<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 29, 2000
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
PARK NATIONAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
OHIO 6021 31-1179518
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
50 NORTH THIRD STREET
P.O. BOX 3500
NEWARK, OHIO 43058-3500
(740) 349-8451
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DAVID C. BOWERS, SECRETARY
PARK NATIONAL CORPORATION
50 NORTH THIRD STREET
P.O. BOX 3500
NEWARK, OHIO 43058-3500
(740) 349-3708
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------------------
COPIES TO:
<TABLE>
<S> <C>
CHARLES S. DEROUSIE, ESQ. AND MARTIN WERNER, ESQ.
ELIZABETH TURRELL FARRAR, ESQ. WERNER & BLANK CO., L.P.A.
VORYS, SATER, SEYMOUR AND PEASE LLP 7205 WEST CENTRAL AVENUE
52 EAST GAY STREET TOLEDO, OHIO 43617
COLUMBUS, OHIO 43215 (419) 841-8051
(614) 464-6400
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable following the effective date of the
Registration Statement and upon the effective date of the merger of Security
Banc Corporation with and into the Registrant pursuant to the Agreement and Plan
of Merger described in the enclosed joint proxy statement/prospectus included as
Part I of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================ ================== ======================= ======================= ================
Proposed maximum Proposed maximum Amount of
Title of each class of Amount to be offering aggregate registration
securities being registered registered (1) price per unit offering price (2) fee
-------------------------------- ------------------ ----------------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
Common Shares,
without par value........... 3,350,000 N/A $258,373,294 $64,594
================================ ================== ======================= ======================= ================
</TABLE>
(1) Represents the estimated maximum number of common shares of the Registrant
that the Registrant expects would be issuable to shareholders of Security
Banc Corporation pursuant to the terms of the Agreement and Plan of Merger
between the Registrant and Security Banc Corporation.
(2) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) and Rule 457(f)(1) of the General Rules and
Regulations under the Securities Act of 1933 based upon the market value of
the securities to be cancelled in exchange for common shares of the
Registrant in the merger. On December 27, 2000, there were 11,777,700
common shares of Security Banc Corporation outstanding (excluding common
shares issuable upon exercise of outstanding options) and the average of
the bid and asked prices of such common shares on such date was $21.9375,
resulting in an aggregate value of $258,373,294.
-------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 3
The information in this joint proxy statement/prospectus is not complete and may
be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission, which includes this joint
proxy statement/prospectus, is effective. This joint proxy statement/prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
<PAGE> 4
PARK NATIONAL CORPORATION
50 NORTH THIRD STREET
NEWARK, OHIO 43055
-------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders of Park National Corporation, an Ohio
corporation, will be held at the offices of The Park National Bank, 50 North
Third Street, Newark, Ohio, on [ ], [ ], 2001, at [ ]:00 [_.M.], local
time, for the following purposes:
1. To consider and vote on a proposal to adopt the Agreement and Plan
of Merger, dated as of November 20, 2000, by and between Park and
Security Banc Corporation, an Ohio corporation. Subject to the
terms and conditions of the merger agreement, at the effective
time of the merger, each outstanding Security common share (other
than those as to which dissenters' rights are perfected under the
Ohio General Corporation Law) will be converted into the right to
receive Park common shares as more fully described in the
accompanying joint proxy statement/prospectus.
2. To transact any other business which properly comes before the
special meeting or any adjournment of the special meeting.
THE BOARD OF DIRECTORS OF PARK UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN
FAVOR OF THE PROPOSAL TO ADOPT THE AGREEMENT AND PLAN OF MERGER.
We have fixed [ ], 2001 as the record date for determining those
shareholders entitled to vote at the special meeting and any adjournment of the
special meeting. Accordingly, only shareholders of record as of the close of
business on that date will be entitled to notice of, and to vote at, the special
meeting and any adjournment of the special meeting.
Whether or not you plan to attend the special meeting, please complete,
sign and date the enclosed proxy card and promptly return it in the accompanying
envelope, which requires no postage if mailed in the United States. You may
revoke your proxy at any time before it is voted at the special meeting by
delivering a later-dated executed proxy card or a written notice of revocation
to Park or by voting in person at the special meeting. Your attendance at the
special meeting will not, in and of itself, constitute a revocation of your
proxy.
By Order of the Board of Directors,
Newark, Ohio
[ ], 2001 David C. Bowers, Secretary
<PAGE> 5
SECURITY BANC CORPORATION
40 SOUTH LIMESTONE STREET
SPRINGFIELD, OHIO 45502
-------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders of Security Banc Corporation, an Ohio
corporation, will be held at [ ], Ohio, on [ ], [ ],
2001, at [ ]:00 [_.m.], local time, for the following purposes:
1. To consider and vote on a proposal to adopt the Agreement and Plan
of Merger, dated as of November 20, 2000, by and between Security
and Park National Corporation, an Ohio corporation. Subject to the
terms and conditions of the merger agreement, at the effective
time of the merger, each outstanding Security common share (other
than those as to which dissenters' rights are perfected under the
Ohio General Corporation Law) will be converted into the right to
receive Park common shares as more fully described in the
accompanying joint proxy statement/prospectus.
2. To transact any other business which properly comes before the
special meeting or any adjournment of the special meeting.
THE BOARD OF DIRECTORS OF SECURITY UNANIMOUSLY RECOMMENDS THAT YOU VOTE
IN FAVOR OF THE PROPOSAL TO ADOPT THE AGREEMENT AND PLAN OF MERGER.
We have fixed [ ], 2001 as the record date for determining those
shareholders entitled to vote at the special meeting and any adjournment of the
special meeting. Accordingly, only shareholders of record as of the close of
business on that date will be entitled to notice of, and to vote at, the special
meeting and any adjournment of the special meeting.
Whether or not you plan to attend the special meeting, please complete,
sign and date the enclosed proxy card and promptly return it in the accompanying
envelope, which requires no postage if mailed in the United States. You may
revoke your proxy at any time before it is voted at the special meeting by
delivering a later-dated executed proxy card or a written notice of revocation
to Security or by voting in person at the special meeting. Your attendance at
the special meeting will not, in and of itself, constitute a revocation of your
proxy.
By Order of the Board of Directors,
Springfield, Ohio
[ ], 2001 J. William Stapleton, Executive
Vice President and Secretary
<PAGE> 6
<TABLE>
<S> <C>
---------------------------------------------------- ------------------------------------------------------
PARK NATIONAL CORPORATION PARK NATIONAL CORPORATION
PROSPECTUS AND
FOR SECURITY BANC CORPORATION
3,350,000 COMMON SHARES OF JOINT PROXY STATEMENT
PARK NATIONAL CORPORATION FOR
TO BE ISSUED IN CONNECTION WITH THE MERGER OF SPECIAL MEETING OF SHAREHOLDERS OF
SECURITY BANC CORPORATION PARK NATIONAL CORPORATION
INTO TO BE HELD ON [ ], 2001,
PARK NATIONAL CORPORATION AT [ ]:00 [_.M.]
AND
SPECIAL MEETING OF SHAREHOLDERS OF
SECURITY BANC CORPORATION
TO BE HELD ON [ ], 2001
AT [ ]:00 [_.M.]
---------------------------------------------------- ------------------------------------------------------
</TABLE>
The boards of directors of Park National Corporation and Security Banc
Corporation have each unanimously approved a merger agreement to combine our
corporations. If the merger is completed, Security will merge into Park. Each
common share of Park that a Park shareholder holds prior to the merger will
continue to be one Park common share after the merger. Each common share of
Security that a Security shareholder holds prior to the merger will be converted
into approximately .2844 Park common shares. In lieu of issuing fractional
shares, Park will make a cash payment based on a formula in the merger
agreement. Following the merger, Security's subsidiaries, Security National Bank
and Trust Company, The Citizens National Bank of Urbana and The Third Savings
and Loan Company, will be subsidiaries of Park, and Security will no longer
exist as a separate entity.
Park common shares are listed on the American Stock Exchange under the
symbol "PRK". On November 20, 2000, the last trading day prior to the joint
public announcement by Park and Security of the signing of the merger agreement,
Park common shares closed at $91.375 per share. On [ ], the last trading
day before the date of this joint proxy statement/prospectus, Park common shares
closed at $[ ] per share.
Park and Security cannot complete the merger unless the shareholders of
both Park and Security vote to adopt the merger agreement. YOUR VOTE IS VERY
IMPORTANT. IF YOU FAIL TO VOTE, THE EFFECT WILL BE A VOTE "AGAINST" ADOPTION OF
THE MERGER AGREEMENT.
Each of our corporations will hold a special meeting of our shareholders
to vote on the adoption of the merger agreement. This document is a joint proxy
statement for use by both Park and Security in soliciting proxies for their
special meetings of shareholders. It is also a prospectus for Park relating to
the Park common shares that will be issued to Security shareholders in the
merger in exchange for their Security common shares. This document gives
detailed information about the merger, and includes a copy of the merger
agreement. We urge you to read the entire document before deciding how to vote.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS RELATING TO THE MERGER, WHICH ARE
DESCRIBED BEGINNING ON PAGE [ ].
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE PARK COMMON SHARES TO BE ISSUED IN
CONNECTION WITH THE MERGER OR DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This joint proxy statement/prospectus is dated [ ], 2001 and is
first being mailed to shareholders of Park and of Security on or about [ ],
2001.
<PAGE> 7
REFERENCES TO ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important business and
financial information about Park and Security from documents that Park and
Security have filed with the Securities and Exchange Commission, but have not
included or delivered with this joint proxy statement/prospectus. This
information is available to you without charge upon your written or oral
request. You can obtain documents related to Park and Security that are
incorporated by reference into this joint proxy statement/prospectus by
requesting them in writing or by telephone from the appropriate corporation:
<TABLE>
<S> <C>
Park National Corporation Security Banc Corporation
50 North Third Street 40 South Limestone Street
P.O. Box 3500 Springfield, Ohio 45502
Newark, Ohio 43058-3500 Attention: J. William Stapleton, Executive
Attention: David C. Bowers, Secretary Vice President and Secretary
(740) 349-3708 (937) 324-6916
</TABLE>
PLEASE REQUEST DOCUMENTS NO LATER THAN [ ], 2001 IN ORDER TO RECEIVE
THEM BEFORE THE SPECIAL meetings. If you request any documents, they will be
mailed to you by first class mail, or another equally prompt means, by the next
business day after your request is received.
See "Where You Can Find More Information" on page [ ] for more
information about the documents referred to in this joint proxy
statement/prospectus.
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Description Page
----------- ----
<S> <C>
Questions and Answers About the Merger............................................................................1
Summary...........................................................................................................3
Parties to the Merger.........................................................................................3
Park National Corporation.................................................................................3
Security Banc Corporation.................................................................................4
Park Special Meeting..........................................................................................4
Security Special Meeting......................................................................................5
The Merger....................................................................................................5
Reasons for the Merger....................................................................................5
Opinion of Austin Associates, Inc.........................................................................6
Exchange of Security Common Shares........................................................................6
Fractional Shares.........................................................................................7
Exchange of Security Certificates.........................................................................7
Accounting Treatment......................................................................................7
Federal Income Tax Consequences...........................................................................7
Interests of Persons in the Merger........................................................................8
Resale of Park Common Shares..............................................................................8
Regulatory Approvals......................................................................................9
The Merger Agreement..........................................................................................9
Representations and Warranties; Covenants.................................................................9
Conditions; Effective Time................................................................................9
Amendment and Termination.................................................................................9
Recommendations of the Boards of Directors of Park and Security..........................................10
Treatment of Security Stock Options......................................................................10
Rights of Dissenting Shareholders............................................................................10
Comparison of Rights of Holders of Park Common Shares and of Security Common Shares..........................11
Historical and Pro Forma Comparative Unaudited Per Share Data................................................11
Selected Financial Data......................................................................................12
Park Unaudited Selected Financial Data...................................................................13
Security Unaudited Selected Financial Data...............................................................14
Unaudited Pro Forma Combined Selected Financial Data.....................................................15
Risk Factors.....................................................................................................16
The Park Special Meeting.........................................................................................17
Matters to be Considered at the Park Special Meeting.........................................................17
Voting at the Park Special Meeting; Park Record Date.........................................................17
The Security Special Meeting.....................................................................................18
Matters to be Considered at the Security Special Meeting.....................................................18
Voting at the Security Special Meeting; Security Record Date.................................................18
Principal Shareholders of Park...................................................................................19
Principal Shareholders of Security...............................................................................22
The Merger.......................................................................................................24
Background...................................................................................................25
Reasons for the Merger.......................................................................................28
Opinion of Austin Associates, Inc............................................................................30
Summary of Financial Terms of Merger.....................................................................32
Industry Comparative Analysis............................................................................33
Comparable Transaction Analysis..........................................................................34
Contribution Analysis....................................................................................34
Pro Forma Merger Analysis................................................................................35
Pro Forma Equivalent Dividends...........................................................................35
Additional Limiting Conditions...........................................................................35
</TABLE>
i
<PAGE> 9
<TABLE>
<S> <C>
Effect on Outstanding Park Common Shares and Exchange of Security Common Shares..............................36
Effect on Outstanding Park Common Shares.................................................................36
Exchange of Security Common Shares.......................................................................36
No Fractional Park Common Shares to Be Issued............................................................37
Closing of Security Share Transfer Books; Exchange of Certificates Evidencing Security Common Shares.....37
Rights of Holders of Security Share Certificates Prior to Surrender......................................37
Lost Share Certificates..................................................................................37
Treatment of Outstanding Security Options................................................................37
Accounting Treatment of the Merger...........................................................................38
Federal Income Tax Consequences of the Merger................................................................38
Interests of Persons in the Merger...........................................................................39
Resale of Park Common Shares Received in the Merger..........................................................40
Regulatory Approvals.........................................................................................41
Existing Relationship between Park and Security..............................................................41
The Merger Agreement.............................................................................................41
The Merger...................................................................................................41
Conversion of Security Common Shares.........................................................................42
Representations and Warranties...............................................................................42
Conduct of Business Pending the Merger.......................................................................43
Conditions to the Consummation of the Merger.................................................................47
Effective Time of the Merger.................................................................................50
Amendment and Termination....................................................................................50
Acquisition Proposals........................................................................................52
Security.................................................................................................52
Park.....................................................................................................52
Costs and Expenses; Indemnification..........................................................................53
Recommendation and Vote......................................................................................53
Rights of Dissenting Shareholders................................................................................53
Unaudited Condensed Pro Forma Combined Financial Information.....................................................54
Business of Park.................................................................................................63
General......................................................................................................63
Additional Information.......................................................................................64
Management of Park...............................................................................................64
Board of Directors...........................................................................................64
Executive Officers...........................................................................................67
Additional Information.......................................................................................67
Business of Security.............................................................................................67
General......................................................................................................67
Additional Information.......................................................................................68
Comparison of Rights of Holders of Park Common Shares and Holders of Security Common Shares......................69
Authorized Capital Stock.....................................................................................69
Composition of Board of Directors............................................................................69
Classification...............................................................................................69
Nominations..................................................................................................70
Removal......................................................................................................70
Mandatory Retirement.........................................................................................70
Cumulative Voting............................................................................................70
Special Voting Requirements..................................................................................71
Amendments of Articles.......................................................................................72
Amendments to the Regulations................................................................................72
Calling a Special Meeting....................................................................................72
Preemptive Rights............................................................................................72
Dividends....................................................................................................73
Anti-Takeover Statutes.......................................................................................73
Ohio Control Share Acquisition Act.......................................................................73
</TABLE>
ii
<PAGE> 10
<TABLE>
<S> <C>
Ohio Merger Moratorium Statute...........................................................................74
Director and Officer Liability and Indemnification...........................................................74
Legal Matters....................................................................................................76
Experts..........................................................................................................76
Park.........................................................................................................76
Security.....................................................................................................76
Cautionary Statement Regarding Forward-Looking Information.......................................................76
Where You Can Find More Information..............................................................................77
SEC Filings..................................................................................................77
Registration Statement.......................................................................................78
Documents Incorporated by Reference..........................................................................78
Park Documents...........................................................................................78
Security Documents.......................................................................................78
List of Appendices
------------------
Appendix A Agreement and Plan of Merger, dated as of November 20, 2000, between
Park National Corporation and Security Banc Corporation.............................. A-1
Appendix B Opinion of Austin Associates, Inc.................................................... B-1
Appendix C Ohio Revised Code Section 1701.85.................................................... C-1
</TABLE>
iii
<PAGE> 11
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q. WHAT WILL SECURITY SHAREHOLDERS RECEIVE FOR THEIR SECURITY COMMON SHARES
IN THE MERGER?
A. When the merger is completed, Security shareholders will receive
approximately .2844 Park common shares for each of their common shares of
Security. Because the market price of the Park common shares may change
from day to day, Security shareholders cannot be sure of the market value
of the Park common shares they will receive in the merger at the time
they vote their Security common shares. The closing price of a Park
common share on November 20, 2000, the last trading day before the
announcement of the signing of the merger agreement, was $91.375. The
closing price of a Park common share on [ ], 2001, the last trading
day before the date of this joint proxy statement/prospectus, was $[ ].
Q. WHAT HAPPENS TO MY FUTURE DIVIDENDS?
A. Security paid a quarterly dividend of $.20 per share on December 8, 2000
to shareholders of record on November 30, 2000. Security plans to
continue paying quarterly dividends at that rate on its common shares
until the closing of the merger. Security and Park agreed in the merger
agreement to cooperate to assure that during any applicable period, there
will not be a payment of both a Park and a Security dividend to former
Security shareholders as a result of the merger.
Q. WHAT WILL HAPPEN IF THE SHAREHOLDERS OF PARK AND SECURITY DO NOT ADOPT
THE MERGER AGREEMENT?
A. If the merger agreement is not adopted by the shareholders of both Park
and Security, management and the board of directors of each corporation
will continue to operate Park and Security as before, and each
corporation may consider other strategic alternatives. However, Security
may be required to pay Park a termination fee of $10,000,000 if:
- Security terminates the merger agreement because it receives a
proposal from another party to acquire Security; or
- the merger agreement is terminated for a different reason and
Security enters into an agreement with another party to sell
Security within one year from the date of termination of the
merger agreement.
Q. WHAT DO I NEED TO DO NOW?
A. After you have carefully read this document, please indicate on your
proxy card how you want to vote. Sign and date the proxy card and mail it
in the enclosed prepaid return envelope marked "Proxy" as soon as
possible, so that your common shares may be represented and voted at the
Park special meeting or the Security special meeting, as appropriate.
In order for us to complete the merger, the holders of at least
two-thirds of the issued and outstanding Park common shares and the
holders of at least two-thirds of the issued and outstanding Security
common shares must vote to adopt the merger agreement. THE BOARDS OF
DIRECTORS OF PARK AND SECURITY UNANIMOUSLY RECOMMEND VOTING "FOR" THE
ADOPTION OF THE MERGER AGREEMENT.
Q. WHAT HAPPENS IF I DO NOT SEND IN MY PROXY CARD, IF I DO NOT INSTRUCT MY
BROKER TO VOTE MY COMMON SHARES, OR IF I ABSTAIN FROM VOTING?
A. If you do not send in your proxy card, if you do not instruct your broker
to vote your common shares, or if you abstain from voting, it will have
the same effect as a vote "against" adoption of the merger agreement.
1
<PAGE> 12
Q. IF MY BROKER HOLDS MY COMMON SHARES IN "STREET NAME," WILL MY BROKER VOTE
MY COMMON SHARES FOR ME?
A. Your broker cannot vote your common shares without specific instructions
from you. Unless you follow the directions your broker provides to you
regarding how to instruct your broker to vote your common shares, your
common shares will not be voted.
Q. CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A. Yes. You can change your vote at any time before your proxy is voted at
the Park special meeting or the Security special meeting, as appropriate.
Just send in a later-dated, signed proxy card or a written notice of
revocation to the person to whom you submitted your proxy card before the
appropriate special meeting. You can also change your vote by attending
the appropriate special meeting and voting in person. Your attendance at
the special meeting alone will not revoke your proxy. If you have
instructed your broker to vote your common shares, you must follow the
directions received from your broker to change those instructions.
Q. WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A. Park and Security are working toward completing the merger during the
second quarter of 2001. We anticipate completing the merger shortly after
the special meetings are held, assuming that the shareholders of both
Park and Security adopt the merger agreement.
Q. WHERE CAN I FIND MORE INFORMATION ABOUT THE FILINGS PARK AND SECURITY
MAKE WITH THE SEC?
A. Park and Security file reports and other information with the SEC. You
may read and copy this information at the SEC's public reference
facilities. Please call the SEC at 1-800-SEC-0330 for information about
these facilities. This information is also available on the Internet site
the SEC maintains at www.sec.gov. Information regarding Park is available
on the Internet site Park maintains at www.parknationalcorp.com and at
the offices of the American Stock Exchange. You can also request copies
of the filings made with the SEC from Park or Security.
Q. WHO CAN ANSWER ANY OTHER QUESTIONS I MAY HAVE?
A. If you have questions, you may contact Park and Security at:
<TABLE>
<S> <C>
Park National Corporation Security Banc Corporation
50 North Third Street 40 South Limestone Street
P.O. Box 3500 Springfield, Ohio 45502
Newark, Ohio 43058-3500 Attention: J. William Stapleton, Executive
Attention: David C. Bowers, Secretary Vice President and Secretary
(740) 349-3708 (937) 324-6916
</TABLE>
2
<PAGE> 13
SUMMARY
This summary highlights selected information from this joint proxy
statement/prospectus. It does not contain all of the information that you may
consider important. We urge you to read carefully the entire document and the
other documents referred to in this joint proxy statement/prospectus to fully
understand the proposed merger. Each item in this summary includes a page
reference directing you to a more complete description of that item.
We propose a merger between Park and Security. If the holders of at least
two-thirds of the issued and outstanding Park common shares and the holders of
at least two-thirds of the issued and outstanding Security common shares adopt
the merger agreement, and if all other conditions to the consummation of the
merger are satisfied, Security will merge into Park. As a result, Security's
subsidiaries, Security National Bank and Trust Company, The Citizens National
Bank of Urbana and The Third Savings and Loan Company, will become wholly-owned
subsidiaries of Park. Park will continue its corporate existence under Ohio law
as the surviving corporation of the merger.
PARTIES TO THE MERGER
PARK NATIONAL CORPORATION (SEE PAGE [ ])
50 North Third Street
P.O. Box 3500
Newark, Ohio 43058-3500
(740) 349-8451
Park is an Ohio corporation registered as a bank holding company under
the Bank Holding Company Act of 1956, and subject to regulation by the Board of
Governors of the Federal Reserve System.
Through its banking subsidiaries, The Park National Bank, Newark, Ohio, a
national banking association; The Richland Trust Company, Mansfield, Ohio, an
Ohio state-chartered bank; Century National Bank, Zanesville, Ohio, a national
banking association; The First-Knox National Bank of Mount Vernon, a national
banking association; United Bank, N.A., Bucyrus, Ohio, a national banking
association; and Second National Bank, Greenville, Ohio, a national banking
association, Park is engaged in a general commercial banking and trust business
in small to medium population Ohio communities. In early 1999, Park organized
Guardian Financial Services Company, an Ohio consumer finance company based in
Hilliard, Ohio. Park's subsidiaries operate 77 full-service offices and a
network of 80 automatic teller machines in 20 central and southern Ohio
counties.
Park National Bank is further divided into two banking divisions with the
Park National Division headquartered in Newark, Ohio and the Fairfield National
Division headquartered in Lancaster, Ohio. First-Knox National Bank is similarly
divided into two banking divisions with the First-Knox National Division
headquartered in Mount Vernon, Ohio and the Farmers and Savings Division
headquartered in Loudonville, Ohio.
As of September 30, 2000, Park had total consolidated assets of
approximately $3.2 billion, total consolidated deposits of approximately $2.4
billion and total consolidated shareholders' equity of approximately $308
million.
3
<PAGE> 14
SECURITY BANC CORPORATION (SEE PAGE [ ])
40 South Limestone Street
Springfield, Ohio 45502
(937) 324-6920
Security, headquartered in Springfield, Ohio, is an Ohio corporation
registered in 1985 as a bank holding company under the Bank Holding Company Act
and subject to regulation by the Federal Reserve Board. Security has three
subsidiaries, Security National Bank and Trust Company, Springfield, Ohio, a
national banking association; The Citizens National Bank of Urbana, Urbana,
Ohio, a national banking association; and The Third Savings and Loan Company,
Piqua, Ohio, an Ohio state-chartered savings association.
Security had total consolidated assets of approximately $1.0 billion,
total consolidated deposits of approximately $724 million and total consolidated
shareholders' equity of approximately $123 million as of September 30, 2000.
Through its subsidiaries, Security offers a broad range of banking
services to the commercial, industrial and consumer market segments which it
serves. Services include commercial, real estate and personal loans; checking,
savings and time deposits; and other customer services such as safe deposit
facilities. Security does not have any foreign operations, assets or
investments.
PARK SPECIAL MEETING (SEE PAGE [ ])
Park will hold a special meeting of shareholders on [ ], [ ],
2001, at [ ]:00 [_.M.], local time, at the offices of The Park National Bank, 50
North Third Street, Newark, Ohio. Only the holders of record of the issued and
outstanding Park common shares at the close of business on [ ], 2001 will be
entitled to notice of, and to vote at, the Park special meeting and any
adjournment of the Park special meeting. As of the record date, there were
10,783,682 Park common shares issued and outstanding, each of which will be
entitled to one vote on each matter properly submitted for vote to the
shareholders at the Park special meeting.
At the Park special meeting, Park will ask the Park shareholders to
consider and vote upon:
- a proposal to adopt the merger agreement and
- the transaction of any other business that properly comes before
the Park special meeting or any adjournment of the Park special
meeting.
The affirmative vote of the holders of at least two-thirds of the issued
and outstanding Park common shares, voting in person or by proxy, is required to
adopt the merger agreement. If a Park shareholder abstains from voting or fails
to return a properly executed proxy card, the effect will be a vote "AGAINST"
adoption of the merger agreement. As of December 15, 2000, the directors and
executive officers of Park (16 individuals) and their respective affiliates in
the aggregate beneficially owned 1,801,032 Park common shares (excluding those
subject to currently exercisable options), or 16.7% of the outstanding Park
common shares.
If a Park shareholder returns a properly executed proxy card prior to the
Park special meeting and does not revoke the proxy prior to its use, the Park
common shares represented by that proxy card will be voted at the Park special
meeting, or any adjournment of the Park special meeting. The Park common shares
will be voted as specified on the proxy card or, in the absence of specific
instructions to the contrary, will be voted "FOR" adoption of the merger
agreement.
If a Park shareholder returns a proxy card which has been voted "AGAINST"
adoption of the merger agreement, that proxy will not be used to vote to adjourn
the special meeting so that Park may solicit further support for adoption of the
merger agreement.
4
<PAGE> 15
SECURITY SPECIAL MEETING (SEE PAGE [ ])
Security will hold a special meeting of shareholders on [ ], [ ],
2001, at [ ]:00 [_.M.], local time, at [ ], Ohio. Only
the holders of record of the issued and outstanding Security common shares at
the close of business on [ ], 2001 will be entitled to notice of, and to
vote at, the Security special meeting and any adjournment of the Security
special meeting. As of the record date, there were 11,777,700 Security common
shares issued and outstanding, each of which will be entitled to one vote on
each matter properly submitted for vote to the shareholders at the Security
special meeting.
At the Security special meeting, Security will ask the Security
shareholders to consider and vote upon:
- a proposal to adopt the merger agreement and
- the transaction of any other business that properly comes before
the Security special meeting or any adjournment of the Security
special meeting.
The affirmative vote of the holders of at least two-thirds of the issued
and outstanding Security common shares, voting in person or by proxy, is
required to adopt the merger agreement. If a Security shareholder abstains from
voting or fails to return a properly executed proxy card, the effect will be a
vote "AGAINST" adoption of the merger agreement. As of December 15, 2000, the
directors and executive officers of Security (13 individuals) and their
respective affiliates in the aggregate beneficially owned 403,573 Security
common shares (excluding those subject to currently exercisable options), or
3.4% of the outstanding Security common shares.
If a Security shareholder returns a properly executed proxy card prior to
the Security special meeting and does not revoke the proxy prior to its use, the
Security common shares represented by that proxy card will be voted at the
Security special meeting, or any adjournment of the Security special meeting.
The Security common shares will be voted as specified on the proxy card or, in
the absence of specific instructions to the contrary, will be voted "FOR"
adoption of the merger agreement.
If a Security shareholder returns a proxy card which has been voted
"AGAINST" adoption of the merger agreement, that proxy will not be used to vote
to adjourn the Security special meeting so that Security may solicit further
support for adoption of the merger agreement.
THE MERGER (SEE PAGE [ ])
REASONS FOR THE MERGER (SEE PAGE [ ])
The board of directors of Security believes that the merger with Park is
fair and in the best interests of Security and its shareholders. In negotiating
the terms of the merger, management of Security considered a number of factors
with a view to maximizing shareholder value in the intermediate and long term,
including:
- the opinion of Austin Associates, Inc. that the exchange ratio
provided for in the merger agreement was fair to Security
shareholders from a financial point of view;
- the overall financial terms of the merger;
- current long-term industry developments and trends;
- competitive factors;
- the business and financial condition and earnings prospects of
Park;
- the competence, experience and integrity of Park's management;
- the adequacy of the consideration to be received by Security's
shareholders in the merger;
5
<PAGE> 16
- the historical trading prices of the Security common shares; and
- future prospects for Security.
The board of directors of Park believes that the merger with Security is
fair and in the best interests of Park and its shareholders. In negotiating the
terms of the merger, management of Park considered a number of factors with a
view to maximizing shareholder value in the intermediate and long term,
including:
- the earnings potential of the combined business;
- the strengthened capital base of the combined business;
- the potential realization of economies of scale;
- the growth prospects within the existing market area of Security's
subsidiaries; and
- expansion of the community banking model successfully employed by
Park.
OPINION OF AUSTIN ASSOCIATES, INC. (SEE PAGE [ ])
Security's financial advisor, Austin Associates, Inc., has delivered its
written opinion to the board of directors of Security to the effect that, as of
November 20, 2000, the financial terms of Park's offer to acquire Security were
fair to Security and its shareholders. A copy of the Austin Associates opinion
letter is attached as Appendix B. You should read the opinion letter in its
entirety for a description of the procedures followed, assumptions and
qualifications made and matters considered by Austin Associates, as well as for
a description of the limitations of the opinion.
EXCHANGE OF SECURITY COMMON SHARES (SEE PAGE [ ])
At the effective time of the merger, all Security common shares that are
held by Security as treasury shares, will be canceled and retired and no Park
common shares or other consideration will be delivered in exchange for those
Security common shares. Any Security common shares owned by Park will become
treasury shares of Park after the merger. As of the date of this joint proxy
statement/prospectus, Park directly owned 15,000 Security common shares. All of
the remaining issued and outstanding Security common shares, other than those as
to which the holders have properly exercised dissenter's rights, will be
converted into a number of Park common shares equal to an exchange ratio
described in the merger agreement. The exchange ratio will be determined by
dividing 3,350,000 by the number of Security common shares outstanding
immediately prior to the effective time of the merger. On [ ], 2001, there
were [11,777,700] Security common shares issued and outstanding. Based on this,
the exchange ratio will equal approximately .2844, calculated by dividing
3,350,000 by [11,777,700].
The Park common shares are listed on the American Stock Exchange, under
the symbol "PRK". The Security common shares are traded on the over-the-counter
market, under the symbol "STYB". The following table sets forth the high and low
sales prices on the American Stock Exchange of Park common shares on November
20, 2000 and the bid and ask prices reported on the over-the-counter market of
Security common shares on November 20, 2000, the last trading day prior to the
joint public announcement by Park and Security of the signing of the merger
agreement. The table also sets forth the equivalent per share basis of Security
common shares, calculated by multiplying the high and low sales prices of Park
common shares on November 20, 2000 by the assumed exchange ratio of .2844.
6
<PAGE> 17
<TABLE>
<S> <C>
Sales prices on November 20, 2000
for Park common shares:
High................................... $ 92.25
Low.................................... $ 90.00
Prices on November 20, 2000 for Security
common shares:
Bid.................................... $ 18.00
Ask.................................... $ 17.50
Equivalent per share basis:
High................................... $ 26.24
Low.................................... $ 25.60
</TABLE>
OF COURSE, THE MARKET PRICE OF THE PARK COMMON SHARES WILL FLUCTUATE
PRIOR TO THE MERGER. PARK AND SECURITY ENCOURAGE YOU TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE PARK COMMON SHARES.
Park will file an application to list the Park common shares to be issued
in the merger for trading on the American Stock Exchange.
FRACTIONAL SHARES (SEE PAGE [ ])
Park will not issue fractional common shares in the merger. In lieu of
fractional shares, Park will pay to each holder of Security common shares who
otherwise would be entitled to receive a fraction of a Park common share, an
amount in cash, rounded to the nearest cent, determined by multiplying the
fractional share interest by the market value of a Park common share. The market
value of a Park common share will equal the average closing sale price of a Park
common share for the 20 trading days immediately preceding the tenth day prior
to the effective time of the merger, as reported on the American Stock Exchange.
EXCHANGE OF SECURITY CERTIFICATES (SEE PAGE [ ])
As soon as reasonably practicable after the consummation of the merger,
First-Knox National Bank, exchange agent for the merger, will advise each
Security shareholder of the merger by letter of transmittal accompanied by
instructions for surrendering the certificate or certificates evidencing the
shareholder's Security common shares to the exchange agent. CERTIFICATES FOR
SECURITY COMMON SHARES SHOULD NOT BE SENT TO FIRST-KNOX NATIONAL BANK UNTIL
AFTER RECEIPT OF THE LETTER OF TRANSMITTAL AND SHOULD NOT BE RETURNED TO
SECURITY WITH THE ENCLOSED PROXY CARD.
ACCOUNTING TREATMENT (SEE PAGE [ ])
The consummation of the merger is conditioned upon the availability of
the pooling-of-interests method of accounting for the merger.
"Pooling-of-interests" means that, for accounting and financial reporting
purposes, Park and Security will be treated as if they had always been one
combined entity. If the holders of more than 10% of the common shares of either
Park or Security exercise their rights to dissent to the merger, Park may not be
able to utilize the pooling-of-interests method of accounting for the merger.
Because pooling-of-interests accounting is a condition to the merger, the
unavailability of this method could result in the termination of the merger
agreement.
FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE [ ])
The consummation of the merger is conditioned upon receipt of the opinion
of Vorys, Sater, Seymour and Pease LLP, legal counsel to Park, to the effect
that the merger will constitute a tax-free reorganization under Section 368(a)
of the Internal Revenue Code of 1986. Security shareholders will not recognize a
gain or loss upon the issuance of Park common shares to them. A gain or loss
will be recognized, however, in respect of cash received upon the exercise of
dissenters' rights by Park shareholders or by Security shareholders. A gain or
loss will also be
7
<PAGE> 18
recognized by Security shareholders with respect to any cash received in lieu of
fractional shares. Neither the opinion of counsel nor the discussion of federal
income tax consequences in this joint proxy statement/prospectus is binding upon
either the Internal Revenue Service or the courts. You should consult your own
tax advisor for a full understanding of the tax consequences of the merger.
INTERESTS OF PERSONS IN THE MERGER (SEE PAGE [ ])
Park has agreed to indemnify each of the officers, directors and
employees of Security and each Security subsidiary to the full extent Security
or any Security subsidiary would have been required to indemnify that individual
under Ohio law and the governing documents of Security and Security's
subsidiaries. The merger agreement also provides for the continuation of
director and officer liability insurance for the directors and officers of
Security and each of Security's subsidiaries for a period of three years,
following the effective time of the merger.
In addition, Park will ensure that participants in Security's split
dollar insurance benefit program will continue to receive the vested portion of
their death benefits following the completion of the merger. Also, if Park
ceases to maintain Security's pension plan, Park has agreed to provide
participants in the Security pension plan who become participants in the Park
pension plan with the same accrued benefits that they have earned under the
Security pension plan.
Security National Bank, a subsidiary of Security, has entered into
employment agreements with three of its executive officers, Harry O. Egger, J.
William Stapleton and William C. Fralick. The employment agreements provide
these individuals with severance benefits and accelerated vesting of benefits
under benefit plans if their employment with Security National Bank is
terminated without cause within one year of a change in control of Security. The
employment agreements also provide for the payment of benefits in the event that
the employee's employment is terminated without cause or as the result of
disability or death. Third Savings, another subsidiary of Security, has entered
into a similar agreement with Scott A. Gabriel, one of its executive officers.
Citizens National Bank, another subsidiary of Security, has entered into a
similar employment agreement with James R. Wilson, one of its executive
officers. Under the terms of another agreement between Mr. Wilson and Citizens
National Bank, Mr. Wilson (or in the event of his death, his wife) is entitled
to receive annual cash payments for a period of ten years following his
retirement or death.
All of the individuals who have entered into employment agreements with a
subsidiary of Security are also executive officers of Security. Messrs. Egger,
Gabriel and Wilson also serve as directors of Security.
Each option to purchase Security common shares that is outstanding
immediately before the merger is completed will be converted into an option to
buy Park common shares. The number of Park common shares subject to each
converted option, as well as the exercise price of that option, will be adjusted
to reflect the exchange ratio. As of the date of this joint proxy
statement/prospectus, the directors and executive officers of Security held
in-the-money options covering an aggregate of 36,400 Security common shares with
exercise prices of $16.50.
RESALE OF PARK COMMON SHARES (SEE PAGE [ ])
The Park common shares to be issued upon consummation of the merger have
been registered with the SEC under the Securities Act and will be freely
transferable. However, common shares of Park received by any person who is
deemed to be an "affiliate" (as that term is defined under the Securities Act of
1933) of Security prior to the merger or of Park after the merger may be resold
by that person only in compliance with the volume and manner-of-sale
requirements of Rules 144 and 145 under the Securities Act. Affiliates of Park
will be governed by the additional provisions of Rule 144. Affiliates of
Security or Park generally include individuals or entities that control, are
controlled by, or are under common control with, that corporation and may
include certain officers and directors of that corporation as well as principal
shareholders of that corporation. In addition, Security has obtained customary
agreements with all directors, officers and affiliates of Security under which
those persons have agreed not to dispose of their Park common shares in a manner
that would adversely affect the ability of Park to treat the merger as a
pooling-of-interests for financial accounting purposes.
8
<PAGE> 19
REGULATORY APPROVALS (SEE PAGE [ ])
Consummation of the merger is subject to prior receipt by Park and
Security of all necessary regulatory approvals. The principal regulatory
approval required to be obtained is from the Federal Reserve Board. A bank
holding company merger application was filed with the Federal Reserve Board on
January 2, 2001. The required notice filing with the Office of Thrift
Supervision will be made in accordance with the regulations of the OTS.
THE MERGER AGREEMENT (SEE PAGE [ ])
REPRESENTATIONS AND WARRANTIES; COVENANTS (SEE PAGE [ ])
In the merger agreement, Park and Security each have made representations
and warranties to the other. In addition, Park and Security each have made
covenants, including covenants related to the conduct of business between the
date of the merger agreement and the effective time of the merger.
CONDITIONS; EFFECTIVE TIME (SEE PAGES [ ] AND [ ])
The consummation of the merger is subject to satisfaction or waiver of
a number of conditions. These include:
- adoption of the merger agreement by Park shareholders and by
Security shareholders;
- absence of any legal prohibitions against the merger;
- material compliance by Park and Security with their obligations
under the merger agreement;
- receipt of all required regulatory approvals and expiration of all
applicable waiting periods;
- in the aggregate, less than 10% of the total number of common
shares to be issued by Park in the merger are:
- the subject of dissenters' rights exercised by Park or
Security shareholders, or
- subject to purchase as fractional Park shares;
- the truth and correctness of the representations and warranties of
Park and Security in all material respects; and
- listing of the Park common shares to be issued in the merger on
the American Stock Exchange.
Where the law permits, either Park or Security could choose to waive a
condition to its obligation to complete the merger even when that condition has
not been satisfied. As soon as possible after the satisfaction or waiver of all
conditions, Park and Security will cause a certificate of merger to be filed
with the Ohio Secretary of State. Park and Security currently anticipate that
the merger will be completed during the second quarter of 2001.
AMENDMENT AND TERMINATION (SEE PAGE [ ])
Park and Security may agree in writing to amend or terminate the merger
agreement at any time without completing the merger, even after their respective
shareholders have approved it. Security also may decide not to proceed with the
merger if the average closing sale price of a Park common share, for the 20
trading day period immediately preceding the tenth day prior to the effective
time of the merger, is less than $77.50 and if the ratio of the price decline
for Park common shares exceeds the ratio of the price decline for shares of the
common stock of a specific group of bank holding companies. In addition, either
Security or Park may decide to terminate the merger agreement:
9
<PAGE> 20
- upon specified breaches by the other party;
- if the merger has not been completed by October 31, 2001;
- if a regulatory authority fails to approve the merger; or
- upon the occurrence or the failure to occur of other conditions
described in the merger agreement and described in greater detail
later in this joint proxy statement/prospectus.
Under specific circumstances, if the merger is not completed, Security
could be required to pay a special fee to Park. In the merger agreement,
Security has agreed not to solicit or encourage the submission of any other
acquisition proposal by a third party. However, the board of directors of
Security is not prohibited from taking any action which is necessary in the
exercise of its fiduciary duties. If the merger is not completed because of
another possible acquisition involving Security, the merger agreement may
require Security to pay a $10,000,000 special fee to Park. If the merger
agreement is terminated for a different reason and Security enters into an
agreement to sell Security to another party within one year, then Security may
be required to pay a $10,000,000 special fee to Park under specified
circumstances. This $10,000,000 fee could discourage other companies from trying
to acquire Security before the merger.
Additionally, Park has agreed not to accept any acquisition proposal by a
third party unless the third party agrees to the perform Park's obligations
under the merger agreement. This could discourage other companies from trying to
acquire Park before the merger.
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS OF PARK AND SECURITY (SEE PAGE [ ])
The boards of directors of Park and Security both believe that
consummation of the proposed merger is in the best interest of their respective
corporations and shareholders. Accordingly, the boards of directors of Park and
Security recommend that their respective shareholders vote "FOR" adoption of the
merger agreement.
TREATMENT OF SECURITY STOCK OPTIONS (SEE PAGE [ ])
Each option to buy Security common shares that is outstanding and not yet
exercised immediately before the merger is completed will be converted into an
option to buy Park common shares. The number of Park common shares subject to
each converted option, as well as the exercise price of that option, will be
adjusted to reflect the exchange ratio. The other terms of each converted option
will be substantially the same as those of the original Security option.
RIGHTS OF DISSENTING SHAREHOLDERS (SEE PAGE [ ])
Any shareholder of either Park or Security who does not vote in favor of
adoption of the merger agreement and who delivers a written demand for payment
of the fair cash value of the shareholder's common shares in the manner provided
by Section 1701.85 of the Ohio Revised Code will be entitled, if and when the
merger is consummated and upon strict compliance with the procedures described
in Section 1701.85, to receive the fair cash value of the shareholder's common
shares. A copy of Section 1701.85 is attached as Appendix C to this document. If
you are a Security shareholder, the amount of cash you will receive if you
exercise your dissenters' rights may be equal to, more than or less than the
value of the Park common shares you would otherwise receive in the merger. If
you are a Park shareholder and you wish to submit a written demand for payment
of the fair cash value of your Park common shares, you must deliver such notice
by [ ], 2001 to Park National Corporation, 50 North Third Street, Newark,
Ohio 43055, Attention: David C. Bowers, Secretary. If you are a Security
shareholder and you wish to submit a written demand for payment of the fair cash
value of your Security common shares, you must deliver such notice by [ ],
2001 to Security Banc Corporation, 40 South Limestone Street, Springfield, Ohio
45502, Attention: J. William Stapleton, Executive Vice President and Secretary.
Completion of the merger is subject to the condition that, in the aggregate,
less than 10% of the number of Park common shares to be issued in the merger are
subject to purchase as fractional Park common shares or the subject of
dissenters' rights exercised by shareholders of Park and Security.
10
<PAGE> 21
COMPARISON OF RIGHTS OF HOLDERS OF PARK COMMON SHARES AND OF SECURITY COMMON
SHARES (SEE PAGE [ ])
After the merger, Security shareholders will become shareholders of Park
and the articles and regulations of Park will govern their rights as
shareholders. Several differences exist between the articles and regulations of
Security and the articles and regulations of Park which affect the rights of the
shareholders of those corporations. Examples of differences include provisions
affecting the removal and nomination of directors, pre-emptive rights,
cumulative voting and voting on certain significant corporate transactions.
However, since Security and Park are both Ohio corporations, Ohio law will
continue to govern the rights of Security shareholders after the merger.
HISTORICAL AND PRO FORMA COMPARATIVE UNAUDITED PER SHARE DATA
The following table shows historical information about Park's and
Security's earnings per common share, dividends per common share, book value per
common share and similar information reflecting the merger, which we refer to as
"pro forma" information. In presenting the comparative pro forma information for
the time periods shown, it is assumed that Park and Security were merged
throughout those periods.
It is also assumed that Park and Security will be treated as if they had
always been combined for accounting and financial reporting purposes, a method
known as "pooling-of-interests" accounting. The information listed as
"equivalent pro forma" was obtained by multiplying pro forma amounts by the
exchange ratio of .2844.
The information in the following table is based on, and you should read
it together with, the historical financial information that Park and Security
have presented in prior filings with the SEC. The pro forma information does not
necessarily reflect what the historical results of Park would have been had Park
and Security been combined during the periods presented. Park and Security are
incorporating the historical financial information included in their SEC filings
into this joint proxy statement/prospectus by reference. See "Where You Can Find
More Information" on page [ ] for a description of where you can find these
prior SEC filings.
11
<PAGE> 22
<TABLE>
<CAPTION>
AS OF OR FOR THE AS OF OR FOR THE
NINE MONTHS ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, 2000 1999 1998 1997
----------------------------- ---- ---- ----
<S> <C> <C> <C> <C>
PARK NATIONAL CORPORATION
Basic earnings per common share:
Historical $ 3.91 $ 4.30 $ 4.31 $ 3.93
Pro forma 3.89 4.45 4.36 3.99
Diluted earnings per common share:
Historical 3.90 4.28 4.28 3.91
Pro forma 3.88 4.43 4.33 3.97
Dividends declared on common shares:
Historical 1.95 2.36 1.94 1.60
Pro forma 1.95 2.36 1.94 1.60
Book value per common share:
Historical 28.46 26.63 26.31 24.46
Pro forma 30.36 28.55 28.20 26.15
SECURITY BANC CORPORATION
Basic earnings per common share:
Historical 1.08 1.40 1.29 1.20
Equivalent pro forma 1.11 1.27 1.24 1.13
Diluted earnings per common share:
Historical 1.08 1.39 1.28 1.19
Equivalent pro forma 1.10 1.26 1.23 1.13
Dividends declared on common shares:
Historical 0.42 0.55 0.50 0.45
Equivalent pro forma 0.55 0.67 0.55 0.46
Book value per common share:
Historical 10.39 9.85 9.71 8.96
Equivalent pro forma 8.63 8.12 8.02 7.44
</TABLE>
SELECTED FINANCIAL DATA
The following tables present consolidated historical financial data for
Park and for Security. They also present similar pro forma information
reflecting the merger. The pro forma information reflects the
pooling-of-interests method of accounting.
The information in the following tables is based on historical financial
information that Park and Security have presented in prior filings with the SEC.
The pro forma information does not necessarily reflect what the historical
results of Park would have been had Park and Security been combined during the
periods presented. You should read all of the summary financial information that
is provided in the following tables together with the historical financial
information contained in the SEC filings incorporated by reference in this joint
proxy statement/prospectus and the more detailed pro forma financial information
provided in this joint proxy statement/prospectus, which you can find beginning
on page [ ]. See "Where You Can Find More Information" on page [ ] for a
description of where you can find historical financial information included in
the SEC filings Park and Security have made.
12
<PAGE> 23
PARK UNAUDITED SELECTED FINANCIAL DATA
(In thousands, except share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
2000 1999 1999 1998 1997 1996 1995
--------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 184,294 $ 165,581 $ 224,316 $ 217,446 $ 209,217 $ 190,409 $ 176,349
Interest expense 81,006 67,295 91,554 93,868 90,779 81,963 76,950
Net interest income 103,288 98,286 132,762 123,578 118,438 108,446 99,399
Provision for loan losses 5,850 5,419 11,269 6,978 7,284 5,383 5,563
Noninterest income 22,366 19,800 23,564 26,455 22,535 18,464 17,676
Noninterest expense 60,857 57,651 79,912 75,323 71,910 68,341 65,226
Income tax expense 16,529 15,798 18,358 20,724 18,738 16,403 13,945
--------------------------- ----------------------------------------------------------------------
Net income $ 42,418 $ 39,218 $ 46,787 $ 47,008 $ 43,041 $ 36,783 $ 32,341
=========================== ======================================================================
Earnings per share - basic $ 3.91 $ 3.60 $ 4.30 $ 4.31 $ 3.93 $ 3.36 $ 2.94
Earnings per share - diluted $ 3.90 $ 3.59 $ 4.28 $ 4.28 $ 3.91 $ 3.34 $ 2.93
Cash dividends declared per
share $ 1.95 $ 1.71 $ 2.36 $ 1.94 $ 1.60 $ 1.38 $ 1.19
Book value per share (period
end) $ 28.46 $ 26.94 $ 26.63 $ 26.31 $ 24.46 $ 22.06 $ 20.55
Average common shares
outstanding - basic 10,846,778 10,879,079 10,878,045 10,902,374 10,964,198 10,946,085 10,997,563
Average common shares
outstanding - diluted 10,881,216 10,931,166 10,934,203 10,970,913 11,021,886 10,999,492 11,042,272
Common shares outstanding
(period end) 10,806,593 10,870,590 10,892,408 10,862,356 10,962,602 10,941,463 10,835,253
Average balances:
Assets $ 3,147,636 $ 2,960,716 $ 2,995,648 $ 2,784,832 $ 2,614,951 $ 2,382,411 $ 2,233,343
Earning assets 2,973,583 2,768,651 2,802,368 2,594,178 2,455,613 2,240,652 2,091,458
Deposits 2,415,536 2,339,827 2,343,856 2,250,408 2,101,258 1,932,479 1,816,100
Short-term borrowings 264,154 288,713 310,544 209,335 177,631 141,813 157,754
Long-term debt 147,995 17,958 17,714 24,976 51,973 46,797 33,413
Shareholders' equity 289,581 288,358 287,407 274,616 250,500 226,021 205,241
Period end balances:
Assets $ 3,212,184 $ 3,075,474 $ 3,133,363 $ 2,945,879 $ 2,697,763 $ 2,574,686 $ 2,340,211
Long-term debt 181,677 17,088 16,993 23,402 39,140 62,740 33,415
Ratios:
Return on average assets 1.80% 1.77% 1.56% 1.69% 1.65% 1.54% 1.45%
Return on average equity 19.57% 18.18% 16.28% 17.12% 17.18% 16.27% 15.76%
</TABLE>
13
<PAGE> 24
SECURITY UNAUDITED SELECTED FINANCIAL DATA
(In thousands, except share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
2000 1999 1999 1998 1997 1996 1995
--------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 54,706 $ 51,128 $ 68,718 $ 64,034 $ 62,778 $ 51,891 $ 49,706
Interest expense 23,438 20,345 27,684 24,195 24,903 19,311 18,003
Net interest income 31,268 30,783 41,034 39,839 37,875 32,580 31,703
Provision for loan losses 1,065 900 1,200 1,540 1,300 1,875 950
Noninterest income 6,485 6,211 8,533 8,489 7,104 5,893 5,210
Noninterest expense 17,428 17,237 23,548 22,974 22,729 18,021 18,079
Income tax expense 6,347 6,175 7,801 8,194 6,462 5,190 5,177
--------------------------- ----------------------------------------------------------------------
Net income $ 12,913 $ 12,682 $ 17,018 $ 15,620 $ 14,488 $ 13,387 $ 12,707
=========================== ======================================================================
Earnings per share - basic $ 1.08 $ 1.04 $ 1.40 $ 1.29 $ 1.20 $ 1.11 $ 1.06
Earnings per share - diluted $ 1.08 $ 1.04 $ 1.39 $ 1.28 $ 1.19 $ 1.10 $ 1.05
Cash dividends declared per
share $ 0.42 $ 0.39 $ 0.55 $ 0.50 $ 0.45 $ 0.41 $ 0.37
Book value per share (period
end) $ 10.39 $ 9.85 $ 9.85 $ 9.71 $ 8.96 $ 8.33 $ 7.50
Average common shares
outstanding - basic 11,921,658 12,175,904 12,165,146 12,143,743 12,117,526 12,057,694 12,025,658
Average common shares
outstanding - diluted 11,942,516 12,239,866 12,218,821 12,227,292 12,194,892 12,136,898 12,110,976
Common shares outstanding
(period end) 11,793,000 12,149,427 12,097,000 12,166,425 12,131,172 12,100,034 12,029,054
Average balances:
Assets $ 957,740 $ 947,639 $ 954,953 $ 846,472 $ 829,305 $ 698,254 $ 652,302
Earning assets 897,464 866,529 870,718 777,336 763,438 650,922 609,859
Deposits 714,082 696,165 695,988 688,561 677,733 565,882 535,403
Short-term borrowings 42,364 29,712 36,305 37,738 40,290 33,187 27,996
Long-term debt 92,933 95,395 96,147 - - - -
Shareholders' equity 119,153 119,912 119,991 114,088 104,060 94,378 85,227
Period end balances:
Assets $ 986,529 $ 957,892 $ 976,411 $ 883,500 $ 839,605 $ 816,334 $ 676,106
Long-term debt 103,499 93,990 97,652 - - - -
Ratios:
Return on average assets 1.79% 1.78% 1.78% 1.85% 1.75% 1.92% 1.95%
Return on average equity 14.45% 14.10% 14.18% 13.69% 13.92% 14.18% 14.91%
</TABLE>
14
<PAGE> 25
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL DATA
(In thousands, except share data)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
2000 1999 1999 1998 1997 1996 1995
--------------------------- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 239,000 $ 216,709 $ 293,034 $ 281,480 $ 271,995 $ 242,300 $ 226,055
Interest expense 104,444 87,640 119,238 118,063 115,682 101,274 94,953
Net interest income 134,556 129,069 173,796 163,417 156,313 141,026 131,102
Provision for loan losses 6,915 6,319 12,469 8,518 8,584 7,258 6,513
Noninterest income 28,851 26,011 32,097 34,944 29,639 24,357 22,886
Noninterest expense 78,285 74,888 103,460 98,297 94,639 86,362 83,305
Income tax expense 22,876 21,973 26,159 28,918 25,200 21,593 19,122
--------------------------- ----------------------------------------------------------------------
Net income $ 55,331 $ 51,900 $ 63,805 $ 62,628 $ 57,529 $ 50,170 $ 45,048
=========================== ======================================================================
Earnings per share - basic $ 3.89 $ 3.62 $ 4.45 $ 4.36 $ 3.99 $ 3.49 $ 3.12
Earnings per share - diluted $ 3.88 $ 3.60 $ 4.43 $ 4.33 $ 3.97 $ 3.47 $ 3.11
Cash dividends declared per
share $ 1.95 $ 1.71 $ 2.36 $ 1.94 $ 1.60 $ 1.38 $ 1.19
Book value per share (period
end) $ 30.36 $ 28.79 $ 28.55 $ 28.20 $ 26.15 $ 23.79 $ 21.95
Average common shares
outstanding - basic 14,235,876 14,341,906 14,337,813 14,356,055 14,410,422 14,375,293 14,417,660
Average common shares
outstanding - diluted 14,276,246 14,412,184 14,409,236 14,448,355 14,490,113 14,451,226 14,486,634
Common shares outstanding
(period end) 14,156,256 14,325,887 14,332,795 14,322,487 14,412,707 14,382,713 14,256,316
Average balances:
Assets $ 4,105,285 $ 3,908,355 $ 3,950,601 $ 3,631,304 $ 3,444,256 $ 3,080,665 $ 2,885,645
Earning assets 3,870,956 3,635,180 3,673,086 3,371,514 3,219,051 2,891,574 2,701,317
Deposits 3,129,618 3,035,992 3,039,844 2,938,969 2,778,991 2,498,361 2,351,503
Short-term borrowings 306,518 318,425 346,849 247,073 217,921 175,000 185,750
Long-term debt 240,928 113,353 113,861 24,976 51,973 46,797 33,413
Shareholders' equity 408,643 408,270 407,398 388,704 354,560 320,399 290,468
Period end balances:
Assets $ 4,198,439 $ 4,033,366 $ 4,109,774 $ 3,829,379 $ 3,537,368 $ 3,391,020 3,016,317
Long-term debt 285,176 111,078 114,645 23,402 39,140 62,740 33,415
Ratios:
Return on average assets 1.80% 1.77% 1.62% 1.72% 1.67% 1.63% 1.56%
Return on average equity 18.10% 17.00% 15.66% 16.11% 16.23% 15.66% 15.51%
</TABLE>
15
<PAGE> 26
RISK FACTORS
You should consider the following matters in deciding how to vote. You
also should consider the other information included or incorporated by reference
in this document.
SINCE THE MARKET PRICE OF THE PARK COMMON SHARES FLUCTUATES, SECURITY
SHAREHOLDERS CANNOT BE SURE OF THE MARKET VALUE OF THE PARK COMMON SHARES THEY
WILL RECEIVE IN THE MERGER.
- At the time the merger is completed, each Security common share
will be converted into approximately .2844 Park common shares.
This exchange ratio will not be adjusted in the event of any
increase or decrease in the price of the Park common shares or the
Security common shares. As a result, the value of the Park common
shares received by Security shareholders in the merger may be
higher or lower than the market value of the Park common shares at
the time the Security shareholders vote on the merger agreement.
Security may decide not to proceed with the merger if the average
closing sale price of Park common shares, for the 20 trading day
period immediately preceding the tenth day prior to the effective
time of the merger, is less than $77.50 and if the ratio of the
price decline for Park common shares exceeds the ratio of the
price decline for shares of the common stock of a specific group
of bank holding companies. Security, however, is not obligated to
exercise this right and the parties could decide to proceed with
the merger even if the average closing sale price of the Park
common shares for that 20 day trading period is less than $77.50
per share.
WE CANNOT ASSURE YOU THAT PARK AND SECURITY WILL SUCCESSFULLY INTEGRATE THEIR
BUSINESSES.
- Security has three subsidiaries, Security National Bank, Citizens
National Bank and Third Savings. Park National currently intends
to operate Security National Bank, Citizens National Bank and
Third Savings as separate subsidiaries after the merger under
their present management. The merger will nevertheless require
some integration of the management and operations of corporations
that have previously operated separately. This involves a number
of risks, including the possible loss of key management personnel
and additional demands on management resulting from the increase
in the consolidated size of Park after the merger.
THE TERMINATION FEE MAY DISCOURAGE OTHER COMPANIES FROM TRYING TO ACQUIRE
SECURITY EVEN IF THE OTHER ACQUISITION COULD OFFER HIGHER IMMEDIATE VALUE TO
SECURITY SHAREHOLDERS.
- Security has agreed to pay Park a termination fee that could
discourage other companies from trying to acquire Security. Other
acquisitions might be superior to the merger with Park for the
Security shareholders. If this termination fee were to be paid,
Security would experience a negative impact on its financial
condition and results of operations. This could discourage other
companies from trying to acquire Security.
DIRECTORS AND EXECUTIVE OFFICERS OF SECURITY MAY HAVE INTERESTS THAT ARE
DIFFERENT FROM OR IN ADDITION TO THE INTERESTS OF OTHER SHAREHOLDERS OF
SECURITY.
- When considering the recommendations of the Security board of
directors, Security shareholders should be aware that some members
of the Security board of directors and some executive officers of
Security may have interests in the merger that are different from,
or in addition to, those of other Security shareholders. Some of
these interests are described below.
- After the merger, Park will indemnify each of the officers,
directors and employees of Security and each of the Security
subsidiaries from and against specific liabilities arising out of
the fact that the individual is or was an officer, director or
employee of Security or any Security subsidiaries. The merger
agreement also provides for the continuation of director and
officer liability insurance for Security's directors and officers
for a period of three years.
16
<PAGE> 27
- Security's subsidiaries have entered into employment agreements
with some of their executive officers. Many of these employment
agreements provide that the executive officers will receive
severance pay if they are discharged without cause within one year
of a change of control of Security. The employment agreements also
provide benefits if the executive officer is terminated without
cause or as the result of disability or death. The executive
officers who have entered into these employment agreements are
also executive officers of Security and three are directors of
Security.
PARK'S ACQUISITION STRATEGY COULD POSE RISKS IN THE FUTURE.
- Park has grown through acquisitions during recent years and
anticipates that it will make additional acquisitions in the
future. Park may need to issue additional Park common shares to
pay for future acquisitions, which would further dilute the
ownership interest of Park shareholders, including former Security
shareholders. Future acquisitions also may require Park to use
substantial cash or other liquid assets or to incur debt. If this
occurs, Park may be more susceptible to economic downturns and
competitive pressures.
THE PARK SPECIAL MEETING
This joint proxy statement/prospectus is furnished to the shareholders of
Park in connection with the solicitation on behalf of the board of directors of
Park of proxies for use at the Park special meeting to be held at the offices of
The Park National Bank, 50 North Third Street, Newark, Ohio, on [ ], [ ],
2001 at [ ]:00 [_.M.], local time, or any adjournment of the Park special
meeting. This joint proxy statement/prospectus and the accompanying form of
proxy card were first mailed to Park shareholders on or about [ ], 2001.
MATTERS TO BE CONSIDERED AT THE PARK SPECIAL MEETING
At the Park special meeting, Park shareholders will be asked to consider
and vote upon the adoption of the merger agreement. Park shareholders also will
consider and vote upon any other business which properly comes before the Park
special meeting.
The Park board of directors has unanimously approved the merger agreement
and recommends that the Park shareholders vote "for" adoption of the merger
agreement.
VOTING AT THE PARK SPECIAL MEETING; PARK RECORD DATE
Only holders of record of Park common shares at the close of business on
[ ], 2001 will be entitled to notice of, and to vote at, the Park special
meeting. As of that date, there were [ ] Park common shares issued and
outstanding. Each Park common share entitles the holder to one vote on each
matter to be submitted to the Park shareholders at the Park special meeting. A
majority of the issued and outstanding Park common shares constitutes a quorum
for the Park special meeting.
Park common shares represented by signed proxy cards or voting
instructions that are returned to Park will be counted toward the quorum in all
matters even though they are marked as "abstain" or "against" or they are not
marked at all. Broker non-votes will also count toward the establishment of a
quorum. BECAUSE THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF
THE ISSUED AND OUTSTANDING PARK COMMON SHARES IS REQUIRED TO ADOPT THE MERGER
AGREEMENT, THE EFFECT OF AN ABSTENTION OR BROKER NON-VOTE IS THE SAME AS A "NO"
VOTE.
If a Park shareholder properly signs and returns the accompanying proxy
card to Park prior to the Park special meeting and does not revoke it, the proxy
will be voted in accordance with the instructions contained on the card. If a
Park shareholder does not give any instructions, the individuals designated as
proxies in the accompanying proxy card will vote "FOR" adoption of the merger
agreement. In that event, the Park shareholder will not have the right to
dissent from the merger and demand payment of the "fair cash value" of that
shareholder's Park common shares.
17
<PAGE> 28
THE PROXIES OF THE PARK BOARD OF DIRECTORS MAY NOT VOTE PARK COMMON
SHARES REPRESENTED BY A PROXY CARD WHICH HAVE BEEN VOTED "AGAINST" ADOPTION OF
THE MERGER AGREEMENT TO ADJOURN THE PARK SPECIAL MEETING FOR THE PURPOSE OF
SOLICITING FURTHER SUPPORT FOR ADOPTION OF THE MERGER AGREEMENT.
The Park board of directors is not currently aware of any matters other
than those referred to above which will come before the Park special meeting. If
any other matter should be presented at the Park special meeting for action, the
individuals named in the accompanying proxy card will vote the Park common
shares represented thereby in their own discretion.
A Park shareholder may revoke a proxy at any time before it is actually
voted at the Park special meeting by delivering written notice of revocation to
the Secretary of Park, David C. Bowers, by submitting a later-dated proxy, or by
attending the Park special meeting and voting in person. ATTENDANCE AT THE PARK
SPECIAL MEETING WILL NOT, IN AND OF ITSELF, CONSTITUTE A REVOCATION OF A PROXY.
Park and Security will share the cost of preparing, printing and mailing
proxy materials to Park shareholders. Proxies may be solicited personally or by
telephone, mail or telegraph. Officers or employees of Park may assist with
personal or telephone solicitation and will receive no additional compensation
for doing so. Park will also reimburse brokerage houses and other nominees for
their reasonable expenses in forwarding proxy materials to beneficial owners of
Park common shares.
THE SECURITY SPECIAL MEETING
This joint proxy statement/prospectus is furnished to the shareholders of
Security in connection with the solicitation on behalf of the board of directors
of Security of proxies for use at the Security special meeting to be held at
[ ], Ohio, on [ ], [ ], 2001 at [ ]:00 [_.M.],
local time, or any adjournment of the Security special meeting. This joint proxy
statement/prospectus and the accompanying form of proxy card were first mailed
to Security shareholders on or about [ ], 2001.
MATTERS TO BE CONSIDERED AT THE SECURITY SPECIAL MEETING
At the Security special meeting, Security shareholders will be asked to
consider and vote upon the adoption of the merger agreement. Security
shareholders also will consider and vote upon any other business which properly
comes before the Security special meeting.
The Security board of directors has unanimously approved the merger
agreement and recommends that the Security shareholders vote "FOR" adoption of
the merger agreement.
VOTING AT THE SECURITY SPECIAL MEETING; SECURITY RECORD DATE
Only holders of record of Security common shares at the close of business
on [ ], 2001 will be entitled to notice of, and to vote at, the Security
special meeting. As of that date, there were [11,777,700] Security common shares
issued and outstanding. Each Security common share entitles the holder to one
vote on each matter to be submitted to the Security shareholders at the Security
special meeting. A majority of the issued and outstanding Security common shares
constitutes a quorum for the Security special meeting.
Security common shares represented by signed proxy cards or voting
instructions that are returned to Security will be counted toward the quorum in
all matters even though they are marked as "abstain" or "against" or they are
not marked at all. Broker non-votes will also count toward the establishment of
a quorum. BECAUSE THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF
THE ISSUED AND OUTSTANDING SECURITY COMMON SHARES IS REQUIRED TO ADOPT THE
MERGER AGREEMENT, THE EFFECT OF AN ABSTENTION OR BROKER NON-VOTE IS THE SAME AS
A "NO" VOTE.
If a Security shareholder properly signs and returns the accompanying
proxy card to Security prior to the Security special meeting and does not revoke
it, the proxy will be voted in accordance with the instructions contained on the
card. If a Security shareholder does not give any instructions, the individuals
designated as proxies
18
<PAGE> 29
in the accompanying proxy card will vote "FOR" adoption of the merger agreement.
In that event, the Security shareholder will not have the right to dissent from
the merger and demand payment of the "fair cash value" of that shareholder's
Security common shares.
THE PROXIES OF THE SECURITY BOARD OF DIRECTORS MAY NOT VOTE SECURITY
COMMON SHARES REPRESENTED BY A PROXY CARD WHICH HAVE BEEN VOTED "AGAINST"
ADOPTION OF THE MERGER AGREEMENT TO ADJOURN THE SECURITY SPECIAL MEETING FOR THE
PURPOSE OF SOLICITING FURTHER SUPPORT FOR ADOPTION OF THE MERGER AGREEMENT.
The Security board of directors is not currently aware of any matters
other than those referred to above which will come before the Security special
meeting. If any other matter should be presented at the Security special meeting
for action, the individuals named in the accompanying proxy card will vote the
Security common shares represented thereby in their own discretion.
A Security shareholder may revoke a proxy at any time before it is
actually voted at the Security special meeting by delivering written notice of
revocation to the Executive Vice President and Secretary of Security, J. William
Stapleton, by submitting a later-dated proxy, or by attending the Security
special meeting and voting in person. ATTENDANCE AT THE SECURITY SPECIAL MEETING
WILL NOT, IN AND OF ITSELF, CONSTITUTE A REVOCATION OF A PROXY.
Park and Security will share the cost of preparing, printing and mailing
proxy materials to the Security shareholders. Proxies may be solicited
personally or by telephone, mail or telegraph. Officers or employees of Security
may assist with personal or telephone solicitation and will receive no
additional compensation for doing so. Security will also reimburse brokerage
houses and other nominees for their reasonable expenses in forwarding proxy
materials to beneficial owners of Security common shares.
PRINCIPAL SHAREHOLDERS OF PARK
The following table provides information regarding the beneficial
ownership of Park common shares as of December 15, 2000, for each of the current
directors of Park, each of the executive officers of Park, all directors and
executive officers of Park as a group, and each person known by Park to
beneficially own more than 5% of the outstanding Park common shares. As of
December 15, 2000, none of the directors or executive officers of Park held
Security common shares.
19
<PAGE> 30
Amount and Nature of Beneficial Ownership (1)
<TABLE>
<CAPTION>
Park Common Shares
Which Can Be
Acquired Upon Percent of Class (2)
Name of Beneficial Park Exercise of Options --------------------
Owner or Number of Common Shares Exercisable December 15, Post-
of Persons in Group Presently Held Within 60 Days Total 2000 Merger (3)
------------------- -------------- -------------- ----- ---- ----------
<S> <C> <C> <C> <C> <C>
The Park National Bank,
Trust Department
50 North Third Street
Newark, OH 43055 1,157,298 (4) 0 1,157,298 10.7% 8.2%
John L. Warner
355 Bryn Du Drive
Granville, OH 43023 803,123 (5) 0 803,123 7.4% 5.7%
Maureen Buchwald 1,717 1,303 3,020 (6) (6)
James J. Cullers 8,519 (7) 651 9,170 (6) (6)
C. Daniel DeLawder (8) 83,603 (9) 6,499 90,102 (6) (6)
D. C. Fanello 1,619 (10) 0 1,619 (6) (6)
R. William Geyer 5,032 (11) 0 5,032 (6) (6)
Philip H. Jordan, Jr., Ph.D. 3,862 (12) 0 3,862 (6) (6)
Howard E. LeFevre 48,139 (13)(14) 0 48,139 (6) (6)
Phillip T. Leitnaker 2,705 (15) 0 2,705 (6) (6)
William T. McConnell (8) 193,350 (13)(16) 0 193,350 1.8% 1.4%
James A. McElroy 35,224 (17) 1,303 36,527 (6) (6)
John J. O'Neill 142,152 (13) 0 142,152 1.3% 1.0%
William A. Phillips 8,947 (18) 0 8,947 (6) (6)
J. Gilbert Reese 432,456 (13)(19) 0 432,456 4.0% 3.1%
Rick R. Taylor 1,644 0 1,644 (6) (6)
David C. Bowers (8) 28,940 (20) 4,700 33,640 (6) (6)
All current executive
officers and directors as
a group (16 persons) 1,801,032 (21) 14,456 1,815,488 16.8% 12.8%
</TABLE>
------------------------
(1) Unless otherwise noted, the beneficial owner has sole voting and
investment power with respect to all of the Park common shares reflected in the
table. All fractional Park common shares have been rounded to the nearest whole
common share.
(2) The percent of class is based on 10,783,682 Park common shares
outstanding and entitled to vote on December 15, 2000, and the number of Park
common shares, if any, as to which the named individual has the right to acquire
beneficial ownership upon the exercise of options exercisable within 60 days of
that date.
(3) The post-merger percent of class is based on 10,783,682 Park
common shares outstanding on December 15, 2000, plus the issuance of 3,350,000
Park common shares in the merger. The officers and directors of Park disclaim
beneficial ownership of the 15,000 Security common shares held by Park.
(4) The Trust Department of Park National Bank, as the fiduciary of
various agency, trust and estate accounts, has sole voting and investment power
with respect to 1,147,848 of these Park common shares and shared voting and
investment power with respect to 9,450 of these Park common shares. The officers
and directors of Park National Bank and Park disclaim beneficial ownership of
the Park common shares beneficially owned by the Trust
20
<PAGE> 31
Department of Park National Bank. The number shown does not include Park common
shares held by Park National Bank's Trust Department in various trust accounts,
as to which Park National Bank's Trust Department has no voting or investment
power.
(5) The number shown includes 358,386 Park common shares held by Mr.
Warner in a family trust for which Mr. Warner serves as trustee and exercises
sole voting and investment power; 9,450 Park common shares held in a family
trust for which he serves as co-trustee with Park National Bank's Trust
Department and exercises shared voting and investment power; and 6,022 Park
common shares held by the wife of Mr. Warner as to which she exercises sole
voting and investment power.
(6) Represents ownership of less than 1% of the outstanding Park
common shares.
(7) The number shown includes 609 Park common shares held by Mr.
Cullers' wife; 640 Park common shares held in a trust with respect to which Mr.
Cullers has sole voting and investment power; 4,142 Park common shares held in a
Keough plan maintained by Mr. Cullers' law firm with respect to which Mr.
Cullers has voting and investment power; 165 Park common shares held by Mr.
Cullers as custodian for his grandchildren; and 89 Park common shares held by
Mr. Cullers' wife as custodian for their grandchildren. The number shown does
not include 20,127 Park common shares held by Mr. Cullers as trustee of a trust
as to which the grantor has retained sole voting and investment power.
(8) Executive officer of Park.
(9) The number shown includes 34,965 Park common shares held by the
wife of Mr. DeLawder as to which she exercises sole voting and investment power;
1,355 Park common shares held by Mr. DeLawder's daughter and 1,355 Park common
shares held by Mr. DeLawder's son as to which Mr. DeLawder exercises shared
voting and investment power; and 6,829 Park common shares held for the account
of Mr. DeLawder in the Park National Corporation Employees Voluntary Salary
Deferral Plan and Trust (the "Park 401(k) Plan").
(10) The number shown includes 1,199 Park common shares held in a trust
as to which Mr. Fanello has sole voting and investment power; but does not
include 420 Park common shares held in a grantor trust established for the
benefit of the wife of Mr. Fanello, with respect to which Park common shares Mr.
Fanello has no voting or investment power.
(11) The number shown includes 613 Park common shares held by the wife
of Mr. Geyer as to which she exercises sole voting and investment power; and
2,835 Park common shares held in Mr. Geyer's account in a Keough plan.
(12) The number shown includes 3,863 Park common shares held in a trust
with respect to which Mr. Jordan has sole voting and investment power.
(13) The number shown does not include 31,213 Park common shares owned
by the Newark Campus Development Fund, an Ohio not for profit corporation, of
which the following directors of Park serve as officers and/or trustees: Messrs.
LeFevre, McConnell, O'Neill and Reese. None of these individuals has the power
to vote these Park common shares without the consent of a majority of the Newark
Campus Development Fund's board of trustees and, therefore, each disclaims
beneficial ownership of the Park common shares.
(14) The number shown includes 48,139 Park common shares held in an
inter vivos trust created by Mr. LeFevre for which Park National Bank's Trust
Department serves as trustee and Mr. LeFevre exercises sole voting and
investment power.
(15) The number shown includes 980 Park common shares held jointly by
Mr. Leitnaker and his wife as to which they share voting and investment power;
and 525 Park common shares held by the wife of Mr. Leitnaker as to which she
exercises sole voting or investment power.
21
<PAGE> 32
(16) The number shown includes 70,444 Park common shares held by the
wife of Mr. McConnell as to which she exercises sole voting and investment
power; 16,170 Park common shares held in an inter vivos irrevocable trust
established by Mr. McConnell with respect to which Park National Bank's Trust
Department serves as trustee; and 3,906 Park common shares held for the account
of Mr. McConnell in the Park 401(k) plan.
(17) The number shown includes 20,127 Park common shares held in a
trust as to which Mr. McElroy exercises sole voting and investment power; 12,677
Park common shares owned by AMG Industries, Inc., a corporation controlled by
Mr. McElroy; and 670 Park common shares held by Mr. McElroy's wife as to which
she exercises sole voting and investment power.
(18) The number shown includes 1,090 Park common shares held for the
account of Mr. Phillips in the Park National 401(k) plan and 3,675 Park common
shares held by Mr. Phillips' wife as to which she exercises sole voting and
investment power.
(19) The number shown includes 53,676 Park common shares held by the
wife of Mr. Reese as to which she exercises sole voting and investment power.
(20) The number shown includes 4,539 Park common shares held for the
account of Mr. Bowers in the Park 401(k) plan and 2,921 Park common shares held
by Mr. Bowers' wife as to which she exercises sole voting and investment power.
(21) See Notes (5), (7) and (9) through (20) above.
PRINCIPAL SHAREHOLDERS OF SECURITY
The following table furnishes information regarding the beneficial
ownership of Security common shares as of December 15, 2000, for each of the
current directors of Security, each of the executive officers of Security, all
directors and executive officers of Security as a group, and each person known
by Security to beneficially own more than 5% of the outstanding Security common
shares. As of December 15, 2000, none of the directors or executive officers of
Security held Park common shares.
22
<PAGE> 33
Amount and Nature of Beneficial Ownership(1)
<TABLE>
<CAPTION>
Security
Common Shares
Which Can Be
Acquired Upon
Exercise of Percentage
In-the-Money Ownership Park Common Post-Merger
Name of Beneficial Security Options of Shares to be Percentage
Owner or Number Common Shares Exercisable Security Received in Ownership
of Persons in Group Presently Held Within 60 Days Total (2) Merger(3) of Park (4)
------------------- -------------- -------------- ----- ---- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Fleet National Bank, 681,168 0 681,168 5.8% 193,724 1.4%
Co-Trustee(5)
159 E. Main St.
Rochester, NY 14604
and
Robert E. Harley,
Co-Trustee(5)
1 South Limestone St.
Springfield, OH 45501
Security National Bank, 1,968,973 0 1,968,973 16.7% 559,975 4.0%
Trust Department
40 South Limestone St.
Springfield, OH 45502
Vincent J. Denama 56,112 (6) 0 56,112 * 15,958 **
Harry O. Egger 134,146 (7) 14,000 148,146 1.3% 38,151 **
Larry D. Ewald 43,036 (8) 0 43,036 * 12,239 **
Scott A. Gabriel 11,153 (9) 0 11,153 * 3,171 **
Larry E. Kaffenbarger 4,845 0 4,845 * 1,377 **
Richard E. Kramer 34,659 (10) 0 34,659 * 9,857 **
Dr. Karen E. Nagle 655 0 655 * 186 **
Thomas J. Veskauf 6,170 (11) 0 6,170 * 1,754 **
Chester L. Walthall 4,096 (12) 0 4,096 * 1,164 **
Robert A. Warren 3,490 0 3,490 * 992 **
James R. Wilson 42,874 (13) 0 42,874 * 12,193 **
William C. Fralick 24,894 (14) 14,000 38,894 * 7,079 **
J. William Stapleton 37,443 (15) 8,400 45,843 * 10,648 **
All current directors and
executive officers as a
group (13 persons) 403,573 36,400 439,973 3.7% 114,769 0.8%
</TABLE>
---------------
* Represents ownership of less than 1% of the outstanding common
shares of Security.
** Represents ownership of less than 1% of the outstanding common
shares of Park following the merger.
(1) Unless otherwise noted, the beneficial owner has sole voting and
investment power with respect to all of the Security common shares reflected in
the table.
23
<PAGE> 34
(2) The percentage of Security common shares owned is based on
11,777,700 Security common shares outstanding and entitled to vote on December
15, 2000, and the number of Security common shares, if any, as to which the
named individual has the right to acquire beneficial ownership upon the exercise
of options exercisable within 60 days of that date.
(3) The number of Park common shares to be received in the merger is
based on the number of Security common shares owned as of December 15, 2000
(excluding the number of Security common shares, if any, as to which the named
individual has the right to acquire beneficial ownership upon the exercise of
options exercisable within 60 days of that date) multiplied by the exchange
ratio of .2844.
(4) The post-merger percentage of Park common shares owned is based on
10,783,682 Park common shares outstanding on December 15, 2000 plus the issuance
of 3,350,00 Park common shares in the merger, and the number of Park common
shares which the named individual will have the right to acquire beneficial
ownership upon the exercise of converted options.
(5) The number shown represents Security common shares held by Fleet
National Bank and Security National Bank as co-trustees of the Jane P. B.
Hollenbeck Trust.
(6) The number shown includes 2,100 Security common shares held by the
wife of Mr. Demana.
(7) The number shown includes 60,359 Security common shares held by
the wife of Mr. Egger.
(8) The number shown includes 15,352 Security common shares held by
the wife of Mr. Ewald and 8,000 Security common shares held in a trust as to
which Mr. Ewald, as co-trustee, shares voting and investment power.
(9) The number shown includes 185 Security common shares held by the
wife of Mr. Gabriel.
(10) The number shown includes 2,379 Security common shares held by the
wife of Mr. Kramer and 25,216 Security common shares held in a trust as to which
Mr. Kramer shares voting and investment power.
(11) The number shown includes 1,790 Security common shares held by the
wife of Mr. Veskauf and 100 Security common shares held in a trust by Mr.
Veskauf's wife.
(12) The number shown includes 3,032 Security common shares held by the
wife of Mr. Walthall.
(13) The number shown includes 13,092 Security common shares held by
the wife of Mr. Wilson and 14,300 Security common shares held by Mr. Wilson's
children.
(14) The number shown includes 8,000 Security common shares held by the
wife of Mr. Fralick.
(15) The number shown includes 13,261 Security common shares held by
the wife of Mr. Stapleton.
THE MERGER
This section of the joint proxy statement/prospectus contains a summary
of the material terms of the merger. The following description summarizes all of
the material terms of the merger; however, we do not address every provision of
the merger agreement and qualify our description by reference to the merger
agreement. A copy of the merger agreement is attached to this document as
Appendix A. Park and Security urge you to read the merger agreement in its
entirety.
Under the terms of the merger agreement, at the effective time of the
merger, Security will merge into Park and the separate existence of Security
will end. At that time, each issued and outstanding Security common share, other
than those as to which dissenters' rights are perfected, will be converted into
approximately .2844 Park common shares. All Security common shares owned by
Security as treasury shares will be canceled and retired and
24
<PAGE> 35
no Park common shares or other consideration will be delivered in exchange for
those Security common shares. For more information, see "The Merger - Effect on
Outstanding Park Common Shares and Exchange of Security Common Shares - Exchange
of Security Common Shares" on page [ ]. As discussed further below, the
consideration to be received by the Security shareholders in the merger was
determined by arm's-length negotiations between the management of Park and
Security.
Park has provided all information contained in this joint proxy
statement/prospectus relating to Park and Security has provided all information
relating to Security . The party providing the information is responsible for
the accuracy of that information.
BACKGROUND
The terms and conditions of the merger agreement were determined through
arm's-length negotiations between the management and boards of directors of
Security and Park. The following is a brief summary of those negotiations.
William T. McConnell, Chairman of the Board of Park, and C. Daniel
DeLawder, President and Chief Executive Officer of Park, have been acquainted
for a number of years with Harry O. Egger, Chairman, President and Chief
Executive Officer of Security. The three have been active in bank trade
association work, and have shared "best practices" of their respective
organizations on several occasions.
Messrs. Egger and McConnell have had a number of conversations and visits
spanning nearly twenty years, during which time they developed considerable
knowledge of each other's financial institutions and operating methods. There
are several examples where these visits led to changes in a particular procedure
or product resulting in improved performance. Both Security National Bank and
Park National Bank have consistently been high performing banks, and the sharing
of various types of information has contributed to their success. In short, the
two banks perform very much alike.
During several visits, Messrs. Egger and McConnell had conversations
concerning the possible advantages of a business combination of the two bank
holding companies. Such conversations preceded a meeting on October 26, 1999, in
the Columbus office of Park National Bank among Messrs. Egger, McConnell and
DeLawder.
At that time, it was clear substantive change was occurring in the
banking industry. Among several changes discussed were increased reliance on
expensive technology, the rapid consolidation of banks through mergers as well
as the further de-regulation of the banking industry. These issues were offered
as strong evidence by Messrs. McConnell and DeLawder that a combination of
Security and Park could be advantageous to the organizations' respective
communities, shareholders and employees.
Messrs. McConnell and DeLawder also shared numerous reasons for the
historical success of Park, especially during the past fifteen years. Park has
grown through affiliation with other highly respected community banks to create
an organization of a family of banks having a presence in fifteen different
counties in Ohio, operating 60 banking offices through six different banks. It
was emphasized these banks continue to operate with their pre-merger identity,
boards of directors and substantially the same staff. This continuing form of
organization has contributed to each bank's recognition as a leader in its
market.
Through the combination of these banks under one form of ownership,
economies of scale have been realized that, in addition to the community bank
focus, has enabled Park to remain a highly successful organization. The
additional size through the combination of the banks has been a factor allowing
significant capital expenditures to be made concurrent with product and service
development. It is strongly believed that Park, and each of Park's subsidiary
banks, has been able to be very responsive to community financial needs, and to
itself be more profitable as a result.
Messrs. McConnell and DeLawder suggested the combination of Security and
Park, while not guaranteed, would be advantageous to their respective
constituencies. Importantly, a merger would provide a more sizable base from
which they could effectively compete to the benefit of the resulting
corporation.
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<PAGE> 36
While a value for Security's shareholders was not addressed specifically,
it was suggested that Park's analysis would include the current and prospective
earnings contributions of the respective corporations. The analysis should allow
a conclusion to be drawn that would prove to be mutually acceptable to all
parties. Mr. Egger acknowledged the discussion points had considerable merit,
and he intended to give considerable thought to the proposed combination.
A few weeks later, on December 17, 1999, Mr. DeLawder called Mr. Egger to
inform Mr. Egger that Park had signed a definitive agreement to acquire SNB
Corp., a one bank holding company operating in Darke and Mercer counties under
the name of Second National Bank. Both counties are immediately adjacent to
counties in which Security has banking offices.
The agreement with SNB Corp. was signed one week after Park had signed a
similar agreement to acquire U.B. Bancshares, Inc., a one bank holding company
operating in Crawford and Marion counties under the name of United Bank, N.A.
Mr. DeLawder stated these two additional banks, when the mergers were completed
early in 2000, would bring the total banks owned by Park to eight, operating in
20 counties through 78 different offices. Mr. DeLawder attempted to make clear
that the combination of Security with Park was not only still possible, but
highly desirable. Following the closing of the SNB Corp. and U.B. Bancshares
mergers, the three banks owned by Security, and operating in six counties now
all adjacent to counties in which Park subsidiary banks have a physical
presence, would be a natural geographic fit within the Park organization. Mr.
DeLawder encouraged Mr. Egger to give further thought to the proposition, to
which Mr. Egger agreed.
Mr. DeLawder next called Mr. Egger on February 15, 2000, to see if Mr.
Egger had additional questions or perhaps had come to any conclusion. Mr. Egger
responded that he was still giving the possible combination serious
consideration, but was not yet prepared to talk further. The two agreed to
remain in touch over the next several months.
Mr. DeLawder again called Mr. Egger on May 1, 2000, to let Mr. Egger know
the closings for the U.B. Bancshares and SNB Corp. mergers had occurred. Mr.
DeLawder also reiterated Park's strong desire to continue discussions of a
possible combination of Security and Park. Mr. Egger suggested they talk again
sometime during the later part of June, and Mr. DeLawder agreed to call at that
time.
On June 22, 2000, Messrs. Egger and DeLawder had another telephone
conversation, and agreed to meet on July 12, 2000. Mr. Egger invited Mr.
DeLawder to Security National Bank in Springfield, to continue discussions.
During the visit, Messrs. Egger and DeLawder discussed, at considerable length,
several issues. Among them, the resulting structure of the three financial
institutions owned by Security, the staff and boards of the respective financial
institutions and those financial institutions' continuing ability to respond to
community needs received the greatest attention. Mr. DeLawder responded by
providing several examples of how the subsidiary banks of Park operated, with an
emphasis on the continuing identity of each bank and its considerable autonomy.
At the conclusion of the meeting, Mr. Egger suggested it might be beneficial for
he and Mr. McConnell to meet again to discuss these and other issues.
At a meeting on July 19, 2000, Messrs. Egger and McConnell discussed
corporate governance issues, and specifically, how Security's interest would be
represented in a possible combination of the corporations. Mr. McConnell stated
Park's management would welcome the input of Mr. Egger in the future, and
suggested Mr. Egger would be recommended to join the board of Park, and
additionally, be elected vice chairman of the board. Both steps would allow
Park's interest in the western part of Ohio to be actively and substantively
represented. Mr. Egger's considerable experience would also be an asset to the
organization in all other matters as well.
Mr. McConnell addressed the earnings valuation approach favored by Park.
They revisited the discussion of October 26, 1999 dealing with the pricing
discipline and valuation model embraced by Park. Mr. McConnell emphasized the
equitable nature of such a combination. Shareholders of both corporations would
have ownership in the resulting corporation based on their respective level of
earnings contributed.
Mr. McConnell suggested that while Park has a very good sense of earnings
for Park, it would be beneficial for Mr. Egger to share further financial
information about Security with Park in order for additional projections by Park
to be possible. They agreed to continue discussions, and to share respective net
income information.
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<PAGE> 37
During a meeting on August 16, 2000, Messrs. Egger and DeLawder discussed
information intended to allow both parties to gain a better understanding of the
net income potential of each, and as well, to learn of any special conditions
existing with asset quality, legal issues or other factors that could influence
a valuation of either organization. In the absence of information that would
negatively influence valuation, both agreed to proceed. Mr. DeLawder requested
another meeting, and the two agreed to meet on September 1, 2000 in Columbus.
During the September 1, 2000 meeting, Mr. DeLawder shared the earnings
valuation procedure that resulted in Park's offering 3,300,000 common shares as
the total consideration in exchange for the outstanding Security common shares,
including common shares subject to outstanding options. Mr. Egger acknowledged
the offer, subject in both cases to board approval, and invited Mr. DeLawder to
Springfield to further discuss the proposal.
During a September 13, 2000 meeting, Mr. Egger provided additional
information as Security's basis for requesting that the aggregate consideration
the Security shareholders would receive be increased by several thousand Park
common shares. Mr. Egger also suggested he might not want to continue employment
if the proposed merger occurred. Mr. DeLawder expressed disappointment in Mr.
Egger's personal position, and stated the consideration offered by Park assumed
the continued employment of Mr. Egger as the Chief Executive Officer of Security
National Bank with continuing responsibility for the other two financial
institutions owned by Security. They both agreed to give additional thought to
the points raised during the meeting, and agreed they should meet again on
September 27, 2000.
During a September 27, 2000 meeting, Mr. DeLawder stated that without Mr.
Egger, the offer for Security would be considerably less. Further, Park's
management concluded the offer of 3,300,000 Park common shares was appropriate,
if Mr. Egger agreed to continue employment. Mr. Egger agreed to consider
continuing employment, but was reluctant to accept Park's conclusion not to
offer additional common shares. Mr. Egger suggested that several of the senior
staff of Security meet with several senior staff of Park to further discuss
earnings opportunities and clarify any questions Park may have.
Subsequently, Messrs. William C. Fralick, J. William Stapleton, James R.
Wilson and Scott A. Gabriel, all representing the three financial institutions
owned by Security, met with Messrs. DeLawder, David C. Bowers, John W. Kozak and
David L. Trautman, who represented banks owned by Park. The meeting occurred on
October 5, 2000 in Columbus, Ohio. During the meeting, schedules were exchanged
that contained considerable detail requested by both corporations in order to
become better informed of the other. Discussions at length occurred that allowed
the representatives from Security to learn more thoroughly the operating style
of Park and the differences in subsidiary bank approaches in the several markets
served by Park's subsidiary banks.
Messrs. Egger and DeLawder next talked by telephone on October 12, 2000.
Mr. Egger agreed to consider full-time employment. They talked further about
consideration issues, and agreed a face-to-face meeting would be more
appropriate. Mr. DeLawder next visited Mr. Egger at his office in Springfield on
October 20, 2000. During this meeting, Mr. Egger reviewed in further detail his
reasoning for an increase in the valuation of Security. Additionally, Mr. Egger
had conferred with selected senior staff of Security, and they confirmed his
conclusions on valuation.
Before proceeding further, Messrs. Egger and DeLawder concluded it would
be appropriate to enter into a more formal stage of discussion, and each agreed
to seek approval from his board of directors to enter into a confidentiality
agreement. Appropriate approval was subsequently received, and a confidentiality
agreement was signed by Security and Park on October 27, 2000.
Messrs. Egger and DeLawder met again on November 1, 2000 in Columbus,
Ohio. Mr. DeLawder stated that Park's management had recommended to Park's
executive committee, on October 27, 2000, that the total consideration for the
merger with Security be increased to 3,350,000 Park common shares. The
consideration was to accommodate the Security common shares subject to
outstanding options, and represented an increase from Park's original offer as a
result of a better understanding of Security's future prospects. Mr. Egger then
responded he would make the proposal known to the board of Security, and he
planned to schedule a meeting for November 16, 2000. He also stated the meeting
would include a representative from Austin Associates, Inc., who Security
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<PAGE> 38
would engage to render a fairness opinion on the proposed transaction.
Additionally, Austin Associates would be asked to discuss with Security's board
of directors the alternatives that may be available to the Security board.
Following this meeting, Mr. Egger called Mr. DeLawder on November 17,
2000, to inform him that the Security board had agreed in concept to consider
the proposal, but Mr. Egger was of the opinion that the number of Park common
shares to be exchanged should be increased. Mr. DeLawder noted that a meeting of
Park's executive committee was scheduled for later that same day. Management
planned to make a recommendation to the executive committee regarding Security,
and the executive committee would in turn make a recommendation to the Park
board of directors on Monday, November 20, 2000, if appropriate.
Mr. DeLawder shared with Mr. Egger that Messrs. McConnell and DeLawder
were now prepared to recommend that the merger consideration be 3,350,000 Park
common shares. Further, they planned to recommend that Park assume the
obligations related to the common shares issuable upon exercise of outstanding
Security options. This assumption would result in an additional approximately
50,000 Park common shares being issuable in connection with the transaction.
Subsequently, Park's executive committee and Park's board of directors
met on November 20, 2000 to ratify the recommendations outlined above.
Security's board also met on Monday, November 20, 2000, and approved the terms
as outlined.
REASONS FOR THE MERGER
The decision of the Park board of directors and the Security board of
directors to approve the merger agreement and to recommend that their respective
shareholders adopt the merger agreement is the result of each board of
directors' individual assessment of the opportunities to enhance shareholder
value as a result of the merger.
The board of directors of Security believes that the merger with Park is
fair and in the best interest of Security and its shareholders and recommends
that the Security shareholders vote "FOR" adoption of the merger agreement. The
Security board of directors considered all of the following factors in approving
the merger agreement and believes that each of the factors represents an
important reason why it is recommending that its shareholders vote in favor of
adopting the merger agreement:
- the opinion of Austin Associates that the exchange ratio provided
for in the merger agreement was fair to Security shareholders from
a financial point of view;
- the overall financial terms of the merger;
- current long-term industry development and trends;
- competitive factors;
- the business and financial condition and earnings prospects of
Park;
- the competence, experience and integrity of Park's management;
- the adequacy of the consideration to be received by Security's
shareholders in the merger;
- the historical trading prices of the Security common shares; and
- future prospects for Security.
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<PAGE> 39
In negotiating the terms of the merger, management of Park considered a
number of factors with a view to maximizing shareholder value in the
intermediate and long term, including:
- the earnings potential of the combined business;
- the strengthened capital base of the combined business;
- the potential realization of economies of scale;
- the growth prospects within the existing market area of Security's
subsidiaries; and
- expansion of the community banking model successfully employed by
Park.
Park has a proven history of successfully joining with other community
banks to offer products and services of such high value that the banks are
viewed as unique within their respective markets. Park and Security believe that
Security's three subsidiary financial institutions will have the benefit of
replicating Park's subsidiary bank strategies, practices and procedures that
have allowed Park to gain competitive advantages within the respective markets
served by the subsidiary financial institutions.
Park's management believes the markets served by Security have similar
potential for product and service delivery. Security's market areas have many
parallels characteristic to those markets currently served by Park. It is
expected that Security's markets will be receptive to the Park approach to
banking and accordingly, will provide levels of profitability comparable to
those of the other banking subsidiaries of Park.
Additionally, the former subsidiaries of Security will add value to the
existing subsidiaries of Park by sharing unique approaches that have been
successful for Security. Park has benefited from each new community bank that
has joined the Park organization over the years, and it is expected the addition
of the former subsidiaries of Security will be beneficial for existing Park
subsidiary banks in a similar fashion.
Security's subsidiaries operate within attractive geographic areas of
Ohio, served by interstate highways 70 and 75. These markets have enjoyed higher
growth than some of the current markets served by Park's subsidiary banks, and
are desirable market area extensions for Park. Further, with the three Security
subsidiaries situated near the expanding Columbus, Ohio and Dayton, Ohio
metropolitan areas, Park and Security believe the markets will enjoy
above-average growth over the next several years.
The combined capital base of the corporations should allow for
significant and necessary investment in evolving technology. In order to remain
competitive with regional and super regional banking companies, Park and
Security believe it is critical to have the capacity to invest in computer
hardware and software, physical facilities and other delivery methods in order
to attract and retain customers. Such investments, made within the context of a
larger organization, would be shared by a larger base of customers, and the
investments on a relative basis would be more affordable. Economies of scale are
expected to realized, and shareholder value further enhanced by such
combination.
Park's primary financial goal is to achieve a superior long-term return
on shareholders' equity which the Park board of directors believes may be
achieved through the merger. The tables below compare (1) the return on average
assets for Park, all U.S. bank holding companies with $3 billion to $10 billion
in consolidated assets and Security, and (2) the return on average equity for
Park, all U.S. bank holding companies with $3 billion to $10 billion in
consolidated assets and Security.
29
<PAGE> 40
<TABLE>
<CAPTION>
RETURN ON AVERAGE ASSETS
Year ended December 31,
----------------------------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Park 1.65% 1.69% 1.56%
Peer U.S. bank holding companies 1.26% 1.19% 1.17%
Security 1.75% 1.85% 1.78%
</TABLE>
<TABLE>
<CAPTION>
RETURN ON AVERAGE EQUITY
Year ended December 31,
----------------------------------------------------------------
1997 1998 1999
---- ---- ----
<S> <C> <C> <C>
Park 17.18% 17.12% 16.28%
Peer U.S. bank holding companies 14.13% 13.40% 13.75%
Security 13.92% 13.69% 14.18%
</TABLE>
OPINION OF AUSTIN ASSOCIATES, INC.
Security retained Austin Associates to provide financial advisory
services in connection with the merger. Security selected Austin Associates as
its financial advisor on the basis of Austin Associates' past relationship with
Security, and Austin Associates' experience and expertise in representing
community banks in similar transactions. Austin Associates is an investment
banking and consulting firm specializing in community bank mergers and
acquisitions.
In conjunction with the meeting of Security's board of directors held on
November 20, 2000 to consider the merger and approve the merger agreement,
Austin Associates delivered its opinion that the terms provided for in the
merger agreement are fair, from a financial point of view, to the shareholders
of Security.
Shareholders should consider the following when reading the discussion of
Austin Associates' opinion:
- The summary of Austin Associates' opinion included in this joint
proxy statement/prospectus is qualified in its entirety by
reference to the full text of the opinion that is attached as
Appendix B to this document. You should read the opinion in its
entirety for a full discussion of the procedures followed,
assumptions made, matters considered and qualifications and
limitations of the review undertaken by Austin Associates in
connection with its opinion.
- Austin Associates expresses no opinion as to the price at which
Park common shares would actually be trading at any time.
- Austin Associates' opinion does not address the relative merits of
the merger and the other business strategies considered by
Security's board of directors, nor does it address the decision of
Security's board of directors to proceed with the merger.
- Austin Associates' opinion to the Security board of directors
rendered in connection with the merger does not constitute a
recommendation to any Security shareholder as to how he or she
should vote at the Security special meeting.
- No limitations were imposed by the Security board of directors or
its management upon Austin Associates with respect to the
investigations made or the procedures followed by Austin
Associates in rendering its opinion.
The preparation of a financial fairness opinion involves various
determinations as to the most appropriate methods of financial analysis and the
application of those methods to the particular circumstances. It is, therefore,
not readily susceptible to partial analysis or summary description. In
connection with rendering its opinion, Austin
30
<PAGE> 41
Associates performed a variety of financial analyses. Austin Associates believes
that its analyses and the facts considered in its analyses, without considering
all other factors and analyses, could create an incomplete or inaccurate view of
the analyses and the process underlying the rendering of Austin Associates'
opinion.
In performing its analyses, Austin Associates made numerous assumptions
with respect to industry performance, business and economic conditions, and
other matters, many of which are beyond the control of Park and Security and may
not be realized. Any estimates contained in Austin Associates' analyses are not
necessarily predictive of future results or values, which may be significantly
more or less favorable than the estimates. Estimates of values of companies do
not purport to be appraisals or necessarily reflect the prices at which the
companies or their securities may actually be sold. Except as described below,
none of the analyses performed by Austin Associates was assigned a greater
significance by Austin Associates than any other. The relative importance or
weight given to these analyses by Austin Associates is not effected by the order
of the analyses or the corresponding results. The summaries of financial
analyses include information presented in tabular format. The tables should be
read together with the text of those summaries.
Austin Associates has relied, without independent verification, upon the
accuracy and completeness of the information it reviewed for the purpose of
rendering its opinion. Austin Associates did not undertake any independent
evaluation or appraisal of the assets and liabilities of Park or Security, nor
was it furnished with any appraisals. Austin Associates has not reviewed any
individual credit files of Park or Security and has assumed that Park's and
Security's allowances are, in the aggregate, adequate to cover losses. Austin
Associates' opinion is based on economic, market and other conditions existing
on the date of its opinion, and on information as of various earlier dates made
available to it which may not necessarily be indicative of current market
conditions.
In rendering its opinion, Austin Associates made the following
assumptions:
- the merger will be accounted for as a pooling-of-interest in
accordance with generally accepted accounting principles;
- all material governmental, regulatory and other consents and
approvals necessary for the consummation of the merger will be
obtained without any adverse effect on Security, Park or the
anticipated benefits of the merger;
- Security had provided all of the information prepared by Security
or its other representatives that might be material to Austin
Associates in its review; and
- the financial projections Austin Associates reviewed were
reasonably prepared on a basis reflecting the best currently
available estimates and judgment of the management of Security as
to the future operating and financial performance of Security.
In connection with its opinion, Austin Associates reviewed:
- the merger agreement;
- audited financial statements of Park for the five years ended
December 31, 1999 and unaudited financial statement summaries as
of September 30, 2000;
- audited financial statements of Security for the five years ended
December 31, 1999 and unaudited financial statement summaries as
of September 30, 2000; and
- publicly available financial and operating information with
respect to the business, operations and prospects of Park and
Security.
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<PAGE> 42
In addition, Austin Associates:
- reviewed the historical market prices and trading activity for the
common shares of Park and Security, and compared the market
activity of Park's common shares with that of certain publicly
traded companies which it deemed to be relevant;
- compared the results of operations of Park with those of certain
financial institutions which it deemed to be relevant;
- compared the financial terms of the merger with the financial
terms, to the extent publicly available, of other recent business
combinations of financial institutions;
- analyzed the pro forma equivalent financial impact of the merger
to Security per share data; and
- conducted such other studies, analyses, inquiries and examinations
as Austin Associates deemed appropriate.
THE FOLLOWING IS A SUMMARY OF ALL MATERIAL ANALYSES PERFORMED BY AUSTIN
ASSOCIATES IN CONNECTION WITH ITS OPINION PROVIDED TO THE SECURITY BOARD OF
DIRECTORS AS OF NOVEMBER 20, 2000. THE SUMMARY DOES NOT PURPORT TO BE A COMPLETE
DESCRIPTION OF THE ANALYSES PERFORMED BY AUSTIN ASSOCIATES.
SUMMARY OF FINANCIAL TERMS OF MERGER
Austin Associates reviewed the financial terms of the merger, including
the form of consideration, the number of Park common shares to be issued, and
the resulting value per share to be received by Security shareholders. Under the
terms of the merger agreement, Park will issue 3,350,000 common shares in
exchange for all the outstanding common shares of Security. Security's board of
directors may terminate the merger if the average closing sale price of a Park
common share, for the 20 trading day period immediately preceding the tenth day
prior to the effective time of the merger, is less than $77.50 and if the ratio
of the price decline for Park common shares exceeds the ratio of price decline
for shares of the common stock of a specific group of bank holding companies.
The merger consideration was determined through arm's-length negotiations
between the management of Park and Security.
Based on 11,777,700 Security common shares outstanding as of the date of
the merger agreement, the exchange ratio would equal .2844. The .2844 exchange
ratio was calculated using the following steps. The consideration for all of
Security's outstanding common shares is 3,350,000 Park common shares. The
3,350,000 Park common shares issued in the transaction was divided by
11,777,700, the number of Security common shares outstanding as of the signing
of the merger agreement, to arrive at an exchange ratio of .2844. To determine
the per share value to Security shareholders, the exchange ratio is multiplied
by closing sale price of a Park common share on November 20, 2000. Based on
Park's closing share price on November 20, 2000 of $91.375, the value per share
to Security common shareholders is $25.99 ($91.375 multiplied by .2844). The
aggregate value of consideration to Security common shareholders equals the
total number of outstanding shares multiplied by the per share price. The
aggregate value, as of November 20, 2000, equaled $306.1 million ($25.99
multiplied by 11,777,700).
In addition to the issuance of Park common shares, Park agreed to assume
and convert all outstanding options to purchase an aggregate of 174,999 Security
common shares into options to purchase Park common shares. The Security options
are exercisable at prices ranging from $7.63 to $46.00 per share. Based on the
$25.99 per share value to Security shareholders, the in-the-money value of the
options measures approximately $758,000. Based on the consideration payable for
the common shares and options of Security, the aggregate value of the
transaction is approximately $306.9 million.
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<PAGE> 43
INDUSTRY COMPARATIVE ANALYSIS
In connection with rendering its opinion, Austin Associates compared
selected results of Park's operating performance to those of 11 Midwest-based
banking organizations having assets of between $2 billion and $5 billion,
including:
- Republic Bancorp, Inc., Owosso, Michigan
- AMCORE Financial Inc., Rockford, Illinois
- First Financial Bancorp., Hamilton, Ohio
- 1st Source Corp., South Bend, Indiana
- Area Bancshares Corp., Owensboro, Kentucky
- Integra Bank Corp., Evansville, Indiana
- Gold Banc Corp., Leawood, Kansas
- Corus Bankshares Inc., Chicago, Illinois
- Intrust Financial Corp., Wichita, Kansas
- Community Trust Bancorp, Pikeville, Kentucky
- Irwin Financial Corp., Columbus, Indiana
Austin Associates considered this group of financial institutions
comparable to Park on the basis of asset size and geographic location. Austin
Associates noted the following selected financial measures for the Midwest-based
banks as compared to Park for the period 1995 to September 30, 2000:
<TABLE>
<CAPTION>
MEDIAN FOR MIDWEST
PARK(1) PEER GROUP
---- ----------
YTD 2000 95-99 Average YTD 2000 95-99 Average
-------- ------------- -------- -------------
<S> <C> <C> <C> <C>
Core Return on Average Assets 1.83% 1.71% 1.08% 1.23%
Core Return on Average Equity 19.93% 18.23% 15.36% 13.84%
Asset Growth Rate 29.20% 14.98% 9.27% 11.78%
Core E.P.S. Growth Rate(2) 7.14% 14.57% 12.14% 14.77%
Leverage Ratio 9.36% 8.96% 8.40% 8.64%
Nonperforming Assets/Assets 0.25% 0.28% 0.64% 0.58%
Net Loan Charge-Offs 0.16% 0.20% 0.26% 0.32%
</TABLE>
------------------
(1) Park historical financial performance from 1995-1999 as reported through
November 20, 2000
(2) Core E.P.S. = Earnings per share excluding nonrecurring income and expenses
Based on return on average assets and return on average equity, this
comparison indicated that Park has an above average level of overall
profitability. Park's historical growth rate in assets has exceeded the Midwest
peer group with core earnings growth approximating the peer's 1995-1999 average.
Park's level of capital as measured by the leverage ratio is above the Midwest
peer median. Park's asset quality measures compare very favorably to the Midwest
peer group.
Austin Associates also reviewed share trading information as of November
20, 2000. The following represents a summary of this review.
<TABLE>
<CAPTION>
MEDIAN FOR MIDWEST
PARK PEER GROUP
---- ----------
<S> <C> <C>
Market Price to Core E.P.S. 17.8 x 10.7 x
Market Price to Tangible Book Value 337% 157%
Average Daily Trading Volume in Shares 3,431 22,261
Average Daily Value of Market Trades $318,000 $439,000
Monthly Trading Volume/ Shares Outstanding 0.70% 2.68%
</TABLE>
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<PAGE> 44
This comparison indicated that Park trades at a premium to the Midwest
peer group as measured by market valuation. Average daily trading volume
indicates that approximately $318,000 worth of Park common shares have traded on
a daily basis during 2000.
COMPARABLE TRANSACTION ANALYSIS
Based on the aggregate transaction value of $306.9 million, Austin
Associates calculated this value to be:
- 250 percent of book value at September 30, 2000;
- 275 percent of tangible book value at September 30, 2000; and
- 17.8 times core net income for the last twelve months ended
September 30, 2000.
Austin Associates reviewed certain information relating to thirteen bank
sale transactions nationally announced from January 1, 2000 to November 17,
2000. The sale transaction bank peer group was selected based on all
transactions in which the selling company's assets ranged from $500 million to
$2 billion. The median asset size of the selling banks measured $1.1 billion.
Austin Associates compared the prices paid in these transactions as compared to
the transaction multiples being paid by Park for Security, and certain
underlying financial performance ratios of the selling banks as compared to
Security, as follows:
<TABLE>
<CAPTION>
MEDIAN COMPARABLE
PARK/SECURITY TRANSACTION
------------- -----------
<S> <C> <C>
Price/Earnings Multiple 17.8 x 19.3 x
Price/Book Value Ratio 250% 260%
Price/Tangible Book Value Ratio 275% 260%
Leverage Ratio 11.87% 7.04%
Return on Average Assets 1.76% 1.15%
Return on Average Equity 14.45% 15.23%
5-Year Average E.P.S. Growth Rate 7.6% 10.9%
</TABLE>
The multiples being paid by Park for Security approximate the median
multiples paid for similarly sized banks during 2000.
CONTRIBUTION ANALYSIS
Austin Associates compared the pro forma ownership interest in Park that
Security shareholders would receive, in the aggregate, to Security's
contribution of selected balance sheet, income statement and market
capitalization measures. The following table compares the range of pro forma
ownership of Security and Park shareholders in the combined corporation, based
upon the estimated exchange ratio of .2844, with each corporation's respective
contribution of various selected measures:
<TABLE>
<CAPTION>
Ratio of
Ownership to
Security Park Contribution
-------- ---- ------------
<S> <C> <C> <C>
PRO FORMA OWNERSHIP 23.7% 76.3% 100%
INCOME STATEMENT % Contribution
---------------
1999 Actual Core Net Income 26.0% 74.0% 91.0%
September 30, 2000 Core Net Income 23.5% 76.5% 101.4%
BALANCE SHEET AS OF SEPTEMBER 30, 2000
Total Assets 23.5% 76.5% 100.8%
Total Deposits 23.4% 76.6% 101.1%
Tangible Shareholders' Equity 27.6% 72.4% 85.8%
</TABLE>
34
<PAGE> 45
<TABLE>
<CAPTION>
Ratio of
Ownership to
Security Park Contribution
-------- ---- ------------
<S> <C> <C> <C>
MARKET CAPITALIZATION
Based on 30 Day Average Closing Price 17.1% 82.9% 138.6%
Based on 5 Day Average Closing Price 17.6% 82.5% 134.9%
Based on November 20, 2000 Closing 17.7% 82.3% 133.9%
</TABLE>
PRO FORMA MERGER ANALYSIS
Austin Associates also reviewed the pro forma effect of the proposed
transaction to Security's and Park's September 30, 2000 year-to-date earnings
per share and book value per share. Austin Associates calculated the pro forma
effect using the estimated .2844 exchange ratio.
Security recorded diluted core earnings per share of $1.08 for the nine
months ended September 30, 2000 and Park's earnings measured $3.90 per share for
the same period. Giving effect to the merger, the equivalent Security earnings
would have equaled $1.11 per share, an increase of 2.4 percent from actual
results.
Security's tangible book value per share equaled $9.47 as of September
30, 2000 and Park's tangible book value measured $27.13 per share. Giving effect
to the merger, the equivalent Security tangible book value would have equaled
$8.14 per share, a decrease of 14.1 percent from actual results.
Park's pro forma year-to-date earnings per share would have equaled
$3.89, a decrease of 0.3 percent from actual results. Park's September 30, 2000
pro forma tangible book value per share would have equaled $28.60, an increase
of 5.4 percent from actual results.
PRO FORMA EQUIVALENT DIVIDENDS
Austin Associates reviewed the current cash dividends paid by Park and
Security. Based on the exchange ratio of .2844, equivalent dividends to
Security's shareholders would have equaled $0.74 for the twelve months ended
September 30, 2000, compared to actual dividends of $0.58 per share. The current
quarterly dividend rate of Park is $0.65 per share, or $2.60 per share on an
annualized basis. Equivalent dividends to Security shareholders would equal
$0.74 annually, assuming an estimated .2844 exchange ratio. This represents a
27.6 percent increase over the last twelve months dividend rate of Security.
ADDITIONAL LIMITING CONDITIONS
The opinion expressed by Austin Associates was based on market, economic
and other relevant considerations as they existed and could be evaluated as of
November 20, 2000. Events occurring after the date of issuance of the opinion,
including but not limited to, changes affecting the securities markets, the
results of operations or material changes in the financial condition of either
Park or Security could materially affect the assumptions used in preparing this
opinion.
Security has agreed to pay Austin Associates $450,000 for its services in
issuing its fairness opinion in connection with the merger. In addition to its
fees and regardless of whether the merger is consummated, Security has agreed to
reimburse Austin Associates for its reasonable out-of-pocket expenses, and to
indemnify Austin Associates against certain liabilities, including liabilities
under securities laws.
THE FULL TEXT OF THE AUSTIN ASSOCIATES OPINION LETTER, WHICH DESCRIBES
THE ASSUMPTIONS MADE AND MATTERS CONSIDERED, IS ATTACHED TO THIS DOCUMENT AS
APPENDIX B. WE URGE YOU TO READ THIS OPINION LETTER IN ITS ENTIRETY. AUSTIN
ASSOCIATES' OPINION IS DIRECTED ONLY TO THE CONSIDERATION TO BE RECEIVED BY
SECURITY SHAREHOLDERS IN THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION AS
TO HOW THE SECURITY SHAREHOLDERS SHOULD VOTE AT THE SECURITY SPECIAL MEETING.
35
<PAGE> 46
EFFECT ON OUTSTANDING PARK COMMON SHARES AND EXCHANGE OF SECURITY COMMON SHARES
EFFECT ON OUTSTANDING PARK COMMON SHARES
Each issued and outstanding Park common share will continue to be one
Park common share after consummation of the merger.
EXCHANGE OF SECURITY COMMON SHARES
At the effective time of the merger, all Security common shares that are
held by Security as treasury shares will be canceled and retired and no Park
common shares or other consideration will be delivered in exchange for those
Security common shares. All Security common shares held by Park will become
treasury shares of Park following the merger. All of the remaining Security
common shares, other than those as to which the holders have properly exercised
dissenters' rights, will be converted into Park common shares.
The exact number of Park common shares to be received for each
outstanding Security common share, is determined by dividing 3,350,000 Park
common shares by the number of Security common shares outstanding immediately
prior to the effective time of the merger. At [ ], 2001, there were
[11,777,700] Security common shares outstanding. The merger agreement prohibits
Security from issuing any additional common shares, except for the [174,999]
Security common shares that are subject to outstanding options. If necessary,
the exchange ratio will be proportionately adjusted to prevent dilution as a
result of a share split, share dividend, recapitalization or similar transaction
with respect to the outstanding Park common shares prior to the effective date
of the merger.
If both of the following conditions are met, Security may elect to
terminate the merger agreement at any time during the three-day period beginning
with the determination date for the merger. The determination date for the
merger is the last day of the 20 trading day period immediately preceding the
tenth day prior to the effective time of the merger:
- the average of the closing sale prices of a Park common share on
the American Stock Exchange for the 20 trading day period
immediately preceding the tenth day prior to the effective time of
the merger must be less than $77.50, and
- the ratio of that 20 trading day average closing sales price to
$91.375, the closing price of a Park National common share on the
American Stock Exchange on November 20, 2000, must be less than
the number obtained by dividing:
- the sum of the average daily closing sales prices of a
share of common stock for the 20 trading day period
immediately preceding the tenth day prior to the effective
time of the merger of each company comprising an index
group of ten similar bank holding companies (multiplied by
a designated weight), by
- the sum of each per share closing price of a share of
common stock of each index group company (multiplied by a
designated weight) on November 20, 2000.
Before making any decision to terminate the merger agreement as a result
of the events described above, the Security board of directors will consult with
its financial and other advisors and will consider all financial and other
information it deems relevant to its decision. The Security board of directors
is under no obligation to resolicit the Security shareholders in the event
Security elects to exercise its termination right in connection with the
occurrence of any of the above-described events. The Security board of directors
will make its decision regarding resolicitation of the shareholders based on the
market conditions and other circumstances relating to the merger existing at the
time. For more information, see "The Merger Agreement - Amendment and
Termination" on page [ ].
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<PAGE> 47
NO FRACTIONAL PARK COMMON SHARES TO BE ISSUED
Park will not issue scrip or fractional interests in Park common shares
in the merger. In lieu of fractional interests, Park will pay the cash value of
the fraction to each holder of Security common shares who otherwise would have
been entitled to a fraction of a Park common share, upon surrender of the
holder's certificates representing Security common shares. The shareholder will
receive an amount of cash, rounded to the nearest cent, determined by
multiplying the fractional share interest by the market value of a Park common
share. The market value of a Park common share will equal the average closing
price of a Park common share for the 20 trading day period immediately preceding
the tenth day prior to the effective time of the merger, as reported on the
American Stock Exchange.
CLOSING OF SECURITY SHARE TRANSFER BOOKS; EXCHANGE OF CERTIFICATES EVIDENCING
SECURITY COMMON SHARES
Security will close its share transfer books in respect of the Security
common shares at the effective time of the merger.
As soon as practicable after the effective time of the merger, each
Security shareholder will be advised of the effectiveness of the merger by
letter accompanied by a letter of transmittal and instructions for use to
surrender the certificate or certificates representing Security common shares to
Park's exchange agent, First-Knox National Bank.
The letter of transmittal will be used to exchange Security certificates
for Park common shares and cash in lieu of any fractional share interest. If any
certificate representing Park common shares is to be issued in a name other than
that in which the Security certificate surrendered for exchange is registered,
the certificate so surrendered must be properly endorsed or otherwise in proper
form for transfer and the person requesting the exchange must pay to Park or
First-Knox National Bank, any applicable transfer or other taxes required by
reason of the issuance of the Park certificate. With respect to any
uncertificated Security common shares, First-Knox National Bank will issue
certificates representing the number of whole Park common shares (plus any cash
in lieu of fractional Park common shares) into which such uncertificated
Security common shares have been converted upon receipt of evidence of ownership
satisfactory to First-Knox National Bank. CERTIFICATES FOR SECURITY COMMON
SHARES SHOULD NOT BE FORWARDED TO FIRST-KNOX NATIONAL BANK UNTIL AFTER RECEIPT
OF THE LETTER OF TRANSMITTAL AND SHOULD NOT BE RETURNED TO SECURITY WITH THE
ENCLOSED PROXY CARD.
RIGHTS OF HOLDERS OF SECURITY SHARE CERTIFICATES PRIOR TO SURRENDER
Upon surrender to First-Knox National Bank of Security certificates and a
properly completed letter of transmittal, the holder of the Security
certificates will be entitled to receive in exchange for the Security
certificates a certificate or certificates representing the Park common shares,
and cash in lieu of any resulting fractional share interest, to which the holder
is entitled. Unless and until the shareholder surrenders the Security
certificates together with a properly completed letter of transmittal, no
dividend payable to holders of record of Park common shares as of any time after
the effective time of the merger will be paid to that holder. Upon surrender of
the holder's outstanding Security certificates to First-Knox National Bank
together with a properly completed letter of transmittal, the former Security
shareholder will receive the dividends, without interest, that have become
payable as of that time with respect to the Park common shares to be issued upon
surrender and conversion.
LOST SHARE CERTIFICATES
Any Security shareholder who has lost or misplaced a certificate for any
of the holder's Security common shares should immediately call J. William
Stapleton at (937) 324-6916 for information regarding the procedures to be
followed in order to obtain Park common shares in exchange for the holder's
Security common shares.
TREATMENT OF OUTSTANDING SECURITY OPTIONS
As of [ ], 200[ ], there were [ ] unexercised Security stock
options outstanding covering an aggregate of [174, 999] Security common shares.
Each option to acquire Security common shares outstanding and
37
<PAGE> 48
unexercised immediately prior to the effective time of the merger will be
converted automatically upon the completion of the merger into an option to
purchase Park common shares, with the following adjustments:
- the number of Park common shares subject to the converted options
will be equal to the number of Security common shares subject to
the original option multiplied by the exchange ratio of .2844; and
- the exercise price per Park common share subject to the converted
option will be equal to the exercise price under the original
Security option divided by the exchange ratio of .2844.
The other terms and conditions of each converted option will be the same
as the original Security option. In any event, options that are incentive stock
options under the Internal Revenue Code will be adjusted in the manner
prescribed by the Internal Revenue Code.
ACCOUNTING TREATMENT OF THE MERGER
The merger, if completed as proposed, will qualify as a
pooling-of-interests for accounting and financial reporting purposes. Under the
pooling-of-interests method of accounting, the historical basis of the assets
and liabilities of Park and Security will be retroactively combined for the
entire fiscal period in which the merger occurs and for all periods prior to the
merger at historically recorded amounts.
The obligations of Park and Security to effect the merger are
conditioned, among other things, upon their receipt from their independent
auditors of letters, dated the closing date of the merger, to the effect that,
for financial reporting purposes, the merger qualifies for pooling-of-interests
accounting treatment under generally accepted accounting principles if
consummated in accordance with the merger agreement. For more information, see
"The Merger Agreement - Conditions to the Consummation of the Merger" on page
[ ]. The merger agreement further provides that neither Park nor Security
will intentionally take or cause to be taken any action, whether before or after
the effective time of the merger, which would disqualify the merger as a
pooling-of-interests for accounting purposes.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Park and Security will receive an opinion of Vorys, Sater, Seymour and
Pease LLP as of the closing date to the effect that the merger will be treated
for federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, Park and Security each will be
parties to that reorganization within the meaning of Section 368(b) of the
Internal Revenue Code, and accordingly, for federal income tax purposes:
- neither Park nor Security will recognize any gain or loss as a
result of the merger;
- shareholders of Security who exchange their Security common shares
solely for Park common shares in the merger will not recognize any
gain or loss, except to the extent that those shareholders receive
cash in lieu of a fractional share;
- payment of cash to a Security shareholder in lieu of fractional
Park common shares should be treated as having been received by
such Security shareholder either as a taxable dividend or as a
distribution in partial redemption of the shareholder's Security
common shares, in accordance with Section 302 of the Internal
Revenue Code;
- the tax basis of Park common shares received by shareholders of
Security who exchange all of their Security common shares solely
for Park common shares in the merger will be the same as the tax
basis of the Security common shares surrendered in exchange; and
- the holding period of the Park common shares received in the
merger will include the holding period of Security common shares
surrendered in exchange, provided the Security common shares were
held as capital assets at the effective time of the merger.
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<PAGE> 49
The merger agreement provides that neither Park nor Security will
intentionally take or cause to be taken any action, whether before or after the
effective time of the merger, which would disqualify the merger as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code. Vorys, Sater, Seymour and Pease LLP will base its opinion on facts,
representations and assumptions set forth in the opinion, the merger agreement
and certificates of officers of Security and Park, which will not have been
independently investigated or verified.
THE FOREGOING DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES OF THE
MERGER TO PARK AND SECURITY SHAREHOLDERS WHO PERFECT DISSENTERS' RIGHTS. FOR
MORE INFORMATION, SEE "RIGHTS OF DISSENTING SHAREHOLDERS" ON PAGE [ ].
THIS DISCUSSION DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS
OF THE MERGER OR THE TAX CONSEQUENCES OF THE MERGER TO SHAREHOLDERS WHO MAY BE
SUBJECT TO SPECIAL RULES, INCLUDING, FOR EXAMPLE, FOREIGN SHAREHOLDERS. THIS
DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE INTERNAL REVENUE
CODE, EXISTING AND PROPOSED TREASURY REGULATIONS UNDER THE INTERNAL REVENUE CODE
AND CURRENT ADMINISTRATIVE RULINGS AND COURT DECISIONS. THE OPINION OF COUNSEL
DESCRIBED ABOVE IS NOT BINDING UPON THE INTERNAL REVENUE SERVICE, AND THE
PARTIES WILL NOT SEEK OR OBTAIN ANY RULINGS OF THE INTERNAL REVENUE SERVICE.
PARK AND SECURITY CAN PROVIDE NO ASSURANCE THAT THE INTERNAL REVENUE SERVICE
WILL AGREE WITH THE TAX CONSEQUENCES OF THE MERGER DESCRIBED ABOVE. ALL OF THE
FOREGOING IS SUBJECT TO CHANGE AND ANY CHANGE COULD AFFECT THE CONTINUING
VALIDITY OF THIS DISCUSSION. THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO A
SECURITY SHAREHOLDER WHO ACQUIRED SECURITY COMMON SHARES UPON EXERCISE OF AN
EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION. PARK AND SECURITY URGE THEIR
RESPECTIVE SHAREHOLDERS TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND
EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND ANY PROPOSED CHANGES IN
THOSE TAX LAWS.
INTERESTS OF PERSONS IN THE MERGER
Park has agreed to indemnify each of the officers, directors and
employees of Security and each Security subsidiary to the full extent Security
or any Security subsidiary would have been required to indemnify that individual
under Ohio law and the governing documents of Security and the Security
subsidiaries. The merger agreement also provides for the continuation of
director and officer liability insurance for these individuals for a period of
three years. For more information, see "The Merger Agreement - Costs and
Expenses; Indemnification" on page [ ] and "Comparison of Rights of Holders of
Park Common Shares and Holders of Security Common Shares - Director and Officer
Liability and Indemnification" on page [ ].
In addition, Park has agreed to take all actions necessary to ensure that
each participant in Security's split dollar insurance benefit program will
continue to receive the vested portion of the participant's death benefits
following completion of the merger. Also, if Park ceases to maintain Security's
pension plan, Park has agreed to provide each participant in the Security
pension plan who becomes a participant in the Park pension plan with the same
accrued benefits that the participant has earned under Security's pension plan.
Each participant in Security's pension plan who becomes a participant in Park's
pension plan will be entitled to receive the higher of:
- a benefit consisting of a benefit computed under the Security
pension plan formula for the period of participation before the
merger plus a benefit computed under the Park pension plan formula
for the period of participation after the merger; or
- a benefit computed by using the Park pension plan formula for the
combined period of participation in the Security pension plan and
the Park pension plan.
Security National Bank has entered into employment agreements with three
of its executive officers, Harry O. Egger, J. William Stapleton and William C.
Fralick. Third Savings has entered into a similar agreement with Scott A.
Gabriel, one of its executive officers, and Citizens National Bank has entered
into a similar employment agreement with James R. Wilson, one of its executive
officers. The employment agreements provide for the continuation of the
individual's salary and benefits for the remaining term of the employment
agreement if his employment is terminated without cause or by reason of his
disability. If the individual dies during his term of
39
<PAGE> 50
employment, his estate or other beneficiary will be entitled to receive his
salary through the last day of the calendar month in which the individual died
as well as a pro-rata annual incentive award for the fiscal year of his death.
If Mr. Egger's employment is terminated other than for cause, he will receive an
annual supplemental retirement benefit payable for the remainder of his life. If
Mr. Egger retires after reaching age 65 or his employment is terminated
following a change in control, the annual benefit payable is $153,320. If Mr.
Egger retires prior to age 65, the annual benefit is a reduced amount based upon
his age at the time of retirement.
The employment agreements also provide for the payment of a lump sum
severance benefit if an individual's employment is terminated other than for
cause or by reason of his death or disability within twelve months following a
change in control of Security or the Security subsidiary employing the
individual. In the case of Mr. Egger, the amount of the severance benefit is
three times his annual salary as of the termination date. In the case of each of
Messrs. Stapleton, Fralick, Gabriel and Wilson, the amount of the severance
benefit is two times his annual salary as of the termination date. As of the
date of this joint proxy statement/prospectus, the annual salaries of Messrs.
Egger, Stapleton, Fralick, Gabriel and Wilson are $400,000, $175,000, $175, 000,
$152,000 and $192,000, respectively. In addition, to the extent the relevant
individual is not vested in any retirement plan, he will become fully vested and
payment from any qualified defined benefit retirement plan will be made as if
the individual had 24 additional months of service and 24 additional months of
age (36 additional months in the case of Mr. Egger). Messrs. Stapleton, Fralick,
Gabriel and Wilson would also be entitled to the payment of $35,000 for the
purpose of out-placement services.
The obligation of Park to consummate the merger is subject to the
conditions that Mr. Egger's employment agreement be amended to provide that its
term will end on the third anniversary of the closing date of the merger and
that Messrs. Stapleton, Fralick, Wilson and Gabriel's employment agreements be
amended to provide that their terms will end on the second anniversary of the
closing date of the merger.
Mr. Wilson is party to another agreement with Citizens National Bank
under which he is entitled to receive annual cash payments of $50,000 (payable
in monthly installments) for a period of ten years following his retirement
after reaching age 65. If he dies prior to his retirement, Mr. Wilson's wife
will receive annual cash payments of $75,000 (payable in monthly installments)
for a period of ten years. If Mr. Wilson elects to retire before age 65 but
after age 50, his retirement benefits under this agreement will be reduced based
on the ratio of the number of months worked since November 20, 1990 to 170
months. If Mr. Wilson becomes totally and permanently disabled prior to reaching
age 65, he will receive $1,556.88 monthly during the period following
satisfaction of a three-month waiting period until he reaches age 65.
All of the individuals who have entered into employment agreements with a
subsidiary of Security are also executive officers of Security. Messrs. Egger,
Gabriel and Wilson also serve as directors of Security.
Each option to purchase Security common shares that is outstanding
immediately before the merger is completed will be converted into an option to
buy Park common shares as described above under "Effect on Outstanding Park
Common Shares - Treatment of Outstanding Security Options." As of the date of
this joint proxy statement/prospectus, Harry O. Egger held in-the-money options
covering 14,000 Security common shares with exercise prices of $16.50; William
C. Fralick held in-the-money options covering 14,000 Security common shares with
exercise prices of $16.50; and J. William Stapleton held in-the-money options
covering 8,400 Security common shares with exercise prices of $16.50.
RESALE OF PARK COMMON SHARES RECEIVED IN THE MERGER
The Park common shares that will be issued if the merger is consummated
have been registered under the Securities Act and will be freely transferable.
However, common shares of Park received by any person who is deemed to be an
"affiliate" (as that term is defined under the Securities Act of 1933) of
Security prior to the merger or of Park after the merger may be resold by that
person only in compliance with the volume and manner-of-sale requirements of
Rules 144 and 145 under the Securities Act. Affiliates of Park will be governed
by the additional provisions of Rule 144. Affiliates of Security or Park
generally include individuals or entities that control, are controlled by, or
are under common control with, that corporation and may include certain officers
and directors of that corporation as well as principal shareholders of that
corporation.
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<PAGE> 51
Security has obtained written agreements from all directors, officers and
affiliates of Security not to dispose of their Park common shares in a manner
that would adversely affect the ability of Park to treat the merger as a
pooling-of-interests for financial accounting purposes.
PERSONS WHO MIGHT BE DEEMED AFFILIATES OF SECURITY SHOULD CONSULT WITH
THEIR LEGAL ADVISORS PRIOR TO MAKING ANY OFFER OR SALE OF PARK COMMON SHARES
RECEIVED IN THE MERGER.
REGULATORY APPROVALS
Consummation of the merger is subject to prior receipt by Park and
Security of all necessary regulatory approvals. The principal regulatory
approval required to be obtained is from the Federal Reserve Board. A bank
holding company merger application was filed with the Federal Reserve Board on
January 2, 2001. The required notice filing with the OTS will be made in
accordance with the regulations of the OTS.
Park will file an application with the American Stock Exchange to list
the Park common shares to be issued in the merger.
The approval of an application means only that the regulatory criteria
for approval have been satisfied or waived. It does not mean that the approving
authority has determined that the consideration to be received by Security
shareholders is fair. Regulatory approval does not constitute an endorsement or
recommendation of the merger.
Park and Security will not complete the merger before they receive all
requisite regulatory approvals and all applicable waiting periods have expired
and any conditions imposed in the regulatory approvals have been complied with.
Park and Security cannot guarantee that they will obtain all approvals or that
those approvals will not impose conditions which would have a material adverse
effect on the business, operations, assets or financial condition of Park and
the Park subsidiaries taken as a whole or otherwise materially impair the value
to Park of Security and the Security subsidiaries as a whole. If the Federal
Reserve Board imposes this type of condition, the merger agreement permits the
boards of directors of Park and Security to abandon the merger.
Park and Security cannot assure you as to when, or if, they will obtain
necessary regulatory approvals. If the merger is not completed by October 31,
2001, either Park or Security may terminate the merger agreement. For more
information, see "The Merger Agreement - Amendment and Termination" on page [ ].
EXISTING RELATIONSHIP BETWEEN PARK AND SECURITY
Except in connection with the merger agreement and the transactions
contemplated by the merger agreement, Security has not conducted business with,
nor has it had any business relationship with, Park prior to the transactions
described in the merger agreement. As of December 15, 2000, Park owned 15,000
Security common shares and none of Park's affiliates owned any Security common
shares.
THE MERGER AGREEMENT
THE MERGER
The merger agreement provides that, subject to the adoption of the merger
agreement by the shareholders of Park and Security and the satisfaction or
waiver of the other conditions to the merger, Security will merge into Park.
Following completion of the merger, Security will no longer exist as a separate
corporation. The merger agreement provides for Park and Security to implement
the merger by causing a certificate of merger to be filed with the Ohio
Secretary of State, consistent with the applicable provisions of the merger
agreement.
The material provisions of the merger agreement are briefly summarized
below. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the merger agreement, which is
reprinted as Appendix A to this joint proxy statement/prospectus and
incorporated in this joint proxy statement/prospectus by this reference. Park
and Security urge you to read the merger agreement in its entirety for a more
complete description of the merger.
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CONVERSION OF SECURITY COMMON SHARES
At the effective time of the merger, each Security common share
outstanding immediately prior to the effective time of the merger, other than
those as to which dissenters' rights are perfected, will be converted into
approximately .2844 Park common shares. All Security common shares owned by
Security as treasury shares will be canceled and retired, and no Park common
shares or other consideration will be delivered in exchange for those shares.
All Security common shares owned by Park will become treasury shares of Park.
For more information, see "The Merger - Effect on Outstanding Park Common Shares
and Exchange of Security Common Shares" on page [ ].
REPRESENTATIONS AND WARRANTIES
In the merger agreement, Security has made representations and warranties
concerning the following items:
- due organization, good standing and authority to carry on business
of Security and its subsidiaries;
- capital structure of Security;
- status of Security National Bank, Citizens National Bank and Third
Savings;
- corporate power and authority to enter into the merger agreement
and consummate the merger and enforceability of the merger
agreement and related matters;
- financial statements and reports and absence of undisclosed
liabilities;
- absence of any material adverse change to Security or its
subsidiaries;
- loans;
- allowance for loan losses;
- regulatory reports and records filed by Security and its
subsidiaries;
- taxes of Security and its subsidiaries;
- property of Security and its subsidiaries;
- legal proceedings involving Security or its subsidiaries;
- absence of regulatory proceedings involving Security or its
subsidiaries;
- absence of conflicts of the merger agreement with applicable laws,
contracts and corporate documents;
- commissions, finder's fees or similar payments payable only to
Austin Associates;
- employment agreements and compliance with employment laws;
- employee benefit plans and compliance with provisions of the
Employee Retirement Income Security Act of 1974;
- compliance with laws;
- accuracy and completeness of information supplied by Security for
inclusion in the registration statement on Form S-4 of which this
joint proxy statement/prospectus is a part;
- insurance;
- required governmental and third-party proceedings in connection
with the merger;
- material contracts and absence of defaults;
- environmental matters;
- absence of actions that would prevent the merger from being
accounted for as a pooling-of-interests;
- compliance with takeover laws;
- risk management instruments;
- complete and accurate books and records;
- repurchase agreements;
- accuracy of representations and warranties;
- title to investment securities held by Security and its
subsidiaries;
- reports and records filed by Security with the SEC;
- compliance with fiduciary responsibilities with respect to the
administration of accounts;
- compliance with the Federal Community Reinvestment Act;
- ownership of Park common shares; and
- receipt of an opinion of Austin Associates that the consideration
to be received by Security shareholders in the merger is fair.
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Park has made representations and warranties concerning the following
items:
- Park's due organization, good standing and authority to carry on
business;
- corporate power and authority to enter into the merger agreement
and consummate the merger and enforceability of the merger
agreement and related matters;
- capitalization of Park;
- absence of conflicts of the merger agreement with applicable laws,
contracts and corporate documents;
- financial statements and reports;
- absence of any material adverse change to Park and its
subsidiaries;
- compliance with takeover laws;
- reports and records filed by Park with the SEC;
- no commissions, finder's fees or similar payments;
- required governmental and third-party proceedings in connection
with the merger;
- absence of actions that would prevent the merger from being
accounted for as a pooling-of-interests;
- accuracy and completeness of information supplied by Park in the
registration statement on Form S-4 of which this joint proxy
statement/prospectus is a part;
- deposit insurance;
- accuracy of representations and warranties; and
- ownership of Security common shares.
Park and Security believe that the representations and warranties
contained in the merger agreement are customary in transactions similar in
nature to the merger. For more information, see Articles Three and Four of the
merger agreement, which is attached as Appendix A to this document.
CONDUCT OF BUSINESS PENDING THE MERGER
The merger agreement requires Security to conduct its business and the
business of each of its subsidiaries in the ordinary and usual course consistent
with past practice. Under this covenant, the merger agreement specifically
prohibits Security from:
- taking any action which would be inconsistent with any
representation or warranty of Security in the merger agreement;
and
- engaging in any lending activities other than in the ordinary
course of business consistent with past practice.
The merger agreement also requires Security not to take, and to cause
each of its subsidiaries not to take, any of the following actions without the
consent of Park:
- selling, transferring, mortgaging, pledging, encumbering or
subjecting to any lien, any of the assets of Security or its
subsidiaries, except in the ordinary course of business for full
and fair consideration;
- making any capital expenditure or capital additions or betterments
which individually exceed $100,000;
- becoming bound by, entering into, or performing any material
contract or commitment which is other than in the ordinary course
of its business or which would cause or result in Security being
unable to perform its obligations under the merger agreement;
- declaring, paying or setting aside for payment any dividends or
making any distributions on its capital shares other than
quarterly cash dividends on Security common shares for fiscal
quarters ending on or after December 31, 2000 in an amount not to
exceed $0.20 per share;
- purchasing, redeeming, retiring or otherwise acquiring any of its
common shares;
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- issuing or granting any option or right to acquire any of its
shares or any bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which shareholders of
Security may vote;
- effecting any split, recapitalization, combination, exchange of
shares, readjustment or other share reclassification;
- amending its governing documents;
- merging or consolidating with any other person or otherwise
reorganizing, except for the merger;
- acquiring all or any portion of, the assets, business, deposits or
properties of any other entity, except by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in the
ordinary course of business and consistent with past practices;
- entering into, establishing, adopting or amending any pension,
retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or
arrangement, or any trust agreement, or similar arrangement,
related to the plan or arrangement, in respect of any director,
officer or employee of Security or its subsidiaries, or taking any
action to accelerate the vesting or exercisability of stock
options, restricted stock or other compensation or benefits
payable under those plans or arrangements. Security, however, may:
- take any of these actions in order to satisfy either
applicable law or previously disclosed contractual
obligations existing as of November 20, 2000 or regular
annual renewal of insurance contracts; and
- terminate its defined contribution retirement plan at any
time before the effective time of the merger, with benefit
distributions deferred until the Internal Revenue Service
issues a favorable determination with respect to the
terminating plan's tax-qualified status upon termination.
In this event, Security and Park will cooperate in good
faith to apply for approval and to agree upon associated
plan termination amendments that will, among other things,
provide for the application of all assets of a terminating
plan for its participants, and allow plan participants not
only to receive lump-sum distributions of their benefits,
but also to transfer those benefits to the Park 401(k) plan
that Park maintains for its employees and employees of its
subsidiaries;
- paying any general wage or salary increase or bonus, other than
normal pay increases and bonuses consistent with past practices,
or entering into or amending or renewing any employment,
consulting, severance or similar agreements or arrangements with
any officer, director or employee, except, in each case, for
changes required by law or to satisfy previously disclosed
contractual obligations existing as of November 20, 2000;
- entering into or terminating any contract, other than a loan
contract, requiring the payment or receipt of $100,000 or more in
any 12-month period or amending or modifying in any material
respect any of its existing material contracts;
- incurring any indebtedness for money borrowed or incurring any
material obligation or liability other than in the ordinary course
of business;
- taking any action that would, or is reasonably likely to, prevent
or impede the merger from qualifying for pooling-of-interest
accounting or as a reorganization with the meaning of Section
368(a) of the Internal Revenue Code;
- implementing or adopting any change in its accounting principles,
practices or methods, other than as required by generally accepted
accounting principles;
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- waiving or canceling any right of material value or material
debts, except in the ordinary course of business consistent with
past practices;
- taking any action that would result in:
- any of its representations and warranties set forth in the
merger agreement being or becoming untrue in any material
respect at or prior to the effective time of the merger,
- any of the conditions to the merger not being satisfied, or
- a violation of any provision of the merger agreement,
except as required by law or regulation;
- causing any material adverse change in the amount or general
composition of deposit liabilities;
- making any material investment, except in the ordinary course of
business;
- except as required by applicable law or regulation:
- implementing or adopting any material change in its
interest rate risk management and other risk management
policies, procedures or practices,
- failing to follow its existing policies or practices with
respect to managing its exposure to interest rate and other
risk, or
- failing to use commercially reasonable means to avoid any
material increase in its aggregate exposure to interest
rate risk;
- taking any action or omitting to take any action which would
terminate or enable an employee of Security or any of its
subsidiaries to terminate his employment or employment agreement
without cause and continue to receive compensation after
termination of his employment; or
- entering into any agreement to do any of the foregoing.
The merger agreement also requires Security and each of its subsidiaries
to:
- use commercially reasonable efforts to maintain their property and
facilities in their present condition and working order, ordinary
wear and tear excepted;
- perform all of their obligations under all agreements relating to
or affecting their properties, rights and business, except where
nonperformance would not have a material adverse effect;
- use commercially reasonable efforts to maintain and preserve their
respective business organizations intact, retain present key
employees and maintain the respective relationships of customers,
suppliers and others having business relationships with them;
- maintain insurance coverage with reputable insurers, which in
respect of amounts, premiums, types and risks insured, were
maintained by them as of September 30, 2000, and upon the renewal
or termination of that insurance, use commercially reasonable best
efforts to renew or replace that insurance coverage with reputable
insurers, which in respect of amounts, premiums, types and risks
insured were maintained by them as of September 30, 2000;
- provide reasonable access by Park to information of Security and
each of its subsidiaries;
- timely file all tax returns and pay any tax shown on those tax
returns as due;
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- deliver to Park, upon its specific request, title insurance
commitments for title insurance policies for parcels of real
property owned or leased by Security or any of its subsidiaries,
each in an amount equal to the carrying cost of the real property
interest to be insured as indicated in the books of Security or
any of its subsidiaries;
- provide Park, upon its specific request, with current land surveys
of parcels of real property owned or leased by Security or any of
its subsidiaries; and
- promptly notify Park of the filing of any reports with the SEC by
persons or entities who have acquired beneficial ownership of 5%
or more of Security's common shares.
The merger agreement requires each of Park and Security:
- to use their reasonable best efforts to take all actions necessary
to satisfy all of the conditions to the merger, to comply with all
applicable legal requirements, to make all necessary filings, to
obtain all necessary governmental and third party consents and to
otherwise consummate the merger;
- to take all necessary steps to exempt the agreement and the merger
from the requirements of any takeover law and any provisions in
their governing documents and to assist in any challenge to the
validity or applicability to the merger of any takeover law;
- to notify the other party in writing if it becomes aware of any
fact, condition or occurrence that would:
- cause or constitute a breach of any representation,
warranty or covenant in the merger agreement,
- make the satisfaction of the conditions in the agreement
unlikely or impossible,
- have a material adverse effect on the company providing the
notification, either individually or in the aggregate, with
other facts, conditions or occurrences, or
- in the case of Security, be required to be set forth in an
amendment to the registration statement on Form S-4 or a
supplement to this joint proxy statement/prospectus; and
- not to take any action subsequent to the date of the merger
agreement that would adversely affect the ability of Park to treat
the merger as a pooling-of-interests or the characterization of
the merger as a tax-free reorganization under Section 368(a) of
the Internal Revenue Code.
Park also has agreed:
- to provide reasonable access by Security to information of Park
and each of its subsidiaries;
- to file a listing application with the American Stock Exchange
covering the Park common shares to be issued in the merger; and
- to indemnify the officers, directors and employees of Security and
each of Security's subsidiaries and to provide certain employee
benefits, as described below.
Employees of Security and each of Security's subsidiaries will have the
opportunity to continue as employees of Park or one of its subsidiaries, subject
to the right of Park and its subsidiaries to terminate an employee for cause.
After the effective time of the merger, employees of Security and its
subsidiaries will continue to participate in the Security employee benefit plans
until Park determines that those employees will, subject to eligibility
requirements, participate in Park's employee benefit plans and that all or some
of the Security plans will be terminated or merged into Park's employee benefit
plans. Park will give employees of Security and its subsidiaries credit for
years of service for purposes of eligibility and vesting, but not for benefit
accrual purposes, in Park's employee benefit plans, and the
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employees will not be subject to any exclusion or penalty for pre-existing
conditions that were covered under Security's welfare plans, or to any waiting
period relating to that coverage. In addition, if Park adopts a new plan or
program for its employees or executives, to the extent its employees or
executives receive past service credits for any reason, Park will credit
similarly-situated employees and executives of Security and its subsidiaries
with equivalent credit for service with Security, its subsidiaries and any of
their predecessors.
Park and Security have agreed to coordinate the payment of dividends with
respect to the Park common shares and the Security common shares and the record
dates and payment dates relating to dividends.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The obligation of each of Park and Security to consummate the merger is
subject to a number of conditions, including the following:
- the adoption of the merger agreement by the requisite vote of the
Park shareholders and the Security shareholders;
- all necessary regulatory approvals have been obtained in
connection with the merger and all statutory waiting periods have
expired;
- no regulatory approvals contain any conditions, restrictions or
requirements which Park reasonably determines would either before
or after the effective time, have a material adverse effect on
Park or prevent Park from realizing the economic benefits of the
merger and related transactions;
- no court or other governmental or regulatory authority has
enacted, issued, promulgated, enforced, threatened, commenced a
proceeding with respect to, or entered, any statute, rule,
regulation, judgment, decree, injunction or other order
prohibiting or delaying consummation of the transactions
contemplated by the merger agreement;
- the Form S-4 registration statement of which this joint proxy
statement/prospectus forms a part has become effective and no stop
order suspending the effectiveness of the registration statement
has been issued or no proceedings for that purpose initiated or
threatened by the SEC;
- all permits and other authorizations required under state
securities laws to consummate the transactions contemplated by the
merger agreement and issue the Park common shares to be issued in
the merger have been received;
- Park has received from Ernst & Young LLP, Park's independent
auditors, their opinion, dated the date of the closing date of the
merger, that the merger qualifies for pooling-of-interests
accounting treatment; and
- the Park common shares to be issued in the merger have been
approved for listing on the American Stock Exchange.
The obligation of Park to consummate the merger is also subject to a
number of additional conditions, including the following:
- the representations and warranties of Security contained in the
merger agreement are true and correct in all material respects as
of the closing of the merger, or in the case of representations
and warranties made as of a specified date earlier than the
closing date of the merger, on and as of that date, and Security
has delivered a certificate to Park to that effect;
- Security has performed all obligations required by Security under
the merger agreement and Security has delivered a certificate to
Park to that effect;
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- in the aggregate, less than 10% of the total number of common
shares to be issued by Park National in the merger are subject to
purchase as fractional share interests or the subject of
dissenters' rights exercised by shareholders of Park or Security;
- Park has received the opinion of Vorys, Sater, Seymour and Pease
LLP stating that the merger constitutes a tax-free
"reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code;
- Park has received the opinion of Werner & Blank Co., L.P.A., legal
counsel to Security, stating that:
- Security is a corporation duly incorporated and in good
standing under the laws of the State of Ohio;
- Security National Bank and Citizens National Bank are
national banking associations duly organized and in good
standing under the laws of the United States of America;
- Third Savings is an Ohio state-charted savings association
duly organized and in good standing under the laws of the
State of Ohio;
- all eligible accounts of deposit in Security National Bank,
Citizens National Bank and Third Savings are insured by the
Federal Deposit Insurance Corporation to the fullest extent
permitted by law;
- Security is a duly and validly registered bank holding
company under the Bank Holding Company Act;
- the merger agreement was duly approved by the Security
board of directors and duly adopted by the Security
shareholders;
- the merger agreement was duly executed by Security and,
with stated exceptions, constitutes the binding obligation
of Security and is enforceable in accordance with its terms
against Security;
- the merger does not conflict with the governing documents
of Security or any of its subsidiaries;
- Security has the authority to perform its obligations under
the merger agreement and to complete the transactions
contemplated by the merger agreement;
- Security and each of its subsidiaries have the authority to
own their properties and carry out their businesses;
- Werner & Blank has no knowledge of any pending or
threatened legal proceedings, claims or investigations
which would prevent the completion of the merger, declare
the merger to be unlawful or cause the merger to be
rescinded; and
- upon the filing of the certificate of merger with the
Secretary of State of Ohio, the merger will become
effective;
- Park has received a statement issued by Security pursuant to
Section 1.897-2(h) of the regulations issued under the Internal
Revenue Code certifying that the Security common shares are not
U.S. real property interest;
- Security has obtained the consent or approval of each person,
other than governmental and regulatory authorities, whose consent
or approval is required to permit Park to succeed to any
obligation, right or interest of Security or any of its
subsidiaries under any loan or credit agreement, note, mortgage,
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indenture, lease, license or other agreement or instrument, except
where the failure to obtain such a consent or approval would not
have a material adverse effect on Park following the merger;
- The employment agreement between Harry O. Egger and Security
National Bank is amended to provide that the employment agreement
will end on the third anniversary of the closing date of the
merger; and
- The employment agreements between J. William Stapleton and
Security National Bank, William C. Fralick and Security National
Bank, James R. Wilson and Citizens National Bank and Scott A.
Gabriel and Third Savings are amended to provide that each
employment agreement will end on the second anniversary of the
closing date of the merger.
The obligation of Security to consummate the merger is also subject to a
number of additional conditions, including the following:
- the representations and warranties of Park contained in the merger
agreement are true and correct in all material respects as of the
closing of the merger, or in the case of representations and
warranties made as of a specified date earlier than the closing
date of the merger, on and as of that date, and Park has delivered
a certificate to Security to that effect;
- Park has performed all obligations required by Park under the
merger agreement and Park has delivered a certificate to Security
to that effect;
- Security has received the opinion of Vorys, Sater, Seymour and
Pease LLP, legal counsel to Park, stating that the merger
constitutes a tax free "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code and no gain or loss
will be recognized by shareholders of Security who receive Park
common shares in exchange for Security common shares and cash in
lieu of fractional share interests, other than the gain or loss to
be recognized as to cash received in lieu of fractional share
interests;
- Security has received the opinion of Vorys, Sater, Seymour and
Pease LLP, legal counsel to Park, stating that:
- Park is a corporation duly incorporated and in good
standing under the laws of the State of Ohio;
- Park is a duly and validly registered bank holding company
under the Bank Holding Company Act;
- the merger agreement was duly approved by the Park board of
directors and duly adopted by the Park shareholders;
- the merger agreement was duly executed by Park and with
stated exceptions, constitutes the binding obligation of
Park and is enforceable in accordance with its terms
against Park;
- the merger will not conflict with Park's governing
documents;
- Park has the authority to perform its obligations under the
merger agreement and to complete the transactions
contemplated by the merger agreement;
- the common shares of Park to be issued as consideration in
the merger, when issued, will be duly authorized, fully
paid and non-assessable; and
- upon the filing of the certificate of merger with the
Secretary of State of Ohio, the merger will become
effective; and
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- Park has obtained the consent or approval of each person, other
than governmental and regulatory authorities, which is required in
connection with the merger under any loan or credit agreement,
note, mortgage, indenture, lease or other agreement or instrument,
except for those that would not have a material adverse effect on
Park if not obtained.
Where the law permits, Park or Security could decide to complete the
merger even though one or more conditions was not satisfied. By law, neither
Park nor Security can waive (1) the condition of adoption of the merger
agreement by Park's or Security's shareholders or (2) any court order or law
having the effect of making illegal or otherwise prohibiting the consummation of
the merger. Whether any of the conditions would be waived would depend upon the
facts and circumstances as determined by the reasonable business judgment of the
board of directors of Park or Security.
EFFECTIVE TIME OF THE MERGER
Upon satisfaction or waiver of all conditions under the merger agreement,
Park and Security will cause an appropriate certificate of merger to be filed
with the Ohio Secretary of State. The merger will become effective upon the
filing of the certificate of merger or at a time after the filing that Park and
Security agree to in writing and state in the certificate of merger. Park and
Security anticipate that the merger will be completed during the second quarter
of 2001.
The closing of the transactions contemplated by the merger agreement will
take place on a day designated by Park which is not:
- earlier than the third business day after the last of the
conditions described in the merger agreement has been satisfied or
waived in accordance with the terms of the merger agreement, or
- later than the last business day of the month in which that third
business day occurs.
However, the date chosen by Park may not fall after October 31, 2001 or after
the date or dates on which any regulatory authority approval or extension
expires. Park and Security are also free to agree to close the transactions on a
different date.
AMENDMENT AND TERMINATION
Park and Security may amend the merger agreement at any time before or
after the Park special meeting or the Security special meeting. However, after
approval of the matters to be considered at the special meetings, Park and
Security may not make an amendment which by law requires further approval by the
Park shareholders or the Security shareholders, unless that further approval is
obtained.
Park and Security may agree in writing to terminate the merger agreement
at any time before completion of the merger, even if the shareholders of both
Park and Security have adopted it.
Either Security or Park may decide to terminate the merger agreement if:
- the merger has not been completed by October 31, 2001, unless the
failure to complete the merger arises out of or results from the
breach of the merger agreement by the party seeking to terminate;
- the shareholders of Security fail to adopt the merger agreement by
the requisite vote at the Security special meeting of shareholders
or an adjournment of the Security special meeting; or
- the shareholders of Park fail to adopt the merger agreement by the
requisite vote at the Park special meeting of shareholders or an
adjournment of the Park special meeting;
- a governmental authority fails to approve the merger.
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Park may decide to terminate the merger agreement if:
- Security breaches any representation and warranty in the merger
agreement and does not cure the breach within 30 days following
receipt of written notice of the breach or cannot cure the breach
within that time, except that the breach individually or in the
aggregate, must have or be reasonably likely to have a materially
adverse effect; or
- Security fails to comply in any material respect with any covenant
or agreement in the merger agreement within 30 days following
receipt by Security of written notice of the breach or cannot cure
the breach during that time.
Security may decide to terminate the merger agreement if:
- Park breaches any representation and warranty in the merger
agreement and does not cure the breach within 30 days following
receipt of written notice of the breach, or cannot cure the breach
within that time, except that the breach, individually or in the
aggregate, must have or be reasonably likely to have a materially
adverse effect;
- Park fails to comply in any material respect with any covenant or
agreement in the merger agreement within 30 days following receipt
by Park of written notice of the breach or cannot cure the breach
during that time;
- Security determines, based on advice of its counsel, that
termination is required for its board of directors to comply with
its fiduciary duties to shareholders by reason of another
acquisition proposal having been made, except that Security must
not have otherwise breached its obligations to not solicit or
initiate or knowingly encourage the acquisition proposal and to
notify Park of any proposal and that Security must pay a
termination fee of $10,000,000 to Park prior to termination;
- during the three-day period beginning with the determination date
of the merger (the last day of the 20 trading day period
immediately preceding the tenth day prior to the effective time of
the merger), if both of the following conditions are satisfied:
- the average of the closing sales prices of a Park common
share on the American Stock Exchange for the 20 trading day
period immediately preceding the tenth day prior to the
effective time of the merger is less than $77.50, and
- the ratio of that 20 trading day average closing sales
price to $91.375 (the closing price of a Park common share
on the American Stock Exchange on November 20, 2000) is
less than the number obtained by dividing:
- the sum of the average daily closing sales prices of
a share of common stock for the 20 trading day
period immediately preceding the tenth day prior to
the effective time of the merger of each company
comprising an index group of ten similar bank
holding companies (multiplied by a designated
weight), by
- the sum of each per share closing price of a share
of common stock of each index group company
(multiplied by a designated weight) on November 20,
2000.
In the event of termination, the merger agreement will become void except
that provisions regarding acquisition proposals of Security, confidentiality,
press releases, payment of fees and expenses, the accuracy and completeness of
information submitted to the SEC and the effect of the termination of the merger
agreement will survive termination.
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ACQUISITION PROPOSALS
SECURITY
Under specific circumstances, Security could be required to pay a special
fee to Park if the merger is not completed and Security enters into an agreement
with another party to acquire Security. In the merger agreement, Security has
agreed not to solicit or encourage the submission of any other acquisition
proposal by a third party. The board of directors of Security, however, may
terminate the merger agreement if another party submits a proposal to acquire
Security and the board determines in good faith that termination is required for
the board to comply with its fiduciary duties to Security's shareholders. If the
board of directors terminates the merger agreement for this reason, Security may
be required to pay Park a special termination fee of $10,000,000.
If the merger agreement is terminated for a reason other than the receipt
by Security of an acquisition proposal from another party, then Security may
still be required to pay a $10,000,000 special fee to Park if Security enters
into an acquisition agreement with another party within one year after the
merger agreement is terminated. Security may be required to pay the fee only if:
- the acquisition agreement with the other party provides that
shareholders of Security will receive at least $22.04 in
consideration for each of their Security common shares; and
- the merger agreement was terminated for reasons other than:
- a breach of any representation and warranty of Park,
- failure of Park to comply in any material respect with its
covenants or agreements in the merger agreement,
- the average closing sale price of a Park common share, for
the 20 trading day period immediately preceding the tenth
day prior to the effective time of the merger, is less than
$77.50 and the ratio of the price decline for Park common
shares exceeds the ratio of the price decline for shares of
the common stock of a specific group of bank holding
companies,
- mutual written agreement of Park and Security,
- the merger has not closed by October 31, 2001, unless
Security caused the merger not to be completed for purposes
of pursuing an acquisition proposal from another party,
- the shareholders of Security do not adopt the merger
agreement, unless the board of directors of Security
announce their intention not to recommend the merger
agreement prior to the Security special meeting,
- the shareholders of Park do not adopt the merger agreement,
or
- the approval of any governmental or regulatory authority
required to complete the merger is denied.
PARK
In the merger agreement, Park has agreed not to accept any offer from any
person to acquire Park unless the party who proposes to acquire Park agrees to
perform Park's obligations under the merger agreement.
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COSTS AND EXPENSES; INDEMNIFICATION
Whether or not the merger is consummated, all costs and expenses incurred
in connection with the merger agreement and the transactions contemplated by the
merger agreement will be paid by the party incurring those costs and expenses,
except that Park and Security will share all expenses incurred in connection
with filing, printing and mailing this joint proxy statement/prospectus equally
and Park will pay all fees due to regulatory authorities and the SEC in
connection with the transactions contemplated by the merger agreement.
Park has agreed to indemnify the present officers, directors and
employees of Security and each Security subsidiary to the full extent Security
or any Security subsidiary would have been required to indemnify that person
under Ohio law and the governing documents of Security and the Security
subsidiaries. In addition, for a period of three years after the effective time
of the merger, Park will provide directors' and officers' liability insurance on
terms no less favorable than those in effect as of November 20, 2000, to
indemnify the present and former officers and directors of Security and the
Security subsidiaries with respect to claims against those individuals arising
from facts or events which occurred prior to the effective time of the merger.
Park will not be required to pay more than 200% of the amount spent by Security
as of November 20, 2000, in order to maintain or procure that insurance, but if
that limit is met, Park must use its reasonable best efforts to maintain or
obtain as much comparable insurance as can be obtained up to the 200% limit.
RECOMMENDATION AND VOTE
The boards of directors of Park and Security believe that the
consummation of the proposed merger is in the best interest of their respective
corporations and their shareholders. The affirmative vote of the holders of
two-thirds of the outstanding Park common shares and the holders of two-thirds
of the outstanding Security common shares is required for the merger agreement
to be adopted.
THE SECURITY BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SECURITY
SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
THE PARK BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE PARK
SHAREHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
RIGHTS OF DISSENTING SHAREHOLDERS
The following is a description of the steps you must take to perfect
dissenters' rights with respect to the merger. The description is not intended
to be complete and is qualified in its entirety by reference to Section 1701.85
of the Ohio Revised Code, a copy of which is included as Appendix C to this
joint proxy statement/prospectus. We recommend that you consult with your own
counsel if you have questions with respect to your rights under the statute.
"Dissenters' rights" is your right to dissent from the merger and to have
the "fair cash value" of your Park common shares or your Security common shares
determined by a court and paid in cash. The "fair cash value" of a Park or a
Security common share is the amount that a willing seller who is under no
compulsion to sell would be willing to accept and that a willing buyer who is
under no compulsion to purchase would be willing to pay. Fair cash value is
determined as of the day prior to the day on which the vote of the appropriate
corporation's shareholders to adopt the merger agreement is taken. When
determining fair cash value, any appreciation or depreciation in market value
resulting from the proposed merger is excluded. In no event can the fair cash
value of a common share exceed the amount specified in the demand of the
particular shareholder discussed in numbered paragraph 3 below.
To perfect your dissenters' rights, you must satisfy each of the
following conditions:
1. You Must be a Shareholder of Park or Security on the Applicable
Record Date. To be entitled to dissenters' rights, you must be the
record holder of the dissenting shares on [ ], 2001, if you
are a Park common shares shareholder, or [ ], 2001, if you
are a Security
53
<PAGE> 64
shareholder. If you have a beneficial interest in Park common
shares or Security common shares held of record in the name of any
other person for which you desire to perfect dissenters' rights,
you must cause the shareholder of record to timely and properly
act to perfect those rights.
2. You Must Not Vote in Favor of Adoption of the Merger Agreement.
Only a shareholder whose Park common shares or Security common
shares are not voted in favor of adoption of the merger agreement
is entitled, if the merger is completed, to be paid the fair cash
value of the Park common shares or Security common shares held of
record by the shareholder on the applicable record date. If you
vote for adoption of the merger agreement, your vote will
constitute a waiver of your dissenters' rights.
3. You Must Serve a Written Demand. On or before the tenth day after
the appropriate corporation's meeting, you must serve a written
demand for payment of the fair cash value of your common shares to
Park, if you are a Park shareholder, or to Security, if you are a
Security shareholder. Your written demand must state your name,
address, the number of common shares as to which you seek relief
and the amount claimed by you as the fair cash value of the common
shares. Voting against adoption of the merger agreement will not
satisfy the requirement of a written demand for payment.
4. You Must Deliver Your Share Certificates for Legending, if
Requested by Park or Security. If requested by Park or Security,
you must submit your share certificates for dissenting shares to
the appropriate corporation within fifteen days after the request
is sent. That corporation will then endorse the share certificates
with a legend that demand for fair cash value has been made.
5. You Must File a Petition in Court, if You and the Appropriate
Corporation Cannot Agree on the Fair Cash Value of Your Dissenting
Shares. If Park or Security and any dissenting shareholder of Park
or Security, as appropriate, cannot agree on the fair cash value
of the dissenting shares, either the corporation or the
shareholder must, within three months after service of the written
demand by the shareholder, file or join in a petition in the Court
of Common Pleas of Licking County, Ohio (in the case of Park) or
Clark County, Ohio (in the case of Security) for a determination
of the fair cash value of the dissenting shares.
If you are a shareholder of Park, you must mail or deliver any written
demand for payment to Park National Corporation, 50 North Third Street, Newark,
Ohio 43055, Attention: David C. Bowers, Secretary. If you are a shareholder of
Security, you must mail or deliver any written demand for payment to Security
Banc Corporation, 40 South Limestone Street, Springfield, Ohio 45502, Attention:
J. William Stapleton, Executive Vice President and Secretary. Because you must
deliver the written demand within the ten-day period following the appropriate
corporation's special meeting, we recommend, but do not require, that if you use
the mails, you use certified or registered mail, return receipt requested, to
confirm that you have made a timely delivery.
If you dissent from the merger, your right to be paid the fair cash value
of your Park common shares or Security common shares will terminate:
- if, for any reason, the merger is not completed;
- if you fail to serve a timely and appropriate written demand upon
Park or Security;
- if you do not, upon request of Park or Security, make timely and
appropriate surrender of the share certificates evidencing your
dissenting shares for endorsement of a legend that you have made a
demand for the fair cash value of your common shares;
- if you withdraw your demand with the consent of the board of
directors of the corporation whose common shares you hold;
54
<PAGE> 65
- if you and the corporation whose common shares you hold do not
agree upon the fair cash value per share of your common shares and
you have not timely filed or joined in an appropriate petition in
the Court of Common Pleas of Licking County, Ohio in the case of
Park or Clark County, Ohio in the case of Security Banc; or
- if you otherwise fail to comply with the requirements of Section
1701.85 of the Ohio Revised Code.
A dissenting shareholder of Park or Security who receives payment for
common shares in cash will recognize capital gain or loss, if the common shares
were held as a capital asset at the effective time of the merger, equal to the
difference between the cash received and the holder's basis in the common
shares, provided the payment is not essentially equivalent to a dividend within
the meaning of Section 302 of the Internal Revenue Code. A sale of common shares
pursuant to an exercise of dissenters' rights will not constitute a "dividend"
if, as a result of the exercise, the shareholder owns no common shares in Park
as the surviving corporation in the merger, either actually or constructively
within the meaning of Section 318 of the Internal Revenue Code.
If you are not in favor of the merger but do not wish to exercise
dissenters' rights, you may, in the alternative, attempt to sell your Park or
Security common shares in the open market at the then current market price.
UNAUDITED CONDENSED PRO FORMA COMBINED FINANCIAL INFORMATION
The following tables present unaudited condensed pro forma combined
financial data to show the impact of the merger on Park's financial position.
The pro forma information reflects the pooling-of-interests method of
accounting. Each condensed pro forma combined balance sheet assumes that the
merger was completed on the date of the balance sheet, and the condensed pro
forma combined statements of income assume that the merger was completed at the
beginning of each period reported. In each instance, the exchange ratio was
assumed to be .2844.
The information in the following tables should be read in conjunction
with the historical financial information that Park and Security have presented
in prior filings with the SEC. The pro forma information does not necessarily
reflect what the historical results of Park would have been had Park and
Security been combined during the periods presented. See "Where You Can Find
More Information" on page [ ] for a description of where you can find the
historical financial information included in prior SEC filings.
55
<PAGE> 66
CONDENSED PRO FORMA COMBINED BALANCE SHEET
AT SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PARK SECURITY
NATIONAL BANC PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS COMBINED
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 101,655 $ 28,610 $ - $ 130,265
Federal funds sold - 16,040 - 16,040
Interest bearing deposits - 1,620 - 1,620
Securities available-for-sale 766,867 183,327 (274) 949,920
Securities held-to-maturity 4,217 27,893 - 32,110
---------- ---------- --------- ----------
Total investment securities 771,084 211,220 (274) 982,030
Loans, net of unearned income 2,256,146 681,330 - 2,937,476
Allowance for possible loan losses 48,266 6,462 - 54,728
---------- ---------- --------- ----------
Loans, net 2,207,880 674,868 - 2,882,748
Bank premises and equipment 30,497 8,680 - 39,177
Other assets 101,068 45,491 - 146,559
---------- ---------- ---------- ----------
TOTAL ASSETS $3,212,184 $ 986,529 $ (274) $4,198,439
---------- ---------- ---------- ----------
LIABILITIES
Deposits $2,368,296 $ 724,187 $ - $3,092,483
Short-term borrowings 326,784 29,917 - 356,701
Long-term borrowings 181,677 103,499 - 285,176
Other liabilities 27,874 6,374 - 34,248
---------- ---------- --------- ----------
TOTAL LIABILITIES 2,904,631 863,977 - 3,768,608
---------- ---------- --------- ----------
SHAREHOLDERS' EQUITY
Common stock $ 76,869 $ 19,827 $ 22,533 $ 119,229
Surplus - 22,533 (22,533) -
Accumulated other comprehensive income, net (3,713) (4,734) - (8,447)
Retained earnings 264,783 98,002 - 362,785
Treasury stock (30,386) (13,076) (274) (43,736)
TOTAL SHAREHOLDERS' EQUITY 307,553 122,552 (274) 429,831
---------- ---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,212,184 $ 986,529 $ (274) $4,198,439
</TABLE>
56
<PAGE> 67
CONDENSED PRO FORMA COMBINED BALANCE SHEET
AT DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PARK SECURITY
NATIONAL BANC PRO FORMA
CORPORATION CORPORATION ADJUSTMENTS COMBINED
--------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 123,975 $ 50,216 $ - $ 174,191
Federal funds sold 1,550 10,010 - 11,560
Interest bearing deposits - 1,560 - 1,560
Securities available-for-sale 778,570 178,614 - 957,184
Securities held-to-maturity 4,321 35,689 - 40,010
----------- ---------- --------- ----------
Total investment securities 782,891 214,303 - 997,194
Loans, net of unearned income 2,127,425 653,025 - 2,780,450
Allowance for possible loan losses 45,176 6,964 - 52,140
----------- ---------- --------- ----------
Loans, net 2,082,249 646,061 - 2,728,310
Bank premises and equipment 32,468 9,292 - 41,760
Other assets 110,230 44,969 - 155,199
----------- ---------- --------- ----------
TOTAL ASSETS $ 3,133,363 $ 976,411 $ - $4,109,774
----------- ---------- --------- ----------
LIABILITIES
Deposits $ 2,408,062 $ 696,546 $ - $3,104,608
Short-term borrowings 364,258 57,731 - $ 421,989
Long-term borrowings 16,993 97,652 - 114,645
Other liabilities 53,989 5,360 - 59,349
----------- ---------- --------- ----------
TOTAL LIABILITIES 2,843,302 857,289 - 3,700,591
----------- ---------- --------- ----------
SHAREHOLDERS' EQUITY
Common stock 79,108 19,800 22,302 121,210
Surplus - 22,302 (22,302) 0
Accumulated other comprehensive income, net (9,161) (7,143) - (16,304)
Retained earnings 243,488 90,084 - 333,572
Treasury stock (23,374) (5,921) - (29,295)
TOTAL SHAREHOLDERS' EQUITY 290,061 119,122 - 409,183
----------- ---------- --------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,133,363 $ 976,411 - $4,109,774
</TABLE>
57
<PAGE> 68
CONDENSED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARK SECURITY
NATIONAL BANC CONSOLIDATED
CORPORATION CORPORATION PRO FORMA
--------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 146,342 $ 43,766 $ 190,108
Investment securities 37,810 10,035 47,845
Other 142 905 1,047
----------- ----------- -----------
Total interest income 184,294 54,706 239,000
INTEREST EXPENSE:
Deposits 62,901 18,129 81,030
Short-term borrowings 10,990 1,650 12,640
Long-term borrowings 7,115 3,659 10,774
----------- ----------- -----------
Total interest expense 81,006 23,438 104,444
----------- ----------- -----------
Net interest income 103,288 31,268 134,556
Provision for loan losses 5,850 1,065 6,915
----------- ----------- -----------
Net interest income after provision for loan
losses 97,438 30,203 127,641
NONINTEREST INCOME 22,366 6,485 28,851
NONINTEREST EXPENSE 60,857 17,428 78,285
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 58,947 19,260 78,207
Income tax expense 16,529 6,347 22,876
----------- ----------- -----------
NET INCOME $ 42,418 $ 12,913 $ 55,331
=========== =========== ===========
EARNINGS PER SHARE:
Basic $ 3.91 $ 1.08 $ 3.89
Diluted $ 3.90 $ 1.08 $ 3.88
Average common shares - basic 10,846,778 11,921,658 14,235,876
Average common shares - diluted 10,881,216 11,942,516 14,276,246
</TABLE>
58
<PAGE> 69
CONDENSED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARK SECURITY
NATIONAL BANC CONSOLIDATED
CORPORATION CORPORATION PRO FORMA
--------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 173,722 $ 54,373 $ 228,095
Investment securities 50,226 13,268 63,494
Other 368 1,077 1,445
------------ ----------- -----------
Total interest income 224,316 68,718 293,034
INTEREST EXPENSE:
Deposits 76,294 21,287 97,581
Short-term borrowings 14,225 1,542 15,767
Long-term borrowings 1,035 4,855 5,890
------------ ----------- -----------
Total interest expense 91,554 27,684 119,238
------------ ----------- -----------
Net interest income 132,762 41,034 173,796
Provision for loan losses 11,269 1,200 12,469
------------ ----------- -----------
Net interest income after provision for loan
losses 121,493 39,834 161,327
NONINTEREST INCOME 23,564 8,533 32,097
NONINTEREST EXPENSE 79,912 23,548 103,460
------------ ----------- -----------
INCOME BEFORE INCOME TAXES 65,145 24,819 89,964
Income tax expense 18,358 7,801 26,159
------------ ----------- -----------
NET INCOME $ 46,787 $ 17,018 $ 63,805
============ =========== ===========
EARNINGS PER SHARE:
Basic $ 4.30 $ 1.40 $ 4.45
Diluted $ 4.28 $ 1.39 $ 4.43
Average common shares - basic 10,878,045 12,165,146 14,337,813
Average common shares - diluted 10,934,203 12,218,821 14,409,236
</TABLE>
59
<PAGE> 70
CONDENSED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARK SECURITY
NATIONAL BANC CONSOLIDATED
CORPORATION CORPORATION PRO FORMA
--------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 169,943 $ 53,093 $ 223,036
Investment securities 46,537 8,339 54,876
Other 966 2,602 3,568
----------- ----------- -----------
Total interest income 217,446 64,034 281,480
INTEREST EXPENSE:
Deposits 82,470 22,468 104,938
Short-term borrowings 9,938 1,727 11,665
Long-term borrowings 1,460 0 1,460
----------- ----------- -----------
Total interest expense 93,868 24,195 118,063
----------- ----------- -----------
Net interest income 123,578 39,839 163,417
Provision for loan losses 6,978 1,540 8,518
----------- ----------- -----------
Net interest income after provision for loan
losses 116,600 38,299 154,899
NONINTEREST INCOME 26,455 8,489 34,944
NONINTEREST EXPENSE 75,323 22,974 98,297
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 67,732 23,814 91,546
Income tax expense 20,724 8,194 28,918
----------- ----------- -----------
NET INCOME $ 47,008 $ 15,620 $ 62,628
=========== =========== ===========
EARNINGS PER SHARE:
Basic $ 4.31 $ 1.29 $ 4.36
Diluted $ 4.28 $ 1.28 $ 4.33
Average common shares - basic 10,902,374 12,143,743 14,356,055
Average common shares - diluted 10,970,913 12,227,292 14,448,355
</TABLE>
60
<PAGE> 71
CONDENSED PRO FORMA COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PARK SECURITY
NATIONAL BANC CONSOLIDATED
CORPORATION CORPORATION PRO FORMA
----------------- --------------- ---------------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees $ 164,315 $ 50,168 $ 214,483
Investment securities 44,069 10,721 54,790
Other 833 1,889 2,722
----------- ----------- -----------
Total interest income 209,217 62,778 271,995
INTEREST EXPENSE:
Deposits 79,195 22,903 102,098
Short-term borrowings 8,422 2,000 10,422
Long-term borrowings 3,162 0 3,162
----------- ----------- -----------
Total interest expense 90,779 24,903 115,682
----------- ----------- -----------
Net interest income 118,438 37,875 156,313
Provision for loan losses 7,284 1,300 8,584
----------- ----------- -----------
Net interest income after provision for loan
losses 111,154 36,575 147,729
NONINTEREST INCOME 22,535 7,104 29,639
NONINTEREST EXPENSE 71,910 22,729 94,639
----------- ----------- -----------
INCOME BEFORE INCOME TAXES 61,779 20,950 82,729
Income tax expense 18,738 6,462 25,200
----------- ----------- -----------
NET INCOME $ 43,041 $ 14,488 $ 57,529
=========== =========== ===========
EARNINGS PER SHARE:
Basic $ 3.93 $ 1.20 $ 3.99
Diluted $ 3.91 $ 1.19 $ 3.97
Average common shares - basic 10,964,198 12,117,526 14,410,422
Average common shares - diluted 11,021,886 12,194,892 14,490,113
</TABLE>
61
<PAGE> 72
PARK NATIONAL CORPORATION AND SECURITY BANC CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1 - Basis of Presentation
On November 21, 2000, Park announced that it had signed a definitive
agreement to acquire Security in a stock-for-stock merger.
The unaudited pro forma condensed combined financial information has
been prepared assuming that the merger will be accounted for under the
pooling-of-interests accounting method and is based on the historical
consolidated financial statements of the two corporations. A review of each
corporation's respective accounting policies has not been completed. As a result
of this review, it might be necessary to restate certain amounts in the
financial statements of the combined corporation to conform to those accounting
policies that will be followed by the combined corporation. Any restatements of
this nature are not expected to be material.
Note 2 - Shareholders' Equity
Under the terms of the merger agreement, Park will issue 3,350,000
common shares to the Security shareholders. The exchange ratio is expected to be
.2844, so that Security shareholders will receive .2844 Park common share for
each common share of Security owned immediately prior to the completion of the
merger. The Park common shares do not have a stated value and as a result, the
surplus account is not used. In combining the financial statements of Park and
Security, the surplus account for Security is moved to common shares.
Park owns 15,000 Security common shares at a cost of $274,000. These
common shares were purchased on June 2, 2000. In combining the financial
statements of Park and Security, this $274,000 is eliminated by reducing
securities available-for-sale and increasing treasury stock.
62
<PAGE> 73
BUSINESS OF PARK
GENERAL
Park is a bank holding company which is incorporated under Ohio law.
Through its banking subsidiaries, Park National Bank, Richland Trust, Century
National Bank, First-Knox National Bank, United Bank and Second National Bank,
Park is engaged in a general commercial banking and trust business in small to
medium population Ohio communities. Guardian Financial provides consumer finance
services in the central Ohio area. Park's subsidiaries compete for deposits and
loans with other banks, savings associations, credit unions and other types of
financial institutions and operate 77 full-service offices and a network of 80
automatic teller machines in 20 central and southern Ohio counties.
Park National Bank, Richland Trust, Century National Bank, First-Knox
National Bank, United Bank and Second National Bank provide the following
principal services:
- the acceptance of deposits for demand, savings and time accounts and
the servicing of those accounts;
- commercial, industrial, consumer and real estate lending, including
installment loans and automobile leasing, credit cards and personal
lines of credit;
- safe deposit operations;
- trust services;
- cash management;
- electronic funds transfers; and
- a variety of additional banking-related services tailored to the
needs of individual customers.
Park National Bank also leases equipment under terms similar to its
commercial lending policies. Park Leasing Company, a division of Park National
Bank, originates and services direct leases of equipment which Park National
Bank acquires with no outside financing. In addition, Scope Leasing, Inc., a
wholly-owned subsidiary of Park National Bank, specializes in aircraft
financing.
Park is subject to regulation by the Federal Reserve Board. As national
banks, Park National Bank, Century National Bank, First-Knox National Bank,
United Bank and Second National Bank are supervised and regulated by the Office
of the Comptroller of the Currency. As an Ohio state-chartered bank, Richland
Trust is supervised and regulated by the Ohio Division of Financial
Institutions. In addition, as insurer of their deposits, the Federal Deposit
Insurance Corporation has some regulatory authority over Park National Bank,
Richland Trust, Century National Bank, First-Knox National Bank, United Bank and
Second National Bank, including authority to impose assessments for deposit
insurance. As an Ohio consumer finance company, Guardian Financial is supervised
and regulated by the Ohio Division of Financial Institutions.
Park National Bank, in addition to having seven offices in Newark
(including the main office and the Operations Center) has offices in Granville,
Heath (two offices), Hebron, Johnstown, Kirkersville, Pataskala and Utica in
Licking County, an office in Columbus in Franklin County, an office in
Cincinnati in Hamilton County, an office in Dayton in Montgomery County and
offices in Baltimore, Pickerington and Lancaster (seven offices) in Fairfield
County. The offices in Fairfield County comprise the Fairfield National
Division. Park National Bank also operates nine stand-alone automatic banking
center locations.
Richland Trust, in addition to six offices in Mansfield (including the
main office), has offices in Butler, Lexington, Ontario and Shelby (two offices)
in Richland County. Richland Trust also operates three stand-alone automatic
banking center locations.
63
<PAGE> 74
Century National Bank, in addition to having four offices (including the
main office) and a mortgage lending office in Zanesville, has offices in New
Concord and Dresden in Muskingum County, Malta in Morgan County, New Lexington
in Perry County, Logan in Hocking County, Athens in Athens County and Coshocton
in Coshocton County. Century National Bank also operates seven stand-alone
automatic banking center locations.
First-Knox National Bank, in addition to having three offices (including
the main office and operations center) in Mount Vernon, has offices in
Loudonville and Perrysville in Ashland County, an office in Millersburg in
Holmes County, offices in Centerburg, Danville and Fredericktown in Knox County,
two offices in Mount Gilead in Morrow County and an office in Bellville in
Richland County. The offices in Ashland County comprise the Farmers and Savings
Division. First-Knox National Bank also operates four stand-alone automatic
banking center locations.
United Bank, in addition to having two offices (including the main
office and operations center) in Bucyrus, has offices in Crestline and Galion in
Crawford County and offices in Waldo, Marion, Caledonia, and Prospect in Marion
County.
Second National Bank, in addition to having four offices (including the
main office) in Greenville has two offices in Arcanum and an office in
Versailles in Darke County and an office in Fort Recovery in Mercer County.
Guardian Financial has its main office in Hilliard in Franklin County,
an office in Mansfield where it leases space from Richland Trust, and an office
in Lancaster where it leases space from the Fairfield National Division of Park
National Bank.
ADDITIONAL INFORMATION
For additional information concerning Park, see "Where You Can Find More
Information" on page [ ].
MANAGEMENT OF PARK
BOARD OF DIRECTORS
The following table gives information, as of [ ], 200[ ],
concerning the individuals who are and will remain the members of the board of
directors of Park, the surviving corporation in the merger. Unless the table
indicates otherwise, each individual has held his or her principal occupation
for more than five years.
<TABLE>
<CAPTION>
Position(s) Held with Park Director of Park
and its Principal Subsidiaries Continuously
Name Age and Principal Occupations Since Term Expires In
---- --- ------------------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Maureen Buchwald 69 Vice President of Ariel Corporation 1997 2001
(manufacturer of reciprocating compressors)
until her retirement in 1997; Director of
First-Knox National Bank
James J. Cullers 70 Senior Partner, Zelkowitz, Barry & Cullers, 1997 2003
Attorneys at Law, Mount Vernon, Ohio;
Director of First-Knox National Bank
</TABLE>
64
<PAGE> 75
<TABLE>
<CAPTION>
Position(s) Held with Park Director of Park
and its Principal Subsidiaries Continuously
Name Age and Principal Occupations Since Term Expires In
---- --- ------------------------- ----------------- ---------------
<S> <C> <C> <C> <C>
C. Daniel DeLawder 51 Chief Executive Officer since January 1999, 1994 2002
and President since 1994, of Park; Chief
Executive Officer since January 1999,
President since 1993, Executive Vice President
from 1992 to 1993, and Director of Park National
Bank; Chairman of Advisory Board since 1989 and
President from 1985 to 1992 of the Fairfield
National Division of Park National Bank;
Director of Richland Trust; Director of Second
National Bank; Chairman of the Board of
Guardian Finance
D. C. Fanello 78 Vice Chairman and founder of Shiloh Corporation, 1990 2001
Mansfield, Ohio (stamping/blanking); Director of
Richland Trust
R. William Geyer 69 Partner, Kincaid, Taylor and Geyer, Attorneys at 1992 2003
Law, Zanesville, Ohio; Director of Century
National Bank
Philip H. Jordan, Jr., 69 Retired. From 1975 to 1995, President of 1997 2002
Ph.D. Kenyon College; Chairman of the Board and
Director of First-Knox National Bank
Howard E. LeFevre 93 Chairman of the Board of Freight Service, 1987 2002
Inc., Newark, Ohio (leasing and warehousing);
Director of Park National Bank
Phillip T. Leitnaker 72 President and owner of Phillip Leitnaker 1990 2001
Construction, Inc. Baltimore, Ohio
(construction company); Owner of Leitnaker
Farms, Baltimore, Ohio (farming); President
and majority owner of D & B Paving Company,
Baltimore, Ohio (paving company); Member of
Advisory Board of Fairfield National Division
of Park National Bank
</TABLE>
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<TABLE>
<CAPTION>
Position(s) Held with Park Director of Park
and its Principal Subsidiaries Continuously
Name Age and Principal Occupations Since Term Expires In
---- --- ------------------------- -------------- ---------------
<S> <C> <C> <C> <C>
William T. McConnell 67 Chairman of the Board since 1994, Chief 1986 2003
Executive Officer from 1986 to January
1999, and President from 1986 to 1994, of
Park; Chairman of the Board since 1993,
Chief Executive Officer from 1983 to January
1999, President from 1979 to 1993, and
Director of Park National Bank; Director of
Century National Bank; Director of First-Knox
National Bank
James A. McElroy 68 Chairman of the Board, AMG Industries, Inc. 1997 2003
(manufacturer of automobile parts), Mount
Vernon, Ohio; Director of First-Knox National
Bank
John J. O'Neill 80 President/Owner of Southgate Corporation, 1987 2002
Newark, Ohio (real estate development and
management); Director of Park National Bank
William A. Phillips 67 Chairman of the Board since 1986, Chief 1990 2003
Executive Officer from 1986 to 1998, and
Director of Century National Bank
J. Gilbert Reese 75 Senior Partner, Reese, Pyle, Drake & Meyer, 1987 2001
P.L.L., Attorneys at Law, Newark, Ohio;
Chairman Emeritus of First Federal Savings
and Loan Association of Newark, Newark,
Ohio; Director of Park National Bank
Rick R. Taylor 53 President of Jay Plastics Corp., Mansfield, 1995 2001
Ohio (plastic parts manufacturer); Director
of Richland Trust
John L. Warner 73 Agent, Dawson, Coleman & Wallace Insurance 1987 2003
Agency, Inc. (successor to W. A. Wallace
Co.), Newark, Ohio (insurance); Director
of Park National Bank
</TABLE>
In addition, Park and Security have agreed that, following the merger,
Harry O. Egger will become a director of Park with a term expiring in 2002. Mr.
Egger is 61 years old and has served as a director of Security since 1977. Mr.
Egger also serves as the Chairman of the Board, President and Chief Executive
Officer of Security and as the Chairman of the Board and Chief Executive Officer
of Security National Bank.
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EXECUTIVE OFFICERS
The following table lists the names and ages of the executive officers
of Park as of [ ], 200[ ], the positions presently held by those individuals
and their individual business experience during the past five years. These
individuals will be the executive officers of the surviving corporation in the
merger. The board of directors may remove any of the executive officers at any
time.
<TABLE>
<CAPTION>
Positions Held with Park and its
Name Age Principal Subsidiaries and Principal Occupation
---- --- -----------------------------------------------
<S> <C> <C>
William T. McConnell 67 Chairman of the Board since 1994, Chief Executive
Officer from 1986 to January 1999, President from
1986 to 1994 and Director of Park; Chairman of the
Board since 1993, Chief Executive Officer from
1983 to January 1999, President from 1979 to 1993,
and Director of Park National Bank; Director of
Century National Bank; Director of First-Knox
National Bank
C. Daniel DeLawder 51 Chief Executive Officer since January 1999,
President since 1994 and Director of Park; Chief
Executive Officer since January 1999, President
since 1993, Executive Vice President from 1992
to 1993, and Director of Park National Bank;
Chairman of Advisory Board since 1989 and President
from 1985 to 1992 of the Fairfield National Division
of Park National Bank; Director of Richland Trust;
Director of Second National Bank; Chairman of the
Board of Guardian Financial
David C. Bowers 63 Secretary since 1987, Chief Financial Officer and
Chief Accounting Officer from 1990 to 1998, and
Director from 1989 to 1990, of Park; Executive Vice
President since January 1999, Senior Vice President
from 1986 to January 1999, and Director of Park
National Bank; Director of Guardian Financial
</TABLE>
In addition, Park and Security have agreed that Harry O. Egger will
become the Vice Chairman of Park following the merger. Mr. Egger is 61 years
old. He current serves as the Chairman of the Board, President and Chief
Executive Officer of Security and as the Chairman of the Board and Chief
Executive Officer of Security National Bank.
ADDITIONAL INFORMATION
For additional information concerning the directors and executive
officers of Park, see "Where You Can Find More Information" on page [ ].
BUSINESS OF SECURITY
GENERAL
Security is a bank holding company incorporated under Ohio law. Security
is headquartered in Springfield, Ohio. Security was organized in 1985 under the
laws of the State of Ohio. The subsidiaries of Security are Security National
Bank, Citizens National Bank and Third Savings. Security National Bank is a
national banking association organized under the statutes of the United States
as the result of an agreement to merge The Guardian Bank of Springfield, Ohio,
with and into The New Carlisle National Bank under the title of The Security
National Bank. The agreement to merge was finalized and given approval by the
Office of the Comptroller of the Currency on October 1, 1969. Security National
Bank was granted the authority to act as fiduciary as of May 30, 1978, thereby
changing its name to "The Security National Bank and Trust Co." Security
National Bank is operating under a 1903 charter. On September 30, 1996, Citizens
National Bank became a wholly-owned subsidiary of Security when Security merged
with CitNat Bancorp, Inc., a $140 million one bank holding company headquartered
in Urbana, Ohio, in a transaction accounted for a pooling-of-interests. Citizens
National Bank is a national banking association
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<PAGE> 78
chartered in 1865. On October 21, 1996, Third Savings became a wholly-owned
subsidiary of Security when Security acquired all of the outstanding shares of
Third Financial Corporation, a $156 million one bank holding company
headquartered in Piqua, Ohio. The acquisition was accounted for using the
purchase method of accounting. Third Savings was chartered in 1884. All of the
banking centers of Security's subsidiaries are located in Champaign, Clark,
Fayette, Greene, Madison, and Miami Counties.
Security's subsidiaries provide full service banking to individuals as
well as to industry and governmental subdivisions through each of their
twenty-four banking centers. Security's subsidiaries have made a strong impact
on all the counties they serve through a great variety of services, including
personal checking accounts and savings programs, certificates of deposit, money
market accounts, certificates of deposit and individual retirement accounts.
A broad range of credit programs for all retail customers includes
mortgage loans, credit card banking under the VISA designation, installment
loans, and secured and unsecured personal loans. The banking services provided
to commercial customers and government include maintenance of demand and time
deposit accounts. Available are all types of commercial loans, including loans
under lines of credit and revolving credit, term loans, real estate mortgage
loans and other specialized loans. Security's subsidiaries further serve the
requirements of large and small industrial and commercial enterprises in the
Springfield and Dayton metropolitan area and elsewhere by providing financial
counseling, cash management and other automated services. The subsidiaries'
commercial banking divisions are organized to serve the needs of the corporate
customers by handling business and commercial mortgages, corporate deposits and
other corporate financial services. The consumer banking divisions, which
encompass the credit card and installment loan departments, serve individual as
well as corporate customers. The residential mortgage loan departments provide
conventional as well as adjustable rate mortgage loans to individuals. Each
Security subsidiary manages the investment of funds for that institution using
U.S. government and agency securities, municipal (tax-exempt) securities, as
well as federal funds, and certificates of deposit of U.S. banks and savings and
loans. Each Security subsidiary, in consultation with the other Security
subsidiaries, sets the rates on its liability products. Complete fiduciary
services are available to individuals, charitable institutions, commercial
customers and government agencies through Security National Bank's trust
division. The personal trust department serves as investment agent and custodian
for securities portfolios of individuals, as trustees for living and
testamentary trusts and as executor and administrator of probate estates. The
corporate trust department serves as trustee for corporate and municipal bond
issues, and as registrar for securities. The institutional services department
provides employee benefit plan fund management for qualified retirement plans
and investment management and securities custody services for not-for-profit
institutions.
There are over a half dozen commercial banks in Springfield, Clark
County and adjoining counties, furnishing general banking services and thus
providing strong competition to Security's subsidiaries. Security's subsidiaries
compete for deposits not only with commercial banks in their area, but also with
savings associations and other non-bank competitors, such as brokerage houses.
In addition to the competition described above, Security's subsidiaries compete
in various areas of service offered to individuals, industry and government with
banks in Southwestern Ohio, many of which possess greater financial resources
than Security.
The earnings of Security are affected by general economic conditions as
well as the monetary policies of the Federal Reserve Board. Such policies, which
have the effect of regulating the national supply of bank reserves and bank
credit, can have a major affect upon the source and cost of loanable and
investable funds and the rates of return earned on loans and investments. Among
the means available to the monetary authorities to influence the size and
distribution of reserves are open market operations by the Federal Reserve
Board, changes in cash reserve requirements against member bank deposits.
ADDITIONAL INFORMATION
For additional information concerning Security, see "Where You Can Find
More Information" on page [ ].
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<PAGE> 79
COMPARISON OF RIGHTS OF HOLDERS OF PARK COMMON SHARES
AND HOLDERS OF SECURITY COMMON SHARES
As a result of the merger, the holders of Security common shares will
become holders of Park common shares. Following the merger, the Park articles
and regulations will govern the rights of those shareholders. Both Security and
Park are incorporated in Ohio, so the Ohio General Corporation Law will continue
to govern the rights of Security shareholders after the merger.
Differences exist between the rights of holders of Park common shares
and the rights of holders of Security common shares arising from the
distinctions between the articles and regulations of Park and Security. The
rights, however, of holders of Park common shares and those of holders of
Security common shares are similar in many material respects. The significant
differences are addressed below.
AUTHORIZED CAPITAL STOCK
Park's authorized capital stock consists of 20,000,000 common shares,
without par value, and, as of December 15, 2000, 10,783,682 of these common
shares were outstanding. As of December 15, 2000, an additional 302,480 Park
common shares were subject to outstanding stock options and 327,506 Park common
shares were available for future grants of stock options. Park common shares are
listed on the American Stock Exchange under the symbol "PRK".
Security's authorized capital stock consists of 18,000,000 common
shares, $1.5625 par value per share, and, as of [ ], 200[ ],
[11,777,700] of these common shares were outstanding. As of [ ], 200[ ],
an additional [174,999] Security common shares were subject to outstanding stock
options. Security common shares are listed on the over-the-counter market under
the symbol "STYB".
COMPOSITION OF BOARD OF DIRECTORS
The Park regulations provide for a board of directors consisting of not
more than 16 and not less than five directors. Park currently has 15 directors.
Under the Park regulations, there are two ways to change the number of
directors. The number of directors can be changed by the affirmative vote of the
holders of a majority of the shares represented in person or by proxy at any
shareholder meeting to change the number of directors or by a majority of the
Park directors then in office. In the case of a change approved by the
directors, the directors may not increase the number of directors to a number
which exceeds by more than two the number of directors last elected by the
shareholders and cannot exceed 16.
The Security regulations provide for a board of directors consisting of
16 directors. Security currently has 11 directors. The Security articles and
regulations do not address how the number of directors may be changed. As a
result, Ohio statutory law governs the changing of the number of directors.
Under Section 1701.58 of the Ohio Revised Code, the shareholders may change the
size of the board of directors by a resolution approved by the affirmative vote
of the holders of a majority of shares represented at any meeting called for the
purpose of electing directors.
CLASSIFICATION
The regulations of both Park and Security divide each corporation's
board of directors into three classes with staggered terms whereby one class is
elected each year for a three-year term. Classification of directors makes it
more difficult for shareholders to change the composition of the board of
directors. Generally, two annual meetings, instead of one, are required to
change the composition of more than one-half of the board of directors. Should a
shareholder attempt to force a proxy contest, a tender or exchange offer or
other extraordinary corporate transaction, this classification and extra time
period would allow the board sufficient time to review the proposal as well as
any available alternatives in order to act in what it believes to be the best
interests of the corporation and its shareholders. The classification
provisions, however, also may discourage a third party from starting a proxy
contest, making a tender offer or otherwise attempting to gain control of the
corporation. As a result, the
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<PAGE> 80
corporation may miss an opportunity to enter into a transaction that could be
beneficial to the corporation and its shareholders.
NOMINATIONS
The Park regulations provide that shareholder nominations for election
to the Park board of directors must be made in writing and must be delivered or
mailed to the President of Park not less than 14 days nor more than 50 days
prior to any meeting of shareholders called for the election of directors.
However, if Park gives less than 21 days' notice of the meeting to its
shareholders, the nomination must be mailed or delivered to the President of
Park not later than the close of business on the seventh day following the day
on which Park mailed the notice of the meeting. The notification must include
the following information to the extent known by the notifying shareholder:
- the name and address of each proposed nominee;
- the principal occupation of each proposed nominee;
- the total number of Park common shares that will be voted for each
proposed nominee;
- the name and residence address of the notifying shareholder; and
- the number of Park common shares beneficially owned by the notifying
shareholder.
Nominations which the chairman of the meeting determines are not made in
accordance with the Park regulations may be disregarded.
The Security articles and regulations do not contain any similar
nomination procedures.
REMOVAL
The holders of a majority of the voting power of Park entitled to elect
directors may remove a director with or without cause. Unless all directors (or
all directors of a particular class) are removed, however, no individual
director may be removed if the votes of a sufficient number of shares are cast
against the director's removal that, if cumulatively voted at an election of all
of the directors (or all of the directors of a particular class), would be
sufficient to elect at least one director.
The Security articles and regulations do not include provisions limiting
the removal of directors. As a result, Ohio statutory law governs the removal of
a director from the board of Security. Under Section 1701.58 of the Ohio Revised
Code, the shareholders may remove any director from office, with or without
cause, by the affirmative vote of the holders of a majority of the voting power
entitled to elect directors. Unless all directors are removed (or all directors
of a particular class), however, no individual director may be removed if the
votes of a sufficient number of shares are cast against the director's removal
that, if cumulatively voted at an election of all of the directors (or all
directors of a particular class), would be sufficient to elect at least one
director.
MANDATORY RETIREMENT
The Security regulations provide that directors of Security will become
ineligible for reelection upon reaching the age of 70. There is no similar
mandatory retirement age for directors of Park.
CUMULATIVE VOTING
The holders of Park common shares have the right to cumulate votes in
the election of directors. With cumulative voting, it is possible for the
holders of a minority of the common shares to elect one or more directors to the
board of directors, even though the holders of a majority of the common shares
oppose the election of the director(s). The absence of cumulative voting
eliminates the ability of a minority of the shareholders of a
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<PAGE> 81
corporation to elect one or more directors to that corporation's board of
directors and allows the holders of a majority of the shares of that corporation
to elect each of the directors.
Security's articles specifically eliminate the right of Security
shareholders to exercise cumulative voting rights in the election of directors.
SPECIAL VOTING REQUIREMENTS
The Park articles contain special voting requirements that may be deemed
to have anti-takeover effects. These voting requirements are described in
Article Eighth and apply when any of the following actions are contemplated:
- 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;
- 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;
- any merger of Park or one of its subsidiaries with a 20% beneficial
owner or its affiliates or associates;
- 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;
- any reclassification of Park common shares or any recapitalization
involving the common shares of Park consummated within five years
after a 20% beneficial owner becomes such;
- any agreement providing for any of the previously described business
combinations; and
- any amendment to Article Eighth of the Park articles.
The enlarged majority vote required when Article Eighth applies is the
greater of:
- four-fifths of the outstanding Park common shares entitled to vote
on the proposed business combination, or
- that fraction of the outstanding Park common shares having:
- as the numerator a number equal to the sum of:
- the number of Park common shares beneficially owned by the
20% beneficial owner plus
- two-thirds of the remaining number of Park common shares
outstanding,
- and as the denominator, a number equal to the total number of
outstanding Park common shares entitled to vote.
Article Eighth does not apply where (1) the shareholders who do not vote
in favor of the transaction and whose proprietary interest will be terminated in
connection with a transaction are paid a "minimum price per share"
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and (2) a proxy statement satisfying the requirements of the Securities Exchange
Act of 1934 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 Park articles or
regulations.
The Security articles also contain special voting requirements. The
Security articles state that any merger, consolidation or acquisition of
Security by another corporation without the approval of Security's board of
directors requires the affirmative approval of 80% of the outstanding Security
common shares and 80% of the outstanding preferred shares or any other class of
shares of Security outstanding at that time.
AMENDMENTS OF ARTICLES
Under Ohio corporate law, the vote of holders of shares entitling them
to exercise at least two-thirds of the voting power of the corporation is
required to adopt an amendment to the articles of the corporation, unless the
articles provide for a different proportion which cannot be less than a
majority. As discussed above under "Special Voting Rights," Park's articles
require that any amendment to Article Eighth of the articles be adopted by a
different proportion of Park's shareholders. Security's articles do not alter
the two-thirds voting requirement for amending its articles.
AMENDMENTS TO THE REGULATIONS
The Park regulations may be amended by the affirmative vote of
two-thirds of the voting power of Park at a meeting held for that purpose or
without a meeting by the written consent of two-thirds of the voting power of
Park. The Security regulations may be amended by the affirmative vote of a
majority of the voting power of Security at a meeting held for that purpose or
without a meeting by the written consent of two-thirds of the voting power of
Security.
CALLING A SPECIAL MEETING
Under the Park regulations, special meetings of shareholders may be
called by the Chairman of the Board, the President, or, in case of the
President's absence, death, or disability, the Vice President authorized to
exercise the authority of the President, the Secretary, the board of directors
at a meeting or acting without a meeting by a majority of the board of directors
or the holders of at least 25% of the voting power of Park.
Under the Security regulations, special meetings of the shareholders may
be called by the Chairman of the Board, the President, or in case of the
President's absence, death or disability, the Vice President authorized to
exercise the authority of the President, a majority of the directors then in
office acting with or without a meeting, and by three or more shareholders
holding of record 25% or more of the stock of Security.
PREEMPTIVE RIGHTS
The shareholders of Park have preemptive rights under specified
circumstances. A preemptive right allows a shareholder to maintain a
proportionate share of ownership by purchasing shares of any new share issuance.
The purpose of the right is to protect shareholders from dilution of value and
control when new shares are issued.
On the offering or sale of any shares of Park, on reasonable terms fixed
by the Park board of directors, shareholders of the same class of shares have
the right to purchase additional shares in proportion to their respective share
holdings at the price fixed for the sale of the shares. This right does not
exist where:
- the shares offered or sold are treasury shares;
- the shares offered or sold are issued as a share dividend or
distribution;
- the shares are offered or sold in connection with any merger or
consolidation to which Park is a party or any acquisition of, or
investment in, another business entity or its assets by Park;
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<PAGE> 83
- the shares are offered or sold under the terms of a stock option
plan or employee benefit, compensation or incentive plan which has
been approved by the holders of three-fourths of the issued and
outstanding shares of Park; or
- the shares offered or sold are released from preemptive rights by
the affirmative vote or written consent of the holders of two-thirds
of the shares entitled to preemptive rights.
Neither the Security articles nor regulations alter the rights of
Security shareholders with respect to preemptive rights that are provided under
the Ohio General Corporation Law.
DIVIDENDS
As Ohio corporations, Security and Park may, in the discretion of their
respective boards of directors, generally pay dividends to their shareholders
out of surplus, however created, but must notify the shareholders if a dividend
is paid out of capital surplus.
The ability of Park and Security to obtain funds for the payment of
dividends and for other cash requirements largely depends on the amount of
dividends which may be declared by their subsidiaries. In addition, the Federal
Reserve Board expects each of Park and Security to serve as a source of strength
to its subsidiary banks, which may require it to retain capital for further
investments in its subsidiary banks, rather than for dividends for its
shareholders.
ANTI-TAKEOVER STATUTES
OHIO CONTROL SHARE ACQUISITION ACT
Section 1701.831 of the Ohio Revised Code or the "Ohio Control Share
Acquisition Act" provides that notice and informational filings and special
shareholder meetings and voting procedures must occur prior to consummation of a
proposed "control share acquisition," which is defined as any acquisition of
shares of an "issuing public corporation" that would entitle the acquirer,
directly or indirectly, alone or with others, to exercise or direct the voting
power of the issuing public corporation in the election of directors within any
of the following ranges:
- one-fifth or more but less than one-third of the voting power;
- one-third or more but less than a majority of the voting power; or
- a majority or more of the voting power.
An "issuing public corporation" is an Ohio corporation with fifty or
more shareholders that has its principal place of business, principal executive
offices, or substantial assets within the State of Ohio, and as to which no
valid close corporation agreement exists. Assuming compliance with the notice
and informational filing requirements prescribed by the Ohio Control Share
Acquisition Act, the proposed control share acquisition may take place only if,
at a duly convened special meeting of shareholders at which at least a majority
of the voting power is represented in person or by proxy, the acquisition is
approved by both:
- a majority of the voting power of the corporation represented in
person or by proxy at the meeting, and
- a majority of the voting power at the meeting exercised by
shareholders, excluding:
- the acquiring shareholder,
- officers of the corporation elected or appointed by the
directors of the corporation,
- employees of the corporation who are also directors of the
corporation, and
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- persons who acquire specified amounts of shares after the first
public disclosure of the proposed control share acquisition.
The Ohio Control Share Acquisition Act does not apply to a corporation
whose articles or regulations so provide. The Ohio Control Share Acquisition Act
applies to Security since it has not taken any corporate action to opt out of
it. Park has opted out of the application of the Ohio Control Share Acquisition
Act in its regulations.
OHIO MERGER MORATORIUM STATUTE
Chapter 1704 of the Ohio Revised Code or the "Ohio Merger Moratorium
Statute" prohibits certain business combinations and transactions between an
"issuing public corporation" and a beneficial owner of shares representing 10%
or more of the voting power of the corporation in the election of directors (an
"interested shareholder") for at least three years after the interested
shareholder becomes such, unless the board of directors of the issuing public
corporation approves either (1) the transaction or (2) the acquisition of the
corporation's shares that resulted in the person becoming an interested
shareholder, in each case before the interested shareholder became such.
For three years after a person becomes an interested shareholder, the
following transactions between the corporation and the interested shareholder or
persons related to such shareholder are prohibited:
- the sale or acquisition of an interest in assets meeting thresholds
specified in the statute,
- mergers and similar transactions,
- a voluntary dissolution,
- the issuance or transfer of shares or any rights to acquire shares
having a fair market value at least equal to 5% of the aggregate
fair market value of the corporation's outstanding shares,
- a transaction that increases the interested shareholder's
proportionate ownership of the corporation, and
- any other benefit that is not shared proportionately by all
shareholders.
After the three-year period, transactions between the corporation and
the interested shareholder are permitted if:
- the transaction is approved by the holders of shares with at least
two-thirds of the voting power of the corporation in the election of
directors (or a different proportion specified in the corporation's
articles), including at least a majority of the outstanding shares
after excluding shares controlled by the interested shareholder, or
- the business combination results in shareholders, other than the
interested shareholder, receiving a "fair market value" for their
shares determined by the method described in the statute.
A corporation may elect not to be covered by the Ohio Merger Moratorium
Statute by the adoption of an appropriate amendment to its articles. The Ohio
Merger Moratorium Statute applies to Security since it has not taken any
corporate action to opt out of it. Park has opted out of the Ohio Merger
Moratorium Statute in its articles.
DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION
The regulations of Park provide that Park will indemnify its directors
or officers against expenses (including attorney's fees, filing fees, court
reporter's fees and transcript costs) judgments, fines and amounts paid in
settlement by reason of the fact that they are or were directors, officers,
employees or agents of Park or, at the request of Park, were serving another
entity in a similar capacity. In order to receive indemnification, the directors
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or officers must have acted in good faith and in a manner they reasonably
believed to be in the best interests of Park. With regard to criminal matters,
Park will indemnify directors and officers if the directors or officers had no
reasonable cause to believe their conduct was unlawful. Directors or officers
claiming indemnification will be presumed to have acted in good faith and in a
manner they reasonably believed to be not opposed to the best interests of Park
and, with respect to any criminal matter, to have had no reasonable cause to
believe their conduct was unlawful.
Park will not indemnify any officer or director of Park who was a party
to any completed action or suit instituted by, or in the right of, Park for any
matter asserted in the action as to which the officer or director has been
adjudged to be liable for acting with reckless disregard for the best interests
of Park or misconduct, other than negligence, in the performance of the
individual's duty to Park. If, however, the Court of Common Pleas of Licking
County, Ohio or the court in which the action was brought determines that the
officer or director is fairly and reasonably entitled to indemnity, Park must
indemnify the officer or director to the extent permitted by the court.
Park will make any indemnification not precluded by Park's regulations
only upon a determination that the director or officer has met the applicable
standard of conduct. The determination may be made only:
- by a majority vote of a quorum of disinterested directors;
- if a quorum is not obtainable or if a majority of a quorum of
disinterested directors so directs, in a written opinion by
independent legal counsel;
- by the shareholders; or
- by the Court of Common Pleas of Licking County, Ohio or the court,
if any, in which the action was brought.
Park will pay expenses incurred in defending any action, suit or
proceeding in advance upon receipt of an undertaking by or on behalf of the
director or officer to repay that amount if the director or officer is not
entitled to be indemnified by Park.
The regulations of Park state that the indemnification provided by the
regulations is not exclusive of any other rights to which any individual seeking
indemnification may be entitled. Additionally, the Park regulations provide that
Park may purchase and maintain insurance on behalf of any individual who is or
was a director, officer, employee or agent of Park, or who is or was serving
another entity at the request of Park, against any liability asserted against
the individual and incurred by the individual in that capacity, or arising out
of the individual's status as such, whether or not Park National would have the
obligation or power to indemnify the individual under the Park regulations. Park
has purchased and maintains those policies.
The articles of Security provide that Security will indemnify, to the
full extent permitted by Ohio law, its present and past directors, officers,
employees, agents and other persons it has the power to indemnify under Ohio
law. The Security articles further state that Security may, upon the affirmative
vote of a majority of its directors, purchase insurance for the purpose of
indemnifying its directors, officers, employees and agents to the extent
indemnification of these persons is permitted by Ohio law. Security has
purchased and maintains such policies.
Park also has agreed to indemnify the present officers, directors and
employees of Security and its subsidiaries to the full extent required under
Ohio law and the governing documents of Security and Security's subsidiaries. In
addition, for a three-year period from the date of the merger, Park will
maintain directors' and officers' liability insurance policies covering the
officers and directors of Security and Security's subsidiaries so long as the
cost does not exceed 200% of the current premiums paid by Security for its
directors' and officers' liability insurance policies. For more information, see
"The Merger Agreement - Costs and Expenses; Indemnification" on page [ ].
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LEGAL MATTERS
The federal income tax consequences of the merger, along with other
legal matters in connection with the merger and the issuance of Park common
shares to former Security shareholders, will be passed upon for Park by Vorys,
Sater, Seymour and Pease LLP.
EXPERTS
PARK
The consolidated financial statements of Park as of December 31, 1999
and 1998, and for each of the three years in the period ended December 31, 1999,
incorporated by reference in this joint proxy statement/prospectus from Park's
Annual Report on Form 10-K for the fiscal year ended December 31, 1999, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon, incorporated by reference herein. Those consolidated financial
statements are incorporated by reference in this joint proxy
statement/prospectus in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
The supplemental consolidated financial statements of Park as of
December 31, 1999 and 1998, and for each of the three years in the period ended
December 31, 1999, incorporated by reference in this joint proxy
statement/prospectus from Park's Current Report on Form 8-K dated December 21,
2000, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon, incorporated by reference herein. Generally accepted
accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling-of-interests method in financial
statements that do not include the date of consummation. The supplemental
consolidated financial statements do not extend through the date of
consummation; however, they will become the historical consolidated financial
statements of Park after financial statements covering the date of consummation
of the business combinations are issued. The supplemental consolidated financial
statements referred to above are incorporated by reference in this joint proxy
statement/prospectus in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
SECURITY
The consolidated financial statements of Security as of December 31,
1999 and 1998, and for each of the three years in the period ended December 31,
1999, incorporated by reference in this joint proxy statement/prospectus from
Security's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon, incorporated by reference herein. Those consolidated
financial statements are incorporated by reference in this joint proxy
statement/prospectus in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This document contains forward-looking statements about the merger and
about Park's and Security's respective financial condition, results of
operations, plans, objectives, future performance and business. This includes
information relating to:
- benefits, revenues and earnings estimated to result from the merger;
and
- estimated costs of combining Park and Security.
It also includes statements using words like "believes," "expects,"
"intends," "anticipates" or "estimates" or similar expressions.
These forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those predicted by the forward-looking
statements because of various factors and possible events, including those
discussed under "Risk Factors" above and the following:
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<PAGE> 87
- income, interest and non-interest, following the merger is lower
than expected;
- the costs of providing compensation and benefits to Park's employees
increase;
- competition increases in the banking industry or Park's markets;
- costs or difficulties related to the integration of Security's
business or other acquired businesses are greater than expected;
- there are adverse changes in general economic conditions or in
competitive forces;
- technological changes are more difficult or expensive to implement
than anticipated;
- there are adverse changes in the securities markets; and
- Park suffers the loss of key personnel.
There is also the risk that Park incorrectly analyzes these risks and
forces, or that the strategies Park develops to address them are unsuccessful.
Because these forward-looking statements involve risks and
uncertainties, actual results may differ significantly from those predicted in
these forward-looking statements. You should not place a lot of weight on these
statements. These statements speak only as of the date of this document or, in
the case of any document incorporated by reference, the date of that document.
All subsequent written and oral forward-looking statements attributable
to Park or Security or any person acting on behalf of Park or Security are
qualified by the cautionary statements in this section. Park and Security have
no obligation to revise these forward-looking statements.
WHERE YOU CAN FIND MORE INFORMATION
SEC FILINGS
Park and Security file annual, quarterly and current reports, proxy
statements and other information with the SEC. These SEC filings are available
to the public at the Internet site maintained by the SEC at http://www.sec.gov.
You can also read and copy any document filed by Park or Security with the SEC
at the SEC's public reference rooms located at:
<TABLE>
<S> <C> <C>
450 Fifth Street, N.W. New York Regional Office Chicago Regional Office
Room 1024 7 World Trade Center Citicorp Center
Washington, D.C. 20549 Suite 1300 500 West Madison Street
New York, New York 10048 Suite 1400
Chicago, Illinois 60661
</TABLE>
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. You may also obtain copies of these SEC filings by mail from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates.
SEC filings are also available from commercial document retrieval
services. Park's SEC filings can also be obtained from the Internet site
maintained by Park at www.parknationalcorp.com and the American Stock Exchange.
For information on obtaining copies of Park's SEC filings at the American Stock
Exchange, call 1-212-306-1000.
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<PAGE> 88
REGISTRATION STATEMENT
Park has filed with the SEC a registration statement on Form S-4 to
register the Park common shares to be issued to Security shareholders in the
merger. The registration statement, including the attached exhibits and
schedules, contains additional relevant information about Park and Security.
This joint proxy statement/prospectus is part of that registration statement.
The rules and regulations of the SEC allow us to omit some information included
in the registration statement from this document.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows Park and Security to "incorporate by reference"
information into this joint proxy statement/prospectus. This means that Park and
Security can disclose important information to you by referring you to another
document included as an appendix to this joint proxy statement/prospectus or to
documents filed separately with the SEC. The information incorporated by
reference is considered to be a part of this joint proxy statement/prospectus,
except for any information that is superseded by information that is included
directly in this joint proxy statement/prospectus.
PARK DOCUMENTS
This joint proxy statement/prospectus incorporates by reference the
documents filed by Park with the SEC described below. All of these documents
were or will be filed under SEC File No. 1-13006.
- Current Report on Form 8-K filed on December 21, 2000 which includes
the supplemental financial statements for 1999, 1998 and 1997 which
give retroactive effect for the acquisitions of SNB Corp. and U.B.
Bancshares, Inc.;
- Annual Report on Form 10-K for the fiscal year ended December 31,
1999;
- Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2000, June 30, 2000 and September 30, 2000;
- Current Reports on Form 8-K dated February 29, 2000, March 15, 2000
and April 18, 2000;
- The description of the Park common shares contained in the Current
Report on Form 8-K filed on April 21, 1998, including any amendment
or report filed to update that description; and
- All reports and definitive proxy or information statements of Park
filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this joint proxy statement/prospectus and
before completion of the merger and the exchange of Park common
shares for Security common shares.
SECURITY DOCUMENTS
This joint proxy statement/prospectus incorporates by reference the
documents filed by Security with the SEC described below. All of these documents
were or will be filed under SEC File No. 0-13655.
- Annual Report on Form 10-K for the fiscal year ended December 31,
2000 and Amendment No. 1 thereto dated June 7, 2000;
- Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 2000, June 30, 2000 and September 30, 2000;
- The description of Security's common shares contained in Security's
Registration Statement on Form S-4 (Amendment No. 1) (Registration
No. 333-07611) filed on July 16, 1996, including any amendment or
report filed to update that description; and
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<PAGE> 89
- All reports and definitive proxy or information statements of
Security filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act after the date of this joint proxy statement/prospectus
and before completion of the merger and the exchange of Park common
shares for Security common shares.
You can obtain copies of any of the documents incorporated by reference
in this joint proxy statement/prospectus through Park or Security, as the case
may be, or from the SEC through the SEC's Internet site at the address described
above. Documents incorporated by reference are available from the corporations,
without charge, excluding exhibits other than those that are specifically
incorporated by reference in this joint proxy statement/prospectus. You may
obtain a copy of any documents incorporated by reference by requesting them in
writing or by telephone from the appropriate corporation at the following
addresses:
<TABLE>
<S> <C>
Park National Corporation Security Banc Corporation
50 North Third Street 40 South Limestone Street
P.O. Box 3500 Springfield, Ohio 45502
Newark, Ohio 43058-3500 Attention: J. William Stapleton, Executive
Attention: David C. Bowers, Secretary Vice President and Secretary
(740) 349-3708 (937) 324-6916
</TABLE>
PLEASE REQUEST DOCUMENTS BY [ ], 2001, TO ASSURE THAT YOU WILL
RECEIVE THEM BEFORE THE SPECIAL MEETINGS. If you request any incorporated
documents, Park or Security, as appropriate, will mail them to you by first
class mail, or another equally prompt means, within one business day after
receiving your request.
Park and Security have not authorized anyone to give any information or
make any representation about the merger or our corporations that differs from,
or adds to, the information in this joint proxy statement/prospectus or in the
reports that are publicly filed with the SEC. Therefore, if anyone does give you
different or additional information, you should not rely on it.
This joint proxy statement/prospectus is dated [ ], 2001. The
information contained in this joint proxy statement/prospectus speaks only as of
that date, unless the information specifically indicates that another date
applies. You should not assume that the information contained in this joint
proxy statement/prospectus is accurate as of any date other than that date, and
neither the mailing of this joint proxy statement/prospectus to you nor the
issuance to you of Park common shares will create any implication to the
contrary.
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<PAGE> 90
APPENDIX A
AGREEMENT AND PLAN OF MERGER,
DATED AS OF NOVEMBER 20, 2000,
BETWEEN PARK NATIONAL CORPORATION
AND SECURITY BANC CORPORATION
A-1
<PAGE> 91
TABLE OF CONTENTS
PAGE
ARTICLE ONE -- THE MERGER....................................................2
1.01. Merger; Surviving Corporation..................................2
1.02. Effective Time.................................................2
1.03. Effects of the Merger..........................................2
ARTICLE TWO -- CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES................3
2.01. Conversion of Security Shares..................................3
2.02. Exchange of Certificates.......................................4
2.03. Park Shares....................................................9
ARTICLE THREE -- REPRESENTATIONS AND WARRANTIES OF SECURITY..................9
3.01. Representations and Warranties of Security.....................9
ARTICLE FOUR -- REPRESENTATIONS AND WARRANTIES OF PARK......................30
4.01. Representations and Warranties of Park........................30
ARTICLE FIVE -- FURTHER COVENANTS OF SECURITY...............................34
5.01. Operation of Business.........................................34
5.02. Notification..................................................39
5.03. Shareholder Approval..........................................39
5.04. Acquisition Proposals.........................................40
5.05. Delivery of Information.......................................40
5.06. Affiliates Compliance with the Securities Act.................40
5.07. Takeover Laws.................................................41
5.08. Title Insurance...............................................41
5.09. Schedule 13D and 13G Filings..................................42
5.10. Survey........................................................42
ARTICLE SIX -- FURTHER COVENANTS OF PARK....................................42
6.01. Access to Information.........................................42
6.02. Opportunity of Employment; Employee Benefits..................43
6.03. AMEX Listing..................................................43
6.04. Takeover Laws.................................................44
6.05. Notification..................................................44
6.06. Shareholder Approval..........................................44
6.07. Officers' and Directors' Indemnification......................44
6.08. Governance....................................................46
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6.09. Park Acquisition Proposal.....................................46
ARTICLE SEVEN -- FURTHER OBLIGATIONS OF THE PARTIES.........................46
7.01. Security Stock Options........................................46
7.02. Necessary Further Action......................................47
7.03. Cooperative Action............................................47
7.04. Satisfaction of Conditions....................................47
7.05. Accounting and Tax Treatment..................................47
7.06. Confidentiality...............................................48
7.07. Press Releases................................................48
7.08. Registration Statement........................................48
7.09. Regulatory Applications.......................................49
7.10. Dividends.....................................................50
7.11. Supplemental Assurances.......................................50
7.12. Security Split Dollar Plan....................................50
7.13. Security Pension Plan.........................................51
ARTICLE EIGHT -- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES.....51
8.01. Conditions to the Obligations of Park.........................51
8.02. Conditions to the Obligations of Security.....................54
8.03. Mutual Conditions.............................................55
ARTICLE NINE -- CLOSING.....................................................56
9.01. Closing.......................................................56
9.02. Closing Transactions Required of Park.........................57
9.03. Closing Transactions Required of Security.....................57
ARTICLE TEN -- NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS....58
10.01. Non-Survival of Representations, Warranties and Covenants.....58
ARTICLE ELEVEN -- TERMINATION...............................................58
11.01. Termination...................................................58
11.02. Effect of Termination.........................................61
ARTICLE TWELVE -- MISCELLANEOUS.............................................63
12.01. Notices.......................................................63
12.02. Counterparts..................................................64
12.03. Entire Agreement..............................................64
12.04. Successors and Assigns........................................64
12.05. Captions......................................................64
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12.06. Governing Law.................................................64
12.07. Payment of Fees and Expenses..................................64
12.08. Amendment.....................................................65
12.09. Waiver........................................................65
12.10. Disclosure Schedules..........................................65
12.11. No Third-Party Rights.........................................65
12.12. Waiver of Jury Trial..........................................65
12.13. Severability..................................................65
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"Agreement" -- Preamble
"AMEX" -- Section 2.02(e)
"Acquisition Proposal" -- Section 5.04
"Average Closing Price of Park Shares" -- Section 2.02(e)
"BHC Act" -- Section 3.01(a)
"CERCLA" -- Section 3.01(y)
"Citizens National" -- Section 3.01(a)
"Closing Date" -- Section 9.01
"Closing" -- Section 9.01
"Code" -- Preamble
"Compensation and Benefit Plans" -- Section 3.01(s)
"Confidentiality Agreement" -- Section 7.06
"Constituent Corporations" -- Preamble
"Consultants" -- Section 3.01(s)
"Costs" -- Section 6.07(a)
"Converted Option" -- Section 7.01
"CRA" -- Section 3.01(jj)
"Determination Date" -- Section 11.01(d)
"Directors" -- Section 3.01(s)
"DOL" -- Section 3.01(s)
"Effective Time" -- Section 1.02
"Employees" -- Section 3.01(s)
"Environmental Law" -- Section 3.01(y)
"ERISA" -- Section 3.01(s)
"ERISA Affiliate" -- Section 3.01(s)
"ERISA Affiliate Plan" -- Section 3.01(s)
"Exchange Act" -- Section 3.01(hh)
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"Exchange Ratio" -- Section 2.01(b)
"FDIC" -- Section 3.01(k)
"Federal Reserve" -- Section 3.01(k)
"Final Index Price" -- Section 11.01(d)
"Final Price" -- Section 11.01(d)
"GAAP" -- Section 3.01(f)
"Governmental Authority" -- Section 3.01(p)
"Hazardous Substances" -- Section 3.01(y)
"Indemnified Party" -- Section 6.07(a)
"Index Group" -- Section 11.01(d)
"Initial Index Price" -- Section 11.01(d)
"Insurance Amount" -- Section 6.07(b)
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<PAGE> 95
"IRS" -- Section 3.01(l)
"Joint Proxy Statement" -- Section 5.03(b)
"Joint Proxy Statement/Prospectus" -- Section 7.08(a)
"Loan Assets" -- Section 3.01(i)
"Loan Documentation" -- Section 3.01(i)
"material adverse effect" -- Section 3.01(a)
"material" -- Section 3.01(a)
"Merger Shares" -- Section 2.01(b)
"Merger" -- Preamble
"OCC" -- Section 3.01(k)
"ODFI" -- Section 3.01(k)
"Officers" -- Section 3.01(s)
"OGCL" -- Section 1.01
"OTS" -- Section 3.01(k)
"Park" -- Preamble
"Park Balance Sheet Date" -- Section 4.01(f)
"Park Dissenting Shares" -- Section 2.02(1)
"Park Financial Statements" -- Section 4.01(f)
"Park Meeting" -- Section 6.06(b)
"Park Shareholders' Adoption" -- Section 11.01(b)
"Park Shares" -- Preamble
"Park Stock Option Plan" -- Section 4.01(c)
"PBGC" -- Section 3.01(s)
"PCBs" -- Section 3.01(y)
"Pension Plan" -- Section 3.01(s)
"Registration Statement" -- Section 7.08(a)
"Regulatory Authorities" -- Section 3.01(o)
"Rule 145 Affiliates" -- Section 5.06(a)
"SEC" -- Section 3.01(c)
"Secretary of State" -- Section 1.02
"Securities Act" -- Section 3.01(u)
"Security" -- Preamble
"Security Balance Sheet Date" -- Section 3.01(f)
"Security Certificates" -- Section 2.02(a)
"Security Disclosure Schedule" -- Preamble
"Security Dissenting Share" -- Section 2.02(k)
"Security Financial Statements" -- Section 3.01(f)
"Security Meeting" -- Section 5.03(b)
"Security National" -- Section 3.01(a)
"Security Real Properties" -- Section 3.01(m)
"Security Shares" -- Preamble
"Security Shareholders' Adoption" -- Section 11.01(b)
"Security Split Dollar Plan" -- Section 7.12
"Security Stock Option Plans" -- Section 3.01(b)
"Security Stock Options" -- Section 3.01(b)
"Security Subsidiaries" -- Section 3.01(a)
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<PAGE> 96
"Security Subsidiary Real Estate Collateral" -- Section 3.01(y)
"Security Voting Debt" -- Section 3.01(b)
"Starting Date" -- Section 11.01(d)
"Starting Price" -- Section 11.01(d)
"Subsidiary" -- Section 3.01(c)
"Surviving Corporation" -- Section 1.01
"Takeover Laws" -- Section 3.01(aa)
"Tax" -- Section 3.01(l)
"Tax Returns" -- Section 3.01(l)
"Third Savings" -- Section 3.01(a)
"Total Security Shares Outstanding" -- Section 2.01(b)
"trading days" -- Section 2.02(e)
"Updated Security Disclosure Schedule" -- Section 5.02
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<PAGE> 97
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as
of November 20, 2000, is made and entered into by and between Park National
Corporation, an Ohio corporation ("Park"), and Security Banc Corporation, an
Ohio corporation ("Security") (Park and Security are sometimes hereinafter
collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Security and Park have
each determined that it is in the best interests of their respective
corporations and shareholders for Security to merge with and into Park (the
"Merger"), upon the terms and subject to the conditions set forth in and
pursuant to the terms of this Agreement; and
WHEREAS, the Boards of Directors of Security and Park have
each approved this Agreement and the consummation of the transactions
contemplated hereby; and
WHEREAS, as a result of the Merger, in accordance with the
terms of this Agreement, Security will cease to have a separate corporate
existence, and shareholders of Security will receive from Park in exchange for
each common share, $1.5625 par value, of Security (the "Security Shares"), the
number of common shares, without par value, of Park (the "Park Shares")
calculated in accordance with the terms of this Agreement; and
WHEREAS, it is the intention of Security and Park that the
Merger contemplated by this Agreement be accounted for under the
"pooling-of-interests" accounting method; and
WHEREAS, for Federal income tax purposes, it is intended that
the Merger contemplated by this Agreement qualify as a "reorganization" under
the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, Security has previously provided to Park a schedule
disclosing additional information about Security (the "Security Disclosure
Schedule");
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, Security and Park, intending to be legally bound hereby,
agree as follows:
<PAGE> 98
ARTICLE ONE
THE MERGER
1.01. MERGER; SURVIVING CORPORATION
Upon the terms and subject to the conditions of this Agreement, at the
Effective Time (as defined in Section 1.02), Security shall merge with and into
Park in accordance with the General Corporation Law of the State of Ohio (the
"OGCL"). Park shall be the continuing and surviving corporation in the Merger,
shall continue to exist under the laws of the State of Ohio, and shall be the
only one of the Constituent Corporations to continue its separate corporate
existence after the Effective Time. As used in this Agreement, the term
"Surviving Corporation" refers to Park at and after the Effective Time. As a
result of the Merger, the outstanding shares of capital stock and the treasury
shares of the Constituent Corporations shall be converted in the manner provided
in Article Two.
1.02. EFFECTIVE TIME
The Merger shall become effective upon the later of (a) the filing of
the appropriate certificate of merger with the Secretary of State of the State
of Ohio (the "Secretary of State") or (b) such time thereafter as is agreed to
in writing by Park and Security and so provided in the certificate of merger.
The date and time at which the Merger shall become effective is referred to in
this Agreement as the "Effective Time."
1.03. EFFECTS OF THE MERGER
At the Effective Time:
(a) the Articles of Incorporation of Park as in effect immediately
prior to the Effective Time shall be the articles of the
Surviving Corporation;
(b) the Regulations of Park as in effect immediately prior to the
Effective Time shall be the regulations of the Surviving
Corporation; and
(c) the authorized number of directors of the Surviving
Corporation shall be the authorized number of directors of
Park immediately prior to the Effective Time. At the Effective
Time, each individual who is serving as a director of Park
immediately prior to the Effective Time shall become a
director of the Surviving Corporation and each such individual
shall serve as a director of the Surviving Corporation for the
balance of the term for which such individual was elected a
director of Park. In addition, Harry O. Egger shall become a
director of the Surviving Corporation and shall have a term
expiring at the annual meeting of the shareholders of the
Surviving Corporation to be held in 2002. Each director of the
Surviving Corporation shall serve as such until his or her
successor is duly elected and qualified in the manner provided
in the articles and regulations of the Surviving Corporation
or as otherwise provided by law or until his or her earlier
death, resignation or removal in the manner provided in the
articles
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and regulations of the Surviving Corporation or as otherwise
provided by law;
(d) each individual who is an officer of Park immediately prior to
the Effective Time shall become an officer of the Surviving
Corporation with each such individual to hold the same office
in the Surviving Corporation, in accordance with the
regulations thereof, as he held in Park immediately prior to
the Effective Time. In addition, Harry O. Egger shall become
Vice Chairman of the Surviving Corporation in accordance with
the regulations thereof; and
(e) the Merger shall have the effects prescribed in the OGCL.
ARTICLE TWO
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
2.01. CONVERSION OF SECURITY SHARES
At the Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof:
(a) Conversion of Security Shares. Subject to Sections 2.01(c) and
2.02, each Security Share issued and outstanding immediately
prior to the Effective Time shall be converted into that
number of fully paid and non-assessable Park Shares equal to
the Exchange Ratio as defined in Section 2.01(b) of this
Agreement. After the Effective Time, all such Security Shares
shall no longer be outstanding and each certificate previously
representing any Security Shares shall thereafter represent
the Park Shares into which such Security Shares have been
converted. Certificates previously representing Security
Shares shall be exchanged for certificates representing whole
Park Shares (and cash in lieu of fractional Park Share
interests) issued in consideration therefor upon the surrender
of such certificates in accordance with Section 2.02, without
interest.
(b) Exchange Ratio.
(i) The Exchange Ratio shall be equal to:
3,350,000 (THE "Merger Shares")
------------------------------------------------
Total Security Shares Outstanding
(as defined in Section 2.01(b)(ii))
(ii) "Total Security Shares Outstanding" shall mean the
total number of Security Shares issued and
outstanding immediately prior to the Effective Time
(other than Security Shares held in treasury by
Security).
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<PAGE> 100
(iii) The Exchange Ratio shall be subject to adjustment in
accordance with Section 2.02(m).
(c) Cancellation of Treasury Shares; Security Shares Owned by
Park. All Security Shares held by Security as treasury shares
shall be cancelled and retired and shall cease to exist and no
Park Shares or other consideration shall be delivered in
exchange therefor. All Security Shares, if any, that are
beneficially owned by Park shall become treasury shares of the
Surviving Corporation.
2.02. EXCHANGE OF CERTIFICATES
(a) Exchange Agent. At or prior to the Effective Time, Park shall
deposit, or shall cause to be deposited, with First-Knox
National Bank (the "Exchange Agent"), for the benefit of the
holders of certificates which immediately prior to the
Effective Time evidenced Security Shares (the "Security
Certificates"), for exchange in accordance with this Article
Two, certificates representing Park Shares and an estimated
amount of cash necessary to pay cash in lieu of fractional
Park Share interests in accordance with Section 2.02(e) (such
certificates for Park Shares, together with any dividends or
distributions with a record date occurring on or after the
Effective Time with respect thereto, and such cash for
fractional Park Share interests being hereinafter referred to
as the "Exchange Fund") issuable pursuant to Section 2.01 in
exchange for such Security Shares.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the
Exchange Agent to mail to each holder of record of Security
Shares immediately prior to the Effective Time, (i) a letter
of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Security
Certificates shall pass, only upon delivery of such Security
Certificates to the Exchange Agent, and which shall be in such
form and have such other provisions as the Surviving
Corporation may reasonably specify) and (ii) instructions for
use in effecting the surrender of the Security Certificates in
exchange for certificates representing Park Shares and cash in
lieu of fractional Park Share interests. Upon surrender by
such holder of a Security Certificate or Certificates
evidencing all Security Shares standing in such holder's name
for cancellation to the Exchange Agent together with such
letter of transmittal, duly executed, the holder of such
Security Certificate or Certificates shall be entitled to
receive in exchange therefor a certificate representing the
number of whole Park Shares, and/or a check in respect of any
fractional Park Share interests, which such holder has the
right to receive in respect of the Security Certificate or
Certificates surrendered pursuant to the provisions of this
Article Two (after taking into account all Security Shares
then held by such holder), and the
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Security Certificate or Certificates so surrendered shall
forthwith be canceled. In the event of a transfer of ownership
of Security Shares which is not registered in the transfer
records of Security, a certificate representing the proper
number of Park Shares, and/or a check in respect of any
fractional Park Share interests, may be issued to a transferee
if the Security Certificate representing such Security Shares
is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by
evidence that any applicable share transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02,
each Security Certificate shall be deemed at any time after
the Effective Time for all corporate purposes (except as
provided in Section 2.02(c)) to represent only the number of
whole Park Shares into which the Security Shares represented
by such Security Certificate have been converted as provided
in this Article Two and the right to receive upon such
surrender cash in lieu of any fractional Park Share interests
as contemplated by this Section 2.02.
(c) Distributions with Respect to Unexchanged Shares; Voting.
(i) Dividends or other distributions declared or made
after the Effective Time with respect to Park Shares
with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Security
Certificate with respect to the Park Shares
represented thereby, and any cash payment in lieu of
fractional Park Shares shall be paid to any such
holder pursuant to Section 2.02(e), only after
surrender of such Security Certificate by the holder
thereof. Subject to the effect of applicable laws,
following surrender of any such Security Certificate,
there shall be paid to the holder of the certificates
representing whole Park Shares issued in exchange
therefor, without interest, (A) as promptly as
practicable after the time of such surrender, the
amount of any cash payable with respect to a
fractional Park Share interest to which such holder
is entitled pursuant to Section 2.02(e) and the
amount of dividends or other distributions with a
record date after the Effective Time theretofore paid
(but withheld pursuant to the immediately preceding
sentence) with respect to such whole Park Shares, and
(B) at the appropriate payment date, the amount of
dividends or other distributions with a record date
after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with
respect to such whole Park Shares.
(ii) Former holders of record as of the Effective Time of
Security Shares shall not be entitled to vote the
Park Shares into which their Security Shares shall
have been converted on matters submitted to the
shareholders of Park until the Security Certificates
formerly representing such Security Shares shall have
been surrendered in
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accordance with this Section 2.02 or certificates
evidencing such Park Shares shall have been issued in
exchange therefor.
(d) No Further Ownership Rights in Security Shares. All
Park Shares issued upon conversion of Security Shares
in accordance with the terms hereof (including any
cash paid pursuant to Section 2.02(c) or 2.02(e))
shall be deemed to have been issued in full
satisfaction of all rights pertaining to such
Security Shares, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to
the Effective Time which may have been declared or
made by Security on such Security Shares in
accordance with the terms of this Agreement on or
prior to the Effective Time and which remain unpaid
at the Effective Time. If, after the Effective Time,
Security Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled
and exchanged as provided in this Article Two.
(e) No Fractional Park Shares.
(i) No certificates or scrip representing
fractional Park Shares shall be issued upon
the surrender for exchange of Security
Certificates evidencing Security Shares, and
such fractional Park Share interests will
not entitle the owner thereof to vote or to
any rights of a shareholder of the Surviving
Corporation.
(ii) Each holder of Security Shares who would
otherwise be entitled to receive a
fractional Park Share shall receive from the
Exchange Agent an amount of cash equal to
the product obtained by multiplying (a) the
fractional Park Share interest to which such
holder (after taking into account all
Security Shares held at the Effective Time
by such holder) would otherwise be entitled
by (b) the Average Closing Price of Park
Shares (as defined below in Section
2.02(e)(iii) below). No interest shall be
payable with respect to such cash payment.
(iii) The "Average Closing Price of Park Shares"
shall mean the average of the closing sale
prices of a Park Share on the American Stock
Exchange ("AMEX") (as reported in The Wall
Street Journal or, if not reported therein,
in another authoritative source) during the
period of 20 trading days (as hereinafter
defined in this Section 2.02(e)(iii))
immediately preceding the tenth day prior to
the Effective Time. As used in this
Agreement, "trading days" shall mean days on
which actual trades of Park Shares occur.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the
shareholders of Security for six months after the
Effective Time shall be delivered to the Surviving
Corporation, upon
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demand, and any shareholders of Security who have not
theretofore complied with this Article Two shall
thereafter look only to the Surviving Corporation for
payment of their claim for Park Shares, any cash in
lieu of fractional Park Share interest and any
dividends or distributions with respect to Park
Shares, in each case without interest.
(g) No Liability. None of Park, Security, the Exchange
Agent or the Surviving Corporation shall be liable to
any former holder of Security Shares for Park Shares
(or dividends or distributions with respect thereto)
or cash in lieu of a fractional Park Share interest
delivered to a public official pursuant to any
applicable abandoned property, escheat or similar
law.
(h) Share Transfer Books. Unless otherwise required by
Section 1701.85 of the OGCL, after the Effective Time
there shall be no further registration of transfers
on the share transfer books of the Surviving
Corporation of the Security Shares which were
outstanding immediately prior to the Effective Time.
(i) Lost Certificates. If there shall be delivered to the
Exchange Agent by any person who is unable to produce
any Security Certificate for Security Shares for
surrender to the Exchange Agent in accordance with
this Section 2.02:
(a) Evidence to the satisfaction of the
Surviving Corporation that such Security
Certificate has been lost, wrongfully taken,
or destroyed;
(b) Such security or indemnity as may be
requested by the Surviving Corporation to
save it harmless (which shall not include
the requirement to obtain a third party bond
or surety); and
(c) Evidence to the satisfaction of the
Surviving Corporation that such person was
the owner of the Security Shares theretofore
represented by each such Security
Certificate claimed by him to be lost,
wrongfully taken or destroyed and that he is
the person who would be entitled to present
such Security Certificate for exchange
pursuant to this Agreement;
then the Exchange Agent, in the absence of actual
notice to it that any Security Shares theretofore
represented by any such Security Certificate have
been acquired by a bona fide purchaser, shall deliver
to such person the Park Shares (and cash in lieu of
fractional Park Share interests) that such person
would have been entitled to receive upon surrender of
each such lost, wrongfully taken or destroyed
Security Certificate.
(j) Waiver. The Surviving Corporation may from time to
time, in the case of one or more persons, waive one
or more of the rights provided to it in this
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Article Two to withhold certain payments, deliveries
and distributions; and no such waiver shall
constitute a waiver of its rights thereafter to
withhold any such payment, delivery or distribution
in the case of any person.
(k) Security Shareholders' Dissenters' Rights. Anything
contained in this Agreement or elsewhere to the
contrary notwithstanding, if any holder of an
outstanding Security Share shall properly exercise
dissenters' rights with respect thereto in accordance
with Section 1701.85 of the OGCL (a "Security
Dissenting Share"), then:
(i) Each such Security Dissenting Share shall
nevertheless be deemed to be extinguished at
the Effective Time as provided elsewhere in
this Agreement;
(ii) Each person perfecting such dissenter's
rights shall thereafter have only such
rights (and shall have such obligations) as
are provided in Section 1701.85 of the OGCL,
and the Surviving Corporation shall not be
required to deliver any Park Shares or cash
payments to such person in substitution for
each such Security Dissenting Share in
accordance with this Agreement; provided,
however, that if any such person shall have
failed to perfect or shall withdraw or lose
such holder's rights under division (D) of
Section 1701.85 of the OGCL, each such
holder's Security Dissenting Shares shall
thereupon be deemed to have been converted
as of the Effective Time into the right to
receive Park Shares and cash in lieu of
fractional Park Share interests in
accordance with the Exchange Ratio, without
any interest thereon, pursuant to Section
2.01.
No holder of Security Dissenting Shares shall be
entitled to submit a letter of transmittal, and any
letter of transmittal submitted by a holder of
Security Dissenting Shares shall be invalid.
(l) Park Shareholders' Dissenters' Rights. Anything
contained in this Agreement to the contrary
notwithstanding, if any person shall perfect
dissenter's rights in respect of one or more Park
Shares, in accordance with Section 1701.85 of the
OGCL, then all of the rights accruing from the Park
Shares which are outstanding immediately before the
Effective Time and which are held by any shareholders
who have not voted such Park Shares in favor of the
adoption of this Agreement and who shall have
delivered to Park a written demand for appraisal of
such Park Shares in the manner provided in Section
1701.85 of the OGCL shall be suspended at the
Effective Time; provided, however, that (i) the
holders of such Park Shares (hereinafter referred to
as "Park Dissenting Shares") upon compliance with the
provisions of Section 1701.85 of the OGCL, shall be
entitled to payment of the appraised value of such
Park Dissenting Shares
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in accordance with Section 1701.85 of the OGCL and
(ii) the rights accruing from Park Dissenting Shares
shall remain suspended until the earlier of (A) the
date on which such holder, upon compliance with the
provisions of Section 1701.85 of the OGCL,
establishes the right to the payment of the appraised
value of such Park Dissenting Shares in accordance
with the provisions of Section 1701.85 of the OGCL
and such value is paid to such holder, at which time
such Park Dissenting Shares shall be cancelled and
extinguished in consideration and exchange for such
payment, and (B) the date on which either the demand
for appraisal of such Park Dissenting Shares is
withdrawn with the consent of Park or such holder
forfeits the rights to appraisal of such Park
Dissenting Shares by failing to establish such
holder's entitlement to appraisal rights in
accordance with Section 1701.85 of the OGCL, at which
time such Park Dissenting Shares shall be deemed to
be issued and outstanding.
(m) Changes in Park Shares. In the event Park changes (or
establishes a record date for changing) the number of
Park Shares issued and outstanding prior to the
Effective Time as a result of a share split, share
dividend, recapitalization or similar transaction
with respect to the outstanding Park Shares and the
record date therefor shall be prior to the Effective
Time, or exchanges the Park Shares for a different
number or kind of shares or securities or is involved
in any transaction resulting in any of the foregoing,
the Exchange Ratio shall be proportionately adjusted.
2.03. PARK SHARES
All Park Shares, if any, that are owned directly by Security
shall become treasury shares of the Surviving Corporation. Each other Park Share
issued and outstanding immediately prior to the Effective Time shall continue to
be issued and outstanding and unaffected by the Merger. Each Park Share held by
Park in treasury shall continue to be a treasury share of the Surviving
Corporation.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF SECURITY
3.01. REPRESENTATIONS AND WARRANTIES OF SECURITY
Security hereby represents and warrants to Park that:
(a) Corporate Status.
(i) Security is an Ohio corporation and a bank
holding company registered under the Bank
Holding Company Act of 1956, as amended (the
"BHC Act"); is duly organized, validly
existing and in good standing under the laws
of Ohio; and has the full corporate
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power and authority to own its property, to
carry on its business as presently
conducted, and to enter into and, subject to
the required adoption of this Agreement by
the Security shareholders and the obtaining
of appropriate approvals of Governmental
Authorities and Regulatory Authorities,
perform its obligations under this Agreement
and consummate the transactions contemplated
by this Agreement. Security is not qualified
to do business in any other jurisdiction or
required to be so qualified to do business
in any other jurisdiction except where the
failure to be so qualified would not have a
material adverse effect on Security. Copies
of the articles of incorporation and
regulations of Security and all amendments
thereto have been delivered to Park by
Security in Section 3.01(a) of the Security
Disclosure Schedule.
(ii) Security National Bank and Trust Company
("Security National"), Citizens National
Bank ("Citizens National") and The Third
Savings and Loan Company ("Third Savings"
and, collectively with Security National and
Citizens National, the "Security
Subsidiaries") are the only Subsidiaries (as
that term is defined in Section 3.01(c)) of
Security. Each of Security National and
Citizens National is a national banking
association; is duly organized, validly
existing and in good standing under the laws
of the United States of America; and has the
full corporate power and authority to own
its property, and to carry on its business
as presently conducted. Third Savings is an
Ohio state-chartered savings association; is
duly organized, validly existing and in good
standing under the laws of the State of
Ohio; and has full corporate power and
authority to own its property, and to carry
on its business as presently conducted. No
Security Subsidiary is qualified to do
business in any other jurisdiction or
required to be qualified to do business in
any other jurisdiction except where the
failure to be so qualified would not have a
material adverse effect on such Security
Subsidiary. Copies of the governing
instruments of each Security Subsidiary and
all amendments thereto have been delivered
to Park in Section 3.01(a) of the Security
Disclosure Schedule.
(iii) As used in this Agreement, (A) any reference
to any event, change or effect being
"material" with respect to any entity means
an event, change or effect which is material
in relation to the financial condition,
properties, assets, liabilities, businesses
or results of operations of such entity and
its subsidiaries taken as a whole and (B)
the term "material adverse effect" means,
with respect to an entity, a material
adverse effect on the financial condition,
properties, assets, liabilities, businesses
or results of operations of such entity and
its subsidiaries taken as a whole or on the
ability of
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such entity to perform without material
delay its obligations under this Agreement
or consummate the Merger and the other
material transactions contemplated by this
Agreement.
(b) Capitalization of Security.
(i) The authorized capital of Security consists
solely of 18,000,000 common shares, $1.5625
par value per share, of which 11,777,700
Security Shares are issued and outstanding
and 911,558 Security Shares are held in
treasury by Security. All outstanding
Security Shares have been duly authorized
and are validly issued, fully paid and
non-assessable, and were not issued in
violation of the preemptive rights of any
person. All Security Shares issued have been
issued in compliance with all applicable
federal and state securities laws. As of the
date of this Agreement, 174,999 Security
Shares were reserved for issuance upon the
exercise of outstanding stock options (the
"Security Stock Options") granted under the
Security Banc Corporation 1987 Stock Option
Plan, the Security Banc Corporation 1995
Stock Option Plan and the Security Banc
Corporation 1998 Stock Option Plan
(collectively, the "Security Stock Option
Plans"). Security has furnished to Park a
true, complete and correct copy of each of
the Security Stock Option Plans and a list
of all participants therein which identifies
the number of Security Shares subject to
Security Stock Options held by each
participant, the exercise price or prices of
such Security Stock Options and the dates
each Security Stock Option was granted,
becomes exercisable and expires.
(ii) As of the date of this Agreement, except for
this Agreement and the Security Stock
Options, there are no options, warrants,
calls, rights, commitments or agreements of
any character to which Security is a party
or by which it is bound obligating Security
to issue, deliver or sell, or cause to be
issued, delivered or sold, any additional
Security Shares or obligating Security to
grant, extend or enter into any such option,
warrant, call, right, commitment or
agreement. As of the date of this Agreement,
there are no outstanding contractual
obligations of Security to repurchase,
redeem or otherwise acquire any Security
Shares except for such obligations arising
under the Security Stock Option Agreement.
(iii) Except as disclosed in Section 3.01(b) of
the Security Disclosure Schedule, since
September 30, 1998, Security has not (A)
issued or permitted to be issued any
Security Shares, or securities exercisable
for or convertible into Security Shares,
other than upon exercise of the Security
Stock Options granted prior to the date
hereof under the Security Stock Option
Plans; (B) repurchased,
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redeemed or otherwise acquired, directly or
indirectly through any Security Subsidiary
or otherwise, any Security Shares; or (C)
declared, set aside, made or paid to the
shareholders of Security dividends or other
distributions on the outstanding Security
Shares, other than (x) regular quarterly
cash dividends on the Security Shares at a
rate not in excess of the regular quarterly
cash dividends most recently declared by
Security prior to the date of this Agreement
and (y) the quarterly dividend in the amount
of $0.20 per Security Share declared in
respect of the fiscal quarter ended December
31, 2000.
(iv) No bonds, debentures, notes or other
indebtedness of Security having the right to
vote on any matters on which Security
shareholders may vote ("Security Voting
Debt") are issued or outstanding.
(c) Subsidiaries. The Security Subsidiaries are the only
Subsidiaries of Security. Security owns of record and
beneficially all of the issued and outstanding equity
securities of each Security Subsidiary. There are no
options, warrants, calls, rights, commitments or
agreements of any character to which Security or any
Security Subsidiary is a party or by which any of
them is bound obligating any Security Subsidiary to
issue, deliver or sell, or cause to be issued,
delivered or sold, additional equity securities of
any Security Subsidiary (other than to Security) or
obligating Security or any Security Subsidiary to
grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. There are no
contracts, commitments, understandings or
arrangements relating to Security's rights to vote or
to dispose of the equity securities of any Security
Subsidiary which it owns. All of the equity
securities of the Security Subsidiaries held by
Security are fully paid and non-assessable (except as
provided in 12 U.S.C. Section 55 in the case of
Security National and Citizens National and any
comparable provision of applicable state law in the
case of Third Savings) and are owned by Security free
and clear of any charge, mortgage, pledge, security
interest, hypothecation, restriction, claim, option,
lien, encumbrance or interest of any persons
whatsoever. Except as disclosed in Section 3.01(c) of
the Security Disclosure Schedule, Security does not
own beneficially, directly or indirectly, any equity
securities or similar interests of any person, or any
interest in a partnership or joint venture of any
kind, other than the Security Subsidiaries.
For purposes of this Agreement, "Subsidiary" has the
meaning ascribed to it in Rule 1-02 of Regulation S-X
promulgated by the Securities and Exchange Commission
(the "SEC").
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(d) Corporate Proceedings. All corporate proceedings of
Security necessary to authorize the execution,
delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby,
in each case by Security, have been duly and validly
taken, except for the adoption of this Agreement by
the holders of at least two-thirds of the outstanding
Security Shares entitled to vote thereon (which is
the only required shareholder vote thereon). The
Board of Directors of Security has recommended
adoption of this Agreement by the shareholders of
Security and directed that this Agreement be
submitted to the shareholders of Security for their
approval. This Agreement has been validly executed
and delivered by duly authorized officers of
Security. The Board of Directors of Security has
received the written opinion of Austin Associates,
Inc. to the effect that as of the date hereof, the
consideration to be received by the holders of
Security Shares in the Merger is fair to the holders
of Security Shares from a financial point of view.
(e) Authorized and Effective Agreement. This Agreement
constitutes the legal, valid and binding obligation
of Security, enforceable against Security in
accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar
laws relating to or affecting the enforcement of
creditors' rights generally, by general equitable
principles (regardless of whether enforceability is
considered in a proceeding in equity or at law) and
by an implied covenant of good faith and fair
dealing. Security has the absolute and unrestricted
right, power, authority and capacity to execute and
deliver this Agreement and, subject to the required
adoption of this Agreement by the Security
shareholders, the obtaining of appropriate approvals
by Regulatory Authorities and Governmental
Authorities and the expiration of applicable
regulatory waiting periods, to perform its
obligations under this Agreement.
(f) Financial Statements of Security. Security has
furnished to Park accurate and complete copies of
consolidated financial statements of Security
consisting of (i) consolidated balance sheets as of
December 31, 1999 and 1998, and the related
consolidated statements of income, changes in
shareholders' equity and cash flows for the three
years ended December 31, 1999, including accompanying
notes and the report thereon of Ernst & Young LLP and
(ii) the unaudited consolidated balance sheet as of
September 30, 2000 (the "Security Balance Sheet
Date"), the related unaudited consolidated statements
of income for the three and nine months ended
September 30, 2000 and 1999, of changes in
shareholders' equity for the nine months ended
September 30, 2000 and 1999, and of cash flows for
the nine months ended September 30, 2000 and 1999
(collectively, all of such consolidated financial
statements are referred to as the "Security Financial
Statements"). The Security Financial Statements were
prepared in accordance with generally accepted
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accounting principles ("GAAP") applied on a
consistent basis and present fairly, in all material
respects, the consolidated financial condition of
Security at the dates, and the consolidated results
of operations and cash flows for the periods, stated
therein; subject, in the case of the interim
statements, to normal year-end audit adjustments
which are not expected to be, individually or in the
aggregate, materially adverse to Security and the
absence of full footnotes.
(g) Absence of Undisclosed Liabilities. Except as
disclosed in Section 3.01(g) of the Security
Disclosure Schedule, neither Security nor any
Security Subsidiary had any debt, obligation,
guarantee or liability at the Security Balance Sheet
Date, whether absolute, accrued, contingent or
otherwise that would be required to be reflected on
and reserved against in the Security Financial
Statements or in the notes thereto except for debts,
obligations, guarantees or liabilities which,
individually or in the aggregate, do not exceed
$50,000. Except as disclosed in Section 3.01(g) of
the Security Disclosure Schedule, all debts,
liabilities, guarantees and obligations of Security
and the Security Subsidiaries incurred since the
Security Balance Sheet Date have been incurred in the
ordinary course of business and are usual and normal
in amount both individually and in the aggregate.
Except as disclosed in Section 3.01(g) of the
Security Disclosure Schedule, neither Security nor
any Security Subsidiary is in default or breach of
any material agreement to which Security or the
Security Subsidiary is a party.
(h) Absence of Changes. Except as set forth in Section
3.01(h) of the Security Disclosure Schedule, since
the Security Balance Sheet Date: (i) there has not
been any material adverse change in the business,
operations, assets or financial condition of Security
and the Security Subsidiaries taken as a whole, and,
to the knowledge of Security, no fact or condition
exists which Security believes will cause such a
material adverse change in the future; and (ii)
Security has not taken or permitted any of the
actions described in Section 5.01(b) of this
Agreement.
(i) Loan Documentation. To the knowledge of Security, the
documentation ("Loan Documentation") governing or
relating to the loan and credit-related assets ("Loan
Assets") representing the loan portfolio of each
Security Subsidiary is legally sufficient for the
purposes intended thereby and creates enforceable
rights of such Security Subsidiary in accordance with
the terms of such Loan Documentation, subject to
applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar
laws relating to or affecting the enforcement of
creditors' rights generally, by general equitable
principles (regardless of whether enforceability is
considered in a proceeding in equity or at law) and
by an implied covenant of good faith and fair
dealing. Except as set forth in Section 3.01(i) of
the Security Disclosure Schedule, no debtor
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under any of the Loan Documentation has asserted any
claim or defense with respect to the subject matter
thereof. Except as set forth in Section 3.01(i) of
the Security Disclosure Schedule, none of the
Security Subsidiaries is a party to a loan, including
any loan guaranty, with any director, executive
officer or five percent (5%) shareholder of Security
or any Security Subsidiary, or any person,
corporation or enterprise controlling, controlled by
or under common control with either Security or any
Security Subsidiary. All loans and extensions of
credit that have been made by a Security Subsidiary
and that are subject either to Sections 22(g) or
22(h) of the Federal Reserve Act, as amended, or to
12 C.F.R. Part 215 (Regulation O), comply therewith.
(j) Allowance for Loan Losses. Except as set forth in
Section 3.01(j) of the Security Disclosure Schedule,
there is no loan which was made by any Security
Subsidiary and which is reflected as an asset of such
Security Subsidiary on the Security Financial
Statements that (i) is 90 days or more delinquent or
(ii) has been classified by examiners (regulatory or
internal) as "Substandard," "Doubtful" or "Loss." The
allowance for loan losses reflected on the Security
Financial Statements has been determined in
accordance with GAAP and in accordance with all rules
and regulations applicable to Security and the
Security Subsidiaries and is adequate in all material
respects. Security has considered all potential
losses known to Security to the best of its knowledge
in establishing the current allowance for loan losses
for each Security Subsidiary, other than such losses
that if incurred would not have a material adverse
effect on either Security or the appropriate Security
Subsidiary.
(k) Reports and Records. Security and the Security
Subsidiaries have filed all reports and maintained
all records required to be filed or maintained by
them under the rules and regulations of the Board of
Governors of the Federal Reserve System (the "Federal
Reserve"), the Office of the Comptroller of the
Currency (the "OCC"), the Office of Thrift
Supervision (the "OTS"), the Ohio Division of
Financial Institutions (the "ODFI"), and the Federal
Deposit Insurance Corporation (the "FDIC"), except
for such reports and records the failure to file or
maintain would not reasonably be expected to have a
material adverse effect on Security or the applicable
Security Subsidiary. All such documents and reports
complied in all material respects with applicable
requirements of law and rules and regulations in
effect at the time such documents and reports were
filed and contained in all material respects the
information required to be stated therein. None of
such documents or reports, when filed, contained any
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
or necessary in order to make the statements therein,
in light of the circumstances under which they were
made, not misleading.
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(l) Taxes. Except as set forth in Section 3.01(l) of the
Security Disclosure Letter, Security and the Security
Subsidiaries have timely filed all returns,
statements, reports and forms (including elections,
declarations, disclosures, schedules, estimates and
information returns) (collectively, the "Tax
Returns") with respect to all federal, state, local
and foreign income, gross income, gross receipts,
gains, premium, sales, use, ad valorem, transfer,
franchise, profits, withholding, payroll, employment,
excise, severance, stamp, occupancy, license, lease,
environmental, customs, duties, property, windfall
profits and all other taxes (including any interest,
penalties or additions to tax with respect thereto,
individually, a "Tax" and, collectively, "Taxes")
required to be filed with the appropriate tax
authority through the date of this Agreement. Such
Tax Returns are and will be true, correct and
complete in all material respects. Security and the
Security Subsidiaries have paid and discharged all
Taxes due from them, other than such Taxes that are
adequately reserved as shown on the Security
Financial Statements or have arisen in the ordinary
course of business since the Security Balance Sheet
Date. Except as set forth in Section 3.01(l) of the
Security Disclosure Letter, neither the Internal
Revenue Service (the "IRS") nor any other taxing
agency or authority, domestic or foreign, has
asserted, is now asserting or, to the knowledge of
Security, is threatening to assert against Security
or any Security Subsidiary any deficiency or claim
for additional Taxes. There are no unexpired waivers
by Security or any Security Subsidiary of any statute
of limitations with respect to Taxes. The accruals
and reserves for Taxes reflected in the Security
Financial Statements are adequate for the periods
covered. Security and the Security Subsidiaries have
withheld or collected and paid over to the
appropriate Governmental Authorities or are properly
holding for such payment all Taxes required by law to
be withheld or collected. There are no liens for
Taxes upon the assets of Security or any Security
Subsidiary, other than liens for current Taxes not
yet due and payable. Neither Security nor any
Security Subsidiary has agreed to make, or is
required to make, any adjustment under Section 481(a)
of the Code. Except as set forth in Section 3.01(l)
of the Security Disclosure Letter, or as may be
caused by any agreement entered into by Park, neither
Security nor any Security Subsidiary is a party to
any agreement, contract, arrangement or plan that has
resulted, or could result, individually or in the
aggregate, in the payment of "excess parachute
payments" within the meaning of Section 280G of the
Code. Neither Security nor any Security Subsidiary
has ever been a member of an affiliated group of
corporations, within the meaning of Section 1504 of
the Code, other than an affiliated group of which
Security is or was the common parent corporation. No
Tax is required to be withheld pursuant to Section
1445 of the Code as a result of the transactions
contemplated by this Agreement.
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(m) Property and Title. Section 3.01(m) of the Security
Disclosure Schedule lists and describes all real
property, and any leasehold interest in real
property, owned or held by Security or any Security
Subsidiary and used in the business of Security or
any Security Subsidiary (collectively, the "Security
Real Properties"). The Security Real Properties
constitute all of the real property and interests in
real property used in the businesses of Security and
the Security Subsidiaries. Copies of all leases of
real property to which Security or any Security
Subsidiary is a party have been provided to Park in
Section 3.01(m) of the Security Disclosure Schedule.
Such leasehold interests have not been assigned or
subleased. All Security Real Properties which are
owned by Security or any Security Subsidiary are free
and clear of all mortgages, liens, security
interests, defects, encumbrances, easements,
restrictions, reservations, conditions, covenants,
agreements, encroachments, rights of way and zoning
laws, except (i) those set forth in the Security
Financial Statements or Section 3.01(m) of the
Security Disclosure Schedule; (ii) easements,
restrictions, reservations, conditions, covenants,
rights of way, zoning laws and other defects and
irregularities in title and encumbrances which do not
materially impair the use thereof for the purposes
for which they are held; and (iii) the lien of
current taxes not yet due and payable. Security and
the Security Subsidiaries own, and are in rightful
possession of, and have good title to, all of the
other assets indicated in the Security Financial
Statements as being owned by Security or a Security
Subsidiary, free and clear of any charge, mortgage,
pledge, security interest, hypothecation,
restriction, claim, option, lien, encumbrance or
interest of any persons whatsoever except those
described in the Security Financial Statements or
Section 3.01(m) of the Security Disclosure Schedule
and except for those assets disposed of in the
ordinary course of business consistent with past
practices. All of the assets of Security and the
Security Subsidiaries are in good operating
condition, except for normal maintenance and routine
repairs, and are adequate to continue to conduct the
businesses of Security and the Security Subsidiaries
as such businesses are presently being conducted.
(n) Legal Proceedings. Except as set forth in Section
3.01(n) of the Security Disclosure Schedule, there
are no actions, suits, proceedings, claims or
investigations pending or, to the knowledge of
Security and the Security Subsidiaries, threatened in
any court, before any governmental agency or
instrumentality or in any arbitration proceeding (i)
against Security or any Security Subsidiary which
would have a material adverse effect on Security; or
(ii) against or by Security or any Security
Subsidiary which would prevent the consummation of
this Agreement or any of the transactions
contemplated hereby or declare the same to be
unlawful or cause the rescission thereof.
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(o) Regulatory Matters. None of Security, the Security
Subsidiaries and the respective properties of
Security and the Security Subsidiaries is a party to
or subject to any order, judgment, decree, agreement,
memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission
to, or extraordinary supervisory letter from, any
court or federal or state governmental agency or
authority, including any such agency or authority
charged with the supervision or regulation of
financial institutions (or their holding companies)
or issuers of securities or engaged in the insurance
of deposit (including, without limitation, the OCC,
the Federal Reserve, the OTS, the ODFI, the SEC and
the FDIC) or the supervision or regulation of
Security or any Security Subsidiary (collectively,
the "Regulatory Authorities"). Neither Security nor
any Security Subsidiary has been advised by any
Regulatory Authority that such Regulatory Authority
is contemplating issuing or requesting (or is
considering the appropriateness of issuing or
requesting) any such order, judgment, decree,
agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
(p) No Conflict. Subject to the required adoption of this
Agreement by the shareholders of Security, receipt of
the required approvals of Regulatory Authorities and
Governmental Authorities, expiration of applicable
regulatory waiting periods, and required filings
under federal and state securities laws, the
execution, delivery and performance of this
Agreement, and the consummation of the transactions
contemplated by this Agreement, by Security do not
and will not (i) conflict with, or result in a
violation of, or result in the breach of or a default
(or which with notice or lapse of time would result
in a default) under, any provision of: (A) any
federal, state or local law, regulation, ordinance,
order, rule or administrative ruling of any
administrative agency or commission or other federal,
state or local governmental authority or
instrumentality (each, a "Governmental Authority")
applicable to Security or any Security Subsidiary or
any of their respective properties; (B) the articles
of incorporation or regulations of Security, the
articles of association or by-laws of Security
National or Citizens National or the articles of
incorporation and regulations of Third Savings; (C)
any material agreement, indenture or instrument to
which Security or any Security Subsidiary is a party
or by which it or its properties or assets may be
bound; or (D) any order, judgment, writ, injunction
or decree of any court, arbitration panel or any
Governmental Authority applicable to Security or any
Security Subsidiary; (ii) result in the creation or
acceleration of any security interest, mortgage,
option, claim, lien, charge or encumbrance upon or
interest in any property of Security or any Security
Subsidiary; or (iii) violate the terms or conditions
of, or result in the cancellation, modification,
revocation or suspension of, any material license,
approval, certificate, permit or authorization held
by Security or any Security Subsidiary.
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(q) Brokers, Finders and Others. Except for the fees paid
or payable to Austin Associates, Inc., there are no
fees or commissions of any sort whatsoever claimed
by, or payable by Security or any Security Subsidiary
to, any broker, finder, intermediary, attorney,
accountant or any other similar person in connection
with effecting this Agreement or the transactions
contemplated hereby, except for ordinary and
customary legal and accounting fees.
(r) Employment Agreements. Except as disclosed in Section
3.01(r) of the Security Disclosure Schedule, neither
Security nor any Security Subsidiary is a party to
any employment, change in control, severance or
consulting agreement not terminable at will. Neither
Security nor any Security Subsidiary is a party to,
bound by or negotiating, any collective bargaining
agreement, nor are any of their respective employees
represented by any labor union or similar
organization. Security and Security Subsidiaries are
in compliance in all material respects with all
applicable laws respecting employment and employment
practices, terms and conditions of employment and
wages and hours, and neither Security nor any
Security Subsidiary has engaged in any unfair labor
practice.
(s) Employee Benefit Plans.
(i) Section 3.01(s)(i) of the Security
Disclosure Schedule contains a complete and
accurate list of all bonus, incentive,
deferred compensation, pension (including,
without limitation, Pension Plans defined
below), retirement, profit-sharing, thrift,
savings, employee stock ownership, stock
bonus, stock purchase, restricted stock,
stock option, severance, welfare (including,
without limitation, "welfare plans" within
the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA")), fringe benefit plans,
employment or severance agreements and all
similar practices, policies and arrangements
maintained or contributed to (currently or
within the last six years) by (A) Security
or any Security Subsidiary and in which any
employee or former employee (the
"Employees"), consultant or former
consultant (the "Consultants"), officer or
former officer (the "Officers"), or director
or former director (the "Directors") of
Security or any Security Subsidiary
participates or to which any such Employees,
Consultants, Officers or Directors either
participate or are parties or (B) any ERISA
Affiliate (as defined below) (collectively,
the "Compensation and Benefit Plans").
Neither Security nor any Security Subsidiary
has any commitment to create any additional
Compensation and Benefit Plan or to modify
or change any existing Compensation and
Benefit Plan, except as otherwise
contemplated by Sections 6.02, 7.01, and
7.12 of this Agreement.
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<PAGE> 116
(ii) Each Compensation and Benefit Plan has been
operated and administered in all material
respects in accordance with its terms and
with applicable law, including, but not
limited to, ERISA, the Code, the Securities
Act (as defined in Section 3.01(u)), the
Exchange Act (as defined in Section
3.01(hh)), the Age Discrimination in
Employment Act, or any regulations or rules
promulgated thereunder, and all filings,
disclosures and notices required by ERISA,
the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment
Act and any other applicable law have been
timely made. Each Compensation and Benefit
Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of
ERISA (a "Pension Plan") and which is
intended to be qualified under Section
401(a) of the Code has received a favorable
determination letter (including a
determination that the related trust under
such Compensation and Benefit Plan is exempt
from tax under Section 501(a) of the Code)
from the IRS and Security is not aware of
any circumstances likely to result in
revocation of any such favorable
determination letter. There is no material
pending or, to the knowledge of Security,
threatened legal action, suit or claim
relating to the Compensation and Benefit
Plans other than routine claims for benefits
thereunder. Neither Security nor any
Security Subsidiary has engaged in a
transaction, or omitted to take any action,
with respect to any Compensation and Benefit
Plan that would reasonably be expected to
subject Security or any Security Subsidiary
to a tax or penalty imposed by either
Section 4975 of the Code or Section 502 of
ERISA, assuming for purposes of Section 4975
of the Code that the taxable period of any
such transaction expired as of the date
hereof.
(iii) No liability (other than for payment of
premiums to the Pension Benefit Guaranty
Corporation ("PBGC") which have been made or
will be made on a timely basis) under Title
IV of ERISA has been or is expected to be
incurred by Security or any Security
Subsidiary with respect to any ongoing,
frozen or terminated "single-employer plan,"
within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by
any of them, or any single-employer plan of
any entity (an "ERISA Affiliate Plan") which
is considered one employer with Security
under Section 4001(a)(14) of ERISA or
Section 414(b), (c) or (m) of the Code (an
"ERISA Affiliate"). None of Security, the
Security Subsidiaries or any ERISA Affiliate
has contributed, or has been obligated to
contribute, to a multiemployer plan under
Subtitle E of Title IV of ERISA (as defined
in ERISA Sections 3(37)(A) and 4001(a)(3))
at any time since September 26, 1980. No
notice of a "reportable event", within the
meaning of Section 4043 of ERISA,
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for which the 30-day reporting requirement
has not been waived, has been required to be
filed for any Compensation and Benefit Plan
or by any ERISA Affiliate Plan within the
12-month period ending on the date hereof,
and no such notice will be required to be
filed as a result of the transactions
contemplated by this Agreement. The PBGC has
not instituted proceedings to terminate any
Pension Plan or ERISA Affiliate Plan and, to
Security's knowledge, no condition exists
that presents a material risk that such
proceedings will be instituted. There is no
pending investigation or enforcement action
by the PBGC, the Department of Labor (the
"DOL"), the IRS or any other Governmental
Authority with respect to any Compensation
and Benefit Plan. Under each Pension Plan
and ERISA Affiliate Plan, as of the date of
the most recent actuarial valuation
performed prior to the date of this
Agreement, the actuarially determined
present value of all "benefit liabilities",
within the meaning of Section 4001(a)(16) of
ERISA (as determined on the basis of the
actuarial assumptions contained in such
actuarial valuation of such Pension Plan or
ERISA Affiliate Plan), did not exceed the
then current value of the assets of such
Pension Plan or ERISA Affiliate Plan and
since such date there has been neither an
adverse change in the financial condition of
such Pension Plan or ERISA Affiliate Plan
nor any amendment or other change to such
Pension Plan or ERISA Affiliate Plan that
would increase the amount of benefits
thereunder which reasonably could be
expected to change such result.
(iv) All contributions required to be made under
the terms of any Compensation and Benefit
Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective
bargaining agreement to which Security or
any Security Subsidiary is a party have been
timely made or have been reflected on the
Security Financial Statements. Neither any
Pension Plan nor any ERISA Affiliate Plan
has an "accumulated funding deficiency"
(whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of
ERISA and all required payments to the PBGC
with respect to each Pension Plan or ERISA
Affiliate Plan have been made on or before
their due dates. None of Security, the
Security Subsidiaries or any ERISA Affiliate
(x) has provided, or would reasonably be
expected to be required to provide, security
to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section
401(a)(29) of the Code, and (y) has taken
any action, or omitted to take any action,
that has resulted, or would reasonably be
expected to result, in the imposition of a
lien under Section 412(n) of the Code or
pursuant to ERISA.
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(v) Except as disclosed in Section 3.01(s)(v) of
the Security Disclosure Schedule, neither
Security nor any Security Subsidiary has any
obligations to provide retiree health and
life insurance or other retiree death
benefits under any Compensation and Benefit
Plan, other than benefits mandated by
Section 4980B of the Code. Except as
disclosed in Section 3.01(s)(v) of the
Security Disclosure Schedule, there has been
no communication to Employees by Security or
any Security Subsidiary that would
reasonably be expected to promise or
guarantee such Employees retiree health or
life insurance or other retiree death
benefits on a permanent basis.
(vi) Security and the Security Subsidiaries do
not maintain any Compensation and Benefit
Plans covering foreign Employees.
(vii) With respect to each Compensation and
Benefit Plan, if applicable, Security has
provided or made available to Park, true and
complete copies of existing: (A)
Compensation and Benefit Plan documents and
amendments thereto; (B) trust instruments
and insurance contracts; (C) two most recent
Forms 5500 filed with the IRS; (D) most
recent actuarial report and financial
statement; (E) most recent summary plan
description; (F) forms filed with the PBGC
within the past year (other than for premium
payments); (G) most recent determination
letter issued by the IRS; (H) any Form 5310,
Form 5310A, Form 5300 or Form 5330 filed
within the past year with the IRS; and (I)
most recent nondiscrimination tests
performed under ERISA and the Code
(including but not limited to Code Section
401(k) and 401(m) tests).
(viii) Except as disclosed on Section 3.01(s)(viii)
of the Security Disclosure Schedule, the
consummation of the transactions
contemplated by this Agreement would not,
directly or indirectly (including, without
limitation, as a result of any termination
of employment prior to or following the
Effective Time), reasonably be expected to
(A) entitle any Employee, Consultant or
Director to any payment (including severance
pay or similar compensation) or any increase
in compensation, (B) result in the vesting
or acceleration of any benefits under any
Compensation and Benefit Plan or (C) result
in any material increase in benefits payable
under any Compensation and Benefit Plan.
(ix) Except as disclosed on Section 3.01(s)(ix)
of the Security Disclosure Schedule, neither
Security nor any Security Subsidiary
maintains any compensation plans, programs
or arrangements the payments under which
would not reasonably be expected to be
deductible as a result of the limitations
under Section 162(m) of the Code and the
regulations issued thereunder.
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(x) Except as disclosed on Section 3.01(s)(x) of
the Security Disclosure Schedule, as a
result, directly or indirectly, of the
transactions contemplated by this Agreement
(including, without limitation, as a result
of any termination of employment prior to or
following the Effective Time), none of Park,
Security or the Surviving Corporation, or
any of their respective Subsidiaries will be
obligated to make a payment that would be
characterized as an "excess parachute
payment" to an individual who is a
"disqualified individual" (as such terms are
defined in Section 280G of the Code) of
Security on a consolidated basis, without
regard to whether such payment is reasonable
compensation for personal services performed
or to be performed in the future.
(t) Compliance with Laws. Each of Security and the
Security Subsidiaries:
(i) has been in compliance with all applicable
federal, state, local and foreign statutes,
laws, regulations, ordinances, rules,
judgments, orders or decrees applicable
thereto or to the employees conducting such
business, including, without limitation, the
Equal Credit Opportunity Act, as amended,
the Fair Housing Act, as amended, the
Federal Community Reinvestment Act, as
amended, the Home Mortgage Disclosure Act,
as amended, and all other applicable fair
lending laws and other laws relating to
discriminatory business practices, except
for failures to be in compliance which,
individually or in the aggregate, have not
had or would not reasonably be expected to
have a material adverse effect on Security
or any Security Subsidiary;
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all
filings, applications and registrations
with, all Governmental Authorities that are
required in order to permit it to own or
lease its properties and to conduct its
business as presently conducted, except
where the failure to obtain any of the
foregoing or to make any such filing,
application or registration has not had or
would not reasonably be expected to have a
material adverse effect on Security or any
Security Subsidiary; all such permits,
licenses, certificates of authority, orders
and approvals are in full force and effect
and to Security's knowledge, no suspension
or cancellation of any of them is
threatened; and
(iii) has received no notification or
communication from any Governmental
Authority (A) asserting that Security or any
Security Subsidiary is not in compliance
with any of the statutes, regulations or
ordinances which such Governmental Authority
enforces or (B) threatening to revoke any
license, franchise, permit or governmental
authorization (nor, to Security's knowledge,
do
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any reasonable grounds for any of the
foregoing exist), which has not been
resolved to the satisfaction of the
Governmental Authority which sent such
notification or communication.
(u) Security Information. None of the information
relating to Security and the Security Subsidiaries to
be contained in (i) the Registration Statement (as
that term is defined in Section 7.08 below) will, at
the time the Registration Statement is filed with the
SEC and at the time it becomes effective under the
Securities Act of 1933, as amended (the "Securities
Act"), contain any untrue statement of a material
fact or omit to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading, and (ii)
the Joint Proxy Statement (as that term is defined in
Section 5.03(b) below), as of the date such Joint
Proxy Statement is mailed to shareholders of Security
and up to and including the date of the meeting of
Security's shareholders to which such Joint Proxy
Statement relates, will contain any untrue statement
of a material fact or omit to state a material fact
required to be stated therein or necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not
misleading, provided that, in each case, information
as of a later date shall be deemed to modify
information as of an earlier date. All information
about Security and the Security Subsidiaries included
in the Registration Statement and the Joint Proxy
Statement will be deemed to have been supplied by
Security.
(v) Insurance.
(i) Section 3.01(v) of the Security Disclosure
Schedule sets forth all of the insurance
policies, binders or bonds maintained by
Security or any Security Subsidiary and a
description of all claims filed by Security
or any Security Subsidiary against the
insurers of Security and the Security
Subsidiaries since December 31, 1997.
Security and the Security Subsidiaries are
insured with reputable insurers against such
risks and in such amounts as the management
of Security reasonably has determined to be
prudent in accordance with industry
practices. All such insurance policies are
in full force and effect; Security and the
Security Subsidiaries are not in material
default thereunder; and all claims
thereunder have been filed in due and timely
fashion.
(ii) The savings accounts and deposits of each of
Security National, Citizens National and
Third Savings are insured up to applicable
limits by the FDIC in accordance with the
Federal Deposit Insurance Act, and each of
Security National, Citizens National and
Third Savings has paid all assessments and
filed all reports required by the Federal
Deposit Insurance Act.
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(w) Governmental and Third-Party Proceedings. No consent,
approval, authorization of, or registration,
declaration or filing with, any court, Governmental
Authority or any other third party is required to be
made or obtained by Security or any Security
Subsidiary in connection with the execution, delivery
or performance by Security of this Agreement or the
consummation by Security of the transactions
contemplated hereby, except for (A) filings of
applications and notices, as applicable, with and the
approval of certain federal and state banking
authorities, (B) filings with the SEC and state
securities authorities, (C) the filing of the
appropriate certificate of merger with the Secretary
of State pursuant to the OGCL, and (D) the adoption
of this Agreement by the Security shareholders. As of
the date hereof, Security is not aware of any reason
why the approvals set forth in Section 7.09 will not
be received without the imposition of a condition,
restriction or requirement of the type described in
Section 7.09.
(x) Contracts. Section 3.01(x) of the Security Disclosure
Schedule sets forth a list, identifying by dates,
subject matter and parties, of all contracts,
agreements and instruments to which Security or any
Security Subsidiary is a party or by which any of
them is bound, and which involve the payment by or to
Security or any Security Subsidiary of more than
$50,000 in connection with the purchase of property
or goods or the performance of services and which are
not in the ordinary course of their respective
businesses. True, complete and correct copies of all
such contracts, agreements and instruments have been
delivered to Park. Neither Security nor any Security
Subsidiary, nor any other party thereto, is in
default under any such contract, agreement,
commitment, arrangement or other instrument to which
it is a party, by which its respective assets,
business or operations may be bound or affected in
any way, or under which it or its respective assets,
business or operations receive benefits, and there
has not occurred any event that, with the lapse of
time or the giving of notice or both, would
constitute such a default.
(y) Environmental Matters. Except as otherwise disclosed
in Section 3.01(y) of the Security Disclosure
Schedule: (i) Security and the Security Subsidiaries
are and have been at all times in compliance in all
material respects with all applicable Environmental
Laws (as that term is defined in this Section
3.01(y)), and, to the knowledge of Security, neither
Security nor any Security Subsidiary has engaged in
any activity in violation of any applicable
Environmental Law; (ii)(A) no investigations,
inquiries, orders, hearings, actions or other
proceedings by or before any court or Governmental
Authority are pending or, to the knowledge of
Security, threatened in connection with any of
Security's or any Security Subsidiary's activities
and any Security Real Properties or improvements
thereon, and (B) to the knowledge of Security, no
investigations, inquiries, orders, hearings, actions
or other proceedings by or before any court or
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Governmental Authority are pending or threatened in
connection with any real properties in respect of
which any Security Subsidiary has foreclosed or holds
a mortgage or mortgages (hereinafter referred to as
the "Security Subsidiary Real Estate Collateral");
(iii) no claims at any time have been made or
threatened by any third party against Security or any
Security Subsidiary, or with respect to the Security
Real Properties or improvements thereon, or, to the
knowledge of Security, the Security Subsidiary Real
Estate Collateral or improvements thereon, relating
to damage, contribution, cost recovery, compensation,
loss, injunctive relief, remediation or injury
resulting from any Hazardous Substance (as that term
is defined in this Section 3.01(y)) which have not
been resolved to the satisfaction of the involved
parties and which have had or are reasonably expected
to have a material adverse effect on Security or any
Security Subsidiary; (iv) no Hazardous Substances
have been integrated into the Security Real
Properties or improvements thereon or any component
thereof, or, to the knowledge of Security, the
Security Subsidiary Real Estate Collateral or
improvements thereon or any component thereof in such
manner or quantity as may reasonably be expected to
or in fact would pose a threat to human health or the
value of the real property and improvements; (v) to
Security's knowledge, no portion of the Security Real
Properties or improvements thereon, or the Security
Subsidiary Real Estate Collateral or improvements
thereon is located within 500 feet of (A) a release
of Hazardous Substance which has been reported or is
required to be reported under any Environmental Law
or (B) the location of any site used, in the past or
presently, for the disposal of any Hazardous
Substances; and (vi) neither Security nor any
Security Subsidiary has knowledge, based upon
commercially reasonable inquiry, that (A) any of the
Security Real Properties or improvements thereon, or
the Security Subsidiary Real Estate Collateral or
improvements thereon has been used for the storage or
disposal of Hazardous Substances or has been
contaminated by Hazardous Substances, (B) any of the
business operations of Security or any Security
Subsidiary have contaminated lands, waters or other
property of others with Hazardous Substances, except
routine, office-generated solid waste, or (C) any of
the Security Real Properties or improvements thereon,
or the Security Subsidiary Real Estate Collateral or
improvements thereon have in the past or presently
contain underground storage tanks, friable asbestos
materials or PCB-containing equipment.
For purposes of this Agreement, (i) "Environmental
Law" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended
("CERCLA"); the Resource Conservation and Recovery
Act of 1976, as amended; the Hazardous Materials
Transportation Act, as amended; the Toxic Substances
Control Act, as amended; the Federal Water Pollution
Control Act, as amended; the Safe Drinking Water Act,
as amended; the Clean Air Act, as amended; the
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Occupational Safety and Health Act of 1970, as
amended; the Hazardous & Solid Waste Amendments Act
of 1984, as amended; the Superfund Amendments and
Reauthorization Act of 1986, as amended; the
regulations promulgated thereunder, and any other
federal, state, county, municipal, local or other
statute, law, ordinance or regulation which may
relate to or deal with human health or the
environment, as of the date of this Agreement, and
(ii) "Hazardous Substances" means, at any time: (a)
any "hazardous substance" as defined in sec. 101(14)
of CERCLA or regulations promulgated thereunder; (b)
any "solid waste," "hazardous waste," or "infectious
waste," as such terms are defined in any other
Environmental Law as of the date of this Agreement;
and (c) friable asbestos, urea-formaldehyde,
polychlorinated biphenyls ("PCBs"), nuclear fuel or
material, chemical waste, radioactive material,
explosives, known carcinogens, petroleum products and
by-products, and other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or
substances listed or identified in, or regulated by,
any Environmental Law.
(z) Pooling. Neither Security nor any Security Subsidiary
has taken, permitted or agreed to take any action
that would prevent Park from accounting for the
business combination to be effected by the Merger as
a "pooling-of-interests."
(aa) Takeover Laws. Security has taken all action required
to be taken by it in order to exempt this Agreement
and the transactions contemplated hereby from, and
this Agreement and the transactions contemplated
hereby are exempt from, the requirements of any
"moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or
other anti-takeover laws or regulations of any state
(collectively, "Takeover Laws") applicable to it,
including, without limitation, those of the State of
Ohio.
(bb) Risk Management Instruments. All material interest
rate swaps, caps, floors, option agreements, futures
and forward contracts and other similar risk
management arrangements, whether entered into for
Security's own account, or for the account of one or
more of the Security Subsidiaries or any of their
respective customers (all of which are listed on the
Security Disclosure Schedule), were entered into (i)
in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory
policies and (ii) with counter-parties believed to be
financially responsible at the time; and each of them
constitutes the valid and legally binding obligation
of Security or the applicable Security Subsidiary,
enforceable in accordance with its terms, and is in
full force and effect. Neither Security nor any
Security Subsidiary, nor to Security's knowledge any
other party thereto, is in breach of any of its
obligations under any such agreement or arrangement.
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(cc) Books and Records. The books and records of Security
and the Security Subsidiaries have been fully,
properly and accurately maintained and have been
maintained in accordance with sound business
practices. Such books and records fairly reflect the
substance of events and transactions included
therein.
(ee) Repurchase Agreements. With respect to any agreement
pursuant to which Security or any Security Subsidiary
has purchased securities subject to an agreement to
repurchase, Security or the relevant Security
Subsidiary, as the case may be, has a valid,
perfected first lien or security interest in or
evidence of ownership in book entry form of the
government securities or other collateral securing
the repurchase agreement, and the value of such
collateral equals or exceeds the amount of the debt
secured thereby.
(ff) Disclosure. No representation or warranty by Security
contained in this Agreement and no statement
contained in any certificate or other document
(including the Security Disclosure Schedule and any
letter furnished by Security as contemplated by
Sections 8.01(d) and 8.02(c) of this Agreement)
furnished by Security to Park pursuant to this
Agreement contains any untrue statement of a material
fact or omits to state a material fact necessary to
make the statements contained herein and therein not
misleading, in the light of the circumstances under
which they were made.
(gg) Investment Securities. Each of Security and the
Security Subsidiaries has good and marketable title
to all securities held by it (except securities sold
under repurchase agreement or held in any fiduciary
or agency capacity), free and clear of any charge,
mortgage, pledge, security interest, hypothecation,
restriction, claim, option, lien, encumbrance or
interest of any person or persons whatsoever, except
to the extent such securities are pledged in the
ordinary course of business consistent with prudent
banking practice to secure obligations of Security or
any Security Subsidiary. Such securities are valued
on the books of Security in accordance with GAAP.
(hh) SEC Filings. The Security Shares are registered with
the SEC pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange
Act"). Security has filed all reports and proxy
materials required to be filed by it with the SEC
pursuant to the Exchange Act, except for any reports
or proxy materials the failure to file which would
not have a material adverse effect upon Security and
the Security Subsidiaries taken as a whole. All such
filings, at the time of filing, complied in all
material respects as to form and included all
exhibits required to be filed under the applicable
rules of the SEC. None of such documents, when filed,
contained any untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary in
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order to make the statements therein, in light of the
circumstances under which they were made, not
misleading.
(ii) Fiduciary Responsibilities. During the applicable
statute of limitations period, (i) each Security
Subsidiary has properly administered all accounts (if
any) for which it acts as a fiduciary or agent,
including, but not limited to, accounts for which it
serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investor
advisor, in accordance with the terms of the
governing documents and applicable state and federal
law and regulation and common law, and (ii) neither
any Security Subsidiary nor any Director, Officer or
Employee of a Security Subsidiary acting on behalf of
such Security Subsidiary has committed any breach of
trust with respect to any such fiduciary or agency
account, and the accountings of each such fiduciary
or agency account are true and correct and accurately
reflect the assets of such fiduciary or agency
account. To the knowledge of Security, there is no
investigation or inquiry by any regulatory Authority
pending or threatened against or affecting any
Security Subsidiary relating to the compliance by
such Security Subsidiary with sound fiduciary
principles and applicable regulations.
(jj) CRA Compliance. Neither Security nor any Security
Subsidiary has received any notice of non-compliance
with the applicable provisions of the Federal
Community Reinvestment Act, as amended ("CRA"), and
the regulations promulgated thereunder, and each of
Security National, Citizens National and Third
Savings has received a CRA rating of satisfactory or
better from the OCC or the OTS, as appropriate.
Security knows of no fact or circumstance or set of
facts or circumstances which would cause Security or
any Security Subsidiary to receive any notice of
non-compliance with such provisions or cause the CRA
rating of Security or any Security Subsidiary to fall
below satisfactory.
(kk) Ownership of Park Shares. As of the date hereof,
except as otherwise disclosed in Section 3.01(kk) of
the Security Disclosure Schedule, neither Security
nor, to the knowledge of Security, any of its
affiliates or associates (as such terms are defined
under the Exchange Act), (i) beneficially owns,
directly or indirectly, or (ii) is a party to any
agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing
of, any Park Shares.
(ll) The Board of Directors of Security has received an
opinion of Austin Associates, Inc. dated the date of
this Agreement to the effect that the consideration
to be received by the Security shareholders in the
Merger is fair, from a financial point of view, to
the Security shareholders.
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ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF PARK
4.01. REPRESENTATIONS AND WARRANTIES OF PARK
Park hereby warrants and represents to Security that:
(a) Corporate Status. Park is an Ohio corporation and a
bank holding company registered under the BHC Act; is
duly organized, validly existing and in good standing
under the laws of the State of Ohio; and has the full
corporate power and authority to own its property, to
carry on its business as presently conducted and to
enter into and, subject to the required adoption of
this Agreement by the Park shareholders and the
obtaining of appropriate approvals of Governmental
Authorities and Regulatory Authorities, perform its
obligations under this Agreement and consummate the
transactions contemplated by this Agreement.
(b) Corporate Proceedings. All corporate proceedings of
Park necessary to authorize the execution, delivery
and performance of this Agreement, and the
consummation of the transactions contemplated by this
Agreement, in each case by Park, have been duly and
validly taken, except for the adoption of this
Agreement by the holders of two-thirds of the
outstanding Park Shares entitled to vote thereon
(which is the only required shareholder vote
thereon). This Agreement has been validly executed
and delivered by duly authorized officers of Park.
(c) Capitalization of Park.
(i) As of the date of this Agreement, the
authorized capital stock of Park consists
only of 20,000,000 common shares, without
par value, of which 10,798,043 Park Shares
are issued and outstanding and 393,686 Park
Shares are held in treasury by Park. The
outstanding Park Shares have been duly
authorized and are validly issued, fully
paid and non-assessable, and were not issued
in violation of the preemptive rights of any
person. As of the date of this Agreement,
307,978 Park Shares were reserved for
issuance upon the exercise of outstanding
incentive stock options granted under the
Park National Corporation 1995 Incentive
Stock Option Plan (the "Park Stock Option
Plan") and 326,551 Park Shares were
available for future grants of incentive
stock options under the Park Stock Option
Plan. As of the date of this Agreement,
except for the Merger Shares issuable
pursuant to this Agreement, Park has no
other commitment or obligation to issue,
deliver or sell any Park Shares.
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(ii) The Park Shares to be issued in exchange for
Security Shares in the Merger, when issued
in accordance with the terms of this
Agreement, will be duly authorized, validly
issued, fully paid and non-assessable and
subject to no preemptive rights.
(d) Authorized and Effective Agreement. This Agreement
constitutes the legal, valid and binding obligation
of Park, enforceable against Park in accordance with
its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating
to or affecting the enforcement of creditors' right
generally, by general equitable principles
(regardless of whether enforceability is considered
in a proceeding in equity or at law) and by an
implied covenant of good faith and fair dealing. Park
has the absolute and unrestricted right, power,
authority and capacity to execute and deliver this
Agreement and, subject to the required adoption of
this Agreement by the Park shareholders, satisfaction
of the requirements referred to in Section 4.01(k),
the expiration of applicable regulatory waiting
periods, and required filings under federal and state
securities laws, to perform its obligations under
this Agreement.
(e) No Conflict. Subject to the required adoption of this
Agreement by Park's shareholders, the satisfaction of
the requirements referred to in Section 4.01(k), the
expiration of applicable regulatory waiting periods,
and required filings under federal and state
securities laws, the execution, delivery and
performance of this Agreement, and the consummation
of the transactions contemplated by this Agreement,
by Park do not and will not (i) conflict with, or
result in a violation of, or result in the breach of
or a default (or which with notice or lapse of time
would result in a default) under, any provision of:
(A) any federal, state or local law, regulation,
ordinance, order, rule or administrative ruling of
any Governmental Authority applicable to Park or any
of its properties; (B) the Articles of Incorporation
or Regulations of Park; (C) any material agreement,
indenture or instrument to which Park is a party or
by which it or its properties or assets may be bound;
or (D) any order, judgment, writ, injunction or
decree of any court, arbitration panel or any
Governmental Authority applicable to Park; (ii)
result in the creation or acceleration of any
security interest, mortgage, option, claim, lien,
charge or encumbrance upon or interest in any
property of Park; or (iii) violate the terms or
conditions of, or result in the cancellation,
modification, revocation or suspension of, any
material license, approval, certificate, permit or
authorization held by Park.
(f) Financial Statements of Park. Park has furnished to
Security consolidated financial statements of Park
consisting of (i) consolidated balance sheets as of
December 31, 1999 and 1998 and the related
consolidated statements of income, changes in
shareholders' equity and cash flows for the three
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years ended December 31, 1999, including accompanying
notes and the report thereon of Ernst & Young LLP and
(ii) unaudited consolidated balance sheet as of
September 30, 2000 (the "Park Balance Sheet Date"),
the related unaudited consolidated statements of
income for the three and nine months ended September
30, 2000 and 1999, of changes in shareholders' equity
for the nine months ended September 30, 2000 and 1999
and of cash flows for the nine months ended September
30, 2000 and 1999 (collectively, all of such
consolidated financial statements are referred to as
the "Park Financial Statements"). The Park Financial
Statements were prepared in conformity with GAAP
applied on a consistent basis and present fairly, in
all material respects, the consolidated financial
condition of Park at the dates, and the consolidated
results of operations and cash flows for the periods,
stated therein; subject, in the case of the interim
financial statements, to normal year-end audit
adjustments which are not expected to be,
individually or in the aggregate, materially adverse
to Park and the absence of full footnotes.
(g) Absence of Changes. Since the Park Balance Sheet
Date: (i) the businesses of Park and its Subsidiaries
have been conducted only in the ordinary course
consistent with past practice; (ii) there has been no
material adverse change in the assets, liabilities,
business or operations of Park and its Subsidiaries
taken as a whole; and (iii) there has been no damage,
destruction, loss or event (whether or not insured
against) which in the aggregate has had or might
reasonably be expected to have a material adverse
effect on the business or operations of Park and its
Subsidiaries taken as a whole.
(h) Takeover Laws. Park has taken all action required to
be taken by it in order to exempt this Agreement and
the transactions contemplated hereby from, and this
Agreement and the transactions contemplated hereby
are exempt from, the requirements of any Takeover
Laws applicable to Park.
(i) SEC Filings. The Park Shares are registered with the
SEC pursuant to Section 12(b) of the Exchange Act.
Park has filed all reports and proxy materials
required to be filed by it with the SEC pursuant to
the Exchange Act, except for any reports or proxy
materials the failure to file which would not have a
material adverse effect upon Park and its
Subsidiaries taken as a whole. All such filings, at
the time of filing, complied in all material respects
as to form and included all exhibits required to be
filed under the applicable rules of the SEC. None of
such documents, when filed, contained any untrue
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they were
made, not misleading.
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(j) Brokers, Finders and Others. There are no fees or
commissions of any sort whatsoever claimed by, or
payable by Park to, any broker, finder, intermediary
or any other similar person in connection with
effecting this Agreement or the transactions
contemplated hereby.
(k) Governmental and Third-Party Proceedings. No consent,
approval, authorization of, or registration,
declaration or filing with, any court, Governmental
Authority or any other third party is required to be
made or obtained by Park in connection with the
execution, delivery or performance by Park of this
Agreement or the consummation by Park of the
transactions contemplated hereby, except for (A)
filings of applications or notices, as applicable,
with and the approval of certain federal and state
banking authorities, (B) filings with the SEC and
state securities authorities, (C) the adoption of
this Agreement by the Park shareholders, (D) the
filing of the appropriate certificate of merger with
the Secretary of State pursuant to the OGCL and (E)
receipt of the approvals set forth in Section 7.09.
As of the date hereof, Park is not aware of any
reason why the approvals set forth in Section 7.09
will not be received without the imposition of a
condition, restriction or requirement of the type
described in Section 7.09.
(l) Pooling. Neither Park nor any of its Subsidiaries has
taken or permitted any action which would prevent the
Merger from being accounted for as a
"pooling-of-interests."
(m) Park Information. None of the information relating to
Park and its Subsidiaries to be contained in (i) the
Registration Statement will, at the time the
Registration Statement is filed with the SEC and at
the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact
or omit to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading, and (ii)
the Joint Proxy Statement, as of the date such Joint
Proxy Statement is mailed to shareholders of Park and
up to and including the date of the meeting of the
Park shareholders to which such Joint Proxy Statement
relates, will contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary in order
to make the statements therein, in light of the
circumstances under which they were made, not
misleading, provided that, in each case, information
as of a later date shall be deemed to modify
information as of an earlier date. All information
about Park and its Subsidiaries included in the
Registration and the Joint Proxy Statement will be
deemed to have been supplied by Park.
(n) Deposit Insurance. The deposits of Park's bank
Subsidiaries are insured by the FDIC in accordance
with the Federal Deposit Insurance Act and
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said bank Subsidiaries have paid all assessments and
filed all reports required by the Federal Deposit
Insurance Act.
(o) Disclosure. No representation or warranty by Park
contained in this Agreement, and no statement
contained in any certificate or other document
(including any letter furnished by Park as
contemplated by Sections 8.01(d) and 8.02(c) of this
Agreement) furnished by Park to Security pursuant to
this Agreement contains any untrue statement of a
material fact or omits to state a material fact
necessary to make the statements contained herein and
therein not misleading, in the light of the
circumstances under which they were made.
(p) Ownership of Security Shares. As of the date hereof,
other than 15,000 Security Shares beneficially owned
directly by Park, neither Park nor any of its
Subsidiaries (i) beneficially owns, directly or
indirectly, or (ii) is a party to any agreement,
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, any
Security Shares.
ARTICLE FIVE
FURTHER COVENANTS OF SECURITY
5.01. OPERATION OF BUSINESS
Security covenants with Park that throughout the period from
the date of this Agreement to and including the Closing:
(a) Conduct of Business. Security's business, and the
business of each Security Subsidiary, will be
conducted only in the ordinary and usual course
consistent with past practice. Without the written
consent of Park, Security shall not, and shall cause
each Security Subsidiary not to (i) take any action
which would be inconsistent with any representation
or warranty of Security set forth in this Agreement
or which would cause a breach of any such
representation or warranty if made at or immediately
following such action; or (ii) engage in any lending
activities other than in the ordinary course of
business consistent with past practice. To the extent
permitted under applicable law or regulation,
Security shall send to Park via facsimile
transmission a copy of all loan presentations made to
the Board of Directors of Security at the same time
as such presentations are transmitted to such Board
and all other proposals for loans in excess of
$500,000. Security shall consult with Park prior to
(x) hiring any full-time officer, other than
replacement employees for positions then existing;
and (y) purchasing any investment securities.
(b) Changes in Business and Capital Structure. Except as
provided for by this Agreement, set forth in the
Security Disclosure Letter or as otherwise
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approved expressly in writing by Park (which approval
will not be unreasonably withheld or delayed),
Security will not, and will cause each Security
Subsidiary not to:
(i) sell, transfer, mortgage, pledge or subject
to any lien or otherwise encumber any of the
assets of Security or the Security
Subsidiary, tangible or intangible, except
in the ordinary course of business for full
and fair consideration actually received;
(ii) make any capital expenditure or capital
additions or betterments which individually
exceed $100,000;
(iii) become bound by, enter into, or perform any
material contract, commitment or transaction
which is other than in the ordinary course
of its business or which would cause or
result in its being unable to perform its
obligations under this Agreement;
(iv) declare, pay or set aside for payment any
dividends or make any distributions on its
capital shares issued and outstanding other
than quarterly cash dividends on Security
Shares in respect of fiscal quarters ending
on or after December 31, 2000 in an amount
not to exceed $0.20 per share, in each case
with record and payment dates as indicated
in Section 7.10 of this Agreement;
(v) purchase, redeem, retire or otherwise
acquire any of its capital shares;
(vi) issue or grant any option or right to
acquire any of its capital shares or any
Voting Debt or effect, directly or
indirectly, any share split,
recapitalization, combination, exchange of
shares, readjustment or other
reclassification;
(vii) amend its articles of incorporation,
constitution, articles of association,
regulations, by-laws or other governing
documents;
(viii) merge or consolidate with any other person
or otherwise reorganize except for the
Merger;
(ix) acquire (other than by way of foreclosures
or acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of
debts previously contracted in good faith,
in each case in the ordinary and usual
course of business consistent with past
practice) all or any portion of, the assets,
business, deposits or properties of any
other entity;
(x) enter into, establish, adopt or amend any
pension, retirement, stock option, stock
purchase, savings, profit-sharing, deferred
compensa-
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tion, consulting, bonus, group insurance or
other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust
agreement (or similar arrangement) related
thereto, in respect of any Director, Officer
or Employee of Security or any Security
Subsidiary, or take any action to accelerate
the vesting or exercisability of stock
options, restricted stock or other
compensation or benefits payable thereunder;
provided, however, that Security may (A)
take such actions in order to satisfy either
applicable law or contractual obligations
existing as of the date hereof and disclosed
in the Security Disclosure Schedule or
regular annual renewals of insurance
contracts; and (B) terminate its defined
contribution retirement plan at any time
before the Effective Time, with benefit
distributions deferred until the IRS issues
a favorable determination with respect to
the terminating plan's tax-qualified status
upon termination and with Security and Park
to cooperate in good faith to apply for such
approval and to agree upon associated plan
termination amendments that shall, among
other things, provide for the application of
all assets of a terminating plan for its
participants, and allow plan participants
not only to receive lump-sum distributions
of their benefits but also to transfer those
benefits to the Park National Corporation
Employee's Voluntary Salary Deferral Plan
and Trust maintained for employees of Park
and its Subsidiaries;
(xi) pay any general wage or salary increase or
bonus, other than normal pay increases and
bonuses consistent with past practices, or
enter into or amend or renew any employment,
consulting, severance or similar agreements
or arrangements with any Officer, Director
or Employee, except, in each case, for
changes which are required by applicable law
or to satisfy contractual obligations
existing as of the date hereof and disclosed
in the Security Disclosure Schedule;
(xii) enter into or terminate any contract, other
than a loan contract, requiring the payment
or receipt of $100,000 or more in any
12-month period or amend or modify in any
material respect any of its existing
material contracts;
(xiii) incur any indebtedness for money borrowed or
incur any material obligation or liability
other than in the ordinary course of
business;
(xiv) take any action that would, or is reasonably
likely to, prevent or impede the Merger from
qualifying (A) for "pooling-of-interests"
accounting treatment or (B) as a
reorganization within the meaning of Section
368(a) of the Code;
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(xv) implement or adopt any change in its
accounting principles, practices or methods,
other than as may be required by GAAP;
(xvi) waive or cancel any right of material value
or material debts, except in the ordinary
course of business consistent with past
practices;
(xvii) take any action that would result in (A) any
of its representations or warranties
contained in this Agreement being or
becoming untrue in any material respect at
any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set
forth in Article Eight not being satisfied
or (C) a violation of any provision of this
Agreement except, in each case, as may be
required by applicable law or regulation;
(xviii) cause any material adverse change in the
amount or general composition of deposit
liabilities;
(xix) make any material investment (except in the
ordinary course of business); or
(xx) enter into any agreement to do any of the
foregoing.
(c) Maintenance of Property. Security and the Security
Subsidiaries will use their commercially reasonable
efforts to maintain and keep their respective
properties and facilities in their present condition
and working order, ordinary wear and tear excepted.
(d) Performance of Obligations. Security and the Security
Subsidiaries will perform all of their obligations
under all agreements relating to or affecting their
respective properties, rights and businesses, except
where nonperformance would not have a material
adverse effect on Security or any Security
Subsidiary.
(e) Maintenance of Business Organization. Security will,
and will cause the Security Subsidiaries to, use
their commercially reasonable efforts to maintain and
preserve their respective business organizations
intact; to retain present key Employees; and to
maintain the respective relationships of customers,
suppliers and others having business relationships
with them. Security will not, and will cause the
Security Subsidiaries not to, take any action or omit
to take any action which would terminate or enable
any Employee of Security or any Security Subsidiary
to terminate his employment or employment agreement
without cause and continue thereafter to receive
compensation.
(f) Insurance. Security and the Security Subsidiaries
will maintain insurance coverage with reputable
insurers, which in respect of amounts, premiums,
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types and risks insured, were maintained by them at
the Security Balance Sheet Date, and upon the renewal
or termination of such insurance, Security and the
Security Subsidiaries will use commercially
reasonable best efforts to renew or replace such
insurance coverage with reputable insurers, in
respect of the amounts, premiums, types and risks
insured or maintained by them at the Balance Sheet
Date.
(g) Access to Information. Security will, and will cause
the Security Subsidiaries to, take all action
necessary to (i) afford the officers and designated
representatives of Park full access during normal
business hours upon reasonable notice to all of
Security's and each Security Subsidiary's respective
properties and, to the extent Security or any
Security Subsidiary has or may provide such access,
to the Security Subsidiary Real Estate Collateral
(including for purposes of inspection and
investigation for soil and groundwater tests), books,
records, Tax Returns and reports, financial
statements, contracts and commitments, and any work
papers relating to any of the foregoing; (ii) furnish
to Park any and all documents, copies of documents,
and information (A) concerning compliance and/or
noncompliance with Environmental Laws and with
respect to the past, present or suspected future
presence of Hazardous Substances on the Security Real
Properties and the Security Subsidiary Real Estate
Collateral, including but not limited to
environmental audit and Phase I reports, and (B)
concerning Security's and each Security Subsidiary's
affairs as Park may reasonably request; (iii) afford
full access to Park to Security's and each Security
Subsidiary's Officers, Directors, Employees and
agents in order that Park may have full opportunity
to make such investigation as it shall desire to make
of the business and affairs of Security and the
Security Subsidiaries; and (iv) authorize Park's
representatives to inquire of government agencies,
and inspect the files of those agencies, with respect
to the environment conditions on and about the
Security Real Properties and the Security Subsidiary
Real Estate Collateral. During the period from the
date of this Agreement to the Effective Time,
Security shall promptly furnish Park with copies of
all monthly and other interim financial statements
produced in the ordinary course of business as the
same shall become available.
(h) Payment of Taxes. Security shall, and shall cause
Security Subsidiaries to, timely file all Tax Returns
required to be filed on or before the Closing Date,
and pay any Tax shown on such Tax Returns to be due.
(i) Risk Management. Except as required by applicable law
or regulation, neither Security nor any Security
Subsidiary shall (i) implement or adopt any material
change in its interest rate risk management and other
risk management policies, procedures or practices;
(ii) fail to follow its existing policies or
practices with respect to managing its exposure to
interest rate and other risks; or (iii) fail to use
commercially reasonable
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means to avoid any material increase in its aggregate
exposure to interest rate risk.
5.02. NOTIFICATION
Between the date of this Agreement and the Closing Date,
Security will promptly notify Park in writing if Security becomes aware of any
fact or condition that (a) causes or constitutes a breach of any of Security's
representations and warranties or (b) would (except as expressly contemplated by
this Agreement) cause or constitute a breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. Should any such fact or
condition require any change in the Security Disclosure Schedule, Security will
promptly deliver to Park a supplement to the Security Disclosure Schedule
specifying such change ("Updated Security Disclosure Schedule"). During the same
period, Security will promptly notify Park of (i) the occurrence of any breach
of any of Security's covenants contained in this Agreement, (ii) the occurrence
of any event that may make the satisfaction of the conditions in this Agreement
impossible or unlikely or (iii) the occurrence of any event that is reasonably
likely, individually or taken with all other facts, events or circumstances
known to Security, to result in a material adverse effect with respect to
Security. In addition, if at any time prior to the Effective Time, any event or
circumstance relating to Security or any of its Officers or Directors should be
discovered which should be set forth in an amendment to the Registration
Statement or a supplement to the Joint Proxy Statement, Security shall promptly
inform Park.
5.03. SHAREHOLDER APPROVAL
Security covenants that:
(a) The Board of Directors of Security will recommend the
adoption of this Agreement and the approval of the
transactions contemplated hereby to the shareholders
of Security, subject to that Board's fiduciary
obligations under Ohio law, as determined in good
faith after consultation with and based upon advise
of independent legal counsel.
(b) Security will call a meeting of its shareholders (the
"Security Meeting") to be held as soon as reasonably
practicable after the Registration Statement is
declared effective by the SEC, for the purpose of
adopting this Agreement and approving the
transactions contemplated hereby and will, subject to
the provisions of Sections 5.03(a) and 5.04, use its
best efforts to effect such adoption and approval.
Security will prepare appropriate proxy solicitation
materials in respect of the Security Meeting, which
materials will include the joint proxy statement of
Security and Park (the "Joint Proxy Statement") and
which will be a part of the Registration Statement to
be submitted by Park to the SEC pursuant to Section
7.08 of this Agreement.
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5.04. ACQUISITION PROPOSALS
From and after the date hereof, Security will not, directly or
indirectly, through any of its Officers, Directors, Employees, agents or
advisors, (i) solicit or initiate or knowingly encourage, including by means of
furnishing information, any proposals, offers or inquiries from any person
relating to any acquisition or purchase of 20% or more of the outstanding shares
of any class of voting securities of, or 20% or more of the assets or deposits
of, Security or any Security Subsidiary, or any merger, tender or exchange
offer, consolidation or business combination involving, Security or any Security
Subsidiary (an "Acquisition Proposal") or (ii) unless the Board of directors of
Security determines in good faith that such action is required for that Board to
fulfill the Board's fiduciary duties and obligations to the Security
shareholders under Ohio law as advised by counsel to Security and Security gives
prior notice to Park of such action (in which event Security may furnish
information), engage in negotiations with or disclose any nonpublic information
relating to Security or any Security Subsidiary or afford access to the Security
Real Properties, or the books or records of Security or any Security Subsidiary
to any person that may be considering or has made an Acquisition Proposal.
Security shall promptly (within 24 hours) notify Park, orally and in writing, if
any such proposal, offer, inquiry or contact is made and shall, in any such
notice, indicate the identity and terms and conditions of any proposal or offer,
or any such inquiry or contact. Security shall immediately cease and cause to be
terminated any activities, discussions or negotiations conducted prior to the
date of this Agreement with any parties other than Park with respect to any
Acquisition Proposal and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal.
5.05. DELIVERY OF INFORMATION
(a) Security will promptly furnish to Park all
information requested by Park regarding Security's
assets, properties, business, affairs, operations,
condition (financial or otherwise), prospects and
corporate organization as shall be required by the
rules and regulations under the Securities Act or by
the SEC for inclusion in the Registration Statement
described in Section 7.08 and shall otherwise
reasonably assist Park in the preparation and filing
of such Registration Statement.
(b) Security shall furnish to Park promptly after such
documents are available: (i) all reports, proxy
statements or other communications by Security to its
shareholders generally; and (ii) all press releases
relating to any transactions.
5.06. AFFILIATES COMPLIANCE WITH THE SECURITIES ACT
(a) In the Security Disclosure Schedule and no later than
the 15th day prior to the mailing of the Security
Proxy Statement, Security shall deliver to Park a
schedule of all persons whom Security reasonably
believes are, or are likely to be, as of the date of
the Security Meeting, deemed to be "affiliates" of
Security as that term is used in Rule 145 under the
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Securities Act and/or Accounting Series Releases 130
and 135, as amended, of the SEC (the "Rule 145
Affiliates"). Thereafter and until the Effective
Time, Security shall identify to Park each additional
person whom Security reasonably believes to have
thereafter become a Rule 145 Affiliate.
(b) Security shall use its diligent efforts to cause each
person who is identified as a Rule 145 Affiliate
pursuant to Section 5.06(a) above (who has not
executed and delivered the same concurrently with the
execution of this Agreement) to execute and deliver
to Park on or before the date of mailing of the Joint
Proxy Statement, a written agreement, substantially
in the form of Exhibit A attached hereto. Because the
Merger is intended to qualify for
"pooling-of-interests" accounting treatment, the Park
Shares received by such Rule 145 Affiliates in the
Merger shall not be transferable for a period
beginning 30 days before the Effective Time and
ending on such date as financial results covering at
least 30 days of post-Merger operations have been
published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies,
regardless of whether each such Rule 145 Affiliate
has provided the written agreement referred to in
this Section, and the certificates representing such
Park Shares will bear an appropriate restrictive
legend.
5.07. TAKEOVER LAWS
Security shall take all necessary steps to (a) exempt (or
cause the continued exemption of) this Agreement and the Merger from the
requirements of any Takeover Law and from any provisions under its articles of
incorporation and regulations, as applicable, by action of the Board of
Directors of Security or otherwise, and (b) assist in any challenge by Park to
the validity, or applicability to the Merger, of any Takeover Law.
5.08. TITLE INSURANCE
For each parcel of Security Real Property as to which Park may
specifically request, Security shall deliver to Park, and Park shall pay for, a
title insurance commitment (ALTA Form B-1992 or its equivalent) for a fee
owner's title insurance policy or leasehold owner's title insurance policy, as
appropriate, each in an amount equal to the carrying cost of the premises or
leasehold interest to be insured (including all improvements thereon), on the
books of Security or the applicable Security Subsidiary. Each title insurance
commitment shall show that marketable fee simple title to the owned premises or
that valid leasehold title to the leased premises, as appropriate, is in the
name of Security or a Security Subsidiary, and that the premises is free and
clear of any liens and encumbrances except taxes and assessments not delinquent
and utility and other easements that do not interfere with the use of the
Security Real property for the business being conducted thereon. Each such
commitment shall provide that such fee owner's policy committed for therein
shall be an ALTA Form B-1992, and each leasehold owner's policy shall be an ALTA
Form B-1992, or other form acceptable to Park.
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5.09. SCHEDULE 13D AND 13G FILINGS
Security shall promptly advise Park of the filing of a
Schedule 13D or 13G under the Exchange Act, if any, with respect to Security and
shall provide Park with a copy of any such Schedule promptly after receipt
thereof.
5.10. SURVEY
For each parcel of Security Real Property as to which Park may
specifically request, within 30 days after receipt of such request, Security
shall provide to Park, at Park's cost, a current land survey of such parcel of
Security Real Property. Each survey shall be conducted and prepared by a duly
licensed land surveyor approved by Park and, unless otherwise agreed by Park in
writing, shall be a duly certified ALTA/ACSM field survey, which shall comply
with such requirements as are typical of transactions of this type and shall
confirm that the Security Real Property is not subject to any easements,
restrictions, set backs, encroachments or other limitations except utility and
other easements that do not interfere with the use of the Security Real Property
for the business then being conducted thereon, and that the Security Real
Property is not located in any flood hazard area.
ARTICLE SIX
FURTHER COVENANTS OF PARK
6.01. ACCESS TO INFORMATION
(a) Park shall, and shall cause its Subsidiaries to, take
all action necessary to (i) afford the Officers and
designated representatives of Security full access
during normal business hours upon reasonable notice
to all of Park's and each Park Subsidiary's
respective properties and, to the extent Park or any
Park Subsidiary has or may provide such access, to
the books, records, Tax Returns (as that term is
defined in Section 3.01(l)) and reports, financial
statements, contracts and commitments, and any work
papers relating to any of the foregoing; (ii) furnish
to Security any and all documents, copies of
documents and information concerning Park's and each
Park Subsidiary's affairs as Security may reasonably
request; and (iii) afford full access to Security to
Park's and each Park Subsidiary's officers and
directors in order that Security may have full
opportunity to make such investigation as it shall
desire to make of the business and affairs of Park
and the Park Subsidiaries.
(b) Park shall furnish to Security promptly after such
documents are available: (i) all reports, proxy
statements or other communications by Park to its
shareholders generally; and (ii) all press releases
relating to any transactions.
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6.02. OPPORTUNITY OF EMPLOYMENT; EMPLOYEE BENEFITS
The existing Employees of Security and the Security
Subsidiaries shall have the opportunity to continue as employees of Park or one
of its Subsidiaries, at the Effective Time; subject, however, to the right of
Park and its Subsidiaries to terminate any such employees for "cause."
Notwithstanding the preceding sentence, Park agrees to honor the employment
agreements that the Security Subsidiaries have with the Officers disclosed in
Section 6.02 of the Security Disclosure Schedule, provided that each such
agreement shall have been modified prior to the Effective Time as contemplated
in Section 8.01(h) of this Agreement. It is understood and agreed that except as
provided in the second sentence of this Section 6.02, nothing in this Section
6.02 or elsewhere in this Agreement shall be deemed to be a contract of
employment or be construed to give said employees any rights other than as
employees at will under applicable law and said employees shall not be deemed to
be third-party beneficiaries of this provision. From and after the Effective
Time, subject to the provisions of Sections 7.12 and 7.13, the Employees of
Security and the Security Subsidiaries shall continue to participate in the
Security Compensation and Benefit Plans in effect at the Effective Time unless
and until Park, in its sole discretion, shall determine that the Employees of
Security and the Security Subsidiaries shall, subject to applicable eligibility
requirements, participate in employee benefit plans of Park and that all or some
of the Security Compensation and Benefit Plans shall be terminated or merged
into certain employee benefit plans of Park. Notwithstanding the foregoing, each
Security Employee and each Security Subsidiary Employee shall be credited with
years of service with Security, the appropriate Security Subsidiary and, to the
extent credit would have been given by Security or the appropriate Security
Subsidiary for years of service with a predecessor (including any business
organization acquired by Security or any Security Subsidiary), years of service
with a predecessor of Security or a Security Subsidiary, for purposes of
eligibility and vesting (but not for benefit accrual purposes) in the employee
benefit plans of Park, and shall not be subject to any exclusion or penalty for
pre-existing conditions that were covered under the Security Compensation and
Benefit Plans immediately prior to the Effective Time, or to any waiting period
relating to such coverage. If, after the Effective Time, Park adopts a new plan
or program for its employees or executives, then to the extent its employees or
executives receive past service credits for any reason, Park shall credit
similarly-situated employees and executives of Security and the Security
Subsidiaries with equivalent credit for service with Security, a Security
Subsidiary or their respective predecessors, to the extent that years of service
credit would have been given by Security or the appropriate Security Subsidiary
for years of service with a predecessor of Security or a Security Subsidiary.
The foregoing covenants shall survive the Merger, and Park shall before the
Effective Time adopt resolutions that amend its tax-qualified retirement plans
to provide for the Security or Security Subsidiary service credits referenced
herein.
6.03. AMEX LISTING
Park shall file a listing application with AMEX for the Park
Shares to be issued to the former holders of Security Shares in the Merger at
the time prescribed by applicable rules and regulations of AMEX. In addition,
Park will use its best efforts to maintain its listing on AMEX.
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6.04. TAKEOVER LAWS
Park shall take all necessary steps to (a) exempt (or cause
the continued exemption of) this Agreement and the Merger from the requirements
of any Takeover Law and from any provisions under its Articles of Incorporation
and Regulations, as applicable, by action of the Board of Directors of Park or
otherwise, and (b) assist in any challenge by Security to the validity, or
applicability to the Merger, of any Takeover Law.
6.05. NOTIFICATION
Between the date of this Agreement and the Closing Date, Park
will promptly notify Security in writing if Park becomes aware of any fact or
condition that (a) causes or constitutes a breach of any of Park's
representations and warranties or (b) would (except as expressly contemplated by
this Agreement) cause or constitute a breach of any such representation or
warranty had such representation or warranty been made as of the time of
occurrence or discovery of such fact or condition. During the same period, Park
will promptly notify Security of (i) the occurrence of any breach of any of
Park's covenants contained in this Agreement, (ii) the occurrence of any event
that may make the satisfaction of the conditions in this Agreement impossible or
unlikely or (iii) the occurrence of any event that is reasonably likely,
individually or taken with all other facts, events or circumstances known to
Park, to result in a material adverse effect with respect to Park.
6.06. SHAREHOLDER APPROVAL
Park covenants that:
(a) The Board of Directors of Park will recommend the
adoption of this Agreement and the approval of the
transactions contemplated hereby to the shareholders
of Park, subject to that Board's fiduciary
obligations under Ohio law, as determined in good
faith after consultation with and based upon advise
of independent legal counsel.
(b) Park will call a meeting of its shareholders (the
"Park Meeting") to be held as soon as reasonably
practicable after the Registration Statement is
declared effective by the SEC, for the purpose of
adopting this Agreement and approving the
transactions contemplated hereby and will, subject to
the provisions of Section 6.06(a), use its best
efforts to effect such adoption and approval. Park
will prepare appropriate proxy solicitation materials
in respect of the Park Meeting, which materials will
include the Joint Proxy Statement and which will be a
part of the Registration Statement to be submitted by
Park to the SEC pursuant to Section 7.08 of this
Agreement.
6.07. OFFICERS' AND DIRECTORS' INDEMNIFICATION
(a) Following the Effective Time, Park shall indemnify,
defend and hold harmless the present Directors,
Officers and Employees of Security and
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the Security Subsidiaries (each, an "Indemnified
Party") against costs or expenses (including
reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative,
arising out of actions or omissions occurring on or
prior to the Effective Time (including, without
limitation, the transactions contemplated by this
Agreement) to the fullest extent that Security or any
Security Subsidiary is required to indemnify (and
advance expenses to) an Indemnified Party under the
laws of the jurisdiction of formation or
incorporation of Security or the relevant Security
Subsidiary, and the articles of incorporation and
regulations of Security or Third Savings or the
articles of association and by-laws of Security
National or Citizens National, in each case to the
extent applicable to the particular Indemnified
Party, as in effect on the date hereof; provided that
any determination required to be made with respect to
whether an Indemnified Party's conduct complies with
the standards set forth under the laws of the
jurisdiction of formation or incorporation, the
articles of incorporation and regulations of Security
or Third Savings or the articles of association and
by-laws of Security National or Citizens National, as
appropriate, shall be made by the court in which the
claim, action, suit or proceeding was brought or by
independent counsel (which shall not be counsel that
provides material services to Park) selected by Park
and reasonably acceptable to such Indemnified Party.
(b) For a period of three years from the Effective Time,
Park shall use its reasonable best efforts to provide
that portion of directors' and officers' liability
insurance that serves to reimburse the present and
former Officers and Directors of Security and the
Security Subsidiaries (determined as of the Effective
Time) (as opposed to Security) with respect to claims
against such Officers and Directors arising from
facts or events which occurred before the Effective
Time, on terms no less favorable than those in effect
on the date hereof; provided, however, that Park may
substitute therefor policies providing at least
comparable coverage containing terms and conditions
no less favorable than those in effect on the date
hereof; provided, however that in no event shall Park
be required to expend more than 200 percent of the
current amount expended by Security (the "Insurance
Amount") to maintain or procure such directors' and
officers' liability insurance coverage; provided,
further that if Park is unable to maintain or obtain
the insurance called for by this Section 6.07(b),
Park shall use its reasonable best efforts to obtain
as much comparable insurance as is available for the
Insurance Amount; and provided, further, that
Officers and Directors of Security or any Security
Subsidiary may be required to make application and
provide customary representations and warranties to
Park's insurance carrier for the purpose of obtaining
such insurance.
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(c) Any Indemnified Party wishing to claim
indemnification under Section 6.07(a), upon learning
of any claim, action, suit, proceeding or
investigation described above, shall promptly notify
Park thereof; provided that the failure so to notify
shall not affect the obligations of Park under
Section 6.07(a) unless and to the extent that Park is
actually prejudiced as a result of such failure.
(d) If Park or any of its successors or assigns shall
consolidate with or merge into any other entity and
shall not be the continuing or surviving entity of
such consolidation or merger or shall transfer all or
substantially all of its assets to any entity, then
and in each case, proper provision shall be made so
that the successors and assigns of Park shall assume
the obligations set forth in this Section 6.07.
6.08. GOVERNANCE
Park's Board of Directors shall take action to cause the
directors comprising the full Board of Directors of the Surviving Corporation at
the Effective Time to be the individuals contemplated in Section 1.03(c).
6.09. PARK ACQUISITION PROPOSAL
Park shall not accept any offer from any person regarding an
Acquisition Proposal (as defined in Section 5.04, however, references therein to
Security shall be deemed for purposes of this Section 6.09 to refer to Park)
unless such offer is expressly conditioned upon, or the offeror agrees to, the
performance by Park or its successor in interest of the obligations of park to
consummate the Merger under the terms of this Agreement. Park acknowledges that
the restrictions and agreements contained in this Section 6.09 are reasonable
and necessary to protect the legitimate interest of Security that would not be
quantifiable and for which no adequate remedy would exist at law and agrees and
consents to, in addition to all other remedies which may be available to
Security, the entry of an injunction by any court of competent jurisdiction
against consummation of any Acquisition Proposal involving Park and another
person which does not comply with this Section 6.09 until such Acquisition
Proposal does comply with this Section 6.09.
ARTICLE SEVEN
FURTHER OBLIGATIONS OF THE PARTIES
7.01. SECURITY STOCK OPTIONS
Prior to the Effective Time of the Merger, Park and Security
shall take all such actions as may be necessary to cause each unexpired and
unexercised Security Stock Option in effect on the date of this Agreement which
has been granted to current or former Directors, Officers or Employees of
Security or a Security Subsidiary by Security, to be converted at the Effective
Time into an option (a "Converted Option") to purchase that number of Park
Shares equal to the number of Security Shares issuable immediately prior to the
Effective time upon
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exercise of the Security Stock Option multiplied by the Exchange Ratio, with an
exercise price equal to the exercise price which existed under the corresponding
Security Stock Option divided by the Exchange Ratio, and with other terms and
conditions that are the same as the terms and conditions of such Security Stock
Option immediately prior to the Effective Time (taking into account any
acceleration of vesting, if any, that would result from the Merger under the
terms of the Security Stock Option Plans as in effect on the date hereof);
provided, that with respect to any Security Stock Option that is an "incentive
stock option" within the meaning of Section 422 of the Code, the foregoing
conversion shall be carried out in a manner satisfying the requirements of
Section 424(a) of the Code. In connection with the issuance of Park Shares, Park
shall (a) reserve for issuance the number of Park Shares that will become
subject to the Converted Options pursuant to this Section 7.01 and (b) from and
after the Effective Time, upon exercise of Converted Options, make available for
issuance all Park Shares covered thereby, subject to the terms and conditions
applicable thereto.
7.02. NECESSARY FURTHER ACTION
Each of Security and Park agrees to use its reasonable best
efforts in good faith to take, or cause to be taken, all necessary actions and
execute all additional documents, agreements and instruments required to
consummate the transactions contemplated in this Agreement.
7.03. COOPERATIVE ACTION
Subject to the terms and conditions of this Agreement, each of
Security and Park agrees to use its reasonable best efforts in good faith to
take, or cause to be taken, all further actions and execute all additional
documents, agreements and instruments which may be reasonably required, in the
opinion of counsel for Security and counsel for Park, to satisfy all legal
requirements of the State of Ohio and the United States, so that this Agreement
and the transactions contemplated hereby will become effective as promptly as
practicable.
7.04. SATISFACTION OF CONDITIONS
Each of Park and Security shall use its reasonable best
efforts in good faith to satisfy all of the conditions to this Agreement and to
cause the consummation of the transactions described in this Agreement,
including making all applications, notices and filings with Governmental
Authorities and Regulatory Authorities and taking all steps to secure promptly
all consents, rulings and approvals of Governmental Authorities and Regulatory
Authorities which are necessary for the performance by each party of each of its
obligations under this Agreement and the transactions contemplated hereby.
7.05. ACCOUNTING AND TAX TREATMENT
Each of Security and Park agrees not to take any actions
subsequent to the date of this Agreement that would adversely affect the ability
of the Surviving Corporation to treat the Merger as a "pooling-of-interests" in
accordance with GAAP or Security or the shareholders of Security to characterize
the Merger as a tax-free reorganization under Section 368(a) of the Code. Each
of Security and Park agrees to take such action as may be reasonably required,
if such action may be reasonably taken to reverse the impact of any past actions
which would
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adversely impact the ability of the Surviving Corporation to treat the Merger as
a "pooling-of-interests" for accounting purposes or for the Merger to be
characterized as a tax-free reorganization under Section 368(a) of the Code.
7.06. CONFIDENTIALITY
The Mutual Confidentiality Agreement, dated October 27, 2000,
between Security and Park (the "Confidentiality Agreement") is hereby
incorporated in this Agreement in its entirety.
7.07. PRESS RELEASES
Each of Park and Security shall not make any press release or
other public announcement concerning the transactions contemplated by this
Agreement without the consent of the other party hereto as to the form and
contents of such press release or public announcement, except to the extent that
such press release or public announcement may be required by law or AMEX rules
to be made before such consent can be obtained.
7.08. REGISTRATION STATEMENT
(a) Park agrees to prepare pursuant to all applicable
laws, rules and regulations a registration statement
on Form S-4 (the "Registration Statement") to be
filed by Park with the SEC in connection with the
issuance of Park Shares in the Merger (including the
Joint Proxy Statement constituting a part thereof and
all related documents). Security agrees to cooperate,
and to cause the Security Subsidiaries to cooperate,
with Park, its counsel and its accountants, in the
preparation of the Registration Statement and the
Joint Proxy Statement; and provided that Security and
the Security Subsidiaries have cooperated as required
above, Park agrees to file the Registration
Statement, which will include the Joint Proxy
Statement and a prospectus in respect of the Park
Shares to be issued in the Merger (together, the
"Joint Proxy Statement/Prospectus") with the SEC as
promptly as reasonably practicable. Each of Security
and Park agrees to use all reasonable efforts to
cause the Registration Statement including the Joint
Proxy Statement/Prospectus to be declared effective
under the Securities Act as promptly as reasonably
practicable after the filing thereof. Park also
agrees to use all reasonable efforts to obtain, prior
to the effective date of the Registration Statement,
all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the
transactions contemplated by this Agreement. Security
agrees to furnish to Park all information concerning
Security, the Security Subsidiaries and the Officers,
Directors and shareholders of Security and the
Security Subsidiaries as may be reasonably requested
in connection with the foregoing.
(b) Each of Security and Park agrees, as to itself and
its Subsidiaries, that none of the information
supplied or to be supplied by it for inclusion or
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incorporation by reference in (i) the Registration
Statement will, at the time the Registration
Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act,
contain any untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary to make the statements therein
in light of the circumstances under which they were
made, not misleading, and (ii) the Joint Proxy
Statement/Prospectus and any amendment or supplement
thereto will, at the date of mailing to the Security
and Park shareholders, at the time of the Security
Meeting and at the time of the Park Meeting, as the
case may be, contain any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make
the statements therein in light of the circumstances
under where they were made not misleading. Each of
Security and Park further agrees, if it shall become
aware prior to the Effective Time of any information
furnished by it that would cause any of the
statements in the Registration Statement and the
Joint Proxy Statement/Prospectus to be false or
misleading with respect to any material fact, or to
omit to state any material fact necessary to make the
statements therein not false or misleading, to
promptly inform the other party thereof and to take
the necessary steps to correct the Registration
Statement and the Joint Proxy Statement/Prospectus.
(c) Park agrees to advise Security, promptly after Park
receives notice thereof, of the time when the
Registration Statement has become effective or any
supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the
qualification of Park Shares for offering or sale in
any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by
the SEC for the amendment or supplement of the
Registration Statement or for additional information.
7.09. REGULATORY APPLICATIONS
Park and Security and their respective Subsidiaries shall
cooperate and use their respective reasonable best efforts to prepare all
documentation, to timely effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental and
Regulatory Authorities necessary to consummate the transactions contemplated by
this Agreement. Each of Park and Security shall have the right to review in
advance, and to the extent practicable, each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to, and shall be provided in advance so as to reasonably exercise
its right to review in advance, all material written information submitted to
any third party or any Governmental or Regulatory Authority in connection with
the transactions contemplated by this Agreement. In exercising the foregoing
right, each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party hereto agrees that it will consult with the other party
hereto with respect to the obtaining of all material permits, consents,
approvals and authorizations of all third parties and Governmental and
Regulatory Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each
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party will keep the other apprised of the status of material matters relating to
completion of the transactions contemplated hereby. Each party agrees, upon
request, to furnish the other party with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or of its Subsidiaries to
any third party or Governmental or Regulatory Authority.
7.10. DIVIDENDS
After the date of this Agreement, each of Security and Park
shall coordinate with the other the payment of dividends with respect to the
Security Shares and the Park Shares and the record dates and payment dates
relating thereto, it being the intention of the parties hereto that the former
holders of Security Shares shall not receive two dividends, or fail to receive
one dividend, for any single calendar quarter with respect to their Security
Shares and/or the Park Shares that any such holder receives in exchange for such
Security Shares in the Merger.
7.11. SUPPLEMENTAL ASSURANCES
(a) On the date the Registration Statement becomes
effective and on the Closing Date, Security shall
deliver to Park a certificate signed by its principal
executive officer and its principal financial officer
to the effect that, to such officers' knowledge, the
information contained in the Registration Statement
relating to the business, financial condition and
affairs of Security and the Security Subsidiaries,
does not contain any untrue statement of a material
fact or omit to state any material fact required to
be stated therein or necessary to make the statements
therein not misleading in light of the circumstances
under which they were made.
(b) On the date the Registration Statement becomes
effective and on the Closing Date, Park shall deliver
to Security a certificate signed by its chief
executive officer and its chief financial officer to
the effect that, to such officers' knowledge, the
Registration Statement (other than the information
contained therein relating to the business, financial
condition and affairs of Security and the Security
Subsidiaries) does not contain any untrue statement
of a material fact or omit to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading in light of the
circumstances under which they were made.
7.12. SECURITY SPLIT DOLLAR PLAN
Prior to the Closing Date, Security and Park shall take all
necessary actions and shall otherwise cooperate to ensure that following the
Effective Time each participant in the Security Split Dollar insurance benefit
program (the "Security Split Dollar Plan") immediately prior to the Effective
Time shall continue to receive the full benefit of the vested portion of such
participant's death benefit under the terms of the Security Split Dollar Plan
for the life of the participant.
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7.13. SECURITY PENSION PLAN
If Park merges the Security Pension Plan into the Park Pension
Plan or otherwise ceases to maintain the Security Pension Plan, each participant
under the Security Pension Plan immediately prior to the merger of the Pension
Plans shall be provided with the same accrued benefit under the Park Pension
Plan or any successor defined benefit plan of Park (using the same actuarial
assumptions, discount rates and service credit) that the participant was
entitled to receive under the Security Pension Plan immediately prior to the
merger of the Pension Plans. Park also agrees that the former Security Employees
who become participants in the Park Pension Plan would receive, at such time as
they are entitled to receive benefits under the Park Pension Plan, the higher
of:
(a) a benefit comprised of two components: (i) a benefit
computed under the Security Pension Plan formula in respect of
the period of participation therein prior to the merger of the
Security Pension Plan and the Park Pension Plan; and (ii) a
benefit computed under the Park Pension Plan formula in
respect of the period following the merger of the Security
Pension Plan and the Park Pension Plan; or
(b) the benefit computed by using the Park Pension Plan
formula and based upon their combined periods of service for
purposes of the Park Pension Plan and the Security Pension
Plan.
ARTICLE EIGHT
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
8.01. CONDITIONS TO THE OBLIGATIONS OF PARK
The obligations of Park under this Agreement shall be subject
to the satisfaction, or written waiver by Park prior to the Closing Date, of
each of the following conditions precedent:
(a) The representations and warranties of Security set
forth in this Agreement shall be true and correct in
all material respects as of the date of this
Agreement and as of the Closing Date as though such
representations and warranties were also made as of
the Closing Date, except (i) that those
representations and warranties which by their terms
speak as of a specific date shall be true and correct
as of such date and (ii) where the failure to be so
true and correct would not, individually or in the
aggregate, have or be reasonably likely to have a
material adverse effect on Security or any Security
Subsidiary; and Park shall have received a
certificate, dated the Closing Date, signed on behalf
of Security by the chief executive officer and the
chief financial officer of Security to such effect.
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(b) Security shall have performed in all material
respects all of its covenants and obligations under
this Agreement to be performed by it on or prior to
the Closing Date, including those relating to the
Closing, and Park shall have received a certificate,
dated the Closing Date, signed on behalf of Security
by the chief executive officer and the chief
financial officer of Security to such effect.
(c) In the aggregate, an amount of less than ten percent
(10%) of the number of Park Shares to be issued in
the Merger shall be (i) subject to purchase as
fractional Park Share interests, (ii) Security
Dissenting Shares in connection with the Merger
contemplated by this Agreement; and (iii) held by
shareholders of Park who have demanded payment of the
appraised value of their Park Shares under OGCL
Section 1701.85 in connection with the Merger.
(d) Park shall have received the written opinion of its
counsel, dated the Closing Date, to the effect that,
on the basis of facts, representations and
assumptions set forth in such opinion, the Merger
constitutes a tax-free reorganization within the
meaning of Section 368(a) of the Code. In rendering
its opinion, counsel to Park will require and rely
upon representations contained in letters from Park
and Security.
(e) Park shall have received the written opinion of
Werner & Blank Co., L.P.A., counsel to Security,
dated the Closing Date, to the effect that, on the
basis of the facts, representations and assumptions
set forth in the opinion: (i) Security is a
corporation duly incorporated, validly existing and
in good standing under the laws of the State of Ohio;
(ii) Security National and Citizens National are
national banking associations duly organized, validly
existing and in good standing under the laws of the
United States of America; (iii) Third Savings is an
Ohio state-chartered savings association, duly
organized, validly existing and in good standing
under the laws of the State of Ohio; (iv) all
eligible accounts of deposit in each Security
Subsidiary are insured by the FDIC to the fullest
extent permitted by law; (v) Security is a duly and
validly registered bank holding company under the
BHCA; (vi) this Agreement has been duly approved by
the Board of Directors of Security and duly adopted
by the shareholders of Security and no further
corporate proceedings are required to authorize the
transactions contemplated by this Agreement; (vii)
this Agreement has been duly executed by Security and
constitutes a binding obligation on Security
enforceable in accordance with its terms against
Security, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, and other similar laws
relating to or affecting the enforcement of
creditors' rights generally, by general equitable
principles, regardless of whether enforceability is
considered in a proceeding in equity or at law and an
implied covenant of good faith and fair dealing;
(viii) the execution and delivery of this
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Agreement did not, and the consummation of the Merger
will not, conflict with any provision of the articles
of incorporation, articles of association,
regulations, bylaws or other governing documents of
Security or the Security Subsidiaries; (ix) Security
has the full corporate power and authority to perform
its obligations under this Agreement and to
consummate the transactions contemplated by this
Agreement; (x) Security and the Security Subsidiaries
have the full corporate power and authority to own
their respective properties and to carry on their
respective businesses as presently conducted; (xi)
upon the filing of the certificate of merger with the
Secretary of State, the Merger shall become effective
in accordance with the terms thereof; and (xii) such
counsel knows of no pending or threatened actions,
suits, proceedings, claims or investigations which
would prevent the consummation of this Agreement or
any of the transactions contemplated hereby or
declare the same to be unlawful or cause the
rescission thereof.
(f) Park shall have received a copy of a statement,
issued by Security pursuant to Section 1.897-2(h) of
the regulations issued under the Code, certifying
that the Security Shares are not an U.S. real
property interest and dated not more than thirty days
prior to the Closing Date.
(g) Security shall have obtained the consent or approval
of each person (other than Governmental and
Regulatory Authorities) whose consent or approval
shall be required in order to permit the succession
by the Surviving Corporation pursuant to the Merger
to any obligation, right or interest of Security or
any Security Subsidiary under any loan or credit
agreement, note, mortgage, indenture, lease, license
or other agreement or instrument, except those for
which failure to obtain such consents and approvals
would not, individually or in the aggregate, have a
material adverse effect, after the Effective Time, on
the Surviving Corporation.
(h) The employment agreement between Harry O. Egger and
Security National shall have been amended in a manner
satisfactory to Park to provide that the term thereof
shall end on the third anniversary of the Closing
Date. Each of (i) the employment agreement between J.
William Stapleton and Security National, (ii) the
employment agreement between William C. Fralick and
Security National, (iii) the employment agreement
between James R. Wilson and Citizens National, and
(iv) the employment agreement between Scott A.
Gabriel and Third Savings, shall have been amended in
a manner satisfactory to Park to provide that the
term thereof shall end on the second anniversary of
the Closing Date.
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8.02. CONDITIONS TO THE OBLIGATIONS OF SECURITY
The obligations of Security under this Agreement shall be
subject to satisfaction, or written waiver by Security prior to the Closing
Date, of each of the following conditions precedent:
(a) The representations and warranties of Park set forth
in this Agreement shall be true and correct in all
material respects as of the date of this Agreement
and as of the Closing Date as though such
representations and warranties were also made as of
the Closing Date, except (i) that representations and
warranties which by their terms speak as of a
specific date shall be true and correct as of such
date and (ii) where the failure to be so true and
correct would not, individually or in the aggregate,
have or be reasonably likely to have a material
adverse effect on Park and its Subsidiaries taken as
a whole; and Security shall have received a
certificate, dated the Closing Date, signed on behalf
of Park by the chief executive officer and the chief
financial officer to such effect.
(b) Park shall have performed in all material respects
all of its covenants and obligations under this
Agreement to be performed by it on or prior to the
Closing Date, including those related to the Closing,
and Security shall have received a certificate, dated
the Closing Date, signed on behalf of Park by the
chief executive officer and the chief financial
officer to such effect.
(c) Security shall have received the written opinion of
counsel to Park, dated the Closing Date, to the
effect that, on the basis of facts, representations
and assumptions set forth in such opinion, (i) the
Merger constitutes a tax-free reorganization within
the meaning of Section 368(a) of the Code, and (ii)
no gain or loss will be recognized by shareholders of
Security who receive Park Shares in exchange for
Security Shares, and cash in lieu of fractional Park
Share interests, other than the gain or loss to be
recognized as to cash received in lieu of fractional
Park Share interests. In rendering its opinion,
counsel to Park will require and rely upon
representations contained in letters from Security
and Park.
(d) Security shall have received the written opinion of
Vorys, Sater, Seymour and Pease LLP, counsel to Park,
dated the Closing Date, to the effect that, on the
basis of the facts, representations and assumptions
set forth in the opinion, (i) Park is a corporation
incorporated, duly validly existing and in good
standing under the laws of the State of Ohio; (ii)
Park is a duly and validly registered bank holding
company under the BHCA; (iii) this Agreement has been
duly approved by the Board of Directors of Park and
duly adopted by the shareholders of Park and no
further corporate proceedings are required to
authorize the transactions contemplated by this
Agreement; (iv) this Agreement has been duly executed
by Park and
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constitutes the binding obligation of Park,
enforceable in accordance with its terms against
Park, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws
relating to or affecting the enforcement of
creditors' rights generally, by general equitable
principles (regardless of whether enforceability is
considered in a proceeding in equity or at law) and
by an implied covenant of good faith and fair
dealing; (v) the execution and delivery of this
Agreement did not, and the consummation of the Merger
will not, conflict with any provision of the Articles
of Incorporation or Regulations of Park; (vi) Park
has the full corporate power and authority to perform
its obligations under this Agreement and to
consummate the transactions contemplated by this
Agreement; (vii) the Park Shares to be issued as
Merger Shares, when issued, shall be duly authorized,
fully paid and non-assessable; and (viii) upon the
filing of the appropriate certificate of merger with
the Secretary of State, the Merger shall become
effective in accordance with the terms thereof.
(e) Park shall have obtained the consent or approval of
each person (other than Governmental and Regulatory
Authorities) whose consent or approval shall be
required in connection with the transactions
contemplated hereby under any loan or credit
agreement, note, mortgage, indenture, lease, license
or other agreement or instrument, except those for
which failure to obtain such consents and approvals
would not, individually or in the aggregate, have a
material adverse effect, after the Effective Time, on
the Surviving Corporation.
8.03. MUTUAL CONDITIONS
The obligations of Security and Park under this Agreement
shall be subject to the satisfaction, or written waiver by Park and Security
prior to the Closing Date, of each of the following conditions precedent:
(a) The shareholders of Security and the shareholders of
Park shall have duly adopted this Agreement by the
required vote.
(b) All approvals of Governmental Authorities and
Regulatory Authorities required to consummate the
transactions contemplated by this Agreement shall
have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect
thereof shall have expired and no such approvals or
statute, rule or order shall contain any conditions,
restrictions or requirements which Park reasonably
determines would either before or after the Effective
Time (i) have a material adverse effect on Park and
its Subsidiaries take as a whole after giving effect
to the consummation of the Merger; or (ii) prevent
Park from realizing the major portion of the economic
benefits of the Merger and the transactions
contemplated thereby which Park currently anticipates
obtaining.
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(c) No temporary restraining order, preliminary or
permanent injunction or other order issued by a court
of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger
shall be in effect. No Governmental or Regulatory
Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced, threatened,
commenced a proceeding with respect to or entered any
statute, rule, regulation, judgment, decree,
injunction or other order (whether temporary,
preliminary or permanent) prohibiting or delaying
consummation of the transactions contemplated by this
Agreement.
(d) The Registration Statement shall have become
effective under the Securities Act and no stop order
or similar restraining order suspending the
effectiveness of the Registration Statement shall
have been issued and no proceeding for that purpose
shall have been initiated or, to the knowledge of the
parties, threatened by the SEC.
(e) Park shall have received all state securities and
"blue sky" permits and other authorizations and
approvals necessary to consummate the Merger and the
transactions contemplated hereby and no order
restraining the ability of Park to issue Park Shares
pursuant to the Merger shall have been issued and no
proceedings for that purpose shall have been
initiated or threatened by any state securities
administrator.
(f) Park and Security shall have received from their
independent auditors, a letter dated the Closing
Date, stating such independent auditors' opinion
that, based upon the information furnished, the
Merger shall qualify for "pooling-of-interests"
accounting treatment.
(g) The Park Shares to be issued in the Merger shall have
been approved for listing on AMEX subject to official
notice of issuance.
ARTICLE NINE
CLOSING
9.01. CLOSING
The closing (the "Closing") of the transactions contemplated
by this Agreement shall be held at the offices of Park, 50 North Third Street,
Newark, Ohio 43055, commencing at 10:00 a.m., local time, on (a) the date
designated by Park, which date shall not be earlier than the third business day
to occur after the last of the conditions set forth in Article Eight shall have
been satisfied or waived in accordance with the terms of this Agreement
(excluding conditions that, by their terms, cannot be satisfied until the
Closing Date) or later than the last business day of the month in which such
third business day occurs; provided, no such election shall cause the Closing to
occur on a date after that specified in Section 11.01(b)(i) of this Agreement or
after the date or dates on which any Governmental or Regulatory Authority
approval or any extension
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thereof expires, or (b) such other date to which the parties agree in writing.
The date of the Closing is sometimes herein called the "Closing Date."
9.02. CLOSING TRANSACTIONS REQUIRED OF PARK
At the Closing, Park shall cause all of the following to be
delivered to Security:
(a) A certificate of merger duly executed by Park in
accordance with Section 1701.81 of the OGCL and in
appropriate form for filing with the Secretary of
State.
(b) The certificates of Park contemplated by Section
8.02(a) and (b) of this Agreement.
(c) Copies of resolutions adopted by the directors and
the shareholders of Park, approving and adopting this
Agreement and authorizing the consummation of the
transactions described herein, accompanied by a
certificate of the secretary or assistant secretary
of Park, dated as of the Closing Date, and certifying
(i) the date and manner of adoption of each such
resolution; and (ii) that each such resolution is in
full force and effect, without amendment or repeal,
as of the Closing Date.
(d) The opinions of counsel to Park contemplated by
Sections 8.02(c) and 8.02(d) of this Agreement.
9.03. CLOSING TRANSACTIONS REQUIRED OF SECURITY
At the Closing, Security shall cause all of the following to
be delivered to Park:
(a) A certificate of merger duly executed by Security in
accordance with Section 1701.81 of the OGCL and in
appropriate form for filing with the Ohio Secretary
of State.
(b) The certificates of Security contemplated by Sections
8.01(a) and (b) of this Agreement.
(c) Copies of all resolutions adopted by the directors
and the shareholders of Security approving and
adopting this Agreement and authorizing the
consummation of the transactions described herein,
accompanied by a certificate of the secretary or the
assistant secretary of Security, dated as of the
Closing Date, and certifying (i) the date and manner
of the adoption of each such resolution; and (ii)
that each such resolution is in full force and
effect, without amendment or repeal, as of the
Closing Date.
(d) The opinion of counsel to Security contemplated by
Section 8.01(e) of this Agreement.
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(e) The agreements referred to in Section 5.06 from each
Rule 145 Affiliate.
ARTICLE TEN
NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
10.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS
The representations, warranties and covenants of Park and
Security set forth in this Agreement, or in any document delivered pursuant to
the terms hereof or in connection with the transactions contemplated hereby,
shall not survive the Closing and the consummation of the transactions referred
to herein, other than covenants which by their terms are to survive or be
performed after the Effective Time (including, without limitation, those set
forth in Sections 6.02, 6.07, 6.08, 7.01, 7.05, 7.06, 7.07, 7.12 and 7.13, this
Article Ten and Article Twelve); except that no such representations, warranties
or covenants shall be deemed to be terminated or extinguished so as to deprive
Park (or any director, officer or controlling person thereof) of any defense in
law or equity which otherwise would be available against the claims of any
person, including, without limitation, any shareholder or former shareholder of
either Security or Park.
ARTICLE ELEVEN
TERMINATION
11.01. TERMINATION
This Agreement may be terminated, and the Merger may be
abandoned, at any time prior to the Effective Time, whether prior to or after
this Agreement has been adopted by the shareholders of Security and/or the
shareholders of Park:
(a) By mutual written agreement of Security and Park duly
authorized by action taken by or on behalf of their
respective Boards of Directors;
(b) By either Security or Park upon written notification
to the non-terminating party by the terminating
party:
(i) at any time after October 31, 2001, if the
Merger shall not have been consummated on or
prior to such date and such failure to
consummate the Merger is not caused by a
breach of this Agreement by the terminating
party;
(ii) if the shareholders of Security shall not
have adopted this Agreement (the "Security
Shareholders' Adoption") by reason of the
failure to obtain the requisite vote upon a
vote held at a Security Meeting, or any
adjournment thereof;
(iii) if the shareholders of Park shall not have
adopted this Agreement (the "Park
Shareholders' Adoption") by reason of the
failure to
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obtain the requisite vote upon a vote held
at a Park Meeting, or any adjournment
thereof;
(iv) the approval of any Governmental or
Regulatory Authority required for
consummation of the Merger and the other
transactions contemplated by this Agreement
shall have been denied by final
non-appealable action of such Governmental
or Regulatory Authority.
(c) By Park by providing written notice to Security:
(i) if prior to the Closing Date, any
representation and warranty of Security
shall have become untrue such that the
condition set forth at Section 8.01(a) would
not be satisfied and which breach has not
been cured within 30 days following receipt
by Security of written notice of breach or
is incapable of being cured during such time
period; or
(ii) if Security shall have failed to comply in
any material respect with any covenant or
agreement on the part of Security contained
in this Agreement required to be complied
with prior to the date of such termination,
which failure to comply shall not have been
cured within 30 days following receipt by
Security of written notice of such failure
to comply or is incapable of being cured
during such time period.
(d) By Security by providing written notice to Park:
(i) if prior to the Closing Date, any
representation and warranty of Park shall
have become untrue such that the condition
set forth at Section 8.02(a) would not be
satisfied and which breach has not been
cured within 30 days following receipt by
Park of written notice of breach or is
incapable of being cured during such time
period;
(ii) if Park shall have failed to comply in any
material respect with any covenant or
agreement on the part of Park contained in
this Agreement required to be complied with
prior to the date of such termination, which
failure to comply shall not have been cured
within 30 days following receipt by Park of
written notice of such failure to comply or
is incapable of being cured during such time
period;
(iii) if the Board of Directors of Security
determines in good faith, based upon advice
from independent counsel, that termination
of this Agreement is required for the Board
of Directors of Security to comply with its
fiduciary duties to shareholders imposed by
law by
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reason of an Acquisition Proposal having
been made and provided Security complied
with its obligations under Section 5.04 and
provided further that Security's ability to
terminate pursuant to this subsection
(d)(iii) is conditioned upon the prior
payment by Security to Park of any amounts
owed by Security to Park pursuant to Section
11.02(b); or
(iv) if the Board of Directors of Security so
determines by a vote of a majority of the
members of the entire Board, at any time
during the three-day period commencing with
the Determination Date (as defined below) if
both of the following conditions are
satisfied: (A) the Average Closing Price on
the Determination Date shall be less than
$77.50; and (B) the ratio of the Average
Closing Price to the Starting Price (as
defined below), rounded to the nearest one
one-hundredth, shall be less than the number
obtained by dividing the Final Index Price
(as defined below) on the Determination Date
by the Initial Index Price (as defined
below) on the Starting Date (as defined
below), rounded to the nearest one
one-hundredth.
For purposes of this Section 11.01(d)(iv),
the following terms shall have the meanings
indicated:
"Determination Date" shall mean the last day
of the 20 trading day period referenced in
the definition of Average Price.
"Final Index Price" shall mean the sum of
the Final Price for each company comprising
the Index Group multiplied by the
appropriate weighting.
"Final Price," with respect to any company
belonging to the Index Group, shall mean the
average of the daily closing sales prices of
a share of common stock of such company, as
reported on the consolidated transactions
reporting system for the market or exchange
on which such common stock is principally
traded, during the period of 20 trading days
ending on the Determination Date.
"Index Group" shall mean the ten bank
holding companies listed below, the common
stock of which shall be publicly traded and
as to which there shall not have been a
publicly announced proposal since the
Starting Date and before the Determination
Date for any such company to be acquired. In
the event that the common stock of any such
company ceases to be publicly traded or a
proposal to acquire any such company is
announced after the Starting Date and before
the Determination Date, such company shall
be removed from the Index Group, and the
weights attributed to the remaining
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companies shall be adjusted proportionately
for purposes of determining the Final Index
Price. The ten bank holding companies and
the weights attributed to them are as
follows:
<TABLE>
<CAPTION>
Bank Holding Company Ticker Weighting
-------------------- ------ ---------
<S> <C> <C>
Amcore Financial, Inc. AMFI 10.000%
First Financial Bancorp. FFBC 10.000%
Fifth Third Bancorp FITB 10.000%
FirstMerit Corporation FMER 10.000%
Fulton Financial Corporation FULT 10.000%
Integra Bank Corporation IBNK 10.000%
Mercantile Bankshares Corporation MRBK 10.000%
National Penn Bancshares, Inc. NPBC 10.000%
S&T Bancorp, Inc. STBA 10.000%
Sky Financial Group, Inc. SKYF 10.000%
</TABLE>
"Initial Index Price" shall mean the sum of
each per share closing price of the common
stock of each company comprising the Index
Group multiplied by the applicable
weighting, as such prices are reported on
the consolidated transactions reporting
system for the market or exchange on which
such common stock is principally traded on
the Starting Date.
"Starting Date" shall mean the last trading
day immediately preceding the date of the
first public announcement of entry into this
Agreement.
"Starting Price" shall mean the closing
price of a Park Share on AMEX (as reported
in The Wall Street Journal, or if not
reported therein, in another authoritative
source) on the Starting Date.
If any company belonging in the Index Group
declares or effects a stock dividend,
reclassification, recapitalization,
split-up, combination, exchange of shares or
similar transaction between the Starting
Date and the Determination Date, the prices
for the common stock of such company shall
be appropriately adjusted for the purposes
of applying this Section 11.01(d)(iv).
11.02. EFFECT OF TERMINATION.
(a) If this Agreement is validly terminated by either
Security or Park pursuant to Section 11.01, this
Agreement will forthwith become null and void and
there will be no liability or obligation on the part
of either Security or Park, except (i) that the
provisions of Sections 5.04, 7.06, 7.07, 7.08(b) and
12.07 and this Section 11.02 will continue to apply
following any such
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termination, (ii) that nothing contained herein shall
relieve any party hereto from liability for willful
breach of its representations, warranties, covenants
or agreements contained in this Agreement and (iii)
as provided in paragraph (b) below.
(b) In the event that any person or group shall have made
an Acquisition Proposal and thereafter: (i) this
Agreement is terminated by Security pursuant to
Section 11.01(d)(iii) or (ii) this Agreement is
terminated for any other reason (other than by
Security pursuant to Section 11.01(d)(i), (ii) or
(iv) or termination by either party pursuant to
Section 11.01(a) or Section 11.01(b)(i) (unless
Security shall have caused the Merger not to be
consummated by October 31, 2001 for the purposes of
pursuing an Acquisition Proposal), (ii) (unless the
Security directors shall have failed to recommend the
Merger or withdrawn or modified or announced their
intention not to recommend the Merger prior to the
Security Meeting, failed to solicit proxies in favor
of the Merger or recommended or approved another
Acquisition Proposal), (iii) or (iv)) and, in the
case of this clause (ii) only, a definitive agreement
with respect to such Acquisition Proposal is executed
within one year after such termination, and pursuant
to which each outstanding Security Share is entitled
to receive at least $22.04 in consideration, then
Security shall pay to Park, by wire transfer of same
day funds, either on the date contemplated in Section
11.01(d)(iii) if applicable, or otherwise, within two
(2) business days after such amount becomes due, a
termination fee of $10,000,000.
(c) In the event of a termination of this Agreement
pursuant to which a payment is made in full
compliance with Section 11.02(b), the receipt of such
payment shall serve as liquidated damages with
respect to any breach of this Agreement by the party
which has made such payment giving rise to such
termination, and the receipt of any such payment
shall be the sole and exclusive remedy (at law or in
equity) with respect to any such breach.
(d) In the event any action, suit, proceeding or claim is
commenced or asserted by a party against another
party and/or any director or officer of such other
party relating, directly or indirectly, to this
Agreement, it is expressly agreed that no party shall
be entitled to obtain any punitive, exemplary,
treble, or consequential damages of any type under
any circumstances in connection with such action,
suit, proceeding or claim, regardless of whether such
damages may be available under law, the parties
hereby waiving their rights, if any, to recover any
such damages in connection with any such action,
suit, proceeding or claim.
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ARTICLE TWELVE
MISCELLANEOUS
12.01. NOTICES
All notices, requests, demands and other communications
required or permitted to be given under this Agreement shall be given in writing
and shall be deemed to have been duly given (a) on the date of delivery if
delivered by hand or by telecopy or telefacsimile, upon confirmation of receipt,
(b) on the first business day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the third business day following
the date of mailing if sent by certified mail, postage prepaid, return receipt
requested. All notices thereunder shall be delivered to the following addresses:
If to Security, to:
Security Banc Corporation
40 South Limestone Street
Springfield, OH 45502
Attention: Harry O. Egger
Facsimile Number: (937) 324-6966
with a copy to:
Werner & Blank Co., L.P.A.
7205 West Central Avenue
Toledo, OH 43617
Attention: Martin Werner, Esq.
Facsimile Number: (419) 841-8380
If to Park, to:
Park National Corporation
50 North Third Street
Newark, OH 43055
Attention: C. Daniel DeLawder
Facsimile Number: (740) 349-3765
with a copy to:
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
P.O. Box 1008
Columbus, OH 43216-1008
Attention: Elizabeth Turrell Farrar, Esq.
Facsimile Number: (614) 719-4708
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Any party to this Agreement may, by notice given in accordance with this Section
12.01, designate a new address for notices, requests, demands and other
communications to such party.
12.02. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be a duplicate original, but all of which taken
together shall be deemed to constitute a single instrument.
12.03. ENTIRE AGREEMENT
This Agreement (including each exhibit and schedule provided
pursuant hereto), together with the Confidentiality Agreement, represents the
entire agreement between the parties hereto in respect of the subject matter of
this Agreement and supersedes any and all prior and contemporaneous agreements
between the parties hereto in connection with the subject matter of this
Agreement, other than the Confidentiality Agreement.
12.04. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns (including successive, as well as
immediate, successors and assigns) of the parties hereto. This Agreement may not
be assigned by either party hereto without the prior written consent of the
other party.
12.05. CAPTIONS
The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or modify this
Agreement or its interpretation, construction or meaning and are in no way to be
construed as part of this Agreement.
12.06. GOVERNING LAW
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio, without giving effect to
principles of conflicts or choice of laws (except to the extent that mandatory
provisions of Federal law are applicable).
12.07. PAYMENT OF FEES AND EXPENSES
Except as otherwise agreed in writing, each party hereto shall
pay all costs and expenses, including legal and accounting fees, and all
expenses relating to its performance of, and compliance with, its undertakings
herein, except that printing and mailing expenses shall be shared equally
between Security and Park. All fees to be paid to Governmental and Regulatory
Authorities and the SEC in connection with the transactions contemplated by this
Agreement shall be borne by Park.
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12.08. AMENDMENT
From time to time and at any time prior to the Effective Time,
this Agreement may be amended only by an agreement in writing executed in the
same manner as this Agreement, after authorization of such action by the Boards
of Directors of the Constituent Corporations; except that after the earlier to
occur of the Security Meeting and the Park Meeting, this Agreement may not be
amended if it would violate the OGCL or the federal securities laws.
12.09. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege.
12.10. DISCLOSURE SCHEDULES
In the event of any inconsistency between the statements in
the body of this Agreement and those in the Security Disclosure Schedule (other
than an exception expressly set forth as such in the Security Disclosure
Schedule with respect to a specifically identified representation or warranty),
the statements in the body of this Agreement will control.
12.11. NO THIRD-PARTY RIGHTS
Except as specifically set forth herein, nothing expressed or
referred to in this Agreement will be construed to give any person other than
the parties to this Agreement any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
12.12. WAIVER OF JURY TRIAL
Each of the parties hereto irrevocably waives any and all
right to trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
12.13. SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
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IN WITNESS WHEREOF, this Agreement and Plan of Merger has been
executed on behalf of Park National Corporation and Security Banc Corporation to
be effective as of the date set forth in the first paragraph above.
ATTEST: PARK NATIONAL CORPORATION
/s/ David C. Bowers By: /s/ C. Daniel DeLawder
---------------------------- -----------------------
Printed Name: C. Daniel DeLawder
Title: President and Chief Executive Officer
ATTEST: SECURITY BANC CORPORATION
/s/ J. William Stapleton By: /s/ Harry O. Egger
---------------------------- -------------------
Printed Name: Harry O. Egger
Title: Chairman of the Board, President
and Chief Executive Officer
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<PAGE> 163
EXHIBIT A
TO AGREEMENT AND PLAN OF MERGER
November 20, 2000
Park National Corporation
50 North Third Street
Newark, Ohio 43058-3500
Attention: C. Daniel DeLawder, President
and Chief Executive Officer
Gentlemen:
I have been advised that, as of the date hereof, I may be deemed to be
an "affiliate" of Security Banc Corporation, an Ohio corporation ("Security"),
as the term "affiliate" is (i) defined for purposes of paragraphs (c) and (d) of
Rule 145 of the Rules and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), and/or (ii) used in and for purposes
of Accounting Series, Releases 130 and 135, as amended, of the Commission.
Pursuant to the terms of the Agreement and Plan of Merger, dated as of November
20, 2000 (the "Merger Agreement"), by and between Security and Park National
Corporation, an Ohio corporation ("Park"), Security will be merged (the
"Merger") with and into Park and the name of the surviving corporation will be
Park National Corporation, an Ohio corporation (the "Surviving Corporation").
As used herein, "Security Common Shares" means the Common Shares, par
value $1.5625 per share, of Security and "Surviving Corporation Common Shares"
means the Common Shares, without par value, of the Surviving Corporation.
I represent, warrant and covenant to the Surviving Corporation that in
the event I receive any Surviving Corporation Common Shares as a result of the
Merger:
A. I shall not make any sale, transfer or other disposition of
any Surviving Corporation Common Shares (including any securities which
may be paid as a dividend or otherwise distributed thereon or received
pursuant to the exercise of stock options) acquired by me in the Merger
in violation of the 1933 Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and
discussed their requirements and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Surviving Corporation
Common Shares (including any securities which may be paid as a dividend
or otherwise distributed thereon or received pursuant to the exercise
of stock options) to the extent I felt necessary, with my counsel or
counsel for Security.
<PAGE> 164
C. I have been advised that the issuance of Surviving
Corporation Common Shares to me pursuant to the Merger has been or will
be registered with the Commission under the 1933 Act on a Registration
Statement on Form S-4. However, I have also been advised that, because
at the time the Merger will be submitted for a vote of the shareholders
of Security, I may be deemed to be an affiliate of Security, the
distribution by me of any Surviving Corporation Common Shares acquired
by me in the Merger will not be registered under the 1933 Act and that
I may not sell, transfer or otherwise dispose of any Surviving
Corporation Common Shares (including any securities which may be paid
as a dividend or otherwise distributed thereon or received pursuant to
the exercise of stock options) acquired by me in the Merger unless (i)
such sale, transfer or other disposition has been registered under the
1933 Act, (ii) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the 1933 Act, or (iii) in the
opinion of counsel reasonably acceptable to the Surviving Corporation,
such sale, transfer or other disposition is otherwise exempt from
registration under the 1933 Act.
D. I understand that the Surviving Corporation is under no
obligation to register under the 1933 Act the sale, transfer or other
disposition by me or on my behalf of any Surviving Corporation Common
Shares acquired by me in the Merger or to take any other action
necessary in order to make an exemption from such registration
available.
E. I also understand that stop transfer instructions will be
given to the Surviving Corporation's transfer agent with respect to
Surviving Corporation Common Shares (including any securities which may
be paid as a dividend or otherwise distributed thereon or received
pursuant to the exercise of stock options) and that there will be
placed on the certificates for the Surviving Corporation Common Shares
acquired by me in the Merger, or any substitutions therefor, a legend
stating in substance:
"The common shares represented by this certificate were issued
in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The common shares represented
by this certificate may only be transferred in accordance with
the terms of an agreement dated November 20, 2000 between the
registered holder hereof and the issuer of the certificate, a
copy of which agreement will be mailed to the holder hereof
without charge within five days after receipt of written
request therefor."
F. I also understand that unless the transfer by me of my
Surviving Corporation Common Shares has been registered under the 1933
Act or is a sale made in conformity with the provisions of Rule 145,
the Surviving Corporation reserves the right to put the following
legend on the certificates issued to my transferee:
"The common shares represented by this certificate have not
been registered under the Securities Act of 1933 and were
acquired from a person who received such common shares in a
transaction to which Rule 145 promulgated under the Securities
Act of 1933 applies. The
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common shares may not be sold, pledged or otherwise
transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without such
legends if the undersigned shall have delivered to the Surviving Corporation a
copy of a letter from the staff of the Commission, or an opinion of counsel in
form and substance reasonably satisfactory to the Surviving Corporation, to the
effect that such legends are not required for purposes of the 1933 Act.
I further represent to and covenant with Security and the Surviving
Corporation that I will not, within the 30 days prior to the Effective Time (as
defined in the Agreement), sell, transfer or otherwise dispose of any Security
Common Shares and that I will not sell, transfer or otherwise dispose of any
Surviving Corporation Common Shares (whether or not acquired by me in the
Merger) until after such time as results covering at least 30 days of
post-Merger combined operations of Security and Park have been published by the
Surviving Corporation, in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the Commission on
Form 10-K, 10-Q or 8-K, or any other public filing or announcement which
includes the combined results of operations. Furthermore, I understand that
Security and the Surviving Corporation will give stop transfer instructions to
their respective transfer agents in order to prevent the breach of the
representations, warranties and covenants made by me in this paragraph. I also
understand that the Merger is intended to be treated for accounting purposes as
a "pooling-of-interests," and I agree that, if Security or the Surviving
Corporation advises me in writing that additional restrictions apply to my
ability to sell, transfer or otherwise dispose of Security Common Shares or
Surviving Corporation Common Shares in order to be entitled to use the
"pooling-of-interests" accounting method, I will abide by such restrictions.
Very truly yours,
---------------------------------------
Printed Name:
--------------------------
Accepted this _____ day of
____________, 2000
By:
---------------------------
Printed Name:
------------------
Title:
-------------------------
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<PAGE> 166
EXHIBITS AND DISCLOSURE SCHEDULES TO
AGREEMENT AND PLAN OF MERGER,
DATED AS OF NOVEMBER 20, 2000,
BY AND BETWEEN
PARK NATIONAL CORPORATION
AND
SECURITY BANC CORPORATION
1. Exhibit A - Form of Affiliate Letter Restricting Resale of Securities
2. Representations and Warranties Disclosure Schedule of Security Banc
Corporation
3. Updated Representations and Warranties Disclosure Schedule of Security
Banc Corporation.
The above-described Schedules are not being filed herewith. Park National
Corporation agrees to furnish supplementally to the Securities and Exchange
Commission a copy of any omitted Schedule upon request.
<PAGE> 167
[Letterhead of Austin Associates, Inc.]
APPENDIX B
November 20, 2000
CONFIDENTIAL
Board of Directors
Security Banc Corporation
40 South Limestone Street
Springfield, OH 45502
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to Security Banc Corporation ("Security") of the terms of the Agreement
and Plan of Merger dated as of November 20, 2000 ("Agreement") between Security
and Park National Corporation, Newark, Ohio ("Park"). The Agreement provides for
a merger of Security with and into Park, with Park being the surviving
corporation.
The terms of the Agreement provide for the issuance of 3,350,000 shares of Park
common stock to Security common stockholders. Based on Security's current
outstanding common shares, the exchange ratio equals .2844. The Agreement
further provides that stock options previously granted by Security be converted
into and become options to purchase Park common stock. Security's Board may
terminate the transaction if the Park Average Closing Price (as defined in the
Agreement) is less than $77.50.
In carrying out our engagement, we have reviewed and analyzed material bearing
upon the financial and operating condition of Security and Park, including but
not limited to the following: (i) the Agreement; (ii) the audited financial
statements of Security and Park for the period 1995 through 1999; (iii)
unaudited financial statements of Security and Park for the period ending
September 30, 2000; (iv) certain other publicly available information regarding
Security and Park; (v) publicly available information regarding the performance
of certain other companies whose business activities were believed by Austin
Associates to be generally comparable to those of Security and Park; (vi) the
financial terms, to the extent publicly available, of certain comparable
transactions; and (vii) such other analysis and information as we deemed
relevant.
In our review and analysis, we relied upon and assumed the accuracy and
completeness of the financial and other information provided to us or publicly
available, and have not attempted to verify the same. We have made no
independent verification as to the status of individual loans made by Security
or Park, and have instead relied upon representations and information concerning
loans of Security and Park in the aggregate. In rendering our opinion, we have
assumed that the transaction will be a tax-free reorganization with no material
adverse tax consequences to Security or Park, or to Security shareholders
receiving Park stock. In addition, we have assumed in the course of obtaining
the necessary approvals for the transaction, no condition will be imposed that
will have a material adverse effect on the contemplated benefits of the
transaction to Security and its shareholders.
Based upon our analysis and subject to the qualifications described herein, we
believe that as of the date of this letter, the terms of the Agreement are fair,
from a financial point of view, to Security and its shareholders.
Austin Associates reserves the right to review all disclosures in the proxy
materials and consent to the characterization of our fairness opinion. For our
services in rendering this opinion, Security will pay us a fee and indemnify us
against certain liabilities.
/s/ Austin Associates, Inc.
AUSTIN ASSOCIATES, INC.
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APPENDIX C
OHIO REVISED CODE SECTION 1701.85
DISSENTING SHAREHOLDER'S DEMAND FOR FAIR CASH VALUE OF SHARES
(A)(1) A shareholder of a domestic corporation is entitled to relief as
a dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division (C)
of section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case of
a merger pursuant to section 1701.801 [1701.80.1] of the Revised Code shall be a
record holder of the shares of the corporation as to which he seeks relief as of
the date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 [1701.80.1] of the Revised Code, the dissenting
shareholder shall deliver to the corporation a written demand for payment with
the same information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the new
entity, whether the demand is served before, on, or after the effective date of
the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing the
shares as to which he seeks relief, the dissenting shareholder, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such certificates terminates his rights as a dissenting shareholder,
at the option of the corporation, exercised by written notice sent to the
dissenting shareholder within twenty days after the lapse of the fifteen-day
period, unless a court for good cause shown otherwise directs. If shares
represented by a certificate on which such a legend has been endorsed are
transferred, each new certificate issued for them shall bear a similar legend,
together with the name of the original dissenting holder of such shares. Upon
receiving a demand for payment from a dissenting shareholder who is the record
holder of uncertificated securities, the corporation shall make an appropriate
notation of the demand for payment in its shareholder records. If uncertificated
shares for which payment has been demanded are to be transferred, any new
certificate issued for the shares shall bear the legend required for
certificated securities as provided in this paragraph. A transferee of the
shares so endorsed, or of uncertificated securities where such notation has been
made, acquires only such rights in the corporation as the original dissenting
holder of such shares had immediately after the service of a demand for payment
of the fair cash value of the shares. A request under this paragraph by the
corporation is not an admission by the corporation that the shareholder is
entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come
to an agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the
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proposal was adopted by the shareholders of the corporation, or, if the proposal
was not required to be submitted to the shareholders, was approved by the
directors. Other dissenting shareholders, within that three-month period, may
join as plaintiffs or may be joined as defendants in any such proceeding, and
any two or more such proceedings may be consolidated. The complaint shall
contain a brief statement of the facts, including the vote and the facts
entitling the dissenting shareholder to the relief demanded. No answer to such a
complaint is required. Upon the filing of such a complaint, the court, on motion
of the petitioner, shall enter an order fixing a date for a hearing on the
complaint and requiring that a copy of the complaint and a notice of the filing
and of the date for hearing be given to the respondent or defendant in the
manner in which summons is required to be served or substituted service is
required to be made in other cases. On the day fixed for the hearing on the
complaint or any adjournment of it, the court shall determine from the complaint
and from such evidence as is submitted by either party whether the dissenting
shareholder is entitled to be paid the fair cash value of any shares and, if so,
the number and class of such shares. If the court finds that the dissenting
shareholder is so entitled, the court may appoint one or more persons as
appraisers to receive evidence and to recommend a decision on the amount of the
fair cash value. The appraisers have such power and authority as is specified in
the order of their appointment. The court thereupon shall make a finding as to
the fair cash value of a share and shall render judgment against the corporation
for the payment of it, with interest at such rate and from such date as the
court considers equitable. The costs of the proceeding, including reasonable
compensation to the appraisers to be fixed by the court, shall be assessed or
apportioned as the court considers equitable. The proceeding is a special
proceeding and final orders in it may be vacated, modified, or reversed on
appeal pursuant to the Rules of Appellate Procedure and, to the extent not in
conflict with those rules, Chapter 2505 of the Revised Code. If, during the
pendency of any proceeding instituted under this section, a suit or proceeding
is or has been instituted to enjoin or otherwise to prevent the carrying out of
the action as to which the shareholder has dissented, the proceeding instituted
under this section shall be stayed until the final determination of the other
suit or proceeding. Unless any provision in division (D) of this section is
applicable, the fair cash value of the shares that is agreed upon by the parties
or fixed under this section shall be paid within thirty days after the date of
final determination of such value under this division, the effective date of the
amendment to the articles, or the consummation of the other action involved,
whichever occurs last. Upon the occurrence of the last such event, payment shall
be made immediately to a holder of uncertificated securities entitled to such
payment. In the case of holders of shares represented by certificates, payment
shall be made only upon and simultaneously with the surrender to the corporation
of the certificates representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders
of the corporation, fair cash value as to those shareholders shall be determined
as of the day prior to the day on which the vote by the shareholders was taken
and, in the case of a merger pursuant to section 1701.80 or 1701.801 [1701.80.1]
of the Revised Code, fair cash value as to shareholders of a constituent
subsidiary corporation shall be determined as of the day before the adoption of
the agreement of merger by the directors of the particular subsidiary
corporation. The fair cash value of a share for the purposes of this section is
the amount that a willing seller who is under no compulsion to sell would be
willing to accept and that a willing buyer who is under no compulsion to
purchase would be willing to pay, but in no event shall the fair cash value of a
share exceed the amount specified in the demand of the particular shareholder.
In computing such fair cash value, any appreciation or depreciation in market
value resulting from the proposal submitted to the directors or to the
shareholders shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief, and
the right and obligation of the corporation to purchase such shares and to pay
the fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section,
unless the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind their
adoption of the action involved;
(c) The dissenting shareholder withdraws his demand, with the
consent of the corporation by its directors;
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(d) The corporation and the dissenting shareholder have not come to
an agreement as to the fair cash value per share, and neither the shareholder
nor the corporation has filed or joined in a complaint under division (B) of
this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger
or consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the
demand until either the termination of the rights and obligations arising from
it or the purchase of the shares by the corporation, all other rights accruing
from such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The regulations of Park provide that Park will indemnify its directors
or officers against expenses (including attorney's fees, filing fees, court
reporter's fees and transcript costs), judgments, fines and amounts paid in
settlement by reason of the fact that they are or were directors, officers,
employees or agents of Park or, at the request of Park, were serving another
entity in a similar capacity. In order to receive indemnification, the directors
or officers must have acted in good faith and in a manner they reasonably
believed to be in the best interests of Park. With regard to criminal matters,
Park will indemnify directors and officers if the directors or officers had no
reasonable cause to believe their conduct was unlawful. Directors or officers
claiming indemnification will be presumed to have acted in good faith and in a
manner they reasonably believed to be not opposed to the best interests of Park
and, with respect to any criminal matter, to have had no reasonable cause to
believe their conduct was unlawful.
Park will not indemnify any officer or director of Park who was a party
to any completed action or suit instituted by, or in the right of, Park for any
matter asserted in the action as to which the officer or director has been
adjudged to be liable for acting with reckless disregard for the best interests
of Park or misconduct, other than negligence, in the performance of his duty to
Park. If, however, the Court of Common Pleas of Licking County, Ohio or the
court in which the action was brought determines that the officer or director is
fairly and reasonably entitled to indemnity, Park must indemnify the officer or
director to the extent permitted by the court.
Park will make any indemnification not precluded by Park's regulations
only upon a determination that the director or officer has met the applicable
standard of conduct. The determination may be made only by a majority vote of a
quorum of disinterested directors; if a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written opinion
by independent legal counsel; by the shareholders; or by the Court of Common
Pleas of Licking County, Ohio or the court, if any, in which the action was
brought.
Park will pay expenses incurred in defending any action, suit or
proceeding in advance upon receipt of an undertaking by or on behalf of the
director or officer to repay that amount if the director or officer is not
entitled to be indemnified by Park.
The regulations of Park state that the indemnification provided by the
regulations is not exclusive of any other rights to which any person seeking
indemnification may be entitled. Additionally, the Park regulations provide that
Park may purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of Park, or who is or was serving another
entity at the request of Park, against any liability asserted against him and
incurred by him in that capacity, or arising out of his status as such, whether
or not Park would have the obligation or power to indemnify him under the Park
regulations. Park has purchased and maintains those policies.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
2.1 Agreement and Plan of Merger (excluding exhibits and schedules),
dated as of November 20, 2000, by and between Park National
Corporation ("Park") and Security Banc Corporation ("Security")
(included in the joint proxy statement/prospectus as part of
Appendix A)
3.1 Articles of Incorporation of Park as filed with the Ohio Secretary
of State on March 24, 1992 (incorporated herein by reference to
Exhibit 3(a) to Park's Form 8-B, filed on May 20, 1992 (File No.
0-18772) ("Park's Form 8-B"))
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3.2 Certificate of Amendment to the Articles of Incorporation of Park as
filed with the Ohio Secretary of State on May 6, 1993 (incorporated
herein by reference to Exhibit 3(b) to Park's Annual Report on Form
10-K for the fiscal year ended December 31, 1993 (File No. 0-18772))
3.3 Certificate of Amendment to the Articles of Incorporation of Park as
filed with the Ohio Secretary of State on April 16, 1996
(incorporated herein by reference to Exhibit 3(a) to Park's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1996 (File No. 1-13006))
3.4 Certificate of Amendment by Shareholders to the Articles of
Incorporation of Park as filed with the Ohio Secretary of State on
April 22, 1997 (incorporated herein by reference to Exhibit 3(a)(1)
to Park's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1997 (File No. 1-13006)("Park's June 1997 Form 10-Q"))
3.5 Articles of Incorporation of Park (reflecting amendments through
April 22, 1997) (for SEC reporting compliance purposes only - not
filed with Ohio Secretary of State (incorporated herein by reference
to Exhibit 3(a)(2) to Park's June 1997 Form 10-Q)
3.6 Regulations of Park (incorporated herein by reference to Exhibit
3(b) to Park's Form 8-B)
3.7 Certified Resolution regarding adoption of amendment to Subsection
2.02(A) of the Regulations of Park by Shareholders on April 22, 1997
(incorporated herein by reference to Exhibit 3(b)(1) to Park's June
1997 Form 10-Q)
3.8 Regulations of Park (reflecting amendments through April 22, 1997)
(for SEC reporting compliance purposes only) (incorporated herein by
reference to Exhibit 3(b)(2) to Park's June 1997 Form 10-Q)
5 Opinion of Vorys, Sater, Seymour and Pease LLP, counsel to Park, as
to the legality of the securities being issued
*8 Opinion of Vorys, Sater, Seymour and Pease LLP, counsel to Park, as
to tax matters
10.1 Summary of Incentive Bonus Plan of Park (incorporated herein by
reference to Exhibit 10.1 to Park's Registration Statement on Form
S-4 filed February 22, 2000 (Registration No. 333-30858) ("Park's
February 2000 Form S-4"))
10.2 Split-Dollar Agreement, dated May 17, 1993, between William T.
McConnell and The Park National Bank (incorporated herein by
reference to Exhibit 10(f) to Park's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 (File No. 0-18772)); and
Schedule A identifying other identical Split-Dollar Agreements
between subsidiaries of Park and executive officers of such
subsidiaries who are directors or executive officers of Park
(incorporated herein by reference to Exhibit 10.2 to Park's February
2000 Form S-4)
10.3 Split-Dollar Agreement dated September 29, 1993, between Dominic C.
Fanello and The Richland Trust Company (incorporated herein by
reference to Exhibit 10(g) to Park's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 (File No. 0-18772)); and
Schedule A identifying other identical Split-Dollar Agreements
between directors of Park National and The Park National Bank, The
Richland Trust Company, Century National Bank or The First-Knox
National Bank of Mount Vernon as identified in such Schedule A
(incorporated herein by reference to Exhibit 10.3 to Park's February
2000 Form S-4)
II-2
<PAGE> 173
10.4 Park National Corporation 1995 Incentive Stock Option Plan (as
amended through April 20, 1998) (incorporated herein by reference to
Exhibit 10 to Park's Registration Statement on Form S-8 filed May
14, 1998 (Registration No. 333-52653))
10.5 Form of Stock Option Agreement executed in connection with the grant
of options under the Park National Corporation 1995 Incentive Stock
Option Plan, as amended (incorporated herein by reference to Exhibit
10(i) to Park's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (File No. 1-13006))
10.6 Description of Park National Corporation Supplemental Executive
Retirement Plan (incorporated herein by reference to Exhibit 10(i)
to Park's Registration Statement on Form S-4, filed on January 24,
1997 (Registration No. 333-20417))
21 Subsidiaries of Park
23.1 Consent of Vorys, Sater, Seymour and Pease LLP with respect to its
opinion relating to the legality of the securities being issued
(included in Exhibit 5)
*23.2 Consent of Vorys, Sater, Seymour and Pease LLP with respect to its
tax opinion (included in Exhibit 8)
23.3 Consent of Ernst & Young LLP (with respect to Park)
23.4 Consent of Ernst & Young LLP (with respect to Security)
23.5 Consent of Austin Associates, Inc., financial advisors to Security
24 Powers of Attorney of Directors and Executive Officers of Park
authorizing the signing of their names to this Registration
Statement and any and all amendments to this Registration Statement
and other documents submitted in connection herewith
99.1 Form of Fairness Opinion of Austin Associates, Inc. (set forth in
Appendix B to the joint proxy statement/prospectus included in this
Registration Statement)
99.2 Form of Notice of Special Meeting of Shareholders of Security (set
forth following the cover page of this Registration Statement)
99.3 Form of Proxy to be used in connection with Special Meeting of
Shareholders of Security
*99.4 Form of Letter to be Sent to Shareholders of Security
99.5 Form of Notice of Special Meeting of Shareholders of Park (set forth
immediately following the cover page of this Registration Statement)
99.6 Form of Proxy to be used in connection with Special Meeting of
Shareholders of Park
*99.7 Form of Letter to be Sent to Shareholders of Park
--------------------
* To be filed by amendment
II-3
<PAGE> 174
(b) FINANCIAL STATEMENT SCHEDULES.
All supporting schedules have been omitted because they are not
required.
ITEM 22. UNDERTAKINGS.
(A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(B) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(C) The undersigned Registrant hereby undertakes:
(1) That, prior to any public reoffering of the securities
registered hereunder through use of a prospectus which is a part of this
Registration Statement, by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph
(1) immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
Registration Statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the
II-4
<PAGE> 175
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(D) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(E) The undersigned Registrant hereby undertakes:
(1) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in the documents filed subsequent to the
effective date of the Registration Statement through the date of responding to
the request.
(2) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the Registration Statement
when it became effective.
II-5
<PAGE> 176
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement on Form S-4 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Newark, State of Ohio, on the 29th day of December, 2000.
PARK NATIONAL CORPORATION
By: /s/ C. Daniel DeLawder
----------------------------------------
C. Daniel DeLawder
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed by the following persons in
the capacities indicated below on the 29th day of December, 2000.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<S> <C>
* Chairman of the Board and Director
------------------------------------
William T. McConnell
/s/ C. Daniel DeLawder President, Chief Executive Officer and
------------------------------------ Director (Principal Executive Officer)
C. Daniel DeLawder
* Chief Financial Officer and Principal
------------------------------------ Accounting Officer
John W. Kozak
* Director
------------------------------------
Maureen Buchwald
* Director
------------------------------------
James J. Cullers
* Director
------------------------------------
D. C. Fanello
* Director
------------------------------------
R. William Geyer
* Director
------------------------------------
Philip H. Jordan, Jr., Ph.D.
* Director
------------------------------------
Howard E. LeFevre
</TABLE>
II-6
<PAGE> 177
* Director
------------------------------------
Phillip T. Leitnaker
* Director
------------------------------------
James A. McElroy
* Director
------------------------------------
John J. O'Neill
* Director
------------------------------------
William A. Phillips
* Director
------------------------------------
J. Gilbert Reese
* Director
------------------------------------
Rick R. Taylor
* Director
------------------------------------
John L. Warner
---------------------
*By C. Daniel DeLawder pursuant to Power of Attorney executed by the directors
and executive officers listed above, which Power of Attorney has been filed with
the Securities and Exchange Commission.
/s/ C. Daniel DeLawder
---------------------------------------------
C. Daniel DeLawder
President and Chief Executive Officer
II-7
<PAGE> 178
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
2.1 Agreement and Plan of Merger (excluding exhibits and
schedules), dated as of November 20, 2000, by and between Park
National Corporation ("Park") and Security Banc Corporation
("Security") (included in the joint proxy statement/prospectus
as part of Appendix A)
3.1 Articles of Incorporation of Park as filed with the Ohio
Secretary of State on March 24, 1992 (incorporated herein by
reference to Exhibit 3(a) to Park's Form 8-B, filed on May 20,
1992 (File No. 0-18772) ("Park's Form 8-B"))
3.2 Certificate of Amendment to the Articles of Incorporation of
Park as filed with the Ohio Secretary of State on May 6, 1993
(incorporated herein by reference to Exhibit 3(b) to Park's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993 (File No. 0-18772))
3.3 Certificate of Amendment to the Articles of Incorporation of
Park as filed with the Ohio Secretary of State on April 16,
1996 (incorporated herein by reference to Exhibit 3(a) to
Park's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996 (File No. 1-13006))
3.4 Certificate of Amendment by Shareholders to the Articles of
Incorporation of Park as filed with the Ohio Secretary of State
on April 22, 1997 (incorporated herein by reference to Exhibit
3(a)(1) to Park's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1997 (File No. 1-13006)("Park's June
1997 Form 10-Q"))
3.5 Articles of Incorporation of Park (reflecting amendments
through April 22, 1997) (for SEC reporting compliance purposes
only - not filed with Ohio Secretary of State (incorporated
herein by reference to Exhibit 3(a)(2) to Park's June 1997 Form
10-Q)
3.6 Regulations of Park (incorporated herein by reference to
Exhibit 3(b) to Park's Form 8-B)
3.7 Certified Resolution regarding adoption of amendment to
Subsection 2.02(A) of the Regulations of Park by Shareholders
on April 22, 1997 (incorporated herein by reference to Exhibit
3(b)(1) to Park's June 1997 Form 10-Q)
3.8 Regulations of Park (reflecting amendments through April 22,
1997) (for SEC reporting compliance purposes only)
(incorporated herein by reference to Exhibit 3(b)(2) to Park's
June 1997 Form 10-Q)
5 Opinion of Vorys, Sater, Seymour and Pease LLP, counsel to
Park, as to the legality of the securities being issued
*8 Opinion of Vorys, Sater, Seymour and Pease LLP, counsel to
Park, as to tax matters
10.1 Summary of Incentive Bonus Plan of Park (incorporated herein by
reference to Exhibit 10.1 to Park's Registration Statement on
Form S-4 filed February 22, 2000 (Registration No. 333-30858)
("Park's February 2000 Form S-4"))
</TABLE>
<PAGE> 179
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
10.2 Split-Dollar Agreement, dated May 17, 1993, between William T.
McConnell and The Park National Bank (incorporated herein by
reference to Exhibit 10(f) to Park's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (File No.
0-18772)); and Schedule A identifying other identical
Split-Dollar Agreements between subsidiaries of Park and
executive officers of such subsidiaries who are directors or
executive officers of Park (incorporated herein by reference to
Exhibit 10.2 to Park's February 2000 Form S-4)
10.3 Split-Dollar Agreement dated September 29, 1993, between
Dominic C. Fanello and The Richland Trust Company (incorporated
herein by reference to Exhibit 10(g) to Park's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 (File No.
0-18772)); and Schedule A identifying other identical
Split-Dollar Agreements between directors of Park National and
The Park National Bank, The Richland Trust Company, Century
National Bank or The First-Knox National Bank of Mount Vernon
as identified in such Schedule A (incorporated herein by
reference to Exhibit 10.3 to Park's February 2000 Form S-4)
10.4 Park National Corporation 1995 Incentive Stock Option Plan (as
amended through April 20, 1998) (incorporated herein by
reference to Exhibit 10 to Park's Registration Statement on
Form S-8 filed May 14, 1998 (Registration No. 333-52653))
10.5 Form of Stock Option Agreement executed in connection with the
grant of options under the Park National Corporation 1995
Incentive Stock Option Plan, as amended (incorporated herein by
reference to Exhibit 10(i) to Park's Annual Report on Form 10-K
for the fiscal year ended December 31, 1998 (File No. 1-13006))
10.6 Description of Park National Corporation Supplemental Executive
Retirement Plan (incorporated herein by reference to Exhibit
10(i) to Park's Registration Statement on Form S-4, filed on
January 24, 1997 (Registration No. 333-20417))
21 Subsidiaries of Park
23.1 Consent of Vorys, Sater, Seymour and Pease LLP with respect to
its opinion relating to the legality of the securities being
issued (included in Exhibit 5)
*23.2 Consent of Vorys, Sater, Seymour and Pease LLP with respect to
its tax opinion (included in Exhibit 8)
23.3 Consent of Ernst & Young LLP (with respect to Park)
23.4 Consent of Ernst & Young LLP (with respect to Security)
23.5 Consent of Austin Associates, Inc., financial advisors to
Security
24 Powers of Attorney of Directors and Executive Officers of Park
authorizing the signing of their names to this Registration
Statement and any and all amendments to this Registration
Statement and other documents submitted in connection herewith
99.1 Form of Fairness Opinion of Austin Associates, Inc. (set forth
in Appendix B to the joint proxy statement/prospectus included
in this Registration Statement)
99.2 Form of Notice of Special Meeting of Shareholders of Security
(set forth following the cover page of this Registration
Statement)
</TABLE>
<PAGE> 180
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<S> <C>
99.3 Form of Proxy to be used in connection with Special Meeting of
Shareholders of Security
*99.4 Form of Letter to be Sent to Shareholders of Security
99.5 Form of Notice of Special Meeting of Shareholders of Park (set
forth immediately following the cover page of this Registration
Statement)
99.6 Form of Proxy to be used in connection with Special Meeting of
Shareholders of Park
*99.7 Form of Letter to be Sent to Shareholders of Park
</TABLE>
---------------------
* To be filed by amendment
