Common use of Statements and Representations Clause in Contracts

Statements and Representations. FLBank hereby certifies and represents after consulting with its legal counsel, accountants and auditors regarding the meaning of and factual support for the following representations and, to the extent necessary, with its personnel and advisors having knowledge pertinent to the following that the statements and representations made herein are accurate, correct and complete in all respects at the date hereof and will be true, correct and complete in all respects as of the Effective Time (as if made as of the Effective Time): 1. The terms of the Agreement and all other agreements entered into in connection therewith, including the amount of CVCY Common Stock and cash in lieu of fractional shares to be received by the holders (“FLBank Stockholders”) of FLBank Common Stock (the “FLBank Common Stock”), were bargained for at arm’s length by the parties to the Agreement, and the fair market value of the CVCY Common Stock and cash in lieu of fractional shares to be received by the FLBank Stockholders will be approximately equal to the fair market value of the FLBank Common Stock surrendered by such FLBank Stockholders in the Merger. In connection with the Merger, no FLBank Stockholder will receive in exchange for FLBank Common Stock, directly or indirectly, any consideration from CVCY or Central Valley Community Bank or any related party (within the meaning of Treasury Regulation section 1.368-1(e)(4)) with respect to either of them other than CVCY Common Stock pursuant to the terms of the Agreement, cash in lieu of fractional shares of CVCY Common Stock, and cash pursuant to the exercise of appraisal rights. 2. FLBank has not made and will not make any distributions with respect to or in redemption of FLBank Common Stock in contemplation of the Merger or during the period beginning with the commencement of negotiations (whether formal or informal) between CVCY and FLBank regarding the Merger and ending at the Effective Time (the “Pre-Merger Period”). 3. Neither FLBank nor any person related to FLBank within the meaning of Treasury Regulation Section 1.368-1(e)(4) (a “FLBank Affiliate”) nor any partnership in which FLBank or a FLBank Affiliate is a partner has purchased, redeemed, or otherwise acquired, or made any distributions with respect to, any FLBank Common Stock prior to or in contemplation of the Merger, or otherwise, as part of a plan of which the Merger is a part. 4. FLBank expects that FLBank Stockholders will exercise appraisal rights with respect to not more than ten percent (10%) of the FLBank Common Stock issued and outstanding as of the Effective Date.

Statements and Representations. FLBank CVCY and Central Valley Community Bank hereby certifies certify and represents represent after consulting with its their legal counsel, accountants and auditors regarding the meaning of and factual support for the following representations and, to the extent necessary, with its their personnel and advisors having knowledge pertinent to the following that the statements and representations made herein are accurate, correct and complete in all respects at the date hereof and will be true, correct and complete in all respects as of the Effective Time (as if made as of the Effective Time): 1. The terms of the Agreement and all other agreements entered into in connection therewith, including the amount of CVCY Common Stock (“CVCY Common Stock”) and cash in lieu of fractional shares to be received by the holders (“FLBank Stockholders”) of FLBank Common Stock (the “FLBank Common Stock”), Stock were bargained for at arm’s length by the parties to the Agreement, and the fair market value of the CVCY Common Stock and cash in lieu of fractional shares to be received by the FLBank Stockholders will be approximately equal to the fair market value of the FLBank Common Stock surrendered by such FLBank Stockholders in the Merger. In connection with the Merger, no FLBank Stockholder will receive in exchange for FLBank Common Stock, directly or indirectly, any consideration from CVCY or Central Valley Community Bank or any related party (within the meaning of Treasury Regulation section 1.368-1(e)(4)) with respect to either of them other than CVCY Common Stock pursuant to the terms of the Agreement, Agreement and cash in lieu of fractional shares of CVCY Common Stock, and cash pursuant to the exercise of appraisal rights. 2. FLBank has not made and will not make any distributions with respect to or in redemption of FLBank Common Stock in contemplation of the Merger or during the period beginning with the commencement of negotiations (whether formal or informal) between CVCY and FLBank regarding the Merger and ending at the Effective Time (the “Pre-Merger Period”). 3. Neither FLBank nor any person related to FLBank within the meaning of Treasury Regulation Section 1.368-1(e)(4) (a “FLBank Affiliate”) nor any partnership in which FLBank or a FLBank Affiliate is a partner has purchased, redeemed, or otherwise acquired, or made any distributions with respect to, any FLBank Common Stock prior to or in contemplation of the Merger, or otherwise, as part of a plan of which the Merger is a part. 4. FLBank expects Central Valley Community Bank expect that FLBank Stockholders will exercise appraisal rights with respect to not more than ten percent (10%) of the FLBank Common Stock issued and outstanding as of the Effective Time. 3. Except for the payment of cash in lieu of fractional shares of CVCY Common Stock otherwise to be issued in the Merger, there is no plan or intention by CVCY, any person related to CVCY within the meaning of Treasury Regulation Section 1.368-1(e)(4) (a “CVCY Affiliate”), or any partnership in which CVCY or a CVCY Affiliate is a partner to purchase, redeem, or otherwise acquire, following the Merger, any CVCY Common Stock issued pursuant to the Agreement. 4. CVCY has not acquired and will not acquire any shares of FLBank Common Stock, for consideration other than CVCY Common Stock, in contemplation of the Merger or during the period beginning with the commencement of negotiations (whether formal or informal) regarding the Merger and ending at the Effective Time (the “Pre-Merger Period”). No CVCY Affiliate and no partnership in which CVCY or a CVCY Affiliate is a partner has acquired or will acquire shares of FLBank Common Stock, for consideration other than CVCY Common Stock, in contemplation of the Merger or during the Pre-Merger Period. Until the Effective Time, except as set forth in the Agreement and the documents referenced in the Agreement, neither CVCY nor any CVCY Affiliate will own beneficially or of record, or will have owned beneficially or of record during the five years immediately prior to the Effective Time, any shares of FLBank Common Stock, or other securities, options, warrants, or instruments giving the holder thereof the right to acquire FLBank Common Stock or other securities offered by FLBank. To the knowledge of CVCY and Central Valley Community Bank, FLBank has no outstanding equity interests other than the FLBank Common Stock. 5. Central Valley Community Bank is a California state chartered bank conducting active banking operations in the State of California. At all times since January 1, 2016, Central Valley Community Bank has been wholly owned directly by CVCY. 6. Immediately following the Effective Time, Central Valley Community Bank will be wholly owned directly by CVCY. CVCY has no plan or intention: (i) to liquidate Central Valley Community Bank, merge Central Valley Community Bank into another entity, or cause Central Valley Community Bank to cease its separate legal existence for federal income tax purposes; (ii) to sell or otherwise dispose of (or cause or permit Central Valley Community Bank to issue to any Person other than CVCY) any shares or securities of, or other interests in, Central Valley Community Bank; or (iii) to sell or otherwise dispose of, or to cause Central Valley Community Bank to sell or otherwise dispose of, any of Central Valley Community Bank’s or FLBank’s assets; except that CVCY or Central Valley Community Bank may: (x) make dispositions of assets to unrelated third parties for fair market value consideration in the ordinary course of business; (y) make transfers Table of Contents described in Section 368(a)(2)(C) of the Code, or in the applicable Treasury Regulation; or (z) make occasional sales of Central Valley Community Bank’s assets to unrelated third parties for fair market value that do not prevent the continuation of FLBank’s “historic business” or use of “historic business assets” as described in paragraph 7 below. 7. Assuming the accuracy of paragraph 4 of the Tax Representation Certificate of FLBank, executed as of the date hereof, following the Merger, CVCY or Central Valley Community Bank (or a member or members of the “qualified group,” as defined in Treasury Regulation Section 1.368-l(d)(4)(ii), that includes CVCY as the “issuing corporation,” as defined in Treasury Regulation Section 1.368 l(b)), will continue the “historic business” of FLBank or use a “significant portion” (at least 33 1/3 percent by value) of FLBank’s “historic business assets” in a business (all within the meaning of Treasury Regulation Section 1.368-l(d)). For purposes of this representation, CVCY will be treated as owning its proportionate share of FLBank’s business assets used in a business of any partnership in which members of CVCY’s qualified group either own a significant interest or have active and substantial management functions as partners with respect to that partnership business. 8. Pursuant to the Merger, FLBank will merge with and into Central Valley Community Bank, and Central Valley Community Bank will acquire substantially all of the assets and liabilities of FLBank. After the Merger, at least ninety percent (90%) of the fair market value of the net assets and at least seventy percent (70%) of the fair market value of the gross assets held by FLBank immediately prior to the Merger will be held by Central Valley Community Bank. For the purpose of this representation, the following assets of FLBank will be treated as property held by FLBank immediately prior to the Merger but not by Central Valley Community Bank subsequent to the Merger: (i) assets disposed of by FLBank (other than assets transferred from FLBank to Central Valley Community Bank in the Merger or assets sold to unrelated third parties for fair market value) prior to or subsequent to the Merger and in contemplation thereof (including without limitation any asset disposed of, other than in the ordinary course of business, pursuant to a plan or intent existing during the Pre-Merger Period); (ii) assets used by FLBank to pay other expenses or liabilities incurred in connection with the Merger or other liabilities or obligations that are not operating liabilities or obligations incurred in the ordinary course of business; (iii) assets used to make payments in lieu of fractional shares or pursuant to the exercise of appraisal rights; and (iv) assets used to make distributions, redemptions, or other payments in respect of FLBank Common Stock or rights to acquire such stock (including payments treated as such for tax purposes) that are made in contemplation of the Merger, that are related thereto, or that are made during the Pre-Merger Period. 9. To CVCY’s and Central Valley Community Bank’s knowledge, with respect to each instance, if any, in which shares of FLBank Common Stock have been purchased during the Pre-Merger Period (a “Stock Purchase”): (i) the Stock Purchase was not made by the purchaser as an agent, or for the benefit, of CVCY or Central Valley Community Bank; (ii) the purchase price paid or other obligation incurred by such purchaser was funded by such purchaser’s own assets and was not advanced, and will not be reimbursed, either directly or indirectly, by CVCY or Central Valley Community Bank; (iii) other than in the Merger pursuant to the Agreement, at no time was such purchaser or any other party required or obligated to surrender to CVCY or Central Valley Community Bank the FLBank Common Stock acquired in the Stock Purchase, and neither such purchaser nor any other party will be required to surrender to CVCY the CVCY Common Stock for which such shares of FLBank Common Stock will be exchanged in the Merger; and (iv) the Stock Purchase was not a formal or informal condition to consummation of the Merger and was entered into solely to satisfy the separate interests of such purchaser and the seller. 10. If CVCY or Central Valley Community Bank pays or assumes any expenses of FLBank, it will pay or assume only those expenses that are solely and directly related to the Merger and will do so only in accordance with the guidelines established in Revenue Ruling 73-54, 1973-1 C.B. 187. FLBank Stockholders will pay their own expenses, if any, incurred in connection with the Merger. 11. There is no inter-corporate indebtedness existing between CVCY and FLBank or between Central Valley Community Bank and FLBank that was issued, acquired, or will be settled at a discount. 12. Neither CVCY nor Central Valley Community Bank is an “investment company” as defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code. 13. To CVCY’s and Central Valley Community Bank’s knowledge, at the Effective Time the fair market value of the assets of FLBank will exceed the sum of its liabilities, plus the amount of liabilities, if any, to which its assets are subject. 14. FLBank Stockholders will receive in the Merger shares of CVCY Common Stock with a value, determined as of the date described in Treasury Regulation Section 1.368-1(e)(2)(i) (the “Valuation Date”), equal to at least forty percent (40%) of the total value, determined as of the Valuation Date, of all of the shares of FLBank Common Stock outstanding on the Valuation Date. For purposes of this representation, shares of FLBank Common Stock that were redeemed, sold, or otherwise transferred, directly or indirectly, in connection with the Merger to Central Valley Community Bank, CVCY, or any party related (within the meaning of Treasury Regulation Section 1.368-1(e)(4)) to either entity will be treated as outstanding shares of FLBank Common Stock on the Valuation Date. The issuance in the Merger of cash in lieu of fractional shares of CVCY Common Stock represents a mere mechanical rounding off solely for the purpose of avoiding the expense and inconvenience to CVCY of issuing fractional shares, and does not represent separately bargained-for consideration. The total cash consideration that will be paid in lieu of issuing fractional shares of CVCY Common Stock will not exceed one percent (1%) of the total consideration that will be issued pursuant to the Agreement to the FLBank Table of Contents Stockholders in exchange for their FLBank Common Stock. No FLBank Stockholder will receive cash pursuant to Section 2.3(b) of the Agreement in exchange for FLBank Common Stock in an amount equal to or greater than the value of one full share of CVCY Common Stock valued in a manner consistent with Section 2.3(b) of the Agreement. 15. None of what is received nominally as, or in the form of, cash or other non-stock compensation for services by any stockholder-employees (including for the purposes of this paragraph any stockholder-independent contractors) of FLBank will be in fact separate consideration for, allocable to, or otherwise attributable to any of the FLBank Common Stock held by such stockholder-employee. None of the CVCY Common Stock that is received nominally as, or in the form of, consideration for FLBank Common Stock by any stockholder-employees of FLBank will be in fact consideration for or otherwise attributable to services or allocable to any employment (or independent contractor) arrangement. The compensation paid to any stockholder-employees of FLBank by CVCY or by Central Valley Community Bank following the Merger will be for services actually rendered and will be commensurate with amounts that would be paid to third parties bargaining at arm’s-length for similar services. 16. CVCY and Central Valley Community Bank have a bona fide business reason for engaging in the Merger unrelated to taxes as will be summarized in the Registration Statement. 17. The Merger will not result in a transaction whereby gain or loss with respect to FLBank property not subject to tax under the Code prior to the Merger will become subject to tax under the Code after the Merger. 18. There are no other agreements, arrangements or understandings among any of CVCY, Central Valley Community Bank, or FLBank and/or any of their subsidiaries, affiliates, or stockholders bearing on the terms of the Merger other than the agreements, arrangements and understandings described or referenced in the Agreement. 19. The Merger will be consummated in compliance with the terms of the Agreement, none of the material terms and conditions therein has been waived or modified, and CVCY and Central Valley Community Bank have no plan or intention to waive or modify any such terms or conditions. 20. Following the Merger, CVCY and Central Valley Community Bank will comply with the recordkeeping and filing requirements of Treasury Regulation Section 1.368-3 and will report the Merger on their U.S. federal income tax returns in a manner consistent with the Merger constituting a reorganization within the meaning of Section 368(a) of the Code. 21. Central Valley Community Bank is a wholly-owned, corporate subsidiary of CVCY, and therefore CVCY is in “control” of Central Valley Community Bank, within the meaning of Section 368(c) of the Code (“Control”). Central Valley Community Bank does not have outstanding any warrants, options, convertible securities, or any other type of right pursuant to which any person can acquire stock in Central Valley Community Bank that, if exercised or converted, would affect CVCY’s retention of Control. Following the Merger, there is no plan or intention for Central Valley Community Bank to issue additional shares of its stock that would result in CVCY losing Control of Central Valley Community Bank. 22. Following the Merger: CVCY has no plan or intention to: (a) liquidate Central Valley Community Bank; (b) to merge Central Valley Community Bank with and into another corporation; (c) to sell or otherwise dispose of the stock of Central Valley Community Bank; or (d) to cause Central Valley Community Bank to sell or otherwise dispose of any of the assets of FLBank acquired in the Merger, except for dispositions made in the ordinary course of business or transfers described in Section 368(a)(2)(C) of the Code or Treasury Regulation Section 1.368-2(k). 23. No shares of stock of Central Valley Community Bank will be issued in the Merger. 24. There is no intercorporate indebtedness existing between either: (a) Central Valley Community Bank (or any of its subsidiaries) and FLBank (or any of its subsidiaries); or (