Plan has been administered in all material respects in accordance with its terms. All contributions required to be made prior to the date hereof to any Parent Benefit Plan by applicable Law or regulation or by any plan document or other contractual undertaking, and all premiums due and payable prior to the date hereof with respect to insurance policies funding any Parent Benefit Plan, have been timely made or paid in full. Except as would not reasonably be expected to result in any liability to Parent or any of its Subsidiaries, none ofthere are no pending or threatened claims (other than routine claims for benefits in the Valley Real Property hasordinary course), lawsuits or arbitrations which have been condemnedasserted, threatened or otherwise taken by any Governmental Entityinstituted, and to the Knowledge of Valley,Parent, no condemnationset of circumstances exists which may reasonably give rise to a claim or takinglawsuit against the Parent Benefit Plans, any fiduciaries thereof with respect to their duties to the Parent Benefit Plans or the assets of any of the trusts under any of the Parent Benefit Plans.
(b) No Parent Benefit Plan is threateneda Multiemployer Plan or contemplateda Multiple Employer Plan; (ii) none of Parent and its Subsidiaries nor any of their respective ERISA Affiliates has, at any time during the last six years, contributed to or been obligated to contribute to any Multiemployer Plan or Multiple Employer Plan; (iii) none thereofof Parent and its Subsidiaries nor any of their respective ERISA Affiliates has incurred any Withdrawal Liability that has not been satisfied in full; and (iv) no Parent Benefit Plan is subject to any claim, contractTitle IV or Law which might adversely affect its useSection 302 of ERISA or value for the purposes now made of it. To the Knowledge of Valley, noneto Sections 412 or 430 of the premises or propertiesCode. None of Valley or any ofParent and its Subsidiaries is subject tohas any current interests of third partiesliability for life, health, medical or other restrictionswelfare benefits to former employees or limitations that would impairbeneficiaries or be inconsistent with the current use of such propertydependents thereof, except for health continuation coverage as required by Valley or any of its Subsidiaries.
(f) Valley has delivered to CVB true, accurate and complete copies of eachSection 4980B of the followingCode or Part 6 of Subtitle B of Title I of ERISA and at no expense to the extent in the possessionParent and its Subsidiaries and except for long-term or control of Valleyshort-term disability plans and in any way related to any of the Valley Real Property: (i) title commitments together with legible copies of all underlying exceptions, (ii) title policies, (iii) environmental reports, (iv) zoning reports and zoning letters, and (v) licenses and permits.severance arrangements.
(g) Since January 1, 2015, VBB has not applied for or received permission to open any additional branch or operate at any other location.
3.225.20Insurance. Section 3.22 of the Valley Disclosure Schedule lists all insurance policies and bonds maintained by Valley and each of its Subsidiaries. Except as set forth on Section 3.22 of the Valley Disclosure Schedule, (i) ValleyPreviously Disclosed, (a) Parent and each of its Subsidiaries is, and at all times within five (5) years hereof each has been, insured with insurers and has insurance coverage adequate to insure against all risks normally insured against by companies in similar businesses and of comparable size, (ii)reasonably consistent with industry practice, (b) neither ValleyParent nor any of its Subsidiaries is in default under any policy of insurance or bond such that it could be cancelled, and all such insurance policies and bonds maintained by Valley and eachParent or any of its Subsidiaries are in full force and effect and, except for expirations in the ordinary course, will remain so through and after the Closing, and (iii) Valley(c) Parent and each of its Subsidiaries
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have has filed claims with, or given notice of claims to, its insurers with respect to all material matters and occurrences for which it believes it has coverage. Valley has furnished CVB with true and correct copies
5.21 Reorganization. To Parent’s Knowledge, none of all insurance policies and bonds identified on Section 3.22 of the Valley Disclosure Schedule, including all amendments and supplements thereto.
3.23Accounting and Internal Controls.
(a) The records, systems, controls, data and information of Valley and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of Valley or accountants (including all means of access thereto and therefrom). Valley has devised and maintain internal control over financial reporting (within the meaning of Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Such internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP and includes policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of Valley, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of Valley are being made only in accordance with authorizations of management and directors of Valley, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Valley’s assets that could have a material effect on its financial statements. Valley has Previously Disclosed, based on its most recent evaluation prior to the date hereof, to its auditors and the audit committee of its Board of Directors: (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in its internal controls over financial reporting.
(b) Since January 1, 2013, (A) neither Valley nor, to the Knowledge of Valley, any director, officer, auditor, accountant or representative of ValleyParent or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or written claim regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to loan loss reserves, write-downs, charge-offs and accruals) of Valley or any of its Subsidiaries or its respective internal accounting controls, including any material complaint, allegation, assertion or written claim that Valley or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (B) no attorney representing Valley or any of its Subsidiaries, whether or not employed by it, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by it or any of its officers or directors to its board of directors or any committee thereof or to any of its directors or officers.
3.24Derivatives. Except as set forth in Section 3.24 of the Valley Disclosure Schedule, neither Valley nor any of its Subsidiaries is a party to nor has agreed to enter into an exchange-traded or over-the-counter equity, interest rate, foreign exchange or other swap, forward, future, option, cap, floor or collar or any other contract that is not included on the balance sheet and is a derivative contract (including various combinations thereof) or owns securities that are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes,” or “capped floating rate mortgage derivatives” (each, a “Derivative Transaction”). All Derivative Transactions, whether entered into for the account of Valley or any of its Subsidiaries or for the account of a customer of Valley or any of its Subsidiaries, were entered into in the ordinary course of business and in accordance with prudent banking practice and applicable Laws and other policies, practices, and procedures employed by Valley and each of its Subsidiaries is and with counterparties believed to be financially responsible at the time, and are legal, valid and binding obligations of Valley or any of its Subsidiaries, as the case may be, enforceable against it in accordance with their terms (except as such enforcement may be limited by the Enforceability Exceptions). Valley and each of its Subsidiaries have duly performed in all material respects all of its obligations thereunder to the extent required, and, to Knowledge of Valley, there are no breaches, violations or defaults or allegations or assertions of such by any party thereunder. The financial position of
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Valley on a consolidated basis under or with respect to each such Derivative Transaction has been reflected in all material respects in the books and records of Valley in accordance with GAAP.
3.25Loan Matters.
(a) Each loan, loan agreement, note or borrowing arrangement (including leases, credit enhancements, commitments, guarantees and interest-bearing assets) in which Valley or any of its Subsidiaries is a creditor (collectively, “Loans”) currently outstanding (i) is evidenced by notes, agreements or other evidences of indebtedness that are true, genuine and what they purport to be, (ii) to the extent secured, has been secured by valid Liens which have been perfected and (iii) to the Knowledge of Valley, is a legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms (subject to the Enforceability Exceptions). The notes or other credit or security documents with respect to each such outstanding Loan were in compliance with all applicable Laws at the time of origination or purchase by Valley or any of its Subsidiaries.
(b) Each outstanding Loan was solicited and originated, and is and has been administered and, where applicable, serviced, and the relevant Loan files are being maintained in accordance with the relevant notes or other credit or security documents and Valley’s written underwriting standards, in each case with all applicable requirements of applicable Law and government programs.
(c) None of the agreements pursuant to which Valley or any of its Subsidiaries has sold or is servicing (i) Loans or pools of Loans or (ii) participations in Loans or pools of Loans contains any obligation to repurchase such Loans or interests therein or to pursue any other form of recourse against Valley.
(d) Valley has Previously Disclosed to CVB all claims for repurchases by Valley or any of its Subsidiaries of Loans that were sold to third parties by Valley or any of its Subsidiaries that are outstanding or threatened (in writing), in each case, as of the date hereof or the Closing Date.
(e) Section 3.25(e) of the Valley Disclosure Schedule sets forth a list of (i) each Loan that as of August 31, 2016 and as of the fifth (5th) Business Day immediately preceding the Closing Date (A) was contractually past due 90 days or more in the payment of principal and/or interest, (B) was on non-accrual status, (C) was classified as “substandard,” “doubtful,” “loss,” “classified,” “criticized,” “credit risk assets,” “concerned loans,” “watch list,” “impaired” or “special mention” (or words of similar import) by Valley or any of its Subsidiaries, or any Governmental Entity (D) a specific reserve allocation existed in connection therewith or (E) was required to be accounted for as a troubled debt restructuring in accordance with ASC 310-40, (ii) each Loan that as of August 31, 2016 and as of the fifth (5th) Business Day immediately preceding the Closing Date had an outstanding balance and/or unfunded commitment of $25,000 or more and that as of such date as to which (A) a reasonable doubt exists as to the timely future collectability of principal and/or interest, whether or not interest is still accruing or the Loans are less than 90 days past due or (B) the interest rate terms have been reduced and/or the maturity dates have been extended subsequent to the agreement under which the Loan was originally created due to concerns regarding the borrower’s ability to pay in accordance with such initial terms, and (iii) each asset of Valley that as of August 31, 2016 and as of the fifth (5th) Business Day immediately preceding the Closing Date was classified as “other real estate owned,” “other repossessed assets” or as an asset to satisfy Loans, and the book value thereof as of such date. For each loan identified in accordance with the immediately preceding sentence, Section 3.25(e) of the Valley Disclosure Schedule sets forth the outstanding balance, including accrued and unpaid interest, on each such Loan and the identity of the borrower thereunder as of August 31, 2016 and as of the fifth (5th) Business Day immediately preceding the Closing Date.
(f) Section 3.25(f) of the Valley Disclosure Schedule sets forth a list of all Loans as of the date of this Agreement by Valley or any of its Subsidiaries to any directors, officers and principal shareholders (as such terms are defined in Regulation O of the Federal Reserve (12 C.F.R. Part 215) of Valley or any of its Subsidiaries. There are no employee, officer, director or other Affiliate Loans on which the borrower is paying a rate other than that reflected in the note or other relevant credit or security agreement or on which the borrower is paying a rate which was not in compliance with Regulation O, and all such Loans are and were originated in compliance with all applicable Laws.
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(g) Section 3.25(g) of the Valley Disclosure Schedule sets forth a list of all Loans (i) providing for zero rate, 1.23% interest rate or any other below-market rate of interest or below-market fees or other “teaser” rates or fees or their equivalents, (ii) as to which Valley or VBB, as applicable, has waived its right to collect interest or (iii) providing for an interest rate that is not consistent with Valley’s or VBB’s, as applicable, written policies with respect to Loan pricing in effect as of the date of this Agreement.
(h) Neither Valley nor any of its Subsidiaries is now, nor has it ever been, since January 1, 2013 subject to any fine, suspension, settlement or other contract or other administrative agreement or sanction by, or any reduction in any loan purchase commitment from, any Governmental Entity or agency relating to the origination, sale or servicing of mortgage or consumer Loans or Loans guaranteed by any governmental agency.
(i) Since January 1, 2013, Valley and each of its Subsidiaries has complied with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated by Valley or any of its Subsidiaries satisfied: (1) all applicable Laws with respect to the origination, insuring, purchase, sale, pooling, servicing, subservicing, loan modification, loss mitigation or filing of claims in connection with such mortgage loans, including, to the extent applicable, all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending Laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, in each case applicable as of the time of such origination, processing, underwriting or credit approval; (2) the responsibilities and obligations relating to such mortgage loans set forth in any agreement or understanding between Valley and any Agency, loan investor or insurer; (3) the applicable rules, regulations, guidelines, procedures, handbooks and other requirements of any Agency, loan investor or insurer, in each case applicable as of the time of such origination, processing, underwriting or credit approval; and (4) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each such mortgage loan; in each case applicable as of the time of such origination, processing, underwriting or credit approval.
(j) Since January 1, 2013, no customer of Valley or any of its Subsidiaries has indicated in writing to Valley or any of its Subsidiaries that it has terminated or intends to terminate its relationship with Valley or any of its Subsidiaries for poor performance, poor loan service or concern with respect to Valley’s any of its Subsidiaries’ compliance with Laws.
(k) Since January 1, 2013, neither Valley nor any of its Subsidiaries has engaged in, and, to the Knowledge of Valley, no third-party vendors (including outside law firms and other third-party foreclosure services providers) used by Valley or any of its Subsidiaries has engaged in, directly or indirectly, (1) any foreclosures in violation of any applicable Law, including but not limited to the Servicemembers Civil Relief Act, or in breach of any binding Regulatory Agreement or (2) the conduct referred to as “robo-signing” or any other similar conduct of approving or notarizing documents relating to mortgage loans that do not comply with any applicable Law.
(l) Since January 1, 2013, neither Valley nor any of its Subsidiaries has foreclosed upon, managed or taken a deed or title to, any real estate (other than single-family residential properties) without complying with all applicable FDIC environmental due diligence standards (including FDIC Bulletin FIL-14-93, and update FIL-98-2006) or foreclosed upon, managed or taken a deed or title to, any such real estate if the environmental assessment indicates the liabilities under Environmental Laws are likely in excess of the asset’s value.
3.26Community Reinvestment Act Compliance. VBB is in compliance with the applicable provisions of the Community Reinvestment Act of 1977 (“CRA”) and the regulations promulgated thereunder and has received a CRA rating of “satisfactory” or higher in its most recently completed exam, and Valley has no Knowledge that VBB’s compliance under the CRA should constitute grounds for either the denial by any Governmental Entity of any application to consummate the transactions contemplated by this Agreement or the imposition of a materially burdensome condition in connection with the approval of any such application, or the existence of any fact or circumstance or set of facts or circumstances which would reasonably be expected to result in VBB having its
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current rating lowered. Neither Valley nor any of its Subsidiaries has received a written notice from any third-party group representing community interests raising concerns or objections with respect to its policies or practices in its relations or practices with customers, vendors or clients.
3.27Bank Secrecy Act Compliance. Neither Valley nor any of its Subsidiaries has been advised of any supervisory concerns regarding its compliance with the Bank Secrecy Act (31 U.S.C. §5322, et seq.) or related state or federal anti-money laundering Laws, including (i) those provisions of the United States Code providing penalties for the laundering of monetary instruments (18 U.S.C. §1956) or engaging in monetary transactions in property derived from specified unlawful activity (18 U.S.C. §1957) and (ii) any “Know Your Customer” regulations, guidelines or supervisory policies and examination requirements.
3.28Investment Securities. Except as set forth on Section 3.28 of the Valley Disclosure Schedule, neither Valley nor any of its Subsidiaries has (a) held any Investment Securities on December 31, 2015, (b) has or acquired, sold or disposed of any Investment Security since December 31, 2015, or (c) has held any Investment Security until maturity since December 31, 2015. For purposes of this Agreement, “Investment Security” means any equity security or debt security as defined in Accounting Standards Codification Topic 320.
3.29Related Party Transactions. Except for Loans set forth in Section 3.25(f) of the Valley Disclosure Schedule, for ordinary course bank deposit, trust and asset management services on arms’ length terms, and “compensation” as defined in Item 402 of the SEC’s Regulation S-K, there are no transactions or series of related transactions, agreements, arrangements or understandings, nor are there any currently proposed transactions or series of related transactions, between Valley or any of its Subsidiaries, on the one hand, and any current or former director or “executive officer” (as defined in Rule 3b-7 under the Exchange Act) of Valley or any of its Subsidiaries or any Person who beneficially owns (as defined in Rules 13d-3 and 13d-5 of the Exchange Act) 5% or more of Valley Common Stock (or any of such Person’s immediate family members or Affiliates) on the other hand.
3.30Operating Losses. Section 3.30 of the Valley Disclosure Schedule sets forth any Operating Loss (as defined below) that has occurred at Valley or any of its Subsidiaries during the period after December 31, 2015, to the date of this Agreement. Except as set forth on Section 3.30 of the Valley Disclosure Schedule, to its Knowledge, no event has occurred, and no action has been taken or omitted to be taken by any employee of Valley or any of its Subsidiaries that has resulted in the incurrence by Valley or any of its Subsidiaries of an Operating Loss or that might reasonably be expected to result in the incurrence by Valley or any of its Subsidiaries of an Operating Loss after the date hereof, which, net of any insurance proceeds payable in respect thereof, exceeds, or would exceed $25,000 individually or when aggregated with all other Operating Losses, $50,000 during such period. For purposes of this Agreement, “Operating Loss” means any individual loss resulting from cash shortages, lost or misposted items, disputed clerical and accounting errors, forged checks, payment of checks over stop payment orders, counterfeit money, wire transfers made in error, theft, robberies, defalcations, check kiting, fraudulent use of credit cards or electronic teller machines, civil money penalties, fines, litigation, claims, arbitration awards or other similar acts or occurrences
3.31Employee and Labor Matters.
(a) Section 3.31(a) of the Valley Disclosure Schedule contains a complete and correct list, as of the date of this Agreement, of the name of each employee, job description, job location, title, current annual base salary, other compensation and wage and hour exemption status of Valley and each of its Subsidiaries and a summary of all Contracts or commitments by Valley to increase the compensation or to modify the conditions or terms of employment including all agreements regarding Change of Control Payments. All persons who have been treated as independent contractors by Valley for tax purposes have met the criteria to be so treated under applicable Law.
(b) Neither Valley nor any of its Subsidiaries is, nor at any time since January 1, 2013 were either of them, a party to or bound by any labor or collective bargaining agreement and, to the Knowledge of Valley, there
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are no organizational campaigns, petitions or other activities or proceedings of any labor union, workers’ council or labor organization seeking recognition of a collective bargaining unit with respect to, or otherwise attempting to represent, any of the employees of Valley or any of its Subsidiaries or compel Valley or any of its Subsidiaries to bargain with any such labor union, workers’ council or labor organization. There are no labor related controversies, strikes, slowdowns, walkouts or other work stoppages pending or, to the Knowledge of Valley, threatened (in writing) and neither Valley nor any of its Subsidiaries has experienced any such labor related controversy, strike, slowdown, walkout or other work stoppage since January 1, 2012. Neither Valley nor any of its Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to employees or employment practices. Valley and each of its Subsidiaries is in material compliance with all applicable Laws relating to labor, employment, termination of employment or similar matters, including but not limited to Laws relating to discrimination, disability, classification of workers, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, and has not engaged in any unfair labor practices or similar prohibited practices. Except as set forth in Section 3.31(b) of the Valley Disclosure Schedule, there are no complaints, lawsuits, arbitrations, administrative proceedings, or other proceedings of any nature pending or, to the Knowledge of Valley, threatened against Valley brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, any class of the foregoing, or any Governmental Entity, relating to any such Law, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.
(c) No executive or group of employees has informed Valley of his, her or their intent to terminate employment.
(d) No Person has claimed, or to Knowledge of Valley has valid reason to claim, that any employee or former employee of Valley (i) is in violation of any material term of any employment agreement, confidentiality agreement, non-competition agreement or any restrictive covenant with such Person; (ii) has improperly disclosed or utilized any trade secret, confidential or proprietary information or documentation belonging to such Person in connection with their employment; or (iii) has interfered in the employment relationship with such Person and any of its present or former employees in violation of any Law or enforceable agreement between such Person and the applicable employee.
(e) Valley has made available to CVB prior to the date of this Agreement a copy of all material written policies and procedures related to the employees of Valley and each of its Subsidiaries and a written description of all material unwritten policies and procedures related to the employees of Valley and each of its Subsidiaries.
(f) All employees of Valley and each of its Subsidiaries are authorized to work in the United States of America and a Form I-9 has been properly completed and retained with regard to each such employee.
3.32Trust Matters. Neither Valley nor any of its Subsidiaries exercises any trust powers, including, but not limited to, trust administration, and neither it nor any predecessor has exercised such trust powers for a period from and after January 1, 2013. The term “trusts” as used in this Section 3.32 includes (i) any and all common-law or other trusts between an individual, corporation or other entities and Valley and each of its Subsidiaries or a predecessor, as trustee or co-trustee, including, any pension or other qualified or nonqualified employee benefit plans, compensation, testamentary, inter vivos, and charitable trust indentures; (ii) any and all decedents’ estates where Valley or any of its Subsidiaries, or a predecessor is serving or has served as a co-executor or sole executor, personal representative or administrator, administrator de bonis non, administrator de bonis non with will annexed, or in any similar fiduciary capacity; (iii) any and all guardianships, conservatorships or similar positions where Valley or any of its Subsidiaries, or a predecessor is serving or has served as a co-grantor or a sole grantor or a conservator or co-conservator of the estate, or in any similar fiduciary capacity; and (iv) any and all agency and/or custodial accounts and/or similar arrangements, including plan administrator for employee
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benefit accounts, under which Valley or any of its Subsidiaries, or a predecessor is serving or has served as an agent or custodian for the owner or other party establishing the account with or without investment authority.
3.33Information Technology; Security & Privacy. All information technology and computer systems and services (including software, information technology and telecommunication hardware and other equipment) relating to the transmission, storage, maintenance, organization,presentation, generation, processing or analysis of data and information, whether or not in electronic format, used in or necessary to the conduct of Valley’s business on a consolidated basis (collectively, “Valley IT Systems”) have been properly maintained by technically competent personnel, in accordance with standards set by the manufacturers or otherwise in accordance with standards prudent in the industry (including strong passwords), to ensure proper operation, monitoring and use. Valley IT Systems are in material compliance with regulatory standards and guidelines as required by applicable Law. Valley has commercially reasonable disaster recovery plans, procedures and facilities for its business and has taken commercially reasonable steps to safeguard Valley IT Systems. Valley IT Systems are in good working condition to effectively perform all information technology operations necessary to conduct consolidated business. Neither Valley nor any of its Subsidiaries has experienced since January 1, 2012 any material disruption to, or material interruption in, its conduct of its business attributable to a defect, bug, breakdown, cyber or security breach or other failure or deficiency of Valley IT Systems. Each of Valley and its Subsidiaries has taken reasonable measures to provide for the backup and recovery of the data and information necessary to the conduct of its businesses (including such data and information that is stored on magnetic or optical media in the ordinary course) without material disruption to, or material interruption in, the conduct of their respective businesses. Neither Valley nor any of its Subsidiaries, is in breach of any material contract related to any Valley IT Systems. To the Knowledge of Valley, Valley and each of its Subsidiaries has at all times complied in all material respects with all applicable legal requirements (including but not limited to all regulatory standards and guidelines) relating to privacy, data protection and the collection and use of personal information gathered or accessed in the course of the operations of Valley and each of its Subsidiaries. Valley and each of its Subsidiaries has at all times complied in all material respects with all rules, policies and procedures established by Valley and its Subsidiaries, as applicable, from time to time with respect to the foregoing. No claims are pending and, to its Knowledge, no claims have been asserted or threatened against Valley or any of its Subsidiaries or are likely to be asserted or threatened against Valley or any of its Subsidiaries by any Person alleging a violation of such Person’s privacy, personal or confidentiality rights under any such Laws, policies or procedures. The consummation of the Merger, the Bank Merger and the other transactions contemplated hereby will not breach or otherwise cause any violation of any such Laws, policies or procedures. With respect to all personal information described herein, Valley and each of its Subsidiaries has each taken all steps reasonably necessary (including implementing and monitoring compliance with measures with respect to technical and physical security) to protect the information in a manner consistent with the Laws, policies or procedures referred to herein. To the Knowledge of Valley, there has been no unauthorized access to or other misuse of that information.
3.34Accuracy and Completeness of Information Furnished. The representations and warranties made by Valley hereby or any other document delivered pursuant to the terms of this Agreement contain no statements of material fact which are untrue or misleading, or omit to state any material fact which is necessary under the circumstances to prevent the statements contained herein or therein from being misleading. Valley represents and warrants to CVB that the statements contained in this Article III are true, correct and complete as of the date of this Agreement, subject to and as qualified by the Valley Disclosure Schedule. The Valley Disclosure Schedule and the contents thereof including all documents delivered or provided in connection therewith, shall be confidential in accordance with Section 6.3(c) of this Agreement. Valley has made a good faith effort to ensure that the disclosure on each schedule of the Valley Disclosure Schedule corresponds to the section referenced herein. However, for purposes of the Valley Disclosure Schedule, any item disclosed on any schedule therein is deemed to be similarly disclosed with respect to all schedules under which such item may be relevant as and to the extent that it is reasonably clear on the face of such schedule that such item applies to such other schedule.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CVB
Except as Previously Disclosed, CVB hereby represents and warrants to Valley as follows:
4.1Corporate Organization.
(a) CVB is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of California. Citizens Business Bank is a commercial bank duly formed and validly existing under the Laws of the State of California. Each of CVB and Citizens Business Bank has the requisite corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on CVB, is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary. CVB is duly registered as a bank holding company under the BHC Act.
(b) True, complete and correct copies of the articles of incorporation of CVB (the “CVB Articles”) and bylaws of CVB (the “CVB Bylaws”), as in effect as of the date of this Agreement, have previously been publicly filed by CVB and made available to Valley. The CVB Articles and CVB Bylaws made available to Valley are in full force and effect.
(c) Citizens Business Bank (i) is duly incorporated validly existing and in good standing under the Laws of its jurisdiction of organization and (ii) has the requisite corporate (or similar) power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted and, except as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on CVB, is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary. The deposit accounts of Citizens Business Bank are insured by the FDIC through the Deposit Insurance Fund to the fullest extent permitted by Law, all premiums and assessments required to be paid in connection therewith have been paid when due, and no proceedings for the termination of such insurance are pending or, to the Knowledge of CVB, threatened.
4.2Capitalization.
(a) The authorized capital stock of CVB consists of (i) 225,000,000 shares of common stock, no par value per share (the “CVB Common Stock”), of which, as of June 30, 2016 (the “CVB Capitalization Date”), 107,946,952 were issued and outstanding, and (ii) 20,000,000 shares of preferred stock, no par value per share (“CVB Preferred Stock”), none of which were outstanding as of the CVB Capitalization Date. As of the CVB Capitalization Date, 1,124,078 shares of CVB Common Stock were authorized for issuance upon exercise of options issued pursuant to employee and director stock plans of CVB or a Subsidiary of CVB in effect as of the date of this Agreement (the “CVB Stock Plans”). All of the issued and outstanding shares of CVB Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. As of the date of this Agreement, no Voting Debt of CVB is issued or outstanding. Except pursuant to this Agreement and the options described in this Section 4.2, CVB does not have and is not bound by any outstanding subscriptions, options, warrants, calls, rights, commitments or agreements of any character calling for the purchase or issuance of any shares of CVB Common Stock, CVB Preferred Stock, Voting Debt of CVB or any other equity securities of CVB or any securities representing the right to purchase or otherwise receive any shares of CVB Common Stock, CVB Preferred Stock, Voting Debt of CVB or other equity securities of CVB. There are no contractual obligations of CVB or any of its Subsidiaries (i) to repurchase, redeem or otherwise acquire any shares of capital stock of CVB or any equity security of CVB or its Subsidiaries or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of CVB or its Subsidiaries or (ii) pursuant to
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which CVB or any of its Subsidiaries is or could be required to register shares of CVB capital stock or other securities under the Securities Act. There are no voting trusts or other agreements or understandings to which CVB, any Subsidiary of CVB or, to the Knowledge of CVB, any of their respective officers or directors, is a party with respect to the voting of any CVB Common Stock, CVB Preferred Stock, Voting Debt or other equity securities of CVB. The shares of CVB Common Stock to be issued pursuant to the Merger will be duly authorized and validly issued and, at the Effective Time, all such shares will be fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.
(b) All of the issued and outstanding shares of capital stock or other equity ownership interests of Citizens Business Bank are owned by CVB, directly or indirectly, free and clear of any material Liens, and all of such shares or equity ownership interests are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. Citizens Business Bank does not have or is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of Citizens Business Bank or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of Citizens Business Bank.
4.3Authority; No Violation.
(a) CVB has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the Merger or the other transactions contemplated hereby have been duly, validly and unanimously approved and this Agreement duly adopted by the Board of Directors of CVB and the Board of Directors of CVB has determined that the Merger, on the terms and conditions set forth in this Agreement, is advisable and in the best interests of CVB its shareholders. This Agreement has been duly and validly executed and delivered by CVB and (assuming due authorization, execution and delivery by Valley) constitutes the valid and binding obligation of each of CVB, enforceable against CVB and Citizens Business Bank in accordance with its terms (subject to the Enforceability Exceptions). The Board of Directors of Citizens Business Bank has unanimously adopted and CVB, as the sole shareholder of Citizens Business Bank, has duly adopted, the Bank Merger Agreement.
(b) Neither the execution and delivery of this Agreement, nor the consummation by CVB or Citizens Business Bank, as applicable, of the Merger, the Bank Merger or the other transactions contemplated hereby, nor compliance with any of the terms or provisions of this Agreement, will (i) violate any provision of the CVB Articles, CVB Bylaws or similar chartering documents of CVB’s Subsidiaries, or (ii) assuming that the consents, approvals and filings referred to in Section 4.4 are duly obtained and/or made, (A) violate any Law applicable to CVB, any of its Subsidiaries or any of their respective properties or assets or (B) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event that, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of CVB or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, franchise, permit, agreement, bylaw or other instrument or obligation to which CVB or any of its Subsidiaries is a party or by which any of them or any of their respective properties or assets is bound except, with respect to clause (ii), for any such violation, conflict, breach, default, termination, cancellation, acceleration or creation as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on CVB or Citizens Business Bank.
4.4Consents and Approvals. Except for (a) any applicable filing with the Nasdaq Stock Market (“Nasdaq”), (b) the filing with the SEC of the Form S-4 and declaration of effectiveness of the Form S-4, (c) the filings of applications and notices with the Commissioner pursuant to the California Financial Code and approval of or non-objection to such applications, filings and notices with respect to the Bank Merger, (d) the filing of a bank merger application with the FDIC pursuant to the Bank Merger Act of 1960, as amended, (e) the filing of the
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Agreement of Merger with the California Secretary, (f) the filing of the Bank Merger Agreement with the California Secretary and the Commissioner, (g) Valley’s filing of a notice concerning the Merger with FINRA, (h) such filings and approvals as are required to be made or obtained under the securities or “blue sky” Laws of various states in connection with the issuance of the shares of CVB Common Stock pursuant to the Agreement, and (i) the filing by CVB with the Federal Reserve under the BHC Act for such approvals, wavier or non-objection as may be necessary for CVB to acquire Valley, no consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with the consummation by CVB or Citizens Business Bank of the Merger or the Bank Merger, as applicable, and the other transactions contemplated by this Agreement, No consents or approvals of or filings or registrations with any Governmental Entity are necessary in connection with the execution and delivery by CVB of this Agreement.
4.5Reports.
(a) CVB and each of its Subsidiaries have timely filed all reports, registration statements, proxy statements and other materials, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 2013 with the Regulatory Agencies and each other applicable Governmental Entity, and all other reports and statements required to be filed by them since January 1, 2013, including any report or statement required to be filed pursuant to the Laws, rules or regulations of the United States, any state, any foreign entity, or any Regulatory Agency or other Governmental Entity, and have paid all fees and assessments due and payable in connection therewith, and there are no material violations or exceptions in any such material report or statement that are unresolved as of the date hereof.
(b) An accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by CVB pursuant to the Securities Act or the Exchange Act since January 1, 2013 (the “CVB SEC Reports”) is publicly available. No such CVB SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of the relevant meetings, respectively), contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances in which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) shall be deemed to modify information as of an earlier date. As of their respective dates, all CVB SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto.
(c) CVB is in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the Nasdaq.
4.6Financial Statements. The financial statements of CVB and its Subsidiaries included (or incorporated by reference) in the CVB SEC Reports (including the related notes, where applicable) (i) have been prepared from, and are in accordance with, the books and records of CVB and its Subsidiaries; (ii) fairly present in all material respects the consolidated results of operations, cash flows, changes in shareholders’ equity and consolidated financial position of CVB and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount); (iii) complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except, in each case, as indicated in such statements or in the notes thereto. The books and records of CVB and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual transactions. As of the date hereof, KPMG LLP has not resigned (or informed CVB that indicated it intends to resign) or been dismissed as independent public accountants of CVB as a result of or in connection with any disagreements with CVB on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
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4.7Broker’s Fees. Neither CVB nor any of its Subsidiaries nor any of their respective officers or directors have employed any broker, finder or financial advisor or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with the Merger or any other transactions contemplated by this Agreement, other than to Keefe, Bruyette & Woods, Inc.
4.8Absence of Changes. Since December 31, 2015, no event, change or development or combination of changes or developments have occurred that has had or would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on CVB.
4.9Compliance with Applicable Law. CVB and each of its Subsidiaries hold, and have at all times since January 1, 2013 held, all licenses, franchises, permits and authorizations which are necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to applicable Law (and have paid all fees and assessments due and payable in connection therewith) and, to the Knowledge of CVB, no suspension or cancellation of any such licenses, franchise, permit or authorization is threatened in writing, except in each case where the failure to hold such license, franchise, permit or authorization, such fees or assessments or such suspensions or cancellations would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on CVB. CVB and each of its Subsidiaries have complied with, and are not in default or violation of any, applicable Law relating to CVB or any of its Subsidiaries that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on CVB.
4.10Approvals. As of the date of this Agreement, CVB knows of no reason why all regulatory approvals from any Governmental Entity required for the consummation of the transactions contemplated by this Agreement should not be obtained on a timely basis.
4.11CVB Information. The information relating to CVB and its Subsidiaries that is provided by CVB or its representatives for inclusion in the Form S-4, or in any application, notification or other document filed with any other Regulatory Agency or other Governmental Entity in connection with the transactions contemplated by this Agreement, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading. The portions of the Proxy Statement relating to CVB and its Subsidiaries and other portions within the reasonable control of CVB and its Subsidiaries will comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder.
4.12Legal Proceedings. Except as Previously Disclosed, there is no suit, action, investigation, claim, proceeding or review pending, or to the Knowledge of CVB, threatened against or affecting it or any of its Subsidiaries or any of the current or former directors or executive officers of it or any of its Subsidiaries and there are no facts or circumstances that would reasonably be expected to result in any claims against CVB or any of its Subsidiaries that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on CVB. There is no outstanding injunction, order, writ, award, judgment, settlement, arbitration ruling, decree or regulatory restriction imposed upon or entered into by CVB, any of its Subsidiaries or the assets of it or any of its Subsidiaries that would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on CVB.
4.13Accounting and Internal Controls.
(a) The records, systems, controls, data and information of CVB and its Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of CVB or its Subsidiaries or accountants (including all means of access thereto and therefrom). CVB and its Subsidiaries have devised and maintain internal control over financial reporting (within the meaning of Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Such internal control over financial reporting is effective in providing reasonable
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assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP and includes policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of CVB, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of CVB are being made only in accordance with authorizations of management and directors of CVB, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of CVB’s assets that could have a material effect on its financial statements. CVB has designed and implemented disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information relating to CVB and its Subsidiaries is made known to its management by others within those entities as appropriate to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act and such disclosure controls and procedures are effective.
(b) CVB’s management has completed an assessment of the effectiveness of its internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended December 31, 2015, and such assessment concluded that such controls were effective. CVB has previously disclosed, based on its most recent evaluation prior to the date hereof, to its auditors and the audit committee of its board of directors (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in its internal controls over financial reporting.
(c) Since January 1, 2013, except as Previously Disclosed, (A) neither CVB nor any of its Subsidiaries nor, to the Knowledge of CVB, any director, officer, auditor, accountant or representative of it or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or written claim regarding the accounting or auditing practices, procedures, methodologies or methods (including with respect to loan loss reserves, write-downs, charge-offs and accruals) of CVB or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or written claim that CVB or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (B) no attorney representing CVB or any of its Subsidiaries, whether or not employed by it or any of its Subsidiaries, has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation by it or any of its officers or directors to its board of directors or any committee thereof or to any of its directors or officers.
4.14Reorganization. Neither CVB nor Citizen Business Bank has taken or agreed to take any action, or is aware of any fact or circumstance, that would prevent or impede, or could reasonably be expected to prevent or impede, the Merger from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code.
4.15Accuracy5.22 Representations and CompletenessWarranties. To the Knowledge of Information Furnished. The representationsParent, the materials prepared by Parent and warrantiesCitizens and made by CVB hereby or any other document delivered pursuantavailable in the data room to Suncrest in the termscourse of this Agreementits due diligence investigation of Parent and Citizens contain no statements of material fact which are untrueuntrue. Except for the representations and warranties in this Article 5, neither Parent nor any other Person makes any express or misleading,implied representation or omitwarranty with respect to stateParent and its Subsidiaries, or their respective businesses, operations, assets, liabilities, conditions (financial or otherwise) or prospects, and Parent hereby disclaims any material fact whichsuch other representations or warranties. In particular, without limiting the foregoing disclaimer, and except for the representations and warranties made by Parent in this Article 5, neither Parent nor any Person makes or has made any representation to Suncrest or any of Suncrest’s Affiliates or representatives with respect to any oral or written information presented to Suncrest or any of Suncrest’s Affiliates or representatives in the course of their due diligence investigation of Parent (including any financial projections or forecasts), the negotiation of this Agreement or in the course of the transactions contemplated hereby. Parent acknowledges and agrees that neither Suncrest nor any other Person has made or is necessary under the circumstances to prevent the statementsmaking any express or implied representation or warranty other than those contained herein or therein from being misleading.in Article 4.
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