Item 1.01 Entry into a Definitive Material Agreement.
On January 8, 2020, Norwood Financial Corp. ("Norwood Financial") and its wholly
owned subsidiary, Wayne Bank, and UpState New York Bancorp, Inc. ("UpState
Bancorp"), and its wholly owned subsidiary, USNY Bank, entered into an Agreement
and Plan of Merger (the "Merger Agreement"), pursuant to which UpState Bancorp
will merge with and into Norwood Financial, with Norwood Financial as the
surviving corporation. Concurrent with the merger, it is expected that USNY Bank
will merge with and into Wayne Bank.
Under the terms of the Merger Agreement, each outstanding share of UpState
Bancorp common stock will be converted into either the right to receive $33.33
in cash or 0.9390 shares of Norwood Financial common stock. The elections of
UpState Bancorp stockholders will be subject to the requirement that 10% of the
merger consideration (which includes any shares as to which the holders have
exercised dissenters' rights) be paid in cash and that the remainder be paid in
Norwood common stock. In the event of a greater than 20% decline in market value
of Norwood Financial common stock, UpState Bancorp may, in certain
circumstances, be able to terminate the Merger Agreement unless Norwood
Financial increases the number of shares into which UpState Bancorp common stock
may be converted. In addition to the purchase price per share, UpState Bancorp
may also be permitted, under certain performance conditions, to distribute at
the closing of the merger, a special cash dividend of up to an additional $0.67
per share to UpState Bancorp's shareholders.
UpState Bancorp directors Jeffrey S. Gifford and Alexandra K. Nolan will be
appointed to the boards of directors of Norwood Financial and Wayne Bank. In
addition, the other directors of UpState Bancorp will be invited to join a
regional advisory board. UpState Bancorp President and CEO R. Michael Briggs
will enter into a consulting agreement with Wayne Bank. Norwood Financial will
retain the brand names of USNY's two units, Bank of the Finger Lakes and Bank of
Cooperstown, and will also retain USNY's administration center in Geneva, New
York. Scott D. White, unit President of Bank of Cooperstown, and Jeffrey E.
Franklin, unit President of Bank of the Finger Lakes, will also remain in place
as executives of their units.
The transaction is subject to customary closing conditions, including the
receipt of regulatory approvals and approval by the shareholders of Norwood
Financial and UpState Bancorp. The merger is currently expected to be completed
early in the third quarter of 2020.
Each of the directors and executive officers of Norwood Financial and UpState
Bancorp have agreed to vote their shares in favor of the approval of the Merger
Agreement at the shareholders meetings to be held to vote on the proposed
transaction. If the merger is not consummated under certain circumstances,
UpState Bancorp has agreed to pay Norwood Financial a termination fee of
$3.2 million.
The Merger Agreement also contains usual and customary representations and
warranties that Norwood Financial and UpState Bancorp made to each other as of
specific dates. The assertions embodied in those representations and warranties
were made solely for purposes of the contract between Norwood Financial and
UpState Bancorp, and may be subject to important qualifications and limitations
agreed to by the parties in connection with negotiating its terms. Moreover, the
representations and warranties are subject to a contractual standard of
materiality
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that may be different from what may be viewed as material to shareholders, and
the representations and warranties may have been used to allocate risk between
Norwood Financial and UpState Bancorp rather than establishing matters as facts.
The foregoing summary of the Merger Agreement is not complete and is qualified
in its entirety by reference to the complete text of such document, which is
filed as Exhibit 2.1 to this Form 8-K and which is incorporated herein by
reference in its entirety.
Item 7.01 Regulation FD Disclosure.
On January 9, 2020, Norwood Financial released a presentation to investors
containing additional information regarding the Merger. The presentation is
included in this Report as Exhibit 99.1 and is furnished herewith, and shall not
be deemed "filed" for any purpose nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933.
Item 8.01 Other Events.
On January 9, 2020, Norwood Financial and UpState Bancorp issued a joint press
release announcing the signing of the Merger Agreement. A copy of the press
release is filed as Exhibit 99.2 hereto and incorporated by reference herein.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, but are not limited to, statements about
(i) the benefits of the merger between Norwood Financial and UpState Bancorp,
including anticipated future results, cost savings and accretion to reported
earnings that may be realized from the merger; (ii) Norwood Financial and
UpState Bancorp's plans, objectives, expectations and intentions and other
statements contained in this presentation that are not historical facts; and
(iii) other statements identified by words such as "expects," "anticipates,"
"intends," "plans," "believes," "seeks," "estimates" or words of similar
meaning.
Forward-looking statements involve risks and uncertainties that may cause actual
results to differ materially from those in such statements. The following
factors, among others, could cause actual results to differ materially from the
anticipated results expressed in the forward-looking statements: the businesses
of Norwood Financial and UpState Bancorp may not be combined successfully, or
such combination may take longer than expected; the cost savings from the merger
may not be fully realized or may take longer than expected; operating costs,
customer loss and business disruption following the merger may be greater than
expected; governmental approvals of the merger may not be obtained, or adverse
regulatory conditions may be imposed in connection with governmental approvals
of the merger or otherwise; the stockholders of UpState Bancorp or Norwood
Financial may fail to approve the merger; the interest rate environment may
further compress margins and adversely affect new interest income; the risks
associated with continued diversification of assets and adverse changes to
credit quality; and difficulties associated with achieving expected future
financial results. Additional factors that could cause actual results to differ
materially from those expressed in the forward-looking statements are discussed
in Norwood Financial' s reports (such as the Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the
Securities and Exchange Commission (the "SEC") and available at the SEC's
Internet website (www.sec.gov). All subsequent written and oral forward-looking
statements concerning the proposed transaction or other matters attributable to
Norwood Financial or UpState Bancorp or any person acting on their behalf are
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expressly qualified in their entirety by the cautionary statements above. Except
as required by law, Norwood Financial and UpState Bancorp do not undertake any
obligation to update any forward-looking statement to reflect circumstances or
events that occur after the date the forward-looking statement is made.
Additional Information
In connection with the proposed merger, Norwood Financial will file a
Registration Statement on Form S-4 with the SEC, which will contain the proxy
materials of Norwood Financial Corp. and UpState Bancorp and certain other
information regarding Norwood Financial Corp. These proxy materials will set
forth complete details of the merger. Investors are urged to carefully read the
proxy materials when filed with the SEC, as they will contain important
information. Investors will be able to obtain a free copy of the proxy materials
free of charge at the SEC's website at www.sec.gov. The proxy materials may also
be accessed for free on Norwood's website at
www.waynebank.com/stockholder-services or by directing a written request to
UpState New York Bancorp, Inc., 389 Hamilton Street, Geneva, New York 14456,
Attention: Corporate Secretary. Investors should read the proxy materials before
making a decision regarding the merger. Norwood Financial, UpState Bancorp and
certain of their respective directors, executive officers and employees may be
deemed to be participants in the solicitation of proxies in respect of the
proposed transaction under the rules of the SEC. Information regarding Norwood's
directors and executive officers is available in its definitive proxy statement,
which was filed with the SEC on March 22, 2019, and certain of its Current
Reports on Form 8-K. UpState Bancorp's directors and executive officers who may
be deemed to be participants in the solicitation of proxies in respect of the
proposed transaction are R. Michael Briggs, Robert W. Sollenne, Scott White,
Jeffrey E. Franklin, H. Todd Bullard, H. Taylor Fitch III, Jeffrey S. Gifford,
Jeffrey K. Haggerty, Murray P. Heaton, J. Michael Moffat, Alexandra K. Nolan and
Steven C. Smith. Other information regarding the participants in the
solicitation of proxies in respect of the proposed transaction and a description
of their direct and indirect interests, by security holdings or otherwise, will
be contained in the joint proxy statement/prospectus and other relevant
materials to be filed with the SEC. Free copies of these documents, when
available, may be obtained as described above.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated January 8, 2020 by and among
Norwood Financial Corp., Wayne Bank, UpState Bancorp, Inc. and USNY
Bank. The schedules have been omitted from the Merger Agreement as
filed with the SEC pursuant to Item 601(b)(2) of Regulation S-K. The
omitted information is considered immaterial from an investor's
perspective. Norwood Financial Corp. will furnish to the SEC
supplementally a copy of any omitted schedule upon request from the
SEC.
99.1 Norwood Financial Corp. Investor Presentation, dated January 9,
2020
99.2 Joint Press Release, dated January 9, 2020
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