Exhibit 4.1


 


EXECUTION COPY


 


CLASS B
WARRANT


 


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.


 


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


 


CLASS B WARRANT


 


to purchase


 


[·] 


 


Shares of


 


Mandatorily Convertible Cumulative Participating
Preferred Stock, Series A 


 


dated as of October 23, 2009


 


West Coast Bancorp


 


an Oregon Corporation


 


Issue
Date:  October 23, 2009


 


1.                                       Definitions.  Unless the
context otherwise requires, when used herein the following terms shall have the
meanings indicated.


 


“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 or policies of such person, whether through the ownership of voting
securities, by contract or otherwise.


 


“Applicable Price” means 95% of the greater
of (A) the Market Price per share of outstanding Common Stock on the date
on which the Company issues or sells any Common Stock other than Excluded Stock
and (B) the Market Price per share of outstanding Common Stock on the
first date of the announcement of such issuance or sale.


 

















 


“Appraisal Procedure” means a procedure
whereby two independent appraisers, one chosen by the Company and one by a
majority in interest of the holders of Class B Warrants, shall mutually
agree upon the determinations then the subject of appraisal.  Each party shall deliver a notice to the
other appointing its appraiser within fifteen (15) days after the Appraisal
Procedure is invoked.  If within thirty
(30) days after appointment of the two appraisers they are unable to agree upon
the amount in question, a third independent appraiser shall be chosen within
ten (10) days thereafter by the mutual consent of such first two
appraisers or, if such first two appraisers fail to agree upon the appointment
of a third appraiser, such appointment shall be made by the American
Arbitration Association, or any organization successor thereto, from a panel of
arbitrators having experience in the appraisal of the subject matter to be
appraised.  The decision of the third
appraiser so appointed and chosen shall be given within thirty (30) days after
the selection of such third appraiser. 
If three appraisers shall be appointed and the determination of one
appraiser is disparate from the middle determination by more than twice the
amount by which the other determination is disparate from the middle
determination, then the determination of such appraiser shall be excluded, the
remaining two determinations shall be averaged and such average shall be
binding and conclusive on the Company and the Warrantholder; otherwise, the
average of all three determinations shall be binding and conclusive on the
Company and the Warrantholder.  The costs
of conducting any Appraisal Procedure shall be borne by the holders of Class B
Warrants requesting such Appraisal Procedure, except that (A) the fees and
expenses of the appraiser appointed by the Company and any other costs incurred
by the Company shall be borne by the Company and (B) if such Appraisal
Procedure shall result in a determination that is disparate by 5% or more from
the Company’s initial determination, all costs of conducting such Appraisal
Procedure shall be borne by the Company.


 


“Beneficial Owner”
and “Beneficial Ownership” have
the meanings given to such terms in Rules 13d-3 and 13d-5 of the Exchange
Act.


 


“Board” means the Board of Directors of the
Company.


 


“Board Representative” has the meaning given to it in the
Investment Agreement.


 


“Business Combination” means a merger,
consolidation, statutory share exchange or similar transaction that requires
adoption by the Company’s stockholders.


 


“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 New York generally are authorized or
required by law or other governmental actions to close.


 


“Capital Stock” means (A) with respect
to any Person that is a corporation or company, any and all shares, interests,
participations or other equivalents (however designated) of capital or capital
stock of such Person and (B) with respect to any Person that is not a
corporation or company, any and all partnership or other equity interests of
such Person.


 


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


 


(A)                              any Person is or becomes a Beneficial Owner (other
than the Investor and its Affiliates), directly or indirectly, of 24.9% or more
of the aggregate voting power of the 


 


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outstanding
Voting Securities of the Company and, in connection with or subsequent to such
acquisition, the Incumbent Directors cease for any reason to constitute at
least a majority of the Board; provided, that any person becoming a director subsequent to the date
of the Investment 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 (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 (C) below
with respect to such Business Combination or this paragraph in the case of a
contested election); provided, further, that
the Board Representative will be treated as an Incumbent Director even if the
Person designated to be such Board Representative should change;


 


(B)                                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 voting power of the outstanding Voting Securities of the
Company; provided, however,  that
the event described in this clause (B) will not be deemed a Change of
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; and provided, further,
that such holdings or acquisitions by any such plan (other than any plan
maintained under Section 401(k) of the Internal Revenue Code of 1986,
as amended) do not exceed 50% of the then outstanding Voting Securities of the
Company, (iii) by any underwriter temporarily holding securities pursuant
to an offering of such securities or (iv) pursuant to a Non-Qualifying
Transaction;


 


(C)                                a Business Combination, to the extent it is not a
Non-Qualifying Transaction; or


 


(D)                               adoption of a plan of liquidation or dissolution of
the Company or a sale of all or substantially all of the Company’s assets.


 


“Common Stock” means the Company’s common
stock, no par value, and (except as used in the definition of Non-Qualifying
Transaction) any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to an agreement or Business Combination to which the Company is a party.


 


“Company” means West Coast Bancorp, an
Oregon corporation.


 


“Exchange Act” means the Securities
Exchange Act of 1934, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Excluded Stock” means (A) shares of
Common Stock issued by the Company as a stock dividend payable in shares of
Common Stock, or upon any subdivision or split-up of the outstanding shares of
Capital Stock, in each case which is subject to Section 13(B), or upon
conversion of shares of Capital Stock (but not the issuance of such Capital
Stock which will be subject to the provision of Section 13(A)), (B) shares
of Common Stock to be issued to directors, employees or consultants of the
Company pursuant to options, restricted stock units or other 


 


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equity-based awards granted prior to the date of
issuance of this Warrant and pursuant to options, restricted stock units or
other equity-based awards granted after the date of issuance of this Warrant if
the exercise price per share of Common Stock on the date of such grant equals
or exceeds the Market Price of a share of Common Stock on the date of such
grant, (C) shares of Common Stock issued upon conversion of the Series A
Preferred Stock, (D) shares of Common Stock issued upon conversion of the Series B
Preferred Stock, (E) shares of Common Stock issued upon exercise of any
other warrant, with terms substantially similar to the Warrant, issued on the
date hereof and (F) shares of Common Stock issued upon exercise of
subscription rights in connection with a Permitted Rights Offering.


 


“Exercise Price” means $0.50, subject to
adjustment from time to time in accordance with Section 13.


 


“Expiration Time” has the meaning given to
it in Section 3.


 


“Fair Market Value” means, with respect to any security or
other property, the fair market value of such security or other property as
determined by the Board, acting in good faith. 
If the Warrantholder does not accept the Board’s calculation of Fair
Market Value and the Warrantholder and the Company are unable to agree on Fair
Market Value, the procedures described in Section 16 shall be used to
determine Fair Market Value.


 


“Group”
means a “group” within the meaning of Section 13(d)(3) of the
Exchange Act.


 


“Incumbent Directors” means individuals
who, on the date of the Investment Agreement, constitute the Board.


 


“Investment Agreement” means the Investment
Agreement, dated as of October 23, 2009, between the Company and the
Investor, including all schedules and exhibits thereto.


 


“Investor” means [·].


 


“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 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 


 


4

















 


or equity interest) on that date as determined by a
nationally recognized independent investment banking firm retained by the
Company for this purpose.


 


“Non-Qualifying
Transaction” means any Business Combination that satisfies all of
the following criteria:  (A) more
than 50% of the total voting power of the capital stock of the surviving
corporation resulting from such Business Combination, 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, is represented by shares of Common Stock that were
outstanding immediately before such Business Combination (or, if applicable, is
represented by shares into which such Common Stock was converted pursuant to
such Business Combination) and (B) 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
approved the execution of the initial agreement providing for such Business
Combination.


 


“Ordinary Cash Dividends” means a regular
quarterly cash dividend out of surplus or net profits legally available
therefor (determined in accordance with generally accepted accounting
principles, consistently applied) and consistent with past practice.


 


“Ownership Limit” means at the time of
determination, 9.9% of any class of Voting Securities of the Company outstanding
at such time.  Any calculation of a
Warrantholder’s percentage ownership of the outstanding Voting Securities of
the Company for purposes of this definition shall be made in accordance with
the relevant provisions of Regulation Y of the Board of Governors of the
Federal Reserve System.


 


“Permitted Rights Offering” shall mean 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 and in no event later than March 1,
2010.


 


“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.


 


“Preliminary Control Event” means, with
respect to the Company, (A) the execution of definitive documentation for
a transaction or (B) the recommendation that stockholders tender in
response to a tender or exchange offer, in each case, that could reasonably be
expected to result in a Change of Control upon consummation.


 


“Pro Rata Repurchases” means any purchase
of shares of Common Stock by the Company or any Affiliate thereof pursuant to (A) any
tender offer or exchange offer subject to Section 13(e) of the
Exchange Act, or (B) pursuant to any other offer available to
substantially all holders of Common Stock, in each case whether for cash,
shares of Capital Stock of the 


 


5

















 


Company, other securities of the Company, evidences of
indebtedness of the Company or any other Person or any other property
(including, without limitation, shares of Capital Stock, other securities or
evidences of indebtedness of a Subsidiary of the Company), or any combination
thereof, effected while this Warrant is outstanding; provided, however,  that “Pro Rata Repurchase” shall not include any purchase
of shares by the Company or any Affiliate thereof made in accordance with the
requirements of Rule 10b-18 as in effect under the Exchange Act.  The “Effective
Date” of a Pro Rata Repurchase shall mean the date of acceptance of
shares for purchase or exchange under any tender or exchange offer which is a
Pro Rata Repurchase or the date of purchase with respect to any Pro Rata
Repurchase that is not a tender or exchange offer.


 


“Purchase Price” has the meaning given to it in Section 2.


 


“SEC” has the meaning given to it in Section 12.


 


“Securities” has the meaning given to it in
the recitals of the Investment Agreement.


 


“Securities Act” means the Securities Act
of 1933, as amended, or any successor statute, and the rules and
regulations promulgated thereunder.


 


“Series A  Preferred Stock”
means the Mandatorily Convertible Cumulative Participating Preferred Stock, Series A
of the Company.


 


“Series B  Preferred Stock”
means the Mandatorily Convertible Cumulative Participating Preferred Stock, Series B
of the Company.”


 


“Shares” is defined in Section 2.


 


“Stockholder Proposals”
has the meaning given to it in the Investment Agreement.


 


“Subsidiary” of a Person means any
corporation, bank, savings bank, association or other Person 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.


 


“Transfer” has the meaning given to it in Section 8(B).


 


“Voting Securities” means, 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.


 


“Warrantholder” has the meaning given to it
in Section 2.


 


“Warrant” means this Warrant, issued to the
Investor pursuant to the Investment Agreement.


 


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“Widely Dispersed Offering” means (a) a widespread
public distribution, including pursuant to Rule 144 under the Securities
Act, (b) a transfer in which no transferee (or group of associated
transferees) would receive more than 2% of any class of Voting Securities of
the Company or (c) a transfer to a transferee that would control more than
50% of the Voting Securities of the Company without any transfer from the
Investor.


 


2.                                       Number of Shares of Series A Preferred Stock;
Exercise Price.  This certifies that, for value received, [·],
its Affiliates or its registered assigns (the “Warrantholder”)
is entitled, upon the terms and subject to the conditions hereinafter set
forth, to acquire from the Company, in whole or in part fully paid and
nonassessable shares of Series A Preferred Stock, no par value, of the
Company, convertible into [·] shares of Common Stock (the “Shares”) at a purchase price (the “Purchase
Price”) equal to the product of the Exercise Price per Share and the
number of Shares into which the Series A Preferred Stock issuable upon
exercise is convertible or, in certain circumstances, to acquire from the
Company shares of Series B Preferred Stock in accordance with Section 3(B) and
Section 14.  The number of Shares
into which the Series A Preferred Stock issuable upon exercise is
convertible and the Exercise Price are subject to adjustment as provided
herein, and all references to “Shares,” “Common Stock” and “Exercise Price”
herein shall be deemed to include any such adjustment or series of adjustments.


 


3.                                       Exercise of Warrant; Term.  (A) 
In the event that prior to March 1, 2010, the Stockholder Proposals are
not approved by the holders of Common Stock in the manner required therefor by
NASDAQ’s rules, regulations and interpretations and the Oregon Business
Corporation Act, from and after March 1, 2010, to the extent permitted by
applicable laws and regulations, the right to purchase the Series A
Preferred Stock and other securities represented by this Warrant is
exercisable, in whole or in part by the Warrantholder, at any time or from time
to time, but in no event later than 11:59 p.m., New York City time, on the
seventh anniversary of the date of issuance of the Warrant (the “Expiration Time”), by (i) the
surrender of this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the office of the Company in
Lake Oswego, Oregon (or such other office or agency of the Company in the
United States as it may designate by notice in writing to the Warrantholder at
the address of the Warrantholder appearing on the books of the Company), and (ii) payment
of the Purchase Price for the Series A Preferred Stock or Series B
Preferred Stock thereby purchased at the election of the Warrantholder by
having the Company withhold shares of Series A Preferred Stock (or Series B
Preferred Stock) issuable upon exercise of the Warrant equal in value to the
Purchase Price as to which this Warrant is so exercised based on the Market
Price of the Common Stock on the trading day immediately prior to the date on
which this Warrant and the Notice of Exercise are delivered to the Company.


 


If the
Warrantholder does not exercise this Warrant in its entirety, the Warrantholder
will be entitled to receive from the Company within a reasonable time, and in
any event not exceeding three (3) Business Days, a new warrant in
substantially identical form for the purchase of that number of shares of Series A
Preferred Stock equal to the difference between the number of shares of Series A
Preferred Stock subject to this Warrant and the number of shares of Series A
Preferred Stock as to which this Warrant is so exercised.


 


(B)                                Notwithstanding anything herein to the contrary, in no
event shall the Investor be entitled to receive shares of Series A
Preferred Stock upon the exercise hereof to the extent (but 


 


7

















 


only to the
extent) that such receipt would cause the Investor to own, or be deemed for
applicable bank regulatory purposes to own, Voting Securities of the Company in
excess of the Ownership Limit.  If any
delivery of shares of Series A Preferred Stock otherwise deliverable to
the Investor pursuant to a valid exercise of this Warrant is not made, in whole
or in part, as a result of the foregoing limitations set forth above, the
Company shall be obligated to satisfy the remainder of the Investor’s exercise
of the Warrant in shares of Series B Preferred Stock in accordance with Section 14.


 


4.                                       Issuance of Series A Preferred Stock;
Authorization; Listing.  Certificates for Series A
Preferred Stock or Series B Preferred Stock, as the case may be, issued
upon exercise of this Warrant will be issued in such name or names as the
Warrantholder may designate and will be delivered to such named Person or
Persons within a reasonable time, not to exceed three (3) Business Days
after the date on which this Warrant has been duly exercised in accordance with
the terms of this Warrant.  The Company
hereby represents and warrants that any Series A Preferred Stock or Series B
Preferred Stock  issued upon the exercise of this
Warrant in accordance with the provisions of Section 3 and all other provisions
of this Warrant will be duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges (other than liens or
charges created by the Warrantholder or taxes in respect of any transfer
occurring contemporaneously therewith). 
The Company agrees that the Series A Preferred Stock or Series B
Preferred Stock  so issued will be deemed to have
been issued to the Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are delivered to the
Company in accordance with the terms of this Warrant, notwithstanding that the
stock transfer books of the Company may then be closed or certificates
representing such Series A Preferred Stock or Series B Preferred
Stock, as the case may be, may not be actually delivered on such date.  Immediately following approval by
stockholders of the increase in the authorized number of shares of Common Stock
as provided in the Investment Agreement, the Company will at all times
thereafter reserve and keep available, in the case of Common Stock, out of its
authorized but unissued Common Stock, and, in the case of the Series A
Preferred Stock or the Series B Preferred Stock, out of its authorized but
unissued preferred stock, solely for the purpose of providing for the exercise
of this Warrant and the conversion of Series A Preferred Stock or Series B
Preferred Stock, the aggregate number of shares of Series A Preferred
Stock or Series B Preferred Stock (and the aggregate number of shares of Common
Stock into which such shares of Series A Preferred Stock and Series B
Preferred Stock are convertible), as the case may be,  then
issuable upon exercise of this Warrant. 
The Company will (i) procure, at its sole expense, the listing of
the securities issuable upon exercise of this Warrant, including, but not
limited to the shares of Series A Preferred Stock or Series B
Preferred Stock issuable pursuant to Section 13 of this Warrant subject to
issuance or notice of issuance on all stock exchanges on which the Common Stock
are then listed or traded and (ii) maintain the listing of such Shares and
other securities after issuance.  The
Company will use commercially reasonable efforts to ensure that the Series A
Preferred Stock and the Series B Preferred Stock  may
be issued without violation of any applicable law or regulation or of any
requirement of any securities exchange on which the Series A Preferred
Stock or Series B Preferred Stock, as the case may be,  are
listed or traded.


 


5.                                       No Fractional Shares or Scrip. 
No fractional shares or scrip representing fractional shares shall be
issued upon any exercise of this Warrant. 
In lieu of any fractional share to which the Warrantholder would
otherwise be entitled, the Warrantholder shall be entitled to 


 


8

















 


receive
a cash payment equal to the Market Price of the Series A Preferred Stock
or Series B Preferred Stock less the Exercise Price for the shares of
Common Stock into which such fractional share could be converted.  For purposes of this Section 5, the
“Market Price” of any Series A Preferred Stock or Series B Preferred
Stock withheld upon exercise of this Warrant shall be deemed to be the Market
Price of the number of shares of Common Stock into which one share of such Series A
Preferred Stock or Series B Preferred Stock could be converted if such Series A
Preferred Stock or Series B Preferred Stock were then convertible.


 


6.                                       No Rights as Shareholders; Transfer Books. 
This Warrant does not entitle the Warrantholder to any voting rights or
other rights as a shareholder of the Company prior to the date of exercise
hereof.  The Company will at no time
close its transfer books against transfer of this Warrant in any manner which
interferes with the timely exercise of this Warrant.


 


7.                                       Charges, Taxes and Expenses. 
Issuance of certificates for Series A Preferred Stock or Series B
Preferred Stock to the Warrantholder upon the exercise of this Warrant shall be
made without charge to the Warrantholder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificates, all of
which taxes and expenses shall be paid by the Company.


 


8.                                       Transfer/Assignment.


 


(A)                              Subject to compliance with clause (B) of this Section 8,
without obtaining the consent of the Company to assign or transfer this
Warrant, this Warrant and all rights hereunder are transferable, in whole or in
part, upon the books of the Company by the registered holder hereof in person
or by duly authorized attorney, and a new warrant shall be made and delivered
by the Company, of the same tenor and date as this Warrant but registered in
the name of the transferee, upon surrender of this Warrant, duly endorsed, to
the office or agency of the Company described in Section 3.  All expenses (other than stock transfer
taxes) and other charges payable in connection with the preparation, execution
and delivery of the new warrants pursuant to this Section 8 shall be paid
by the Company.


 


(B)                                The Warrantholder shall not be entitled to directly or
indirectly sell, transfer, make any short sale of, loan, grant any option for
the purchase of or interest in or otherwise dispose of (“Transfer”)
this Warrant or any rights hereunder in whole or in part prior to the first
anniversary of the date of original issuance, except that such restrictions on
Transfer shall cease to apply earlier (1) upon a Preliminary Control
Event or a Change of Control or (2) on March 1, 2010 in the event the
Stockholder Proposals shall not have been approved prior thereto in the manner
required therefor by NASDAQ’s rules, regulations and interpretations and the
Oregon Business Corporation Act; provided, however, that any such Transfer made after the first
anniversary of the date of the original issuance must be made to a third party
in a Widely Dispersed Offering.


 


(C)                                Notwithstanding the restrictions on transfer set forth
in clause (B) of this Section 8, this Warrant may be transferred
(1) by the Investor to any controlled Affiliate of the Investor, (2) by
any Warrantholder to the Company and (3) by any Warrantholder to any
Person with the written consent of the Company, in each case subject to
applicable laws and regulations.


 


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9.                                       Exchange and Registry of Warrant. 
This Warrant is exchangeable, upon the surrender hereof by the
Warrantholder to the Company, for a new warrant or warrants of like tenor and
representing the right to purchase the same aggregate number of Series A
Preferred Stock and other securities. 
The Company shall maintain a registry showing the name and address of
the Warrantholder as the registered holder of this Warrant.  This Warrant may be surrendered for exchange
or exercise, in accordance with its terms, at the office of the Company, and
the Company shall be entitled to rely in all respects, prior to written notice
to the contrary, upon such registry.


 


10.                                 Loss, Theft, Destruction or Mutilation of Warrant. 
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and in the case of
any such loss, theft or destruction, upon receipt of an indemnity or security
reasonably satisfactory to the Company, or, in the case of any such mutilation,
upon surrender and cancellation of this Warrant, the Company shall make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the same aggregate
number of shares of Series A Preferred Stock and other securities as
provided for in such lost, stolen, destroyed or mutilated Warrant.


 


11.                                 Saturdays, Sundays, Holidays, etc. 
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall not be a Business Day,
then such action may be taken or such right may be exercised on the next
succeeding day that is a Business Day.


 


12.                                 Rule 144 Information. 
The Company covenants that it will use its reasonable best efforts to
timely file all reports and other documents required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) thereunder (or, if the Company is not required to file
such reports under the Securities Act or the Exchange Act, it will, upon the
request of any Warrantholder, make publicly available such information as
necessary to permit sales pursuant to Rule 144), and it will use
reasonable best efforts to take such further action as any Warrantholder may
reasonably request, all to the extent required from time to time to enable such
holder to sell the Warrants without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144 or
Regulation S under the Securities Act, as such rules may be amended
from time to time, or (ii) any successor rule or regulation hereafter
adopted by the SEC.  Upon the written
request of any Warrantholder, the Company will deliver to such Warrantholder a
written statement that it has complied with such requirements.


 


13.                                 Adjustments and Other Rights. 
The Exercise Price and the number of Shares into which the Series A
Preferred Stock and Series B Preferred Stock issuable upon exercise of
this Warrant are to be convertible pursuant to Section 2 of this Warrant
shall be subject to adjustment from time to time as follows; provided, that
no single event shall be subject to adjustment under more than one
sub-section of this Section 13 so as to result in duplication; provided, further, that,
notwithstanding any provision of this Warrant to the contrary, any adjustment
shall be made to the extent (and only to the extent) that such adjustment would
not cause or result in any Warrantholder and its Affiliates, collectively,
being in violation of the Ownership Limit (excluding for purposes of this
calculation any reduction in the percentage of Voting Securities or other
capital stock of the Company such Warrantholder and its Affiliates so owns,
controls or 


 


10
















 


has
the power to vote resulting from transfers by the Investor and its Affiliates
of Securities purchased by the Investor pursuant to the Investment Agreement)
or any other applicable law, regulation or rule of any governmental
authority or self-regulatory organization. 
Any adjustment (or portion thereof) prohibited pursuant to the foregoing
proviso shall, at the option of the Warrantholder, (i) be postponed and
implemented on the first date on which such implementation would not result in
the condition described in such proviso or (ii) be effected through the
right to exercise the Warrant for Series B Preferred Stock to the extent
it would otherwise have been exercisable for Series A Preferred Stock in
excess of the adjusted amount, mutatis mutandis.


 


(A)                              Common Stock Issued at Less Than the Applicable Price.  (i)  If
the Company issues or sells, or agrees to issue or sell, any Common Stock or
other securities that are convertible into or exchangeable or exercisable for
Common Stock (or are otherwise linked to Common Stock), other than Excluded
Stock, for consideration per share less than the Applicable Price, then the
Exercise Price in effect immediately prior to each such issuance or sale will
immediately (except as provided below) be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to such issuance or
sale by a fraction, (x) the numerator of which shall be (1) the
number of shares of Common Stock outstanding immediately prior to such issuance
or sale plus (2) the number of shares of Common Stock which the aggregate
consideration received by the Company for the total number of such additional
shares of Common Stock (or other securities that are convertible into or
exchangeable or exercisable for Common Stock (or are otherwise linked to Common
Stock)) so issued or sold would purchase at the Applicable Price, and (y) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such issuance or sale (including the number of shares of
Common Stock into which such other securities are convertible or for which such
other securities are exchangeable or exercisable).  In such event, the number of shares of Common
Stock into which the Series A Preferred Stock and Series B Preferred
Stock issuable upon the exercise of this Warrant are to be convertible pursuant
to Section 2 of this Warrant shall be increased to the number obtained by
dividing (x) the product of (1) the number of Shares issuable upon
the exercise of this Warrant before such adjustment and (2) the Exercise
Price in effect immediately prior to the issuance or sale giving rise to this
adjustment, by (y) the new Exercise Price determined in accordance with
the immediately preceding sentence.  For
the avoidance of doubt, no increase in the Exercise Price or reduction in the
number of Shares into which the Series A Preferred Stock and Series B
Preferred Stock issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant shall be made pursuant to this
sub-clause (i) of this Section 13(A).


 


(ii)                                  For the purposes of any adjustment of the
Exercise Price and the number of Shares into which the Series A Preferred
Stock and Series B Preferred Stock issuable upon exercise of this Warrant
are to be convertible pursuant to Section 2 of this Warrant pursuant to
this Section 13(A), the following provisions shall be applicable:


 


(1)                                  In the case of the issuance or sale of equity or
equity-linked securities for cash, the amount of the consideration received by
the Company shall be deemed to be the amount of the gross cash proceeds
received by the Company for such securities before deducting therefrom any
discounts or commissions allowed, paid or incurred by the 


 


11

















 


Company for any
underwriting or otherwise in connection with the issuance and sale thereof.


 


(2)                                  In the case of the issuance or sale of equity or
equity-linked securities (otherwise than upon the conversion of shares of
Capital Stock or other securities of the Company) 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 Market Value, before deducting
therefrom any discounts or commissions allowed, paid or incurred by the Company
for any underwriting or otherwise in connection with the issuance and sale
thereof.


 


(3)                                  In the case of the issuance of (i) options,
warrants or other rights to purchase or acquire equity or equity-linked
securities (whether or not at the time exercisable) or (ii) securities by
their terms convertible into or exchangeable for equity or equity-linked
securities (whether or not at the time so convertible or exchangeable) or
options, warrants or rights to purchase such convertible or exchangeable
securities (whether or not at the time exercisable):


 


(a)                                  The aggregate maximum number of shares of securities
deliverable upon exercise of such options, warrants or other rights to purchase
or acquire equity or equity-linked securities shall be deemed to have been
issued at the time such options, warrants or rights are issued and for a
consideration equal to the consideration (determined in the manner provided in Section 13(A)(i) and
(ii)), if any, received by the Company upon the issuance or sale of such
options, warrants or rights plus the minimum purchase price provided in such
options, warrants or rights for the equity or equity-linked securities covered
thereby.


 


(b)                                 The aggregate maximum number of shares of equity or
equity-linked securities deliverable upon conversion of or in exchange for any
such convertible or exchangeable securities, or upon the exercise of options,
warrants or other rights to purchase or acquire such convertible or
exchangeable securities and the subsequent conversion or exchange thereof,
shall be deemed to have been issued at the time such securities were issued or
such options, warrants or rights were issued and for a consideration equal to
the consideration, if any, received by the Company for any such securities and
related options, warrants or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional consideration (in
each case, determined in the manner provided in Section 13(A)(i) and
(ii)), if any, to be received by the Company upon the conversion or exchange of
such securities, or upon the exercise of any related options, warrants or
rights to purchase or acquire such convertible or exchangeable securities and
the subsequent conversion or exchange thereof.


 


12

















 


(c)                                  On any change in the number of shares of equity or
equity-linked securities deliverable upon exercise of any such options,
warrants or rights or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by
the Company upon such exercise, conversion or exchange, but excluding changes
resulting from the anti-dilution provisions thereof (to the extent comparable
to the anti-dilution provisions contained herein), the Exercise Price and the
number of Shares into which the Series A Preferred Stock and Series B
Preferred Stock issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant as then in effect shall forthwith be
readjusted to such Exercise Price and number of Shares as would have been
obtained had an adjustment been made upon the issuance or sale of such options,
warrants or rights not exercised prior to such change, or of such convertible
or exchangeable securities not converted or exchanged prior to such change,
upon the basis of such change.


 


(d)                                 If the Exercise Price and the number of Shares into
which the Series A Preferred Stock and Series B Preferred Stock
issuable upon exercise of this Warrant are to be convertible pursuant to Section 2
of this Warrant shall have been adjusted upon the issuance or sale of any such
options, warrants, rights or convertible or exchangeable securities, no further
adjustment of the Exercise Price and the number of Shares into which the Series A
Preferred Stock and Series B Preferred Stock issuable upon exercise of
this Warrant are to be convertible pursuant to Section 2 of this Warrant
shall be made for the actual issuance of Common Stock upon the exercise,
conversion or exchange thereof.


 


(B)                                Stock Splits, Subdivisions, Reclassifications or
Combinations.  If the Company shall (i) declare a
dividend or make a distribution on its Common Stock in shares of Common Stock, (ii) subdivide
or reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding Common Stock into a
smaller number of shares, the number of Shares into which the Series A
Preferred Stock and Series B Preferred Stock issuable upon exercise of
this Warrant are to be convertible pursuant to Section 2 of this Warrant
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the Warrantholder after such date shall be
entitled to purchase the number of shares of Common Stock which such holder
would have owned or been entitled to receive after such date had this Warrant
been exercised immediately prior to such date and the Series A Preferred
Stock and the Series B Preferred Stock issuable upon such exercise had
been converted to Common Stock immediately prior to such date.  In such event, the Exercise Price in effect
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall be
adjusted to the number obtained by dividing (x) the product of (1) the
number of Shares into which the Series A Preferred Stock and Series B
Preferred Stock issuable upon the exercise of this Warrant are to be
convertible pursuant to Section 2 of this Warrant before such adjustment
and (2) the Exercise Price in effect immediately prior to the record or
effective date, as the case may be, for such dividend, distribution,
subdivision, combination or reclassification giving rise to this adjustment by (y) the
new number 


 


13

















 


of
Shares into which the Series A Preferred Stock and Series B Preferred
Stock issuable upon exercise of this Warrant are to be convertible pursuant to Section 2
of this Warrant determined pursuant to the immediately preceding sentence.


 


(C)                                Other Distributions.  Except with
respect to a Permitted Rights Offering, in case the Company shall fix a record
date for the making of a distribution to all holders of shares of its Common
Stock (i) of shares of any class other than its Common Stock other than
shares referred to in Section 13(A)(i), (ii) of evidence of
indebtedness of the Company or any Subsidiary, (iii) of assets or cash
(excluding Ordinary Cash Dividends, and dividends or distributions referred to
in Section 13(B)), or (iv) of rights or warrants (other than in
connection with the adoption of a shareholder rights plan), in each such case,
the Exercise Price in effect prior thereto shall be reduced immediately
thereafter to the price determined by dividing (x) an amount equal to the
difference resulting from (1) the number of shares of Common Stock
outstanding on such record date multiplied by the Exercise Price per Share on
such record date, less (2) the Fair Market Value of said shares or
evidences of indebtedness or assets or rights or warrants to be so distributed,
by (y) the number of shares of Common Stock outstanding on such record
date; such adjustment shall be made successively whenever such a record date is
fixed.  In such event, the number of
shares of Common Stock into which the Series A Preferred Stock and Series B
Preferred Stock issuable upon the exercise of this Warrant are to be
convertible pursuant to Section 2 of this Warrant shall be increased to
the number obtained by dividing (x) the product of (1) the number of
Shares issuable upon the exercise of this Warrant before such adjustment, and (2) the
Exercise Price in effect immediately prior to the issuance giving rise to this
adjustment by (y) the new Exercise Price determined in accordance with the
immediately preceding sentence.  In the
event that such distribution is not so made, the Exercise Price and the number
of Shares into which the Series A Preferred Stock and Series B
Preferred Stock issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant then in effect shall be readjusted,
effective as of the date when the Board determines not to distribute such
shares, evidences of indebtedness, assets, rights or warrants, as the case may
be, to the Exercise Price that would then be in effect and the number of Shares
into which the Series A Preferred Stock and Series B Preferred Stock
that would then be issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant if such record date had not been
fixed.


 


(D)                               Certain Repurchases of Common Stock. 
In case the Company effects a Pro Rata Repurchase of Common Stock, then
the Exercise Price shall be reduced to the price determined by multiplying the
Exercise Price in effect immediately prior to the effective date of such Pro
Rata Repurchase by a fraction of which the numerator shall be (i) the
product of (x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the Market Price of a
share of Common Stock on the trading day immediately preceding the first public
announcement by the Company or any of its Affiliates of the intent to effect
such Pro Rata Repurchase, minus (ii) the aggregate purchase price of the
Pro Rata Repurchase, and of which the denominator shall be the product of (i) the
number of shares of Common Stock outstanding immediately prior to such Pro Rata
Repurchase minus the number of shares of Common Stock so repurchased and (ii) the
Market Price per share of Common Stock on the trading day immediately preceding
the first public announcement of such Pro Rata Repurchase.  In such event, the number of Shares into
which the Series A Preferred Stock and Series B Preferred Stock
issuable upon the exercise of this Warrant are to be convertible pursuant to 


 


14

















 


Section 2
of this Warrant shall be increased to the number obtained by dividing (x) the
product of (1) the number of Shares into which the Series A Preferred
Stock and Series B Preferred Stock issuable upon the exercise of this
Warrant are to be convertible pursuant to Section 2 of this Warrant before
such adjustment, and (2) the Exercise Price in effect immediately prior to
the Pro Rata Repurchase giving rise to this adjustment by (y) the new
Exercise Price determined in accordance with the immediately preceding
sentence.


 


(E)                                 Business Combinations.  In case of
any Business Combination or reclassification of Common Stock (other than a
reclassification of Common Stock referred to in Section 13(B)), any Shares
(assuming, for these purposes, that the Stockholder Proposals shall have been
approved) issued or issuable upon exercise of this Warrant are to be
convertible pursuant to Section 2 of this Warrant after the date of such
Business Combination or reclassification shall be exchangeable for the number
of shares of stock or other securities or property (including cash) to which
the Common Stock into which the Series A Preferred Stock and Series B
Preferred Stock issuable (at the time of such Business Combination or
reclassification) upon exercise of this Warrant are to be convertible pursuant
to Section 2 of this Warrant immediately prior to the consummation of such
Business Combination or reclassification would have been entitled upon
consummation of such Business Combination or reclassification; and in any such
case, if necessary, the provisions set forth herein with respect to the rights
and interests thereafter of the Warrantholder shall be appropriately adjusted
so as to be applicable, as nearly as may reasonably be, to any shares of stock
or other securities or property thereafter deliverable on the exercise of this
Warrant.  In determining the kind and
amount of stock, securities or the property receivable upon consummation of
such Business Combination, if the holders of Common Stock have the right to
elect the kind or amount of consideration receivable upon consummation of such
Business Combination, then the Warrantholder shall have the right to make a
similar election upon exercise of this Warrant with respect to the number of
shares of stock or other securities or property which the Warrantholder will
receive upon exercise of this Warrant.


 


(F)                                 Rounding of Calculations; Minimum Adjustments. 
All calculations under this Section 13 shall be made to the nearest
one-tenth (1/10th) of a cent or to the nearest one-hundredth (1/100th) of a
share, as the case may be.  Any provision
of this Section 13 to the contrary notwithstanding, no adjustment in the
Exercise Price or the number of Shares into which the Series A Preferred
Stock and Series B Preferred Stock issuable upon the exercise of this
Warrant are to be convertible pursuant to Section 2 of this Warrant shall
be made if the amount of such adjustment would be less than $0.01 or one-tenth
(1/10th) of a share of Common Stock, respectively, but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at the
time of and together with any subsequent adjustment which, together with such
amount and any other amount or amounts so carried forward, shall aggregate
$0.01 or 1/10th of a share of Common Stock, respectively, or more.


 


(G)                                Timing of Issuance of Additional Common Stock Upon
Certain Adjustments.  In any case in which the provisions of this Section 13
shall require that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event (i) issuing to the Warrantholder of this Warrant exercised after
such record date and before the occurrence of such event the additional shares
of Series A Preferred Stock and Series B Preferred Stock issuable
upon such exercise by reason of the adjustment required by such event over and
above the shares of Series A Preferred Stock and Series B 


 


15

















 


Preferred
Stock issuable upon such exercise before giving effect to such adjustment and (ii) paying
to such Warrantholder any amount of cash in lieu of a fractional share of Series A
Preferred Stock or Series B Preferred Stock; provided, however,  that the Company upon request shall deliver to such
Warrantholder a due bill or other appropriate instrument evidencing such
Warrantholder’s right to receive such additional shares, and such cash, upon
the occurrence of the event requiring such adjustment.


 


(H)                               Adjustment for Unspecified Actions. 
If the Company takes any action affecting the Common Stock, other than
actions described in this Section 13, which in the opinion of the Board
would adversely affect the exercise rights of the Warrantholder, the Exercise
Price and/or the number of Shares into which the Series A Preferred Stock
or Series B Preferred Stock received upon exercise of the Warrant are to
be convertible pursuant to Section 2 of this Warrant shall be adjusted for
the Warrantholder’s benefit, to the extent permitted by law, in such manner,
and at such time, as such Board after consultation with the Warrantholder shall
reasonably determine to be equitable in the circumstances.  Failure of the Board to provide for any such
adjustment will be evidence that the Board has determined that it is equitable
to make no such adjustments in the circumstances.


 


(I)                                    Statement Regarding Adjustments. 
Whenever the Exercise Price or the number of Shares into which the Series A
Preferred Stock or Series B Preferred Stock issuable upon exercise of this
Warrant are to be convertible pursuant to Section 2 of this Warrant shall
be adjusted as provided in Section 13, the Company shall forthwith file at
the principal office of the Company a statement showing in reasonable detail
the facts requiring such adjustment and the Exercise Price that shall be in
effect and the number of Shares into which the Series A Preferred Stock or
Series B Preferred Stock issuable upon exercise of this Warrant are to be
convertible pursuant to Section 2 of this Warrant after such adjustment,
and the Company shall also cause a copy of such statement to be sent by mail,
first class postage prepaid, to each Warrantholder at the address appearing in
the Company’s records.


 


(J)                                   Notice of Adjustment Event. 
In the event that the Company shall propose to take any action of the
type described in this Section 13 (but only if the action of the type
described in this Section 13 would result in an adjustment in the Exercise
Price or the number of Shares into which the Series A Preferred Stock and Series B
Preferred Stock issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant or a change in the type of
securities or property to be delivered upon exercise of this Warrant), the
Company shall give notice to the Warrantholder, in the manner set forth in Section 13(I),
which notice shall specify the record date, if any, with respect to any such
action and the approximate date on which such action is to take place.  Such notice shall also set forth the facts
with respect thereto as shall be reasonably necessary to indicate the effect on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require
the fixing of a record date, such notice shall be given at least ten (10) days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least fifteen (15) days prior to the taking of such proposed
action.  Failure to give such notice, or
any defect therein, shall not affect the legality or validity of any such
action.


 


(K)                               No Impairment.  The Company
will not, by amendment of its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, 


 


16

















 


issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Warrant and in taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Warrantholder.


 


(L)                                 Proceedings Prior to Any Action Requiring Adjustment. 
As a condition precedent to the taking of any action which would require
an adjustment pursuant to this Section 13, the Company shall take any
action which may be necessary, including obtaining regulatory, NASDAQ Stock
Market or stockholder approvals or exemptions, in order that the Company may
thereafter validly and legally issue as fully paid and nonassessable all shares
of Common Stock that the Warrantholder is entitled to receive upon conversion
or exercise of this Warrant pursuant to this Section 13.


 


(M)                            Adjustment Rules.  Any
adjustments pursuant to this Section 13 shall be made successively
whenever an event referred to herein shall occur.  If an adjustment in Exercise Price made
hereunder would reduce the Exercise Price to an amount below par value of the
Common Stock, then such adjustment in Exercise Price made hereunder shall
reduce the Exercise Price to the par value of the Common Stock.


 


14.                                 Exercise for Series B Preferred Stock. 
To the extent provided herein, the Warrantholder may exercise all or any
part of this Warrant for a number of shares of Series B Preferred Stock
equal to the number of shares of Series A Preferred Stock it would
otherwise be entitled to receive in accordance with Section 3; provided that the Company shall pay cash to the
Warrantholder in lieu of any fractional shares of Series B Preferred
Stock.  The Company will at all times
reserve and keep available, out of its authorized preferred stock, a sufficient
number of shares of preferred stock for the purpose of providing for the
exchange of this Warrant for shares of Series B Preferred Stock.  It is understood and agreed that, in lieu of
delivering shares of Series B Preferred Stock pursuant to this Section 14,
the Company may deliver depositary shares for shares of a new series of
preferred stock having rights, preferences and privileges identical to the Series B
Preferred Stock, as the case may be.


 


15.                                 Termination.  In the event
that the Stockholder Proposals are approved in the manner required therefor by
NASDAQ’s rules, regulations and interpretations and the Oregon Business
Corporation Act, this Warrant shall terminate and become void.


 


16.                                 Contest and Appraisal Rights. 
Upon each determination of Market Price or Fair Market Value, as the
case may be, hereunder, the Company shall promptly give notice thereof to the
Warrantholder, setting forth in reasonable detail the calculation of such
Market Price or Fair Market Value, and the method and basis of determination
thereof, as the case may be.  If a
majority in interest of the holders of Class B Warrants) shall disagree
with such determination and shall, by notice to the Company given within
fifteen (15) days after the Company’s notice of such determination, elect to
dispute such determination, such dispute shall be resolved in accordance with
this Section 16.  In the event that
a determination of Market Price, or Fair Market Value (if such determination
solely involves Market Price), is disputed, such dispute shall be submitted, at
the Company’s expense, to a NASDAQ Stock Market member firm selected by the
Company and acceptable to a majority in interest of the holders of the Class B



 


17

















 


Warrants,
whose determination of Market Price or Fair Market Value, as the case may be,
shall be binding on the Company and the Warrantholder.  In the event that a determination of Fair
Market Value, other than a determination solely involving Market Price, is
disputed, such dispute shall be resolved through the Appraisal Procedure.


 


17.                                 Governing Law.  This Warrant
shall be binding upon any successors or assigns of the Company.  This Warrant shall constitute a contract
under the laws of the State of New York and for all purposes shall be construed
in accordance with and governed by the laws of the State of New York applicable
to agreements made and to be performed entirely within such state.


 


18.                                 Attorneys’ Fees.  In any
litigation, arbitration or court proceeding between the Company and the
Warrantholder as the holder of this Warrant relating hereto, the prevailing
party shall be entitled to reasonable attorneys’ fees and expenses incurred in
enforcing this Warrant.


 


19.                                 Amendments.  This Warrant
may be amended and the observance of any term of this Warrant may be waived
only, in the case of an amendment, with the written consent of the Company and
the Warrantholder, or in the case of a waiver, by the party against whom the
waiver is to be effective.


 


20.                                 Notices.  All notices
hereunder shall be in writing and shall be effective (A) on the day on
which delivered if delivered personally or transmitted by telex or telegram or
telecopier with evidence of receipt, (B) one Business Day after the date
on which the same is delivered to a nationally recognized overnight courier
service with evidence of receipt, or (C) five Business Days after the date
on which the same is deposited, postage prepaid, in the U.S. mail, sent by
certified or registered mail, return receipt requested, and addressed to the
party to be notified at the address indicated below for the Company, or at the
address for the Warrantholder set forth in the registry maintained by the
Company pursuant to Section 9, or at such other address and/or telecopy or
telex number and/or to the attention of such other person as the Company or the
Warrantholder may designate by ten-day advance written notice.


 


If to the Company, to:


 


West Coast Bancorp

5335 Meadows Road, Suite 201

Lake Oswego, Oregon  97035

Attn:  Richard Rasmussen, General Counsel

Facsimile:  (503) 684-0781


 


18

















 


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


 


	
  Wachtell, Lipton, Rosen & Katz

  
	
  51 West 52nd Street

  
	
  New York, New York 10019-6150

  
	
  Attn:

  	
  Craig M. Wasserman

  
	
   

  	
  Richard K. Kim

  
	
   

  	
  Matthew
  M. Guest

  
	
  Facsimile:
  (212) 403-2000

  



 


21.                                 Prohibited Actions.  The Company
agrees that it will not take any action which would entitle the Warrantholder
to an adjustment of the Exercise Price if the total number of shares Series A
Preferred Stock or Series B Preferred Stock issuable upon exercise of this
Warrant, as the case may be, together with the number of shares of Series A
Preferred Stock or Series B Preferred Stock, in each case, then
outstanding and the number of shares of Series A Preferred Stock or Series B
Preferred Stock, in each case, then issuable upon the exercise of all
outstanding options, warrants, conversion and other rights, would exceed the
total number of shares of Series A Preferred Stock or Series B Preferred
Stock, in each case, then authorized by its certificate of incorporation and
available for reservation for the issuance of Series A Preferred Stock or Series B
Preferred Stock, in each case, issuable pursuant hereto.  The Company further agrees that it will not
take any action which would entitle the Warrantholder to an adjustment of the
Exercise Price if the total number of shares of Common Stock issuable upon
conversion of Series A Preferred Stock or Series B Preferred Stock
issuable upon exercise of this Warrant, together with the number of shares of
Common Stock then outstanding and the number of shares of Common Stock then
issuable upon the exercise of all outstanding Series A Preferred Stock and
Series B Preferred Stock, options, warrants, conversion and other rights,
would exceed the total number of shares of Common Stock then authorized by its
certificate of incorporation and available for reservation for the issuance of
shares of Common Stock issuable upon conversion of the Series A Preferred Stock
or Series B Preferred Stock issuable pursuant hereto.


 


22.                                 Entire Agreement.  This Warrant
and the forms attached hereto, and the Investment Agreement, contain the entire
agreement between the parties with respect to the subject matter hereof and supersede
all prior and contemporaneous arrangements or undertakings with respect
thereto.


 


[Remainder of page intentionally
left blank]


 


19

















 


IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by a duly
authorized officer as of the date first herein above written.


 


 


	
   

  	
  WEST COAST BANCORP

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  
	
   

  	
   

  
	
  [·]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


[Signature Page to Warrant]


 

















 


[Form Of
Notice Of Exercise]


 


	
   

  	
  Date:

  	
   

  	
   

  	
   

  



 


TO:                            West Coast Bancorp


 


RE:                              Election to Subscribe for and Purchase Series A
Preferred Stock


 


The
undersigned, pursuant to the provisions set forth in the attached Warrant,
hereby agrees to subscribe for and purchase the number of shares of the Series A
Preferred Stock set forth below covered by such Warrant.  The undersigned hereby agrees to pay the
aggregate Exercise Price for such shares of Series A Preferred Stock, in
accordance with Section 3 of the Warrant. 
A new warrant evidencing the remaining shares of Series A Preferred
Stock covered by such Warrant, but not yet subscribed for and purchased, should
be issued in the name set forth below. 
If the new warrant is being transferred, an opinion of counsel is
attached hereto with respect to the transfer of such warrant.


 


	
  Number of Shares of Series A
  Preferred Stock:

  	
   

  	
   

  



 


	
  Name and Address of
  Person to be

  	
   

  	
   

  



 


	
  Issued New Warrant:

  	
   

  	
   

  



 


 


	
   

  	
  Holder:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  



 


[Form of
Notice of Exercise]