Exhibit
10.1


 


EXECUTION COPY


 




 





 


INVESTMENT AGREEMENT


 


dated as of October 23, 2009



between



WEST COAST BANCORP



and



[                          ]


 




 





 





















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  Purchase; Closings

  	
   

  
	
   

  	
   

  
	
  1.1

  	
  Purchase

  	
  3

  
	
  1.2

  	
  Closing

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  Representations and Warranties

  	
   

  
	
   

  	
   

  
	
  2.1

  	
  Disclosure

  	
  5

  
	
  2.2

  	
  Representations and Warranties of the Company

  	
  6

  
	
  2.3

  	
  Representations and Warranties of the Investor

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  Covenants

  	
   

  
	
   

  	
   

  
	
  3.1

  	
  Filings; Other Actions

  	
  26

  
	
  3.2

  	
  Expenses

  	
  28

  
	
  3.3

  	
  [Access, Information and Confidentiality

  	
  29

  
	
  3.4

  	
  [Press Release

  	
  30

  
	
  3.5

  	
  [Board Representative

  	
  30

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  Additional Agreements

  	
   

  
	
   

  	
   

  
	
  4.1

  	
  [Agreement

  	
  31

  
	
  4.2

  	
  [No Rights Agreement

  	
  34

  
	
  4.3

  	
  [Gross-Up Rights

  	
  34

  
	
  4.4

  	
  [Governance Matters

  	
  37

  
	
  4.5

  	
  Legend

  	
  39

  
	
  4.6

  	
  Reservation for Issuance; Exchange Listing

  	
  40

  
	
  4.7

  	
  Certain Transactions

  	
  40

  
	
  4.8

  	
  Extension Periods

  	
  40

  
	
  4.9

  	
  Indemnity

  	
  40

  
	
  4.10

  	
  Registration Rights

  	
  42

  
	
  4.11

  	
  Articles of Amendment

  	
  52

  
	
  4.12

  	
  [Transfer Restrictions

  	
  53

  
	
  4.13

  	
  Additional Regulatory Matters

  	
  54

  



 


i





















 


	
  4.14

  	
  Gateway Report

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  Miscellaneous

  	
   

  
	
   

  	
   

  
	
  5.1

  	
  Survival

  	
  55

  
	
  5.2

  	
  Amendment

  	
  55

  
	
  5.3

  	
  Waivers

  	
  55

  
	
  5.4

  	
  Counterparts and Facsimile

  	
  55

  
	
  5.5

  	
  Governing Law

  	
  55

  
	
  5.6

  	
  Waiver of Jury Trial

  	
  56

  
	
  5.7

  	
  Notices

  	
  56

  
	
  5.8

  	
  Entire Agreement, etc.

  	
  57

  
	
  5.9

  	
  Other Definitions

  	
  57

  
	
  5.10

  	
  Captions

  	
  58

  
	
  5.11

  	
  Severability

  	
  58

  
	
  5.12

  	
  No Third Party Beneficiaries

  	
  58

  
	
  5.13

  	
  Time of Essence

  	
  59

  
	
  5.14

  	
  Public Announcements

  	
  59

  
	
  5.15

  	
  Specific Performance

  	
  59

  



 


ii





















 


LIST OF EXHIBITS


 


	
  Exhibit A:

  	
   

  	
  Form of
  Articles of Amendment of Mandatorily Convertible Cumulative Preferred Stock,
  Series A

  
	
  Exhibit B:

  	
   

  	
  Form of
  Articles of Amendment of Mandatorily Convertible Cumulative Preferred Stock,
  Series B

  
	
  Exhibit C:

  	
   

  	
  Form of
  Class C Warrant Certificate

  
	
  Exhibit D:

  	
   

  	
  Form of
  Class D Warrant Certificate

  
	
  Exhibit E:

  	
   

  	
  Forms
  of Opinions of Counsel

  
	
  Exhibit F:

  	
   

  	
  Form of
  Officer’s Certificate from the Company

  
	
  Exhibit G:

  	
   

  	
  Form of
  Officer’s Certificate from the Investor

  
	
  Exhibit H:

  	
   

  	
  Third
  Quarter 2009 Press Release

  
	
  Exhibit I:

  	
   

  	
  382 Rights Plan

  



 


iii





















 


INDEX OF DEFINED TERMS


 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  382
  Rights Plan

  	
   

  	
  4.3(a)

  
	
  Affiliate

  	
   

  	
  5.9(2)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Articles
  of Incorporation

  	
   

  	
  Recitals

  
	
  Beneficially
  Own/Beneficial Owner/Beneficial Ownership

  	
   

  	
  5.9(8)

  
	
  Benefit
  Plan

  	
   

  	
  2.2(p)(1)

  
	
  BHC
  Act

  	
   

  	
  2.2(a)

  
	
  Board
  of Directors

  	
   

  	
  2.2(c)(1)

  
	
  Board
  Representative

  	
   

  	
  4.4(f)

  
	
  Business
  Combination

  	
   

  	
  4.1

  
	
  business
  day

  	
   

  	
  5.9(6)

  
	
  Capitalization
  Date

  	
   

  	
  2.2(c)(1)

  
	
  CBC
  Act

  	
   

  	
  3.1(a)

  
	
  Class B
  Warrant

  	
   

  	
  2.2(d)

  
	
  Class C
  Warrant

  	
   

  	
  Recitals

  
	
  Class C
  Warrant Certificate

  	
   

  	
  Recitals

  
	
  Class D
  Warrant

  	
   

  	
  Recitals

  
	
  Class D
  Warrant Certificate

  	
   

  	
  Recitals

  
	
  Change
  in Control

  	
   

  	
  4.1

  
	
  Closing

  	
   

  	
  1.2(a)

  
	
  Closing
  Date

  	
   

  	
  1.2(a)

  
	
  Code

  	
   

  	
  2.2(p)(2)

  
	
  Common
  Stock/Common Shares

  	
   

  	
  Recitals

  
	
  Company

  	
   

  	
  Preamble

  
	
  Company
  10-K

  	
   

  	
  2.2(f)

  
	
  Company
  Financial Statements

  	
   

  	
  2.2(f)

  
	
  Company
  Preferred Stock

  	
   

  	
  2.2(c)

  
	
  Company
  Reports

  	
   

  	
  2.2(g)(1)

  
	
  Company
  Restricted Stock

  	
   

  	
  2.2(c)(1)

  
	
  Company
  Significant Agreement

  	
   

  	
  2.2(k)

  
	
  Company
  Stock Option

  	
   

  	
  2.2(c)(1)

  
	
  Company
  Stock Option Plan

  	
   

  	
  2.2(c)(1)

  
	
  Company
  Subsidiary/Company Subsidiaries

  	
   

  	
  2.2(b)

  
	
  control/controlled
  by/under common control with

  	
   

  	
  5.9(2)

  
	
  Disclosure
  Schedule

  	
   

  	
  2.1(a)

  
	
  ERISA

  	
   

  	
  2.2(p)(1)

  
	
  ERISA
  Affiliate

  	
   

  	
  2.2(p)(2)

  
	
  ERISA
  Plan

  	
   

  	
  2.2(p)(3)

  
	
  Exchange
  Act

  	
   

  	
  2.2(g)(1)

  
	
  Extension
  Period

  	
   

  	
  4.8

  
	
  FDIC

  	
   

  	
  2.2(b)

  



 


iv





















 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  Federal
  Reserve

  	
   

  	
  4.1

  
	
  GAAP

  	
   

  	
  2.1(b)

  
	
  Governance
  Committee

  	
   

  	
  4.4(a)

  
	
  Governmental
  Entity

  	
   

  	
  2.1(b)

  
	
  herein/hereof/hereunder

  	
   

  	
  5.9(5)

  
	
  Holder

  	
   

  	
  4.10(k)(1)

  
	
  Holders’
  Counsel

  	
   

  	
  4.10(k)(2)

  
	
  including/includes/included/include

  	
   

  	
  5.9(4)

  
	
  Incumbent
  Directors

  	
   

  	
  4.1

  
	
  Indemnified
  Party

  	
   

  	
  4.9(c)

  
	
  Indemnifying
  Party

  	
   

  	
  4.9(c)

  
	
  Indemnitee

  	
   

  	
  4.10(g)(1)

  
	
  Information

  	
   

  	
  3.3(b)

  
	
  Intellectual
  Property

  	
   

  	
  2.2(w)

  
	
  Investor

  	
   

  	
  Preamble

  
	
  IRS

  	
   

  	
  2.2(i)

  
	
  IT
  Assets

  	
   

  	
  2.2(w)

  
	
  knowledge
  of the Company/Company’s knowledge

  	
   

  	
  5.9(9)

  
	
  Liens

  	
   

  	
  2.2(b)

  
	
  Losses

  	
   

  	
  4.9(a)

  
	
  Market
  Price

  	
   

  	
  4.3(a)

  
	
  Material
  Adverse Effect

  	
   

  	
  2.1(b)

  
	
  New
  Security

  	
   

  	
  4.3(a)

  
	
  Non-Qualifying
  Transaction

  	
   

  	
  4.1

  
	
  OBCA

  	
   

  	
  2.2(v)

  
	
  Observer

  	
   

  	
  4.4(d)

  
	
  Opinion
  of Counsel

  	
   

  	
  1.2(b)(1)(ii)

  
	
  or

  	
   

  	
  5.9(3)

  
	
  Parent
  Corporation

  	
   

  	
  4.1

  
	
  Pending
  Underwritten Offering

  	
   

  	
  4.10(l)

  
	
  Pension
  Plan

  	
   

  	
  2.2(p)(3)

  
	
  Permitted
  Liens

  	
   

  	
  2.2(h)

  
	
  Permitted
  Rights Offering

  	
   

  	
  4.3(a)

  
	
  person

  	
   

  	
  5.9(7)

  
	
  Piggyback
  Registration

  	
   

  	
  4.10(a)(4)

  
	
  Preferred
  Shares/Preferred Stock

  	
   

  	
  Recitals

  
	
  Preferred
  Stock Articles of Amendment

  	
   

  	
  Recitals

  
	
  Previously
  Disclosed

  	
   

  	
  2.1(c)

  
	
  Purchase
  Price

  	
   

  	
  1.2(a)

  
	
  Qualifying
  Ownership Interest

  	
   

  	
  4.1

  
	
  register/registered/registration

  	
   

  	
  4.10(k)(3)

  
	
  Registered
  Intellectual Property

  	
   

  	
  2.2(w)

  
	
  Registrable
  Securities

  	
   

  	
  4.10(k)(4)

  



 


v





















 


	
  Term

  	
   

  	
  Location of

  Definition

  
	
  Registration
  Deadline

  	
   

  	
  4.10(a)(1)

  
	
  Registration
  Expenses

  	
   

  	
  4.10(k)(5)

  
	
  Regulatory
  Agreement

  	
   

  	
  2.2(y)

  
	
  Rule 144

  	
   

  	
  4.10(k)(6)

  
	
  Rule 144A

  	
   

  	
  4.10(k)(6)

  
	
  Rule 158

  	
   

  	
  4.10(k)(6)

  
	
  Rule 159A

  	
   

  	
  4.10(k)(6)

  
	
  Rule 405

  	
   

  	
  4.10(k)(6)

  
	
  Rule 415

  	
   

  	
  4.10(k)(6)

  
	
  Scheduled
  Black-out Period

  	
   

  	
  4.10(k)(7)

  
	
  SEC

  	
   

  	
  2.2(f)

  
	
  Section 16(b) Period

  	
   

  	
  4.8

  
	
  Securities

  	
   

  	
  Recitals

  
	
  Securities
  Act

  	
   

  	
  2.2(g)(1)

  
	
  Selling
  Expenses

  	
   

  	
  4.10(k)(8)

  
	
  Series A
  Preferred Stock/Preferred Shares

  	
   

  	
  Recitals

  
	
  Series A
  Preferred Stock Articles of Amendment

  	
   

  	
  Recitals

  
	
  Series B
  Preferred Stock/Preferred Shares

  	
   

  	
  Recitals

  
	
  Series B
  Preferred Stock Articles of Amendment

  	
   

  	
  Recitals

  
	
  Shelf
  Registration Statement

  	
   

  	
  4.10(a)(2)

  
	
  Special
  Registration

  	
   

  	
  4.10(a)(4)

  
	
  Stockholder
  Proposals

  	
   

  	
  3.1(b)

  
	
  subsidiary

  	
   

  	
  5.9(1)

  
	
  Surviving
  Corporation

  	
   

  	
  4.1

  
	
  Tax/Taxes

  	
   

  	
  2.2(i)

  
	
  Tax
  Return

  	
   

  	
  2.2(i)

  
	
  Trade
  Secrets

  	
   

  	
  2.2(w)

  
	
  Transaction
  Documents

  	
   

  	
  Recitals

  
	
  Transfer

  	
   

  	
  4.12(a)

  
	
  Unlawful
  Gains

  	
   

  	
  2.2(n)(5)

  
	
  Voting
  Debt

  	
   

  	
  2.2(c)(1)

  
	
  Voting
  Securities

  	
   

  	
  4.1

  
	
  Warrants

  	
   

  	
  Recitals

  



 


vi




















 


INVESTMENT AGREEMENT, dated as of October 23,
2009 (this “Agreement”), between West Coast Bancorp,
an Oregon corporation (the “Company”) and
[                ],
a [Delaware limited partnership], (the “Investor”).


 


RECITALS:


 


A.            The Investment.  [The Company intends to sell to the Investor,
and the Investor intends to purchase from the Company, as an investment in the
Company, the securities as described herein. 
The securities to be purchased at the closing are [•] shares of Series A
mandatorily convertible cumulative participating preferred stock, no par value,
of the Company (the “Series A  Preferred Stock” or “Series A Preferred
Shares”), [•] shares of Series B mandatorily convertible
cumulative participating preferred stock, no par value, of the Company (the “Series B Preferred Stock” or “Series B
Preferred Shares” and together with the Series A Preferred
Stock, the “Preferred Stock” or “Preferred Shares”), a warrant exercisable, in the event that
the Stockholder Proposals (defined below) shall not have been approved by March 1,
2010, to purchase [•] shares of Series A
Preferred Stock (a “Class B Warrant”).
an immediately exercisable warrant to purchase [•] shares of Series B
Preferred Stock, no par value, of the Company (a “Class C
Warrant”), and a warrant exercisable, in the event that the Stockholder
Proposals (defined below) shall not have been approved by March 1, 2010,
to purchase [•] shares of Series B Preferred Stock (a “Class D Warrant” and, together with the Class C
Warrant, the “Warrants”).](1)


 


B.            The Securities.  The term “Securities” refers
collectively to (i) the shares of Series A Preferred Stock and the
shares of Series B Preferred Stock being purchased pursuant to this
Agreement, (ii) the Warrants issued under this Agreement, and (iii) any
securities (including shares of common stock, no par value, of the Company (the
“Common Stock” or “Common
Shares”) and Preferred Stock) into which any of the foregoing are
converted, exchanged or exercised in accordance with the terms thereof or this
Agreement.  When issued, the Preferred
Stock will be evidenced by one or more share certificates incorporating the
terms set forth in an articles of amendment in the forms attached as Exhibit A
(the “Series A Preferred Stock Articles of Amendment”)  and Exhibit B (the “Series B Preferred Stock Articles of Amendment” and,
together with the Series A Preferred Stock Articles of Amendment, the “Preferred Stock Articles of Amendment”), respectively, in
each case, made a part of the Company’s Restated Articles of Incorporation, as
amended on April 22, 2003 (the “Articles of Incorporation”),
by the filing of the Preferred Stock Articles of Amendment with the Office of
the Secretary of State of Oregon.  When
issued, the Warrants will be evidenced by certificates in the forms attached as
Exhibit C (the “Class C Warrant
Certificate”) and Exhibit D (the “Class D
Warrant Certificate”), respectively.


 


C.            Transaction
Documents.  The term “Transaction Documents” refers collectively to this
Agreement, the Preferred Stock Articles of Amendment, the Class C Warrant
Certificate and the Class D Warrant Certificate.


 






(1) Conformed to the
Securities actually sold to each Investor.


 

















 


NOW, THEREFORE, in consideration of the premises, and of
the representations, warranties, covenants and agreements set forth herein, the
parties agree as follows:


 


2

















 


ARTICLE I


 


Purchase; Closings


 


1.1           Purchase.  On the terms and subject to the conditions
set forth herein, the Investor will (i) purchase from the Company, and the
Company will sell to the Investor, a number of shares of Series A
Preferred Stock and a number of shares of Series B Preferred Stock each as
set forth herein and (ii) receive from the Company, and the Company will
deliver to the Investor, the Warrants.


 


1.2           Closing.


 


(a)           The closing shall take place
immediately following the execution and delivery of this Agreement at the
offices of Wachtell, Lipton, Rosen & Katz LLP located at 51 West 52nd
Street, New York, New York 10019 or such other location as agreed by the
parties (the “Closing”).  The date of the Closing is referred to as the
“Closing Date.”  [Subject to the satisfaction or waiver on the
Closing Date of the conditions described in Section 1.2(b), at the
Closing, the Company will deliver to the Investor (i) [•] shares of Series A
Preferred Stock in book-entry form, with one or more certificates representing
such shares of Series A Preferred Stock to be delivered to the Investor
promptly after the Closing, (ii) [•] shares of Series B
Preferred Stock in book-entry form, with one or more certificates representing
such shares of Series B Preferred Stock to be delivered to the Investor
promptly after Closing, (iii) one or more certificates representing the Class C
Warrant exercisable to purchase [•] shares of Series B Preferred
Stock and (iv) one or more certificates representing the Class D
Warrant exercisable to purchase [•] shares of Series B Preferred
Stock, against payment by the Investor by wire transfer of immediately
available United States funds to a bank account designated by the Company for
an aggregate purchase price of $[•] (the “Purchase
Price”), all of which shall be deemed to have happened
concurrently.](2)


 


(b)           Closing Conditions.


 


(1)           The obligation
of the Investor to consummate the Closing is subject to the fulfillment by the
Company or written waiver by the Investor prior to or contemporaneously with
the Closing of each of the following conditions:


 


(i)            the Company
shall have caused the shares of Common Stock reserved for issuance pursuant to
the exercise or conversion of the Securities to be approved for listing on the
NASDAQ Stock Market, subject to official notice of issuance;


 


(ii)           the Company
shall have delivered to the Investor the opinions of counsel for the Company
(the “Opinion of Counsel”) in the forms set
forth in Exhibit E hereto;


 






(2) Conformed to the Securities actually
sold to each Investor.


 


3

















 


(iii)          the Company
shall have delivered to the Investor a duly executed Officer’s Certificate in
the form set forth in Exhibit F hereto;


 


(iv)          the
representations and warranties of the Company set forth in Sections 2.2(a),
(d)(1), (d)(2)(i)(A), (d)(3), (j), (n)(4), (x) and (y) of this
Agreement shall be true and correct in all respects (except to the extent such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true and correct in such respect
set forth above as of such date);


 


(v)           [the Company
shall have directly reimbursed the fees and expenses of Sullivan &
Cromwell LLP, counsel to the Investor, and compensated the Investor for certain
expenses in each case as specified in Section 3.2;](3)


 


(vi)          the Company
shall have received proceeds of the sale of the shares of the Securities of an
aggregate amount not less than $150 million (which includes the Purchase
Price), contemporaneously with the Closing, from the Investor and other
investors on substantially the same terms, of which $130 million will be
contributed to the Company’s principal depository institution subsidiary; and


 


(vii)         the Company
shall have performed in all material respects all obligations required to be
performed by it at or prior to or contemporaneously with the Closing under this
Agreement.


 


(2)           The obligation
of the Company to consummate the Closing is subject to the fulfillment by the
Investor or written waiver by the Company prior to the Closing of each of the
following conditions:


 


(i)            the Investor
shall have delivered to the Company a duly executed Officer’s Certificate in
the form set forth in Exhibit G hereto;


 


(ii)           the
representations and warranties of the Investor set forth in Sections 2.3(a),
(b)(1), (b)(2)(i)(A), (b)(3), (c), (d) and (g) of this Agreement
shall be true and correct in all respects (except to the extent such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true and correct in such respect
set forth above as of such date);


 


(iii)          the Company
shall have received proceeds of the sale of the shares of the Securities of an
aggregate amount not less than $150 million (which includes the Purchase
Price), contemporaneously with the Closing, from the Investor and other
investors on substantially the same terms, of which $130 


 






(3) Included in the Investment Agreement
of one of the investors.


 


4

















 


million
will be contributed to the Company’s principal depository institution
subsidiary; and


 


(iv)          the Investor
shall have performed in all material respects all obligations required to be
performed by it at or prior to the Closing under this Agreement.


 


ARTICLE II


 


Representations and Warranties


 


2.1           Disclosure.


 


(a)           On or prior to the date of
this Agreement, each of the Company and the Investor delivered to the other a
schedule (“Disclosure Schedule”) setting forth,
among other things, items the disclosure of which is necessary or appropriate
either in response to an express disclosure requirement contained in a
provision hereof or as an exception to one or more representations or
warranties contained in Section 2.2 with respect to the Company, or in Section 2.2(ff)
with respect to the Investor, or to one or more of its covenants contained in Article III;
provided, however,
that notwithstanding anything in this Agreement to the contrary, the mere
inclusion of an item in such schedule shall not be deemed an admission that
such item represents a material exception or material fact, event, or
circumstance or that such item has had or would reasonably be expected to have
a Material Adverse Effect on the Company or the Investor, as applicable.


 


(b)           “Material
Adverse Effect” means, with respect to the Investor, only
clause (2) that follows, or, with respect to the Company, both
clauses (1) and (2) that follow, any circumstance, event,
change, development or effect that, individually or in the aggregate (1) is
or would reasonably be expected to be material and adverse to the financial
position, results of operations, business or condition (financial or otherwise)
of the Company and its subsidiaries taken as a whole, or (2) would
materially impair the ability of either the Investor or the Company,
respectively, to perform its respective obligations under this Agreement or
otherwise materially threaten or materially impede the consummation of the
transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect,
under clause (1), shall not be deemed to include the impact of (A) changes,
after the date of this Agreement, in the U.S. generally accepted accounting
principles (“GAAP”), (B) changes, after
the date hereof, in applicable laws, rules and regulations or
interpretations thereof by any governmental or regulatory authorities,
agencies, courts, commissions or other entities, whether federal, state, local
or foreign, or applicable self-regulatory organizations (each, a “Governmental Entity”), (C) actions or omissions of the
Company expressly required by the terms of this Agreement or taken with the
prior written consent of the Investor, (D) general changes in the economy
or the industries in which the Company and its subsidiaries operate, and (E) the
public disclosure of this Agreement or the transactions contemplated hereby, in
each case to the extent that such circumstances, events, changes, developments
or effects described in the foregoing clauses (A), (B) and (D) do
not have a disproportionate effect on the Company and its subsidiaries, taken
as a 


 


5

















 


whole (relative to other industry
participants in the industries in which the Company and its subsidiaries
compete).


 


(c)           “Previously
Disclosed” with regard to (1) any party means information set
forth on its Disclosure Schedule corresponding to the provision of this
Agreement to which such information relates; provided
that information which, on its face, reasonably should indicate to the reader
that it relates to another provision of this Agreement, shall also be deemed to
be Previously Disclosed with respect to such other provision and (2) the
Company, includes information publicly disclosed by the Company in the Company
Reports filed by it with or furnished to the SEC and publicly available prior
to the date of this Agreement (excluding any risk factor disclosures contained
in such documents under the heading “Risk Factors” and any disclosure of risks
included in any “forward-looking statements” disclaimer or other statements
that are similarly non-specific and are predictive or forward-looking in
nature).


 


2.2           Representations and Warranties
of the Company.  Except as
Previously Disclosed, the Company represents and warrants as of the date of
this Agreement (except to the extent made only as of a specified date, in which
case as of such date) to the Investor that:


 


(a)           Organization and Authority.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Oregon, is
duly qualified to do business and is in good standing in all jurisdictions
where its ownership or leasing of property or the conduct of its business
requires it to be so qualified and failure to be so qualified would have a
Material Adverse Effect on the Company and has corporate power and authority to
own its properties and assets and to carry on its business as it is now being
conducted.  The Company is duly
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended, or any successor statute (the “BHC Act”).  The Company has furnished or made available
to the Investor, prior to the date hereof, true, correct and complete copies of
the Company’s Articles of Incorporation and bylaws as amended through the date
of this Agreement.


 


(b)           Company’s Subsidiaries.  The Company has Previously Disclosed a true,
complete and correct list of all of its subsidiaries as of the date of this
Agreement (individually, a “Company Subsidiary”
and, collectively, the “Company Subsidiaries”),
all shares of the outstanding capital stock of each of which are owned directly
or indirectly by the Company.  No equity
security of any Company Subsidiary is or may be required to be issued by reason
of any option, warrant, scrip, preemptive right, right to subscribe to,
gross-up right, call or commitment of any character whatsoever relating to, or
security or right convertible into, shares of any capital stock of such Company
Subsidiary, and there are no contracts, commitments, understandings or
arrangements by which any Company Subsidiary is bound to issue additional
shares of its capital stock, or any option, warrant or right to purchase or
acquire any additional shares of its capital stock.  All of such shares so owned by the Company
are duly authorized and validly issued, fully paid and nonassessable and are
owned by it free and clear of any lien, adverse right or claim, charge, option,
pledge, covenant, title defect, security interest or other encumbrances of any
kind (“Liens”) with respect thereto.  Each Company Subsidiary is an entity duly
organized, validly existing, duly qualified to do business and in good standing
under the laws of its jurisdiction of organization, and has corporate or other
appropriate organizational power and authority to own or lease its properties
and assets and to carry on its business as it is now being conducted, except 


 


6

















 


as would not reasonably be expected to have a
Material Adverse Effect on the Company. 
Except in respect of the Company Subsidiaries, the Company does not own
beneficially, directly or indirectly, more than 5% of any class of equity
securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture.  The Company’s principal depository institution
subsidiary is duly organized and validly existing as an Oregon state-chartered
commercial bank and its deposit accounts are insured by the Federal Deposit
Insurance Corporation (the “FDIC”) to the
fullest extent permitted by the Federal Deposit Insurance Act and the rules and
regulations of the FDIC thereunder, and all premiums and assessments required
to be paid in connection therewith have been paid when due.  The Company has furnished or made available
to the Investor, prior to the date hereof, true, correct and complete copies of
the charter and bylaws of the Company’s principal depository institution
subsidiary as amended through the date of this Agreement.


 


(c)           Capitalization.


 


(1)           The authorized
capital stock of the Company consists of 50,000,000 shares of Common Stock and
10,000,000 shares of preferred stock, no par value (the “Company
Preferred Stock”).  As of
close of business on September 30, 2009 (the “Capitalization
Date”), there were 15,647,356 shares of Common Stock outstanding and
no shares of Company Preferred Stock outstanding.  Since the Capitalization Date and through the
date of this Agreement, except in connection with the Transaction Documents and
the transactions contemplated hereby and thereby, the Company has not (i) issued
or authorized the issuance of any shares of Common Stock or Company Preferred
Stock, or any securities convertible into or exchangeable or exercisable for
shares of Common Stock or Company Preferred Stock (other than shares issued
upon the exercise of Company Stock Options), (ii) reserved for issuance
any shares of Common Stock or Company Preferred Stock or (iii) repurchased
or redeemed, or authorized the repurchase or redemption of, any shares of
Common Stock or Company Preferred Stock. 
As of the Capitalization Date, there were (i) outstanding stock
options issued under the 2002 Stock Incentive Plan, as amended, the 1999 Stock
Option Plan, as amended, the 1995 Stock Option Plan, as amended and the
Directors Stock Option Plan, as amended (together, the “Company Stock
Option Plans”) to purchase an aggregate of 1,751,327 shares of
Common Stock (each, a “Company Stock Option”),
(ii) an aggregate of 137,357 shares of restricted stock (“Company Restricted Stock”) outstanding under the Company
Stock Option Plans and (iii) 30,304 shares of the Common Stock remaining
available for issuance under the Company Stock Option Plans.  As of the close of business on the
Capitalization Date, other than the shares of Common Stock described in clauses
(i) and (iii) of the immediately preceding sentence, no shares of
Common Stock or Company Preferred Stock were reserved for issuance.  All of the issued and outstanding shares of
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.  Each
Company Stock Option (i) was granted in compliance in all material
respects with all applicable Laws and all of the terms and conditions of the
Company Stock Option Plans pursuant to which it was issued, (ii) has an
exercise price per share of Common Stock equal to or greater than the fair
market value of a share of Common Stock on the date of such grant and (iii) has
a grant date identical to the date on 


 


7

















 


which
the Board of Directors of the Company (the “Board of Directors”)
or compensation committee of the Board of Directors actually awarded such
Company Stock Option.  Neither the
Company nor any of its officers, directors, or employees is a party to any
right of first refusal, right of first offer, proxy, voting agreement, voting
trust, registration rights agreement, or shareholders agreement with respect to
the sale or voting of any securities of the Company.  No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which the stockholders
of the Company may vote (“Voting Debt”)
are issued and outstanding.  As of the
date of this Agreement, except as set forth elsewhere in this Section 2.2(c),
the Company does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, repurchase rights, commitments, or agreements of any
character calling for the purchase or issuance of, or securities or rights
convertible into or exchangeable or exercisable for, any shares of Common Stock
or Company Preferred Stock or any other equity securities of the Company or
Voting Debt or any securities representing the right to purchase or otherwise
receive any shares of capital stock of the Company (including any rights plan
or agreement).  The Company has
Previously Disclosed all shares of Company capital stock that have been
purchased, redeemed or otherwise acquired, directly or indirectly, by the Company
or any Company Subsidiary since December 31, 2008 and all dividends or
other distributions that have been declared, set aside, made or paid to the
stockholders of the Company since that date.


 


(2)           Section 2.2(c)(2) of
the Company’s Disclosure Schedule sets forth the following information with
respect to each Company Stock Option and share of Company Restricted Stock,
which is true and correct as of the Capitalization Date: the number of shares
of Common Stock subject to such Company Stock Option and the number of shares
of Company Restricted Stock, and, as applicable, the grant date, exercise
price, number of shares vested or not otherwise subject to restrictions,
vesting schedule and the Company Stock Option Plan under which such Company
Stock Options or shares of Company Restricted Stock were granted.


 


(d)           Authorization.


 


(1)           The Company has
the corporate power and authority to enter into or issue this Agreement, the
Warrants and the Class B Warrants and to carry out its obligations
hereunder and thereunder.  The execution,
delivery and performance of this Agreement, the Warrants and the Class B
Warrants by the Company and the consummation of the transactions contemplated
hereby and thereby, including the issuance of Common Stock in accordance with
the terms of the Preferred Stock, the issuance of the Warrants and the Class B
Warrants and the issuance of the Series B Preferred Stock in accordance
with the terms of the Warrants, as applicable, have been duly authorized by the
affirmative vote of at least a majority of the directors on the Board of
Directors.  This Agreement, the Warrants
and the Class B Warrants have been duly and validly executed and delivered
by the Company and, assuming due authorization, execution and delivery of this
Agreement by the Investor, are valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganizations, fraudulent transfer or similar laws relating to or
affecting creditors generally or by general equitable principles 


 


8

















 


(whether
applied in equity or at law).  No other
corporate proceedings are necessary for the execution and delivery by the
Company of this Agreement, the Warrants and the Class B Warrants, the
performance by the Company of its obligations hereunder and thereunder or the
consummation by the Company of the transactions contemplated hereby and
thereby, subject to receipt of the approval by the Company’s stockholders of
the Stockholder Proposals.  The only vote
of the stockholders of the Company required to approve (i) the conversion
of the Preferred Stock into Common Stock is, for purposes of Rule 5635 of
the NASDAQ Listing Rules, a majority of the votes cast on such proposal and (ii) the
amendment of the Articles of Incorporation to increase the number of authorized
shares of Common Stock to 250,000,000 is a majority of the votes cast on such
proposal.  The Board of Directors has
resolved that the transactions contemplated hereby are in the best interests of
stockholders of the Company and has determined unanimously to recommend to the
stockholders the approval of the Stockholder Proposals.


 


(2)           Neither the
execution, delivery, and performance by the Company of this Agreement, the
Preferred Stock, the Warrants and the Class B Warrants nor the
consummation of the transactions contemplated hereby and thereby, nor
compliance by the Company with any of the provisions thereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
of, or result in the creation of, any Lien, upon any of the properties or
assets of the Company or any Company Subsidiary under any of the material
terms, conditions or provisions of (A) its Articles of Incorporation or
bylaws (or similar governing documents) or (B) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any Company Subsidiary is a party or by
which it may be bound, or to which the Company or any Company Subsidiary or any
of the properties or assets of the Company or any Company Subsidiary may be
subject, or (ii) subject to compliance with the statutes and regulations
referred to in the next paragraph, violate any ordinance, permit, concession,
grant, franchise, law, statute, rule or regulation or any judgment,
ruling, order, writ, injunction or decree applicable to the Company or any
Company Subsidiary or any of their respective properties or assets except in
the case of clause (i)(B) for such violations, conflicts and breaches
as would not reasonably be expected to have a Material Adverse Effect on the
Company.


 


(3)           Other than the
securities or blue sky laws of the various states and except as otherwise provided
in this Agreement, no material notice to, registration, declaration or filing
with, exemption or review by, or authorization, order, consent or approval of,
any Governmental Entity, or expiration or termination of any statutory waiting
period, is necessary for the consummation by the Company of the transactions
contemplated by this Agreement.


 


For
purposes of this Agreement, “Class B Warrant”
shall mean the Class B warrants of the Company dated as of the date hereof
to purchase an aggregate of [•] shares of Series A Preferred Stock.


 


9
















 


(e)                                  Knowledge as to
Conditions.  As of the
date of this Agreement, the Company knows of no reason why any regulatory
approvals and, to the extent necessary, any other approvals, authorizations,
filings, registrations, and notices required or otherwise a condition to the
consummation of the transactions contemplated by the Transaction Documents
cannot, or should not, be obtained.


 


(f)                                    Financial
Statements.  The
consolidated balance sheets of the Company and the Company Subsidiaries as of December 31,
2008 and 2007 and related consolidated statements of income, stockholders’
equity and cash flows for the three years ended December 31, 2008,
together with the notes thereto, and included in the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2008 (the “Company 10-K”), as filed with the U.S. Securities and
Exchange Commission (the “SEC”), and the
unaudited consolidated balance sheets of the Company and the Company
Subsidiaries as of June 30, 2009 and March 31, 2009 and related
consolidated statements of income, stockholders’ equity and cash flows for the
periods then ended, included in the Company’s Quarterly Report on Form 10-Q
for the periods ended June 30, 2009 and March 31, 2009 (collectively,
the “Company Financial Statements”), (1) have
been prepared from, and are in accordance with, the books and records of the
Company and the Company Subsidiaries, (2) complied as to form, as of their
respective date 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, (3) have been prepared in
accordance with GAAP applied on a consistent basis and (4) present fairly
in all material respects the consolidated financial position of the Company and
the Company Subsidiaries at the dates set forth therein and the consolidated
results of operations, changes in stockholders’ equity and cash flows of the
Company and the Company Subsidiaries for the periods stated therein (subject to
the absence of notes and year-end audit adjustments in the case of interim
unaudited statements).


 


(g)                                 Reports.


 


(1)                                  Since December 31,
2006, the Company and each Company Subsidiary have filed all material reports,
registrations, documents, filings, statements and submissions together with any
required amendments thereto, that it was required to file with any Governmental
Entity (the foregoing, collectively, the “Company Reports”)
and have paid all material fees and assessments due and payable in connection
therewith.  As of their respective filing
dates, the Company Reports complied in all material respects with all statutes
and applicable rules and regulations of the applicable Governmental
Entities, as the case may be.  To the
knowledge of the Company, as of the date of this Agreement, there are no
outstanding comments from the SEC or any other Governmental Entity with respect
to any Company Report.  The Company
Reports, including the documents incorporated by reference in each of them,
each contained all of the information required to be included in it and, when
it was filed and as of the date of each such Company Report filed with or
furnished to the SEC, such Company Report did not, as of its date or if amended
prior to the date of this Agreement, as of the date of such amendment, contain
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made in it, in light of the
circumstances under which they were made, not misleading and complied as to
form in all material respects with the applicable requirements of the
Securities Act of 1933, as amended, or any 


 


10

















 


successor
statute (the “Securities Act”), and the
Securities Exchange Act of 1934, as amended, or any successor statute (the “Exchange Act”).  No
executive officer of the Company has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act of 2002.  To the
knowledge of the Company, there are no facts or circumstances that would
prevent its chief executive officer and chief financial officer from giving the
certifications and attestations required pursuant to Rules 13a-14 and
15d-14 under the Exchange Act, without qualification, when next due.


 


(2)                                  The records,
systems, controls, data and information of the Company and the Company
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 the Company or the Company Subsidiaries or accountants (including all means
of access thereto and therefrom), except for any nonexclusive ownership and
nondirect control that would not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the system of internal
accounting controls described below in this Section 2.2(g).  The Company (A) has implemented and
maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of
the Exchange Act) to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to the chief executive
officer and the chief financial officer of the Company by others within those
entities, and (B) has disclosed, based on its most recent evaluation prior
to the date of this Agreement, to the Company’s outside auditors and the audit
committee of the Board of Directors (x) any significant deficiencies and
material weaknesses in the design or operation of internal control over
financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) that are reasonably likely to adversely affect the Company’s ability to
record, process, summarize, and report financial information, and (y) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company’s internal controls over financial
reporting.  The Company has no knowledge
of any reason that its outside auditors and its chief executive officer and
chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted
pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without
qualification, when next due.  Since December 31,
2006, (i) neither the Company nor any Company Subsidiary nor, to the
knowledge of the Company, any director, officer, employee, auditor, accountant
or representative of the Company or any Company Subsidiary has received or
otherwise had or obtained knowledge of any material complaint, allegation,
assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company or any
Company Subsidiary or their respective internal accounting controls, including
any material complaint, allegation, assertion or claim that the Company or any
Company Subsidiary has engaged in questionable accounting or auditing
practices, and (ii) no attorney representing the Company or any Company
Subsidiary, whether or not employed by the Company or any Company Subsidiary,
has reported evidence of a violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors,
employees or agents to the Board of Directors or any committee thereof or to
any director or officer of the Company.


 


11

















 


(h)                                 Properties and
Leases.  Except for any Permitted
Liens, the Company and each Company Subsidiary have good title free and clear
of any Liens to all the real and personal property reflected in the Company’s
consolidated balance sheet as of December 31, 2008 included in the Company
10-K for the period then ended, and all real and personal property acquired
since such date, except such real and personal property as has been disposed of
in the ordinary course of business.  For
purposes of this Agreement, “Permitted Liens”
means (i) liens for taxes and other governmental charges and assessments
arising in the ordinary course which are not yet due and payable, (ii) Liens
of landlords and Liens of carriers, warehousemen, mechanics and materialmen and
other like Liens arising in the ordinary course of business for sums not yet
due and payable, and (iii) other Liens or imperfections on property which
are not material in amount or do not materially detract from the value of or
materially impair the existing use of the property affected by such Lien or
imperfection.  Except as would not
reasonably be expected to have a Material Adverse Effect on the Company, (i) all
leases of real property and all other leases pursuant to which the Company or
such Company Subsidiary, as lessee, leases real or personal property are valid
and effective in accordance with their respective terms, and (ii) there is
not, under any such lease, any existing default by the Company or such Company
Subsidiary or any event which, with notice or lapse of time or both, would
constitute such a default.


 


(i)                                     Taxes.  Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company, each of the Company and the Company Subsidiaries has filed all
federal, state, county, local and foreign Tax Returns, including information
Tax Returns, required to be filed by it and all such filed Tax Returns are,
true, complete and correct in all respects, and paid all Taxes owed by it and
no Taxes owed by it or assessments received by it are delinquent.  The federal income Tax Returns of the Company
and the Company Subsidiaries for the fiscal year ended December 31, 2006,
and for all fiscal years prior thereto, are for the purposes of routine audit
by the Internal Revenue Service (the “IRS”)closed
because of the statute of limitations, and no claims for additional Taxes for
such fiscal years are pending.  Neither
the Company nor any Company Subsidiary has waived any statute of limitations
with respect to Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency, in each case that is still in effect, or has pending
a request for any such extension or waiver. 
Neither the Company nor any Company Subsidiary is a party to any pending
action or proceeding, nor to the Company’s knowledge is any such action or
proceeding threatened by any Governmental Entity, for the assessment or
collection of Taxes, interest, penalties, assessments or deficiencies that
could reasonably be expected to have a Material Adverse Effect on the Company
and no issue has been raised by any federal, state, local or foreign taxing
authority in connection with an audit or examination of the Tax Returns,
business or properties of the Company or any Company Subsidiary which has not
been settled, resolved and fully satisfied, or adequately reserved for (other
than those issues that would not reasonably be expected to have a Material
Adverse Effect on the Company).  Except
as would not reasonably be expected to have a Material Adverse Effect on the
Company, each of the Company and the Company Subsidiaries has withheld and paid
all Taxes that it is required to withhold from amounts owing to employees,
creditors or other third parties. 
Neither the Company nor any Company Subsidiary is a party to, is bound
by or has any obligation under any material Tax sharing or material Tax indemnity
agreement or similar contract or arrangement other than any contract or
agreement between or among the Company and any Company Subsidiary.  Neither the Company nor any Company
Subsidiary has entered into any “listed transaction” within the 


 


12

















 


meaning of Treasury Regulations Section 1.6011-4(b)(2),
or any other transaction requiring disclosure under analogous provisions of
state, local or foreign law.  Neither the
Company nor any Company Subsidiary has liability for the Taxes of any person
other than the Company or any Company Subsidiary under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law).  Neither the Company nor any Company
Subsidiary has been a “distributing corporation” or a “controlled corporation”
in any distribution in which the parties to such distribution treated the
distribution as one to which Section 355 of the Code is applicable.  For the purpose of this Agreement, the term “Tax” (including, with correlative meaning, the term “Taxes”) shall mean any and all domestic or foreign, federal,
state, local or other taxes of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Entity, including taxes on or with respect
to income, franchises, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, unemployment, social security,
workers’ compensation or net worth, and taxes in the nature of excise,
withholding, ad valorem or value added, and
the term “Tax Return” means any return, report,
information return or other document (including any related or supporting
information, and attachments and exhibits) required to be filed with respect to
Taxes, including, without limitation, all information returns relating to Taxes
of third parties, any claims for refunds of Taxes and any amendment or
supplements to any of the foregoing.


 


(j)                                     Absence of
Certain Changes.  Since December 31,
2008, except for publicly disclosed ordinary dividends on the Common Stock, the
Company has not made or declared any distribution or dividend in cash or in
kind to its stockholders or issued or repurchased any shares of its capital
stock or other equity interests.  Since December 31,
2008, the business and operations of the Company have been conducted in all
material respects in the ordinary course of business consistent with past
practice, and there has not been:


 


(1)                                  any
circumstance, occurrence, or development which, individually or in the
aggregate with other circumstances, occurrences, or developments, has had or is
reasonably likely to have a Material Adverse Effect on the Company;


 


(2)                                  any material
damage, destruction, or other casualty loss with respect to any material asset
or property owned, leased, or otherwise used by the Company or any Company
Subsidiary, whether or not covered by insurance;


 


(3)                                  any material
change in any method of accounting or accounting practice by the Company; or


 


(4)                                  any agreement
to do any of the foregoing.


 


(k)                                  Commitments and
Contracts.  The Company
has Previously Disclosed or provided to the Investor or its representatives,
prior to the date hereof, true, correct, and complete copies of each of the
following to which the Company or any Company Subsidiary is a party or subject
(whether written or oral, express or implied) (each, a “Company
Significant Agreement”):


 


(1)                                  any material
labor contract or agreement with any labor union;


 


(2)                                  any contract
containing covenants that limit in any material respect the ability of the
Company or any Company Subsidiary to compete in any line of business or 


 


13

















 


with
any person or which involve any material restriction of the geographical area
in which, or method by which or with whom, the Company or any Company
Subsidiary may carry on its business (other than as may be required by law or
applicable regulatory authorities); and any contract that could require the
disposition of any material assets or line of business of the Company or any
Company Subsidiary;


 


(3)                                  any joint
venture, partnership, strategic alliance, or other similar contract (including
any franchising agreement, but in any event excluding introducing broker agreements);
and any contract relating to the acquisition or disposition of any material
business or material assets (whether by merger, sale of stock or assets, or
otherwise), which acquisition or disposition is not yet complete or where such
contract contains continuing material obligations or contains continuing
indemnity obligations of the Company or any of the Company Subsidiaries;


 


(4)                                  any real
property lease and any other lease with annual rental payments aggregating
$5,000,000 or more;


 


(5)                                  other than with
respect to loans, any contract providing for, or reasonably likely to result
in, the receipt or expenditure of more than $5,000,000 on an annual basis,
including the payment or receipt of royalties or other amounts calculated based
upon revenues or income;


 


(6)                                  any contract or
arrangement under which the Company or any of the Company Subsidiaries is
licensed or otherwise permitted by a third party to use any Intellectual
Property that is material to its business (except for any “shrinkwrap” or “click
through” license agreements or other agreements for software that is generally
available to the public and has not been customized for the Company or the
Company Subsidiaries) or under which a third party is licensed or otherwise
permitted to use any Intellectual Property owned by the Company or any of the
Company Subsidiaries;


 


(7)                                  any contract
that by its terms limits the payment of dividends or other distributions by the
Company or any Company Subsidiary;


 


(8)                                  any standstill
or similar agreement pursuant to which any party has agreed not to acquire
assets or securities of another person;


 


(9)                                  any contract
that would reasonably be expected to prevent, materially delay, or materially
impede the Company’s ability to consummate the transactions contemplated by
this Agreement and the other Transaction Documents;


 


(10)                            any contract
providing for indemnification by the Company or any Company Subsidiary of any
person, except for immaterial contracts entered into in the ordinary course of
business consistent with past practice;


 


(11)                            any contract
that contains a put, call, or similar right pursuant to which the Company or
any Company Subsidiary could be required to purchase or sell, as applicable,
any equity interests or assets that have a fair market value or purchase price
of more than $5,000,000; and


 


14

















 


(12)                            any other
contract or agreement which is a “material contract” within the meaning of Item
601(b)(10) of Regulation S-K.


 


Each of the Company
Significant Agreements is valid and binding on the Company and the Company
Subsidiaries, as applicable, and in full force and effect.  The Company and each of the Company
Subsidiaries, as applicable, are in all material respects in compliance with
and have in all material respects performed all obligations required to be
performed by them to date under each Company Significant Agreement.  Neither the Company nor any of the Company
Subsidiaries knows of, or has received notice of, any material violation or
default (or any condition which with the passage of time or the giving of
notice would cause such a violation of or a default) by any party under any
Company Significant Agreement. 
Consummation of the transactions contemplated by this Agreement will not
place the Company or any of the Company Subsidiaries in breach or default of
any Company Significant Agreement, or trigger any modification, termination or
acceleration thereunder.  To the Company’s
knowledge, there are no material transactions or series of related transactions,
agreements, arrangements or understandings, nor are there any currently
proposed material transactions, or series of related transactions between the
Company or any Company Subsidiaries, on the one hand, and the Company, any
current or former director or executive officer of the Company or any Company
Subsidiaries or any person who Beneficially Owns 5% or more of the Common
Shares (or any of such person’s immediate family members or Affiliates) (other
than Company Subsidiaries), on the other hand.


 


(l)                                     Offering of
Securities.  Neither the
Company nor any person acting on its behalf has taken any action (including,
any offering of any securities of the Company under circumstances which would
require the integration of such offering with the offering of any of the
Securities to be issued pursuant to this Agreement or any other Transaction
Document under the Securities Act and the rules and regulations of the SEC
promulgated thereunder) which would subject the offering, issuance, or sale of
any of such Securities to be issued to the registration requirements of the
Securities Act.


 


(m)                               Litigation and
Other Proceedings; No Undisclosed Liabilities.


 


(1)                                  There is no
pending or, to the knowledge of the Company, threatened, claim, action, suit,
arbitration, mediation, demand, hearing, investigation or proceeding against
the Company or any Company Subsidiary, nor is the Company or any Company
Subsidiary subject to any order, judgment or decree, in each case except as
would not reasonably be expected to have a Material Adverse Effect on the
Company.


 


(2)                                  Neither the
Company nor any of the Company Subsidiaries has any liabilities or obligations
of any nature (absolute, accrued, contingent, or otherwise) which are not
appropriately reflected or reserved against in the financial statements
described in Section 2.2(f) to the extent required to be so reflected
or reserved against in accordance with GAAP, except for (i) liabilities
that have arisen since June 30, 2009 in the ordinary course of business
consistent with past practice and (ii) liabilities that have not had and
would not reasonably be expected to have a Material Adverse Effect on the
Company.


 


15

















 


(n)                                 Compliance with
Laws and Other Matters; Insurance.  Except as Previously Disclosed, the Company
and each Company Subsidiary:


 


(1)                                  in the conduct
of its business is in material compliance with all, and the condition and use
of its properties does not violate or infringe in any material respect any,
applicable material domestic (federal, state or local) or foreign laws,
statutes, ordinances, licenses, rules, regulations, judgments, demands, writs,
injunctions, orders or decrees applicable thereto or to employees conducting
its business, including the Troubled Asset Relief Program, the Sarbanes-Oxley
Act of 2002, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT) Act of 2001, all other applicable fair lending
laws or other laws relating to discrimination and the Bank Secrecy Act;


 


(2)                                  has all
material permits, licenses, franchises, authorizations, orders, and approvals
of, and has made all filings, applications, and registrations with,
Governmental Entities that are required in order to permit it to own or lease
its properties and assets and to carry on its business as presently conducted
and that are material to the business of the Company or such Company
Subsidiary; and all such material permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the knowledge of the
Company, no material suspension or cancellation of any of them is threatened,
and all such filings, applications and registrations are current;


 


(3)                                  currently is
complying with and is not under investigation with respect to or, to the
knowledge of the Company, has been threatened by any Governmental Entity to be
charged with or given notice of any material violation of, all applicable
federal, state, local and foreign laws, regulations, rules, judgments,
injunctions or decrees;


 


(4)                                  has, except for
statutory or regulatory restrictions of general application, not been placed
under any material restriction by a Governmental Entity on its business or
properties, and except for routine examinations by applicable Governmental
Entities, as of the date of this Agreement, received no notification or
communication from any Governmental Entity that an investigation by any
Governmental Entity with respect to the Company or any of the Company
Subsidiaries is pending or threatened;


 


(5)                                  has not, since January 1,
2006 nor to its knowledge, has any other person on behalf of the Company or any
Company Subsidiary that qualifies as a “financial institution” under the U.S.
Anti-Money Laundering laws, knowingly acted, by itself or in conjunction with
another, in any act in connection with the concealment of any currency,
securities or other proprietary interest that is the result of a felony as
defined in the U.S. Anti-Money Laundering laws (“Unlawful
Gains”), nor knowingly accepted, transported, stored, dealt in or
brokered any sale, purchase or any transaction of other nature for Unlawful
Gains;


 


(6)                                  to the extent
it qualifies as a “financial institution” under the U.S. Anti-Money Laundering
laws, has implemented in all material respects such anti-money laundering
mechanisms and kept and filed all material reports and other necessary 


 


16

















 


material
documents as required by, and otherwise complied in all material respects with,
the U.S. Anti-Money Laundering laws and the rules and regulations
thereunder; and


 


(7)                                  is presently
insured, and during each of the past two calendar years (or during such lesser
period of time as the Company has owned such Company Subsidiary) has been
insured, for reasonable amounts with, to the knowledge of the Company,
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with industry
practice, customarily be insured.


 


(o)                                 Labor.  Employees of the Company and the Company
Subsidiaries are not represented by any labor union nor are any collective
bargaining agreements otherwise in effect with respect to such employees.  No labor organization or group of employees
of the Company or any Company Subsidiary has made a pending demand for
recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending
or, to the Company’s knowledge, threatened to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or
authority.  There are no organizing
activities, strikes, work stoppages, slowdowns, lockouts, material arbitrations
or material grievances, or other material labor disputes pending or, to the
Company’s knowledge, threatened against or involving the Company or any Company
Subsidiary.  Each of the Company and the
Company Subsidiaries are in compliance in all material respects with all
applicable laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours.


 


(p)                                 Company Benefit
Plans.


 


(1)                                  “Benefit Plan” means all material employee benefit plans,
programs, agreements, contracts, policies, practices, or other arrangements
providing benefits to any current or former employee, officer, director or
consultant of the Company or any Company Subsidiary or any beneficiary or
dependent thereof that is sponsored or maintained by the Company or any Company
Subsidiary or to which the Company or any Company Subsidiary contributes or is
obligated to contribute or is party, whether or not written, including any
material “employee welfare benefit plan” within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), any “employee pension benefit plan” within the
meaning of Section 3(2) of ERISA (whether or not such plan is subject
to ERISA) and any material bonus, incentive, deferred compensation, vacation,
stock purchase, stock option or equity award, equity-based severance,
employment, change of control, consulting or fringe benefit plan, program,
agreement or policy.  Each Benefit Plan
is listed on Section 2.2(p)(1) of the Company’s Disclosure
Schedule.  True and complete copies of
all Benefit Plans listed on Section 2.2(p)(1) of the Company’s
Disclosure Schedule have been made available to the Investor prior to the date
hereof or have been filed with a Company Report.


 


(2)                                  With respect to
each Benefit Plan, (A) the Company and the Company Subsidiaries have
complied, and are now in compliance, in all material respects, with the
applicable provisions of ERISA, and the Internal Revenue Code of 1986, as
amended (the “Code”) and all other laws and
regulations applicable to such Benefit Plan and (B) each 


 


17

















 


Benefit
Plan has been administered in all material respects in accordance with its
terms.  Except as would not reasonably be
expected to have a Material Adverse Effect on the Company, none of the Company
or the Company Subsidiaries nor any of their respective ERISA Affiliates has
incurred any withdrawal liability as a result of a complete or partial
withdrawal from a multiemployer plan, as those terms are defined in Part I
of Subtitle E of Title IV of ERISA, that has not been satisfied in full.  “ERISA Affiliate”
means any entity, trade or business, whether or not incorporated, which
together with the Company and the Company Subsidiaries would be deemed a “single
employer” within the meaning of Section 4001 of ERISA or Sections 414(b),
(c), (m) or (o) of the Code.


 


(3)                                  Each Benefit
Plan which is subject to ERISA (an “ERISA Plan”)
that is an “employee pension benefit plan” within the meaning of Section 3(2) of
ERISA (“Pension Plan”) and that is intended to
be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the IRS, covering all tax law changes prior
to the Economic Growth and Tax Relief Reconciliation Act of 2001, and the
Company is not aware of any circumstances likely to result in revocation of any
such favorable determination or opinion letter or the loss of the qualification
of such Plan under Section 401(a) of the Code.  Neither the Company nor any Company
Subsidiary has engaged in a transaction with respect to any ERISA Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or any Company Subsidiary to a material tax or
material penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA.


 


(4)                                  Neither the
Company, any Company Subsidiary nor any ERISA Affiliate (x) sponsors,
maintains or contributes to or has within the past six years sponsored,
maintained or contributed to a Pension Plan that is subject to Subtitles C or D
of Title IV of ERISA or (y) sponsors, maintains or has an obligation to
contribute to or has within the past six years sponsored, maintained or had an
obligation to contribute to a “multiemployer plan” within the meaning of Section 3(37)
of ERISA.


 


(5)                                  None of the
execution and delivery of this Agreement, the issuance of the Series A
Preferred Stock, the Series B Preferred Stock and the Warrants, nor the
shareholder approval or consummation of the transactions contemplated hereby
will, whether alone or in connection with another event, (i) result in any
material payment or benefit (including severance, unemployment compensation, “excess
parachute payment” (within the meaning of Section 280G of the Code),
forgiveness of indebtedness or otherwise) becoming due to any current or former
employee, officer or director of the Company or any Company Subsidiary from the
Company or any Company Subsidiary under any Benefit Plan or any other agreement
with any employee, including, for the avoidance of doubt, change in control
agreements, (ii) result in payments under any of the Benefit Plans which
would not be deductible under Section 162(m) of the Code, (iii) materially
increase any compensation or benefits otherwise payable under any Benefit Plan,
(iv) result in any acceleration of the time of payment or vesting of any
such benefits, (v) require the funding or increase in the funding of any
such benefits, or (vi) result in any limitation on the right of the
Company or any Company Subsidiary to amend, merge, terminate or receive a
reversion of assets from any Benefit Plan or related trust.


 


18
















 


(6)           As of the date
hereof, there is no material pending or, to the knowledge of the Company
threatened, litigation relating to the Benefit Plans.  Neither the Company nor any Company
Subsidiary has any obligations for retiree health and life benefits under any
ERISA Plan or collective bargaining agreement, except for health continuation
coverage as required by Section 4980B of the Code or Part 6 of Title
I of ERISA and at no expense to the Company and the Company Subsidiaries.


 


(7)           Except as would not
reasonably be expected to have a Material Adverse Effect on the Company and
except for liabilities fully reserved for or identified in the Company
Financial Statements, there are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted against (i) the Benefit Plans, (ii) any
fiduciaries thereof with respect to their duties to the Benefit Plans, or (iii) the
assets of any of the trusts under any of the Benefit Plans.


 


(q)           Status of Securities.  The shares of Series A Preferred Stock,
the shares of Series B Preferred Stock and the Warrants to be issued
pursuant to this Agreement have been duly authorized by all necessary corporate
action of the Company.  When issued and
sold against receipt of the consideration therefor as provided in this
Agreement, such shares of Preferred Stock will be validly issued, fully paid
and nonassessable, and such issuance will not subject the holders thereof to
personal liability and will not be subject to preemptive rights of any other
stockholder of the Company.  The shares
of Common Stock issuable upon the conversion of the Preferred Stock, upon
receipt of the approval by the Company’s stockholders of the Stockholder
Proposals, and the shares of Preferred Stock issuable upon the exercise of the
Warrants will, if applicable, have been duly authorized by all necessary
corporate action and, when so issued, upon such conversion or exercise will be
validly issued, fully paid and nonassessable, and such issuance will not
subject the holders thereof to personal liability and will not be subject to
preemptive rights of any other stockholder of the Company.  Each of the Warrants, when executed and
delivered by the Company pursuant to this Agreement, will constitute a valid
and legally binding agreement of the Company enforceable in accordance with its
terms (except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws
relating to or affecting creditors generally or by general equitable principles
(whether applied in equity or at law)).


 


(r)            Investment Company.  Neither the Company nor any of the Company
Subsidiaries is an “investment company” as defined under the Investment Company
Act of 1940, as amended, and neither the Company nor any of the Company
Subsidiaries sponsors any person that is such an investment company.


 


(s)           Risk Management; Derivatives.  Except as would not reasonably be expected to
have a Material Adverse Effect on the Company:


 


(1)           The Company and the
Company Subsidiaries have in place risk management policies and procedures
sufficient in scope and operation to protect against risks of the type and in
amounts reasonably expected to be incurred by persons of similar size and in
similar lines of business as the Company and the Company Subsidiaries.


 


19

















 


(2)           All derivative
instruments, including swaps, caps, floors and option agreements, whether
entered into for the Company’s own account, or for the account of one or more
of the Company Subsidiaries or their customers, were entered into (i) only
for purposes of mitigating identified risk and in the ordinary course of
business, (ii) in accordance with prudent practices and in compliance with
all applicable laws, rules, regulations and regulatory policies, and (iii) with
counterparties believed by the Company to be financially responsible at the
time; and each of them constitutes the valid and legally binding obligation of
the Company or one of the Company Subsidiaries, enforceable in accordance with
its terms.  Neither the Company nor the
Company Subsidiaries, nor any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement.


 


(t)            Foreign Corrupt Practices and International Trade
Sanctions.  Neither the Company nor
any Company Subsidiary, nor any of their respective directors, officers,
agents, employees or any other persons acting on their behalf (i) has
violated the Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1 et seq., as
amended, or any other similar applicable foreign, federal, or state legal
requirement, (ii) has made or provided, or caused to be made or provided,
directly or indirectly, any payment or thing of value to a foreign official,
foreign political party, candidate for office or any other person knowing that
the person will pay or offer to pay the foreign official, party or candidate,
for the purpose of influencing a decision, inducing an official to violate
their lawful duty, securing any improper advantage, or inducing a foreign
official to use their influence to affect a governmental decision, (iii) has
paid, accepted or received any unlawful contributions, payments, expenditures
or gifts, (iv) has violated or operated in noncompliance with any export
restrictions, money laundering law, anti-terrorism law or regulation,
anti-boycott regulations or embargo regulations, or (v) is currently
subject to any United States sanctions administered by the Office of Foreign
Assets Control of the United States Treasury Department.


 


(u)           Environmental Liability.  There is no legal, administrative, or other
proceeding, claim or action of any nature seeking to impose, or that could
result in the imposition of, on the Company or any Company Subsidiary, any
liability relating to the release of hazardous substances as defined under any
local, state or federal environmental statute, regulation or ordinance,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, pending or, to the Company’s knowledge, threatened
against the Company or any Company Subsidiary the result of which has a
Material Adverse Effect on the Company; to the Company’s knowledge, there is no
reasonable basis for any such proceeding, claim or action; and to the Company’s
knowledge, neither the Company nor any Company Subsidiary is subject to any
agreement, order, judgment or decree by or with any Governmental Entity or
third party imposing any such environmental liability.


 


(v)           Anti-Takeover Provisions Not Applicable.  The Board of Directors has taken all
necessary action to ensure that the transactions contemplated by the
Transaction Documents or any of the transactions contemplated hereby or thereby
are not subject to the provisions of Section 60.835 of the Oregon Business
Corporation Act (the “OBCA”)
(including, but not limited to, the approval of such transactions and/or
stockholders as contemplated by Section 60.835 of the OBCA and Article VI
of the Articles of Incorporation) and Article VI of the Articles of
Incorporation, and any other similar “moratorium,” “control share,” “fair
price,” 


 


20

















 


“takeover” or “interested stockholder” law,
and in the case that such transactions are subject to such provisions or laws,
the Board of Directors shall take all necessary action to ensure that such
transactions shall be deemed to be exceptions to such provisions or laws,
including, but not limited to, the approval of such transactions  as contemplated under Section 60.835(1) of
the OBCA.  The Securities acquired
pursuant to the Transaction Documents are not subject to the provisions of Section 60.801
to Section 60.816 of the OBCA.


 


(w)          Intellectual Property.  Other than with respect to clause (1) below,
except as would not reasonably be expected to result in a Material Adverse
Effect on the Company,


 


(1)           the Company has
Previously Disclosed or provided to the Investor or its representatives, prior
to the date hereof, a true, correct, and complete list of all Registered
Intellectual Property and material unregistered Intellectual Property that is
owned by the Company or any of the Company Subsidiaries, indicating for each
item of Registered Intellectual Property, the record owner, the patent,
registration or application number (as applicable) and the filing jurisdiction;


 


(2)           the Company and each
of the Company Subsidiaries owns, or otherwise has sufficient rights (all of
which shall survive the consummation of the transactions contemplated hereby)
to use (in each case, free and clear of any claims, liens or encumbrances), all
Intellectual Property used in their respective 
businesses as currently conducted;


 


(3)           all of the
Intellectual Property owned by the Company or any of the Company Subsidiaries
is (i) subsisting in the case of Registered Intellectual Property; (ii) to
the knowledge of the Company, valid and enforceable; and (iii) not subject
to any outstanding order, judgment, decree or agreement adversely affecting the
Company’s or any of the Company Subsidiaries’ use or registration of, or its
rights to, such Intellectual Property;


 


(4)           to the knowledge of
the Company, none of the Company or any of the Company Subsidiaries is
infringing, diluting, misappropriating or otherwise violating the Intellectual
Property rights of any third party;


 


(5)           to the knowledge of
the Company, no person is challenging, infringing, diluting, misappropriating
or otherwise violating any right of the Company or any of the Company
Subsidiaries with respect to any Intellectual Property owned by or licensed to
the Company or the Company Subsidiaries;


 


(6)           there is no
litigation, opposition, cancellation, proceeding, objection or claim pending,
asserted or, to the knowledge of the Company, threatened against the Company or
any of the Company Subsidiaries concerning the ownership, validity,
registerability, enforceability, infringement, dilution, misappropriate,
violation or use of, or licensed right to use, any Intellectual Property, and
to the knowledge of the Company, no valid basis for any such litigation,
opposition, cancellation, proceeding, objection or claim exists;


 


21

















 


(7)           the Company and each
of the Company Subsidiaries have taken all reasonable measures to protect their
Intellectual Property, and to protect the confidentiality of all Trade Secrets
that they own, use or hold, and to the knowledge of the Company, such Trade
Secrets have not been used, disclosed to or discovered by any person except pursuant
to valid and appropriate non-disclosure and/or license agreements which have
not been breached; and


 


(8)           (i) the IT
Assets owned, used or held for use by the Company or any of the Company
Subsidiaries operate and perform in all material respects in accordance with
their documentation and functional specifications and otherwise as required by
the Company and each of the Company Subsidiaries in connection their respective
businesses, (ii) to the knowledge of the Company, no person has gained
unauthorized access to the IT Assets, (iii) the Company and the Company
Subsidiaries have implemented reasonable backup and disaster recovery plans and
technology consistent with industry practices and (iv) the Company and
each of the Company Subsidiaries take all reasonable measures, directly or
indirectly, to ensure the confidentiality, privacy and security of employee,
customer and other confidential information and to comply with their respective
privacy policies or commitments to customers.


 


For the purposes of this
Agreement, “Intellectual Property” shall mean (i) trademarks,
service marks, Internet domain names, logos, product names and slogans,
symbols, trade dress, assumed names, fictitious names, trade names, d/b/a’s,
brand names, business names, corporate names, and any and every other form of
trade identity and other indicia of origin, all applications and registrations
for the foregoing, including renewals of the same, and all goodwill associated
therewith and symbolized thereby; (ii) inventions and discoveries (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, all patents (including utility and design patents,
industrial designs and utility models), invention disclosures and applications
therefor, including divisions, revisions, supplementary protection
certificates, continuations, continuations-in-part and renewal applications,
and including extensions, reissues and re-examinations thereof; (iii) published
and unpublished works of authorship, whether copyrightable or not (including
without limitation databases and other compilations of information, mask works
and semiconductor chip rights, computer and electronic data processing
programs, operating programs and software, both source code and object code,
flow charts, diagrams, and similar items), copyrights therein and thereto, and
registrations and applications therefor, and all renewals, extensions,
restorations and reversions thereof; (iv) trade secrets and other
confidential information (including ideas, research and development, know-how,
formulae, drawings, prototypes, models, designs, technology, compositions,
manufacturing, production and other processes and techniques, schematics,
technical data, engineering, production and other designs, drawings,
engineering notebooks, industrial models, software and specifications, business
methods, customer lists and supplier lists, and any other information meeting
the definition of a trade secret under the Uniform Trade Secrets Act) (“Trade Secrets”); (v) all other intellectual property,
industrial or similar proprietary; and (vi) all rights to sue for and
remedies against past, present and future infringements of, any or all of the
foregoing, including the right to receive all proceeds and damages therefrom, and
rights of priority and protection of interests therein under the laws of any
jurisdiction throughout the world


 


22

















 


“IT Assets”
shall mean computers, computer software, databases, firmware, middleware, servers,
workstations, routers, hubs, switches, data communications lines, and all other
information technology equipment, and all associated documentation.


 


“Registered
Intellectual Property” shall mean all Intellectual Property issued
by, registered with, renewed by or the subject of a pending application before
any Governmental Entity or Internet domain name registrar.


 


(x)            Brokers and Finders.  Except for Sandler O’Neill + Partners, sole
placement agent for the Company, neither the Company nor any Company Subsidiary
nor any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder’s fees, and no broker or finder has acted
directly or indirectly for the Company or any Company Subsidiary, in connection
with the Transaction Documents or the transactions contemplated hereby and
thereby.


 


(y)           Agreements with Regulatory Agencies.  Except as Previously Disclosed, neither the
Company nor any Company Subsidiary is subject to any cease-and-desist or other
similar order or enforcement action issued by, or is a party to any written
agreement, consent agreement or memorandum of understanding with, or is a party
to any commitment letter or similar undertaking to, or is subject to any
capital directive by, or since December 31, 2008, has adopted any board
resolutions at the request of, any Governmental Entity that currently restricts
in any material respect the conduct of its business or that in any material
manner relates to its capital adequacy, its liquidity and funding policies and
practices, its ability to pay dividends, its credit, risk management or
compliance policies, its internal controls, its management, or its operations
or business (each item in this sentence, a “Regulatory Agreement”).  The Company and each Company Subsidiary are
in compliance in all material respects with each Regulatory Agreement to which
it is party or subject, and neither the Company nor any Company Subsidiary has
received any notice from any Governmental Entity indicating that either the
Company or any Company Subsidiary is not in compliance in all material respects
with any such Regulatory Agreement.


 


(z)            Loan Portfolio. 
To the knowledge of the Company, the characteristics of the loan
portfolio of the Company have not materially changed from the characteristics
of the loan portfolio of the Company as of June 30, 2009.


 


(aa)         Listing of Common Stock.  The shares of Common Stock into which all of
the Preferred Shares (including the shares of Series B Preferred Stock for
which the Warrants may be exercised) are convertible have been authorized, to
the extent such Common Stock has been authorized under the Articles of
Incorporation, for listing on the NASDAQ Stock Market, subject to official
notice of issuance.


 


(bb)         Directors’ and Officers’ Insurance.   The Company (i) maintains directors’ and
officers’ liability insurance and fiduciary liability insurance with, to the
knowledge of the Company, financially sound and reputable insurance companies
with benefits and levels of coverage that have been Previously Disclosed, (ii) has
timely paid all premiums on such policies and (iii) there has been no
lapse in coverage during the term of such policies.


 


23

















 


(cc)         Section 16. 
The Board of Directors has approved the issuance and sale of the
Securities, including any acquisition pursuant to the exercise or conversion
thereof, in the manner required to exempt the acquisition of such Securities
from Section 16(b) of the Exchange Act pursuant to Rule 16b-3
thereunder.


 


(dd)         Fees and Expenses. 
All closing fees and expenses (including all costs to be incurred to
register the Registrable Securities and to obtain stockholder approval of the
Stockholder Proposals), the fees and expenses of any Company advisors
(including Company counsel and other professional fees), and fees and expenses
of any broker or finders that the Company is responsible for (including the
fees and expenses of the Company’s sole placement agent, Sandler O’Neill +
Partners) are not expected to exceed $11,000,000.


 


(ee)         [Investment Agreement.  This Agreement is substantially identical in
all material respects to the other investment agreements entered into between
the Company and the other investors purchasing Securities and Class B
Warrants except as to (i) the number of Securities to be purchased and the
aggregate purchase price for such Securities (but not the purchase price per
Security) set forth in Section 1.2; (ii) provisions relating to the
reimbursement of the Investor’s fees and expenses, which do not appear in all
investment agreements but, in the investment agreements which do contain such
provisions, are in the form set forth in Section 3.2 hereof and differ
only as to the amount of fees and expenses to be reimbursed; (iii) this
Agreement shall not provide for the purchase by Investor of Class B
Warrants; (iv) the provisions of Section 3.3(a) hereof providing
the Investor with consulting rights that may not appear in other investment
agreements; (v) one investment agreement provides as a condition to the
obligations of such investor and as an obligation of the Company for the
payment of the fees and expenses of Sullivan & Cromwell LLP, counsel
to such investor, and (vi) that other investment agreements may not
contain the provisions set forth in Sections 2.2(ee), 3.3, 3.4, 3.5, 4.1, 4.2,
4.3 or 4.4 hereof and/or may provide for committee and/or observer
appointments.] (21)


 


2.3           Representations and Warranties of the Investor.  Except as Previously Disclosed, the Investor
hereby represents and warrants as of the date of this Agreement (except to the
extent made only as of a specified date, in which case as of such date), solely
with respect to itself and, where expressly indicated, its Affiliates, to the
Company that:


 


(a)           Organization and Authority.  The Investor is a limited partnership duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing of property
or the conduct of its business requires it to be so qualified and failure to be
so qualified would have a Material Adverse Effect on such Investor, and have partnership
power and authority to own its properties and assets and to carry on its
business as it is now being conducted. 
The Investor has furnished the Company with a true, correct and complete
copy of its certificate of limited partnership through the date of this
Agreement.


 


(b)           Authorization.


 


(1)           The Investor has the
partnership power and authority to enter into this Agreement and to carry out
its obligations hereunder.  The
execution, delivery, and performance of this Agreement by the Investor and the consummation
of the transactions 


 






(21) Included
in the Investment Agreement of one of the investors.


 


24

















 


contemplated hereby have been duly authorized by the Investor’s
partnership, as applicable, and no further approval or authorization by any of
the partners is required.  Subject to
such approvals of Governmental Entities as may be required by statute or
regulation, this Agreement is a valid and binding obligation of the Investor
enforceable against the Investor in accordance with its respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganizations, fraudulent transfer, or similar laws affecting
creditors generally or by general equitable principles (whether applied in
equity or at law).  No other partnership
proceedings are necessary for the execution and delivery by the Investor of
this Agreement, the performance by it of its obligations hereunder or the
consummation by it of the transactions contemplated hereby.


 


(2)           Neither the
execution, delivery, and performance by the Investor of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance by the
Investor with any of the provisions hereof, will (i) violate, conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of, any Lien upon any of the properties or assets of such Investor under any of
the material terms, conditions or provisions of (A) its certificate of
limited partnership or partnership agreement, as applicable, or (B) any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Investor is a party or by which it
may be bound, or to which the Investor or any of the properties or assets of
such Investor may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in the next paragraph, violate any
statute, rule or regulation or, to the knowledge of the Investor, any
judgment, ruling, order, writ, injunction or decree applicable to such Investor
or any of its respective properties or assets except in the case of
clauses (i)(B) and (ii) for such violations, conflicts and
breaches as would not reasonably be expected to have a Material Adverse Effect
on the Investor.


 


(3)           Other than the
securities or blue sky laws of the various states, no material notice to,
registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of, any Governmental Entity, or expiration
or termination of any statutory waiting period, is necessary for the
consummation by the Investor of the transactions set forth in this Agreement.


 


(c)           Purchase for Investment.  The Investor acknowledges that the Securities
have not been registered under the Securities Act or under any state securities
laws.  The Investor (1) is acquiring
the Securities pursuant to an exemption from registration under the Securities
Act for its own account solely for investment with no present intention or plan
to distribute any of the Securities to any person nor with a view to or for
sale in connection with any distribution thereof, (2) will not sell or
otherwise dispose of any of the Securities, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
other applicable securities laws, (3) has such knowledge and experience in
financial and business matters and in investments of this type that it is
capable of evaluating the merits and risks of its investment in the Securities
and of making an informed investment decision, and (4) is an “accredited
investor” (as that term is defined by Rule 501 of the Securities
Act).   Without 


 


25

















 


limiting any of the foregoing, neither the
Investor nor any of its Affiliates has taken, and the Investor will not, and
will cause its Affiliates not to, take any action that would otherwise cause
the Securities to be subject to the registration requirements of the Securities
Act.


 


(d)           Ownership. 
As of the date of this Agreement, the Investor is not the owner of
record or the Beneficial Owner of shares of Common Stock, securities
convertible into or exchangeable for Common Stock, or any other equity or equity-linked
security of the Company or any Company Subsidiary.


 


(e)           Financial Capability.  The Investor has immediately available funds
necessary to consummate the Closing, as of the date of the Closing, on the
terms and conditions contemplated by this Agreement.


 


(f)            Knowledge as to Conditions.  As of the date of this Agreement, the
Investor knows of no reason why any regulatory approvals and, to the extent
necessary, any other approvals, authorizations, filings, registrations, and
notices required or otherwise a condition to the consummation of the
transactions contemplated by the Transaction Documents cannot, or should not,
be obtained.


 


(g)           Brokers and Finders.  Neither the Investor nor its Affiliates or
any of their respective officers, directors or employees has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder’s fees, and no broker or finder has acted
directly or indirectly for the Investor, in connection with the Transaction
Documents or the transactions contemplated hereby and thereby.


 


ARTICLE III


 


Covenants


 


3.1           Filings; Other Actions.


 


(a)           The Investor and the Company will cooperate and consult
with each other and use reasonable best efforts to prepare and file all
necessary documentation, to effect all necessary applications, notices,
petitions, filings, and other documents, and to obtain all necessary permits,
consents, orders, approvals, and authorizations of, or any exemption by, all
third parties and Governmental Entities, and expiration or termination of any
applicable waiting periods, necessary or advisable to consummate the
transactions contemplated by this Agreement and the other Transaction
Documents, to perform covenants contemplated by this Agreement and the other
Transaction Documents, it being agreed that the Investor shall make or file any
such applications, notices, petitions or filings required to be made by it with
Governmental Entities in connection with the transactions contemplated by this
Agreement.   Each party shall execute and
deliver both before and after the Closing such further certificates,
agreements, and other documents and take such other actions as the other party
may reasonably request to consummate or implement such transactions or to
evidence such events or matters.  In
particular, the Investor agrees that it will use its reasonable best efforts to
promptly obtain, and the Company will use its reasonable best efforts to help
the Investor promptly obtain or submit, as the case may be, as 


 


26

















 


promptly as practicable, the approvals and
authorizations of, filings and registrations with, and notifications to, or
expiration or termination of any applicable waiting period, all notices to and,
to the extent required by applicable law or regulation, consents, approvals, or
exemptions from bank regulatory authorities, for the transactions contemplated
by the Transaction Documents. 
Notwithstanding anything herein to the contrary, the Investor and its Affiliates
are not subject to any covenant or agreement under this Agreement to file any
application or notice under the BHC Act or the Change in Bank Control Act of
1978 (the “CBC Act”) in connection with any of the
transactions as contemplated hereby.  The
Investor and the Company will each have the right to review in advance, and to
the extent practicable each will consult with the other, in each case subject
to applicable laws relating to the exchange of information, with respect to all
the information relating to the other party, and any of their respective
subsidiaries, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. 
In exercising the foregoing right, each of the parties hereto agrees to
act reasonably and as promptly as practicable. 
Each party hereto agrees to keep the other party apprised of the status
of matters relating to completion of the transactions contemplated hereby.  The Investor and the Company shall promptly
furnish each other to the extent permitted by applicable laws with copies of
written communications received by them or their subsidiaries from, or
delivered by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement or by any other Transaction
Document.


 


(b)           The Company shall call a special meeting of its
stockholders, as promptly as reasonably practicable after the date of this
Agreement to vote on proposals (collectively, the “Stockholder
Proposals”) to (i) approve the issuance of Common Stock upon
conversion of the Series A Preferred Stock and Series B Preferred
Stock (including the Series B Preferred Stock issuable upon the exercise
of the Class C Warrants) for purposes of Rule 5635 of the NASDAQ
Listing Rules and (ii) amend the Articles of Incorporation to
increase the number of authorized shares of Common Stock to 250,000,000.  The Board of Directors shall unanimously
recommend to the Company’s stockholders that such stockholders approve the
Stockholder Proposals, and shall not modify or withdraw such resolution.  In connection with such meeting, the Company
shall promptly prepare (and the Investor will reasonably cooperate with the
Company to prepare) and file (but in no event more than 30 days following the
Closing Date) with the SEC a preliminary proxy statement, shall use its
reasonable best efforts to solicit proxies for such stockholder approval, and
shall use its reasonable best efforts to respond to any comments of the SEC or
its staff and to cause a definitive proxy statement related to such
stockholders’ meeting to be mailed to the Company’s stockholders as promptly as
practicable after clearance by the SEC. 
The Company shall notify the Investor promptly of the receipt of any
comments from the SEC or its staff with respect to the proxy statement and of
any request by the SEC or its staff for amendments or supplements to such proxy
statement or for additional information and will supply the Investor with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC or its staff, on the other hand, with respect to
such proxy statement.  If at any time
prior to such stockholders’ meeting there shall occur any event that is
required to be set forth in an amendment or supplement to the proxy statement,
the Company shall as promptly as practicable prepare and mail to its
stockholders such an amendment or supplement. 
The Investor and the Company each agree to correct promptly any information
provided by it or on its behalf for use in the proxy statement if and to the
extent that such information shall have become false or misleading in any
material respect, and the 


 


27

















 


Company shall as promptly as practicable
prepare and mail to its stockholders an amendment or supplement to correct such
information to the extent required by applicable laws and regulations.  The Company shall consult with the Investor prior
to mailing any proxy statement, or any amendment or supplement thereto, and
provide the Investor with reasonable opportunity to comment thereon.  The directors’ recommendation described in
this Section 3.1 shall be included in the proxy statement filed in
connection with obtaining such stockholder approval.  In the event that the approval of any of the
Stockholder Proposals is not obtained at such special stockholders’ meeting in
accordance with the requirements of NASDAQ and the Oregon Business Corporation
Act, the Company shall include a proposal to approve (and, the Board of
Directors shall unanimously recommend approval of) such Stockholder Proposal(s) at
a subsequent special meeting of its stockholders to be held no later than 60
days therefrom.  If such stockholder
approval is not obtained prior to March 1, 2010, the Class D Warrant
issued to the Investor shall become exercisable on such date for [•]
shares of Series B Preferred Stock at any time thereafter.  At such time as the Stockholder Proposals are
approved by the stockholders in accordance with the requirements of NASDAQ and
the Oregon Business Corporation Act, the Class D Warrant shall
expire.  Immediately upon approval by
stockholders of the increase in the Company’s authorized number of shares of
Common Stock and Preferred Stock as provided above, the Company shall amend its
Articles of Incorporation to include such increase.


 


(c)           Each party agrees, upon request, to furnish the other
party with all information concerning itself, its subsidiaries, Affiliates,
directors, officers, partners, and stockholders and such other matters as may
be reasonably necessary or advisable in connection with the proxy statement in
connection with such stockholders’ meeting and any other statement, filing,
notice, or application made by or on behalf of such other party or any of its
subsidiaries to any Governmental Entity in connection with Transaction
Documents.


 


(d)           From the date of this Agreement, until the date when
approval of the Stockholder Proposals is obtained, the Company shall not,
directly or indirectly, amend, modify, or waive, and the Board of Directors
shall not recommend approval of any proposal to the stockholders having the
effect of amending, modifying, or waiving any provision in the Articles of
Incorporation in any manner adverse to the Investor or any other holder of
Securities issued pursuant to this Agreement, including, for the avoidance of
doubt, any amendment, modification, or waiver that has the effect of exempting
any person (other than the Investor or any other holder of the Securities
issued pursuant to this Agreement) from the stock ownership restrictions set
forth in Subsection A of Article VI of the Articles of Incorporation.


 


(e)           From the date of this Agreement, the Company shall take
all actions necessary to ensure that none of the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
the stockholder approval of the Stockholder Proposals will constitute a “change
in control” or “change of control” within the meaning of any Benefit Plan.


 


3.2           Expenses. 
The Company shall [(i) directly reimburse the fees and expenses of
Sullivan & Cromwell LLP, counsel to the Investor,](4) and [(ii) compensate
the Investor for all 


 






(4) Included in the Investment Agreement
of one of the investors.


 


28

















 


expenses
in connection with due diligence efforts, the negotiation and preparation of
the Transaction Documents and undertaking of the transactions contemplated by
the Transaction Documents (including out-of-pocket due diligence expenses and
professional fees incurred by or on behalf of the Investor or its Affiliates in
connection with the transactions contemplated hereby, but excluding the
purchase or exercise price for any of the Securities) in an amount equal to $[·], whether or not incurred.](5)   The Company shall be responsible for all closing and annual
administrative fees and expenses (including all costs incurred to register the
Registrable Securities and to obtain stockholder approval of the Stockholder
Proposals), the fees and expenses of any Company advisors (including Company
counsel and other professional fees), SEC registration fees and related
expenses, and fees and expenses of any broker or finders for which the Company
is responsible.  The Company shall pay
its sole placement agent, Sandler O’Neill + Partners,  for the placement of all Preferred Stock and
Warrants issued on the date hereof an amount equal to $7.5 million, of which $5
million will be due and payable at Closing and the remaining $2.5 million will
be due and payable immediately upon approval of the Stockholder Proposals.  Other than as set forth in this Section 3.2
and Section 4.10(b),  each of the
parties will bear and pay all other costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated under the Transaction
Documents.


 


3.3           [Access, Information and Confidentiality.


 


(a)           From the date of this Agreement, until the date when the
shares of Common Stock owned by the Investor in the aggregate represent less
than 4.9% of all of the outstanding Common Shares (counting for such purposes
all shares of Common Stock into or for which the Securities owned by the
Investor are directly or indirectly convertible or exercisable[,which for the
avoidance of doubt shall include any Securities or any shares of Series B
Preferred Stock held by the Investor](6) and excluding as shares owned and
outstanding all Common Shares issued by the Company after the Closing Date
other than as contemplated by this Agreement and the Securities), the Company
will ensure that upon reasonable notice, the Company and its subsidiaries will
afford to the Investor and its representatives (including officers and
employees of the Investor, and counsel, accountants and other professionals
retained by the Investor) (i) such access during normal business hours to
its books, records (excluding Tax Returns and associated work papers),
properties and personnel and to such other information as the Investor may
reasonably request [and (ii) reasonable opportunities to routinely consult
with and advise the management of the Company and its subsidiaries, on matters
relating to the operation of the Company. 
The Company agrees to consider, in good faith, the recommendations of
the Investor or its designated representative in connection with the matters on
which it is consulted as described above, recognizing that the ultimate
discretion with respect to all such matters shall be retained by the
Company.](7)


 






(5) Included in the Investment Agreements
of certain key investors.


 


(6) Included in the Investment Agreement
of one of the investors.


 


(7) Included in the Investment Agreement
of one of the investors.


 


29
















 


(b)           Each party to this Agreement will hold, and will cause its
respective subsidiaries and their directors, officers, employees, agents,
consultants, and advisors to hold, in strict confidence, unless disclosure to a
Governmental Entity is necessary or appropriate in connection with any
necessary regulatory approval or unless compelled to disclose by judicial or
administrative process or, in the written opinion of its counsel, by other
requirement of law or the applicable requirements of any Governmental Entity,
all nonpublic records, books, contracts, instruments, computer data and other
data and information (collectively, “Information”)
concerning the other party hereto furnished to it by such other party or its
representatives pursuant to this Agreement (except to the extent that such
information can be shown to have been (1) previously known by such party
on a nonconfidential basis, (2) in the public domain through no fault of
such party, or (3) later lawfully acquired from other sources by the party
to which it was furnished), and neither party hereto shall release or disclose
such Information to any other person, except its auditors, attorneys, financial
advisors, other consultants, and advisors and, to the extent permitted above,
to bank regulatory authorities.](8)


 


3.4           [Press Release.(9)  Within one (1) business
day of the execution of this Agreement, the Company shall issue the press
release substantially in the form and substance of Exhibit H
attached hereto and file such press release with the SEC as an exhibit to a
Current Report on Form 8-K.  Except
as required by applicable law or the listing rules of the NASDAQ Stock
Market, the Company shall not make any additional public releases with respect
to this Agreement or the subject matter hereof. 
Whenever any party determines, based upon the advice of such party’s
counsel, that a public announcement or other disclosure is required by or
advisable with respect to any applicable law or the listing rules of the
NASDAQ Stock Market, the parties shall discuss with each other in good faith
prior to the making of such public announcement or other disclosure.]


 


3.5           [Board Representative.(10)  Notwithstanding Section 4.4,
as soon as permitted by applicable laws and regulations, the Company shall
cause the election or appointment, as the case may be, of the Board
Representative to the Company’s Board of Directors [(including, at the option
of the Board Representative, appointment to the Company’s Governance &
Nominating Committee, Executive Committee, and Loan, Investment &
Asset/Liability Committee (or any successor committees thereto), so long as the
Board Representative qualifies to serve on such committees under applicable rules of
the NASDAQ)](11) and the board of directors of West Coast Bank, in each case in
accordance with all legal and governance requirements regarding service and
election or appointment as a director of the Company and West Coast Bank, and
such election or appointment shall be in full force and effect.]


 






(8) Included
in the Investment Agreements of certain investors.


 


(9) Included
in the Investment Agreements of certain investors.


 


(10) Included
in the Investment Agreements of two investors.


 


(11)
Included in the Investment Agreement of one investor.


 


30

















 


ARTICLE IV


 


Additional Agreements


 


4.1           [Agreement.(12) 
The Investor agrees, until the date that is thirty-six months from the
Closing Date, that without the prior written approval of the Company, neither
it nor any of its Affiliates will, directly or indirectly, in any way acquire,
offer or propose to acquire or agree to acquire, other than as specifically
contemplated in the Transaction Documents, Beneficial Ownership of any equity
securities of the Company if such acquisition would result in the Investor or
its Affiliates having Beneficial Ownership of more than 4.9% of the outstanding
equity securities of the Company (for the avoidance of doubt, the Beneficial
Ownership of the Investor and its Affiliates for the purposes of this Section 4.1
is calculated by dividing (x) the sum of the (i) the number of shares
of Common Stock held by the Investor (if any) and (ii) the number of
shares of Common Stock represented by the Preferred Stock held by the Investor
on an as-converted basis by (y) the sum of (i) the number of shares
of Common Stock outstanding and (ii) the number of shares of Common Stock
represented by the Preferred Stock held by all Investors on an as-converted
basis).]  [Agreement.(13)  The Investor agrees that until such time as
it and its Affiliates no longer own 5% or more of all of the outstanding shares
of Common Stock (counting for such purposes all shares of Common Stock into or
for which shares of any Securities owned by the Investor are directly or
indirectly convertible or exercisable[, which for the avoidance of doubt shall
include any Securities or any shares of Series B Preferred Stock held by
the Investor](14)) (the “Qualifying Ownership
Interest”), without the prior written approval of the Company, that
neither it nor any of its Affiliates will, directly or indirectly:


 


(a)           in any way acquire, offer or propose to acquire or agree
to acquire, other than as specifically contemplated in the Transaction
Documents, Beneficial Ownership of any Voting Securities if such acquisition
would result in the Investor or its Affiliates having Beneficial Ownership of
more than 9.9% of the outstanding shares of a class of voting securities
(within the meaning of the BHC Act and Regulation Y) or Common Stock of the
Company (for the avoidance of doubt, for purposes of calculating the Beneficial
Ownership of the Investor and its Affiliates hereunder, (x) any security
that is convertible into, or exercisable for, any such voting securities or
Common Stock that is Beneficially Owned by the Investor or its Affiliates shall
be treated as fully converted or exercised in accordance with its terms, as the
case may be, into the underlying voting securities or Common Stock, and (y) any
security convertible into, or exercisable for, the Common Stock that is
Beneficially Owned by any person other than the Investor or any of its
Affiliates shall not be taken into account);


 


(b)           make, or in any way participate in, any “solicitation” of “proxies”
(as such terms are defined under Regulation 14A under the Exchange Act,
disregarding clause (iv) of Rule 14a-1(l)(2) and including any
otherwise exempt solicitation pursuant to Rule 14a-2(b)) to 


 






(12) Included in the Investment Agreements of
certain investors.


 


(13) Included in the Investment Agreements of
certain investors.


 


(14) Included in the Investment Agreement of
one of the investors.


 


31

















 


vote, or seek to advise or influence any
person or entity with respect to the voting of, any Voting Securities of the Company;


 


(c)           call or seek to call a meeting of the stockholders of the
Company or initiate any stockholder proposal for action by stockholders of the
Company, form, join or in any way participate in a “group” (within the meaning
of Section 13(d)(3) of the Exchange Act and the rules and
regulations promulgated thereunder) with respect to any Voting Securities, or
seek, propose or otherwise act alone or in concert with others, to influence or
control the management, board of directors or policies of the Company; provided that the Investor and its Affiliates shall not be
considered a “group” for the purposes of this Section 4.1(c);


 


(d)           bring any action or otherwise act to contest the validity
of this Section 4.1 (provided that
neither the Investor nor any of its Affiliates shall be restricted from
contesting the applicability of this Section 4.1 to the Investor or any of
its Affiliates under any particular circumstance) or seek a release of the
restrictions contained herein, or make a request to amend or waive any
provision of this Section 4.1;


 


(e)           enter into or agree, offer, propose or seek (whether
publicly or otherwise) to enter into any acquisition transaction, merger or
other business combination relating to all or part of the Company or any of the
Company Subsidiaries or any acquisition transaction for all or part of the
assets of the Company or any Company Subsidiary or any of their respective
businesses; or


 


(f)            publicly disclose any intention, plan or arrangement
inconsistent with any of the foregoing or take any action that would reasonably
be expected to require the Company to make a public announcement regarding the
possibility of any of the events described in clauses (a) through (e) above;


 


provided, nothing in
this Section 4.1 shall prevent the Investor or its Affiliates from voting
any Voting Securities then Beneficially Owned by the Investor or its Affiliates
in any manner; provided, further,
that nothing in clauses (b), (c) or (e) of this Section 4.1
shall apply to the Investor’s Board Representative solely in his or her
capacity as a director of the Company or West Coast Bank.


 


For purposes of this Agreement, “Voting Securities” shall mean at any time shares of any
class of capital stock of the Company that are then entitled to vote generally
in the election of directors.


 


Notwithstanding the foregoing, the parties
hereto agree that nothing in this Section 4.1 shall apply to any portfolio
company with respect to which the Investor is not the party exercising control
over the decision to purchase Voting Securities or to vote such Voting
Securities; provided that the Investor does not
provide to such entity any nonpublic information concerning the Company or any
Company Subsidiary and such portfolio company is not acting at the request or
direction of or in coordination with the Investor; and provided,
further, that ownership of such shares
is not attributed to the Investor under the BHC Act and the rules and
regulations promulgated thereunder or any written interpretation of the
foregoing by the staff of 


 


32

















 


the Board of Governors of
the Federal Reserve System (the “Federal Reserve”)
that has not been rescinded.


 


Notwithstanding the foregoing restrictions,
if, at any time, (i) there occurs a Change in Control or (ii) any
person (other than an Investor or its Affiliate) shall have commenced and not
withdrawn a bona fide public tender or exchange offer which if consummated
would result in a Change in Control, then the limitations set forth in this Section 4.1
(other than in Section 4.1(a)) shall not be applicable to the Investor for
so long as the conditions described in this paragraph continue.


 


For purposes of this Agreement,


 


“Change in Control”
means, with respect to the Company, the occurrence of any one of the following
events:


 


(1)           any
person is or becomes a Beneficial Owner (other than the Investor and its
Affiliates), directly or indirectly, of 50% or more of the aggregate number of
the Voting Securities; provided, however, that the event described in this clause (1) will
not be deemed a Change in Control by virtue of any holdings or
acquisitions:  (i) by the Company or
any of its Subsidiaries, (ii) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its subsidiaries; provided that such holdings or acquisitions by any such plan
(other than any plan maintained under 401(k) of the Code) do not exceed
50% of the then outstanding Voting Securities, (iii) by any underwriter
temporarily holding securities pursuant to an offering of such securities, or (iv) pursuant
to a Non-Qualifying Transaction;


 


(2)           the
event described in clause (1) above in this definition of “Change in
Control” (substituting all references to 50% in such clause for “24.9%”), and
in connection with such event, individuals who, on the date of this Agreement,
constitute the Board of Directors (the “Incumbent Directors”)
cease for any reason to constitute at least a majority of the Board of
Directors; provided, that
any person becoming a director subsequent to the date of this Agreement whose
election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board of Directors (either by
a specific vote or by approval of the proxy statement of the relevant party in
which such person is named as a nominee for director, without written objection
to such nomination) shall be an Incumbent Director (except that no individuals
who were not directors at the time any agreement or understanding with respect
to any Business Combination or contested election is reached shall be treated
as Incumbent Directors for the purposes of clause (3) below with respect
to such Business Combination or this paragraph in the case of a contested
election); provided, further,
that each Board Representative will be treated as an Incumbent Director even if
the person designated to be such Board Representative should change;


 


(3)           the
consummation of a merger, consolidation, statutory share exchange, or similar
transaction that requires adoption by the Company’s stockholders (a “Business Combination”), unless immediately following such
Business Combination:  (x) more than
50% of the total voting power of the corporation resulting from such Business 


 


33

















 


Combination (the “Surviving Corporation”), or, if applicable, the ultimate
parent corporation that directly or indirectly has Beneficial Ownership of 100%
of the voting securities eligible to elect directors of the Surviving Corporation
(the “Parent Corporation”), is represented by
Voting Securities that were outstanding immediately before such Business
Combination (or, if applicable, is represented by shares into which such Voting
Securities were converted pursuant to such Business Combination), and (y) at
least a majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
following the consummation of the Business Combination were Incumbent Directors
at the time the Company’s Board of Directors approved the execution of the
initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (x) and (y) above
will be deemed a “Non-Qualifying Transaction”);


 


(4)           the
stockholders of the Company approve a plan of liquidation or dissolution of the
Company or a sale of all or substantially all of the Company’s assets; or


 


(5)           the
Company has entered into a definitive agreement, the consummation of which
would result in the occurrence of any of the events described in clauses (1) through
(4) of this definition above.]


 


4.2           [No Rights Agreement.  The Company shall not enter into any poison
pill agreement, stockholders’ rights plan or similar agreement that shall limit
the rights of the Investor to acquire up to the cap set forth in Section 4.1(a) unless
such poison pill agreement, stockholders’ rights plan or similar agreement
grants an exemption or waiver to the Investor immediately effective upon execution
of such plan or agreement that would allow the Investor to acquire up to the
cap set forth in Section 4.1(a).](15)


 


4.3           [Gross-Up Rights.(16)


 


(a)           Sale of New Securities.  For so long as the Investor, together with
its Affiliates, owns 5% or more of all of the outstanding shares of Common
Stock (counting for such purposes all shares of Common Stock into or for which
any securities owned by the Investor are directly or indirectly convertible or
exercisable and, for the avoidance of doubt, including as shares owned and
outstanding all Common Shares issued by the Company after the Closing) (before
giving effect to any issuances triggering provisions of this Section), if at
any time after the date hereof the Company makes any public or nonpublic offering
or sale of any equity (including Common Stock, preferred stock or restricted
stock), or any securities, options or debt that is convertible or exchangeable
into equity or that includes an equity component (such as, an “equity kicker”)
(including any hybrid security) (any such security, a “New Security”) (other than (i) securities
(including rights and shares of a new series of junior participating preferred
stock) issued pursuant to a stockholder rights plan designed to preserve the
utilization of tax benefits (a “382 Rights Plan”);
provided that Holders of the Preferred
Stock 


 






(15) Included in the Investment Agreements of
certain investors.


 


(16) Included in the Investment Agreements of
five investors.


 


34

















 


and the Warrants participate in such
distribution under such 382 Rights Plan as if they held the number of shares of
Common Stock represented by such Preferred Stock and such Warrants on an
as-converted and as-exercised basis; (ii) an offering of up to $10 million
of aggregate offering price of Common Stock pursuant to subscription rights
distributed pro rata to the then existing holders of record of Common Stock at
a price per share of Common Stock not less than $2.00, and the associated
declaration, issuance and exercise of the subscription rights with respect to
such offering and shares of Common Stock issuable in connection with the
exercise of any such rights;
provided that the Company will use its best efforts to ensure that
such rights offering, including exercise of such right, is completed as soon as
practicable, but in no event later than March 1, 2010 (a “Permitted Rights Offering”); (iii) any Common Stock or
other securities issuable upon the exercise or conversion of any securities of
the Company issued or agreed or contemplated to be issued as of the date
hereof; (iv) pursuant to the granting or exercise of employee stock
options or other stock incentives pursuant to the Company’s stock incentive
plans approved by the Board of Directors or the issuance of stock pursuant to
the Company’s employee stock purchase plan approved by the Board of Directors
or similar plan where stock is being issued or offered to a trust, other entity
or otherwise, for the benefit of any employees, officers or directors of the
Company, in each case in the ordinary course of providing incentive
compensation; or (v) issuances of capital stock as full or partial
consideration for a merger, acquisition, joint venture, strategic alliance,
license agreement or other similar nonfinancing transaction) at a price per
share for such New Security (or conversion or exchange price per share) that is
less than 90% of the Market Price on the last trading day preceding the date of
the agreement with respect to the issuance of such New Securities, then the
Investor shall be afforded the opportunity to acquire from the Company for the
same price (net of any underwriting discounts or sales commissions) and on the
same terms (except that, to the extent permitted by law and the Articles of Incorporation
and bylaws of the Company, the Investor may elect to receive such securities in
nonvoting form, convertible into voting securities in a widely dispersed or
public offering) as such securities are proposed to be offered to others, up to
the amount of New Securities in the aggregate required to enable it to maintain
its proportionate Common Stock-equivalent interest in the Company immediately
prior to any such issuance of New Securities. 
The amount of New Securities that the Investor shall be entitled to
purchase in the aggregate shall be determined by multiplying (x) the total
number or principal amount of such offered New Securities by (y) a
fraction, the numerator of which is the sum of (i) the number of shares of
Common Stock held by the Investor, if any, (ii) the number of shares of
Common Stock represented by the Preferred Stock held by the Investor on an
as-converted basis as of such date and (iii) the number of shares of
Common Stock represented by the Warrants held by the Investor on an as-exercised
basis as of such date, and the denominator of which is the sum of (i) the
number of shares of Common Stock then outstanding, (ii) the number of
shares of Common Stock represented by the Preferred Stock and (iii) the
number of shares of Common Stock represented by any Company Preferred Stock and
warrants held by any other person, in each of clauses (ii) and (iii) on
an as-converted basis as of such date. 
Notwithstanding anything herein to the contrary, in no event shall the
Investor have the right to purchase securities hereunder to the extent such
purchase would result in such Investor exceeding the ownership limitation set
forth in Section 4.1(a).  For the
purposes of this Section 4.3, the “Market Price”
of the Common Stock (or other relevant capital stock or equity interest) on any
date of determination means the closing sale price or, if no closing sale price
is reported, the last reported sale price of the shares of the Common Stock (or
other relevant capital stock or equity 


 


35

















 


interest) on the NASDAQ Stock Market on such
date.  If the Common Stock (or other
relevant capital stock or equity interest) is not traded on the NASDAQ Stock
Market on any date of determination, the closing price of the Common Stock (or
other relevant capital stock or equity interest) on such date of determination
means the closing sale price as reported in the composite transactions for the
principal U.S. national or regional securities exchange on which the Common Stock
(or other relevant capital stock or equity interest) is so listed or quoted,
or, if no closing sale price is reported, the last reported sale price on the
principal U.S. national or regional securities exchange on which the Common
Stock (or other relevant capital stock or equity interest) is so listed or
quoted, or if the Common Stock (or other relevant capital stock or equity
interest) is not so listed or quoted on a U.S. national or regional securities
exchange, the last quoted bid price for the Common Stock (or other relevant
capital stock or equity interest) in the over-the-counter market as reported by
Pink Sheets LLC or similar organization, or, if that bid price is not
available, the market price of the Common Stock (or other relevant capital stock
or equity interest) on that date as determined by a nationally recognized
independent investment banking firm retained by the Company for this purpose.


 


(b)           Notice.  In
the event the Company proposes to offer or sell New Securities, it shall give
the Investor written notice of its intention, describing the price (or range of
prices), anticipated amount of securities, timing, and other terms upon which
the Company proposes to offer the same (including, in the case of a registered
public offering and to the extent possible, a copy of the prospectus included
in the registration statement filed with respect to such offering), no later
than ten business days, as the case may be, after the initial filing of a
registration statement with the SEC with respect to an underwritten public
offering, after the commencement of marketing with respect to a Rule 144A
offering or after the Company proposes to pursue any other offering.  The Investor shall have ten business days
from the date of receipt of such a notice to notify the Company in writing that
it intends to exercise its rights provided in this Section 4.3 and as to
the amount of New Securities the Investor desires to purchase, up to the
maximum amount calculated pursuant to Section 4.3(a).  Such notice shall constitute a nonbinding
indication of interest of the Investor to purchase the amount of New Securities
so specified at the price and other terms set forth in the Company’s notice to
it.  The failure of the Investor to
respond within such ten business day period shall be deemed to be a waiver of
such Investor’s rights under this Section 4.3 only with respect to the
offering described in the applicable notice.


 


(c)           Purchase Mechanism. 
If the Investor exercises its rights provided in this Section 4.3,
the closing of the purchase of the New Securities with respect to which such
right has been exercised shall take place within 30 calendar days after the
giving of notice of such exercise, which period of time shall be extended for a
maximum of 180 days in order to comply with applicable laws and regulations
(including receipt of any applicable regulatory or stockholder approvals).  Each of the Company and the Investor agrees
to use its commercially reasonable efforts to secure any regulatory or
stockholder approvals or other consents, and to comply with any law or
regulation necessary in connection with the offer, sale and purchase of, such
New Securities.


 


(d)           Failure of Purchase.  In the event the Investor fails to exercise
its rights provided in this Section 4.3 within said 10 business day period
or, if so exercised, the Investor is unable to consummate such purchase within
the time period specified in Section 4.3(c) above 


 


36

















 


because of its failure to obtain any required
regulatory or stockholder consent or approval, the Company shall thereafter be
entitled (during the period of 60 days following the conclusion of the
applicable period) to sell or enter into an agreement (pursuant to which the
sale of the New Securities covered thereby shall be consummated, if at all,
within 90 days from the date of said agreement) to sell the New Securities not
elected to be purchased pursuant to this Section 4.3 by the Investor or
which the Investor is unable to purchase because of such failure to obtain any
such consent or approval, at a price and upon terms no more favorable in the
aggregate to the purchasers of such securities than were specified in the
Company’s notice to the Investor. 
Notwithstanding the foregoing, if such sale is subject to the receipt of
any regulatory or stockholder approval or consent or the expiration of any
waiting period, the time period during which such sale may be consummated shall
be extended until the expiration of five business days after all such approvals
or consents have been obtained or waiting periods expired, but in no event
shall such time period exceed 180 days from the date of the applicable
agreement with respect to such sale.  In
the event the Company has not sold the New Securities or entered into an
agreement to sell the New Securities within said 60-day period (or sold and
issued New Securities in accordance with the foregoing within 90 days from the
date of said agreement (as such period may be extended in the manner described
above for a period not to exceed 180 days from the date of said agreement)),
the Company shall not thereafter offer, issue or sell such New Securities
without first offering such securities to the Investor in the manner provided
above.


 


(e)           Non-Cash Consideration.  In the case of the offering of securities for
a consideration in whole or in part other than cash, including securities
acquired in exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to be the fair
value thereof as determined by the Board of Directors; provided,
however, that such fair value as
determined by the Board of Directors shall not exceed the aggregate market
price of the securities being offered as of the date the Board of Directors
authorizes the offering of such securities.


 


(f)            Cooperation. 
The Company and the Investor shall cooperate in good faith to facilitate
the exercise of the Investor’s rights under this Section 4.3, including to
secure any required approvals or consents.]


 


4.4           [Governance Matters.(17)


 


(a)           Except as provided in Section 3.5, the Company shall
cause the Board Representative to be elected or appointed to, as the case may
be, subject to all legal and governance requirements regarding service and
election or appointment as a director of the Company and to the approval of the
Company’s Governance and Nominating Committee (the “Governance
Committee”) (such approval not to be unreasonably withheld or
delayed), the Board of Directors for as long as the Investor, together with its
Affiliates, has a Qualifying Ownership Interest and, solely for purposes of
this Section 4.4, excluding as shares owned and outstanding all Common
Shares issued by the Company after the Closing Date, other than as 


 










(17) Two of the investors received the right to maintain representation
on the Board of Directors of West Coast Bancorp and West Coast Bank.  Two other investors received the right to
have board observers.


 


37

















 


contemplated by this Agreement and the
Securities).  The Company will recommend
to its stockholders the election of the Board Representative to the Board of
Directors at the Company’s annual meeting, subject to satisfaction of all legal
and governance requirements regarding service as a director of the Company and
to the approval of the Governance Committee (such approval not to be
unreasonably withheld or delayed).  If
the Investor no longer has a Qualifying Ownership Interest, the Investor will
have no further rights under Sections 4.4(a) through 4.4(c) and, in
each case at the written request of the Board of Directors, shall use all
reasonable best efforts to cause its Board Representative to resign from the
Board of Directors as promptly as possible thereafter.  The Investor shall promptly inform the
Company if and when it ceases to hold a Qualifying Ownership Interest in the
Company.  [At the option of the Board
Representative, the Board of Directors shall cause such Board Representative to
be appointed to the Company’s Governance & Nominating Committee,
Executive Committee, and Loan, Investment, & Asset/Liability Committee
(or any successor committees thereto), so long as the Board Representative
qualifies to serve on such committees under applicable rules of the NASDAQ
and the Company’s corporate governance guidelines and the charters of such
committees.](18)


 


(b)           The Board Representative shall, subject to applicable law,
be the Company’s and the Governance Committee’s nominee to serve on the Board
of Directors.  The Company shall use its
reasonable best efforts to have the Board Representative elected as a director
of the Company by the stockholders of the Company and the Company shall solicit
proxies for the Board Representative to the same extent as it does for any of
its other Company nominees to the Board of Directors.


 


(c)           Subject to Section 4.4(a), upon the death,
resignation, retirement, disqualification, or removal from office as a member
of the Board of Directors of the Board Representative, the Investor shall have
the right to designate the replacement for such Board Representative, which
replacement shall satisfy all legal and governance requirements regarding
service as a director of the Company and shall be reasonably acceptable to the
Company.  The Board of Directors shall
use its reasonable best efforts to take all action required to fill the vacancy
resulting therefrom with such person (including such person, subject to
applicable law, being the Company’s and the Governance Committee’s nominee to
serve on the Board of Directors, using all reasonable best efforts to have such
person elected as director of the Company by the stockholders of the Company
and the Company soliciting proxies for such person to the same extent as it
does for any of its other nominees to the Board of Directors).


 


(d)           The Company hereby agrees that, from and after the Closing
Date, for so long as the Investor has a Qualifying Ownership Interest,
excluding as shares owned and outstanding all Common Shares issued by the
Company after the Closing Date, other than as contemplated by this Agreement
and the Securities, and does not have a Board Representative currently serving
on the Board of Directors (or has a Board Representative whose appointment is
subject to receipt of regulatory approvals), the Company shall, subject to
applicable law, invite a person designated by the Investor and reasonably
acceptable to the Company (the “Observer”) to
attend meetings of the Board of Directors (including any meetings of committees
thereof) in a 


 






(18) Included in the Investment Agreement of
one of the investors.


 


38

















 


nonvoting observer capacity.  The Observer shall be entitled to attend such
meetings only in the event the Investor does not have a Board Representative.  If the Investor no longer has a Qualifying
Ownership Interest, excluding as shares owned and outstanding all Common Shares
issued by the Company after the Closing Date, other than as contemplated by this
Agreement and the Securities, the Investor will have no further rights under
this Section 4.4(d).


 


(e)           The Board Representative shall be entitled to compensation
and indemnification in connection with his or her role as a director to the
same extent as other directors on the Board of Directors, and the Board
Representative or Observer, as the case may be, shall be entitled to
reimbursement for reasonable documented, out-of-pocket expenses incurred in
attending meetings of the Board of Directors or any committee thereof in
accordance with the Company policies. 
The Company shall notify the Board Representative or the Observer, as
the case may be, of all regular meetings and special meetings of the Board of
Directors and of all regular and special meetings of any committee of the Board
of Directors.  The Company shall provide
the Board Representative or the Observer, as the case may be, with copies of
all notices, minutes, consents and other material that it provides to all other
members of the Board of Directors concurrently as such materials are provided
to the other members.


 


(f)            For purposes of this Agreement, “Board Representative” means such person designated by the
Investor to be elected or appointed to the Board of Directors in accordance
with all legal and governance requirements regarding service and election or
appointment as a director of the Company or (ii) any individual designated
as a replacement Board Representative pursuant to Section 4.4(c) hereof.  For purposes of this Agreement, “Observer”
means [·].]


 


4.5           Legend.


 


(a)           The Investor agrees that all certificates or other
instruments representing the Securities subject to this Agreement will bear a
legend substantially to the following effect:


 


“(i)          THE
SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.


 


(ii)           THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER
RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF OCTOBER 23, 2009,
COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.”


 


(b)           Upon request of the Investor, upon receipt by the Company
of an opinion of counsel reasonably satisfactory to the Company to the effect
that such legend is no longer required under the Securities Act or applicable
state laws, as the case may be, the Company shall promptly cause clause (i) of
the legend to be removed from any certificate for any Securities to


 


39
















 


be so transferred and clause (ii) of
the legend shall be removed upon the expiration of such transfer and other
restrictions set forth in this Agreement. 
The Investor acknowledges that the Securities have not been registered
under the Securities Act or under any state securities laws and agrees that it
will not sell or otherwise dispose of any of the Securities, except in
compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable securities laws.


 


4.6           Reservation for Issuance; Exchange Listing.  The Company will reserve that number of
shares of Common Stock and Preferred Stock sufficient for issuance upon
exercise or conversion of Securities owned at any time by the Investor without
regard to any limitation on such exercise or conversion; provided
that in the case of the Preferred Stock, the Company will reserve such
sufficient number of shares of Common Stock following the approval of the
Stockholder Proposals, and in the case of the Warrants, the Company will
reserve such sufficient number of shares of Series B Preferred Stock and
Common Stock.  The Company shall cause
the shares of Common Stock reserved for issuance pursuant to the exercise or
conversion of the Securities to be approved for listing on the NASDAQ Stock
Market, subject to official notice of issuance.


 


4.7           Certain Transactions.  The Company will not merge or consolidate
into, or sell, transfer or lease all or substantially all of its property or
assets to, any other party unless the successor, transferee or lessee party, as
the case may be (if not the Company), expressly assumes the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.


 


4.8           Extension Periods. 
Notwithstanding anything to the contrary contained in the Transaction
Documents, if there exists a period (the “Section 16(b) Period”)
during which any Investor’s purchase, sale, exercise, exchange or conversion of
any Security pursuant to any Transaction Document would result in liability
under Section 16(b) of the Exchange Act, as amended, or the rules and
regulations promulgated thereunder, the period during which such Security may
be purchased, sold, exercised, exchanged or converted, as the case may be, if
prescribed by such Transaction Document, shall be extended for the equivalent
number of days of such Section 16(b) Period (the “Extension Period”), with such Extension Period beginning on
the later of (a) the expiration date of such Security, if any, or (b) the
date of the end of such Section 16(b) Period.


 


4.9           Indemnity.


 


(a)           The Company agrees to indemnify and hold harmless the
Investor and its Affiliates and each of their respective officers, directors,
partners, employees and agents, and each person who controls the Investor
within the meaning of the Exchange Act and the rules and regulations
promulgated thereunder, to the fullest extent lawful, from and against any and
all actions, suits, claims, proceedings, costs, losses, liabilities, damages,
expenses (including reasonable attorneys’ fees and disbursements), amounts paid
in settlement and other costs (collectively, “Losses”)
arising out of or resulting from (1) any inaccuracy in or breach of the
Company’s representations or warranties in Sections 2.2(a), (b), (c), (d)(1),
(d)(2)(i)(A), (d)(3), (l), (q), (x) and (aa) of this Agreement, (2) the
Company’s breach of agreements or covenants made by the Company in this
Agreement and the Warrants or (3) any Losses arising out of or 


 


40

















 


resulting from any legal, administrative or
other proceedings instituted by any Governmental Entity, stockholder of the
Company or any other person (other than the Investor and its Affiliates and the
Company and the Company Subsidiaries) arising out of the transactions
contemplated by this Agreement and the terms of the Securities (other than any
Losses attributable to the acts, errors or omissions on the part of the
Investor, but not including the transactions contemplated hereby).


 


(b)           The Investor agrees to indemnify and hold harmless each of
the Company and its Affiliates and each of their respective officers,
directors, partners, employees and agents, and each person who controls the
Company within the meaning of the Exchange Act and the rules and
regulations promulgated thereunder, to the fullest extent lawful, from and
against any and all Losses arising out of or resulting from (1) any
inaccuracy in or breach of the Investor’s representations or warranties in Sections 2.3 (a), (b)(1), (b)(2)(i)(A),
(b)(3), (c), (d) and (g) of this Agreement or (2) the Investor’s
breach of agreements or covenants made by the Investor in this Agreement.


 


(c)           A party entitled to indemnification hereunder (each, an “Indemnified Party”) shall give written notice to the party
indemnifying it (the “Indemnifying Party”)
of any claim with respect to which it seeks indemnification promptly after the
discovery by such Indemnified Party of any matters giving rise to a claim for
indemnification; provided that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 4.9 unless and to
the extent that the Indemnifying Party shall have been actually prejudiced by
the failure of such Indemnified Party to so notify such party.  Such notice shall describe in reasonable
detail such claim.  In case any such
action, suit, claim or proceeding is brought against an Indemnified Party, the
Indemnified Party shall be entitled to hire, at the cost and expense of the
Indemnifying Party counsel and conduct the defense thereof; provided, however, that
the Indemnifying Party shall only be liable for the legal fees and expenses of
one law firm for all Indemnified Parties, taken together with regard to any
single action or group of related actions, upon agreement by the Indemnified
Parties and the Indemnifying Parties.  If
the Indemnifying Party assumes the defense of any claim, all Indemnified
Parties shall thereafter deliver to the Indemnifying Party copies of all
notices and documents (including court papers) received by the Indemnified
Party relating to the claim, and any Indemnified Party shall cooperate in the
defense or prosecution of such claim. 
Such cooperation shall include the retention and (upon the Indemnifying
Party’s request) the provision to the Indemnifying Party of records and
information that are reasonably relevant to such claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. 
The Indemnifying Party shall not be liable for any settlement of any
action, suit, claim or proceeding effected without its written consent; provided, however, that
the Indemnifying Party shall not unreasonably withhold, delay or condition its
consent.  The Indemnifying Party further
agrees that it will not, without the Indemnified Party’s prior written consent
(which shall not be unreasonably withheld or delayed), settle or compromise any
claim or consent to entry of any judgment in respect thereof in any pending or
threatened action, suit, claim or proceeding in respect of which
indemnification has been sought hereunder unless such settlement or compromise
includes an unconditional release of such Indemnified Party from all liability
arising out of such action, suit, claim or proceeding.


 


41

















 


(d)           For purposes of the indemnity contained in Sections 4.9(a)(1) and
4.9(b)(1), all qualifications and limitations set forth in the parties’
representations and warranties as to “materiality,” “Material Adverse Effect”
and words of similar import, shall be disregarded in determining whether there
shall have been any inaccuracy in or breach of any representations and
warranties in this Agreement.


 


(e)           The obligations of the Indemnifying Party under this Section 4.9
shall survive the transfer, redemption or conversion of the Securities issued
pursuant to this Agreement, or the closing or termination of the Transaction
Documents, provided, that in the event of any
transfer of the Securities to a third party, the Indemnifying Party shall have
no obligations under this Section 4.9 to the transferee.  The indemnity provided for in this Section 4.9
shall be the sole and exclusive monetary remedy of Indemnified Parties after
the Closing for any inaccuracy of any of the representations and warranties
contained in Sections 2.2(a), (b), (c), (d)(1), (d)(2)(i)(A), (d)(3), (l), (q),
(x) and (aa) and Sections 2.3(a), (b)(1), (b)(2)(i)(A), (b)(3), (c), (d) and
(g) of this Agreement or any other breach of any covenant or agreement
contained in this Agreement; provided that
nothing herein shall limit in any way any such parties’ remedies in respect of
fraud, intentional misrepresentation or omission or intentional misconduct by
the other party in connection with the transactions contemplated hereby.  No party to this Agreement (or any of its
Affiliates) shall, in any event, be liable or otherwise responsible to any
other party (or any of its Affiliates) for any consequential or punitive
damages of such other party (or any of its Affiliates) arising out of or
relating to this Agreement or the performance or breach hereof.  The indemnification rights contained in this Section 4.9
are not limited or deemed waived by any investigation or knowledge by the
Indemnified Party prior to or after the date hereof.


 


(f)            Any indemnification payments pursuant to this Section 4.9
shall be treated as an adjustment to the Purchase Price for the Securities for
U.S. federal income and applicable state and local Tax purposes, unless a
different treatment is required by applicable law.


 


4.10         Registration Rights.


 


(a)           Registration.


 


(1)           Subject to the terms
and conditions of this Agreement, the Company covenants and agrees that as
promptly as reasonably practicable after the Closing Date (and in any event no
later than the date that is 60 days after the Closing Date (the “Registration Deadline”)), the Company shall have prepared
and filed with the SEC a Shelf Registration Statement (defined below) covering
all Registrable Securities (or otherwise designate an existing Shelf
Registration Statement filed with the SEC to cover the Registrable Securities),
and, to the extent the Shelf Registration Statement has not theretofore been
declared effective or is not automatically effective upon such filing, the
Company shall use reasonable best efforts to cause such Shelf Registration
Statement to be declared or become effective not later than the Registration
Deadline and to keep such Shelf Registration Statement continuously effective
and in compliance with the Securities Act and usable for resale of such
Registrable Securities for a period from the date of its initial effectiveness
until such time as there are no Registrable Securities remaining (including by
refiling such Shelf Registration Statement (or a new Shelf Registration
Statement) if the initial Shelf Registration Statement expires).  If the Company is a well-known 


 


42

















 


seasoned
issuer (as defined in Rule 405 under the Securities Act) at the time of
filing of the Shelf Registration Statement with the SEC, such Shelf
Registration Statement shall be designated by the Company as an automatic Shelf
Registration Statement.


 


(2)           Any registration
pursuant to this Section 4.10(a) shall be effected by means of a
shelf registration under the Securities Act (a “Shelf
Registration Statement”) in accordance with the methods and
distribution set forth in the Shelf Registration Statement and Rule 415.  If the Investor or any other holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement intends to
distribute any Registrable Securities by means of an underwritten offering it
shall promptly so advise the Company and the Company shall take all reasonable
steps to facilitate such distribution, including the actions required pursuant
to Section 4.10(c); provided, that
the Company shall not be required to facilitate an underwritten offering of
Registrable Securities unless the expected gross proceeds from such offering
exceed $20 million.  The lead
underwriters in any such distribution shall be selected by the holders of a
majority of the Registrable Securities to be distributed and be reasonably
acceptable to the Company.


 


(3)           The Company shall
not be required to effect a registration (including a resale of Registrable
Securities from an effective Shelf Registration Statement) or an underwritten
offering pursuant to this Section 4.10(a): 
(i) with respect to securities that are not Registrable Securities;
(ii) during any Scheduled Black-out Period; or (iii) if the Company
has notified the Investor and all other Holders that in the good faith judgment
of the Board of Directors, it would be materially detrimental to the Company or
its security holders for such registration or underwritten offering to be
effected at such time, in which event the Company shall have the right to defer
such registration or underwritten offering for a period of not more than 45
days after receipt of the request of the Investor or any other Holder; provided that such right to delay a registration or
underwritten offering shall be exercised by the Company (A) only if the
Company has generally exercised (or is concurrently exercising) similar
black-out rights against holders of similar securities that have registration
rights and (B) not more than twice in any 12-month period and not more
than 90 days in the aggregate in any 12-month period.


 


(4)           [Whenever the
Company proposes to register any of its equity securities, other than a
registration pursuant to Section 4.10(a)(1) or a Special
Registration, and the registration form to be filed may be used for the registration
or qualification for distribution of Registrable Securities, the Company will
give prompt written notice to the Investor and all other Holders of its
intention to effect such a registration (but in no event less than ten days
prior to the anticipated filing date) and (subject to clause (6) below)
will include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within
ten business days after the date of the Company’s notice (a “Piggyback Registration”). 
Any such person that has made such a written request may withdraw its
Registrable Securities from such Piggyback Registration by giving written
notice to the Company and the managing underwriter, if any, on or before the
fifth business day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any 


 


43

















 


registration
under this Section 4.10(a)(4) prior to the effectiveness of such
registration, whether or not the Investor or any other Holders have elected to
include Registrable Securities in such registration.  “Special Registration”
means the registration of (i) equity securities and/or options or other
rights in respect thereof solely registered on Form S-4 or Form S-8
(or successor form), (ii) shares of equity securities and/or options or
other rights in respect thereof to be offered to directors, members of
management, employees, consultants, customers, lenders or vendors of the
Company or Company Subsidiaries or in connection with dividend reinvestment
plans and (iii) securities with respect to a Permitted Rights Offering or
382 Rights Plan.


 


(5)           If the registration
referred to in Section 4.10(a)(4) is proposed to be underwritten, the
Company will so advise the Investor and all other Holders as a part of the
written notice given pursuant to Section 4.10(a)(4).  In such event, the right of the Investor and
all other Holders to registration pursuant to this Section 4.10(a) will
be conditioned upon such persons’ participation in such underwriting and the
inclusion of such persons’ Registrable Securities in the underwriting, and each
such person will (together with the Company and the other persons distributing
their securities through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected for
such underwriting by the Company.  If any
participating person disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Investor.


 


(6)           Except as otherwise
disclosed to the Investor, the Company represents and warrants that it has not
granted to any holder of its securities and agrees that it shall not grant “piggyback”
registration rights to one or more third parties to include their securities in
the Shelf Registration Statement or in an underwritten offering under the Shelf
Registration Statement pursuant to Section 4.10(a)(2).  If a Piggyback Registration under Section 4.10(a)(4) relates
to an underwritten primary offering on behalf of the Company, and in either
case the managing underwriters advise the Company that in their reasonable
opinion the number of securities requested to be included in such offering
exceeds the number which can be sold without adversely affecting the
marketability of such offering (including an adverse effect on the per share
offering price), the Company will include in such registration or prospectus
only such number of securities that in the reasonable opinion of such
underwriters can be sold without adversely affecting the marketability of the
offering (including an adverse effect on the per share offering price), which
securities will be so included in the following order of priority: (i) first,
in the case of a Piggyback Registration under Section 4.10(a)(4), the
securities the Company proposes to sell, (ii) second, Registrable
Securities of the Investor and all other Holders who have requested registration
of Registrable Securities pursuant to Section 4.10(a)(2) or
4.10(a)(4), as applicable, pro rata on the
basis of the aggregate number of such securities or shares owned by each such
person and (iii) third, any other securities of the Company that have been
requested to be so included, subject to the terms of this Agreement.](19)


 






(19) “Piggyback” registration rights included
in the Investment Agreements of certain investors.


 


44

















 


(b)           Expenses of Registration.  All Registration Expenses incurred in
connection with any registration, qualification or compliance hereunder shall
be borne by the Company.  All Selling
Expenses incurred in connection with any registrations hereunder shall be borne
by the holders of the securities so registered pro rata
on the basis of the aggregate offering or sale price of the securities so
registered.


 


(c)           Obligations of the Company.  The Company shall use its reasonable best
efforts for so long as there are Registrable Securities outstanding, to take
such actions as are under its control to remain a well-known seasoned issuer
(as defined in Rule 405 under the Securities Act) if it becomes eligible
for such status in the future (and not become an ineligible issuer (as defined
in Rule 405 under the Securities Act)). 
In addition, whenever required to effect the registration of any
Registrable Securities or facilitate the distribution of Registrable Securities
pursuant to an effective Shelf Registration Statement, the Company shall, as
expeditiously as reasonably practicable:


 


(1)           Prepare and file
with the SEC a prospectus supplement with respect to a proposed offering of
Registrable Securities pursuant to an effective registration statement, subject
to this Section 4.10(c), and keep such registration statement effective or
such prospectus supplement current until the securities described therein are
no longer Registrable Securities.


 


(2)           Prepare and file
with the SEC such amendments and supplements to the applicable registration
statement and the prospectus or prospectus supplement used in connection with
such registration statement as may be necessary to comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such registration statement.


 


(3)           Furnish to the
Holders and any underwriters such number of copies of the applicable
registration statement and each such amendment and supplement thereto
(including in each case all exhibits) and of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned or to be distributed
by them.


 


(4)           Use its reasonable
best efforts to register and qualify the securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Holders or any managing
underwriter(s), to keep such registration or qualification in effect for so
long as such registration statement remains in effect, and to take any other
action which may be reasonably necessary to enable such seller to consummate
the disposition in such jurisdictions of the securities owned by such Holder; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.


 


(5)           Notify each Holder
of Registrable Securities at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the applicable prospectus, as then in effect, 


 


45

















 


includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.


 


(6)           Give written notice
to the Holders:


 


(i)            when any
registration statement filed pursuant to Section 4.10(a) or any
amendment thereto has been filed with the SEC (except for any amendment
effected by the filing of a document with the SEC pursuant to the Exchange Act)
and when such registration statement or any post-effective amendment thereto
has become effective;


 


(ii)           of any request by
the SEC for amendments or supplements to any registration statement or the
prospectus included therein or for additional information;


 


(iii)          of the issuance by
the SEC of any stop order suspending the effectiveness of any registration
statement or the initiation of any proceedings for that purpose;


 


(iv)          of the receipt by
the Company or its legal counsel of any notification with respect to the suspension
of the qualification of the Common Stock for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose;


 


(v)           of the happening of
any event that requires the Company to make changes in any effective
registration statement or the prospectus related to the registration statement
in order to make the statements therein not misleading (which notice shall be
accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made); and


 


(vi)          if at any time the
representations and warranties of the Company contained in any underwriting
agreement contemplated by Section 4.10(c)(10) cease to be true and
correct.


 


(7)           Use its reasonable
best efforts to prevent the issuance or obtain the withdrawal of any order
suspending the effectiveness of any registration statement referred to in Section 4.10(c)(6)(iii) at
the earliest practicable time.


 


(8)           Upon the occurrence
of any event contemplated by Section 4.10(c)(5) or 4.10(c)(6)(v),
promptly prepare a post-effective amendment to such registration statement or a
supplement to the related prospectus or file any other required document so
that, as thereafter delivered to the Holders and any underwriters, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.  If the Company notifies the Holders in
accordance with Section 4.10(c)(6)(v) to suspend the use of the
prospectus until the requisite changes to the prospectus have been made, then
the Holders and any underwriters shall suspend use of 


 


46

















 


such
prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file
copies then in such Holder’s or underwriter’s possession.  The total number of days that any such
suspension may be in effect in any 180-day period shall not exceed 60 days.


 


(9)           Use reasonable best
efforts to procure the cooperation of the Company’s transfer agent in settling
any offering or sale of Registrable Securities, including with respect to the
transfer of physical stock certificates into book-entry form in accordance with
any procedures reasonably requested by the Holders or any managing
underwriter(s).


 


(10)         If an underwritten
offering is requested pursuant to Section 4.10(a)(2), enter into an
underwriting agreement in customary form, scope and substance and take all such
other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition
of such Registrable Securities, and in connection therewith in any underwritten
offering (including making members of management and executives of the Company
available to participate in “road shows,” similar sales events and other
marketing activities), (i) make such representations and warranties to the
Holders that are selling stockholders and the managing underwriter(s), if any,
with respect to the business of the Company and its subsidiaries, and the Shelf
Registration Statement, prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in customary
form, substance and scope, and, if true, confirm the same if and when
requested, (ii) use its reasonable best efforts to furnish the underwriters
with opinions of counsel to the Company, addressed to the managing
underwriter(s), if any, covering the matters customarily covered in such
opinions requested in underwritten offerings, (iii) use its reasonable
best efforts to obtain “cold comfort” letters from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any business acquired by the Company for which
financial statements and financial data are included in the Shelf Registration
Statement) who have certified the financial statements included in such Shelf
Registration Statement, addressed to each of the managing underwriter(s), if
any, such letters to be in customary form and covering matters of the type
customarily covered in “cold comfort” letters, (iv) if an underwriting
agreement is entered into, the same shall contain indemnification provisions
and procedures customary in underwritten offerings, and (v) deliver such
documents and certificates as may be reasonably requested by the Holders of a
majority of the Registrable Securities being sold in connection therewith,
their counsel and the managing underwriter(s), if any, to evidence the
continued validity of the representations and warranties made pursuant to clause
(i) above and to evidence compliance with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company.  Notwithstanding anything
contained herein to the contrary, the Company shall not be required to enter
into any underwriting agreement or permit any underwritten offering absent an
agreement by the applicable underwriter(s) to indemnify the Company in
form, scope and substance as is customary in underwritten offerings by the
Company.


 


47
















 


(11)                            Make available
for inspection by a representative of Holders that are selling stockholders,
the managing underwriter(s), if any, and any attorneys or accountants retained
by such Holders or managing underwriter(s), at the offices where normally kept,
during reasonable business hours, financial and other records, pertinent
corporate documents and properties of the Company, and cause the officers,
directors and employees of the Company to supply all information in each case
reasonably requested (and of the type customarily provided in connection with
due diligence conducted in connection with a registered public offering of
securities) by any such representative, managing underwriter(s), attorney or
accountant in connection with such Shelf Registration Statement.


 


(12)                            Cause all such
Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed or, if no similar
securities issued by the Company are then listed on any securities exchange, use
its reasonable best efforts to cause all such Registrable Securities to be
listed on the New York Stock Exchange or the NASDAQ Stock Market, as determined
by the Company.


 


(13)                            If requested by
Holders of a majority of the Registrable Securities being registered and/or
sold in connection therewith, or the managing underwriter(s), if any, promptly
include in a prospectus supplement or amendment such information as the Holders
of a majority of the Registrable Securities being registered and/or sold in connection
therewith or managing underwriter(s), if any, may reasonably request in order
to permit the intended method of distribution of such securities and make all
required filings of such prospectus supplement or such amendment as soon as
practicable after the Company has received such request.


 


(14)                            Timely provide
to its security holders earning statements satisfying the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder.


 


(d)                                 Suspension of Sales.  During any Scheduled Black-out Period and
upon receipt of written notice from the Company that a registration statement,
prospectus or prospectus supplement contains or may contain an untrue statement
of a material fact or omits or may omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that circumstances exist that make inadvisable use of such registration
statement, prospectus or prospectus supplement, each Holder of Registrable
Securities shall forthwith discontinue disposition of Registrable Securities
until termination of such Scheduled Black-out Period or until such Holder has
received copies of a supplemented or amended prospectus or prospectus
supplement, or until such Holder is advised in writing by the Company that the
use of the prospectus and, if applicable, prospectus supplement may be resumed,
and, if so directed by the Company, such Holder shall deliver to the Company
(at the Company’s expense) all copies, other than permanent file copies then in
such Holder’s possession, of the prospectus and, if applicable, prospectus
supplement covering such Registrable Securities current at the time of receipt
of such notice.  The total number of days
that any such suspension may be in effect in any 180-day period shall not
exceed 60 days.


 


48

















 


(e)                                  Termination of Registration
Rights.  A Holder’s registration rights
as to any securities held by such Holder (and its Affiliates, partners, members
and former members) shall not be available unless such securities are
Registrable Securities.


 


(f)                                    Furnishing Information.


 


(1)                                  Neither the
Investor nor any Holder shall use any free writing prospectus (as defined in Rule 405)
in connection with the sale of Registrable Securities without the prior written
consent of the Company.


 


(2)                                  It shall be a
condition precedent to the obligations of the Company with respect to the
Investor and/or the selling Holders to take any action pursuant to Section 4.10(c) that
the Investor and/or the selling Holders and the underwriters, if any, shall
furnish to the Company such information regarding themselves, the Registrable
Securities held by them and the intended method of disposition of such
securities as shall be required to effect the registered offering of their
Registrable Securities.


 


(g)                                 Indemnification.


 


(1)                                  The Company
agrees to indemnify each Holder and, if a Holder is a person other than an
individual, such Holder’s officers, directors, employees, agents,
representatives and Affiliates, and each person, if any, that controls a Holder
within the meaning of the Securities Act (each, an “Indemnitee”),
against any and all Losses, joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto or any
documents incorporated therein by reference or contained in any free writing
prospectus (as such term is defined in Rule 405) prepared by the Company
or authorized by it in writing for use by such Holder (or any amendment or
supplement thereto); or any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided, that the Company shall not be liable to such
Indemnitee in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon (i) an untrue statement or omission made in such
registration statement, including any such preliminary prospectus or final
prospectus contained therein or any such amendments or supplements thereto or
contained in any free writing prospectus (as such term is defined in Rule 405)
prepared by the Company or authorized by it in writing for use by such Holder
(or any amendment or supplement thereto), in reliance upon and in conformity
with information regarding such Indemnitee or its plan of distribution or
ownership interests which was furnished in writing to the Company by such
Indemnitee for use in connection with such registration statement, including
any such preliminary prospectus or final prospectus contained therein or any
such amendments or supplements thereto, or (ii) offers or sales effected by or
on behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free
writing prospectus” (as defined in Rule 405) that was not authorized in
writing by the Company.


 


49

















 


(2)                                  If the
indemnification provided for in Section 4.10(g)(1) is unavailable to
an Indemnitee with respect to any Losses or is insufficient to hold the
Indemnitee harmless as contemplated therein, then the Company, in lieu of
indemnifying such Indemnitee, shall contribute to the amount paid or payable by
such Indemnitee as a result of such Losses in such proportion as is appropriate
to reflect the relative fault of the Indemnitee, on the one hand, and the
Company, on the other hand, in connection with the statements or omissions
which resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of
the Company, on the one hand, and of the Indemnitee, on the other hand, shall
be determined by reference to, among other factors, whether the untrue
statement of a material fact or omission to state a material fact relates to
information supplied by the Company or by the Indemnitee and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission; the Company and each Holder agree that it would not
be just and equitable if contribution pursuant to this Section 4.10(g)(2) were
determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in Section 4.10(g)(1).  No Indemnitee guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from the Company if the Company was not
guilty of such fraudulent misrepresentation.


 


(h)                                 Assignment of Registration
Rights.  The rights of the Investor to
registration of Registrable Securities pursuant to Section 4.10(a) may
be assigned by the Investor to a transferee or assignee of Registrable
Securities to which (i) there is transferred to such transferee no less
than $1 million in Registrable Securities and (ii) such transfer or
assignment is permitted under the terms hereof; provided,
however, that the transferor shall,
within ten days after such transfer, furnish to the Company written notice of
the name and address of such transferee or assignee and the number and type of
Registrable Securities that are being assigned.


 


(i)                                     Holdback.  With respect to any underwritten offering of
Registrable Securities by the Investor or other Holders pursuant to this Section 4.10,
the Company agrees not to effect (other than pursuant to such registration or
pursuant to a Special Registration) any public sale or distribution, or to file
any Shelf Registration Statement (other than such registration or a Special
Registration) covering any of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
period not to exceed ten days prior and 60 days following the effective date of
such offering or such longer period up to 90 days as may be requested by the
managing underwriter.  The Company also
agrees to cause each of its directors and senior executive officers to execute
and deliver customary lockup agreements in such form and for such time period
up to 90 days as may be requested by the managing underwriter.


 


(j)                                     Rule 144; Rule 144A
Reporting.  With a view
to making available to the Investor and Holders the benefits of certain rules and
regulations of the SEC which may permit the sale of the Registrable Securities
to the public without registration, the Company agrees to use its reasonable
best efforts to:


 


50

















 


(1)                                  make and keep
public information available, as those terms are understood and defined in Rule
144(c)(1) or any similar or analogous rule promulgated under the
Securities Act, at all times after the effective date of this Agreement;


 


(2)                                  file with the
SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act, and if at any time the Company is not required
to file such reports, make available, upon the request of any Holder, such
information necessary to permit sales pursuant to Rule 144A (including the
information required by Rule 144A(d) (4) and the Securities Act);


 


(3)                                  so long as the
Investor or a Holder owns any Registrable Securities, furnish to the Investor
or such Holder forthwith upon request: a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 under the
Securities Act, and of the Exchange Act; a copy of the most recent annual or
quarterly report of the Company; and such other reports and documents as the
Investor or Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration; and


 


(4)                                  take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act.


 


(k)                                  As used in this Section 4.10,
the following terms shall have the following respective meanings:


 


(1)                                  “Holder” means the Investor and any other holder of
Registrable Securities to whom the registration rights conferred by this
Agreement have been transferred in compliance with Section 4.10(h) hereof.


 


(2)                                  “Holders’ Counsel” means one counsel for the selling Holders
chosen by Holders holding a majority interest in the Registrable Securities
being registered.


 


(3)                                  “Register,” “registered,”
and “registration” shall refer to a
registration effected by preparing and (a) filing a registration statement
in compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of effectiveness of such
registration statement or (b) filing a prospectus and/or prospectus
supplement in respect of an appropriate effective registration statement on Form S-3
or other form approved by the holders of a majority of Registrable Securities
available for sales of securities pursuant to Rule 415 under the
Securities Act.


 


(4)                                  “Registrable Securities” means (A) all Common Stock,
Preferred Stock, and Warrants held by the Investor from time to time, (B) the
shares of Common Stock or Preferred Stock issued on the date hereof or issuable
pursuant to the conversion of the Preferred Stock or exercise of the Warrants
and (C) any equity securities issued or issuable directly or indirectly
with respect to the securities referred to in the foregoing clause (A) or (B) by
way of conversion, exercise or exchange thereof or stock dividend or stock
split or in connection with a combination of shares, recapitalization,
reclassification, merger, amalgamation, arrangement, consolidation or other 


 


51

















 


reorganization, provided that, once issued, such securities will not be
Registrable Securities when (i) they are sold pursuant to an effective
registration statement under the Securities Act, (ii) they shall have
ceased to be outstanding or (iii) they have been sold in a private
transaction in which the transferor’s rights under this Agreement are not assigned
to the transferee of the securities.  No
Registrable Securities may be registered under more than one registration
statement at one time.


 


(5)                                  “Registration Expenses” means all expenses incurred by the
Company in effecting any registration pursuant to this Agreement (whether or
not any registration or prospectus becomes effective or final) or otherwise
complying with its obligations under this Section 4.10, including, without
limitation, all registration, filing and listing fees, printing expenses, fees
and disbursements of counsel for the Company, blue sky fees and expenses,
expenses incurred by the Company in connection with any “road show,” the
reasonable fees and disbursements of Holders’ Counsel, and expenses of the
Company’s independent accountants in connection with any regular or special
reviews or audits incident to or required by any such registration, but shall
not include Selling Expenses and the compensation of regular employees of the
Company, which shall be paid in any event by the Company.


 


(6)                                  “Rule 144,” “Rule 144A,”
“Rule 158,” “Rule 159A,”
“Rule 405” and “Rule 415”
mean, in each case, such rule promulgated under the Securities Act (or any
successor provision), as the same shall be amended from time to time.


 


(7)                                  “Scheduled Black-out Period” means the period from and
including the last day of a fiscal quarter of the Company to and including the
business day after the day on which the Company publicly releases its earnings
for such fiscal quarter.


 


(8)                                  “Selling Expenses” means all discounts, selling commissions
and stock transfer taxes applicable to the sale of Registrable Securities and
fees and disbursements of counsel for any Holder (other than the fees and
disbursements of Holders’ Counsel included in Registration Expenses).


 


(l)                                     At any time, any holder of
Securities (including any Holder) may elect to forfeit its rights set forth in
this Section 4.10 from that date forward; provided,
that a Holder forfeiting such rights shall nonetheless be entitled to
participate under Sections 4.10(a)(4)-(6) in any Pending Underwritten
Offering to the same extent that such Holder would have been entitled to if the
holder had not withdrawn; and provided,
further, that no such forfeiture shall terminate a Holder’s rights or
obligations under Section 4.10(f) with respect to any prior
registration or Pending Underwritten Offering. 
“Pending Underwritten Offering” means,
with respect to any Holder forfeiting its rights pursuant to this Section 4.10(l),
any underwritten offering of Registrable Securities in which such Holder has
advised the Company of its intent to register its Registrable Securities either
pursuant to Section 4.10(a)(2) or 4.10(a)(4) prior to the date
of such Holder’s forfeiture.


 


4.11                           Articles of Amendment.  At or prior to the Closing, the Company shall
file the Series A Preferred Stock Articles of Amendment for the Series A
Preferred Stock and the Series B Preferred Stock Articles of Amendment for
the Series B Preferred Stock with the Office of the 


 


52

















 


Secretary of State of
Oregon, and such Series A Preferred Stock Articles of Amendment or Series B
Preferred Stock Articles of Amendment, as the case may be, shall be in full
force and effect.


 


4.12                           [Transfer Restrictions.(20)


 


(a)                                  Restrictions on Transfer.  Except as otherwise permitted in this
Agreement or as provided in the terms of the applicable Security, the Investor
will not transfer, sell, assign or otherwise dispose of (“Transfer”)
any Securities acquired pursuant to this Agreement, except as follows: (i) following
the date that is twelve months from the Closing Date, Investor may Transfer any
or all of the Securities owned by the Investor from time to time; and (ii) if
the approval by the Company’s stockholders of the Stockholder Proposals shall
not have been obtained by March 1, 2010, the Investor may Transfer 50% of
the Common Stock, Preferred Stock and the Warrants owned by the Investor during
the period commencing on such date and ending on the date that is twelve months
after the Closing Date.


 


(b)                                 Investor Permitted Transfers.  Notwithstanding Section 4.12(a), the
Investor shall be permitted to Transfer any portion or all of its Securities at
any time under the following circumstances:


 


(1)                                  Transfers by
the Investor to (i) any Affiliate of the Investor under common control
with the Investor’s ultimate parent, general partner or investment advisor (any
such transferee shall be included in the term “Investor”) or (ii) any
limited partner or shareholder of the Investor, but in each case only if the
transferee agrees in writing for the benefit of the Company (with a copy
thereof to be furnished to the Company) to be bound by the terms of this
Agreement;


 


(2)                                  Transfers, if,
at any time, (i) the Company has entered into a definitive agreement, the
consummation of which would result in a Change in Control or (ii) any
person shall have commenced and not withdrawn a bona fide public tender or
exchange offer which if consummated would result in a Change of Control;


 


(3)                                  In the event
that, as a result of (i) any share repurchases, recapitalizations,
redemptions or similar actions by the Company not caused by the Investor or (ii) any
change in the amount of Securities held by the Investor resulting from the
adjustment or exchange provisions or other terms of the Securities, the
Investor reasonably determines, based on the advice of legal counsel and
following consultation with the Company and, if the Company reasonably so
requests, the Federal Reserve, that unless it disposes of all or a portion of
its Securities, it or any of its Affiliates could reasonably be deemed to “control”
the Company for purposes of the BHC Act, the CBC Act or any rules or
regulations promulgated thereunder (or any successor provision), then the
Investor shall be permitted to Transfer the portion of the Securities
reasonably necessary to avoid such control determination.


 






(20) Included in the Investment Agreements of
the two Investors with Board Representatives.


 


53

















 


(c)                                  Any attempted sale, transfer
or other disposition by an Investor which is in violation of this Section 4.12
shall be null and void.]


 


4.13                           Additional Regulatory
Matters.


 


(a)                                  So long as the Investor has
a Qualifying Ownership Interest:


 


(1)                                  each of the
Company and the Investor agrees to cooperate and use its reasonable best
efforts to ensure, including by communicating with each other with respect to
their respective purchases of Common Stock, that neither the Investor nor any
of its Affiliates will become, or control, a “bank holding company” within the
meaning of the BHC Act and the CBC Act; and


 


(2)                                  the Company
shall not knowingly take any action which would reasonably be expected to pose
a substantial risk that the Investor or any of its Affiliates will become, or
control, a “bank holding company” within the meaning of the BHC Act, including
undertaking any redemption, recapitalization, or repurchase of Common Stock, of
securities or rights, options, or warrants to purchase Common Stock, or
securities of any type whatsoever that are, or may become, convertible into or
exchangeable into or exercisable for Common Stock in each case, where the
Investor is not given the right to participate in such redemption,
recapitalization, or repurchase to the extent of the Investor’s pro rata proportion; provided, however, that the Company shall not be deemed to have
violated this Section 4.13(a)(2) if it has given the Investor the
opportunity to participate in such redemption, recapitalization, or repurchase
to the extent of the Investor’s pro rata
proportion and the Investor fails to so participate.


 


(b)                                 Notwithstanding anything in
this Agreement, including the provisions of Section 4.13(a), in no event
will the Investor or any of its Affiliates be obligated to:


 


(1)                                  Without
limiting clause (b)(2) below, (A) propose or accept any divestiture
of any of the Investor’s or any of its Affiliates’ assets, or (B) accept
any operational restriction on the Investor’s or any of its Affiliates’
business, or agree to take any action that limits the Investor’s or its
Affiliates’ commercial practices in any way (except as they relate to the
Company and the Company Subsidiaries) to obtain any consent, acceptance or
approval of any Governmental Entity to consummate the transactions; or


 


(2)                                  Propose or
agree to accept any term or condition or otherwise modify the terms of this
Agreement or any other Transaction Document, including, for the avoidance of
doubt, the terms or the amount of the Securities to be delivered by the Company
under this Agreement, to obtain any consent, acceptance, approval of any
Governmental Entity to the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents if such term, condition,
modification or confirmation would (A) materially adversely affect (with
respect to the Investor or its Affiliates) any material term of the
transactions, or (B) adversely affect (with respect to the Investor or its
Affiliates) any material financial term of the transactions contemplated by
this Agreement and the other Transaction Documents.


 


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4.14         Gateway Report.  The Investor hereby acknowledges that (i) the
Gateway Asset Management Due Diligence Report was prepared by Gateway Asset
Management Company, LLC, (ii) the Investor relied solely on such report
for the information contained therein and (iii) the Investor did not rely
on any third party, including the Company, in evaluating such information.


 


ARTICLE V


 


Miscellaneous


 


5.1           Survival.  Each of the representations and warranties
set forth in this Agreement shall survive the Closing under this Agreement but
only for a period of 15 months following the Closing Date (or until final
resolution of any claim or action arising from the breach of any such
representation and warranty, if notice of such breach was provided prior to the
end of such period) and thereafter shall expire and have no further force and
effect; provided that the representations and
warranties in Sections 2.2(a), 2.2(b), 2.2(c), 2.2(d), 2.3(a) and 2.3(b) shall
survive indefinitely and the representations and warranties in Section 2.2(i) shall
survive until the expiration of the applicable statutory periods of
limitations.  Except as otherwise
provided herein, all covenants and agreements contained herein shall survive
for the duration of any statutes of limitations applicable thereto or until, by
their respective terms, they are no longer operative.


 


5.2           Amendment.  No amendment or waiver of this Agreement will
be effective with respect to any party unless made in writing and signed by an
officer of a duly authorized representative of such party.


 


5.3           Waivers.  No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The conditions to each party’s
obligation to consummate the Closing are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.  No waiver of any party
to this Agreement will be effective unless it is in a writing signed by a duly
authorized officer of the waiving party that makes express reference to the
provision or provisions subject to such waiver.


 


5.4           Counterparts and
Facsimile.  For the convenience of
the parties hereto, this Agreement may be executed in any number of separate
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts will together constitute the same agreement.  Executed signature pages to this
Agreement may be delivered by facsimile and such facsimiles will be deemed as
sufficient as if actual signature pages had been delivered.


 


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5.5           Governing Law.  This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.  The parties hereto irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the state
and federal courts located in the State of New York for any actions, suits or
proceedings arising out of or relating to this Agreement and the transactions
contemplated hereby.


 


5.6           Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.


 


5.7           Notices.  Any notice, request, instruction or other
document to be given hereunder by any party to the other will be in writing and
will be deemed to have been duly given (a) on the date of delivery if
delivered personally or by telecopy or facsimile, upon confirmation of receipt,
(b) on the first business day following the date of dispatch if delivered
by a recognized next-day courier service, or (c) on the third business day
following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. 
All notices hereunder shall be delivered as set forth below, or pursuant
to such other instructions as may be designated in writing by the party to
receive such notice.


 


(1)           If to the Investor:


 


 


with a copy to
(which copy alone shall not constitute notice):


 


 


(2)          If to the Company:


 


West Coast Bancorp

5335 Meadows Road, Suite 201

Lake Oswego, Oregon  97035

Attn:  Richard Rasmussen, General Counsel


Facsimile:  (503) 684-0781


 


with copies to
(which copy alone shall not constitute notice):


 


Wachtell, Lipton, Rosen &
Katz LLP

51 West 52nd Street

New York, New York  10019

Attn:  Craig M. Wasserman


Richard K. Kim


Matthew M.
Guest

Facsimile:  (212) 403-2000


 


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5.8           Entire Agreement,
etc.  This Agreement (including the
Exhibits, Schedules, and Disclosure Schedules hereto) and the Transaction
Documents constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties, both written and
oral, between the parties, with respect to the subject matter hereof; the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors, and with respect to
the Investor, its permitted assigns; and this Agreement will not be
assignable by operation of law or otherwise (any attempted assignment in
contravention hereof being null and void), except that the Investor shall be
permitted to assign its rights or obligations hereunder (i) to any
Affiliate entity, but only if the transferee agrees in writing for the benefit
of the Company (with a copy thereof to be furnished to the Company (any such
transferee shall be included in the term “Investor”)); provided, further, that
no such assignment shall relieve the Investor of any of its obligations under
this Agreement and (ii) as and to the extent provided in Section 4.10.  For the avoidance of doubt, the
confidentiality agreement by and between the Company and the Investor, shall be
void and supplanted by the terms of this Agreement.


 


5.9           Other Definitions.
 Wherever required by the context of this
Agreement, the singular shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa,
and references to any agreement, document or instrument shall be deemed to
refer to such agreement, document or instrument as amended, supplemented or
modified from time to time.  All article,
section, paragraph or clause references not attributed to a particular document
shall be references to such parts of this Agreement, and all exhibit, annex and
schedule references not attributed to a particular document shall be references
to such exhibits, annexes and schedules to this Agreement.  When used herein:


 


(1)           the term “subsidiary”
means those corporations, banks, savings banks, associations and other persons
of which such person owns or controls 51% or more of the outstanding equity
securities either directly or indirectly through an unbroken chain of entities
as to each of which 51% or more of the outstanding equity securities is owned
directly or indirectly by its parent; provided, however, that there shall not be included any such entity to
the extent that the equity securities of such entity were acquired in
satisfaction of a debt previously contracted in good faith or are owned or
controlled in a bona fide fiduciary capacity;


 


(2)           the term “Affiliate”
means, with respect to any person, any person directly or indirectly
controlling, controlled by or under common control with, such other
person.  For purposes of this definition,
“control” (including, with correlative
meanings, the terms “controlled by”
and “under common control with”) when used
with respect to any person, means the possession, directly or indirectly, of
the power to cause the direction of management and/or policies of such person,
whether through the ownership of voting securities by contract or otherwise;


 


(3)           the word “or”
is not exclusive;


 


57

















 


(4)           the words “including,”  “includes,” “included” and “include” are
deemed to be followed by the words “without limitation”;


 


(5)           the terms “herein,”
“hereof” and “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision;


 


(6)           “business day”
means any day except Saturday, Sunday and any day which shall be a legal
holiday or a day on which banking institutions in the State of Oregon generally
are authorized or required by law or other governmental actions to close;


 


(7)           “person” has the
meaning given to it in Section 3(a)(9) of the Exchange Act and as
used in  Sections 13(d)(3)
and 14(d)(2) of the Exchange Act;


 


(8)           “Beneficially Own,”
“Beneficial Owner” and “Beneficial Ownership” are defined in Rules 13d-3 and
13d-5 of the Exchange Act; and


 


(9)           “knowledge of the Company”
or “Company’s knowledge” means the actual
knowledge of the officers of the Company listed on Disclosure Schedule 5.9(9).


 


5.10         Captions.  The article, section, paragraph and clause
captions herein are for convenience of reference only, do not constitute part
of this Agreement and will not be deemed to limit or otherwise affect any of
the provisions hereof.


 


5.11         Severability.  If any provision of this Agreement or the
application thereof to any person (including, the officers and directors of the
Investor and the Company) or circumstance is determined by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions
hereof, or the application of such provision to persons or circumstances other
than those as to which it has been held invalid or unenforceable, will remain
in full force and effect and shall in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party.  Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original
intent of the parties.


 


5.12         No Third Party
Beneficiaries.  Nothing contained in
this Agreement, expressed or implied, is intended to confer or shall confer
upon any person other than the express parties hereto, any benefit right or
remedies, except that the provisions of Sections 4.9 and 4.10 shall inure to
the benefit of the persons referred to in those Sections to the extent provided
therein.  The representations and
warranties set forth in Article II and the covenants set forth in Articles
III and IV have been made solely for the benefit of the parties to this
Agreement and (a) may be intended not as statements of fact, but rather as
a way of allocating the risk to one of the parties if those statements prove to
be inaccurate; (b) have been qualified by reference to the Disclosure
Schedules of each party, each of which contains certain disclosures that are
not reflected in the text of this Agreement; and (c) may apply standards
of materiality in a way that is different from what may be viewed as material
by shareholders of, or other investors in, the Company.


 


58

















 


5.13         Time of Essence.  Time is of the essence in the performance of
each and every term of this Agreement.


 


5.14         Public Announcements.  Subject to each party’s disclosure obligations
imposed by law or regulation, each of the parties hereto will cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement and any of the
transactions contemplated by this Agreement or the other Transaction Documents,
and no party hereto will make any such news release or public disclosure
without first consulting with the other party hereto and receiving its consent
(which shall not be unreasonably withheld, conditioned, or delayed), and each
party shall coordinate with the other with respect to any such news release or
public disclosure.


 


5.15         Specific Performance.  The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms.  It is accordingly agreed that the parties
shall be entitled to seek specific performance of the terms hereof, this being
in addition to any other remedies to which they are entitled at law or equity.


 


* 
*  *


 


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IN WITNESS
WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first herein above written.


 


	
   

  	
  WEST COAST BANCORP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Investor

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


[Signature Page to Investment Agreement]