March 10, 2010
Exhibit
4
March 10,
2010
Heritage
Oaks Bancorp
000 00xx
Xxxxxx
Paso
Xxxxxx, CA 93446
Re:
Board Observation Rights / Management Rights
Gentlemen:
This
letter agreement (the “Management Rights Agreement”) will confirm the agreement
between Heritage Oaks Bancorp (the “Company”) and Patriot Financial Partners,
L.P. and Patriot Financial Partners Parallel, L.P. (collectively referred to
herein as the “Purchaser”) pursuant to which the Purchaser will be entitled to
the following contractual rights in connection with the Purchaser’s investment
in the Company.
Subject
to the limitations set forth herein, the Purchaser will be entitled to designate
a representative (the “Representative”) to attend meetings of the Boards of
Directors of Heritage Oaks Bank and Heritage Oaks Bancorp (the “Boards”) in the
capacity of a nonvoting observer and shall be entitled to such representation as
long as the Purchaser beneficially owns in the aggregate 6.0% of the issued and
outstanding shares of common stock (or shares treated as common stock,
specifically including for all purposes of this Management Rights Agreement,
shares of Series C Convertible Perpetual Preferred Stock) of the Company or
securities convertible into at least 6.0% of the issued and outstanding shares
of common stock of the Company upon conversion. In the event that the
Purchaser has related entities and/or wholly or partially-owned subsidiaries
that are also investors in the Company in a similar fashion, each related and/or
wholly or partially-owned subsidiary must designate, as its Representative, the
same managing partner or principal.
The
Purchaser will be provided all information distributed to the members of the
Boards or their respective committees, quarterly and annual audited and
unaudited consolidated financial statements, and copies of all reports required
to be filed under applicable law or under the terms of any outstanding debt
instrument. The Purchaser, after appropriate notification of
management, may visit and inspect Company (and its subsidiaries’) properties,
books and records. In addition, the Purchaser may consult with
management of the Company and its subsidiaries on the Purchaser’s views on
matters relating to the operation of the business.
The
foregoing rights granted to the Purchaser are subject to the Company’s right to
withhold information and to exclude such Representative from any meeting, or
portion thereof, but only to the extent (i) reasonably necessary to preserve the
Company’s attorney-client privilege, (ii) directly related to a Purchaser’s
investment or (iii) the Boards are meeting in other than routine executive
session.
The
Purchaser agrees that it will not disclose to any third party any information
provided to it by the Company hereunder which is not generally available to the
public or which is specifically designated by the Company as confidential,
except with the prior express approval of the Company’s Chief Executive Officer
or the Chairman of the Company’s Board of Directors or as may otherwise be
required by applicable law. The Purchaser shall comply with all
federal securities laws in connection with its exercise of its rights under this
Management Rights Agreement and its purchases and sales of the Company's
securities, and agrees to be bound by the "xxxxxxx xxxxxxx" policy of the
Company during any period during which it is exercising its rights under this
Management Rights Agreement.
The
aforementioned rights are intended to satisfy the requirement of management
rights for purposes of qualifying the Purchaser’s investments in the Company as
"venture capital investments" for purposes of the Department of Labor "plan
assets" regulation, 29 C.F.R. §2510.3-101. In the event the
aforementioned rights are not satisfactory for such purpose, the Company and the
Purchaser shall reasonably cooperate in good faith to agree upon mutually
satisfactory management rights that satisfy such regulations.
The
provisions of this Management Rights Agreement shall survive the closing under
that certain Securities Purchase Agreement dated of even date with this
Management Rights Agreement, and shall terminate and be of no further force and
effect on the date the Purchaser no longer owns, in the aggregate, 6.0% of the
issued and outstanding shares of common stock of the Company or securities
convertible into at least 6.0% of the issued and outstanding common stock of the
Company upon conversion.
The
rights described herein shall not be assignable without the written consent of
the Company.
The
rights granted to the Purchaser hereunder are not in substitution for, and shall
not be deemed to be in limitation of, any rights otherwise available to the
Purchaser as a holder of securities of the Company or pursuant to any other
agreement with the Company.
[SIGNATURE PAGE
FOLLOWS]
IN WITNESS
WHEREOF, this Management Rights Agreement has been duly executed by the
parties set forth below as of the date written above.
“COMPANY”
HERITAGE
OAKS BANCORP
|
By:
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/s/
Xxxxxxxx X. Xxxx
|
|
Name:
|
Xxxxxxxx
X. Xxxx
|
|
Title:
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President
and Chief Executive
Officer
|
“PURCHASER”
PATRIOT
FINANCIAL PARTNERS, L.P.
PATRIOT
FINANCIAL PARTNERS PARALLEL, L.P.
|
By:
|
/s/
Xxxx Xxxxxx
|
|
Name:
|
Xxxx
Xxxxxx
|
|
Title:
|
Managing
Partner
|
