| Item 1.01 | Entry into a Material Definitive Agreement |
On September 3, 2020, Bogota Financial Corp. (the “Company”), the parent company of Bogota Savings Bank (the “Bank”), and Bogota Financial, MHC, the Company’s mutual holding company parent (the “MHC” and, together with the Company and the Bank, the “Bogota Entities”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Gibraltar Bank, pursuant to which Gibraltar Bank will merge with and into the Bank, with the Bank as the surviving institution (the “Merger”).
Under the terms of the Merger Agreement, depositors of Gibraltar Bank will become depositors of the Bank and will have the same rights and privileges in the MHC as if their accounts had been established at the Bank on the date established at Gibraltar Bank. As part of the transactions contemplated by the Merger Agreement, at the effective time of the Merger, the Company will issue additional shares of its common stock to the MHC in an amount equal to the fair value of Gibraltar Bank as determined by an independent appraiser.
The Merger Agreement has been unanimously approved by the Boards of Directors of each of the Bogota Entities and Gibraltar Bank. Subject to the receipt of all required regulatory and other approvals (including the approval of the Merger by the members of Gibraltar Bank), and the satisfaction or waiver of other customary closing conditions, the parties anticipate that the transactions contemplated by the Merger Agreement will close in the first quarter of 2021.
Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, each of the Bogota Entities will increase the size of their Boards of Directors by one member and appoint one director of Gibraltar Bank to serve on their Boards of Directors.
The Merger Agreement contains customary representations and warranties from the Bogota Entities and Gibraltar Bank, each with respect to their businesses. Each party has also agreed to customary covenants, including, among others, covenants relating to the conduct of its business during the interim period between the execution of the Merger Agreement and the effective time of the Merger. Under the Merger Agreement, Gibraltar Bank has agreed that, subject to certain exceptions, it will not, and will cause its representatives not to, solicit, initiate, encourage or take any action to facilitate (including by providing non-public information) any inquiries or proposals with respect to any third party acquisition proposals. The Merger Agreement provides certain termination rights for each of the Bogota Entities and Gibraltar Bank, and further provides that if the Merger Agreement is terminated as a result of either party’s material breach of the terms of the Merger Agreement, then the breaching party will reimburse the non-breaching party for its transaction expenses up to $500,000. The Merger Agreement also requires Gibraltar Bank to pay the Bogota Entities a termination fee of $500,000 if the Merger Agreement is terminated under certain circumstances.
As described above, the consummation of the Merger is subject to customary closing conditions, including, but not limited to, (1) receipt of all required regulatory and other approvals (including the approval of the Merger by the members of Gibraltar Bank), and (2) the absence of any law or order prohibiting the closing. In addition, each party’s obligation to consummate the Merger is subject to certain other customary conditions, including (1) the accuracy of the representations and warranties of the other party subject to certain materiality standards and (2) compliance in all material respects by the other party with its covenants.
