Document:

Exhibit 4.2

 

EXECUTION COPY

 

CLASS C WARRANT

 

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

 

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

 

CLASS C WARRANT

to purchase 

[·] 

Shares of

 

Mandatorily Convertible Cumulative Participating
Preferred Stock, Series B 

dated as of October 23, 2009

West Coast Bancorp

an Oregon Corporation

 

Issue
Date:  October 23, 2009

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

“Business Day” means any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of New York generally are authorized or
required by law or other governmental actions to close.

 

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

 

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

 

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

 

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outstanding
Voting Securities of the Company and, in connection with or subsequent to such
acquisition, the Incumbent Directors cease for any reason to constitute at
least a majority of the Board; provided, that any person becoming a director subsequent to the date
of the Investment Agreement whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy statement of
the relevant party in which such person is named as a nominee for director,
without written objection to such nomination) shall be an Incumbent Director
(except that no individuals who were not directors at the time any agreement or
understanding with respect to any Business Combination or contested election is
reached shall be treated as Incumbent Directors for the purposes of clause (C) below
with respect to such Business Combination or this paragraph in the case of a
contested election); provided, further, that
the Board Representative will be treated as an Incumbent Director even if the
Person designated to be such Board Representative should change;

 

(B)           any
Person is or becomes a Beneficial Owner (other than the Investor and its
Affiliates), directly or indirectly, of 50% or more of the aggregate voting
power of the outstanding Voting Securities of the Company; provided,
however,  that the event
described in this clause (B) will not be deemed a Change of Control by
virtue of any holdings or acquisitions:  (i) by
the Company or any of its Subsidiaries, (ii) by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any of its
Subsidiaries; and provided, further, that such holdings or
acquisitions by any such plan (other than any plan maintained under Section 401(k) of
the Internal Revenue Code of 1986, as amended) do not exceed 50% of the then
outstanding Voting Securities of the Company, (iii) by any underwriter
temporarily holding securities pursuant to an offering of such securities or (iv) pursuant
to a Non-Qualifying Transaction;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Exercise Price” means $2.00, subject to
adjustment from time to time in accordance with Section 13.

 

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

 

“Fair Market Value” means, with respect to any security or
other property, the fair market value of such security or other property as
determined by the Board, acting in good faith. 
If the Warrantholder does not accept the Board’s calculation of Fair
Market Value and the Warrantholder and the Company are unable to agree on Fair
Market Value, the procedures described in Section 14 shall be used to
determine Fair Market Value.

 

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

 

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

 

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

 

“Investor” means [·].

 

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

 

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

 

“Non-Qualifying
Transaction” means any Business Combination that satisfies all of
the following criteria:  (A) more
than 50% of the total voting power of the capital stock of the surviving
corporation resulting from such Business Combination, or, if applicable, the
ultimate parent corporation that directly or indirectly has Beneficial
Ownership of 100% of the voting securities eligible to elect directors of the
surviving corporation, is represented by shares of Common Stock that were
outstanding immediately before such Business Combination (or, if applicable, is
represented by shares into which such Common Stock was converted pursuant to
such Business Combination) and (B) at least a majority of the members of
the board of directors of the parent corporation (or, if there is no parent
corporation, the surviving corporation) following the consummation of the
Business Combination were Incumbent Directors at the time the Company’s Board
approved the execution of the initial agreement providing for such Business
Combination.

 

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

 

“Permitted Rights Offering” shall mean an offering of up to $10
million of aggregate offering price of Common Stock pursuant to subscription
rights distributed pro rata to the then existing holders of record of Common
Stock at a price per share of Common Stock not less than $2.00, and the
associated declaration, issuance and exercise of the subscription rights with
respect to such offering and shares of Common Stock issuable in connection with
the exercise of any such rights; provided that the Company will use its best
efforts to ensure that such rights offering, including exercise of such right,
is completed as soon as practicable and in no event later than March 1,
2010.

 

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

 

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

 

“Pro Rata Repurchases” means any purchase
of shares of Common Stock by the Company or any Affiliate thereof pursuant to (A) any
tender offer or exchange offer subject to Section 13(e) of the
Exchange Act, or (B) pursuant to any other offer available to
substantially all holders of Common Stock, in each case whether for cash,
shares of Capital Stock of the Company, other securities of the Company,
evidences of indebtedness of the Company or any other Person or any other
property (including, without limitation, shares of Capital Stock, other
securities or evidences of indebtedness of a Subsidiary of the Company), or any
combination thereof, effected while this Warrant is outstanding; provided, however,  that “Pro Rata Repurchase” shall not include any purchase
of shares by the Company or any Affiliate thereof made in accordance with the
requirements of Rule 10b-18 as in effect under the Exchange Act.

 

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The “Effective Date”
of a Pro Rata Repurchase shall mean the date of acceptance of shares for
purchase or exchange under any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata Repurchase that
is not a tender or exchange offer.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Shares” is defined in Section 2.

 

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

 

“Subsidiary” of a Person means any
corporation, bank, savings bank, association or other Person of which such
Person owns or controls 51% or more of the outstanding equity securities either
directly or indirectly through an unbroken chain of entities, as to each of
which 51% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, however,  that there shall not be included
any such entity to the extent that the equity securities of such entity were
acquired in satisfaction of a debt previously contracted in good faith or are
owned or controlled in a bona fide fiduciary
capacity.

 

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

 

“Voting Securities” means, at any time,
shares of any class of capital stock of the Company that are then entitled to
vote generally in the election of directors.

 

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

 

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

 

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

 

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

 

3.             Exercise of Warrant; Term.   To the
extent permitted by applicable laws and regulations, the right to purchase the Series B
Preferred Stock and other securities represented by this Warrant is
exercisable, in whole or in part by the Warrantholder, at any time or from time
to time after the execution and delivery of this Warrant by the Company, on the
date hereof, but in no event later than 11:59 p.m., New York City time, on
the seventh anniversary of the date of issuance of the Warrant (the “Expiration Time”), by (i) the
surrender of this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the office of the Company in
Lake Oswego, Oregon (or such other office or agency of the Company in the
United States as it may designate by notice in writing to the Warrantholder at
the address of the Warrantholder appearing on the books of the Company), and (ii) payment
of the Purchase Price for the the Series B Preferred Stock thereby
purchased at the election of the Warrantholder by having the Company withhold
shares of Series B Preferred Stock issuable upon exercise of the Warrant
equal in value to the Purchase Price as to which this Warrant is so exercised
based on the Market Price of the Common Stock on the trading day immediately
prior to the date on which this Warrant and the Notice of Exercise are
delivered to the Company.

 

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

 

4.             Issuance of Series B Preferred Stock; Authorization; Listing. 
Certificates for Series B Preferred Stock issued upon exercise of
this Warrant will be issued in such name or names as the Warrantholder may
designate and will be delivered to such named Person or Persons within a reasonable
time, not to exceed three (3) Business Days after the date on which this
Warrant has been duly exercised in accordance with the terms of this
Warrant.  The Company hereby represents
and warrants that any Series B Preferred Stock  issued
upon the exercise of this Warrant in accordance with the provisions of Section 3
and all other provisions of this Warrant will be duly and validly authorized
and issued, fully paid and nonassessable and free from all taxes, liens and
charges (other than liens or charges created by the Warrantholder or taxes in
respect of any transfer occurring contemporaneously therewith).  The Company agrees that the Series B
Preferred Stock  so issued will be deemed to have
been issued to the Warrantholder as of the close of business on the date on
which this Warrant and payment of the

 

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Exercise
Price are delivered to the Company in accordance with the terms of this
Warrant, notwithstanding that the stock transfer books of the Company may then
be closed or certificates representing such Series B Preferred Stock may
not be actually delivered on such date. 
Immediately following approval by stockholders of the increase in the
authorized number of shares of Common Stock as provided in the Investment
Agreement, the Company will at all times thereafter reserve and keep available,
in the case of Common Stock, out of its authorized but unissued Common Stock,
and, in the case of the Series B Preferred Stock, out of its authorized
but unissued preferred stock, solely for the purpose of providing for the
exercise of this Warrant and the conversion of Series B Preferred Stock,
the aggregate number of shares of Series B Preferred Stock (and the
aggregate number of shares of Common Stock into which such shares of Series B
Preferred Stock are convertible),  then issuable
upon exercise of this Warrant.  The
Company will (i) procure, at its sole expense, the listing of the
securities issuable upon exercise of this Warrant, including, but not limited
to the shares of Series B Preferred Stock issuable pursuant to Section 13
of this Warrant subject to issuance or notice of issuance on all stock
exchanges on which the Common Stock are then listed or traded and (ii) maintain
the listing of such securities after issuance. 
The Company will use commercially reasonable efforts to ensure that the
the Series B Preferred Stock  may be issued
without violation of any applicable law or regulation or of any requirement of
any securities exchange on which the Series B Preferred Stock is listed or
traded.

 

5.             No Fractional Shares or Scrip.  No fractional
shares or scrip representing fractional shares shall be issued upon any
exercise of this Warrant.  In lieu of any
fractional share to which the Warrantholder would otherwise be entitled, the
Warrantholder shall be entitled to receive a cash payment equal to the Market
Price of the Series B Preferred Stock less the Exercise Price for the
shares of Common Stock into which such fractional share could be
converted.  For purposes of this Section 5,
the “Market Price” of any Series B Preferred Stock withheld upon exercise
of this Warrant shall be deemed to be the Market Price of the number of shares
of Common Stock into which one share of such Series B Preferred Stock
could be converted if such Series B Preferred Stock were then convertible.

 

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

 

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

 

8.             Transfer/Assignment.

 

(A)          Subject
to compliance with clause (B) of this Section 8, without obtaining
the consent of the Company to assign or transfer this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, upon the books of
the Company by the registered holder hereof in person or by duly authorized
attorney, and a new warrant shall be made and delivered by the Company, of the
same tenor and date as this Warrant but registered in the name of the

 

8

 

transferee,
upon surrender of this Warrant, duly endorsed, to the office or agency of the
Company described in Section 3.  All
expenses (other than stock transfer taxes) and other charges payable in
connection with the preparation, execution and delivery of the new warrants
pursuant to this Section 8 shall be paid by the Company.

 

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

 

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

 

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

 

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

 

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

 

12.           Rule 144
Information.  The Company covenants that it will use its
reasonable best efforts to timely file all reports and other documents required
to be filed by it under the

 

9

 

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

 

13.           Adjustments
and Other Rights.  The Exercise Price and the number of Shares
into which the Series B Preferred Stock issuable upon exercise of this
Warrant are to be convertible pursuant to Section 2 of this Warrant shall
be subject to adjustment from time to time as follows; provided, that
no single event shall be subject to adjustment under more than one
sub-section of this Section 13 so as to result in duplication; provided, further, that,
notwithstanding any provision of this Warrant to the contrary, any adjustment
shall be made to the extent (and only to the extent) that such adjustment would
not cause or result in any Warrantholder and its Affiliates, collectively,
being in violation of any applicable law, regulation or rule of any
governmental authority or self-regulatory organization.  Any adjustment (or portion thereof)
prohibited pursuant to the foregoing proviso shall be postponed and implemented
on the first date on which such implementation would not result in the
condition described in such proviso.

 

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

 

10

 

exercise
of this Warrant are to be convertible pursuant to Section 2 of this
Warrant shall be made pursuant to this sub-clause (i) of this Section 13(A).

 

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

 

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

 

(2)           In
the case of the issuance or sale of equity or equity-linked securities
(otherwise than upon the conversion of shares of Capital Stock or other
securities of the Company) for a consideration in whole or in part other than
cash, including securities acquired in exchange therefor (other than securities
by their terms so exchangeable), the consideration other than cash shall be deemed
to be the Fair Market Value, before deducting therefrom any discounts or
commissions allowed, paid or incurred by the Company for any underwriting or
otherwise in connection with the issuance and sale thereof.

 

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

 

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

 

(b)           The
aggregate maximum number of shares of equity or equity-linked securities
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities, or upon the exercise of options, warrants or other rights
to purchase or acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed to have been issued
at the time such securities

 

11

 

were issued or
such options, warrants or rights were issued and for a consideration equal to
the consideration, if any, received by the Company for any such securities and
related options, warrants or rights (excluding any cash received on account of
accrued interest or accrued dividends), plus the additional consideration (in
each case, determined in the manner provided in Section 13(A)(i) and
(ii)), if any, to be received by the Company upon the conversion or exchange of
such securities, or upon the exercise of any related options, warrants or
rights to purchase or acquire such convertible or exchangeable securities and
the subsequent conversion or exchange thereof.

 

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

 

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

 

(B)           Stock
Splits, Subdivisions, Reclassifications or Combinations. 
If the Company shall (i) declare a dividend or make a distribution
on its Common Stock in shares of Common Stock, (ii) subdivide or
reclassify the outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify the outstanding Common Stock into a
smaller number of shares, the number of Shares into which the Series B
Preferred Stock issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant at the time of the record date for
such dividend or distribution or the effective date of such subdivision,
combination or reclassification shall be proportionately adjusted so that the
Warrantholder after such date shall be entitled to purchase the number of
shares of Common Stock which such holder would have owned or been entitled to
receive after such date had this Warrant been exercised immediately

 

12

 

prior
to such date and the Series B Preferred Stock issuable upon such exercise
had been converted to Common Stock immediately prior to such date.  In such event, the Exercise Price in effect
at the time of the record date for such dividend or distribution or the
effective date of such subdivision, combination or reclassification shall be
adjusted to the number obtained by dividing (x) the product of (1) the
number of Shares into which the Series B Preferred Stock issuable upon the
exercise of this Warrant are to be convertible pursuant to Section 2 of
this Warrant before such adjustment and (2) the Exercise Price in effect
immediately prior to the record or effective date, as the case may be, for such
dividend, distribution, subdivision, combination or reclassification giving
rise to this adjustment by (y) the new number of Shares into which the Series B
Preferred Stock issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant determined pursuant to the immediately
preceding sentence.

 

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

 

(D)          Certain
Repurchases of Common Stock.  In case the
Company effects a Pro Rata Repurchase of Common Stock, then the Exercise Price
shall be reduced to the price determined by multiplying the Exercise Price in
effect immediately prior to the effective date of such Pro Rata Repurchase by a
fraction of which the numerator shall be (i) the product of (x) the
number of shares of Common Stock outstanding immediately before such Pro Rata
Repurchase and (y) the Market Price of a share of Common Stock on the
trading day immediately preceding the first public announcement by the Company
or any of its Affiliates of the intent to effect such Pro Rata Repurchase,
minus (ii) the aggregate purchase price of the Pro Rata Repurchase, and of

 

13

 

which
the denominator shall be the product of (i) the number of shares of Common
Stock outstanding immediately prior to such Pro Rata Repurchase minus the
number of shares of Common Stock so repurchased and (ii) the Market Price
per share of Common Stock on the trading day immediately preceding the first
public announcement of such Pro Rata Repurchase.  In such event, the number of Shares into
which the Series B Preferred Stock issuable upon the exercise of this
Warrant are to be convertible pursuant to Section 2 of this Warrant shall
be increased to the number obtained by dividing (x) the product of (1) the
number of Shares into which the Series B Preferred Stock issuable upon the
exercise of this Warrant are to be convertible pursuant to Section 2 of
this Warrant before such adjustment, and (2) the Exercise Price in effect
immediately prior to the Pro Rata Repurchase giving rise to this adjustment by (y) the
new Exercise Price determined in accordance with the immediately preceding
sentence.

 

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

 

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

 

(G)           Timing
of Issuance of Additional Common Stock Upon Certain Adjustments. 
In any case in which the provisions of this Section 13 shall
require that an adjustment shall become

 

14

 

effective
immediately after a record date for an event, the Company may defer until the
occurrence of such event (i) issuing to the Warrantholder of this Warrant
exercised after such record date and before the occurrence of such event the
additional shares of Series B Preferred Stock issuable upon such exercise
by reason of the adjustment required by such event over and above the shares of
Series B Preferred Stock issuable upon such exercise before giving effect
to such adjustment and (ii) paying to such Warrantholder any amount of
cash in lieu of a fractional share of Series B Preferred Stock; provided, however,  that the Company upon request shall deliver to such
Warrantholder a due bill or other appropriate instrument evidencing such
Warrantholder’s right to receive such additional shares, and such cash, upon
the occurrence of the event requiring such adjustment.

 

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

 

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

 

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

 

15

 

(K)          No
Impairment.  The Company will not, by amendment of its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but will at
all times in good faith assist in the carrying out of all the provisions of
this Warrant and in taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrantholder.

 

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

 

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

 

14.           Contest
and Appraisal Rights.  Upon each determination of Market Price or
Fair Market Value, as the case may be, hereunder, the Company shall promptly
give notice thereof to the Warrantholder, setting forth in reasonable detail
the calculation of such Market Price or Fair Market Value, and the method and
basis of determination thereof, as the case may be.  If a majority in interest of the holders of Class C
Warrants shall disagree with such determination and shall, by notice to the
Company given within fifteen (15) days after the Company’s notice of such
determination, elect to dispute such determination, such dispute shall be
resolved in accordance with this Section 14.  In the event that a determination of Market
Price, or Fair Market Value (if such determination solely involves Market
Price), is disputed, such dispute shall be submitted, at the Company’s expense,
to a NASDAQ Stock Market member firm selected by the Company and acceptable to
a majority in interest of the holders of Class C Warrants, whose
determination of Market Price or Fair Market Value, as the case may be, shall
be binding on the Company and the Warrantholder.  In the event that a determination of Fair
Market Value, other than a determination solely involving Market Price, is
disputed, such dispute shall be resolved through the Appraisal Procedure.

 

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

 

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

 

16

 

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

 

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

 

	
  If to the Company, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  West Coast Bancorp

  	
   

  	
   

  
	
  5335 Meadows Road,
  Suite 201

  	
   

  	
   

  
	
  Lake Oswego,
  Oregon  97035

  	
   

  	
   

  
	
  Attn:

  	
  Richard Rasmussen,
  General Counsel

  
	
  Facsimile:  (503) 684-0781

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Wachtell, Lipton,
  Rosen & Katz

  	
   

  	
   

  
	
  51 West 52nd Street

  	
   

  	
   

  
	
  New York, New
  York 10019-6150

  	
   

  	
   

  
	
  Attn:

  	
  Craig M. Wasserman

  
	
   

  	
  Richard
  K. Kim

  
	
   

  	
  Matthew
  M. Guest

  
	
  Facsimile: 
  (212) 403-2000

  	
   

  	
   

  
				

 

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

 

17

 

rights,
would exceed the total number of shares of Common Stock then authorized by its
certificate of incorporation and available for reservation for the issuance of
shares of Common Stock issuable upon conversion of the Series B Preferred
Stock issuable pursuant hereto.

 

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

 

[Remainder of page intentionally
left blank]

 

18

 

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

 

 

	
   

  	
  WEST COAST BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [·]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  

 

[Signature Page to Warrant]

 

 

[Form Of
Notice Of Exercise]

 

	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  	
   

  

 

TO:         West Coast Bancorp

 

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

 

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

 

	
  Number of Shares of Series B
  Preferred Stock:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name and Address of
  Person to be

  	
   

  	
   

  
	
   

  	
   

  
	
  Issued New Warrant:

  	
   

  	
   

  
					

 

 

	
   

  	
  Holder:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

[Form of
Notice of Exercise]Exhibit 4.3

 

EXECUTION COPY

 

CLASS D WARRANT

 

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

 

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

 

CLASS D WARRANT

 

to purchase 

 

[·] 

 

Shares of

 

Mandatorily Convertible Cumulative Participating
Preferred Stock, Series B 

 

dated as of October 23, 2009

 

West Coast Bancorp

 

an Oregon Corporation

 

Issue
Date:  October 23, 2009

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

“Business Day” means any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on which
banking institutions in the State of New York generally are authorized or
required by law or other governmental actions to close.

 

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

 

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

 

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

 

2

 

outstanding
Voting Securities of the Company and, in connection with or subsequent to such
acquisition, the Incumbent Directors cease for any reason to constitute at
least a majority of the Board; provided, that any person becoming a director subsequent to the date
of the Investment Agreement whose election or nomination for election was
approved by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy statement of
the relevant party in which such person is named as a nominee for director,
without written objection to such nomination) shall be an Incumbent Director
(except that no individuals who were not directors at the time any agreement or
understanding with respect to any Business Combination or contested election is
reached shall be treated as Incumbent Directors for the purposes of clause (C) below
with respect to such Business Combination or this paragraph in the case of a
contested election); provided, further, that
the Board Representative will be treated as an Incumbent Director even if the
Person designated to be such Board Representative should change;

 

(B)           any Person is or becomes a Beneficial
Owner (other than the Investor and its Affiliates), directly or indirectly, of
50% or more of the aggregate voting power of the outstanding Voting Securities
of the Company; provided, however,  that
the event described in this clause (B) will not be deemed a Change of
Control by virtue of any holdings or acquisitions:  (i) by the Company or any of its
Subsidiaries, (ii) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its Subsidiaries; and provided, further,
that such holdings or acquisitions by any such plan (other than any plan
maintained under Section 401(k) of the Internal Revenue Code of 1986,
as amended) do not exceed 50% of the then outstanding Voting Securities of the
Company, (iii) by any underwriter temporarily holding securities pursuant
to an offering of such securities or (iv) pursuant to a Non-Qualifying
Transaction;

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

“Fair Market Value” means, with respect to any security or
other property, the fair market value of such security or other property as
determined by the Board, acting in good faith. 
If the Warrantholder does not accept the Board’s calculation of Fair
Market Value and the Warrantholder and the Company are unable to agree on Fair
Market Value, the procedures described in Section 15 shall be used to
determine Fair Market Value.

 

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

 

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

 

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

 

“Investor” means [·].

 

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

 

4

 

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

 

“Non-Qualifying
Transaction” means any Business Combination that satisfies all of
the following criteria:  (A) more
than 50% of the total voting power of the capital stock of the surviving
corporation resulting from such Business Combination, or, if applicable, the
ultimate parent corporation that directly or indirectly has Beneficial
Ownership of 100% of the voting securities eligible to elect directors of the
surviving corporation, is represented by shares of Common Stock that were
outstanding immediately before such Business Combination (or, if applicable, is
represented by shares into which such Common Stock was converted pursuant to
such Business Combination) and (B) at least a majority of the members of
the board of directors of the parent corporation (or, if there is no parent
corporation, the surviving corporation) following the consummation of the
Business Combination were Incumbent Directors at the time the Company’s Board
approved the execution of the initial agreement providing for such Business
Combination.

 

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

 

“Permitted Rights Offering” shall mean an offering of up to $10
million of aggregate offering price of Common Stock pursuant to subscription
rights distributed pro rata to the then existing holders of record of Common
Stock at a price per share of Common Stock not less than $2.00, and the
associated declaration, issuance and exercise of the subscription rights with
respect to such offering and shares of Common Stock issuable in connection with
the exercise of any such rights; provided that the Company will use its best
efforts to ensure that such rights offering, including exercise of such right,
is completed as soon as practicable and in no event later than March 1,
2010.

 

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

 

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

 

“Pro Rata Repurchases” means any purchase
of shares of Common Stock by the Company or any Affiliate thereof pursuant to (A) any
tender offer or exchange offer subject to Section 13(e) of the
Exchange Act, or (B) pursuant to any other offer available to
substantially all holders of Common Stock, in each case whether for cash,
shares of Capital Stock of the Company, other securities of the Company,
evidences of indebtedness of the Company or any other Person or any other
property (including, without limitation, shares of Capital Stock, other
securities or evidences of indebtedness of a Subsidiary of the Company), or any
combination thereof, effected while this Warrant is outstanding; provided, however,  that “Pro Rata Repurchase” shall not include any purchase
of shares by the Company or any Affiliate thereof made in accordance with the
requirements of Rule 10b-18 as in effect under the Exchange Act.  

 

5

 

The “Effective Date”
of a Pro Rata Repurchase shall mean the date of acceptance of shares for
purchase or exchange under any tender or exchange offer which is a Pro Rata
Repurchase or the date of purchase with respect to any Pro Rata Repurchase that
is not a tender or exchange offer.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Shares” is defined in Section 2.

 

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

 

“Subsidiary” of a Person means any
corporation, bank, savings bank, association or other Person of which such
Person owns or controls 51% or more of the outstanding equity securities either
directly or indirectly through an unbroken chain of entities, as to each of
which 51% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, however,  that there shall not be included
any such entity to the extent that the equity securities of such entity were
acquired in satisfaction of a debt previously contracted in good faith or are owned
or controlled in a bona fide fiduciary
capacity.

 

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

 

“Voting Securities” means, at any time,
shares of any class of capital stock of the Company that are then entitled to
vote generally in the election of directors.

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

4.             Issuance of Series B Preferred
Stock; Authorization; Listing.  Certificates
for Series B Preferred Stock issued upon exercise of this Warrant will be
issued in such name or names as the Warrantholder may designate and will be
delivered to such named Person or Persons within a reasonable time, not to
exceed three (3) Business Days after the date on which this Warrant has
been duly exercised in accordance with the terms of this Warrant.  The Company hereby represents and warrants
that any Series B Preferred Stock  issued upon
the exercise of this Warrant in accordance with the provisions of Section 3
and all other provisions of this Warrant will be duly and validly authorized
and issued, fully paid and nonassessable and free from all taxes, liens and
charges (other than liens or charges created by the Warrantholder or 

 

7

 

taxes
in respect of any transfer occurring contemporaneously therewith).  The Company agrees that the Series B
Preferred Stock  so issued will be deemed to have
been issued to the Warrantholder as of the close of business on the date on
which this Warrant and payment of the Exercise Price are delivered to the
Company in accordance with the terms of this Warrant, notwithstanding that the
stock transfer books of the Company may then be closed or certificates
representing such Series B Preferred Stock may not be actually delivered
on such date.  Immediately following
approval by stockholders of the increase in the authorized number of shares of
Common Stock as provided in the Investment Agreement, the Company will at all
times thereafter reserve and keep available, in the case of Common Stock, out
of its authorized but unissued Common Stock, and, in the case of the Series B
Preferred Stock, out of its authorized but unissued preferred stock, solely for
the purpose of providing for the exercise of this Warrant and the conversion of
Series B Preferred Stock, the aggregate number of shares of Series B
Preferred Stock (and the aggregate number of shares of Common Stock into which
such shares of Series B Preferred Stock are convertible) then issuable
upon exercise of this Warrant.  The
Company will (i) procure, at its sole expense, the listing of the
securities issuable upon exercise of this Warrant, including, but not limited
to the shares of Series B Preferred Stock issuable pursuant to Section 13
of this Warrant subject to issuance or notice of issuance on all stock
exchanges on which the Common Stock are then listed or traded and (ii) maintain
the listing of such securities after issuance. 
The Company will use commercially reasonable efforts to ensure that the Series B
Preferred Stock  may be issued without violation
of any applicable law or regulation or of any requirement of any securities
exchange on which the Series B Preferred Stock is listed or traded.

 

5.             No Fractional Shares or Scrip. 
No fractional shares or scrip representing fractional shares shall be
issued upon any exercise of this Warrant. 
In lieu of any fractional share to which the Warrantholder would
otherwise be entitled, the Warrantholder shall be entitled to receive a cash
payment equal to the Market Price of the Series B Preferred Stock less the
Exercise Price for the shares of Common Stock into which such fractional share
could be converted.  For purposes of this
Section 5, the “Market Price” of any Series B Preferred Stock
withheld upon exercise of this Warrant shall be deemed to be the Market Price
of the number of shares of Common Stock into which one share of such Series B
Preferred Stock could be converted if such Series B Preferred Stock were
then convertible.

 

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

 

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

 

8.             Transfer/Assignment.

 

(A)          Subject to compliance with clause (B) of
this Section 8, without obtaining the consent of the Company to assign or
transfer this Warrant, this Warrant and all rights hereunder 

 

8

 

are
transferable, in whole or in part, upon the books of the Company by the
registered holder hereof in person or by duly authorized attorney, and a new
warrant shall be made and delivered by the Company, of the same tenor and date
as this Warrant but registered in the name of the transferee, upon surrender of
this Warrant, duly endorsed, to the office or agency of the Company described
in Section 3.  All expenses (other
than stock transfer taxes) and other charges payable in connection with the
preparation, execution and delivery of the new warrants pursuant to this Section 8
shall be paid by the Company.

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

13.           Adjustments and Other Rights. 
The Exercise Price and the number of Shares into which the Series B
Preferred Stock issuable upon exercise of this Warrant are to be convertible
pursuant to Section 2 of this Warrant shall be subject to adjustment from
time to time as follows; provided, that no single event shall be subject to adjustment under
more than one sub-section of this Section 13 so as to result in
duplication; provided, further,
that, notwithstanding any provision of this Warrant to the contrary, any
adjustment shall be made to the extent (and only to the extent) that such
adjustment would not cause or result in any Warrantholder and its Affiliates,
collectively, being in violation of any applicable law, regulation or rule of
any governmental authority or self-regulatory organization.  Any adjustment (or portion thereof) prohibited
pursuant to the foregoing proviso shall be postponed and implemented on the
first date on which such implementation would not result in the condition
described in such proviso.

 

(A)          Common Stock Issued at Less Than the
Applicable Price.  (i)  If the Company issues or
sells, or agrees to issue or sell, any Common Stock or other securities that
are convertible into or exchangeable or exercisable for Common Stock (or are
otherwise linked to Common Stock), other than Excluded Stock, for consideration
per share less than the Applicable Price, then the Exercise Price in effect
immediately prior to each such issuance or sale will immediately (except as
provided below) be reduced to the price determined by multiplying the Exercise
Price in effect immediately prior to such issuance or sale by a fraction, (x) the
numerator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale plus (2) the number
of shares of Common Stock which the aggregate consideration received by the
Company for the total number of such additional shares of Common Stock (or
other securities that are convertible into or exchangeable or exercisable for
Common Stock (or are otherwise linked to Common Stock)) so issued or sold would
purchase at the Applicable Price, and (y) the denominator of which shall
be the number of shares of Common Stock outstanding immediately after such
issuance or sale (including the number of shares of Common Stock into which
such other securities are convertible or for which such other securities are
exchangeable or exercisable).  In such
event, the number of shares of Common Stock into which the Series B
Preferred Stock issuable upon the exercise of this Warrant are to be
convertible pursuant to Section 2 of this Warrant shall be increased to
the number obtained by dividing (x) the product of (1) the number of
Shares issuable upon the exercise of this Warrant before such adjustment and (2) the
Exercise Price in effect immediately prior to the issuance or sale giving rise
to this adjustment, by (y) the new Exercise Price determined in accordance
with 

 

10

 

the
immediately preceding sentence.  For the
avoidance of doubt, no increase in the Exercise Price or reduction in the
number of Shares into which the Series B Preferred Stock issuable upon
exercise of this Warrant are to be convertible pursuant to Section 2 of
this Warrant shall be made pursuant to this sub-clause (i) of this Section 13(A).

 

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

 

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

 

(2)           In the case of the issuance or sale of
equity or equity-linked securities (otherwise than upon the conversion of
shares of Capital Stock or other securities of the Company) for a consideration
in whole or in part other than cash, including securities acquired in exchange
therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the Fair Market Value,
before deducting therefrom any discounts or commissions allowed, paid or
incurred by the Company for any underwriting or otherwise in connection with
the issuance and sale thereof.

 

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

 

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

 

(b)           The aggregate maximum number of shares of
equity or equity-linked securities deliverable upon conversion of or in
exchange for any such convertible or exchangeable securities, or upon the
exercise of options, warrants or other rights to purchase or acquire such
convertible or 

 

11

 

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

 

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

 

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

 

(B)           Stock Splits, Subdivisions,
Reclassifications or Combinations.  If the
Company shall (i) declare a dividend or make a distribution on its Common
Stock in shares of Common Stock, (ii) subdivide or reclassify the
outstanding shares of Common Stock into a greater number of shares, or (iii) combine
or reclassify the outstanding Common Stock into a smaller number of shares, the
number of Shares into which the Series B Preferred Stock issuable upon
exercise of this Warrant are to be convertible pursuant to Section 2 of
this Warrant at the time of the record date for such dividend or distribution
or the effective date of such subdivision, combination or reclassification
shall be proportionately adjusted so that the Warrantholder after such date
shall 

 

12

 

be
entitled to purchase the number of shares of Common Stock which such holder
would have owned or been entitled to receive after such date had this Warrant
been exercised immediately prior to such date and the Series B Preferred
Stock issuable upon such exercise had been converted to Common Stock
immediately prior to such date.  In such
event, the Exercise Price in effect at the time of the record date for such
dividend or distribution or the effective date of such subdivision, combination
or reclassification shall be adjusted to the number obtained by dividing (x) the
product of (1) the number of Shares into which the Series B Preferred
Stock issuable upon the exercise of this Warrant are to be convertible pursuant
to Section 2 of this Warrant before such adjustment and (2) the
Exercise Price in effect immediately prior to the record or effective date, as
the case may be, for such dividend, distribution, subdivision, combination or
reclassification giving rise to this adjustment by (y) the new number of
Shares into which the Series B Preferred Stock issuable upon exercise of
this Warrant are to be convertible pursuant to Section 2 of this Warrant
determined pursuant to the immediately preceding sentence.

 

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

 

(D)          Certain Repurchases of Common Stock. 
In case the Company effects a Pro Rata Repurchase of Common Stock, then
the Exercise Price shall be reduced to the price determined by multiplying the
Exercise Price in effect immediately prior to the effective date of such Pro
Rata Repurchase by a fraction of which the numerator shall be (i) the
product of (x) the number of shares of Common Stock outstanding
immediately before such Pro Rata Repurchase and (y) the Market Price of a
share of Common Stock on the trading day immediately preceding the 

 

13

 

first
public announcement by the Company or any of its Affiliates of the intent to
effect such Pro Rata Repurchase, minus (ii) the aggregate purchase price
of the Pro Rata Repurchase, and of which the denominator shall be the product
of (i) the number of shares of Common Stock outstanding immediately prior
to such Pro Rata Repurchase minus the number of shares of Common Stock so
repurchased and (ii) the Market Price per share of Common Stock on the
trading day immediately preceding the first public announcement of such Pro
Rata Repurchase.  In such event, the
number of Shares into which the Series B Preferred Stock issuable upon the
exercise of this Warrant are to be convertible pursuant to Section 2 of
this Warrant shall be increased to the number obtained by dividing (x) the
product of (1) the number of Shares into which the Series B Preferred
Stock issuable upon the exercise of this Warrant are to be convertible pursuant
to Section 2 of this Warrant before such adjustment, and (2) the
Exercise Price in effect immediately prior to the Pro Rata Repurchase giving
rise to this adjustment by (y) the new Exercise Price determined in
accordance with the immediately preceding sentence.

 

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

 

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

 

14

 

(G)           Timing of Issuance of Additional Common
Stock Upon Certain Adjustments.  In any case
in which the provisions of this Section 13 shall require that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event (i) issuing to
the Warrantholder of this Warrant exercised after such record date and before
the occurrence of such event the additional shares of Series B Preferred
Stock issuable upon such exercise by reason of the adjustment required by such
event over and above the shares of Series B Preferred Stock issuable upon
such exercise before giving effect to such adjustment and (ii) paying to
such Warrantholder any amount of cash in lieu of a fractional share of Series B
Preferred Stock; provided, however,  that the
Company upon request shall deliver to such Warrantholder a due bill or other
appropriate instrument evidencing such Warrantholder’s right to receive such additional
shares, and such cash, upon the occurrence of the event requiring such
adjustment.

 

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

 

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

 

(J)            Notice of Adjustment Event. 
In the event that the Company shall propose to take any action of the
type described in this Section 13 (but only if the action of the type
described in this Section 13 would result in an adjustment in the Exercise
Price or the number of Shares into which the Series B Preferred Stock
issuable upon exercise of this Warrant are to be convertible pursuant to Section 2
of this Warrant or a change in the type of securities or property to be
delivered upon exercise of this Warrant), the Company shall give notice to the
Warrantholder, in the manner set forth in Section 13(I), which notice
shall specify the record date, if any, with respect to any such action and the
approximate date on which such action is to take place.  Such notice shall also set forth the facts
with respect thereto as shall be reasonably necessary to indicate the effect on
the Exercise Price and the number, kind or class of shares or other securities
or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require
the fixing of a record date, such notice shall be given at least ten (10) days
prior to the date so fixed, and in case of all other action, such notice shall
be given at 

 

15

 

least
fifteen (15) days prior to the taking of such proposed action.  Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any such action.

 

(K)          No Impairment. 
The Company will not, by amendment of its certificate of incorporation
or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in taking
of all such action as may be necessary or appropriate in order to protect the
rights of the Warrantholder.

 

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

 

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

 

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

 

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

 

16.           Governing Law. 
This Warrant shall be binding upon any successors or assigns of the
Company.  This Warrant shall constitute a
contract under the laws of the State of New York 

 

16

 

and
for all purposes shall be construed in accordance with and governed by the laws
of the State of New York applicable to agreements made and to be performed
entirely within such state.

 

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

 

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

 

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

 

If to
the Company, to:

 

West Coast Bancorp

5335 Meadows Road, Suite 201

Lake Oswego, Oregon  97035

	
  Attn:

  	
  Richard Rasmussen,
  General Counsel

  

Facsimile: 
(503) 684-0781

 

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

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019-6150

	
  Attn:

  	
  Craig M. Wasserman

  
	
   

  	
  Richard K. Kim

  
	
   

  	
  Matthew M. Guest

  

Facsimile: 
(212) 403-2000

 

20.           Prohibited Actions. 
The Company agrees that it will not take any action which would entitle
the Warrantholder to an adjustment of the Exercise Price if the total number of
shares Series B Preferred Stock issuable upon exercise of this Warrant,
together with the number of shares of Series B Preferred Stock then
outstanding and the number of shares of Series B Preferred Stock then
issuable upon the exercise of all outstanding options, warrants, conversion and
other rights, would exceed the total number of shares of Series B
Preferred Stock then 

 

17

 

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

 

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

 

[Remainder of page intentionally
left blank]

 

18

 

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

 

 

	
   

  	
  WEST COAST BANCORP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged
  and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [·]

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  

 

[Signature Page to Warrant]

 

 

[Form Of
Notice Of Exercise]

 

	
   

  	
   

  	
  Date:

  	
   

  	
   

  	
   

  	
   

  

 

TO:         West Coast Bancorp

 

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

 

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

 

	
  Number of Shares of
  Series B Preferred Stock:

  	
   

  	
   

  
	
   

  	
   

  
	
  Name and Address of
  Person to be

  	
   

  	
   

  
	
   

  	
   

  
	
  Issued New Warrant:

  	
   

  	
   

  
					

 

 

	
   

  	
  Holder:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

[Form of
Notice of Exercise]

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