other
information with the SEC. The reports, proxy statements and other
information that we file with the SEC are available to the public from the SEC’s
Internet site at http://www.sec.gov. Copies
of certain information filed by us with the SEC are also available through our
Internet site at http://www.parknationalcorp.com. The
information on the SEC Internet site and on our Internet site is not a part of
this prospectus. You may also read and copy any document we file with
the SEC by visiting the SEC’s Public Reference Room in Washington,
D.C. The SEC’s address in Washington, D.C. is 100 F Street N.E.,
Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for information on the operation of the Public Reference
Room. You may also inspect our SEC reports and other information at
NYSE Amex, 30 Broad Street, 5th Floor, New York, New York 10004.
Incorporation
by Reference
The SEC
allows us to “incorporate by reference” into this prospectus information that we
file with the SEC. This means that we can disclose important
information to you by referring you to those documents. Any
information we incorporate in this manner is considered part of this prospectus
except to the extent updated and superseded by information contained in or
incorporated by reference into this prospectus.
We
incorporate by reference the following documents that we have filed with the SEC
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
except as noted below:
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Annual
Report on Form 10-K for the fiscal year ended December 31,
2008;
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Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
2009;
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Current
Reports on Form 8-K filed/furnished on January 9, 2009,
January 26, 2009, March 11, 2009, April 20, 2009 and May 14,
2009;
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The
definitive proxy statement for our 2009 Annual Meeting of Shareholders;
and
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The
description of our Common Shares which is contained in “ITEM 8.01 OTHER
EVENTS.” of our Current Report on Form 8-K filed on May 14, 2009,
together with any subsequent registration statement or report filed for
the purpose of updating such
description.
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We also
incorporate by reference each of the following documents that we will file with
the SEC after the date of this prospectus until this offering is
completed:
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any
reports filed under Section 13(a) or Section 13(c) of the
Exchange Act;
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any
document filed under Section 14 of the Exchange Act;
and
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any
reports filed under Section 15(d) of the Exchange
Act.
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Pursuant
to General Instruction B of Form 8-K, any information furnished pursuant to
“Item 2.02. Results of Operations and Financial Condition”, or “Item
7.01. Regulation FD Disclosure” of Form 8-K is not deemed to be
“filed” for purposes of Section 18 of the Exchange Act, and we are not
incorporating by reference any information furnished pursuant to Item 2.02 or
Item 7.01 (or former Item 9 or Item 12) of Form 8-K into this
prospectus.
1
Statements
contained in this prospectus or any accompanying prospectus supplement as to the
contents of any contract, agreement or other document referred to in this
prospectus or any accompanying prospectus supplement do not purport to be
complete, and, where reference is made to the particular provisions of that
contract, agreement or other document, those references are qualified in all
respects by reference to all of the provisions contained in that contract,
agreement or other document. Any statement contained in a document
incorporated by reference, or deemed to be incorporated by reference, into this
prospectus will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated by reference in this
prospectus modifies or supersedes that statement. Any such statement
so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus.
We will
provide without charge, upon written or oral request, a copy of any or all of
the documents that are incorporated by reference into this prospectus (other
than exhibits, unless they are specifically incorporated by reference in the
documents) and a copy of any or all other contracts, agreements or documents
which are referred to in this prospectus or any accompanying prospectus
supplement. Requests should be directed to: Park National
Corporation, 50 North Third Street, Newark, Ohio 43055,
Attention: John W. Kozak, Chief Financial Officer, telephone number
(740) 349-8451.
This
prospectus is part of a registration statement that we filed with the SEC
utilizing a “shelf” registration process for the delayed offering and sale of
securities pursuant to Rule 415 under the Securities Act. Under this
shelf registration process, we may sell any of the securities described in this
prospectus in one or more offerings from time to time. When we use
the term “securities” in this prospectus, we mean any of the securities that we
may offer under this prospectus, unless we say otherwise. Each time
we use this prospectus to offer securities, we will provide a prospectus
supplement and, if applicable, a pricing supplement that will describe the
specific terms of the offering. The prospectus supplement and any pricing
supplement may also add to, update or change information contained in this
prospectus. If the information in this prospectus is inconsistent with a
prospectus supplement or pricing supplement, you should rely on the information
in the prospectus supplement or pricing supplement. You should
carefully read both this prospectus and any prospectus supplement and pricing
supplement. You also should carefully read the documents incorporated
by reference into this prospectus and the documents we have referred you to in
“WHERE YOU CAN FIND MORE
INFORMATION” for additional information about our Company, including our
consolidated financial statements.
Unless
the context otherwise requires, references to “Park,” the “Company,” “we,” “our”
and “us” and similar terms mean Park National Corporation and its subsidiaries
and predecessors.
We may
use this prospectus to offer any of the following of our securities from time to
time:
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Common
Shares, without par value;
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Preferred
Shares, without par value;
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Senior
Debt Securities;
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Subordinated
Debt Securities;
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Junior
Subordinated Debt Securities;
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Depositary
Shares;
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Warrants;
or
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Units.
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You
should rely only on the information contained or incorporated by reference in
this prospectus and any prospectus supplement and pricing
supplement. We have not authorized anyone to provide you with any
other information. If you receive any other information, you should
not rely on it. This prospectus does not constitute an offer to sell,
or a solicitation of an offer to purchase, any of the securities to which this
prospectus relates in any jurisdiction to or from any person to whom it is
unlawful to make such an offer or solicitation in such
jurisdiction. You should not assume that the information contained in
this prospectus and, if applicable, any prospectus supplement and pricing
supplement or any document incorporated by reference in this prospectus or any
prospectus supplement or pricing supplement, is accurate as of any date other
than the date on the front cover of this prospectus or on the front cover of the
applicable prospectus supplement, pricing supplement or other document or as
specifically indicated in the document. Our business, financial
condition, results of operations and prospects may have changed since that
date.
2
This
prospectus and any accompanying prospectus supplement contains or incorporates
by reference forward-looking statements that set forth anticipated results based
on our management’s plans and assumptions. From time to time, we also
provide forward-looking statements in other materials we release to the public
as well as oral forward-looking statements. Such statements give our
current expectations or forecasts of future events; they do not relate strictly
to historical or current facts. We have tried, wherever possible, to
identify such statements by using words such as “anticipate,” “estimate,”
“expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions
in connection with any discussion of future operating or financial
performance.
We cannot
guarantee that any forward-looking statement will be realized, although our
management believes that we have been prudent in our plans and
assumptions. Achievement of future results is subject to risks,
uncertainties and potentially inaccurate assumptions. If known or
unknown risks or uncertainties should materialize, or if underlying assumptions
should prove inaccurate, actual results could differ materially from past
results and those anticipated, estimated or projected. You should
bear this in mind in reading this prospectus and any accompanying prospectus
supplement. Factors that might cause such differences include, but
are not limited to:
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general
economic and financial market conditions in the markets we serve,
specifically the real estate markets, may be less favorable than
anticipated which could decrease the demand for loan, deposit and other
financial services and increase loan delinquencies and
defaults;
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deterioration
in the asset value of our loan portfolio may be worse than
expected;
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changes
in market rates and prices may adversely impact the value of securities,
loans, deposits and other financial instruments and the interest rate
sensitivity of our consolidated balance
sheet;
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changes
in consumer spending, borrowing and savings
habits;
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our
liquidity requirements could be adversely affected by changes in our
assets and liabilities;
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the
nature, timing and effect of legislative or regulatory developments
including changes in laws concerning taxes, banking, securities and other
aspects of the financial services
industry;
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competitive
factors among financial services organizations, including product and
pricing pressures and our ability to attract, develop and retain qualified
banking professionals;
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our
ability to execute our business plan successfully and within the expected
time frame;
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our
ability to convert our Ohio-based banking divisions to one operating
system;
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the
effect of changes in accounting policies and practices, as may be adopted
by the Financial Accounting Standards Board, the SEC, the Public Company
Accounting Oversight Board and other regulatory
agencies;
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the
effect of fiscal and governmental policies of the United States federal
government;
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rapidly
changing technology affecting the financial services industry;
and
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other
external developments materially affecting our operational and financial
performance.
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3
We
undertake no obligation publicly to update forward-looking statements, whether
as a result of new information, future events or otherwise. You are
advised, however, to consult any further disclosures we make on related subjects
in our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K filed with or furnished to the
SEC. Also note that we provide cautionary discussion of risks,
uncertainties and possibly inaccurate assumptions relevant to our business in
our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K incorporated by reference herein and in prospectus
supplements, pricing supplements and other offering materials. These
are factors that, individually or in the aggregate, management believes could
cause our actual results to differ materially from expected and historical
results. We note these factors for investors as permitted by the
Private Securities Litigation Reform Act of 1995. You should
understand that it is not possible to predict or identify all such
factors. Consequently, you should not consider such disclosures to be
a complete discussion of all potential risks or uncertainties.
We are a
bank holding company headquartered in Newark, Ohio. Our Ohio-based
banking operations are conducted through 128 offices across 29 Ohio counties and
one Kentucky county through our subsidiary The Park National Bank and its
divisions which include Fairfield National Bank, Richland Bank, Century National
Bank, First-Knox National Bank, Farmers and Savings Bank, United Bank, Second
National Bank, Security National Bank, Unity National Bank, Citizens National
Bank and The Park National Bank of Southwest Ohio & Northern
Kentucky. Our Florida and Alabama-based banking operations are
conducted through 18 offices across six Florida counties and one Alabama county
through our subsidiary Vision Bank and its divisions which include Vision Bank
headquartered in Panama City, Florida and the Vision Bank Division of Gulf
Shores, Alabama. Our banking subsidiaries engage in the commercial
banking and trust business primarily in small and medium population Ohio
communities and in Gulf Coast communities in Alabama and the Florida
panhandle. Park’s other subsidiaries include Scope Leasing, Inc.
(d.b.a. Scope Aircraft Finance), Guardian Financial Services Company (d.b.a.
Guardian Finance Company) and Park Title Agency, LLC, and they operate through
an aggregate of eight offices in Ohio.
We were
incorporated under the laws of the State of Ohio, in 1992. Our
principal executive offices are located at 50 North Third Street, Newark,
Ohio 43055, and our telephone number is (740) 349-8451. Our
Internet site can be accessed at http://www.parknationalcorp.com. Information
contained in our Internet site does not constitute part of, and is not
incorporated into, this prospectus.
At March
31, 2009, we had consolidated total assets of approximately $7.1 billion, total
loans of approximately $4.6 billion, total deposits of approximately $4.9
billion and total shareholders’ equity of approximately $656
million.
The
following table shows the ratio of earnings to fixed charges for Park, which
includes our subsidiaries, on a consolidated basis for the periods
indicated:
|
For
the Three
|
For
the Year Ended December 31,
|
||||||||||||||
|
Months
Ended
|
|||||||||||||||
|
March
31, 2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||
|
Ratio
of earnings to fixed charges (1)
|
|||||||||||||||
|
Excluding
Interest on Deposits
|
4.63
|
1.77
|
2.12
|
4.36
|
4.61
|
7.80
|
|||||||||
|
Including
Interest on Deposits
|
2.16
|
1.26
|
1.31
|
2.09
|
2.44
|
3.19
|
|||||||||
|
(1) For
purposes of computing the ratio, earnings consist of income before income
taxes and fixed charges. Fixed charges consist of interest on borrowings
and subordinated debt, one-third of rental expense (which Park believes is
representative of the interest factor), and including/excluding interest
on deposits.
|
|||||||||||||||
4
The
following table shows the ratio of earnings to fixed charges and preferred
dividends for Park, which includes our subsidiaries, on a consolidated
basis:
|
For
the Three
|
For
the Year Ended December 31,
|
||||||||||||||
|
Months
Ended
|
|||||||||||||||
|
March
31, 2009
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||
|
Ratio
of earnings to fixed charges and preferred dividends (1)
|
|||||||||||||||
|
Excluding
Interest on Deposits
|
3.90
|
1.77
|
2.12
|
4.36
|
4.61
|
7.80
|
|||||||||
|
Including
Interest on Deposits
|
2.07
|
1.26
|
1.31
|
2.09
|
2.44
|
3.19
|
|||||||||
|
(1) For
purposes of computing the ratio, earnings consist of income before income
taxes and fixed charges. Fixed charges consist of interest on borrowings
and subordinated debt, one-third of rental expense (which Park believes is
representative of the interest factor), and including/excluding interest
on deposits.
|
|||||||||||||||
We intend
to use the net proceeds from the sales of securities as set forth in the
applicable prospectus supplement.
Unless
otherwise indicated in the applicable prospectus supplement, the legality of the
securities being offered by this prospectus is being passed upon for Park by the
law firm of Vorys, Sater, Seymour and Pease LLP, Columbus, Ohio. As
of May 18, 2009, Vorys, Sater, Seymour and Pease LLP attorneys, together
with members of their immediate families, owned an aggregate of 2,080 of our
Common Shares. Unless otherwise provided in the applicable prospectus
supplement, certain legal matters will be passed upon for any underwriter or
agents by their counsel.
The
consolidated financial statements of Park appearing in Park’s 2008 Annual Report
and incorporated by reference therefrom into Park’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008 (the “Park 2008 Form 10-K”) and the
effectiveness of Park’s internal control over financial reporting as of
December 31, 2008, have been audited by Crowe Horwath LLP, independent
registered public accounting firm, as set forth in their report thereon,
included in Park’s 2008 Annual Report and incorporated by reference therefrom in
the Park 2008 Form 10-K, which Park 2008 Form 10-K is, in turn, incorporated in
this prospectus by reference. Such consolidated financial statements
are incorporated in this prospectus by reference in reliance upon such report
given on the authority of such firm as experts in auditing and
accounting.
5
$5,000,000
Common
Shares
Series
A Common Share Warrants
Series
B Common Share Warrants
PROSPECTUS
SUPPLEMENT
Rodman
& Renshaw, LLC
December
8, 2010