principal amount thereof plus all accrued and unpaid interest thereon, and in the case of shares of Common Stock shall be the Fair Market Value thereof), or (iii) the delivery of a notice to the Company that the Purchaser is exercising the Warrant by authorizing the Company to reduce the number of Warrant Shares subject to the Warrant by the number of shares having an aggregate Fair Market Value equal to the Aggregate Exercise Price.

(ii)            Certificates for Warrant Shares purchased upon exercise of this Warrant shall be delivered by the Company to the Purchaser within five days after the date of the Exercise Time together with any cash payable in lieu of a fraction of a share pursuant to Section 13 hereof.  Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the rights formerly represented by this Warrant which have not expired or been exercised and shall, within such five-day period, deliver such new Warrant to the Person designated for delivery in the Exercise Agreement.

(iii)           The Warrant Shares issuable upon the exercise of this Warrant shall be deemed to have been issued to the Purchaser at the Exercise Time, and the Purchaser shall be deemed for all purposes to have become the Registered Holder of such Warrant Shares at the Exercise Time.

(iv)           The issuance of certificates for Warrant Shares upon exercise of this Warrant shall be made without charge to the Registered Holder or the Purchaser for any issuance tax in respect thereof or other cost incurred by the Company in connection with such exercise and the related issuance of Warrant Shares.

(v)            The Company shall not close its books against the transfer of this Warrant or of any Warrant Shares issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant.

(vi)           The Company shall assist and cooperate with the Registered Holder or any Purchaser required to make any governmental filings or obtain any governmental approvals prior to or in connection with any exercise of this Warrant.

(vii)          Notwithstanding any other provision hereof, if an exercise of any portion of this Warrant is to be made in connection with a public offering or a Sales Event, such exercise may at the election of the Registered Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.

(viii)         The Company shall at all times reserve and keep available out of its authorized but unissued Common Stock solely for the purpose of issuance upon the exercise of the Warrants, the maximum number of Warrant Shares issuable upon exercise of all outstanding Warrants.  All Warrant Shares which are so issuable shall, when issued and upon the payment of the applicable Exercise Price, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens, adverse claims and charges.  The Company shall take all such actions as may be necessary to ensure that all such Warrant Shares may be so issued without violation by the Company of any applicable law or governmental regulation or any requirements of any domestic or foreign securities exchange upon which shares of Common Stock, or other securities constituting Warrant Shares, may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance).  The Company shall use its best efforts to cause the Warrant Shares, immediately upon such exercise, to be listed on any domestic or foreign securities exchange upon which shares of Common Stock, or other securities constituting Warrant Shares, are listed at the time of such exercise.  The Company shall not take any action which would cause the number of authorized but unissued shares of Common Stock to be less than the number of shares required to be reserved hereunder for issuance upon exercise of the Warrants.

(ix)            If the Warrant Shares issuable by reason of exercise of this Warrant are convertible into or exchangeable for any other stock or securities of the Company, the Company shall, at the Purchaser’s option and upon surrender of this Warrant by such Purchaser as provided above together with any notice, statement or payment required to effect such conversion or exchange of Warrant Shares, deliver to such Purchaser (or as otherwise specified by such Purchaser) a certificate or certificates representing the stock or

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securities into which the Warrant Shares issuable by reason of such conversion are convertible or exchangeable, registered in such name or names and in such denomination or denominations as such Purchaser has specified.

(x)             The Company shall not, and shall not permit its subsidiaries to, directly or indirectly, by any action (including, without limitation, reincorporating in a jurisdiction other than Oregon or Delaware, amending its Articles of Incorporation or through any Organic Change (as defined in Section 2D ), the issuance or sale of securities or any other voluntary action) avoid or seek to avoid the observance or performance of any of the terms of this Warrant (except for any action which ratably affects all Warrant Shares and shares of Common Stock), but shall at all times in good faith assist in the carrying out of all such terms of this Warrant.  Without limiting the generality of the foregoing, the Company shall (a) obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant and (b) not undertake any reverse stock split, combination, reorganization or other reclassification of its capital stock which would have the effect of making this Warrant exercisable for less than one share of Common Stock.  Notwithstanding the foregoing, the Registered Holders may waive any of their rights under this Warrant, including without limitation, the antidilution rights set forth in Section 2 below.

C.             Exercise Agreement .  Upon any exercise of this Warrant, the Purchaser shall deliver to the Company an Exercise Agreement in substantially the form set forth in Exhibit I hereto, except that if the Warrant Shares are not to be issued in the name of the Registered Holder, the Exercise Agreement shall also state the name of the Person to whom the certificates for the Warrant Shares are to be issued, and if the number of Warrant Shares to be issued does not include all of the Warrant Shares purchasable hereunder, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the rights hereunder is to be issued.

D.             Automatic Exercise .

(i)             This Warrant shall be deemed to have been exercised in full automatically in a cashless exercise as described in Section 1B(i)(c)(iii) above upon the closing of a transaction constituting a Sales Event.

(ii)            If a Sales Event occurs in which the proceeds to the holder of this Warrant exceed the aggregate Exercise Price for the Warrant Shares, the exercise of this Warrant will be deemed to occur, and the Exercise Time will be deemed to be, immediately prior to the closing of such Sales Event; provided, that this Warrant shall be cancelled in the event that the proceeds to the holder of this Warrant would be less than or equal to the aggregate Exercise Price for the Warrant Shares.  The provisions of Section 1B(ii) through (x) will apply to such exercise.

SECTION 2.  Adjustment of Exercise Price and Number of Shares .  In order to prevent dilution of the rights granted under this Warrant, the Initial Exercise Price shall be subject to adjustment from time to time as provided in this Section 2 (as so adjusted, the “ Exercise Price ”), and the number of Warrant Shares obtainable upon exercise of this Warrant shall be subject to adjustment from time to time, each as provided in this Section 2 .

A.             Adjustment of Exercise Price and Number of Shares upon Issuance of Common Stock .

(i)             If and whenever, on or after the Date of Issuance, the Company issues or sells, or in accordance with Section 2B is deemed to have issued or sold (other than pursuant to a Permitted Issuance) any shares of Common Stock for a consideration per share less than the per share Exercise Price immediately prior to such issuance or sale, then immediately upon such issuance or sale, the Exercise Price shall be reduced to a price (calculated to the nearest cent) determined by multiplying the Exercise Price in effect immediately prior to such issuance or sale by a fraction, (a) the numerator of which shall be the number of shares of Common Stock Deemed Outstanding immediately prior to such issuance or sale plus the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of additional shares of Common Stock actually so issued would purchase at the Exercise Price in effect immediately prior to such issuance or sale, and (b) the denominator of which will be the number of shares of Common Stock Deemed Outstanding immediately prior to such issuance or sale plus the number of additional shares of Common Stock actually so issued.

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(ii)            Upon each such adjustment of the Exercise Price hereunder, the number of Warrant Shares acquirable upon exercise of this Warrant shall be adjusted to equal the number of shares determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment.

B.             Effect on Exercise Price of Certain Events .  For purposes of determining the adjusted Exercise Price under Section 2A , the following shall be applicable:

(i)             Issuance of Rights or Options .  If after the Date of Issuance the Company in any manner grants any rights or options (other than pursuant to a Permitted Issuance) to subscribe for or to purchase Common Stock or any stock or other securities convertible into or exchangeable for Common Stock (including without limitation convertible common stock) (such rights or options being herein called “ Options ” and such convertible or exchangeable stock or securities being herein called “ Convertible Securities ”) and the price per share for which Common Stock is issuable upon the exercise of such Options or upon conversion or exchange of such Convertible Securities is less than the Exercise Price then in effect, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share.  For purposes of this paragraph, the “price per share for which Common Stock is issuable upon exercise of such Options or upon conversion or exchange of such Convertible Securities” is determined by dividing (A) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus the minimum aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Company upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options.  No further adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

(ii)            Issuance of Convertible Securities .  If after the Date of Issuance the Company in any manner issues or sells any Convertible Securities (other than pursuant to a Permitted Issuance) and the price per share for which Common Stock is issuable upon such conversion or exchange thereof is less than the Exercise Price then in effect, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Company for such price per share.  For the purposes of this paragraph, the “price per share for which Common Stock is issuable upon such conversion or exchange thereof” is determined by dividing (A) the total amount received or receivable by the Company as consideration for the issuance or sale of such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities.  No further adjustment of the Exercise Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Exercise Price have been or are to be made pursuant to other provisions of this Section 2B , no further adjustment of the Exercise Price shall be made by reason of such issuance or sale.

(iii)           Change in Option Price or Conversion Rate .  If the purchase price provided for in any Options, the a