SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 24, 2002
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NATIONAL PENN BANCSHARES, INC.
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-10957 23-2215075
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Ident. No.)
Philadelphia and Reading Avenues, Boyertown, PA 19512
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (215) 367-6001
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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events.
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Acquisition Agreement--FirstService Bank
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On September 24, 2002, National Penn Bancshares, Inc. ("NPB"), National
Penn Bank, a wholly-owned subsidiary of NPB ("NP Bank"), and FirstService Bank
("FirstService") entered into an Agreement and Plan of Merger (the "Agreement")
which provides, among other things, for the merger of FirstService with and into
NP Bank, with NP Bank surviving the merger as a wholly-owned subsidiary of NPB
(the "Merger").
The Agreement provides for the exchange of .567 share of NPB common stock,
plus $3.90 in cash, for each share of FirstService common stock. As of the date
of the Agreement, there are 4,304,762 shares of FirstService common stock
outstanding.
* The exchange ratio is subject to adjustment if the average closing
sale price of NPB common stock for the 20 trading-day period ending
on the day 16 days before the date of the FirstService shareholders'
meeting declines to less than $24.75 per share. In that event, the
ratio would adjust to a ratio of .575 NPB share for each
FirstService share, plus $3.90 in cash.
* Should the average closing price of NPB common stock for the 20
trading-day period ending on the day 16 days before the date of the
FirstService shareholders' meeting decline to less than $22.00 per
share, FirstService would have the right to terminate the Agreement
if that decline also was 5% more than the decline in an index of
stock prices of a group of comparable Pennsylvania bank holding
companies over the same time period, unless NPB chooses to increase
the exchange ratio to .582 share for each FirstService share.
* A decline in the average closing price of NPB common stock to less
than $20.625 per share would permit FirstService to terminate the
Agreement.
The Agreement provides for the issuance of stock options for NPB common
stock in substitution for stock options for FirstService common stock, to the
extent the FirstService stock options remain outstanding on the closing date.
The substitute options would reflect the final exchange ratio and otherwise be
on the same terms and conditions as the FirstService options, all of which are
fully vested and exercisable as of the date of the Agreement. There are options
outstanding for 860,489 additional shares of FirstService common stock.
The Merger is intended to be a tax-free exchange for FirstService
shareholders to the extent they receive shares of NPB
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common stock. NPB and FirstService anticipate that closing of the Merger will
occur in the first quarter of 2003.
The Merger is subject to a number of conditions, including approval by the
Office of the Comptroller of the Currency, and approval by the shareholders of
FirstService. FirstService shareholder approval will require the affirmative
vote of holders of two-thirds of the outstanding shares of FirstService common
stock. The Merger does not require approval of NPB's shareholders.
All directors of FirstService (collectively holding approximately 42.66%
of the outstanding shares of FirstService common stock) have agreed (in letter
agreements signed with NPB) to vote in favor of the Merger.
The Agreement provides for FirstService immediately to pay NPB a cash fee
of Five Million Dollars ($5,000,000.00) if FirstService fails to complete the
transactions contemplated by the Agreement after the occurrence of one of the
following events, if NPB is not in material breach of the Agreement:
* A person or group (as those terms are defined in Section 13(d) of
the Exchange Act and the rules and regulations thereunder), other
than NPB or an affiliate of NPB:
* Acquires beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act) of 25% or more of the then
outstanding shares of FirstService common stock; or
* Enters into an agreement, letter of intent or memorandum of
understanding with FirstService pursuant to which such person
or group or any affiliate of such person or group would:
* Merge or consolidate, or enter into any similar
transaction, with FirstService;
* Acquire all or substantially all of the assets or
liabilities of FirstService; or
* Acquire beneficial ownership of securities representing,
or the right to acquire beneficial ownership or to vote
securities representing, 25% or more of the then
outstanding shares of FirstService common stock; or
* FirstService authorizes, recommends or publicly proposes, or
publicly announces an intention to authorize, recommend or propose,
an agreement, letter of intent or
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memorandum of understanding described immediately above; or
* The FirstService shareholders vote but fail to approve the Merger at
the FirstService Shareholders Meeting, or the FirstService
Shareholders Meeting is cancelled, if prior to the shareholder vote
or cancellation:
* The FirstService Board of Directors shall have withdrawn or
modified its recommendation that FirstService shareholders
approve this Agreement; or
* There has been an announcement by a person or group (as those
terms are defined in Section 13(d) of the Exchange Act and the
rules and regulations thereunder), other than NPB or an
affiliate of NPB, of an offer or proposal to acquire 10% or
more of the FirstService common stock then outstanding, or to
acquire, merge, or consolidate with FirstService, or to
purchase all or substantially all of FirstService's assets; or
* Any director or officer of FirstService or other person who
has signed a letter agreement shall have failed to maintain
continued ownership of, and to vote at the FirstService
shareholders' meeting, the shares of FirstService common stock
over which he or she exercises sole or shared voting power (as
identified on his or her signed letter agreement), as required
by such signed letter agreement.
The foregoing description of the Agreement and the related letter
agreements does not purport to be complete and is qualified in its entirety by
reference to the Agreement and the form of letter agreement, which are filed
herein as Exhibits 2.1 and 2.2, respectively.
The Merger is expected to be accretive to National Penn's earnings in the
second year. There are a variety of factors that could cause the actual results
to differ materially from this forward-looking statement. These include, but are
not limited to:
* Expected cost savings from the Merger, including reductions in
interest and non-interest expense, may not be fully realized or
realized within the expected time- frame.
* Revenues following the Merger may be lower than expected, or deposit
attrition, operating costs, customer losses or business disruption
following the Merger may be greater than expected.
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* Commercial loan growth following the Merger may be lower than
expected.
* Competitive pressures among banking and non-banking organizations
may increase significantly.
* Costs, difficulties or delays related to the integration of the
businesses or systems of NPB and FirstService may be greater or
longer than expected.
* Changes in the interest rate environment may reduce interest
margins.
* General economic or business conditions, either nationally or in the
region in which the combined company will be doing business, may be
less favorable than expected, resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit.
* Legislation or regulatory changes may adversely affect the
businesses in which the combined company would be engaged
* Changes may occur in the securities markets.
Additional information with respect to factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statement is included in NPB's quarterly report on Form 10-Q for 2nd quarter
2002 and may be included in subsequent reports filed by NPB with the Securities
and Exchange Commission.
Wayne R. Weidner--Exercise of Stock Options
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On September 26, 2002, Wayne R. Weidner, Chairman, President and Chief
Executive Officer of National Penn Bancshares, Inc., exercised stock options and
acquired 5,012 additional shares of National Penn common stock, increasing his
ownership to approximately 47,550 shares, under a previously reported plan
adopted in August 2002 pursuant to SEC Rule 10b5-1)(c). Under the plan, Mr.
Weidner intends to exercise additional stock options and acquire approximately
5,000 more shares of National Penn common stock in October 2002.
Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
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2.1 - Agreement dated September 24, 2002 between National Penn
Bancshares, Inc., National Penn Bank, and FirstService Bank.
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2.2 - Form of Letter Agreement between FirstService Bank directors and
National Penn Bancshares, Inc.
99 - Press release dated September 24, 2002 of National Penn Banchshares,
Inc. (filed pursuant to Item 9 hereof).
Item 9. Regulation FD Disclosure
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On September 24, 2002, National Penn Bancshares, Inc. issued a press
release concerning its proposed acquisition of FirstService Bank (discussed at
Item 5 hereof). This press release is filed herein, as part of this Item 9, as
Exhibit 99.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL PENN BANCSHARES, INC.
By/s/Wayne R. Weidner
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Wayne R. Weidner
Chairman, President and
Chief Executive Officer
Dated: September 27, 2002
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EXHIBIT INDEX
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Exhibit Number Description
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2.1 Agreement dated September 24, 2002 between National Penn
Bancshares, Inc., National Penn Bank, and FirstService Bank.
2.2 Form of Letter Agreement between FirstService Bank directors and
National Penn Bancshares, Inc.
99 Press release dated September 24, 2002 of National Penn
Banchshares, Inc. (filed pursuant to Item 9 hereof).
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