Unassociated Document


    


    
      
        	
                

              	
                Cira
      Centre

              
	
                2929
      Arch Street, 17th Floor

              
	
                Philadelphia,
      PA 19104

              
	
                T 215 701 9555 F 215 701
    8282

              
	 
      
	
                135
      East 57th Street, 21st Floor

              
	
                New
      York, NY 10022

              
	
                T 646 673 8000 F
      646 673
      8100

              
	 
      
	
                www.cohenandcompany.com

              


      

    

     

    Private and
Confidential

     

    October
26, 2009

     

    Samuel
Hillier

    Cohen
& Company Financial Management, LLC

    2929 Arch
Street, 17th
Floor

    Philadelphia,
PA 19104

     

    
      	
              RE:

            	
              Cascade Bancorp Trust
      Preferred Securities Exchange
Offer

            


    

     

    
      Dear Mr.
Hillier:

    

     

    As you
are aware, Cohen & Company Securities, LLC has been engaged by Cascade
Bancorp (“Cascade” and/or the “Company”) to act as exclusive advisor to the
Company in connection with a restructuring and/or an exchange of its trust
preferred securities held in collateralized debt obligations under your
management (the “Alesco CDOs”) having an aggregate principal amount of
$66,500,000 (the “TPS”) according to the following schedule:

     

    
      
        
          
            
              
                
                  
                    	
                            Trust Name

                          	 	
                            Principal Amount

                          	 	
                            Alesco CDO

                          
	
                            Cascade
      Bancorp Trust I

                          	 	$	20,000,000	 	
                            Alesco
      Preferred Funding VI

                          
	
                            Cascade
      Bancorp Statutory Trust II

                          	 	$	13,250,000	 	
                            Alesco
      Preferred Funding X

                          
	
                            Cascade
      Bancorp Statutory Trust III

                          	 	$	13,250,000	 	
                            Alesco
      Preferred Funding X

                          
	
                            Cascade
      Bancorp Statutory Trust IV

                          	 	
                            $

                            $

                          	
                            10,000,000

                            10,000,000

                          	 	
                            Alesco
      Preferred Funding XI

                            Alesco
      Preferred Funding
XIV

                          


                  

                

              

            

          

        

      

    

     

    As you
may be aware, the Company has lost in excess of $166 million over the past 6
quarters and is currently in deferral on the TPS. In addition, the Company’s
primary operating subsidiary, Bank of the Cascades (the “Bank”), entered into a
Cease and Desist (“C&D”) order with both the FDIC and the Oregon Division of
Finance and Corporate Securities on August 27, 2009. Among other things, this
C&D requires that the bank achieve a Tier 1 Leverage Ratio of 10% within 150
days of said agreement.

     

    As a
result of the aforementioned losses and C&D requirements, the Company is
pursuing an equity capital raise (“Capital Raise”) and has filed a corresponding
registration statement. We believe that the success of this Capital Raise and in
all reality, the future viability of the Company, is contingent upon the
execution of a restructuring and/or an exchange of the TPS.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Cohen
& Company Financial Management, LLC

    October
26,
2009

    Page
2

     

    To this
end, the Trust Preferred Exchange Term Sheet attached hereto as Annex A details the
transaction we propose for Cascade to purchase the TPS from the respective
Alesco CDOs (the “Proposed Transaction”). We believe the Proposed Transaction is
fair and provides your investors with the potential for a 20% overall recovery,
which is materially higher than your current carrying value and we believe,
markedly higher than what you are likely to receive if the Company cannot raise
additional capital.

     

    Please
note that consummation of the Proposed Transaction will require Cohen &
Company Financial Management, LLC (the “Collateral Manager”), and the affected
Alesco CDOs under its management, to transfer to the Company all rights and
title to, and interest in, the TPS. Furthermore, by entering into the Proposed
Transaction, the Collateral Manager will acknowledge all obligations under all
of the TPS shall be deemed fully discharged and that neither it nor its affected
Alesco CDOs shall receive or have any claim for any future, deferred, or past
due payments on the TPS and accrued or penalty interest thereon, whether or not
any of such payments are due or accrued or unpaid. Lastly, the Collateral
Manager and its affected Alesco CDOs will also release Cascade and any and all
officers, directors, affiliates and subsidiaries from any claims whatsoever
relating to, in connection with, or arising out of the Alesco CDOs’ investments
in the TPS.

     

    The
Collateral Manager represents and warrants that it has the requisite power and
authority to enter into this letter agreement and perform its obligations
hereunder.

     

    Each of
Cascade and the Collateral Manager hereby represents and warrants that it has
not, nor any person acting on any of their behalf have engaged, or will engage,
in any form of “general solicitation or general advertising” (within the meaning
of Regulation D under the Securities Act of 1933, as amended) in connection with
any offer or sale of the TPS.

     

    Each of
Cascade and the Collateral Manager hereby represents and warrants that this
letter agreement constitutes the legal, valid and binding obligation of each of
them, enforceable against each of them, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general
principals of equity.

     

    Please
indicate your agreement with the foregoing terms of the Proposed Transaction by
signing below and returning to us the enclosed duplicate of this document,
whereupon this document and your acceptance shall represent a binding agreement
between Cohen & Company Financial Management, LLC, as Collateral Manager,
and Cascade Bancorp.

     

    [Signature
page follows.]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Cohen
& Company Financial Management, LLC

    October
26,
2009

    Page
3

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  Very
      truly yours,

                                
	 
      	 
      
	 
      	
                                  COHEN
      & COMPANY SECURITIES,
LLC

                                


                        

                      

                    

                  

                

              

            

          

        

      

    

    
      


      
        
          
            	 
      	
                    By:

                  	/s/
      Christopher Ricciardi


          

        

      

      


      
        
          
            	 
      	
                    Name:

                  	Christopher
      Ricciardi


          

        

      

      


      
        
          
            	 
      	
                    Title:

                  	CEO


          

        

      

    

     

    AGREED
AND ACCEPTED AS OF

    ___________________,
2009

    


    COHEN
& COMPANY FINANCIAL MANAGEMENT, LLC, AS COLLATERAL

    MANAGER

    


    
      
        
          
            	
                    By:

                  	/s/
      Kenneth R. Smith 	 
      


          

        

      

    

    


    
      
        
          	
                  Name:

                	/s/
      Kenneth R. Smith	 
      


        

      

    

    


    
      
        
          
            
              
                
                  	
                          Title:

                        	 	
                          CCO 
      

                        	 
      


                

              

            

          

        

      

    

    


    AGREED
AND ACCEPTED AS OF 

    October 23, 2009

     

    CASCADE
BANCORP

    


    
      
        
          	
                  By:

                	/s/
      G.D. Newton	 
      


        

      

    

    


    
      
        
          	
                  Name:

                	G.D.
      Newton	 
      


        

      

    

    


    
      
        
          	
                  Title:

                	EVP/CFO	 
      


        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Cohen
& Company Financial Management, LLC

    October
26,
2009

    Page
4

     

    Annex
A

     

    Trust
Preferred Exchange Term Sheet

     

    
      
        
          
            	
                    Privileged
      and Confidential

                  


          

        

      

    

    


    
      
        	
                Securities
      Subject to Offer

              	 
      	
                Cascade
      Bancorp Trust I ($20,000,000), Cascade Bancorp Statutory Trust II
      ($13,250,000), Cascade Bancorp Statutory Trust III ($13,250,000), and
      Cascade Bancorp Statutory Trust IV ($20,000,000).

              
	 
      	 
      	 
      
	
                Consideration

              	 
      	
                Mandatorily
      redeemable Senior Notes (“Notes”) with an aggregate original principal
      balance of $13,300,000, representing 20% of the original principal balance
      of the TPS. The Notes will be issued in certificated form to the Alesco
      CDOs in transactions exempt from registration under the Securities Act of
      1933, as amended.

              
	 
      	 
      	 
      
	
                Senior
      Notes Interest Rate

              	 
      	
                7.5%
      fixed per annum

              
	 
      	 
      	 
      
	
                Senior
      Notes Interest Accrual

              	 
      	
                Interest
      on the Notes shall begin accruing on the latter of January 1, 2010 or the
      date of closing on the basis of 360-day year composed of twelve 30-day
      months.

              
	 
      	 
      	 
      
	
                Payment
      Frequency

              	 
      	
                Quarterly

              
	 
      	 
      	 
      
	
                Payment
      Dates

              	 
      	
                3/15,
      6/15, 9/15 and 12/15, commencing on 3/15/2010

              
	 
      	 
      	 
      
	
                Redemption
      Triggers

              	 
      	
                The
      Company shall redeem the Notes for cash upon the fifth day following the
      closing of a Capital Raise.

              
	 
      	 
      	 
      
	
                Senior
      Notes Maturity

              	 
      	
                Five
      years from date of closing.

              
	 
      	 
      	 
      
	
                Closing
      of Transaction

              	 
      	
                One
      day prior to the pricing of the Company’s Capital Raise. It is currently
      anticipated that the pricing of the Company’s Capital Raise will occur on
      or before June 30, 2010.

              
	 
      	 
      	
                 
      

              
	
                Regulatory
      Approval

              	 
      	
                Consummation
      of the Proposed Transaction is subject to prior approval by the Company’s
      and the Bank’s primary state and Federal Regulators.

              
	 
      	 
      	 
      
	
                Expenses

              	 
      	
                Each
      party shall be responsible for its own expenses relating to the Proposed
      Transaction, including, but not limited to, the fees and expenses of
      its own legal counsel.

              
	 
      	 
      	 
      
	
                Governing
      Law

              	 
      	
                All
      documents will be governed by New York law.

              
	 
      	 
      	 
      
	
                Completion
      of Transaction

              	
                  

              	
                Each
      of the Company and the Collateral Manager hereby agrees to take such
      action or execute such documents reasonably necessary or desirable to
      complete the Proposed
Transaction.