Document:

Exhibit
4.4

 

EXECUTION VERSION

 

West Coast Bancorp

 

and

 

Wells Fargo Bank, National Association

 

Tax Benefit Preservation Plan

 

Dated as of October 23, 2009

 

 

TAX BENEFIT PRESERVATION PLAN

 

Tax
Benefit Preservation Plan, dated as October 23, 2009 (“Plan”) between West
Coast Bancorp, an Oregon corporation (the “Company”) and Wells Fargo
Bank, National Association, as rights agent (the “Rights Agent”).

 

W I T N E S S E T H

 

The
Board of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a “Right”) for each Common Share (as
hereinafter defined) of the Company outstanding on November 2, 2009 (the “Record
Date”) and 50 Rights (subject to adjustment as provided herein) for each
share of Series A Preferred Stock and 50 Rights (subject to adjustment as
provided herein) for each share of Series B Preferred Stock outstanding on the
Record Date, each Right representing the right to purchase one one-hundredth of
a share of Series C Preferred Stock (as hereinafter defined), upon the terms
and subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share, 50 Rights
with respect to each share of Series A Preferred Stock, and 50 Rights with respect
to each share of Series B Preferred Stock that shall become outstanding between
the Record Date and the earliest of the Distribution Date, the Redemption Date,
the Early Expiration Date and the Final Expiration Date (as such terms are
hereinafter defined).

 

Accordingly,
in consideration of the premises and the mutual agreements herein set forth,
the parties hereby agree as follows:

 

Section
1.      Definitions. For purposes of this Plan,
the following terms have the meanings indicated:

 

(a)           “Acquiring Person” shall mean
any Person (other than any Exempt Person) who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of 4.9%
or more of the Common Stock of the Company then outstanding, but shall not
include the Company, any Subsidiary of the Company, any employee benefit plan
of the Company or any Subsidiary of the Company, any entity holding Common
Stock for or pursuant to the terms of any such plan, or any Person becoming an
Acquiring Person as a result of (A) the repurchase of Common Stock, Series A
Preferred Stock or Series B Preferred Stock by the Company or (B) a stock
dividend, stock split, reverse stock split or similar transaction effected by
the Company, in each case unless and until such Person, after becoming aware
that such Person has become an Acquiring Person, becomes a Beneficial Owner of
any additional Common Stock; provided, however, that, (i) any
Person who or which would otherwise be an Acquiring Person as of the date of
this Plan (such person, an “Existing Holder”) will not be deemed to be
an Acquiring Person for any purpose of this Plan prior to or after the date of
this Plan unless and until such time as (A) such Person or any Affiliate or
Associate of such Person thereafter becomes, individually or in the aggregate,
the Beneficial Owner of additional Common Stock representing two-tenths of a percent (0.2%) or more of the Common Stock
then outstanding, not including Common Shares obtained (1) pursuant to any
agreement or regular-way purchase order for Common Stock that is in effect on
or prior to the date of this Plan and consummated in accordance with its terms
after the date of this Plan, or (2) as a result of a stock

 

2

 

dividend,
rights dividend, stock split or similar transaction effected by the Company in
which all holders of Common Stock are treated equally, (B) any other Person who
is the Beneficial Owner of Common Stock becomes an Affiliate or Associate of
such Person after the date of this Plan, or (C) such Person or any
Affiliate  or Associate of such Person
exercises rights, options or warrants to acquire any Common Stock, Series A
Preferred Stock or Series B Preferred Stock; provided, however,
that the foregoing exclusion in this clause (i) shall cease to apply with
respect to any Person at such time as such Person, together with all Affiliates
and Associates of such Person, Beneficially Owns less than 4.9% of the
then-outstanding Common Stock, and (ii) a Person will not be deemed to have
become an Acquiring Person solely as a result of a reduction in the number of shares
of Common Stock outstanding unless and until such time as (A) such Person or
any Affiliate or Associate of such Person thereafter becomes the Beneficial
Owner of any additional Common Stock, other than as a result of a stock
dividend, stock split or similar transaction effected by the Company in which
all holders of Common Stock are treated equally, or (B) any other Person who is
the Beneficial Owner of Common Stock becomes an Affiliate or Associate of such
Person after the date of this Plan. Notwithstanding the foregoing, if (1) the
Board of Directors of the Company determines that a Person who would otherwise
be an “Acquiring Person,” as defined pursuant to the foregoing provisions of
this paragraph (a), has become such inadvertently, and (2) such Person divests
as promptly as practicable or agrees in writing with the Company to divest a
sufficient number of shares of Common Stock so that such Person would no longer
be an “Acquiring Person,” as defined pursuant to the foregoing provisions of
this paragraph (a), then, if the Board of Directors of the Company so chooses,
such Person shall not be deemed to be an “Acquiring Person” for any purposes of
this Plan; provided, however, that the requirement in this clause
(2) shall apply only if the actions specified therein are required by the Board
of Directors of the Company.

 

(b)           “Affiliate” shall have the
meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Plan and,
to the extent not included within the foregoing, will also include, with
respect to any Person, any other Person (other than an Exempt Person) whose
Common Stock would be deemed owned constructively or indirectly by, or
otherwise aggregated with, such first Person pursuant to the provisions of Section
382; provided, however, that a Person will not be deemed to be
the Affiliate or Associate of another Person solely because either or both
Persons are or were Directors of the Company.

 

(c)           “Associate” shall have the
meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this Plan.

 

(d)           A Person shall be deemed the “Beneficial
Owner” of and shall be deemed to “beneficially own” any securities:

 

(i)      which such Person or any of such Person’s
Affiliates or Associates beneficially owns, directly or indirectly;

 

(ii)      which such Person or any of such Person’s
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time or after the
satisfaction of conditions) pursuant to any agreement, arrangement or

 

3

 

understanding
(other than customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise (whether such
rights are exercisable immediately or only after the passage of time or after
the satisfaction of conditions); provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person’s Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations promulgated under
the Exchange Act and (2) is not also then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report); for the avoidance of
doubt, (1) if a Person or any of such Person’s Affiliates or Associates holds Series
A Preferred Stock or a warrant, right or option to acquire Series A Preferred
Stock, such Person shall be deemed to “beneficially own” the Common Stock into
which such Series A Preferred Stock is convertible (notwithstanding any
limitations or conditions on the conversion of the Series A Preferred Stock)
and (2) if a Person or any of such Person’s Affiliates or Associates holds Series
B Preferred Stock or a warrant, right or option to acquire Series B Preferred
Stock, such Person shall be deemed to “beneficially own” the Common Stock into
which such Series B Preferred Stock is convertible (notwithstanding any
limitations or conditions on the conversion of the Series B Preferred Stock);
or

 

(iii)      which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(d)(ii)(B) hereof) or disposing of any securities of the
Company.

 

Notwithstanding
anything in this Plan to the contrary, to the extent not within the foregoing
provisions of this paragraph (d), a Person shall be deemed the “Beneficial
Owner” of, and shall be deemed to “beneficially own” or have “beneficial
ownership” of, any securities which such Person would be deemed to own (whether
constructively, indirectly or otherwise) pursuant to Section 382.

 

Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” (i) when used with reference to a Person’s Beneficial
Ownership of securities (other than Series A Preferred Stock and Series B
Preferred Stock) of the Company, shall mean the number of such securities then
issued and outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed to own
beneficially hereunder and (ii) shall include the number of Common Shares into
which the Series A Preferred Stock then issued and outstanding is convertible
(notwithstanding any

 

4

 

limitations
or conditions on the conversion of the Series A Preferred Stock) and shall
include the number of Common Shares into which the Series B Preferred Stock
then issued and outstanding is convertible (notwithstanding any limitations or
conditions on the conversion of the Series B Preferred Stock).

 

(e)           “Business Day” shall mean any
day other than a Saturday, a Sunday, or a day on which banking institutions in New
York are authorized or obligated by law or executive order to close.

 

(f)            “Close of Business” on any
given date shall mean 5:00 P.M., New York City time, on such date; provided,
however, that, if such date is not a Business Day, it shall mean 5:00 P.M.,
New York City time, on the next succeeding Business Day.

 

(g)           “Common Stock” or “Common
Shares” when used with reference to the Company shall mean the shares of
common stock, no par value, of the Company. “Common Stock” or “Common Shares”
when used with reference to any Person other than the Company shall mean the
capital stock (or equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person, the Person
or Persons which ultimately control such first-mentioned Person.

 

(h)           “Distribution Date” shall have
the meaning set forth in Section 3(a) hereof.

 

(i)            “Early Expiration Date” shall
have the meaning set forth in Section 7(a) hereof.

 

(j)            “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.

 

(k)           “Exchange Ratio” shall have
the meaning set forth in Section 24(a) hereof.

 

(l)            “Exempt Person” shall mean a
Person whose Beneficial Ownership (together with all Affiliates and Associates
of such Person) of 4.9% or more of the then-outstanding Common Stock, as
determined after the date hereof by the Company’s Board of Directors in its
sole discretion, (i) will not jeopardize or endanger the availability to the
Company of any income tax benefit or (ii) is otherwise in the best interests of
the Company; provided, however, that such a Person will cease to
be an Exempt Person if the Board makes a contrary determination with respect to
the effect of such Person’s Beneficial Ownership (together with all Affiliates
and Associates of such Person) regardless of the reason therefor.

 

(m)          “Final Expiration Date” shall
have the meaning set forth in Section 7(a) hereof.

 

(n)           “NASDAQ” shall mean the
National Association of Securities Dealers, Inc. Automated Quotation System.

 

(o)           “Person” shall mean any
individual, firm, corporation, partnership, limited

 

5

 

liability
company, limited liability partnership, trust, estate or other entity, or a
group of Persons making a “coordinated acquisition” of shares or otherwise
treated as an entity within the meaning of Section 1.382-3(a)(1) of the
Treasury Regulations, and shall include any successor (by merger or otherwise)
of such individual or entity, but shall not include a Public Group (as such
term is defined in Section 1.382-2T(f)(13) of the Treasury Regulations).

 

(p)           “Purchase Price” shall have
the meaning set forth in Section 7(b) hereof.

 

(q)           “Record Date” shall have the
meaning set forth in the second paragraph hereof.

 

(r)            “Redemption Date” shall have
the meaning set forth in Section 7(a) hereof.

 

(s)           “Redemption Price” shall have
the meaning set forth in Section 23(a) hereof.

 

(t)            “Right” shall have the
meaning set forth in the second paragraph hereof.

 

(u)           “Right Certificate” shall have
the meaning set forth in Section 3(a) hereof.

 

(v)           “Section 382” shall mean Section
382 of the Internal Revenue Code of 1986, as amended, or any successor
provision or replacement provision.

 

(w)          “Series A Preferred Stock”
shall mean shares of Mandatorily Convertible Cumulative Participating Preferred
Stock, Series A, no par value, of the Company.

 

(x)            “Series B Preferred Stock”
shall mean shares of Mandatorily Convertible Cumulative Participating Preferred
Stock, Series B, no par value, of the Company.

 

(y)           “Series C Preferred Stock”
shall mean shares of Series C Junior Participating Preferred Stock, no par
value, of the Company having the rights and preferences set forth in the Form of
Articles of Amendment to Designate the Terms of Series C Junior Participating
Preferred Stock attached to this Plan as Exhibit A.

 

(z)            “Shares Acquisition Date”
shall mean the first date of public announcement by the Company or an Acquiring
Person, prior to the earliest of the Redemption Date, the Early Expiration Date
and the Final Expiration Date, that an Acquiring Person has become such.

 

(aa)         “Stockholder Approval” shall
mean the approval of this Plan where the votes cast in favor of the Plan exceed
the votes cast against it at the meeting of stockholders of the Company duly
held in accordance with the Company’s Restated Articles of Incorporation and
Amended and Restated Bylaws and applicable law.

 

(bb)         “Subsidiary” of any Person shall
mean any corporation or other entity of

 

6

 

which
a majority of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such Person.

 

(cc)         “Summary of Rights” shall have
the meaning set forth in Section 3(b) hereof.

 

(dd)         “Trading Day” shall have the
meaning set forth in Section 11(d) hereof.

 

(ee)         “Treasury Regulations” shall
mean final, temporary and proposed income tax regulations promulgated under the
Internal Revenue Code of 1986, as amended, including any amendments thereto.

 

Section
2.     Appointment of Rights Agent. The
Company hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable.

 

Section
3.     Issue of Right Certificates.
(a) Until the Close of Business on the tenth day after the Shares Acquisition
Date (including any such Shares Acquisition Date which is after the date of
this Plan and prior to the issuance of the Rights) (the “Distribution Date”),
(i) the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Stock of the Company registered in the names of
the holders thereof and by the certificates for the Series A Preferred Stock and
the Series B Preferred Stock of the Company registered in the names of the
holders thereof (such certificates for the Common Stock, the Series A Preferred
Stock and the Series B Preferred Stock shall also be deemed to be Right
Certificates) and not by separate Right Certificates, and (ii) the right to
receive Right Certificates will be transferable only in connection with the
transfer of the underlying shares of Common Stock, Series A Preferred Stock or Series
B Preferred Stock.  As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be
sent (and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, (x) to each record holder of Common Stock of the Company
as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a “Right Certificate”),
evidencing one Right for each Common Share so held (other than with respect to
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof), (y) to each record holder of Series
A Preferred Stock of the Company as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing the number of Rights held with respect
to each share of Series A Preferred Stock (other than with respect to Rights
that have become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) and (z) to each record holder of Series
B Preferred Stock of the Company as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing the number of Rights held with respect
to each share of Series B Preferred Stock (other than with respect to Rights
that have become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof). 
Upon conversion or exchange of any share of Series A Preferred Stock or

 

7

 

Series
B Preferred Stock into shares of Common Stock, the Rights associated with such
share of Series A Preferred Stock or Series B Preferred Stock will
automatically be extinguished, and a Right will be issued in respect of each
such share of Common Stock.  As of the
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

 

(b)     On the Record Date, or as soon as
practicable thereafter, the Company will, at its option, either send (by
first-class, postage-prepaid mail at the address shown on the records of the
Company) or make otherwise available to each record holder of Common Stock, to
each record holder of Series A Preferred Stock, and to each record holder of Series
B Preferred Stock as of the Close of Business on the Record Date, a copy of a
Summary of Rights to Purchase Series C Preferred Stock, in substantially the
form of Exhibit C hereto (the “Summary of Rights”). With respect to
certificates for Common Stock of the Company outstanding as of the Record Date,
certificates for Series A Preferred Stock outstanding as of the Record Date,
and certificates for Series B Preferred Stock outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the Distribution Date (or the earliest
of the Redemption Date, the Early Expiration Date or the Final Expiration
Date), the surrender for transfer of any certificate for Common Stock, Series A
Preferred Stock or Series B Preferred Stock of the Company outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Stock, Series A Preferred Stock or Series B Preferred Stock of the Company
represented thereby.

 

(c)   Certificates for such Common Stock, Series A
Preferred Stock or Series B Preferred Stock which become outstanding after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date, the Early Expiration Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them a legend in
substantially the following form:

 

This
certificate also evidences and entitles the holder hereof to certain rights as
set forth in the Plan between West Coast Bancorp and Wells Fargo Bank, National
Association, dated as of October 23, 2009, as it may be amended from time to
time (the “Plan”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of West
Coast Bancorp. Under certain circumstances, as set forth in the Plan, such
Rights (as defined in the Plan) will be evidenced by separate certificates and
will no longer be evidenced by this certificate. West Coast Bancorp will mail
to the holder of this certificate a copy of the Plan without charge after
receipt of a written request therefor. As set forth in the Plan, Rights
beneficially owned by any Person (as defined in the Plan) who becomes an
Acquiring Person or an Affiliate or an Associate of any Acquiring Person (each as
defined in the Plan) become null and void.

 

With
respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock, Series A
Preferred Stock or Series B Preferred Stock of the Company represented by such
certificates shall be evidenced by such certificates alone, and the surrender
for transfer of any such certificate (prior to the earliest of the Distribution
Date, the Redemption Date, the Early Expiration Date or the Final Expiration
Date) shall also 

 

8

 

constitute
the transfer of the Rights associated with the Common Stock, Series A Preferred
Stock or Series B Preferred Stock of the Company represented thereby. In the event
that the Company purchases or otherwise acquires any Common Stock, Series A
Preferred Stock or Series B Preferred Stock of the Company after the Record
Date but prior to the Distribution Date, any Rights associated with such Common
Stock, Series A Preferred Stock or Series B Preferred stock of the Company
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Stock, Series A Preferred
Stock or Series B Preferred Stock of the Company which are no longer
outstanding.

 

Section
4.      Form of Right Certificates. (a) The
Right Certificates (and the forms of election to purchase Series C Preferred
Stock and of assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit B hereto, and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Plan, or as may be required to comply with any
applicable law or with any applicable rule or regulation made pursuant thereto
or with any applicable rule or regulation of any stock exchange or the
Financial Industry Regulatory Authority, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredths of a share of Series
C Preferred Stock at the price per one one-hundredth of a share of Series C
Preferred Stock set forth herein in Section 7(b), but the number of such one
one-hundredths of a share of Series C Preferred Stock and the Purchase Price
shall be subject to adjustment as provided herein.

 

Section
5.      Countersignature and Registration. The
Right Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President and Chief Executive Officer, its Chief Financial
Officer, its General Counsel, any of its Vice Presidents or its Treasurer (any
of the foregoing, an “Authorized Officer”), either manually or by
facsimile signature, shall have affixed thereto the Company’s seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually or by facsimile countersigned by the Rights
Agent and shall not be valid for any purpose unless countersigned. In case any
officer of the Company who shall have signed any of the Right Certificates
shall cease to be such officer of the Company before countersignature by the
Rights Agent and issuance and delivery by the Company, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Company with the same force and effect as though the individual who
signed such Right Certificates had not ceased to be such officer of the
Company; and any Right Certificate may be signed on behalf of the Company by
any individual who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate,
although at the date of the execution of this Plan any such individual was not
such an officer.

 

Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates and the date of each of the Right
Certificates.

 

9

 

Section
6.      Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the earliest of the Redemption Date, the Early Expiration
Date or the Final Expiration Date, any Right Certificate or Right Certificates
(other than Right Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been exchanged pursuant to Section
24 hereof) may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates entitling the registered holder to
purchase a like number of one one-hundredths of a share of Series C Preferred
Stock as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent. Neither the Rights Agent
nor the Company shall be obligated to take any action whatsoever with respect
to the transfer of any such surrendered Right Certificate until the registered
holder shall have completed and signed the certificate contained in the form of
assignment on the reverse side of such Right Certificate and shall have
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. Thereupon or as promptly as practicable thereafter,
the Rights Agent shall countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.

 

Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company’s request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.

 

Section
7.      Exercise
of Rights; Purchase Price; Expiration Date of Rights. (a) The registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein), in whole or in part, at any time after
the Distribution Date, upon surrender of the Right Certificate, with the form
of election to purchase on the reverse side thereof duly executed, to the
Rights Agent at the principal office of the Rights Agent, together with payment
of the Purchase Price for each one one-hundredth of a share of Series C
Preferred Stock as to which the Rights are exercised, at or prior to the
earliest of (i) the Close of Business on October 23, 2012 (the “Final
Expiration Date”), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the “Redemption Date”), (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof, (iv) the
repeal of Section 382 or any successor statute, or any other change, if the
Board, in its sole discretion, determines that this Plan is no

 

10

 

longer
necessary for the preservation of tax benefits, (v) October 25, 2010 if
Stockholder Approval has not been obtained prior to such date or (vi) a
determination by the Board, prior to the time any Person becomes an Acquiring
Person, that the Plan and the Rights are no longer necessary for the preservation
or existence of income tax benefits or are no longer in the best interests of
the Company and its stockholders (the earliest of the dates set forth in
clauses (iv), (v), and (vi), the “Early Expiration Date”).

 

(b)      The
Purchase Price for each one one-hundredth of a share of Series C Preferred
Stock purchasable pursuant to the exercise of a Right shall initially be $30.00
(the “Purchase Price”),  and shall
be subject to adjustment from time to time as provided in Section 11 hereof,
and shall be payable in lawful money of the United States of America in
accordance with paragraph (c) below.

 

(c)      Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased and an amount equal to any applicable transfer tax required to be
paid by the holder of such Right Certificate in accordance with Section 9
hereof by certified check, cashier’s check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Series C Preferred Stock certificates for the
number of Series C Preferred Stock to be purchased and the Company hereby
irrevocably authorizes any such transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a share of Series C Preferred
Stock as are to be purchased (in which case certificates for the Series C
Preferred Stock represented by such receipts shall be deposited by the transfer
agent of the Series C Preferred Stock with such depositary agent) and the
Company hereby directs such depositary agent to comply with such request; (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof; (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.  The payment of the Purchase Price shall be
made in cash or by certified bank check or bank draft payable to the order of
the Company. The Company reserves the right to require prior to the occurrence
of an event described in Section 11(a)(ii) that, upon any exercise of Rights, a
number of Rights be exercised so that only whole shares of Series C Preferred
Stock would be issued.

 

(d)      In
case the registered holder of any Right Certificate shall exercise less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to registered holder of such Right Certificate or to such holder’s duly
authorized assigns, subject to the provisions of Section 14 hereof.

 

(e)   Notwithstanding anything in this Agreement to
the contrary, neither the Rights Agent nor the Company will be obligated to
undertake any action with respect to any purported transfer, split up,
combination or exchange of any Right Certificate pursuant to Section 6 or
exercise of a Right Certificate as set forth in this Section 7 unless the
registered holder of such

 

11

 

Right
Certificate has (i) completed and signed the certificate following the form of
assignment or the form of election to purchase, as applicable, set forth on the
reverse side of the Right Certificate surrendered for such transfer, split up,
combination, exchange or exercise and (ii) provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company may reasonably request.

 

Section
8.      Cancellation
and Destruction of Right Certificates. All Right Certificates surrendered
for the purpose of exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be delivered to the
Rights Agent for cancellation or in cancelled form, or, if surrendered to the
Rights Agent, shall be cancelled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by any of the provisions
of this Plan. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. Subject to applicable law and regulation, the Rights Agent
shall maintain in a retrievable database electronic records of all cancelled or
destroyed stock certificates which have been canceled or destroyed by the
Rights Agent. The Rights Agent shall maintain such electronic records or
physical records for the time period required by applicable law and regulation.
Upon written request of the Company (and at the expense of the Company), the
Rights Agent shall provide to the Company or its designee copies of such
electronic records or physical records relating to rights certificates cancelled
or destroyed by the Rights Agent.

 

Section
9.      Availability
of Series C Preferred Stock. (a) The Company covenants and agrees that it
will cause to be reserved and kept available out of its authorized and unissued
Series C Preferred Stock or any Series C Preferred Stock held in its treasury
the number of shares of Series C Preferred Stock that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance with Section
7 hereof. The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all Series C Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such Series
C Preferred Stock (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.

 

(b)              The Company
further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges which may be payable in respect of
the issuance or delivery of the Right Certificates or of any Series C Preferred
Stock upon the exercise of Rights. The Company shall not, however, be required
to pay any transfer tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates or depositary receipts for the Series C Preferred
Stock in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Series C Preferred Stock
upon the exercise of any Rights until any such tax shall have been paid (any
such tax being payable by the holder of such Right Certificate at the time of
surrender) or until it has been established to the Company’s reasonable
satisfaction that no such tax is due.

 

(c)           If the Company determines that
registration under the Securities Act is required, then the Company shall use
commercially reasonable efforts (i) to file, as soon as practicable

 

12

 

after
the Distribution Date, on an appropriate form, a registration statement under
the Securities Act with respect to the securities issuable upon exercise of the
Rights, (ii) to cause such registration statement to become effective as soon
as practicable after such filing and (iii) to cause such registration statement
to remain effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the earlier of (A) the date as of which the Rights
are no longer exercisable for such securities and (B) the earliest of the
Redemption Date, the Early Expiration Date or the Final Expiration Date.  The Company shall also take such action as
may be appropriate under, or to ensure compliance with, the securities or “blue
sky” laws of the various states in connection with the exercisability of the
Rights.  The Company may temporarily
suspend, for a period of time not to exceed 90 calendar days after the date the
Company determines that registration is required, the exercisability of the
Rights in order to prepare and file such registration statement and to permit
it to become effective or to qualify the rights, the exercise thereof or the
issuance of shares of Series C Preferred Stock, Common Stock, or other
securities upon the exercise thereof under state securities or “blue sky”
laws.  Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public announcement at
such time as the suspension is no longer in effect.  The Company shall notify the Rights Agent in
writing whenever it makes a public announcement pursuant to this Section 9 and
give the Rights Agent a copy of such announcement.  In addition, if the Company determines that a
registration statement or other document should be filed under the Securities
Act or any state securities laws following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights, for a period of time
not to exceed 90 calendar days after the date the Company makes such
determination, in each relevant jurisdiction, until such time as a registration
statement has been declared effective or any such other document filed and, if
required, approved, and, upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the suspension
is no longer in effect.  Notwithstanding
anything in this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite registration or qualification in such
jurisdiction has not been effected or the exercise of the Rights is not
permitted under applicable law.

 

Section
10.      Series C Preferred Stock Record Date.
Each Person in whose name any certificate for Series C Preferred Stock is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of the shares of Series C Preferred Stock
represented thereby on, and such certificate shall be dated, the date upon
which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that, if the date of such surrender and payment is a date upon
which the Series C Preferred Stock transfer books of the Company are closed,
such Person shall be deemed to have become the record holder of such shares on,
and such certificate shall be dated, the next succeeding Business Day on which
the Series C Preferred Stock transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Series C Preferred Stock for
which the Rights shall be exercisable, including, without limitation, the right
to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided

 

13

 

herein.

 

Section
11.      Adjustment
of Purchase Price, Number of Shares or Number of Rights. The Purchase
Price, the number of shares of Series C Preferred Stock covered by each Right
and the number of Rights outstanding are subject to adjustment from time to
time as provided in this Section 11.

 

(a)      (i)      In the event the Company shall at any time
after the date of this Plan (A) declare a dividend on the Series C Preferred
Stock payable in Series C Preferred Stock, (B) subdivide the outstanding shares
of Series C Preferred Stock, (C) combine the outstanding shares of Series C
Preferred Stock into a smaller number of shares of Series C Preferred Stock or (D)
issue any shares of its capital stock in a reclassification of the Series C
Preferred Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section 11(a), the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Series C Preferred Stock transfer books of the
Company were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right.

 

(ii)      Subject to Section 23 and Section 24 hereof,
in the event any Person becomes an Acquiring Person, each holder of a Right
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person) shall thereafter have a right to receive, upon exercise thereof at a
price equal to the then current Purchase Price multiplied by the number of one
one-hundredths of a share of Series C Preferred Stock for which a Right is then
exercisable, in accordance with the terms of this Plan and in lieu of Series C
Preferred Stock, such number of Common Stock as shall equal the result obtained
by (A) multiplying the then current Purchase Price by the number of one
one-hundredths of a share of Series C Preferred Stock for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Common Stock of the Company (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event; provided that,
notwithstanding the foregoing, no Right that immediately prior to the
Distribution Date was evidenced by a certificate that also evidenced Series B
Preferred Stock may be exercised for Common Stock pursuant to this Section 11(a)(ii)
until such Right is transferred to a third party in a Widely Dispersed Offering
(as such term is defined in the Articles of Amendment of the Series B Preferred
Stock). In the event that any Person shall become an Acquiring Person and does
not become an Exempt Person prior to the Distribution Date and the Rights shall
then be outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the Rights.

 

Notwithstanding
anything in this Agreement to the contrary, however, from and after the first
occurrence of such event, any Rights that are beneficially owned by (A) any
Acquiring

 

14

 

Person
(or any Affiliate or Associate of any Acquiring Person), (B) a transferee of
any Acquiring Person (or any such Affiliate or Associate) who becomes a
transferee after the occurrence of such Person becoming an Acquiring Person or (C)
a transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with such Person becoming an
Acquiring Person pursuant to either (1) a transfer from the Acquiring Person
(or any such Affiliate or Associate) to holders of its equity securities or to
any Person with whom the Acquiring Person (or any such Affiliate or Associate)
has any continuing agreement, arrangement or understanding, written or
otherwise, regarding the transferred Rights or (2) a transfer that the Board
has determined is part of a plan, arrangement or understanding, written or
otherwise, which has the purpose or effect of avoiding the provisions of this
paragraph, shall be null and void without any further action and any holder of
such Rights shall thereafter have no rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise.  The Company will use commercially reasonable
efforts to ensure that the provisions of this Section 11(a)(ii) are complied
with, but shall have no liability to any holder of Rights Certificates or other
Person as a result of its failure to make any determinations with respect to an
Acquiring Person or its Affiliates, Associates or transferees hereunder.  From and after the occurrence of any Person
becoming an Acquiring Person, no Right Certificates shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have become
void pursuant to the provisions of this paragraph, and any Right Certificates
delivered to the Rights Agent that represents Rights that are or have become
void pursuant to the provisions of this paragraph shall be cancelled.

 

(iii)      In
the event that there shall not be sufficient Common Stock issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with subparagraph (ii) above, the Company may suspend
temporarily such exercise and shall take all such action as may be necessary to
authorize additional Common Stock for issuance upon exercise of the Rights. In
the event the Company shall, after good faith effort, be unable to take all
such action as may be necessary to authorize such additional Common Stock, the
Company shall substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of shares of Series C Preferred
Stock or fraction thereof such that the current per share market price of one share
of Series C Preferred Stock multiplied by such number or fraction is equal to
the current per share market price of one Common Share as of the date of
issuance of such shares of Series C Preferred Stock or fraction thereof.

 

(b)      In case the Company shall fix a record date
for the issuance of rights, options or warrants to all holders of Series C
Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Series C Preferred Stock
(or shares having the same rights, privileges and preferences as the Series C
Preferred Stock (“equivalent preferred shares”)) or securities
convertible into Series C Preferred Stock or equivalent preferred shares at a
price per share of Series C Preferred Stock or equivalent preferred share (or
having a conversion price per share, if a security convertible into Series C
Preferred Stock or equivalent preferred shares) less than the then current per
share market price of the Series C Preferred Stock (as defined in Section 11(d))
on such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Series C Preferred Stock outstanding on such record date
plus the number of

 

15

 

shares
of Series C Preferred Stock which the aggregate offering price of the total
number of shares of Series C Preferred Stock and/or equivalent preferred shares
so to be offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of shares of Series C
Preferred Stock outstanding on such record date plus the number of additional shares
of Series C Preferred Stock and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be
paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights. Shares of Series C Preferred Stock owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed; and, in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.

 

(c)      In case the Company shall fix a record date
for the making of a distribution to all holders of the Series C Preferred Stock
(including any such distribution made in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation) of
evidences of indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Series C Preferred Stock) or subscription
rights or warrants (excluding those referred to in Section 11(b) hereof), the
Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then-current per share
market price of the Series C Preferred Stock on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and holders of the
Rights) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Series C Preferred Stock and the denominator of which shall be such
then-current per share market price of the Series C Preferred Stock on such
record date;  provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and, in the event that
such distribution is not so made, the Purchase Price shall again be adjusted to
be the Purchase Price which would then be in effect if such record date had not
been fixed.

 

(d)      (i)      For the
purpose of any computation hereunder, the “current per share market price” of
any security (a “Security” for the purpose of this Section 11(d)(i)) on
any date shall be deemed to be the average of the daily closing prices per
share of such Security for the 30 consecutive Trading Days immediately prior to
such date; provided, however, that, in the event that the current
per share market price of the Security is determined during a period following
the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security

 

16

 

payable
in shares of such Security or Securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the current per share market
price shall be appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each day shall be the
last sale price, regular way, reported at or prior to 4:00 P.M. Eastern time
or, in case no such sale takes place on such day, the average of the bid and
asked prices, regular way, reported as of 4:00 P.M. Eastern time, in either
case, as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the NASDAQ or, if
the Security is not listed or admitted to trading on the NASDAQ, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last quoted price
reported at or prior to 4:00 P.M. Eastern time or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported as of 4:00 P.M. Eastern time by NASDAQ or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. The term “Trading Day” shall mean a day on
which the principal national securities exchange on which the Security is
listed or admitted to trading is open for the transaction of business, or, if
the Security is not listed or admitted to trading on any national securities
exchange, a Business Day.

 

(ii)      For
the purpose of any computation hereunder, the “current per share market price”
of the Series C Preferred Stock shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Series C Preferred Stock are not
publicly traded, the “current per share market price” of the Series C Preferred
Stock shall be conclusively deemed to be the current per share market price of
the Common Stock as determined pursuant to Section 11(d)(i) hereof
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Stock nor the Series C Preferred Stock are publicly held or
so listed or traded, “current per share market price” shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.

 

(e)      No
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section 11(e) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 11 shall be made to
the nearest cent or to the nearest one one-millionth of a share of Series C
Preferred Stock or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.

 

(f)      If,
as a result of an adjustment made pursuant to Section 11(a) hereof, the holder
of any Right thereafter exercised shall become entitled to receive any shares
of capital

 

17

 

stock
of the Company other than Series C Preferred Stock, thereafter the number of
such other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Series C Preferred Stock
contained in Section 11(a) through (c) hereof, inclusive, and the provisions of
Sections 7, 9 and 10 hereof with respect to the Series C Preferred Stock shall
apply on like terms to any such other shares.

 

(g)      All
Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-hundredths of a share of Series C
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

 

(h)      Unless the Company shall have exercised its
election as provided in Section 11(i) hereof, upon each adjustment of the
Purchase Price as a result of the calculations made in Sections 11(b) and (c) hereof,
each Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Purchase Price, that
number of one one-hundredths of a share of Series C Preferred Stock (calculated
to the nearest one one-millionth of a share of Series C Preferred Stock)
obtained by (A) multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and (B)
dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.

 

(i)      The Company may elect, on or after the date of
any adjustment of the Purchase Price, to adjust the number of Rights in
substitution for any adjustment in the number of one one-hundredths of a share
of Series C Preferred Stock purchasable upon the exercise of a Right. Each of
the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of one one-hundredths of a share of Series C
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of
the adjustment to be made. This record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be

 

18

 

distributed
shall be issued, executed and countersigned in the manner provided for herein,
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.

 

(j)      Irrespective of any adjustment or change in
the Purchase Price or in the number of one one-hundredths of a share of Series C
Preferred Stock issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the
Purchase Price and the number of one one-hundredths of a share of Series C
Preferred Stock which were expressed in the initial Right Certificates issued
hereunder.

 

(k)      Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-hundredth of the then par
value, if any, of the Series C Preferred Stock issuable upon exercise of the
Rights, the Company shall take any corporate action which may, in the opinion
of its counsel, be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of Series C Preferred Stock at such
adjusted Purchase Price.

 

(l)      In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuing to
the holder of any Right exercised after such record date of the Series C
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the Series C Preferred Stock and
other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder
a due bill or other appropriate instrument evidencing such holder’s right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.

 

(m)      Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this Section
11, as and to the extent that it, in its sole discretion, shall determine to be
advisable in order that any consolidation or subdivision of the Series C
Preferred Stock, issuance wholly for cash of any Series C Preferred Stock at
less than the current market price, issuance wholly for cash of Series C
Preferred Stock or securities which by their terms are convertible into or exchangeable
for Series C Preferred Stock, dividends on Series C Preferred Stock payable in Series
C Preferred Stock or issuance of rights, options or warrants referred to in Section
11(b) hereof, hereafter made by the Company to holders of the Series C Preferred
Stock shall not be taxable to such stockholders.

 

(n)      In
the event that, at any time after the date of this Plan and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock, or (ii) effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock) into a greater or lesser number of Common
Stock, then, in any such case, (A) the number of one one-hundredths of a share
of Series C Preferred Stock purchasable after such event upon proper exercise
of each Right shall be determined by multiplying the number of one
one-hundredths of a share of Series C Preferred Stock so purchasable
immediately prior to such event

 

19

 

by
a fraction, the numerator of which is the number of Common Stock outstanding
immediately before such event and the denominator of which is the number of
Common Stock outstanding immediately after such event, and (B) each Common
Share, Series A Preferred Share and Series B Preferred Share outstanding
immediately after such event shall have issued with respect to it that number
of Rights which each Common Share, Series A Preferred Share or Series B
Preferred Share, as applicable, outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in this Section 11(n) shall
be made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.

 

Section
12.      Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in Section 11
hereof, the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment, (b)
file with the Rights Agent and with each transfer agent for the Common Stock, Series
A Preferred Stock, Series B Preferred Stock and the Series C Preferred Stock
and the Securities and Exchange Commission a copy of such certificate and (c) if
such adjustment occurs at any time after the Distribution Date, mail a brief
summary thereof to each holder of a Right Certificate in accordance with Section
25 hereof.

 

Section
13.      Reserved.

 

Section
14.      Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case, as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the NASDAQ or, if the
Rights are not listed or admitted to trading on the NASDAQ, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors
of the Company. If on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in good
faith by the Board of Directors of the Company shall be used.

 

(b)      The
Company shall not be required to issue fractions of shares of Series C
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a

 

20

 

share
of Series C Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Series C Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Series C Preferred Stock). Fractions of shares of Series C Preferred
Stock in integral multiples of one one-hundredth of a share of Series C
Preferred Stock may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided that such agreement shall provide
that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Series C Preferred Stock represented by such depositary receipts. In lieu
of fractional shares of Series C Preferred Stock that are not integral
multiples of one one-hundredth of a share of Series C Preferred Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one share of Series C Preferred
Stock. For the purposes of this Section 14(b), the current market value of a
share of Series C Preferred Stock shall be the closing price of a share of Series
C Preferred Stock (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.

 

(c)           Following the
occurrence of an event described in Section 11(a)(ii), the Company shall not be
required to issue fractions of Common Stock upon exercise of the Rights or to
distribute certificates which evidence fractional Common Shares. In lieu of
fractional Common Shares, the Company shall pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
Common Share. For purposes of this Section 14(c), the current market value of
one Common Share shall be the closing price of one Common Share (as determined
pursuant to Section 11(d)(i)) for the Trading Day immediately prior to the date
of such exercise.

 

(d)           The holder of a
Right, by the acceptance of the Right, expressly waives such holder’s right to
receive any fractional Rights or any fractional shares upon exercise of a Right
(except as provided above).

 

(e)           Whenever a payment
for fractional Rights or fractional shares is to be made by the Rights Agent,
the Company shall (i) promptly prepare and deliver to the Rights Agent a
certificate setting forth in reasonable detail the facts related to such
payment and the prices and/or formulas utilized in calculating such payments,
and (ii) provide sufficient monies to the Rights Agent in the form of fully
collected funds to make such payments.

 

Section
15.      Rights
of Action. (a) All rights of action in respect of this Plan, excepting the
rights of action given to the Rights Agent under Section 18 hereof, are vested
in the respective registered holders of the Right Certificates (or, prior to
the Distribution Date, the registered holders of the Common Stock, Series A
Preferred Stock or Series B Preferred Stock); and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Stock, Series
A Preferred Stock or Series B Preferred Stock), without the consent of the
Rights Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock, Series A Preferred Stock or Series B
Preferred Stock), may, in such holder’s own behalf and for such holder’s own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of,

 

21

 

such
holder’s right to exercise the Rights evidenced by such Right Certificate in
the manner provided in such Right Certificate and in this Plan. Without
limiting the foregoing or any remedies available to the holders of Rights, it
is specifically acknowledged that the holders of Rights would not have an
adequate remedy at law for any breach of this Plan, and will be entitled to
specific performance of the obligations under, and injunctive relief against
actual or threatened violations of the obligations of any Person subject to,
this Plan.

 

(d)        Notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree,
judgment or ruling issued by any court of competent jurisdiction or by any
governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of
such obligation;  provided,  however, that the Company shall use
commercially reasonable efforts to have any such order, decree, judgment or
ruling lifted or otherwise overturned as soon as possible.

 

Section
16.      Plan of Right Holders. Every holder of
a Right, by accepting the same, consents and agrees with the Company and the
Rights Agent and with every other holder of a Right that:

 

(a)      prior to the Distribution Date, the Rights
will be transferable only in connection with the transfer of the Common Stock, Series
A Preferred Stock or Series B Preferred Stock;

 

(b)      after the Distribution Date, the Right
Certificates are transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer; and

 

(c)      the
Company and the Rights Agent may deem and treat the person in whose name the
Right Certificate (or, prior to the Distribution Date, the associated Common
Stock certificate, the associated Series A Preferred Stock certificate or the
associated Series B Preferred Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate, the associated
Common Stock certificate, the associated Series A Preferred Stock certificate
or the associated Series B Preferred Stock certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary or be liable hereunder.

 

Section
17.      Right
Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Right Certificate shall be entitled to vote, receive dividends or be deemed for
any purpose the holder of the shares of Series C Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of

 

22

 

meetings
or other actions affecting stockholders (except as provided in Section 25
hereof), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.

 

Section
18.      Concerning the Rights Agent. The
Company agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder, and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Plan and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, or
expense incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Plan, including the
costs and expenses of defending against any claim of liability in the premises.

 

The
Rights Agent shall be protected and shall incur no liability for, or in respect
of any action taken, suffered or omitted by it in connection with, its
administration of this Plan in reliance upon any Right Certificate or
certificate for the Series C Preferred Stock or Common Stock or Series A Preferred
Stock or Series B Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.

 

In
no event shall the Rights Agent or its directors, officers, agents and
employees be liable for any special, indirect or consequential damages from any
action taken or omitted to be taken by it or them hereunder or in connection
herewith even if advised of the possibility of such damages.  The indemnification provisions contained in
this Section 18 shall survive any termination of services under this Plan,
including resignation or removal of the Rights Agent.

 

Section
19.      Merger
or Consolidation or Change of Name of Rights Agent.  Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may be consolidated,
or any corporation resulting from any merger or consolidation to which the
Rights Agent or any successor Rights Agent shall be a party, or any corporation
succeeding to the stock transfer or corporate trust powers of the Rights Agent
or any successor Rights Agent, shall be the successor to the Rights Agent under
this Plan without the execution or filing of any paper or any further act on
the part of any of the parties hereto;  provided 
that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time
such successor Rights Agent shall succeed to the agency created by this Plan,
any of the Right Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and, in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and, in all such cases, such Right Certificates
shall have the full force provided in the Right Certificates and in this Plan.

 

23

 

In
case at any time the name of the Rights Agent shall be changed and at such time
any of the Right Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and
deliver Right Certificates so countersigned; and, in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and, in all such cases, such Right Certificates shall have the full force
provided in the Right Certificates and in this Plan.

 

Section
20.      Duties of Rights Agent. The Rights
Agent undertakes the duties and obligations imposed by this Plan upon the
following terms and conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be bound:

 

(a)      The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.

 

(b)      Whenever in the performance of its duties
under this Plan the Rights Agent shall deem it necessary or desirable that any
fact or matter (including, without limitation, the identity of any Acquiring
Person and the determination of “current market price”) be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any Authorized Officer and delivered to
the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Plan in reliance upon such certificate.

 

(c)      The
Rights Agent shall be liable hereunder to the Company and any other Person only
for its own negligence, bad faith or willful misconduct.

 

(d)      The
Rights Agent shall not be liable for or by reason of any of the statements of
fact or recitals contained in this Plan or in the Right Certificates (except
its countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.

 

(e)      The
Rights Agent shall not be under any responsibility in respect of the validity
of this Plan or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition
contained in this Plan or in any Right Certificate; nor shall it be responsible
for any change in the exercisability of the Rights (including the Rights
becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in the
terms of the Rights (including the manner, method or amount thereof) provided
for in Section 3, 11, 23 or 24 hereof, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual notice that
such

 

24

 

change
or adjustment is required); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any Series
C Preferred Stock to be issued pursuant to this Plan or any Right Certificate
or as to whether any Series C Preferred Stock will, when issued, be validly
authorized and issued, fully paid and nonassessable.

 

(f)      The
Company agrees that it will perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Plan.

 

(g)      The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any Authorized Officer,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.

 

(h)      The
Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company
or become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Rights Agent under this Plan. Nothing
herein shall preclude the Rights Agent from acting in any other capacity for
the Company or for any other legal entity.

 

(i)      The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.

 

(j)            At any time and
from time to time after the Distribution Date, upon the request of the Company,
the Rights Agent shall deliver to the Company a list, as of the most recent
practicable date (or as of such earlier date as may be specified by the
Company), of the holders of record of the Rights.

 

Section
21.      Change of Rights Agent. The Rights
Agent or any successor Rights Agent may resign and be discharged from its
duties under this Plan upon 30 days’ notice in writing mailed to the Company
and to each transfer agent of the Common Stock, Series A Preferred Stock, Series
B Preferred Stock and Series C Preferred Stock by registered or certified
mail.  The Company may remove the Rights
Agent or any successor Rights Agent upon 30 days’ notice in writing, mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock, Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock by registered or certified mail,
and to the holders of the Right Certificates by first-class mail. If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent. If the Company shall
fail to make such appointment within a period of 30 days after giving notice of

 

25

 

such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (which holder shall, with such notice, submit such holder’s Right
Certificate for inspection by the Company), then the registered holder of any
Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be a corporation or other
entity organized and doing business under the laws of the United States or of
the State of New York (or of any other state of the United States so long as
such corporation or other entity is authorized to do business as a banking
institution in the State of New York), in good standing, which is authorized
under such laws to exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state authority and which has
at the time of its appointment as Rights Agent a combined capital and surplus
of at least $50 million. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not
later than the effective date of any such appointment, the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, Series A Preferred Stock, Series B Preferred Stock
and Series C Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Right Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

 

Section
22.      Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Plan or of the Rights to the
contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by the Board of Directors of
the Company to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Plan.

 

Section
23.      Redemption. (a) The Board of Directors
of the Company may, at its option, at any time prior to such time as any Person
becomes an Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption Price”). The redemption of the Rights by
the Board of Directors of the Company may be made effective at such time, on
such basis and with such conditions as the Board of Directors of the Company,
in its sole discretion, may establish. 
The Company may, at its option, pay the Redemption Price in cash, shares
of Common Stock (based on the current per share market price of the Common Stock
at the time of redemption as determined pursuant to Section 11(d)(i) hereof) or
any other form of consideration deemed appropriate by the Board.

 

(b)           Immediately upon the
action of the Board of Directors of the Company ordering the redemption of the
Rights pursuant to paragraph (a) of this Section 23, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the

 

26

 

only
right thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; provided,
however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Within 10 days after such
action of the Board of Directors of the Company ordering the redemption of the
Rights, the Company shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock, Series A Preferred
Stock or Series B Preferred Stock. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the Company nor any of
its Affiliates or Associates may redeem, acquire or purchase for value any
Rights at any time in any manner other than that specifically set forth in this
Section 23 or in Section 24 hereof, and other than in connection with the
purchase of Common Stock, Series A Preferred Stock or Series B Preferred Stock
prior to the Distribution Date.

 

(c)           In the case of a
redemption under Section 23(a) hereof, the Company may, at its option,
discharge all of its obligations with respect to the Rights by (i) issuing a
press release announcing the manner of redemption of the Rights and (ii) mailing
payment of the Redemption Price to the registered holders of the Rights at
their last addresses as they appear on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
of the Common Stock, Series A Preferred Stock or Series B Preferred Stock, and
upon such action, all outstanding Right Certificates shall be void without any
further action by the Company.

 

Section
24.      Exchange. (a) The Board of Directors of
the Company may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to the
provisions of Section 11(a)(ii) hereof) for Common Stock at an exchange ratio
of one Common Share per Right, appropriately adjusted to reflect any adjustment
in the number of Rights pursuant to Section 11(i) (such exchange ratio being
hereinafter referred to as the “Exchange Ratio”); provided that any
Right that immediately prior to the Distribution Date was evidenced by a
certificate that also evidenced Series B Preferred Stock may not be exchanged
for Common Stock pursuant to this Section 24 until such Right is transferred to
a third party in a Widely Dispersed Offering (as such term is defined in the
Articles of Amendment of the Series B Preferred Stock).

 

(b)      Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (a) of this Section 24 and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only right
thereafter of a holder of such Rights shall be to receive that number of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their last addresses as they appear upon the registry books
of the Rights Agent. Any notice

 

27

 

which
is mailed in the manner herein provided shall be deemed given, whether or not
the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Stock for Rights will be effected,
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected  pro rata 
based on the number of Rights (other than Rights which have become void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.

 

(c)     In
the event that there shall not be sufficient Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Stock for
issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Stock, the Company shall substitute, for each Common
Share that would otherwise be issuable upon exchange of a Right, a number of
shares of Series C Preferred Stock or fraction thereof such that the current
per share market price of one share of Series C Preferred Stock multiplied by
such number or fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such shares of Series C Preferred
Stock or fraction thereof.

 

(d)      The
Company shall not be required to issue fractions of Common Stock or to distribute
certificates representing fractions of shares of Common Stock.  In lieu of such fractional Common Stock, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a
whole Common Share. For the purposes of this paragraph (d), the current market
value of a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of exchange pursuant to this Section 24.

 

Section
25.      Notice
of Certain Events. (a) In case the Company shall, at any time after the
Distribution Date, propose (i) to pay any dividend payable in stock of any
class to the holders of the Series C Preferred Stock or to make any other
distribution to the holders of the Series C Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of the Series C
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Series C Preferred Stock or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of the Series C Preferred Stock (other than a reclassification involving only
the subdivision of outstanding shares of Series C Preferred Stock), (iv) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Stock payable in
Common Stock or to effect a subdivision, combination or consolidation of the
Common Stock (by reclassification or otherwise than by payment of dividends in
Common Stock), then, in each such case, the Company shall give to each holder
of a Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the

 

28

 

record
date for the purposes of such stock dividend, or distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the Common Stock, Series A
Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least 10 days prior to the
record date for determining holders of the Series C Preferred Stock for
purposes of such action, and, in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Stock, Series A Preferred
Stock, Series B Preferred Stock and/or Series C Preferred Stock, whichever
shall be the earlier.

 

(b)                       In case the
event set forth in Section 11(a)(ii) hereof shall occur, then the Company
shall, as soon as practicable thereafter, give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence
of such event, which notice shall describe such event and the consequences of
such event to holders of Rights under Section 11(a)(ii) hereof.

 

Section
26.      Notices.
Notices or demands authorized by this Plan to be given or made by the Rights
Agent or by the holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by overnight delivery service or first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:

 

West
Coast Bancorp

5335 Meadows Road, Suite 201

Lake Oswego, Oregon 97035

Attention: General Counsel

 

Subject
to the provisions of Section 21 hereof, any notice or demand authorized by this
Plan to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by overnight delivery service or first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:

 

Wells
Fargo Bank, National Association

Shareowner Services

161 North Concord Exchange

South St. Paul, MN  55075

Attn: Account Manager

 

Notices
or demands authorized by this Plan to be given or made by the Company or the
Rights Agent to the holder of any Right Certificate shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the Company.

 

Section
27.      Supplements and Amendments. The Company
may from time to time supplement or amend this Plan without the approval of any
holders of Right Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, to shorten or lengthen any time
period

 

29

 

hereunder,
or to amend or make any other provisions with respect to the Rights which the
Company may deem necessary or desirable, any such supplement or amendment to be
evidenced by a writing signed by the Company and the Rights Agent; provided,
however, that, from and after such time as any Person becomes an
Acquiring Person  and does not
become an Exempt Person prior to the Distribution Date, this Plan shall not be
amended in any manner which would adversely affect the interests of the holders
of Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person).

 

Section
28.      Successors. All the covenants and
provisions of this Plan by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.

 

Section
29.      Benefits of this Plan. Nothing in this
Plan shall be construed to give to any Person other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Stock, Series A Preferred Stock or Series B
Preferred Stock) any legal or equitable right, remedy or claim under this Plan;
but this Plan shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Stock, Series A Preferred Stock or Series B
Preferred Stock).

 

Section
30.      Severability. If any term, provision,
covenant or restriction of this Plan is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Plan
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.

 

Section
31.      Governing Law. This Plan and each Right
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and construed
in accordance with the laws of such state applicable to contracts to be made
and performed entirely within such state.

 

Section
32.      Counterparts. This Plan may be executed
in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument. 
A signature to this Plan transmitted electronically shall have the same
authority, effect, and enforceability as an original signature.

 

Section
33.      Descriptive Headings. Descriptive
headings of the several Sections of this Plan are inserted for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.

 

Section
34.      Determinations and Actions by the Board.
For all purposes of this Plan, any calculation of the number of Common Stock
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Stock of which any Person is
the Beneficial Owner, will be made in accordance with, as the Board of
Directors deems to be applicable, the last sentence of Rule 13d-3(d)(1)(i) of
the General Rules and Regulations under the Exchange Act or the provisions of Section
382. The Board of

 

30

 

Directors
of the Company will have the exclusive power and authority to administer this
Plan and to exercise all rights and powers specifically granted to the Board of
Directors of the Company or to the Company, or as may be necessary or advisable
in the administration of this Plan, including without limitation the right and
power to (i) interpret the provisions of this Plan (including without
limitation Section 27, this Section 34 and other provisions hereof relating to
its powers or authority hereunder) and (ii) make all determinations deemed
necessary or advisable for the administration of this Plan (including without
limitation any determination contemplated by Section 1(a) or any determination
as to whether particular Rights shall have become void). All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, any omission with respect to any of the foregoing) which are
done or made by the Board of Directors of the Company in good faith will (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders of
the Rights and all other parties and (y) not subject the Board of Directors of
the Company to any liability to any Person, including without limitation the
Rights Agent and the holders of the Rights.

 

Section
35.             Process to Seek
Exemption. Any Person who desires to effect any acquisition of Common Stock
that would, if consummated, result in such Person (together with its Affiliates
and Associates) beneficially owning 4.9% or more of the then-outstanding Common
Stock (or, in the case of an Existing Holder, additional shares of Common Stock
representing 0.2% or more of the then-outstanding Common Stock) (a “Requesting
Person”) may, prior to the acquisition of the Common Stock and in
accordance with this Section 35, request that the Board grant an exemption with
respect to such acquisition under this Plan so that such acquisition would be
deemed to be an “Exempt Transaction” for purposes of this Plan (an “Exemption
Request”). An Exemption Request shall be in proper form and shall be
delivered by registered mail, return receipt requested, to the Secretary of the
Company at the principal executive office of the Company. To be in proper form,
an Exemption Request shall set forth (i) the name and address of the Requesting
Person, (ii) the number and percentage of shares of Common Stock then
beneficially owned by the Requesting Person, together with all Affiliates and
Associates of the Requesting Person, and (iii) a reasonably detailed
description of the transaction or transactions by which the Requesting Person
would propose to acquire Beneficial Ownership of Common Stock aggregating 4.9%
or more of the then outstanding Common Stock (or, in the case of an Existing
Holder, additional shares of Common Stock representing 0.2% or more of the
then-outstanding Common Stock) and the maximum number and percentage of shares
of Common Stock that the Requesting Person proposes to acquire. The Board shall
make a determination whether to grant an exemption in response to an Exemption
Request as promptly as practicable (and, in any event, within ten (10) Business
Days) after receipt thereof; provided, that the failure of the Board to make a
determination within such period shall be deemed to constitute the denial by
the Board of the Exemption Request.  Any
exemption granted hereunder may be granted in whole or in part, and may be
subject to limitations or conditions (including a requirement that the Requesting
Person agree that it will not acquire Beneficial Ownership of shares of Common
Stock in excess of the maximum number and percentage of shares approved by the
Board), in each case as and to the extent the Board shall determine necessary
or desirable.

 

Any
Exemption Request may be submitted on a confidential basis and, except to the
extent required by applicable law, the Company shall maintain the
confidentiality of such Exemption Request and the Board’s determination with
respect thereto.

 

31

 

IN
WITNESS WHEREOF, the parties hereto have caused this Plan to be duly executed
and attested, all as of the day and year first above written.

 

 

	
   

  	
   

  	
  West
  Coast Bancorp

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /s/
  Robert D. Sznewajs

  
	
   

  	
   

  	
   

  	
  Name:
  Robert D. Sznewajs

  
	
   

  	
   

  	
   

  	
  Title:
  President & CEO

  
	
   

  	
   

  	
   

  
	
  COUNTERSIGNED
  BY:

  	
   

  	
   

  
	
  Wells
  Fargo Bank, National Association

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By 

  	
  /s/
  Pamela E. Herlich

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Pamela
  E. Herlich

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President,

  Account Management

  Wells Fargo Shareowner Services

  	
   

  	
   

  

 

32

 

 

Exhibit A

 

FORM

 

OF

 

ARTICLES OF AMENDMENT

 

TO DESIGNATE THE TERMS OF

 

 

SERIES C JUNIOR PARTICIPATING PREFERRED STOCK

 

OF

 

WEST COAST BANCORP

 

Pursuant to Section 60.131 of the Oregon
Business

Corporation Act

 

West Coast Bancorp, a corporation organized and existing under laws of
the State of Oregon (the “Company”), in accordance with the provisions of
Sections 60.004, 60.131, 60.134 and 60.301 of the Oregon Business Corporation
Act, DOES HEREBY CERTIFY:

 

The board of directors of the Company (the “Board of Directors”), in
accordance with the Restated Articles of Incorporation and the Amended and
Restated Bylaws of the Company and applicable law, adopted the following
resolution on October 22, 2009, creating a series of 2,500,000 shares of
Preferred Stock of the Company designated as “Series C Junior
Participating Preferred Stock”.

 

RESOLVED, that pursuant to the provisions of the Restated Articles of
Incorporation and the Amended and Restated Bylaws of the Company and applicable
law, a series of Preferred Stock, no par value, of the Company be and hereby is
created, and that the designation and number of shares of such series, and the
voting and other powers, designations, preferences and relative, participating,
optional or other rights, and the qualifications, limitations and restrictions
thereof, of the shares of such series, are as follows:

 

Section 1.                      Designation
and Amount. The shares of such series shall be designated as “Series C
Junior Participating Preferred Stock” (the “Series C Preferred Stock”) and
the number of shares constituting the Series C Preferred Stock shall be
2,500,000.  Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided,
that no decrease shall reduce the number of shares of Series C Preferred
Stock to a number less than the number of shares then outstanding plus the
number of shares reserved for issuance upon the

 

33

 

exercise of outstanding options, rights or warrants or upon the conversion
of any outstanding securities issued by the Company convertible into Series C
Preferred Stock.

 

Section 2.                      Dividends
and Distributions.

 

(A)                            Subject
to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series C Preferred
Stock with respect to dividends, the holders of shares of Series C
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September and December in
each year (each such date being referred to herein as a “Quarterly Dividend
Payment Date”), commencing on the first Quarterly Dividend Payment Date after the
first issuance of a share or fraction of a share of Series C Preferred
Stock, in an amount per share (rounded to the nearest cent), subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions, declared on the Common Stock, no par value per share (the
“Common Stock”), of the Company since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series C
Preferred Stock, other than, in each case, a dividend payable in shares of
Common Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise). In the event the Company shall at any time
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series C Preferred Stock were entitled immediately
prior to such event under the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(B)                              The
Company shall declare a dividend or distribution on the Series C Preferred
Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock).

 

(C)                              Dividends,
to the extent payable as provided in paragraphs (A) and (B) of this
Section, shall begin to accrue and be cumulative on outstanding shares of Series C
Preferred Stock from the Quarterly Dividend Payment Date next preceding the
date of issue of such shares, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is
a date after the record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive a quarterly dividend and before such 

 

34

 

Quarterly Dividend Payment Date, in either of
which events such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series C Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series C
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.

 

Section 3.                      Voting
Rights. The holders of shares of Series C Preferred Stock shall have
the following voting rights:

 

(A)                            Subject
to the provision for adjustment hereinafter set forth, each share of Series C
Preferred Stock shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Company. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series C Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were outstanding
immediately prior to such event.

 

(B)                               Except
as otherwise provided herein, in any other Articles of Amendment creating a
series of Preferred Stock or any similar stock, or by law, the holders of
shares of Series C Preferred Stock and the holders of shares of Common
Stock and any other capital stock of the Company having general voting rights
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.

 

(C)                               Except
as set forth herein, or as otherwise provided by law, holders of Series C
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.

 

(D)                              Reference
is made to that certain Tax Benefit Preservation Plan (the “Plan”), dated as of
October 23, 2009, between the Company and Wells Fargo Bank, National
Association, as rights agent. 
Notwithstanding anything in this Section 3, each share of Series C
Preferred Stock that was received by the holder thereof as a result of the
exercise of a Right (as defined in the Plan) that immediately prior to the
Distribution Date (as defined in the Plan) was evidenced by a certificate that
also evidenced the Company’s Mandatorily Convertible Cumulative Participating
Preferred Stock, Series B (the “Series B Preferred Stock”) shall have
no voting rights until transferred to a third party in a Widely Dispersed
Offering (as such term is defined in the Articles of Amendment of the Series B

 

35

 

Preferred Stock).

 

Section 4. Certain Restrictions.

 

(A)                             Whenever
quarterly dividends or other dividends or distributions payable on the Series C
Preferred Stock as provided in Section 2 are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series C Preferred Stock outstanding shall have
been paid in full, the Company shall not:

 

(i)                     declare or
pay dividends, or make any other distributions, on any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series C Preferred Stock;

 

(ii)                  declare or pay
dividends, or make any other distributions, on any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series C Preferred Stock, except dividends paid ratably on the Series C
Preferred Stock and all such parity stock on which dividends are payable or in
arrears in proportion to the total amounts to which the holders of all such
shares are then entitled;

 

(iii)               redeem or purchase
or otherwise acquire for consideration shares of any stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the Series C
Preferred Stock, provided that the Company may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
stock of the Company ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series C Preferred Stock; or

 

(iv)              redeem or purchase
or otherwise acquire for consideration any shares of Series C Preferred
Stock, or any shares of stock ranking on a parity with the Series C
Preferred Stock, except in accordance with a purchase offer made in writing or
by publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.

 

(B)                               The
Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company
could, under paragraph (A) of this Section 4, purchase or otherwise
acquire such shares at such time and in such manner.

 

Section 5. Reacquired Shares. Any shares of Series C
Preferred Stock purchased or otherwise acquired by the Company in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, in the

 

36

 

Restated Articles of Incorporation, or in any other Articles of
Amendment creating a series of Preferred Stock or any similar stock or as
otherwise required by law.

 

Section 6.                      Liquidation,
Dissolution or Winding Up. Upon any liquidation, dissolution or winding up
of the Company, no distribution shall be made (1) to the holders of shares
of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock unless, prior
thereto, the holders of shares of Series C Preferred Stock shall have
received $100 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such
payment, provided that the holders of shares of Series C Preferred Stock
shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount to be distributed per share to holders of shares of Common
Stock, or (2) to the holders of shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series C Preferred Stock, except distributions made ratably on the Series C
Preferred Stock and all such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. In the event the Company shall at any time declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares
of Series C Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

Section 7.                        Consolidation,
Merger, etc.  In case the Company shall enter into any consolidation,
merger, combination, conversion, share exchange or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock, a
member’s interest, a partnership interest, a beneficial interest in a trust or
other owner’s interest, or securities, cash and/or any other property, then in
any such case each share of Series C Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the
aggregate amount of stock, a member’s interest, a partnership interest, a
beneficial interest in a trust or other owner’s interest, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series C Preferred Stock shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.

 

37

 

Section 8.                      No
Redemption. The shares of Series C Preferred Stock shall not be
redeemable.

 

Section 9.                      Rank.
The Series C Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Company’s Preferred Stock.

 

Section 10.                Amendment.
The Restated Articles of Incorporation of the Company shall not be amended in
any manner which would materially alter or change the powers, preferences or
special rights of the Series C Preferred Stock so as to affect them
adversely without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series C Preferred Stock, voting together as a
single class.

 

Exhibit B

 

Form of Right Certificate

 

	
  Certificate No. R-

  	
  Rights

  

 

NOT EXERCISABLE AFTER OCTOBER 23, 2012 OR EARLIER IF REDEMPTION OR EXCHANGE
OCCURS OR AS OTHERWISE SPECIFIED IN THE AGREEMENT. THE RIGHTS ARE SUBJECT TO
REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
AGREEMENT.

 

Right Certificate

 

WEST COAST BANCORP

 

This certifies that
                      ,
or registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Plan, dated as of October 23, 2009 (the
“Plan”), between West Coast Bancorp, an Oregon corporation (the “Company”), and
Wells Fargo Bank, National Association (the “Rights Agent”), to purchase from
the Company at any time after the Distribution Date (as such term is defined in
the Plan) and prior to 5:00 P.M., New York City time, on October 25,
2012 (or earlier as specified in the Plan) at the principal office of the
Rights Agent, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series C Junior
Participating Preferred Stock, par value $0.001 per share, of the Company (the
“Preferred Shares”), at a purchase price of $30.00 per one one-hundredth of a
Preferred Share (the “Purchase Price”), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of October 23, 2009, based on the Preferred Shares
as constituted at such date. As provided in the Plan, the Purchase Price and
the number of one one-hundredths

 

38

 

of a Preferred Share which may be purchased upon the exercise of the
Rights evidenced by this Right Certificate are subject to modification and
adjustment upon the happening of certain events.

 

This Right Certificate is subject to all of the terms, provisions and
conditions of the Plan, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Plan
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Right Certificates. Copies of the Plan are on
file at the principal executive offices of the Company and the offices of the
Rights Agent.

 

This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of Preferred
Shares as the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this Right
Certificate shall be exercised in part, the holder shall be entitled to receive
upon surrender hereof another Right Certificate or Right Certificates for the
number of whole Rights not exercised.

 

Subject to the provisions of the Plan, the Rights evidenced by this
Right Certificate (i) may be redeemed by the Company at a redemption price
of $.001 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company’s Common Stock, no par value per
share.

 

No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but, in lieu thereof, a
cash payment will be made, as provided in the Plan.

 

No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Plan or
herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Plan), or to receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised
as provided in the Plan.

 

This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned manually or by facsimile by the Rights
Agent.

 

WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.  Dated as of
        ,
      .

 

	
   

  	
  WEST COAST BANCORP

  

 

39

 

	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

	
  COUNTERSIGNED BY:

  
	
  WELLS FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

40

 

Form of Reverse Side of Right
Certificate

 

FORM OF ASSIGNMENT

 

(To be
executed by the registered holder if such

holder desires to transfer the Right Certificate.)

 

FOR VALUE RECEIVED
                                
hereby sells, assigns and transfers unto                                         

 

(Please print name and
address of transferee)

 

 

this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
                   
Attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.

 

	
  Dated:

  	
   

  	
   

  

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature Medallion Guaranteed:

 

All Guarantees must be made by a financial institution (such as a bank
or broker) which is a participant in the Securities Transfer Agents Medallion
Program (“STAMP”), the New York Stock Exchange, Inc. Medallion Signature
Program (“MSP”), or the Stock Exchanges Medallion Program (“SEMP”) and must not
be dated.  Guarantees by a notary public
are not acceptable.

 

The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Plan).

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

Form of Reverse Side of Right
Certificate — continued

 

41

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if holder desires to exercise

 Rights
represented by the Right Certificate.)

 

To: WEST COAST BANCORP

 

The undersigned hereby irrevocably elects to exercise
                                   Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:

 

Please insert social security

or other identifying number

 

 

(Please print
name and address)

 

 

If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:

 

Please insert social security

or other identifying number

 

 

(Please print
name and address)

 

 

	
  Dated:

  	
   

  	
   

  

 

	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature Medallion Guaranteed:

 

All Guarantees must be made by a financial institution (such as a bank
or broker) which is a participant in the Securities Transfer Agents Medallion
Program (“STAMP”), the NASDAQ, Inc. Medallion Signature Program (“MSP”),
or the Stock Exchanges Medallion Program (“SEMP”) and must not be dated.
Guarantees by a notary public are not acceptable.

 

The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Plan).

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

42

 

NOTICE

 

The signature in the Form of Assignment or Form of Election
to Purchase, as the case may be, must conform to the name as written upon the
face of this Right Certificate in every particular, without alteration or
enlargement or any change whatsoever.

 

In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Plan) and such Assignment or
Election to Purchase will not be honored.

 

43

 

Exhibit C

 

SUMMARY OF RIGHTS TO PURCHASE

SERIES C PREFERRED STOCK

 

Introduction

 

Our Company, West Coast Bancorp, an Oregon corporation, has entered
into a Tax Benefit Preservation Plan with Wells Fargo Bank, National Association,
as Rights Agent, dated as of October [·],
2009 (the “Plan”). Our Board of Directors (the “Board”) approved the Plan in an
effort to deter acquisitions of our common stock that would potentially limit
our ability to use our built in losses and any resulting net loss carryforwards
to reduce potential future federal income tax obligations.

 

Under the Plan, from and after the record date of October [·],
2009, each share of our common stock will carry with it one preferred share
purchase right (a “Right”), each share of the Company’s Mandatorily Convertible
Cumulative Participating Preferred Stock, Series A (“Series A
Preferred Stock”), will carry with it 50 Rights (subject to adjustment) and
each share of the Company’s Mandatorily Convertible Cumulative Participating
Preferred Stock, Series B (“Series B Preferred Stock”), will carry
with it 50 Rights (subject to adjustment), until the Distribution Date or
earlier expiration of the Rights, as described below. In general, the Rights
will work to impose a significant penalty upon any person or group which
acquires 4.9% or more of our outstanding common stock after October [·],
2009, without the approval of our Board. Stockholders who own 4.9% or more of
the outstanding common stock as of October [·],
2009, will not trigger the Rights so long as they do not (i) acquire
additional shares of common stock representing 0.2% or more of the shares of
common stock then outstanding or (ii) fall under 4.9% ownership of common
stock and then reacquire shares that in the aggregate equal 4.9% or more of the
common stock. The Board may, in its sole discretion, exempt any person or group
for purposes of the Plan if it determines the acquisition by such person or
group will not jeopardize tax benefits or is otherwise in the Company’s best
interests.

 

For those interested in the specific terms of the Plan, we provide the
following summary description. Please note, however, that this description is
only a summary, and is not complete, and should be read together with the
entire Plan, which has been filed with the Securities and Exchange Commission
as an exhibit to our Current Report on Form 8-K, dated October [·],
2009. A copy of the agreement is available free of charge from our Company.

 

The Rights. From the
record date of October [·],
2009, until the Distribution Date or earlier expiration of the Rights, the
Rights will trade with, and will be inseparable from, the common stock, the Series A
Preferred Stock and the Series B Preferred Stock, as applicable. New
Rights will also accompany any new shares of Common Stock, Series A
Preferred Stock or Series B Preferred Stock that we issue after October [·],
2009, until the Distribution Date or earlier expiration of the Rights.

 

Exercise Price. Each
Right will allow its holder to purchase from our Company one one-hundredth of a
share of Series C Junior Participating Preferred Stock, no par value, of
the 

 

44

 

Company (“Series C Preferred Stock”) for $30.00, subject to
adjustment (the “Exercise Price”), once the Rights become exercisable. This
portion of a share of Series C Preferred Stock will give the stockholder
approximately the same dividend, voting, and liquidation rights as would one
share of common stock (subject to certain exceptions described in the Plan with
respect to Rights that immediately prior to the Distribution Date were
evidenced by a certificate that also evidenced Series B Preferred Stock).
Prior to exercise, the Right does not give its holder any dividend, voting, or
liquidation rights.

 

Exercisability. The
Rights will not be exercisable until 10 days after the public announcement that
a person or group has become an “Acquiring Person” by obtaining beneficial
ownership, after October [·],
2009, of 4.9% or more of our outstanding common stock (or if already the
beneficial owner of at least 4.9% of our outstanding common stock, by acquiring
additional shares of our common stock representing 0.2% or more of the shares
of common stock then outstanding), unless exempted by the Board.

 

We refer to the date when the Rights become exercisable as the
“Distribution Date.” Until that date or earlier expiration of the Rights, the
common stock certificates, Series A Preferred Stock certificates and Series B
Preferred Stock certificates will also evidence the Rights, and any transfer of
shares of common stock or Series A Preferred Stock or Series B
Preferred Stock will constitute a transfer of Rights. After that date, the
Rights will separate from the common stock, Series A Preferred Stock and Series B
Preferred Stock, and be evidenced by book-entry credits or by Rights
certificates that we will mail to all eligible holders of common stock, Series A
Preferred Stock and Series B Preferred Stock. Any Rights held by an
Acquiring Person are void and may not be exercised.

 

Consequences of a Person or Group Becoming an
Acquiring Person. If a person or group becomes an
Acquiring Person, all holders of Rights except the Acquiring Person may, for
payment of the Exercise Price, purchase shares of our common stock with a
market value of twice the Exercise Price, based on the market price of the
common stock as of the acquisition that resulted in such person or group
becoming an Acquiring Person (subject to certain exceptions described in the
Plan with respect to Rights that immediately prior to the Distribution Date
were evidenced by a certificate that also evidenced Series B Preferred
Stock).

 

Exchange. After a
person or group becomes an Acquiring Person, our Board may extinguish the
Rights by exchanging one share of common stock or an equivalent security for
each Right, other than Rights held by the Acquiring Person or an Affiliate or
an Associate of any Acquiring Person (subject to certain exceptions described
in the Plan with respect to Rights that immediately prior to the Distribution
Date were evidenced by a certificate that also evidenced Series B
Preferred Stock).

 

Series C Preferred Stock Provisions.

 

Each
one one-hundredth of a share of Series C Preferred Stock, if issued:

 

·                  will not be redeemable.

 

45

 

·                  will entitle holders to dividends equal to the
dividends, if any, paid on one share of common stock.

 

·                  will entitle holders upon liquidation
either to receive $1 per share or an amount equal to the payment made on one
share of common stock, whichever is greater.

 

·                  will have the same voting power as one share of common
stock (subject to certain exceptions described in the Plan with respect to
Rights that immediately prior to the Distribution Date were evidenced by a
certificate that also evidenced Series B Preferred Stock).

 

·                  will entitle holders to a per share
payment equal to the payment made on one share of common stock, if shares of
our common stock are exchanged via merger, consolidation, or a similar
transaction.

 

The value of one one-hundredth interest in a share of Series C
Preferred Stock is expected to approximate the value of one share of
common stock.

 

Expiration. The
Rights will expire on the earliest of (i) October [·],
2012, (ii) the time at which the Rights are redeemed, (iii) the time
at which the Rights are exchanged, (iv) the repeal of Section 382 or
any successor statute, or any other change, if the Board determines that this
Plan is no longer necessary for the preservation of tax benefits, (v) October [·],
2010 if approval of the Plan by our stockholders has not been obtained prior to
such date, or (vi) a determination by the Board, prior to the time any
person or group becomes an Acquiring Person, that the Plan and the Rights are
no longer necessary for the preservation or existence of income tax benefits or
are no longer in the best interests of the Company and its stockholders.

 

Redemption. Our
Board may redeem the Rights for $.001 per Right at any time before any person
or group becomes an Acquiring Person. If our Board redeems any Rights, it must
redeem all of the Rights. Once the Rights are redeemed, the only right of the
holders of Rights will be to receive the redemption price of $.001 per Right.
The redemption price will be adjusted if we have a stock split or stock
dividends of our common stock.

 

Anti-Dilution Provisions.
Our Board may adjust the Exercise Price, the number of shares of Series C
Preferred Stock issuable and the number of outstanding Rights to prevent
dilution that may occur from a stock dividend, a stock split, or a
reclassification of the Series C Preferred Stock or common stock.

 

Amendments. The
terms of the Plan may be amended by our Board without the consent of the
holders of the Rights. After a person or group becomes an Acquiring Person and
does not become an exempt person prior to the Distribution Date, our Board may
not amend the agreement in a way that adversely affects holders of the Rights
(other than an Acquiring Person or an Affiliate or Associate of an Acquiring
Person).

 

46Exhibit
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.

 

54

 

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.

 

55

 

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

 

56

 

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.

 

* 
*  *

 

59

 

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]

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