Unassociated Document

 

    EXECUTION
COPY

     
 

      
        

      

    

     

    AMENDED
AND RESTATED

    


    SECURITIES
PURCHASE AGREEMENT

    


    dated as
of November 16, 2010

    


    between

    


    Cascade
Bancorp

    


    and

    


    BOTC
Holdings LLC

     

    
      
  

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    TABLE
OF CONTENTS

     

    
      
        	 
      	
                Page

              
	 
      	 
      
	
                ARTICLE I

              	 
      
	 
      	 
      
	
                Purchase;
      Closings

              	 
      
	 
      	 
      	 
      
	
                1.1

              	
                Purchase

              	
                2

              
	
                1.2

              	
                Closing

              	
                2

              
	 
      	 
      
	
                ARTICLE II

              	 
      
	 
      	 
      
	
                Representations
      and Warranties

              	 
      
	 
      	 
      	 
      
	
                2.1

              	
                Disclosure

              	
                7

              
	
                2.2

              	
                Representations
      and Warranties of the Company

              	
                8

              
	
                2.3

              	
                Representations
      and Warranties of the Investor

              	
                30

              
	 
      	 
      
	
                ARTICLE III

              	 
      
	 
      	 
      
	
                Covenants

              	 
      
	 
      	 
      	 
      
	
                3.1

              	
                Filings;
      Other Actions

              	
                31

              
	
                3.2

              	
                Expenses

              	
                33

              
	
                3.3

              	
                Access,
      Information and Confidentiality

              	
                34

              
	
                3.4

              	
                Conduct
      of the Business

              	
                34

              
	
                3.5

              	
                Reasonable
      Efforts

              	
                35

              
	
                3.6

              	
                Company
      Forbearances

              	
                35

              
	
                3.7

              	
                Shareholder
      Litigation

              	
                37

              
	 
      	 
      
	
                ARTICLE
      IV

              	 
      
	 
      	 
      
	
                Additional
      Agreements

              	 
      
	 
      	 
      	 
      
	
                4.1

              	
                No
      Rights Agreement

              	
                37

              
	
                4.2

              	
                Governance
      Matters

              	
                38

              
	
                4.3

              	
                Legend

              	
                40

              
	
                4.4

              	
                Certain
      Transactions

              	
                41

              
	
                4.5

              	
                Indemnity

              	
                41

              
	
                4.6

              	
                Registration
      Rights

              	
                43

              
	
                4.7

              	
                Gross-Up
      Rights

              	
                44

              
	
                4.8

              	
                Anti-Takeover
      Matters; Takeover Laws; No Rights Triggered

              	
                46

              
	
                4.9

              	
                Additional
      Regulatory Matters

              	
                46

              
	
                4.10

              	
                VCOC
      Investor

              	
                47

              
	
                4.11

              	
                MFN
      Provision

              	
                48

              


      

    

     

    
      
         


      

      
        -i-

        
          

        

      

      
         


      

    

    
 

    
      
        	
                4.12

              	
                Continued
      Listing Authorization

              	
                48

              
	
                4.13

              	
                Corporate
      Opportunities

              	
                48

              
	 
      	 
      
	
                ARTICLE V

              	 
      
	 
      	 
      
	
                Termination

              	 
      
	 
      	 
      	 
      
	
                5.1

              	
                Termination

              	
                49

              
	
                5.2

              	
                Effects
      of Termination

              	
                50

              
	 
      	 
      
	
                ARTICLE VI

              	 
      
	 
      	 
      
	
                Miscellaneous

              	 
      
	 
      	 
      	 
      
	
                6.1

              	
                Survival

              	
                50

              
	
                6.2

              	
                Amendment

              	
                50

              
	
                6.3

              	
                Waivers

              	
                50

              
	
                6.4

              	
                Counterparts
      and Facsimile

              	
                50

              
	
                6.5

              	
                Governing
      Law

              	
                51

              
	
                6.6

              	
                Waiver
      of Jury Trial

              	
                51

              
	
                6.7

              	
                Notices

              	
                51

              
	
                6.8

              	
                Entire
      Agreement, Etc.

              	
                52

              
	
                6.9

              	
                Other
      Definitions

              	
                52

              
	
                6.10

              	
                Captions

              	
                53

              
	
                6.11

              	
                Severability

              	
                53

              
	
                6.12

              	
                No
      Third-Party Beneficiaries

              	
                53

              
	
                6.13

              	
                Public
      Announcements

              	
                54

              
	
                6.14

              	
                Specific
      Performance

              	
                54

              


      

    

    
    

    
      
         


      

      
        -ii-

        
          

        

      

      
         


      

    


    LIST
OF EXHIBITS

     

    
      	
              Exhibit
      A:

            	
              Form
      of Opinion of Counsel

            
	
              Exhibit
      B:

            	
              Form
      of Officer’s Certificate from the Company

            
	
              Exhibit
      C:

            	
              Form
      of Registration Rights Agreement

            


    

     

    
      
         


      

      
        -iii-

        
          

        

      

      
         


      

    
 

    INDEX
OF DEFINED TERMS

    
    

    
      
        
          
            	
                    Term

                  	 	
                    Location of

                    Definition

                  
	
                    Agency

                  	 	
                    2.2(z)(8)(i)

                  
	
                    Affiliate

                  	 	
                    6.9(2)

                  
	
                    Agreement

                  	 	
                    Preamble

                  
	
                    Articles
      of Incorporation

                  	 	
                    2.2(a)

                  
	
                    Beneficially
      Own/Beneficial Owner/Beneficial Ownership

                  	 	
                    6.9(9)

                  
	
                    Benefit
      Plan

                  	 	
                    2.2(p)(1)

                  
	
                    BHC
      Act

                  	 	
                    1.2(b)(1)(xvi)

                  
	
                    Board
      Observer

                  	 	
                    4.2(f)

                  
	
                    Board
      of Directors

                  	 	
                    1.2(b)(1)(xviii)

                  
	
                    Burdensome
      Condition

                  	 	
                    4.9(c)

                  
	
                    Business
      Combination Exemption Resolution

                  	 	
                    4.8(a)

                  
	
                    business
      day

                  	 	
                    6.9(7)

                  
	
                    CBC
      Act

                  	 	
                    3.1(a)

                  
	
                    Closing

                  	 	
                    1.2(a)

                  
	
                    Closing
      Date

                  	 	
                    1.2(a)

                  
	
                    Code

                  	 	
                    2.2(p)(2)

                  
	
                    Common
      Stock/Common Shares

                  	 	
                    Recitals

                  
	
                    Company

                  	 	
                    Preamble

                  
	
                    Company
      10-K

                  	 	
                    2.2(c)(1)

                  
	
                    Company
      Bank

                  	 	
                    4.2(a)

                  
	
                    Company
      Financial Statements

                  	 	
                    2.2(f)

                  
	
                    Company
      Preferred Stock

                  	 	
                    2.2(c)(1)

                  
	
                    Company
      Reports

                  	 	
                    2.2(g)(1)

                  
	
                    Company
      Restricted Stock

                  	 	
                    2.2(c)(1)

                  
	
                    Company
      Significant Agreement

                  	 	
                    2.2(k)

                  
	
                    Company
      Stock Option

                  	 	
                    2.2(c)(1)

                  
	
                    Company
      Stock Option Plans

                  	 	
                    2.2(c)(1)

                  
	
                    Company
      Subsidiary/Company Subsidiaries

                  	 	
                    2.2(b)

                  
	
                    Company
      TRuPS

                  	 	
                    Recitals

                  
	
                    control/controlled
      by/under common control with

                  	 	
                    6.9(2)

                  
	
                    De
      Minimis Claim

                  	 	
                    4.5(e)

                  
	
                    Disclosure
      Schedule

                  	 	
                    2.1(a)

                  
	
                    Discounted
      TRuPS Amount

                  	 	
                    Recitals

                  
	
                    ERISA

                  	 	
                    2.2(p)(1)

                  
	
                    ERISA
      Affiliate

                  	 	
                    2.2(p)(2)

                  
	
                    ERISA
      Plan

                  	 	
                    2.2(p)(3)

                  
	
                    Exchange
      Act

                  	 	
                    2.2(g)(1)

                  
	
                    FDIC

                  	 	
                    2.2(b)

                  
	
                    Fund
      Entities

                  	 	
                    4.2(i)

                  
	
                    GAAP

                  	 	
                    2.2(f)

                  
	
                    Governmental
      Entity

                  	 	
                    1.2(b)(1)(i)

                  


          

        

      

    

     

    
      
         


      

      
        -iv-

        
          

        

      

      
         


      

    

    


    
      
        
          
            
              
                	
                        Term

                      	 
      	
                        Location of

                        Definition

                      
	
                        herein/hereof/hereunder

                      	 
      	
                        6.9(5)

                      
	
                        including/includes/included/include

                      	 
      	
                        6.9(4)

                      
	
                        Indemnification
      Agreements

                      	 
      	
                        4.2(i)

                      
	
                        Indemnified
      Party

                      	 
      	
                        4.5(c)

                      
	
                        Indemnifying
      Party

                      	 
      	
                        4.5(c)

                      
	
                        Information

                      	 
      	
                        3.3(b)

                      
	
                        Insurer

                      	 
      	
                        2.2(z)(8)(iii)

                      
	
                        IT
      Assets

                      	 
      	
                        2.2(w)(3)

                      
	
                        Intellectual
      Property

                      	 
      	
                        2.2(w)

                      
	
                        Investment
      Amount

                      	 
      	
                        1.2(a)

                      
	
                        Investor

                      	 
      	
                        Preamble

                      
	
                        Investor
      Nominee

                      	 
      	
                        4.2(a)

                      
	
                        IRS

                      	 
      	
                        2.2(i)(1)

                      
	
                        Jointly
      Indemnifiable Claim

                      	 
      	
                        4.2(i)

                      
	
                        knowledge
      of the Company/Company’s knowledge

                      	 
      	
                        6.9(10)

                      
	
                        Liens

                      	 
      	
                        2.2(b)

                      
	
                        Loans

                      	 
      	
                        2.2(z)(2)

                      
	
                        Loan
      Investor

                      	 
      	
                        2.2(z)(8)(ii)

                      
	
                        Losses

                      	 
      	
                        4.5(a)

                      
	
                        Material
      Adverse Effect

                      	 
      	
                        2.1(b)

                      
	
                        NASDAQ

                      	 
      	
                        1.2(b)(1)(xii)

                      
	
                        New
      Security

                      	 
      	
                        4.7(a)

                      
	
                        OBCA

                      	 
      	
                        2.2(v)

                      
	
                        Order

                      	 
      	
                        1.2(b)(1)(xi)

                      
	
                        Other
      Investors

                      	 
      	
                        Recitals

                      
	
                        Other
      Private Placements

                      	 
      	
                        Recitals

                      
	
                        Other
      Securities Purchase Agreements

                      	 
      	
                        Recitals

                      
	
                        Outside
      Date

                      	 
      	
                        5.1(b)

                      
	
                        Pension
      Plan

                      	 
      	
                        2.2(p)(3)

                      
	
                        Per
      Share Purchase Price

                      	 
      	
                        1.2(a)

                      
	
                        Permitted
      Liens

                      	 
      	
                        2.2(h)

                      
	
                        person

                      	 
      	
                        6.9(8)

                      
	
                        Plan
      Asset Regulations

                      	 
      	
                        4.10

                      
	
                        Pool

                      	 
      	
                        2.2(z)(7)

                      
	
                        Pre-Closing
      Period

                      	 
      	
                        3.4

                      
	
                        Previously
      Disclosed

                      	 
      	
                        2.1(c)

                      
	
                        Purchased
      Shares

                      	 
      	
                        1.2(a)

                      
	
                        Registration
      Rights Agreement

                      	 
      	
                        Recitals

                      
	
                        Regulatory
      Agreement

                      	 
      	
                        2.2(y)

                      
	
                        SEC

                      	 
      	
                        2.1(c)

                      
	
                        Securities
      Act

                      	 
      	
                        2.2(g)(1)

                      
	
                        Shareholder
      Litigation

                      	 
      	
                        3.7

                      
	
                        Shareholder
      Approvals

                      	 
      	
                        2.2(d)(1)

                      


              

            

          

        

      

    

     

    
      
         


      

      
        -v-

        
          

        

      

      
         


      

    

     

    
      
        
          
            
              
                	
                        Term

                      	 
      	
                        Location of

                        Definition

                      
	
                        subsidiary

                      	 
      	
                        6.9(1)

                      
	
                        Takeover
      Law

                      	 
      	
                        2.2(v)

                      
	
                        Tax/Taxes

                      	 
      	
                        2.2(i)(1)

                      
	
                        Tax
      Return

                      	 
      	
                        2.2(i)(1)

                      
	
                        Threshold
      Amount

                      	 
      	
                        4.5(e)

                      
	
                        Transaction
      Documents

                      	 
      	
                        Recitals

                      
	
                        TRuPS
      Exchanges

                      	 
      	
                        Recitals

                      
	
                        Trust
      Preferred Securities Exchange Agreements

                      	 
      	
                        Recitals

                      
	
                        Unlawful
      Gains

                      	 
      	
                        2.2(n)(5)

                      
	
                        VCOC

                      	 
      	
                        4.10

                      
	
                        VCOC
      Investor

                      	 
      	
                        4.10

                      
	
                        Voting
      Debt

                      	 
      	
                        2.2(c)(1)

                      


              

            

          

        

      

    

     

    
      
         


      

      
        -vi-

        
          

        

      

      
         


      

    

     

    AMENDED AND RESTATED SECURITIES
PURCHASE AGREEMENT, dated as of November 16, 2010 (this “Agreement”), between Cascade
Bancorp, an Oregon corporation, (the “Company”) and BOTC Holdings
LLC, a Delaware limited liability company (the “Investor”).

     

    RECITALS:

     

    A.           Prior
Agreement.  The Company and the Investor previously entered
into a Securities Purchase Agreement, dated October 29, 2009, as amended
February 16, 2010, June 1, 2010, June 30, 2010, July 15, 2010, July 30, 2010,
August 31, 2010, September 15, 2010, September 29, 2010,  October 29,
2010 and November 5, 2010, and desire to amend and restate such Securities
Purchase Agreement, as of the date hereof, in its entirety.

     

    B.           The
Investment.  The Company intends to sell to the Investor, and
the Investor intends to purchase from the Company, as an investment in the
Company, the securities as described herein.  The securities to be
purchased at the closing are shares of common stock, no par value, of the
Company (“Common Stock”
or “Common
Shares”).

     

    C.           Additional Private
Placements.  Concurrently with the investment contemplated
herein, the Company has agreed to sell Common Shares in private placements (the
“Other Private
Placements”) to the other investors listed in Section 1.2(b)(1)(vi) of
the Disclosure Schedule (the “Other Investors”) under
separate securities purchase agreements (the “Other Securities Purchase
Agreements”), with the closing of such transactions to occur
simultaneously with the closing of this transaction as described
herein.

     

    D.           Registration
Rights.  At Closing, the Company will enter into a Registration
Rights Agreement for the benefit of the Investor and the Other Investors,
substantially in the form attached as Exhibit C hereto (the “Registration Rights
Agreement”), pursuant to which the Company has agreed to provide certain
registration rights with respect to the Purchased Shares under the 1933 Act and
applicable state securities laws.

     

    E.           Exchange
Agreements.  On November 16, 2010, the Company entered into
Exchange Agreements dated November 11, 2010 (together with all other agreements
entered into in connection therewith, the “Trust Preferred Securities Exchange
Agreements”) with Cohen & Company Financial Management, LLC, ATP
Management LLC and each of Alesco Preferred Funding X, Ltd., Alesco Preferred
Funding VI, Ltd., Alesco Preferred Funding XI, Ltd. and Alesco Preferred Funding
XIV, Ltd. with respect to the exchange of all trust preferred securities issued
by issuer trusts originated by the Company (the “Company TRuPS”) for
promissory notes issued by the Company substantially in the forms attached to
the Trust Preferred Securities Exchange Agreements (such exchanges to be
collectively referred to herein as the “TRuPS
Exchanges”).  Following the closing of the transactions
contemplated hereby, such promissory notes shall become due and payable for an
aggregate amount equal to 20% of the aggregate amount of the face value of the
Company TRuPS immediately prior to the completion of the TRuPS Exchanges
(together with accrued interest as provided pursuant to the terms of such
promissory notes) (the “Discounted TRuPS
Amount”).

     

    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    F.           Transaction
Documents.  The term “Transaction Documents” refers
to this Agreement, the Registration Rights Agreement and the Other Securities
Purchase Agreements.

     

    NOW, THEREFORE, in
consideration of the premises, and of the representations, warranties, covenants
and agreements set forth herein, the parties agree as follows:

     

    ARTICLE
I

     

    Purchase;
Closings

     

    1.1           Purchase. On the
terms and subject to the conditions set forth herein, the Investor will purchase
from the Company, and the Company will issue and sell to the Investor, a number
of shares of Common Stock as set forth herein.

     

    1.2           Closing

     

    (a)         
  Subject to the satisfaction (or, where permissible, waiver) of the
conditions to the closing set forth in Section 1.2(b), the closing of the
transactions contemplated hereby (the “Closing”) shall take place
simultaneously with the closing of the Other Private Placements or as shall be
agreed upon in writing by the parties hereto, at the offices of the Company
located at 1100 NW Wall Street, Bend, Oregon 97701 or such other location as
agreed by the parties in writing.  The date of the Closing is referred
to as the “Closing
Date.”  Subject to the satisfaction of the conditions described
in Section 1.2(b), at the Closing, the Company will deliver to the Investor
one or more certificates bearing the appropriate legends herein provided for and
free and clear of all Liens representing such number of whole shares of Common
Stock (the “Purchased
Shares”) determined by dividing the investment amount for the Investor as
disclosed in Section 1.2(b)(1)(vi) of the Disclosure Schedule (the Investor’s
“Investment Amount”
and, in the aggregate with the amounts to be invested pursuant to the Other
Securities Purchase Agreements, the “Investment Amounts”) by $0.40
(as adjusted in accordance with Section 4.12 to reflect any reverse stock split
of the Common Stock effected prior to the Closing, the “Per Share Purchase Price”),
against payment by the Investor of the Investment Amount by wire transfer of
immediately available United States funds to a bank account designated by the
Company; provided, that
if the Purchased Shares would be equal to or greater than 25% of any class of
Voting Securities (as defined in the BHC Act) of the Company outstanding at such
time (assuming, for this purpose only, full conversion of all securities owned
by the Investor and its Affiliates that are convertible into or exercisable for
Voting Securities and no conversion by other holders of such convertible
securities), then the Investor shall purchase the highest number of shares of
Common Stock at the Per Share Purchase Price (and the Investment Amount shall be
reduced accordingly) such that the Investor will not be deemed to own, control
or have the power to vote, for purposes of the BHC Act (as defined below) and
the rules and regulations promulgated thereunder, 25% or more of any class of
Voting Securities (as defined in the BHC Act) of the Company outstanding at such
time (assuming, for this purpose only, full conversion of all securities owned
by the Investor and its Affiliates that are convertible into or exercisable for
Voting Securities and no conversion by other holders of such convertible
securities).

     

    
      
         


      

      
        -2-

        
          

        

      

      
         


      

    

     

    (b)          Closing
Conditions.

     

    (1)          The
obligation of the Investor to consummate the Closing is subject to the
fulfillment prior to or contemporaneously with the Closing of each of the
following conditions:

     

    (i)          
 no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the Closing or shall prohibit or
restrict the Investor or its Affiliates from owning, voting, converting or
exercising any securities of the Company in accordance with the terms thereof
and no lawsuit shall have been commenced by any court, administrative agency or
commission or other governmental authority or instrumentality, whether federal,
state, local or foreign, or any applicable industry self-regulatory organization
(each, a “Governmental
Entity”) seeking to effect any of the foregoing;

     

    (ii)       
   the Shareholder Approvals shall have been
received;

     

    (iii)       
  the representations and warranties of the Company set forth in this
Agreement shall be true and correct in all respects as of the date hereof and as
of the Closing (except to the extent such representations and warranties are
made as of a specified date, in which case such representations and warranties
shall be true and correct in all respects as of such date);

     

    (iv)        
 the Company shall have performed all obligations required to be performed
by it at or prior to or contemporaneously with the Closing under this
Agreement;

     

    (v)          
since the date hereof, there shall not have occurred any circumstance, event,
change, development or effect that, individually or in the aggregate, has had or
could reasonably be expected to have a Material Adverse Effect on the Company or
its principal depository institution subsidiary;

     

    (vi)         
the Company shall receive gross proceeds from the sale of Common Shares pursuant
to the Transaction Documents of an aggregate amount not less than $165 million
or more than $177 million from the investors listed in Section 1.2(b)(1)(vi) of
the Disclosure Schedule, contemporaneously with the Closing and all of such
proceeds, other than (A) amounts used to pay all amounts due under the
promissory notes issued pursuant to the Trust Preferred Securities Exchange
Agreements (not to exceed the Discounted TRuPS Amount) and to pay related fees
and expenses (which related fees and expenses shall not exceed $2.7 million);
(B) amounts used to reimburse the Investor and the investors in the Other
Private Placements for their respective out-of-pocket fees and expenses pursuant
to Section 3.2 of this Agreement and the Other Securities Purchase Agreements;
(C) amounts to pay expenses related to the shareholders’ meeting to be held in
connection with the Shareholder Approvals and to the transactions contemplated
by the Transaction Documents; and (D) up to $1 million which will remain at the
Company for working capital purposes, shall be contributed as capital to the
Company’s principal depository institution subsidiary;

     

    
      
         


      

      
        -3-

        
          

        

      

      
         


      

    

     

    (vii)        
 the Company shall have reimbursed the Investor for out-of-pocket fees and
expenses incurred by the Investor in connection with the transactions
contemplated hereby, including, but not limited to, due diligence efforts, the
negotiation and preparation of this Agreement, accounting, financial and
investment banking advisory services, legal counsel, credit review, and the
undertaking of the transactions contemplated hereby, of $1,964,916 in the
aggregate, which amount includes $1,219,274 for which the Company has reimbursed
the Investor prior to the execution of this Agreement;

     

    (viii)       
 Davis Wright Tremaine LLP, counsel for the Company, shall have delivered
to the Investor their written opinion, dated the Closing Date, in the form set
forth in Exhibit
A hereto, in form and substance satisfactory to the
Investor;

     

    (ix)          
the Company shall have delivered to the Investor a duly executed Officer’s
Certificate in the form set forth in Exhibit B
hereto;

     

    (x)           
the TRuPS Exchanges shall have been completed pursuant to and in accordance with
the terms of the Trust Preferred Securities Exchange Agreements, and the
consummation of the transactions contemplated hereby and by the Other Securities
Purchase Agreements shall constitute a Capital Raise, as defined in and pursuant
to the promissory notes issued pursuant to the Trust Preferred Securities
Exchange Agreements, requiring the payment in full of such promissory notes for
an amount not to exceed, in the aggregate, the Discounted TRuPS
Amount;

     

    (xi)         
 the Company and its subsidiaries shall be in compliance in all material
respects with the policies and procedures adopted by them and disclosed to the
Investor in the Three Year Financial Plan dated May 26, 2010, and none of such
policies and procedures shall have been revoked or modified in any respect that
would make it materially less likely that the Company and its subsidiaries will
be able to comply with the cease-and-desist order dated August 27, 2009 against
the Company Bank issued by the FDIC (as defined below) and the Oregon Division
of Finance and Corporate Securities (the “Order”) (or any other
enforcement orders in effect as of the Closing);

     

    (xii)       
  as of the close of business on the second business day immediately
preceding the Closing, the Company’s (A) classified assets on its balance sheet
shall not be more than 5% higher than the amount set forth as of June 30, 2010,
(B) non-performing assets on its balance sheet shall not be more than 5% higher
than the amount set forth as of June 30, 2010 and (C) the Company’s net loss,
exclusive of tax adjustments or tax expense, for the period June 30, 2010 to the
second business day prior to the Closing Date, shall not exceed $20
million;

     

    
      
         


      

      
        -4-

        
          

        

      

      
         


      

    

     

    (xiii)         the
Company shall have caused the shares of Common Stock issuable at Closing and the
shares of Common Stock to be issued in the Other Private Placements to be
approved for listing on the NASDAQ Capital Market (“NASDAQ”), subject to official
notice of issuance;

     

    (xiv)         the
Company, the Investor and the investors in the Other Private Placements shall
have made or obtained the approvals and authorizations of, filings and
registrations with, and notifications to, and, to the extent required by
applicable law or regulation, consents, approvals, or exemptions from, all
Governmental Entities, including bank regulatory authorities and all third party
consents required to consummate the transactions contemplated by the Transaction
Documents, in each case without the imposition of a Burdensome
Condition;

     

    (xv)          except
as Previously Disclosed (as defined below), no Regulatory Agreement shall have
been threatened or issued by any Governmental Entity with regulatory authority
over the Company and its subsidiaries and neither the Company nor the Company
Bank shall have entered into a written agreement with respect to or otherwise
consented to a Regulatory Agreement;

     

    (xvi)         the
Investor shall have received written confirmation, satisfactory to it in its
reasonable good faith judgment, from the Federal Reserve to the effect that
neither it, nor any of its Affiliates, shall be deemed to “control” the Company
or any of its subsidiaries after the Closing for purposes of the Bank Holding
Company Act of 1956, as amended (the “BHC Act”), by reason of the
purchase of the Purchased Shares or the consummation of the other transactions
contemplated by this Agreement;

     

    (xvii)        no
law, rule, regulation, policy or guidance shall have been enacted or issued by
any Governmental Entity after the date hereof that, individually or in the
aggregate, would reasonably be expected to adversely affect (with respect to the
Investor or its Affiliates) any material financial term of the transactions
contemplated by this Agreement or the anticipated benefits or burdens to the
Investor and its Affiliates of the transactions contemplated
hereby;

     

    (xviii)       contemporaneously
with the Closing, (a) the size of the board of directors of the Company (the
“Board of Directors”)
shall be increased to eleven, (b) the Investor Nominee shall, to the extent
required by applicable law or regulation, have received a notice of
non-objection from the applicable bank regulators and grant of a waiver under
the Depository Institution Management Interlocks Act and shall have been
appointed to the Board of Directors and the board of directors of the Company
Bank; and (c) the Board of Directors and the board of directors of the Company
Bank pursuant to resolutions adopted by the Board of Directors and disclosed to
the Investor prior to the Closing Date shall be comprised as set forth on
Schedule 1.2(b)(1)(xviii), effective as of the Closing;


    
      
         


      

      
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    (xix)          at
Closing, the Registration Rights Agreement shall be executed by the Company and
each investor purchasing securities pursuant to the Other Securities Purchase
Agreements;

     

    (xx)           Sections
2, 3, 4 and 5 of the Shareholders Agreement, dated as of December 27, 2005, by
and among the Company, David F. Bolger and the parties listed on Schedule A
thereto, shall have been terminated and be of no further force and effect;
and

     

    (xxi)          at
the Closing, the Company will deliver a certificate of the Chief Executive
Officer or the Chief Financial Officer certifying compliance with each of the
above conditions and upon the request of the Investor shall provide sufficient
detail that the Investor may verify compliance.

     

    (2)          The
obligation of the Company to consummate the Closing is subject to the
fulfillment prior to the Closing of each of the following
conditions:

     

    (i)           
 the representations and warranties of the Investor set forth in
Section 2.3 of this Agreement shall be true and correct in all
respects as of the date hereof and as of the Closing (except to the extent such
representations and warranties are made as of a specified date, in which case
such representations and warranties shall be true and correct in all respects as
of such date);

     

    (ii)           
the Company shall receive gross proceeds from the sale of Common Shares of an
aggregate amount of not less than $165 million (which includes the Investment
Amount), contemporaneously with the Closing, from the proceeds from the Other
Private Placements and from the Investor as contemplated by this
Agreement;

     

    (iii)           the
Company and the Investor shall have obtained the approvals and authorizations
of, filings and registrations with, and notifications to, and, to the extent
required by applicable law or regulation, consents, approvals, or exemptions
from bank regulatory authorities, for the transactions contemplated by the
Transaction Documents; and

     

    (iv)           the
Investor shall have performed all obligations required to be performed by it at
or prior to the Closing under this Agreement.


    
      
         


      

      
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    ARTICLE
II

     

    Representations
and Warranties

     

    2.1          Disclosure

     

    (a)           On
or prior to the date of this Agreement, the Company delivered to the Investor a
schedule (“Disclosure
Schedule”) setting forth, among other things, items the disclosure of
which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 2.2 or to one or more of
its covenants contained in Article III; provided, however, that notwithstanding
anything in this Agreement to the contrary, the mere inclusion of an item in
such schedule shall not be deemed an admission that such item represents a
material exception or material fact, event, or circumstance or that such item
has had or would reasonably be expected to have a Material Adverse Effect on the
Company.

     

    (b)           “Material Adverse Effect”
means, with respect to the Investor, only clause (2) that follows, or, with
respect to the Company, both clauses (1) and (2) that follow, any
circumstance, event, change, development or effect that, individually or in the
aggregate (1) is or would reasonably be expected to be material and adverse
to the financial position, results of operations, business, assets or
liabilities, management or condition (financial or otherwise) of the Company and
the Company Subsidiaries taken as a whole, or (2) would or would reasonably
be expected to materially impair the ability of either the Investor or the
Company, respectively, to perform its respective obligations under this
Agreement or otherwise materially threaten or materially impede the consummation
of the transactions contemplated by this Agreement; provided, however, that in determining
whether a Material Adverse Effect has occurred, there shall be excluded any
effect to the extent resulting from the following: (A) changes, after the date
hereof, in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks, savings associations or their holding
companies, (B) actions or omissions of the Company expressly required by the
terms of this Agreement or taken with the prior written consent of the Investor,
(C) changes, after the date hereof, in the market price or trading volumes of
the Common Stock or the Company’s other securities (but not the underlying
causes of such changes), (D) changes in global or national political conditions,
including the outbreak or escalation of war or acts of terrorism, and (E) the
public disclosure of this Agreement or the transactions contemplated hereby;
except, with respect to clauses (A) and (D), to the extent that the effects of
such changes have a disproportionate effect on the Company and the Company
Subsidiaries, taken as a whole, relative to other banks, savings associations
and their holding companies generally, and with respect to clause (E), to the
extent that such public disclosure results in additional restrictions or
sanctions against the Company or the Company Bank by a Governmental
Entity.


    
      
         


      

      
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    (c)           “Previously Disclosed” with
regard to the Company (1) means information set forth on its Disclosure Schedule
corresponding to the provision of this Agreement to which such information
relates; provided that
information which is reasonably apparent on its face that it relates to another
provision of this Agreement, shall also be deemed to be Previously Disclosed
with respect to such other provision and (2) includes information publicly
disclosed by the Company in the Company Reports filed by it with or furnished to
the U.S. Securities and Exchange Commission (the “SEC”) on or after January 1,
2010, including amendments thereto filed prior to the date hereof, and publicly
available prior to the date of this Agreement (excluding any risk factor
disclosures contained in such documents under the heading “Risk Factors,” any
disclosure of risks included in any “forward-looking statements” or any other
disclaimers that are non-specific or statements that are predictive or
forward-looking in nature, and any exhibits thereto and documents incorporated
by reference therein).

     

    2.2           Representations and
Warranties of the Company.  Except
as Previously Disclosed, the Company represents and warrants as of the date of
this Agreement and as of the Closing (except to the extent made only as of a
specified date, in which case as of such date) to the Investor
that:

     

    (a)           Organization and
Authority.  The Company is a corporation duly organized and
validly existing under the laws of the State of Oregon, is duly qualified to do
business and is in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and failure to be so qualified would have a Material Adverse Effect on
the Company and has corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted.  The
Company is duly registered as a bank holding company under the BHC
Act.  The Company has furnished or made available to the Investor,
prior to the date hereof, true, correct and complete copies of the Company’s
Articles of Incorporation, as amended through the date of this Agreement (the
“Articles of
Incorporation”), and bylaws as amended through the date of this
Agreement.

     

    (b)           Company’s
Subsidiaries.  The Company has Previously Disclosed a true,
complete and correct list of all of its subsidiaries as of the date of this
Agreement (individually, a “Company Subsidiary” and,
collectively, the “Company
Subsidiaries”), and all shares of the outstanding capital stock of each
of the Company Subsidiaries are owned directly or indirectly by the
Company.  No equity security of any Company Subsidiary is or may be
required to be issued by reason of any option, warrant, scrip, preemptive right,
right to subscribe to, gross-up right, call or commitment of any character
whatsoever relating to, or security or right convertible into, shares of any
capital stock of such Company Subsidiary, and there are no contracts,
commitments, understandings or arrangements by which any Company Subsidiary is
bound to issue additional shares of its capital stock, or any option, warrant or
right to purchase or acquire any additional shares of its capital
stock.  All of the issued and outstanding shares of capital stock (or
equivalent interests of entities other than corporations) of each of the Company
Subsidiaries are duly authorized and validly issued, fully paid and
nonassessable and are owned, directly or indirectly, by the Company free and
clear of any lien, adverse right or claim, charge, option, pledge, covenant,
title defect, security interest or other encumbrances of any kind (“Liens”) with respect
thereto.  Neither the Company nor any of the Company Subsidiaries is a
party to any right of first refusal, right of first offer, proxy, voting
agreement, voting trust, registration rights agreement, or shareholders
agreement with respect to the sale or voting of any securities of any Company
Subsidiary.  Each Company Subsidiary is an entity duly organized,
validly existing, duly qualified to do business and in good standing under the
laws of its jurisdiction of organization, and has corporate or other appropriate
organizational power and authority to own or lease its properties and assets and
to carry on its business as it is now being conducted, except as would not
reasonably be expected to have a Material Adverse Effect on the
Company.  Except in respect of the Company Subsidiaries, the Company
does not own beneficially, directly or indirectly, more than 5% of any class of
equity securities or similar interests of any corporation, bank, business trust,
association or similar organization, and is not, directly or indirectly, a
partner in any partnership or party to any joint venture.  The Company
Bank is duly organized and validly existing as an Oregon state-chartered
commercial bank and its deposit accounts are insured by the Federal Deposit
Insurance Corporation (the “FDIC”) to the fullest extent
permitted by the Federal Deposit Insurance Act and the rules and regulations of
the FDIC thereunder, and all premiums and assessments required to be paid in
connection therewith have been paid when due.  The Company has
furnished or made available to the Investor, prior to the date hereof, true,
correct and complete copies of the charter and bylaws of the Company Bank as
amended through the date of this Agreement.

     

    
      
         


      

      
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    (c)           Capitalization.

     

    (1)           As
of the date hereof, the authorized capital stock of the Company consists of
45,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, no
par value (the “Company
Preferred Stock”).  As of the date hereof, there are 28,538,399
shares of Common Stock outstanding and no shares of Company Preferred Stock
outstanding.  From the date of this Agreement through the Closing
Date, except pursuant to the Transaction Documents and the transactions
contemplated hereby and thereby, the Company shall not have (i) issued or
authorized the issuance of any shares of Common Stock or Company Preferred
Stock, or any securities convertible into or exchangeable or exercisable for
shares of Common Stock or Company Preferred Stock (other than shares issued upon
the exercise of Company Stock Options outstanding on the date of this Agreement
and disclosed in the Company’s Disclosure Schedule), (ii) reserved for
issuance any shares of Common Stock or Company Preferred Stock or
(iii) repurchased or redeemed, or authorized the repurchase or redemption
of, any shares of Common Stock or Company Preferred Stock or any securities
convertible into or exchangeable or exercisable for shares of Common Stock or
Company Preferred Stock.  As of the date hereof, there are
(i) outstanding stock options issued under the Company’s 1994 Incentive
Stock Option Plan, as amended prior to the date hereof and as filed as exhibits
10.1 and 10.2 to the Company’s Annual Report on Form 10-K/A for the year ended
December 31, 2009 (the “Company 10-K”), Deferred
Compensation Plans as filed as exhibit 10.3 to the Company 10-K, 2002 Equity
Incentive Plan, as filed as exhibit 10.4 to the Company 10-K, and 2008
Performance Incentive Plan (together, the “Company Stock Option Plans”)
to purchase an aggregate of 1,564,969 shares
of the Common Stock (each, a “Company Stock Option”),
(ii) an aggregate of 476,840 shares of restricted stock and 11,811
restricted stock units (“Company Restricted Stock”)
outstanding under the Company Stock Option Plans and (iii) 414,630 shares of the
Common Stock reserved for issuance under the Company Stock Option
Plans.  Other than in respect of awards outstanding under or pursuant
to the Company Stock Option Plans, no shares of Common Stock or Company
Preferred Stock are reserved for issuance.  All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.  Each Company
Stock Option (i) was granted in compliance with all applicable laws and all of
the terms and conditions of the Company Stock Option Plans pursuant to which it
was issued, (ii) has an exercise price per share of Common Stock equal to or
greater than the fair market value of a share of Common Stock on the date of
such grant and (iii) has a grant date identical to the date on which the Board
of Directors or compensation committee of the Board of Directors actually
awarded such Company Stock Option.  Neither the Company nor any of its
officers, directors, or employees is a party to any right of first refusal,
right of first offer, proxy, voting agreement, voting trust, registration rights
agreement, or shareholders agreement with respect to the sale or voting of any
securities of the Company.  No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which the shareholders
of the Company may vote (“Voting Debt”) are issued and
outstanding.  Except as set forth elsewhere in this
Section 2.2(c), the Company does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, repurchase rights,
commitments, or agreements of any character calling for the purchase or issuance
of, or securities or rights convertible into or exchangeable or exercisable for,
any shares of Common Stock or Company Preferred Stock or any other equity
securities of the Company or Voting Debt or any securities representing the
right to purchase or otherwise receive any shares of capital stock of the
Company (including any rights plan or agreement).  The Company has
Previously Disclosed all shares of Company capital stock that have been
purchased, redeemed or otherwise acquired, directly or indirectly, by the
Company or any Company Subsidiary since December 31, 2009 and all dividends or
other distributions that have been declared, set aside, made or paid to the
shareholders of the Company since that date.


    
      
         


      

      
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    (2)           Section
2.2(c)(2) of the Company’s Disclosure Schedule sets forth the following
information with respect to each Company Stock Option and share of Company
Restricted Stock, which is true and correct as of the date of this Agreement:
(i) the name of each holder of Company Stock Options and Company Restricted
Stock, (ii) the number of shares of Common Stock subject to such Company Stock
Option and the number of shares of Company Restricted Stock, and, as applicable,
the grant date, exercise price, number of shares vested or not otherwise subject
to repurchase rights, reacquisition rights or other applicable restrictions,
vesting schedule and the Company Stock Option Plan under which such Company
Stock Options or shares of Company Restricted Stock were granted, and (iii)
whether, in the case of a Company Stock Option, such Company Stock Option is an
Incentive Stock Option (within the meaning of the Code).  The Company
has made available to the Investor copies of each form of stock option and
restrictive stock agreements evidencing outstanding Company Stock Options and
has also delivered any other stock option and restricted stock agreements to the
extent there are variations from the form of agreement, specifically identifying
the holder(s) to whom such variant forms apply.

     

    
      
         


      

      
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    (d)           Authorization.

     

    (1)           The
Company has the corporate power and authority to enter into and deliver this
Agreement, the Other Securities Purchase Agreements and the Registration Rights
Agreement and, subject to obtaining the Shareholder Approvals (defined below),
to carry out its obligations hereunder and thereunder.  The execution,
delivery and performance of this Agreement, the Other Securities Purchase
Agreements and the Registration Rights Agreement by the Company and the
consummation of the transactions contemplated hereby and thereby, including the
issuance of Common Stock in accordance with the terms of this Agreement and the
increase in the authorized shares of the Company, have been duly authorized by
the affirmative vote of at least a majority of the directors on the Board of
Directors.  This Agreement and the Other Securities Purchase
Agreements have been, and the Registration Rights Agreement will be, duly and
validly executed and delivered by the Company and, assuming due authorization,
execution and delivery of this Agreement and the Registration Rights Agreement
by the Investor and of the Other Securities Purchase Agreements by the other
parties thereto, are or will be, as applicable, valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganizations, fraudulent transfer or similar laws relating to or
affecting creditors generally or by general equitable principles (whether
applied in equity or at law).  No other corporate proceedings or
approvals or authorizations by the Company or the Company shareholders are
necessary for the execution and delivery by the Company of this Agreement, the
Other Securities Purchase Agreements and the Registration Rights Agreement, the
performance by the Company of its obligations hereunder and thereunder or the
consummation by the Company of the transactions contemplated hereby and thereby,
subject to receipt of the Shareholder Approvals.  The only vote of the
shareholders of the Company required to approve (i) the amendment of the
Articles of Incorporation to increase the number of authorized shares of Common
Stock to at least such number as shall be sufficient to permit the issuance of
Common Stock contemplated in this Agreement and the Other Securities Purchase
Agreements is that more votes are cast for such proposal than are cast against
such proposal and (ii) the issuance of such authorized shares of Common Stock
for purposes of rule 5635 of NASDAQ’s listing rules is a majority of the votes
cast on such proposal (such shareholder approvals to amend the Articles
of Incorporation, and to issue the Common Stock, the “Shareholder
Approvals”).  The Board of Directors has resolved that the
transactions contemplated hereby and by the Other Securities Purchase Agreements
are in the best interests of shareholders of the Company and has determined
unanimously to recommend to the shareholders the approval of the actions with
respect to the Shareholder Approvals.  At meetings duly called and
held on December 7, 2009 and April 26, 2010, the shareholders of the Company
duly and validly approved amendments to the Articles of Incorporation to effect
a reverse stock split of Common Stock at the following ratios: 1:3, 1:5, 1:7 and
1:10.

     

    (2)           Neither
the execution, delivery and performance by the Company of this Agreement, the
Other Securities Purchase Agreements or the Registration Rights Agreement, nor
the consummation of the transactions contemplated hereby and thereby, nor
compliance by the Company with any of the provisions of any of the foregoing,
will (i) violate, conflict with, or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
result in the loss of any benefit or creation of any right on the part of any
third party under, or accelerate the performance required by, or result in a
right of termination or acceleration of, or result in the creation of, any Lien,
upon any of the properties or assets of the Company or any Company Subsidiary
under any of the terms, conditions or provisions of (A) subject to the
receipt of the Shareholder Approvals, its Articles of Incorporation or bylaws
(or similar governing documents) or (B) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any Company Subsidiary is a party or by which
it may be bound, or to which the Company or any Company Subsidiary or any of the
properties or assets of the Company or any Company Subsidiary may be subject, or
(ii) subject to compliance with the statutes and regulations referred to in
the next paragraph, violate any ordinance, permit, concession, grant, franchise,
law, statute, rule or regulation or any judgment, ruling, order, writ,
injunction or decree applicable to the Company or any Company Subsidiary or any
of their respective properties or assets, except in the case of clauses (i)(B)
and (ii) for such violations, conflicts and breaches that are not material,
individually or in the aggregate.

     

    
      
         


      

      
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    (3)           Other
than the securities or blue sky laws of the various states and the filings,
notices, approvals or clearances required under federal or state banking laws,
no notice to, registration, declaration or filing with, exemption or review by,
or authorization, order, consent or approval of, any Governmental Entity, or
expiration or termination of any statutory waiting period, is necessary for the
execution and delivery of this Agreement or the consummation by the Company of
the transactions contemplated by this Agreement, the Other Securities Purchase
Agreements or the Registration Rights Agreement.

     

    (e)           Knowledge as to
Conditions. As of the date of this Agreement, the Company knows of no
reason why any regulatory approvals and, to the extent necessary, any other
approvals, authorizations, filings, registrations, and notices required or
otherwise a condition to the consummation of the transactions contemplated by
the Transaction Documents will not be obtained.

     

    (f)           Financial
Statements.  The Company has previously made available to the
Investor copies of (i) the consolidated balance sheets of the Company as of
December 31, 2009 and 2008 and related consolidated statements of income,
shareholders’ equity and cash flows for the three years ended December 31,
2009, together with the notes thereto, certified by Delap LLP and included in
the Company 10-K, as filed with the SEC, and (ii) the unaudited consolidated
balance sheets of the Company as of September 30, 2010 and related consolidated
statements of income, shareholders’ equity and cash flows for the period then
ended, included in the Company’s Quarterly Report on Form 10-Q for the period
ended September 30, 2010 (collectively, the “Company Financial
Statements”).  The Company Financial Statements, and the
financial statements to be filed by the Company with the SEC after the date of
this Agreement, (1) have been or will be prepared from, and are or will be in
accordance with, the books and records of the Company and the Company
Subsidiaries, (2) complied or will comply, as of their respective date of filing
with the SEC, in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto,
(3) have been or will be prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”) applied on a
consistent basis and (4) present or will present fairly in all material respects
the consolidated financial position of the Company and the Company Subsidiaries
at the dates set forth therein and the consolidated results of operations,
changes in shareholders’ equity and cash flows of the Company and the Company
Subsidiaries for the periods stated therein (subject to the absence of notes and
year-end audit adjustments in the case of interim unaudited
statements).


    
      
         


      

      
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    (g)           Reports.

     

    (1)           Since
December 31, 2007, the Company and each Company Subsidiary have filed all
reports, registrations, documents, filings, statements and submissions together
with any required amendments thereto, that it was required to file with any
Governmental Entity (the foregoing, collectively, the “Company Reports”) and have
paid all fees and assessments due and payable in connection
therewith.  As of their respective filing dates, the Company Reports
complied in all material respects with all statutes and applicable rules and
regulations of the applicable Governmental Entities, as the case may
be.  As of the date of this Agreement, except as set forth in Section
2.2(g) of the Disclosure Schedule, there are no outstanding comments from the
SEC or any other Governmental Entity with respect to any Company
Report.  Except as set forth in Section 2.2(g) of the Disclosure
Schedule, the Company Reports, including the documents incorporated by reference
in each of them, each contained all of the information required to be included
in it and, when it was filed and as of the date of each such Company Report
filed with or furnished to the SEC, such Company Report did not, as of its date
or if amended prior to the date of this Agreement, as of the date of such
amendment, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made in it not
misleading and complied as to form in all material respects with the applicable
requirements of the Securities Act of 1933, as amended, or any successor statute
(the “Securities Act”),
and the Securities Exchange Act of 1934, as amended, or any successor statute
(the “Exchange
Act”).  No executive officer of the Company has failed in any
respect to make the certifications required of him or her under Section 302
or 906 of the Sarbanes-Oxley Act of 2002.  There are no facts or
circumstances that would prevent its chief executive officer and chief financial
officer from giving the certifications and attestations required pursuant to
Rules 13a-14 and 15d-14 under the Exchange Act, without qualification, when next
due.

     

    
      
         


      

      
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    (2)           The
records, systems, controls, data and information of the Company and the Company
Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or the Company Subsidiaries or accountants (including all means
of access thereto and therefrom).  The Company (A) has
implemented and maintains disclosure controls and procedures (as defined in Rule
13a-15(e) of the Exchange Act) to ensure that material information relating to
the Company, including its consolidated subsidiaries, is made known to the chief
executive officer and the chief financial officer of the Company by others
within those entities, and (B) has disclosed, based on its most recent
evaluation prior to the date of this Agreement, to the Company’s outside
auditors and the audit committee of the Board of Directors (x) any
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) that are reasonably likely to adversely affect the Company’s
ability to record, process, summarize, and report financial information, and
(y) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal controls over
financial reporting.  The Company has no knowledge of any reason that
its outside auditors and its chief executive officer and chief financial officer
will not be able to give the certifications and attestations required pursuant
to the rules and regulations adopted pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, without qualification, when next
due.  Since December 31, 2006, (i) neither the Company nor any Company
Subsidiary nor, to the knowledge of the Company, any director, officer,
employee, auditor, accountant or representative of the Company or any Company
Subsidiary has received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of
the Company or any Company Subsidiary or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
the Company or any Company Subsidiary has engaged in questionable accounting or
auditing practices, and (ii) no attorney representing the Company or any Company
Subsidiary, whether or not employed by the Company or any Company Subsidiary,
has reported evidence of a violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of the Company Subsidiaries or
any of their respective officers, directors, employees or agents to the Board of
Directors or any committee thereof or to any director or officer of the Company
or any of the Company Subsidiaries.

     

    (h)           Properties and
Leases.  Except for any Permitted Liens, the Company and each
Company Subsidiary have good title free and clear of any Liens to all the real
and personal property reflected in the Company’s consolidated balance sheet as
of December 31, 2009 included in the Company 10-K for the period then ended, and
all real and personal property acquired since such date, except such real and
personal property as has been disposed of in the ordinary course of
business.  For purposes of this Agreement, “Permitted Liens” means (i)
Liens for taxes and other governmental charges and assessments arising in the
ordinary course which are not yet due and payable, (ii) Liens of landlords and
Liens of carriers, warehousemen, mechanics and materialmen and other like Liens
arising in the ordinary course of business for sums not yet due and payable, and
(iii) other Liens or imperfections on property which are not material in amount
or do not materially detract from the value of or materially impair the existing
use of the property affected by such Lien or imperfection.  Except as
would not be expected to have a Material Adverse Effect, all leases of real
property and all other leases pursuant to which the Company or such Company
Subsidiary, as lessee, leases real or personal property are valid and effective
in accordance with their respective terms and there is not, under any such
lease, any existing default by the Company or such Company Subsidiary or any
event which, with notice or lapse of time or both, would constitute such a
default.

     

    
      
         


      

      
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    (i)           Taxes.

     

    (1)           Each
of the Company and the Company Subsidiaries has filed all federal, state,
county, local and foreign material Tax Returns required to be filed by it and
all such Tax Returns are accurate and complete in all material respects, and
paid all Taxes owed by it and no Taxes owed by it or assessments received by it
are delinquent.  The federal income Tax Returns of the Company and the
Company Subsidiaries for the fiscal year ended December 31, 2007, and for all
fiscal years prior thereto, are for the purposes of audit by the Internal
Revenue Service (the “IRS”) closed because of the
expiration of the statutory period of limitations, and no claims for additional
Taxes for such fiscal years are pending.  Neither the Company nor any
Company Subsidiary has waived any statute of limitations with respect to Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency, in each case that is still in effect, or has pending a request for
any such extension or waiver.  Neither the Company nor any Company
Subsidiary is a party to any pending action or proceeding, nor to the Company’s
knowledge, is any such action or proceeding threatened by any Governmental
Entity, for the assessment or collection of Taxes, interest, penalties,
assessments or deficiencies and no material deficiencies have been proposed by
any federal, state, local or foreign taxing authority in connection with an
audit or examination of the Tax Returns, business or properties of the Company
or any Company Subsidiary which has not been settled, resolved and fully
satisfied, or for which reserves adequate in accordance with GAAP have not been
provided.  Each of the Company and the Company Subsidiaries has
withheld and paid all Taxes that it is required to withhold from amounts owing
to employees, creditors or other third parties.  Neither the Company
nor any Company Subsidiary is a party to, is bound by or has any obligation
under, any material Tax sharing or material Tax indemnity agreement or similar
contract or arrangement other than any contract or agreement between or among
the Company and any Company Subsidiary.  Neither the Company nor any
Company Subsidiary has participated in any “reportable transaction” within the
meaning of Treasury Regulations Section 1.6011-4, or any other transaction
requiring disclosure under analogous provisions of state, local or foreign
law.  Neither the Company nor any Company Subsidiary has liability for
the Taxes of any person other than the Company or any Company Subsidiary under
Treasury Regulations Section 1.1502-6 (or any similar provision of state,
local or foreign law).  Neither the Company nor any Company Subsidiary
has been a “distributing corporation” or a “controlled corporation” in any
distribution in which the parties to such distribution treated the distribution
as one to which Section 355 of the Code is applicable.  The Company has not been a
United States real property holding corporation within the meaning of Section
897 of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.  For the purpose of this
Agreement, the term “Tax” (including, with
correlative meaning, the term “Taxes”) shall mean any and
all domestic or foreign, federal, state, local or other taxes of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any Governmental Entity,
including taxes on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, unemployment, social security, workers’ compensation or net worth,
and taxes in the nature of excise, withholding, ad valorem or value added or
similar taxes, and the term “Tax Return” means any return,
report, information return or other document (including any related or
supporting information, and attachments and exhibits) required to be filed with
respect to Taxes, including, without limitation, all information returns
relating to Taxes of third parties, any claims for refunds of Taxes and any
amendment or supplements to any of the foregoing.

     

    (j)           Absence of Certain
Changes.  Since December 31, 2009, the Company has not, and no
Company Subsidiary has, made or declared any distribution or dividend in cash or
in kind to its shareholders or issued or repurchased any shares of its capital
stock or other equity interests.  Since December 31, 2009, the
business and operations of the Company and the Company Subsidiaries have been
conducted in the ordinary course of business consistent with past practice, and
there has not been:
 

    
      
         


      

      
        -15-

        
          

        

      

      
         


      

    

     

    (1)           except
as Previously Disclosed, any circumstance, occurrence, or development which,
individually or in the aggregate with other circumstances, occurrences, or
developments, has had or is reasonably likely to have a Material Adverse Effect
on the Company;

     

    (2)           any
material damage, destruction, or other casualty loss with respect to any
material asset or property owned, leased, or otherwise used by the Company or
any Company Subsidiary, whether or not covered by insurance; or

     

    (3)           any
change in any method of accounting or accounting policies by the
Company.

     

    (k)           Commitments and
Contracts.  The Company has Previously Disclosed or provided to
the Investor or its representatives, prior to the date hereof, true, correct,
and complete copies of each of the following to which the Company or any Company
Subsidiary is a party or subject (whether written or oral, express or implied)
(each, a “Company Significant
Agreement”):

     

    (1)           any
labor contract or agreement with any labor union;

     

    (2)           any
contract or agreement which grants any person a right of first refusal, right of
first offer or similar right with respect to any material properties, assets or
businesses of the Company or the Company Subsidiaries;

     

    (3)           any
contract containing covenants that limit the ability of the Company or any
Company Subsidiary to compete in any line of business or with any person or
which involve any restriction of the geographical area in which, or method by
which or with whom, the Company or any Company Subsidiary may carry on its
business (other than as may be required by law or applicable regulatory
authorities); and any contract that could require the disposition of any
material assets or line of business of the Company or any Company
Subsidiary;

     

    (4)           any
joint venture, partnership, strategic alliance, or other similar contract
(including any franchising agreement, but in any event, excluding introducing
broker agreements); and any contract relating to the acquisition or disposition
of any material business or material assets (whether by merger, sale of stock or
assets, or otherwise), which acquisition or disposition is not yet complete or
where such contract contains continuing material obligations or contains
continuing indemnity obligations of the Company or any of the Company
Subsidiaries;

     

    (5)           any
real property lease and any other lease with annual rental payments aggregating
$1,000,000 or more;

     

    (6)           other
than with respect to loans, any contract providing for, or reasonably likely to
result in, the receipt or expenditure of more than $1,000,000 on an annual
basis, including the payment or receipt of royalties or other amounts calculated
based upon revenues or income;
 

    
      
         


      

      
        -16-

        
          

        

      

      
         


      

    

     

    (7)           
any contract or arrangement under which the Company or any of the Company
Subsidiaries is licensed or otherwise permitted by a third party to use any
Intellectual Property that is material to its business (except for any
“shrinkwrap” or “click through” license agreements or other agreements for
software that is generally available to the public and has not been customized
for the Company or the Company Subsidiaries) or under which a third party is
licensed or otherwise permitted to use any Intellectual Property owned by the
Company or any of the Company Subsidiaries;

     

    (8)           
any contract that by its terms limits the payment of dividends or other
distributions by the Company or any Company Subsidiary;

     

    (9)           
any standstill or similar agreement pursuant to which the Company or any Company
Subsidiary has agreed not to acquire assets or securities of another
person;

     

    (10)          any
contract that would prevent, delay or impede the Company’s ability to consummate
the transactions contemplated by this Agreement and the Other Securities
Purchase Agreements;

     

    (11)          any
contract providing for indemnification by the Company or any Company Subsidiary
of any person, except for immaterial contracts entered into in the ordinary
course of business consistent with past practice;

     

    (12)          other
than contracts relating to the ordinary course management of credit extensions
and contracts relating to Other Real Estate Owned, any contract that contains a
put, call, or similar right pursuant to which the Company or any Company
Subsidiary could be required to purchase or sell, as applicable, any equity
interests or assets that have a fair market value or purchase price of more than
$250,000;

     

    (13)          any
material employment contract or understanding (including any understandings or
obligations with respect to severance or termination pay, liabilities or fringe
benefits) with any present or former director, officer, employee or
consultant;

     

    (14)          any
material plan, contract or understanding providing for any bonus, pension,
option, deferred compensation, retirement payment, profit sharing or similar
arrangement with respect to any present or former director, officer, employee or
consultant;

     

    (15)          any
contract with any Governmental Entity that imposes any material obligation or
restriction on the Company or the Company Subsidiaries;

     

    (16)          any
contract relating to indebtedness for borrowed money, letters of credit, capital
lease obligations, obligations secured by a Lien or interest rate or currency
hedging agreements (including guarantees in respect of any of the foregoing, but
in any event excluding trade payables, securities transactions and brokerage
agreements arising in the ordinary course of business consistent with past
practice, intercompany indebtedness and immaterial leases for office equipment)
in excess of $1,000,000, except for those issued in the ordinary course of
business; and

     

    
      
         


      

      
        -17-

        
          

        

      

      
         


      

    

     

    (17)          any
other contract or agreement which is a “material contract” within the meaning of
Item 601(b)(10) of Regulation S-K.

     

    Each of
the Company Significant Agreements is valid and binding on the Company and the
Company Subsidiaries, as applicable, and in full force and
effect.  The Company and each of the Company Subsidiaries, as
applicable, are in compliance in all material respects with and have performed
in all material respects all obligations required to be performed by them to
date under each Company Significant Agreement.  Neither the Company
nor any of the Company Subsidiaries knows of, or has received notice of, any
violation or default (or any condition which with the passage of time or the
giving of notice would cause such a violation of or a default) by any party
under any Company Significant Agreement.  Consummation of the
transactions contemplated by this Agreement will not place the Company or any of
the Company Subsidiaries in breach or default of any Company Significant
Agreement, or trigger any modification, termination or acceleration
thereunder.  Other than as contemplated by the Other Securities
Purchase Agreements, there are no transactions or series of related
transactions, agreements, arrangements or understandings, nor are there any
currently proposed transactions, or series of related transactions between the
Company or any Company Subsidiaries, on the one hand, and the Company, any
current or former director or executive officer of the Company or any Company
Subsidiaries or any person who Beneficially Owns 5% or more of the Common Shares
(or any of such person’s immediate family members or Affiliates) (other than
Company Subsidiaries), on the other hand.

     

    (l)          
 Offering of
Securities.  Neither the Company nor any person acting on its
behalf has taken any action (including, any offering of any securities of the
Company under circumstances which would require the integration of such offering
with the offering of any of the Common Stock to be issued pursuant to this
Agreement or any other Transaction Document under the Securities Act and the
rules and regulations of the SEC promulgated thereunder) which would subject the
offering, issuance, or sale of any of such Common Stock to be issued to the
registration requirements of the Securities Act.

     

    (m)           Litigation and Other
Proceedings; No Undisclosed Liabilities.

     

    (1)         
  There is no pending or, to the knowledge of the Company, threatened,
claim, action, suit, arbitration, mediation, demand, hearing, investigation or
proceeding against the Company or any Company Subsidiary that (A) involves a
claim that is or that could be, if adversely determined, for damages in excess
of $100,000, or (B) individually or in the aggregate, has prevented or
materially impaired, or would reasonably be expected to prevent or materially
impair, the ability of the Company to consummate the transactions contemplated
hereby. Neither the Company nor any Company Subsidiary is subject to any
injunction, order, judgment or decree, nor are there any proceedings with
respect to the foregoing pending, or to the knowledge of the Company,
threatened.
 

    
      
         


      

      
        -18-

        
          

        

      

      
         


      

    

     

    (2)           Neither
the Company nor any of the Company Subsidiaries has any liabilities or
obligations of any nature (absolute, accrued, contingent, or otherwise) which
are not appropriately reflected or reserved against in the financial statements
described in Section 2.2(f) to the extent required to be so reflected or
reserved against in accordance with GAAP, except for liabilities that have
arisen since  September 30, 2010 in the ordinary course of business
consistent with past practice.

     

    (n)           Compliance with Laws and
Other Matters; Insurance.  Except as Previously Disclosed, the
Company and each Company Subsidiary:

     

    (1)           in
the conduct of its business is in compliance in all material respects with all,
and the condition and use of its properties does not violate or infringe in any
material respect any, applicable domestic (federal, state or local) or foreign
laws, statutes, ordinances, licenses, rules, regulations, judgments, demands,
writs, injunctions, orders or decrees applicable thereto or to employees
conducting its business, including the Troubled Asset Relief Program, the
Sarbanes-Oxley Act of 2002, the Equal Credit Opportunity Act, the Fair Housing
Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, all other applicable
fair lending laws or other laws relating to discrimination and the Bank Secrecy
Act and as of the date hereof, the Company Bank has a Community Reinvestment Act
rating of “satisfactory” or better;

     

    (2)           has
all material permits, licenses, franchises, authorizations, orders, and
approvals of, and has made all filings, applications, and registrations with,
Governmental Entities that are required in order to permit it to own or lease
its properties and assets and to carry on its business as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect, and all such filings, applications and registrations
are current, and, to the knowledge of the Company, no suspension or cancellation
of any of them is threatened;

     

    (3)           currently
is complying in all material respects with and, to the knowledge of the Company,
is not under investigation with respect to, nor has been threatened by any
Governmental Entity to be charged with or given notice of any material violation
of, all applicable federal, state, local and foreign laws, regulations, rules,
judgments, injunctions or decrees;

     

    (4)           has,
except for statutory or regulatory restrictions of general application, not been
placed under any restriction by a Governmental Entity on its business or
properties, and except for routine examinations by applicable Governmental
Entities, received no notification or communication from any Governmental Entity
that an investigation by any Governmental Entity with respect to the Company or
any of the Company Subsidiaries is pending or threatened;

     

    (5)           has
not, since January 1, 2007, nor has any other person on behalf of the Company or
any Company Subsidiary that qualifies as a “financial institution” under the
U.S. Anti-Money Laundering laws, knowingly acted, by itself or in conjunction
with another, in any act in connection with the concealment of any currency,
securities or other proprietary interest that is the result of a felony as
defined in the U.S. Anti-Money Laundering laws (“Unlawful Gains”), nor
knowingly accepted, transported, stored, dealt in or brokered any sale, purchase
or any transaction of other nature for Unlawful Gains;

     

    
      
         


      

      
        -19-

        
          

        

      

      
         


      

    

     

    (6)           to
the extent it qualifies as a “financial institution” under the U.S. Anti-Money
Laundering laws, has implemented such anti-money laundering mechanisms and kept
and filed all reports and other necessary documents as required by, and
otherwise complied with, the U.S. Anti-Money Laundering laws and the rules and
regulations thereunder; and

     

    (7)           is
presently insured, and during each of the past two calendar years (or during
such lesser period of time as the Company has owned such Company Subsidiary) has
been insured, for reasonable amounts with, to the knowledge of the Company,
financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with industry
practice, customarily be insured.

     

    (o)           Labor.  Employees
of the Company and the Company Subsidiaries are not and have never been
represented by any labor union nor are any collective bargaining agreements
otherwise in effect with respect to such employees.  No labor
organization or group of employees of the Company or any Company Subsidiary has
made a pending demand for recognition or certification, and there are no
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the Company’s knowledge,
threatened to be brought or filed with the National Labor Relations Board or any
other labor relations tribunal or authority, nor have there been in the last
three years.  There are no organizing activities, strikes, work
stoppages, slowdowns, lockouts, arbitrations or grievances, or other labor
disputes pending or, to the knowledge of the Company, threatened against or
involving the Company or any Company Subsidiary, nor have there been in the last
three years.  Each of the Company and the Company Subsidiaries are in
compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours.

     

    (p)           Company Benefit
Plans.

     

    (1)           “Benefit Plan” means all
employment agreements, employee benefit and compensation plans, programs,
agreements, contracts, policies, practices, or other arrangements providing
compensation or benefits to any current or former employee, officer, director or
consultant of the Company or any Company Subsidiary or any beneficiary or
dependent thereof that is sponsored or maintained by the Company or any Company
Subsidiary or to which the Company or any Company Subsidiary contributes or is
obligated to contribute or is party, whether or not written, including without
limitation any “employee welfare benefit plan” within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), any
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA) and any bonus, incentive,
deferred compensation, vacation, stock purchase, stock appreciation right, stock
option or equity award, equity-based severance, employment, change of control,
consulting or fringe benefit plan, program, agreement or policy.  Each
Benefit Plan is listed on Section 2.2(p)(1) of the Company’s Disclosure
Schedule.  True and complete copies of all Benefit Plans listed on
Section 2.2(p)(1) of the Company’s Disclosure Schedule have been made
available to the Investor prior to the date hereof or have been filed with a
Company Report.


    
      
         


      

      
        -20-

        
          

        

      

      
         


      

    

     

    (2)           With
respect to each Benefit Plan, (A) the Company and the Company Subsidiaries have
complied, and are now in compliance with the applicable provisions of ERISA, and
the Internal Revenue Code of 1986, as amended (the “Code”) and all other laws and
regulations applicable to such Benefit Plan and (B) each Benefit Plan has been
administered in accordance with its terms.  None of the Company or the
Company Subsidiaries nor any of their respective ERISA Affiliates has incurred
any withdrawal liability as a result of a complete or partial withdrawal from a
multiemployer plan, as those terms are defined in Part I of Subtitle E of Title
IV of ERISA, that has not been satisfied in full.  “ERISA Affiliate” means any
entity, trade or business, whether or not incorporated, which together with the
Company and the Company Subsidiaries, would be deemed a “single employer” within
the meaning of Section 4001 of ERISA or Sections 414(b), (c), (m) or
(o) of the Code.

     

    (3)           Each
Benefit Plan which is subject to ERISA (an “ERISA Plan”) that is an
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA
(“Pension Plan”) and
that is intended to be qualified under Section 401(a) of the Code is so
qualified, has received a favorable determination letter from the IRS and
nothing has occurred, whether by action or failure to act, that could likely
result in revocation of any such favorable determination or opinion letter or
the loss of the qualification of such Benefit Plan under Section 401(a) of
the Code.  Neither the Company nor any Company Subsidiary has engaged
in a transaction with respect to any ERISA Plan that, assuming the taxable
period of such transaction expired as of the date hereof, could subject the
Company or any Company Subsidiary to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of
ERISA.  Neither the Company nor any Company Subsidiary has incurred or
reasonably expects to incur a material tax or penalty imposed by Section 4980F
of the Code or Section 502 of ERISA.

     

    (4)           Neither
the Company, any Company Subsidiary nor any ERISA Affiliate (x) sponsors,
maintains or contributes to or has within the past six years sponsored,
maintained or contributed to a Pension Plan that is subject to Subtitles C or D
of Title IV of ERISA or (y) sponsors, maintains or has any liability with
respect to or an obligation to contribute to or has within the past six years
sponsored, maintained, had any liability with respect to, or had an obligation
to contribute to a “multiemployer plan” within the meaning of Section 3(37)
of ERISA.


    
      
         


      

      
        -21-

        
          

        

      

      
         


      

    

     

    (5)           None
of the execution and delivery of this Agreement, the issuance of Common Stock,
nor the Shareholder Approvals or consummation of the transactions contemplated
hereby or by the Other Securities Purchase Agreements, will, whether alone or in
connection with another event, (i) constitute a “change in control” or “change
of control” within the meaning of any Benefit Plan or result in any material
payment or benefit (including without limitation severance, unemployment
compensation, “excess parachute payment” (within the meaning of
Section 280G of the Code), forgiveness of indebtedness or otherwise)
becoming due to any current or former employee, officer, director or consultant
of the Company or any Company Subsidiary from the Company or any Company
Subsidiary under any Benefit Plan or any other agreement with any employee,
including, for the avoidance of doubt, any employment or change in control
agreements, (ii) result in payments under any of the Benefit Plans which would
not be deductible under Section 162(m) or Section 280G of the Code, (iii)
materially increase any compensation or benefits otherwise payable under any
Benefit Plan, (iv) result in any acceleration of the time of payment or vesting
of any such benefits, including, for the avoidance of doubt, the Company Stock
Option Plans, (v) require the funding or increase in the funding of any such
benefits, or (vi) result in any limitation on the right of the Company or any
Company Subsidiary to amend, merge, terminate or receive a reversion of assets
from any Benefit Plan or related trust.

     

    (6)           As
of the date hereof, there is no pending or, to the knowledge of the Company,
threatened, litigation relating to the Benefit Plans.  Neither the
Company nor any Company Subsidiary has any obligations for retiree health and
life benefits under any ERISA Plan or collective bargaining agreement, except
for health continuation coverage as required by Section 4980B of the Code
or Part 6 of Title I of ERISA and at no expense to the Company and the Company
Subsidiaries.

     

    (7)           There
are no pending or, to the knowledge of the Company, threatened claims, lawsuits
or arbitrations which have been asserted or instituted against (i) the Benefit
Plans, (ii) any fiduciaries thereof with respect to their duties to the Benefit
Plans, or (iii) the assets of any of the trusts under any of the Benefit
Plans.

     

    (q)           Status of
Securities.  Upon receipt of the Shareholder Approvals, the
shares of Common Stock to be issued pursuant to this Agreement and the Other
Securities Purchase Agreements shall have been duly authorized by all necessary
corporate action of the Company.  When issued and sold against receipt
of the consideration therefor as provided in this Agreement and the Other
Securities Purchase Agreements, such shares of Common Stock will be validly
issued, fully paid and nonassessable, and will not subject the holders thereof
to personal liability and will not be subject to preemptive rights of any other
shareholder of the Company, nor will such issuance result in the violation or
triggering of any price-based antidilution adjustments under any agreement to
which the Company or any Company Subsidiary is a party.

     

    (r)           Investment
Company.  Neither the Company nor any of the Company
Subsidiaries is an “investment company” as defined under the Investment Company
Act of 1940, as amended, and neither the Company nor any of the Company
Subsidiaries sponsors any person that is such an investment
company.

     

    (s)           Risk Management;
Derivatives.

     

    (1)           The
Company and the Company Subsidiaries have in place risk management policies and
procedures sufficient in scope and operation to protect against risks of the
type and in amounts expected to be incurred by persons of similar size and in
similar lines of business as the Company and the Company
Subsidiaries.
 

    
      
         


      

      
        -22-

        
          

        

      

      
         


      

    

     

    (2)           All
derivative instruments, including swaps, caps, floors and option agreements,
whether entered into for the Company’s own account, or for the account of one or
more of the Company Subsidiaries or their customers, were entered into
(i) only for purposes of mitigating identified risk and in the ordinary
course of business, (ii) in accordance with prudent practices and in
material compliance with all applicable laws, rules, regulations and regulatory
policies, and (iii) with counterparties believed by the Company to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of the Company or one of the Company Subsidiaries,
enforceable in accordance with its terms.  Neither the Company nor the
Company Subsidiaries, nor, to the knowledge of the Company, any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement.

     

    (t)           Foreign Corrupt Practices
and International Trade Sanctions.  Neither the Company nor any
Company Subsidiary, nor any of their respective directors, officers, agents,
employees or any other persons acting on their behalf (i) has violated the
Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-1 et seq., as amended, or any
other similar applicable foreign, federal, or state legal requirement,
(ii) has made or provided, or caused to be made or provided, directly or
indirectly, any payment or thing of value to a foreign official, foreign
political party, candidate for office or any other person knowing that the
person will pay or offer to pay the foreign official, party or candidate, for
the purpose of influencing a decision, inducing an official to violate their
lawful duty, securing any improper advantage, or inducing a foreign official to
use their influence to affect a governmental decision, (iii) has paid,
accepted or received any unlawful contributions, payments, expenditures or
gifts, (iv) has violated or operated in noncompliance with any export
restrictions, money laundering law, anti-terrorism law or regulation,
anti-boycott regulations or embargo regulations, or (v) is currently
subject to any United States sanctions administered by the Office of Foreign
Assets Control of the United States Treasury Department.

     

    (u)           Environmental
Liability.  Except as has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company, the Company and each
Company Subsidiary: (i) are in compliance with all applicable Environmental
Laws; (ii) have not owned or operated any property that has been contaminated
with any Hazardous Substance that could be expected to result in liability for
the Company or any Company Subsidiary pursuant to any Environmental Law; (iii)
are not liable for Hazardous Substance disposal or contamination on any third
party property; (iv) have not received any notice, demand, letter, claim or
request for information in the preceding three years indicating that it may be
in violation of or subject to liability under any Environmental Law; (v) are not
subject to any order, decree, injunction or agreement with any Governmental
Entity or any indemnity or other agreement with any third party relating to
liability under any Environmental Law; (vi) to the Company’s knowledge are not
subject to any circumstances or conditions that could reasonably be expected to
result in any claims, liability, investigations, costs or restrictions on the
ownership, use, or transfer of any property in connection with any Environmental
Law; (vii) have not participated in the management of any borrower or other
third party property, or taken any other actions such that they are reasonably
likely to be deemed an owner or operator of such property for purposes of any
Environmental Law and (viii) have made available to the Investors copies of all
environmental reports, studies, assessments, and memoranda in its possession
relating to the Company or its Subsidiaries or any of their current or former
properties or operations. For purposes of this Agreement, “Environmental Law”
means any law, regulation, order, decree, common law or agency requirement
relating to the protection of the environment or human health and safety and
“Hazardous Substance” means any substance that is regulated pursuant to any
Environmental Law including any waste, petroleum products, asbestos, mold and
lead products.


    
      
         


      

      
        -23-

        
          

        

      

      
         


      

    

     

    (v)           Anti-Takeover
Provisions.  The Company and the Board of Directors has taken
all actions necessary to ensure that the transactions contemplated by the
Transaction Documents, individually or taken as a whole (including the
investment hereunder), are not subject to the provisions of Section 60.835 of
the Oregon Business Corporation Act (the “OBCA”) (including, but not
limited to, the approval of such transactions by the Board of Directors and/or
shareholders as contemplated by Section 60.835 of the OBCA and Article X of the
Articles of Incorporation) or Article X of the Articles of Incorporation and any
other similar provisions of an anti-takeover nature contained in its
organizational documents and the provisions of any federal or state
“anti-takeover,” “fair price,” “moratorium,” “control share,” “supermajority,”
“affiliate transaction,” or “business combination” law, including any provisions
of the Oregon Business Corporation Act (each, a “Takeover Law”).  In
the case that any such transactions are subject to such provisions or laws, the
Board of Directors has taken and shall take all necessary action to ensure that
such transactions shall be deemed to be exceptions to such provisions or laws,
including, but not limited to, the approval of such transactions as contemplated
under Section 60.835(1) of the OBCA.  The acquisition of the Common
Stock pursuant to any of the Transaction Documents and the consummation of the
transaction contemplated by each of the Transaction Documents is not a “control
share acquisition” or otherwise subject to the provisions of Section 60.801
to Section 60.816 of the Oregon Business Corporation Act.

     

    (w)           Intellectual
Property.

     

    (1)           (i)
The Company and the Company Subsidiaries own (free and clear of any claims,
liens or encumbrances (including any exclusive licenses or non-exclusive
licenses not granted in the ordinary course of business)) or have a valid
license to use all Intellectual Property used in or necessary to carry on their
business as currently conducted, and (ii) such Intellectual Property referenced
in clause (i) above is valid, subsisting and enforceable, and is not subject to
any outstanding order, judgment, decree or agreement adversely affecting the
Company’s or the Company Subsidiaries’ use of, or rights to, such Intellectual
Property.  The Company and the Company Subsidiaries have sufficient
rights to use all Intellectual Property used in their business as presently
conducted, all of which rights shall survive unchanged following the
consummation of the transactions contemplated by this Agreement. The Company has
Previously Disclosed all of the applications and registrations for all
Intellectual Property owned by the Company or a Company Subsidiary, and the
Company or a Company Subsidiary is the sole and exclusive record and beneficial
owner thereof.


    
      
         


      

      
        -24-

        
          

        

      

      
         


      

    

     

    (2)           Neither
the Company nor any Company Subsidiary has received any notice of infringement
or misappropriation of, or any conflict with, the rights of others with respect
to any Intellectual Property, and no reasonable basis exists for any such claim.
To the Company’s knowledge, no third party has infringed, misappropriated or
otherwise violated the Intellectual Property rights of the Company or the
Company Subsidiaries. There is no litigation, opposition, cancellation,
proceeding, objection or claim pending, asserted, or, to the Company’s
knowledge, threatened against the Company or any Company Subsidiary concerning
the ownership, validity, registerability, enforceability, infringement or use
of, or licensed right to use, any Intellectual Property. To the knowledge of the
Company, none of the Company or any of the Company Subsidiaries is using or
enforcing any Intellectual Property owned by or licensed to the Company or any
of the Company Subsidiaries in a manner that would be expected to result in the
abandonment, cancellation or unenforceability of such Intellectual
Property.  The Company and each of the Company Subsidiaries has taken
all reasonable measures to protect the Intellectual Property owned by or
licensed to the Company or any of the Company Subsidiaries.  No
current or former Affiliate (other than the Company Subsidiaries), partner,
director, shareholder, officer or employee of the Company will, after giving
effect to the transactions contemplated hereby, own or retain any rights to use
any of the Intellectual Property owned, used or held for use by the Company in
the conduct of the business.

     

    (3)           The
computers, computer software, firmware, middleware, servers, workstations,
routers, hubs, switches, data communications lines, and all other information
technology equipment, and all associated documentation used in the business of
the Company and the Company Subsidiaries (the “IT Assets”) operate and
perform in all material respects in accordance with their documentation and
functional specifications and otherwise as required in connection with the
conduct of the business of the Company and the Company Subsidiaries. To the
knowledge of the Company, no person has gained unauthorized access to the IT
Assets. The Company and the Company Subsidiaries have implemented reasonable
backup and disaster recovery technology for the IT Assets consistent with
industry practices. The Company and the Company Subsidiaries take reasonable
measures to ensure the confidentiality, privacy and security of customer,
employee and other personally identifiable information, and are in compliance
with all laws and their own policies and procedures in connection therewith, and
to the knowledge of the Company there has been no unauthorized access to or use
of such information. The Company and the Company Subsidiaries have complied with
all internet domain name registration and other requirements of internet domain
registrars concerning internet domain names that are used in the
business.

     

    “Intellectual Property” shall
mean trademarks, service marks, brand names, domain names, certification marks,
trade dress and other indications of origin, the goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patentable or not, in any jurisdiction; patents, applications for
patents (including divisions, continuations, continuations in part and renewal
applications), and any renewals, extensions or reissues thereof, in any
jurisdiction; nonpublic information, know-how, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrightable or not,
in any jurisdiction; and registrations or applications for registration of
copyrights in any jurisdiction, and any renewals or extensions thereof; and any
similar intellectual property or proprietary rights.


    
      
         


      

      
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    (x)           Brokers and
Finders.  Except for Keefe, Bruyette & Woods, Inc. and
Macquarie Capital (USA), Inc., the fees of which have been Previously Disclosed,
neither the Company nor any Company Subsidiary nor any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder’s fees, and no broker or finder has acted directly or indirectly for the
Company or any Company Subsidiary in connection with the Transaction Documents
or the transactions contemplated hereby and thereby.

     

    (y)           Agreements with Regulatory
Agencies.  Except as Previously Disclosed, neither the Company
nor any Company Subsidiary is subject to any cease-and-desist or other similar
order or enforcement action issued by, or is a party to any written agreement,
consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any capital
directive by, or since December 31, 2007, has adopted any board resolutions at
the request of, any Governmental Entity that currently restricts the conduct of
its business or that relates to its capital adequacy, its liquidity and funding
policies and practices, its ability to pay dividends, its credit, risk
management or compliance policies, its internal controls, its management, or its
operations or business (each item in this sentence, a “Regulatory
Agreement”).  Except as Previously Disclosed, the Company and
each Company Subsidiary is in compliance with each Regulatory Agreement to which
it is party or subject.  Neither the Company nor any Company
Subsidiary has received any notice from any Governmental Entity indicating that
either the Company or any Company Subsidiary is not in compliance with any such
Regulatory Agreement.

     

    (z)           Loan
Portfolio.

     

    (1)           The
aggregate book value of the Company’s non-performing assets as of September 30,
2010 was $129,535,464.

     

    (2)           Except
as set forth in Schedule 2.2(z) of the Disclosure Schedule, as of the date
hereof, none of the Company or the Company Bank is a party to any written or
oral (i) loan, loan agreement, note or borrowing arrangement (including leases,
credit enhancements, commitments, guarantees and interest-bearing assets)
(collectively, “Loans”), other than any Loan
the unpaid principal balance of which does not exceed $250,000, under the terms
of which the obligor was, as of September 30, 2010, over 90 days delinquent in
payment of principal or interest or in default of any other provision, or (ii)
Loan in excess of $250,000 with any director, executive officer or 5% or greater
shareholder of the Company or any Company Subsidiary, or to the knowledge of the
Company, any person, corporation or enterprise controlling, controlled by or
under common control with any of the foregoing. Section 2.2(z) of the Disclosure
Schedule sets forth (x) all of the Loans in original principal amount in excess
of $250,000 of the Company or the Company Bank that as of September 30, 2010
were classified by the Company or the Company Bank or any regulatory examiner as
“Other Loans Specially Mentioned,” “Special Mention,” “Substandard,” “Doubtful,”
“Loss,” “Classified,” “Criticized,” “Credit Risk Assets,” “Concerned Loans,”
“Watch List” or words of similar import, together with the principal amount of
and accrued and unpaid interest on each such Loan as of September 30, 2010 and
the identity of the borrower thereunder, (y) by category of loan (i.e.,
commercial, consumer, etc.), all of the other Loans of the Company and the
Company Subsidiaries that as of September 30, 2010 were classified as such,
together with the aggregate principal amount of and accrued and unpaid interest
on such Loans by category as of September 30, 2010, and (z) each asset of the
Company or the Company Bank that as of September 30, 2010 was classified as
“Other Real Estate Owned” and the book value thereof.


    
      
         


      

      
        -26-

        
          

        

      

      
         


      

    

     

    (3)           Each
Loan of the Company or any of the Company Subsidiaries in original principal
amount in excess of $10,000 (i) is evidenced by notes, agreements or other
evidences of indebtedness that are true, genuine and what they purport to be,
(ii) to the extent secured, has been secured by valid Liens which have been
perfected and (iii) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors’ rights and to general equity
principles.

     

    (4)           Except
as set forth in Section 2.2(z) of the Disclosure Schedule, none of the
agreements pursuant to which the Company or any of the Company Subsidiaries has
sold Loans or pools of Loans or participations in Loans or pools of Loans
contains any obligation to repurchase such Loans or interests
therein.

     

    (5)           The
Company and each Company Subsidiary has complied with, and all documentation in
connection with the origination, processing, underwriting and credit approval of
any mortgage loan originated, purchased or serviced by the Company or any
Company Subsidiary satisfied, (A) the Company’s and the Company Bank’s
underwriting standards (and, in the case of Loans held for resale to investors,
the underwriting standards, if any, of the applicable investors); (B) all
applicable federal, state and local laws, rules and regulations with respect to
the origination, insuring, purchase, sale, pooling, servicing, subservicing, or
filing of claims in connection with mortgage loans, including all laws relating
to real estate settlement procedures, consumer credit protection, truth in
lending laws, usury limitations, fair housing, transfers of servicing,
collection practices, equal credit opportunity and adjustable rate mortgages,
(C) the responsibilities and obligations relating to mortgage loans set forth in
any agreement between the Company or any Company Subsidiary and any Agency, Loan
Investor or Insurer, (D) the applicable rules, regulations, guidelines,
handbooks and other requirements of any Agency, Loan Investor or Insurer and (E)
the terms and provisions of any mortgage or other collateral documents and other
loan documents with respect to each mortgage loan.

     

    (6)           Since
December 31, 2006, no Agency, Loan Investor or Insurer has (A) claimed in
writing that the Company or any Company Subsidiary has violated or has not
complied with the applicable underwriting standards with respect to mortgage
loans sold by the Company or any Company Subsidiary to a Loan Investor or
Agency, or with respect to any sale of mortgage servicing rights to a Loan
Investor, (B) imposed in writing restrictions on the activities (including
commitment authority) of the Company or any Company Subsidiary or (C) indicated
in writing to the Company or any Company Subsidiary that it has terminated or
intends to terminate its relationship with the Company or any Company Subsidiary
for poor performance, poor loan quality or concern with respect to the Company’s
or any Company Subsidiary’s compliance with laws.


    
      
         


      

      
        -27-

        
          

        

      

      
         


      

    

     

    (7)          To
the knowledge of the Company, each Loan included in a pool of Loans originated,
acquired or serviced by the Company or any of the Company Subsidiaries (a “Pool”) meets all eligibility
requirements (including all applicable requirements for obtaining mortgage
insurance certificates and loan guaranty certificates) for inclusion in such
Pool. All such Pools have been finally certified or, if required, recertified in
accordance with all applicable laws, rules and regulations, except where the
time for certification or recertification has not yet expired. To the knowledge
of the Company, no Pools have been improperly certified, and no Loan has been
bought out of a Pool without all required approvals of the applicable
investors.

     

    (8)          For
purposes of this Section 2.2(z):

     

    (i)           “Agency” shall mean the
Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, the Government National Mortgage
Association, or any other federal or state agency with authority to (i)
determine any investment, origination, lending or servicing requirements with
regard to mortgage loans originated, purchased or serviced by the Company or any
Company Subsidiary or (ii) originate, purchase, or service mortgage loans,
or otherwise promote mortgage lending, including, without limitation, state and
local housing finance authorities;

     

    (ii)           “Loan Investor” shall mean any
person (including an Agency) having a beneficial interest in any mortgage loan
originated, purchased or serviced by the Company or any Company Subsidiary or a
security backed by or representing an interest in any such mortgage loan;
and

     

    (iii)           “Insurer” shall mean a person
who insures or guarantees for the benefit of the mortgagee all or any portion of
the risk of loss upon borrower default on any of the mortgage loans originated,
purchased or serviced by the Company or any Company Subsidiary, including the
Federal Housing Administration, the United States Department of Veterans’
Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any
private mortgage insurer, and providers of hazard, title or other insurance with
respect to such mortgage loans or the related collateral.

     

    (aa)          Listing of Common
Stock.  The shares of Common Stock to be issued at the Closing
under this Agreement and the Other Securities Purchase Agreements have been
authorized, to the extent such Common Stock has been authorized under the
Articles of Incorporation, for listing on NASDAQ, subject to official notice of
issuance.

     

    
      
         


      

      
        -28-

        
          

        

      

      
         


      

    

     

    (bb)      
  Insurance.

     

    (1)           The
Company and the Company Subsidiaries are, and will remain following consummation
of the transactions contemplated by the Transaction Documents, insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company reasonably believes to be
prudent and that are of the type customary in the businesses and location in
which the Company and the Company Subsidiaries are engaged.  The
Company and the Company Subsidiaries have not been refused any insurance
coverage sought or applied for, and the Company and the Company Subsidiaries do
not have any reason to believe that they will not be able to renew their
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue their
business at a cost that would not have a Material Adverse Effect on the
Company.

     

    (2)           The
Company (i) maintains directors’ and officers’ liability insurance and fiduciary
liability insurance with financially sound and reputable insurance companies
with benefits and levels of coverage that have been Previously Disclosed, (ii)
has timely paid all premiums on such policies and (iii) there has been no lapse
in coverage during the term of such policies.

     

    (cc)          Board of
Directors.  The Company does not have, and the Board of
Directors have not adopted, any policies, directives or resolutions, or any
amendments to the Company’s by-laws or certificate of incorporation, with
respect to qualification or other requirements for serving as a director on the
Board of Directors of the Company or any Company Subsidiary.

     

    (dd)         Other Private
Placements.  Concurrently with the execution and delivery of
this Agreement, the Company has agreed to sell Common Shares in the Other
Private Placements on the same economic and financial terms and conditions set
forth in this Agreement, with the closing of such Other Private Placements to
occur simultaneously with the Closing. The Company has provided true, correct
and complete copies of the Other Securities Purchase Agreements to the
Investor.  Except for the Other Securities Purchase Agreements and as
set forth in Section 2.2(dd) of the Disclosure Schedule, the Company is not a
party to any agreements, understandings, arrangements or commitments with the
counterparties to the Other Securities Purchase Agreements or their
Affiliates.

     

    (ee)           Approval by Continuing
Directors.  Two-thirds of the Continuing Directors (as defined
in the Articles of Incorporation) have voted in favor of the entering into of
this Agreement and the transactions contemplated by this Agreement, including
the issuance of Common Shares and the increase in authorized shares, and has or
will recommend approval of the transactions contemplated by this Agreement to
the Company’s shareholders.

     

    (ff)           Related Party
Transactions.

    
    

    (1)         
  Except as set forth in Section 2.2(ff) of the Disclosure Schedule or
as part of the normal and customary terms of an individual’s employment or
service as a director, none of the Company or any of the Company Subsidiaries is
party to any extension of credit (as debtor, creditor, guarantor or otherwise),
contract for goods or services, lease or other agreement with any (A) affiliate,
(B) insider or related interest of an insider, (C) shareholder owning 5% or more
of the outstanding Common Stock or related interest of such a shareholder, or
(D) to the knowledge of the Company, and other than credit and consumer banking
transactions in the ordinary course of business, employee who is not an
executive officer. For purposes of the preceding sentence, the term “affiliate”
shall have the meaning assigned in Regulation W issued by the Federal Reserve,
as amended, and the terms “insider,” “related interest,” and “executive officer”
shall have the meanings assigned in the Federal Reserve’s Regulation O, as
amended.


    
      
         


      

      
        -29-

        
          

        

      

      
         


      

    

     

    (2)           The
Company Bank is in compliance with, and has since December 31, 2006, complied
with, Sections 23A and 23B of the Federal Reserve Act, its implementing
regulations, and the Federal Reserve’s Regulation O.

     

    (gg)         Trust Preferred Securities
Exchange Agreements.  The Company has provided true, correct
and complete copies of the Trust Preferred Securities Exchange Agreements to the
Investor.  Except for the Trust Preferred Securities Exchange
Agreements, the Company is not a party to any agreements, understandings,
arrangements or commitments with the counterparties to the Trust Preferred
Securities Exchange Agreements or their Affiliates.

     

    (hh)         Use of
Proceeds.  Section 2.2(hh) of the Disclosure Schedule sets
forth the Company's good faith estimate as of the date hereof of the use of the
proceeds from the sale of Common Shares pursuant to this Agreement and the Other
Securities Purchase Agreements, including an estimate of the amounts payable
under each of the subsections of Section 1.2(b)(1)(vi) and the parties to whom
such amounts shall be paid.

     

    (ii)           No Material Misstatement or
Omission.  None of the representations or warranties made by
the Company in this Agreement or in schedules hereto, including the Disclosure
Schedule, or any certificate furnished by the Company pursuant to this
Agreement, when all such documents are read together in their entirety, contains
or will contain at the Closing Date any untrue statement of a material fact, or
omits or will omit at the Closing Date any material fact necessary in order to
make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.

     

    2.3           Representations and
Warranties of the Investor.  The
Investor hereby represents and warrants as of the date of this Agreement to the
Company that:

     

    (a)           Purchase for
Investment.  The Investor acknowledges that the Common Shares
have not been registered under the Securities Act or under any state securities
laws.  The Investor (1) is acquiring the Common Shares pursuant
to an exemption from registration under the Securities Act for its own account
solely for investment with no present intention or plan to distribute any of the
Common Shares to any person nor with a view to or for sale in connection with
any distribution thereof, in each case in violation of the Securities Act,
(2) will not sell or otherwise dispose of any of the Common Shares, except
in compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable securities laws, (3) has such
knowledge and experience in financial and business matters and in investments of
this type that the Investor is capable of evaluating the merits and risks of the
investment in the Common Shares and of making an informed investment decision,
and (4) is an “accredited investor” (as that term is defined by Rule 501 of
the Securities Act).  Without limiting any of the foregoing, neither
the Investor nor any of its Affiliates has taken, and the Investor will not, and
will cause its Affiliates not to, take any action that would otherwise cause the
securities to be purchased hereunder to be subject to the registration
requirements of the Securities Act.


    
      
         


      

      
        -30-

        
          

        

      

      
         


      

    

     

    (b)           Financial
Capability.  The Investor will have immediately available funds
necessary to consummate the Closing, as of the date of the Closing, on the terms
and conditions contemplated by this Agreement.

     

    ARTICLE
III

     

    Covenants

     

    3.1           Filings; Other
Actions

     

    (a)           The
Investor and the Company will cooperate and consult with each other and use
reasonable best efforts to prepare and file all necessary documentation, to
effect all necessary applications, notices, petitions, filings, and other
documents, and to obtain all necessary permits, consents, orders, approvals, and
authorizations of, or any exemption by, all third parties and Governmental
Entities, and expiration or termination of any applicable waiting periods,
necessary or advisable to consummate the transactions contemplated by this
Agreement and to perform covenants contemplated by this
Agreement.  Each party shall execute and deliver both before and after
the Closing such further certificates, agreements, and other documents and take
such other actions as the other party may reasonably request to consummate or
implement such transactions or to evidence such events or matters.  In
particular, the Company will use its reasonable best efforts to help the
Investor promptly obtain or submit, as the case may be, as promptly as
practicable, the approvals and authorizations of, filings and registrations
with, and notifications to, or expiration or termination of any applicable
waiting period, all notices to and, to the extent required by applicable law or
regulation, consents, approvals, or exemptions from bank regulatory authorities,
for the transactions contemplated by this Agreement.  To the extent
required by law, the Investor shall file as promptly as practicable a notice to
the Federal Reserve pursuant to the Change in Bank Control Act of 1978, as
amended (the “CBC
Act”), with respect to the transactions contemplated by this Agreement
and shall take commercially reasonable actions (including arranging for any
required public notice and entering into usual and customary commitments with
the Federal Reserve regarding passivity) to obtain the non-objection of the
Federal Reserve under the CBC Act, it being understood that failure to obtain
such non-objection, prior to the Outside Date or at all, shall not impose any
liability on the Investor.  The Investor and the Company will each
have the right to review in advance, and to the extent practicable, each will
consult with the other, in each case subject to applicable laws relating to the
exchange of information and confidential information related to the Investor,
all the information (other than personal or sensitive information) relating to
such other party, and any of their respective Affiliates, which appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by this
Agreement.  In exercising the foregoing right, each of the parties
hereto agrees to act reasonably and as promptly as practicable.  Each
party hereto agrees to keep the other party apprised of the status of matters
relating to completion of the transactions contemplated hereby.  The
Investor and the Company shall promptly furnish each other to the extent
permitted by applicable laws with copies of written communications received by
them or their Affiliates from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated by this
Agreement or any other Transaction Document.  Notwithstanding anything
in this Agreement to the contrary, the Investor shall not be required to provide
any materials to the Company that it deems private or confidential nor shall it
be required to make any commitments (other than the passivity commitments
described above) to any Governmental Entity in connection therewith or suffer
any Burdensome Condition.


    
      
         


      

      
        -31-

        
          

        

      

      
         


      

    

     

    (b)           The
Company shall call a special meeting of its shareholders, as promptly as
practicable after the date of this Agreement, to obtain the Shareholder
Approvals, including, without limitation, approving the amendment to the
Articles of Incorporation to increase the number of authorized shares of Common
Stock to 550 million (as adjusted in accordance with Section 4.12 to reflect any
reverse stock split of the Common Stock effected prior to the Closing; provided that the increase in
the number of authorized shares of Common Stock shall be to at least 100 million
shares) and approving for purposes of rule 5635 of NASDAQ’s listing rules the
issuance of Common Shares to the Investor and the investors participating in the
Other Private Placements.  The Board of Directors shall unanimously
recommend to the Company’s shareholders that such shareholders provide the
Shareholder Approvals, and shall not modify or withdraw such
recommendation.  In connection with such meeting, the Company shall
promptly prepare (and the Investor will reasonably cooperate with the Company to
prepare) and file with the SEC a preliminary proxy statement, shall use its
reasonable best efforts to solicit proxies for such shareholder approval, and
shall use its reasonable best efforts to respond promptly to any comments of the
SEC or its staff and to cause a definitive proxy statement related to such
shareholders’ meeting to be mailed to the Company’s shareholders, as promptly as
practicable, after clearance by the SEC.  The Company shall notify the
Investor promptly of the receipt of any comments from the SEC or its staff with
respect to the proxy statement and of any request by the SEC or its staff for
amendments or supplements to such proxy statement or for additional information
and will supply the Investor with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to such proxy statement.  If at
any time prior to such shareholders’ meeting there shall occur any event that is
required to be set forth in an amendment or supplement to the proxy statement,
the Company shall, as promptly as practicable, prepare and mail to its
shareholders such an amendment or supplement.  The Investor and the
Company each agree to correct promptly any information provided by it or on its
behalf for use in the proxy statement if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
shall, as promptly as practicable, prepare and mail to its shareholders an
amendment or supplement to correct such information to the extent required by
applicable laws and regulations.  The Company shall consult with the
Investor prior to filing with the SEC or mailing any proxy statement, or any
amendment or supplement thereto, and provide the Investor with reasonable
opportunity to comment thereon.  The directors’ recommendation
described in this Section 3.1 shall be included in the proxy statement
filed in connection with obtaining such shareholder
approval.  Immediately upon approval by shareholders of the increase
in the Company’s authorized number of shares of Common Stock as provided above,
the Company shall file articles of amendment to duly amend its Articles of
Incorporation to include such increase.


    
      
         


      

      
        -32-

        
          

        

      

      
         


      

    

     

    (c)           Each
party agrees, upon request, to furnish the other party with all information
concerning itself, its subsidiaries, Affiliates, directors, officers, partners,
and shareholders and such other matters as may be reasonably necessary or
advisable in connection with the proxy statement in connection with such
shareholders’ meeting and any other statement, filing, notice, or application
made by or on behalf of such other party or any of its subsidiaries to any
Governmental Entity in connection with this Agreement or the Other Securities
Purchase Agreements.  Notwithstanding anything herein to the contrary,
the Investor shall not be required to furnish the Company with any (1) sensitive
personal biographical or personal financial information of any of the directors,
officers, employees, managers or partners of such Investor or any of their
Affiliates or (2) proprietary and non-public information related to the
organizational terms of, or investors in, such Investor or their Affiliates;
provided, however, that the Investor
will furnish directly to the applicable bank regulator such information as
reasonably requested by such regulator as necessary to consummate the
transactions contemplated hereby.

     

    (d)           From
the date of this Agreement, until the Closing, the Company shall not, directly
or indirectly, amend, modify, or waive, and the Board of Directors shall not
recommend approval of any proposal to the shareholders having the effect of
amending, modifying, or waiving any provision in the Articles of Incorporation
or bylaws of the Company in any manner adverse to the Investor or any other
holder of Common Stock issued pursuant to this Agreement.

     

    (e)           The
Company shall take all actions necessary to ensure that none of the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, nor the consummation of the transactions contemplated as
part of the Other Private Placements nor the Shareholder Approvals will
constitute a “change in control” or “change of control” within the meaning of
any Benefit Plan.

     

    3.2           Expenses.  On
the earlier of the Closing Date and the termination of this Agreement, other
than a termination under circumstances that are directly and solely attributable
to a material breach of this Agreement by the Investor, the Company shall
directly reimburse the Investor for all out-of-pocket fees and expenses incurred
in connection with due diligence efforts, the negotiation and preparation of the
Transaction Documents and undertaking of the transactions contemplated by the
Transaction Documents, including, but not limited to, the fees and expenses of
the Investor’s accounting, financial and investment banking advisors, legal
counsel and credit review, but excluding the purchase price for any of the
securities to be purchased hereunder in an aggregate amount equal to $1,964,916
in the aggregate, which amount includes $1,219,274 for which the Company has
reimbursed the Investor prior to the execution of this Agreement. The Company
shall be responsible for all closing and annual administrative fees and expenses
including all costs incurred to obtain the Shareholder Approvals, the fees and
expenses of any Company advisors (including Company counsel, the Company’s
accounting and financial advisors and other professional fees), SEC registration
fees and related expenses, and fees and expenses of any broker or
finders.  Other than as set forth in this Section 3.2, each of the parties will
bear and pay all other costs and expenses incurred by it or him or on its or his
behalf in connection with the transactions contemplated under this
Agreement.


    
      
         


      

      
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    3.3           Access, Information and
Confidentiality

     

    (a)           From
the date of this Agreement, until the date when the shares of Common Stock owned
by the Investor in the aggregate represent less than 4.9% of all of the
outstanding Common Shares (counting for such purposes all shares of Common Stock
into or for which the securities of the Company owned by the Investor are
directly or indirectly convertible or exercisable and excluding as shares owned
and shares outstanding all Common Shares issued by the Company after the Closing
Date), the Company will ensure that upon reasonable notice, the Company and its
subsidiaries will afford to the Investor and its representatives (including
employees of the Investor, and counsel, accountants, financial and investment
banking advisors and other professionals retained by the Investor) such access
during normal business hours to its books, records, properties and personnel and
to such other information as the Investor may reasonably request.

     

    (b)           Each
party to this Agreement will hold, and will cause its respective subsidiaries
and their directors, officers, employees, agents, consultants, and advisors to
hold, in strict confidence, unless disclosure to a Governmental Entity is
necessary or appropriate in connection with any necessary regulatory approval or
unless compelled to disclose by judicial or administrative process or, in the
written opinion of its counsel, by other requirement of law or the applicable
requirements of any Governmental Entity, all nonpublic records, books,
contracts, instruments, computer data and other data and information
(collectively, “Information”) concerning the
other party hereto furnished to it by such other party or its representatives
pursuant to this Agreement (except to the extent that such information can be
shown to have been (1) previously known by such party on a nonconfidential
basis, (2) in the public domain through no fault of such party, or (3) later
lawfully acquired from other sources by the party to which it was furnished),
and neither party hereto shall release or disclose such Information to any other
person, except its auditors, attorneys, financial advisors, other consultants,
and advisors and, to the extent permitted above, to bank regulatory
authorities.

     

    (c)           The
Company shall promptly provide the Investor with written notice of the
occurrence of any circumstance, event, change, development or effect occurring
after the date hereof and relating to the Company or any Company Subsidiary of
which the Company has knowledge and which constitutes a Material Adverse Effect
or may otherwise cause or render any of the representations and warranties of
the Company set forth in this Agreement to be inaccurate.

     

    3.4           Conduct of the
Business.  Prior
to the earlier of the Closing Date and the termination of this Agreement
pursuant to Section 5.1 (the “Pre-Closing Period”), the
Company shall, and shall cause each Company Subsidiary to, (i) conduct its
business in the ordinary course consistent with past practice, (ii) use
reasonable best efforts to preserve intact its current business organizations
and its rights and permits issued by Governmental Entities, keep available the
services of its current officers and key employees and preserve its
relationships with customers, suppliers, Governmental Entities and others having
business dealings with it to the end that its goodwill and ongoing businesses
shall be unimpaired and (iii) not take any action that would reasonably be
expected to materially adversely affect or materially delay the receipt of any
approvals of any Governmental Entity required to consummate the transactions
contemplated hereby or by the Other Securities Purchase Agreements or materially
adversely affect or materially delay the consummation of the transactions
contemplated hereby or by the Other Securities Purchase Agreements.

     

    
      
         


      

      
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    3.5           Reasonable
Efforts.  The
Company agrees to use its reasonable best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the Investor in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement and the Other Securities Purchase Agreements,
including using reasonable best efforts to accomplish the
following:  (a) the taking of all reasonable acts necessary to
cause the conditions to Closing to be satisfied; (b) the mailing of the
definitive proxy statement to the Company’s shareholders promptly following
clearance from the SEC; (c) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings and the taking of all
reasonable steps necessary to obtain an approval or waiver from, or to avoid an
action or proceeding by any Governmental Entity; (d) the obtaining of all
necessary consents, approvals or waivers from third parties; (e) causing the
TRuPS Exchanges to be consummated prior to the Closing Date, including receipt
of the Regulatory Approval [Primary Note] (as defined in the Trust Preferred
Securities Exchange Agreements); and (f) executing and delivering any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement and the Other Securities
Purchase Agreements.

     

    3.6           Company
Forbearances.  During
the Pre-Closing Period, the Company shall not, and shall not permit any Company
Subsidiary to:

     

    (a)           (i)
adjust, split, combine or reclassify any of its capital stock other than in
connection with the reverse stock split as described in the Company’s proxy
statements filed pursuant to Section 14(a) of the Exchange Act on March 15, 2010
and November 10, 2009 affecting the Common Stock, the terms of which shall be
subject to the prior written consent of the Investor; (ii) set any record or
payment dates for the payment of any dividends or distributions on its capital
stock or make, declare or pay any dividend or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or exercisable
or exchangeable for any shares of its capital stock or stock appreciation rights
or grant any person any right to acquire any shares of its capital stock; or
(iii) issue or commit to issue any additional shares of capital stock (except
pursuant to the exercise of options and restricted stock unit grants outstanding
as of the date hereof and disclosed in the Disclosure Schedule), convertible
debt or any securities convertible into or exercisable or exchangeable for, or
any rights, warrants or options to acquire, any additional shares of capital
stock (including options) or convertible debt;

     

    (b)           
(i) increase the compensation or benefits of any employee of the Company or any
Company Subsidiary (except (x) for increases in salary or wages of employees of
the Company or any Company Subsidiary in the ordinary course of business
consistent with past practice, provided that no such
increase shall result in an annual adjustment of more than 5% of the aggregate
base salary and wages payable by the Company and its Subsidiaries during 2009
and (y) pursuant to the Company’s Benefit Plans as described on the Company’s
Disclosure Schedule); (ii) except as required by law, grant any severance or
termination pay to any employee of the Company or any Company Subsidiary except
pursuant to the terms of any Benefit Plan in effect on the date of this
Agreement and which was made available to the Investor prior to the date of this
Agreement and disclosed in the Company’s Disclosure Schedule; (iii) loan or
advance any money or other property to any employees or directors of the Company
or any Company Subsidiary other than in the ordinary course of business
consistent with past practice; (iv) (x) establish, adopt, enter into, amend or
terminate, or (y) grant (other than in the ordinary course of business
consistent with past practice), any waiver or consent under any Benefit Plan or
any plan, agreement, program, policy, trust, fund or other arrangement that
would be a Benefit Plan if it were in existence as of the date of this
Agreement; or (v) grant or amend or modify any equity or equity-based awards
(including options and restricted stock units);

     

    
      
         


      

      
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    (c)           
(i) incur any indebtedness for borrowed money, other than (x) deposit
liabilities, FHLB advances, advances from the Federal Reserve discount window,
Fed funds purchases and reverse repurchase agreements, in each case entered into
in the ordinary course of business consistent with past practice and, in the
case of reverse repurchase agreements, with a final maturity of five years or
less, or (y) indebtedness incurred in the ordinary course of business consistent
with past practice in order to finance working capital (subject in the case of
this clause (y) to an aggregate maximum amount of $5,000,000), (ii) guarantee,
endorse or assume responsibility for, the obligations of any person other than
any wholly-owned subsidiary of the Company (other than the endorsement of checks
and other negotiable instruments in the normal process of collection) or (iii)
redeem, repurchase, prepay, defease, or cancel, or modify in any material
respect the terms of, indebtedness for borrowed money, other than (x) deposit
liabilities, FHLB advances and reverse repurchase agreements in each case in the
ordinary course of business consistent with past practice or (y) in accordance
with the terms of the applicable instrument as in effect on the date
hereof;

     

    (d)           (i)
settle any action involving claims against the Company or any Company Subsidiary
resulting in monetary damages or other payments in excess of $100,000, or (ii)
agree or consent to the issuance of any order restricting or otherwise affecting
its business or operations, or, in each case, that would cause the Company or
any Company Subsidiary to breach a representation, warranty or covenant
contained in this Agreement or would otherwise adversely affect the rights of
the Investor under this Agreement;

     

    (e)           amend
its certificate of incorporation, bylaws or similar governing documents (other
than for the purpose of effectuating the transactions contemplated by the
Transaction Documents), or enter into a plan of consolidation, merger, share
exchange, reorganization or complete or partial liquidation with any person
(other than consolidations, mergers or reorganizations solely among wholly-owned
subsidiaries of the Company), or a letter of intent or agreement in principle
with respect thereto;

     

    (f)           make
any changes in its accounting methods or method of Tax accounting, practices or
policies, except as may be required under law or GAAP, in each case following
consultation with the Company’s independent public accountants;

     

    (g)           except
as required by law, make or change any Tax election, file any amended Tax
Returns, settle or compromise any material Tax liability of the Company or any
of its subsidiaries, agree to an extension or waiver of the statute of
limitations with respect to the assessment or determination of Taxes of the
Company or any of its subsidiaries, enter into any closing agreement with
respect to any Tax or surrender any right to claim a Tax refund;

     

    (h)           amend,
grant any waiver under or permit to be terminated the Trust Preferred Securities
Exchange Agreements;

     

    
      
         


      

      
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    (i)           sell
any assets in any one transaction or series of related transactions where the
aggregate sales price equals or exceeds $1 million and represents a discount of
20% or more from the aggregate book value of such assets; or

     

    (j)           agree
to, or make any commitment to, take any of the actions prohibited by this
Section 3.6 or that would otherwise materially adversely affect or materially
delay the consummation of the transactions contemplated hereby or by the Other
Securities Purchase Agreements.

     

    3.7           Shareholder
Litigation.  The Company shall promptly
inform the Investor of any claim, action, suit, arbitration, mediation, demand,
hearing, investigation or proceeding (“Shareholder
Litigation”)
against the Company, any Company Subsidiary or any of the past or present
executive officers or directors of the Company or any Company Subsidiary that is
threatened or initiated by or on behalf of any shareholder of the Company in
connection with or relating to the Order or the transactions contemplated hereby
or by the Other Securities Purchase Agreements.  The Company shall
consult with the Investor and keep the Investor informed of all material filings
and developments relating to any such Shareholder
Litigation.

     

    ARTICLE
IV

       

    Additional
Agreements

     

    4.1           No Rights
Agreement.  From
the date hereof through such time during which the Investor owns at least 5% of
the outstanding shares of Common Stock of the Company, the Company shall not
enter into any poison pill agreement, shareholders’ rights plan or similar
agreement that shall limit the rights of the Investor and its Affiliates and
associates to hold any shares of Common Stock or acquire additional securities
of the Company unless such poison pill agreement, shareholders’ rights plan or
similar agreement grants an exemption or waiver to the Investor and its
Affiliates and associates and any group in which the Investor may become a
member of, immediately effective upon execution of such plan or agreement that
would allow the Investor and its Affiliates and associates to acquire such
additional securities of the Company.
 

    
      
         


      

      
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    4.2           Governance
Matters.

     

    (a)           The
Company and the Board of Directors shall, and the Company shall cause the Bank
of the Cascades (the “Company
Bank”), an Oregon chartered stock bank and a wholly owned subsidiary of
the Company, and its board of directors to, appoint one designee of the
Investor to each of
the Board of Directors and the board of directors of the Company Bank, effective
as of the Closing.  Thereafter, for so long as the Investor, together
with its Affiliates, owns at least 5% or more of all of the outstanding shares
of Common Stock (counting for such purposes all shares of Common Stock into or
for which the securities of the Company owned by the Investor are directly or
indirectly convertible or exercisable and excluding as shares owned and shares
outstanding all Common Shares issued by the Company after the Closing Date), at
any election of directors of the Company or the Company Bank, the Investor shall
have the right to nominate one candidate for election to each of the Board of
Directors and the board of directors of the Company Bank, as a candidate
recommended by the Board of Directors, and the Company and the Company Bank
shall cause such person (or any substitute or replacement designated or
nominated by the Investor) to be recommended by its respective board of
directors and to be elected a Director of the Company and of the Company Bank,
including the Company’s use of reasonable best efforts to have such person
elected as a Director of the Board of Directors by the Company’s shareholders
and soliciting proxies for such person to the same extent it does for any other
nominees of its Board of Directors.  Any person nominated or
designated pursuant to this Section 4.2 shall be an “Investor
Nominee.”  Notwithstanding anything to the contrary in the
Articles of Incorporation, bylaws, or any other policies of the Company, the
Company Bank, the Board of Directors or the board of directors of the Company
Bank, the Investor Nominee shall be elected by plurality of the votes cast by
the Common Shares entitled to vote at a meeting at which a quorum is
present.  Pursuant to Section 10.1(e) of the Articles of
Incorporation, a majority of the Continuing Directors (as defined in the
Articles of Incorporation) shall designate the Investor Nominee and each
director designee of the Other Investors as a Continuing Director, in each case
before such individual's initial election as a Director of the
Company.

     

    (b)           The
Investor Nominee shall, at the election of the Investor, and subject to any
applicable exchange listing standards and independence requirements, serve on up
to two committees of each of the Board of Directors and the board of directors
of the Company Bank, it being understood and agreed that the foregoing shall not
restrict the Investor Nominee from serving on any other committee to which he is
appointed by the Board of Directors or the board of directors of the Company
Bank; provided that the
Investor Nominee shall not serve as chairman or vice-chairman (or in any similar
capacity) of any such committee or represent more than twenty-five percent (25%)
of the members of any such committee, provided further, that the
Investor Nominee shall not serve on the Audit Committee.  The
Nominating and Corporate Governance Committee, effective as of the Closing,
shall consist of all members of the Board of Directors who meet applicable
exchange listing standards and independence requirements for service on such
committee.

     

    (c)           Notwithstanding
anything to the contrary contained herein, if the Investor Nominee resigns, is
removed pursuant to Section 4.2(d) or otherwise, or is unable to continue to
serve as a Director of the Company or as a Director of the Company Bank, the
Investor may designate a replacement Director and the relevant board of
directors shall elect such person a Director; provided, however, that in each case,
the Investor remains entitled to nominate and designate Directors pursuant to
this Section 4.2 and such action is taken in accordance with this Section
4.2(c); and provided
further, however, that the replacement
Director designated pursuant to this Section 4.2(c) shall not include, without
the consent of the Board of Directors (or nominating committee thereof), any
individual who is an Affiliate of a competitor of the Company.

     

    (d)           Any
Director of the Company may be removed from the Board of Directors or from the
board of directors of the Company Bank in accordance with applicable law and the
governing documents of the Company or of the Company Bank, as applicable; provided, however, that with respect to
the Investor Nominee, any such removal shall require the prior written consent
of the Investor unless such removal is required by applicable law or such
Director is no longer qualified to serve as a Director pursuant to applicable
SEC or regulatory requirements, or a generally applicable policy of the Board of
Directors.

     

    
      
         


      

      
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    (e)           Any
vacancies on the Board of Directors and on the board of directors of the Company
Bank shall be filled in accordance with the applicable bylaws and, if the
vacancy is with respect to the Investor Nominee, this Section 4.2.

     

    (f)           The
Company hereby agrees that, from and after the Closing Date, for so long as the
Investor, together with its respective Affiliates, owns at least 5% or more of
all of the outstanding shares of Common Stock (counting for such purposes all
shares of Common Stock into or for which the securities of the Company owned by
the Investor are directly or indirectly convertible or exercisable and excluding
as shares owned and shares outstanding all Common Shares issued by the Company
after the Closing Date), the Company shall, subject to applicable law, invite a
person designated by the Investor and reasonably acceptable to the Board of
Directors (the “Board
Observer”) to attend meetings of the Board of Directors (or any committee
thereof) and the board of directors of the Company Bank (or any committee
thereof) in a nonvoting observer capacity.  If the Investor no longer
beneficially owns the minimum number of shares of Common Stock as specified in
the first sentence of this Section 4.2(f), the Investor shall have no further
rights under this Section 4.2(f).

     

    (g)           The
Company, the Board of Directors and the board of directors of the Company Bank
shall ensure, to the extent permitted by applicable law and Federal Reserve
Board policy, that any Directors nominated or designated pursuant to this
Section 4.2 shall enjoy the same rights, capacities, entitlements,
indemnification rights and compensation as any other members of the Board of
Directors and the board of directors of the Company Bank, as
applicable.  The Investor Nominee shall be entitled to reimbursement
for documented, reasonable out-of-pocket expenses incurred in attending meetings
of the Board of Directors (or any committee thereof) and the board of directors
of the Company Bank (or any committee thereof), to the same extent as other
members of the Board of Directors and the board of directors of the Company
Bank.  The Company shall notify the Investor Nominee and the Board
Observer of all regular meetings and special meetings of the Board of Directors
and the board of directors of the Company Bank and of all regular and special
meetings of any committee thereof. The Company shall provide the Investor
Nominee and the Board Observer with copies of all notices, minutes, consents and
other material that it provides to all other members of the Board of Directors
or the board of directors of the Company Bank concurrently as such materials are
provided to the other members.  The Board Observer shall not be
entitled to participate in discussions of matters brought to the Board of
Directors or the board of directors of the Company Bank.

     

    (h)           The
parties acknowledge and agree that there shall be a vacancy on each of the Board
of Directors and the board of directors of the Company Bank as of the
Closing.  The Company agrees to fill, or cause to be filled (with
respect to the Company Bank), such vacancies with an individual nominated by the
Nominating and Corporate Governance Committee following the Closing, but in any
event not later than immediately following the next annual meeting of
shareholders following the date of this Agreement.  Effective
immediately following the next annual meeting of shareholders following the date
of this Agreement, the number of directors on the Board of Directors and the
board of directors of the Company Bank shall not exceed ten (10).  Not
more than three (3) of the persons serving on the Board of Directors shall be
the nominees of the Other Investors.


    
      
         


      

      
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    (i)           On
or before the Closing, the Company shall, and shall cause the Company Bank to,
enter into a customary Directors & Officers Indemnification Agreement
(collectively, the “Indemnification Agreements”)
with the Investor Nominee in form and substance reasonably satisfactory to the
Investor.  Any replacement Investor Nominee shall be entitled to enter
into Directors and Officers Indemnification Agreements with the Company and the
Company Bank on the same terms as the Indemnification
Agreements.  Given that certain Jointly Indemnifiable Claims may arise
due to the relationship between the Fund Entities and the Company and Company
Bank and the service of the Investor Nominee as a Director of the Company and
the Company Bank at the request of the Fund Entities, the Company acknowledges
and agrees, and shall cause the Company Bank to acknowledge and agree, that the
Company and the Company Bank shall be fully and primarily responsible for the
indemnification and advancement of expenses of the Investor Nominee in
connection with any such Jointly Indemnifiable Claim, pursuant to and in
accordance with the terms of the Indemnification Agreements, irrespective of any
right of recovery the Investor Nominee may have from the Fund Entities or any of
their respective Affiliates.  Under no circumstances shall the Company
or the Company Bank be entitled to any right of contribution by the Fund
Entities or any of their Affiliates and no right of recovery the Investor
Nominee may have from the Fund Entities or any of their respective Affiliates
shall reduce or otherwise alter the rights of the Investor Nominee or the
obligations of the Company and the Company Bank under the Indemnification
Agreements.  For purposes of this Section 4.2(i), (i) the term “Fund Entities” shall mean any
corporation, limited liability company, partnership, joint venture, trust,
employee benefit plan or other entity or enterprise (other than the Company, the
Company Bank or any other corporation, limited liability company, partnership,
joint venture, trust, employee benefit plan or other entity or enterprise the
Investor Nominee has agreed, on behalf of the Company or the Company Bank or at
the Company’s or at the Company Bank’s request, to serve as a director, officer,
employee or agent and which service is covered by the Indemnification
Agreements) from whom the Investor Nominee may be entitled to indemnification or
advancement of expenses with respect to which, in whole or in part, the Company
and/or the Company Bank may also have an indemnification or advancement
obligation and (ii) the term “Jointly Indemnifiable Claim”
shall mean any claim for which the Investor Nominee shall be entitled to
indemnification from both any Fund Entity and the Company and/or the Company
Bank pursuant to applicable law, any indemnification agreement or the
certificate of incorporation, bylaws, partnership agreement, operating
agreement, certificate of formation, certificate of limited partnership or
comparable organizational documents of the Company, the Company Bank and the
Fund Entities.

     

    (j)           The
Company and the Board of Directors shall not take any action that would result
in any amendment to the governing documents of the Company or the Company Bank
inconsistent with the provisions of this Section 4.2.

     

    4.3           Legend.

     

    (a)           The
Investor agrees that all certificates or other instruments representing the
securities subject to this Agreement will bear a legend substantially to the
following effect:


    
      
         


      

      
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    “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.”

     

    (b)           Upon
request of the Investor, upon receipt by the Company of an opinion of counsel
reasonably satisfactory to the Company to the effect that such legend is no
longer required under the Securities Act or applicable state laws, as the case
may be, the Company shall promptly cause the legend to be removed from any
certificate for any securities.  The Investor acknowledges that the
Purchased Shares have not been registered under the Securities Act or under any
state securities laws and agrees that it will not sell or otherwise dispose of
any of the Purchased Shares, except in compliance with the registration
requirements or exemption provisions of the Securities Act and any other
applicable securities laws.

     

    4.4           Certain
Transactions.  The
Company will not merge or consolidate into, or sell, transfer or lease all or
substantially all of its property or assets to, any other party unless the
successor, transferee or lessee party, as the case may be (if not the Company),
or, at the request of the Investor, the ultimate parent of such successor,
transferee or lessee party of the Company, expressly assumes the due and
punctual performance and observance of each and every covenant and condition of
this Agreement to be performed and observed by the Company.

     

    4.5           Indemnity.

     

    (a)           The
Company agrees to indemnify and hold harmless the Investor and its Affiliates
and each of their respective officers, directors, partners, members, managers,
employees and agents, to the fullest extent lawful, from and against any and all
actions, suits, claims, proceedings, costs, losses, liabilities, damages,
expenses (including attorneys’ fees and disbursements), amounts paid in
settlement and other costs (collectively, “Losses”) arising out of or
resulting from (1) any inaccuracy in or breach of the Company’s
representations or warranties in Section 2.2 of this Agreement or any
certificate delivered by or on behalf of the Company pursuant to this Agreement,
(2) the Company’s breach of agreements or covenants made by the Company in
this Agreement or (3) any Losses arising out of or resulting from any
legal, administrative or other proceedings instituted by any Governmental
Entity, shareholder of the Company or any other person (other than the Investor
and its Affiliates and the Company and the Company Subsidiaries) arising out of
the transactions contemplated by this Agreement (other than any Losses
attributable to the acts, errors or omissions on the part of the Investor, but
not including the transactions contemplated hereby).


     

    (b)           The
Investor agrees to indemnify and hold harmless each of the Company and its
Affiliates and each of their respective officers, directors, partners, members,
managers, employees and agents, to the fullest extent lawful, from and against
any and all Losses arising out of or resulting from (1) any inaccuracy in
or breach of the Investor’s representations or warranties in this Agreement or
(2) the Investor’s breach of agreements or covenants made by the Investor
in this Agreement.


    
      
         


      

      
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    (c)           A
party entitled to indemnification hereunder (each, an “Indemnified Party”) shall
give written notice to the party indemnifying it (the “Indemnifying Party”) of any
claim with respect to which it seeks indemnification promptly after the
discovery by such Indemnified Party of any matters giving rise to a claim for
indemnification; provided that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 4.5 unless and to the
extent that the Indemnifying Party shall have been actually prejudiced by the
failure of such Indemnified Party to so notify such party.  Such
notice shall describe in reasonable detail such claim.  In case any
such action, suit, claim or proceeding is brought against an Indemnified Party,
the Indemnified Party shall be entitled to hire, at the cost and expense of the
Indemnifying Party, counsel and conduct the defense thereof; provided, however, that the
Indemnifying Party shall only be liable for the legal fees and expenses of one
law firm for all Indemnified Parties, taken together with regard to any single
action or group of related actions, upon agreement by the Indemnified Parties
and the Indemnifying Parties.  If the Indemnifying Party assumes the
defense of any claim, all Indemnified Parties shall thereafter deliver to the
Indemnifying Party copies of all notices and documents (including court papers)
received by the Indemnified Party relating to the claim, and any Indemnified
Party shall cooperate in the defense or prosecution of such
claim.  Such cooperation shall include the retention and (upon the
Indemnifying Party’s request) the provision to the Indemnifying Party of records
and information that are reasonably relevant to such claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder.  The Indemnifying
Party shall not be liable for any settlement of any action, suit, claim or
proceeding effected without its written consent; provided, however, that the
Indemnifying Party shall not unreasonably withhold, delay or condition its
consent.  The Indemnifying Party further agrees that it will not,
without the Indemnified Party’s prior written consent (which shall not be
unreasonably withheld or delayed), settle or compromise any claim or consent to
entry of any judgment in respect thereof in any pending or threatened action,
suit, claim or proceeding in respect of which indemnification has been sought
hereunder unless such settlement or compromise includes an unconditional release
of such Indemnified Party from all liability arising out of such action, suit,
claim or proceeding.

     

    (d)           For
purposes of the indemnity contained in Sections 4.5(a)(1) and 4.5(b)(1),
all qualifications and limitations set forth in the parties’ representations and
warranties as to “materiality,” “Material Adverse Effect” and words of similar
import, shall be disregarded in determining (i) whether there shall have been
any inaccuracy in or breach of any representations and warranties in this
Agreement and (ii) the amount of Losses in respect of any breach of any
representation or warranty.

     

    (e)           The
Company shall not be required to indemnify the Indemnified Parties pursuant to
Section 4.5(a)(1), disregarding all qualifications or limitations set forth in
its representations and warranties as to “materiality,” “Material Adverse
Effect” and words of similar import, (1) with respect to any claim for
indemnification if the amount of Losses with respect to such claim are less than
$50,000 (any claim involving Losses less than such amount being referred to as a
“De Minimis Claim”) and
(2) unless and until the aggregate amount of all Losses incurred with respect to
all claims (other than De Minimis Claims) pursuant to Section 4.5(a)(1) exceed
$250,000 (the “Threshold
Amount”), in which event the Company shall be responsible for the entire
amount of such Losses.  The Investor shall not be required to indemnify the
Indemnified Parties pursuant to Section 4.5(b)(1), disregarding all
qualifications or limitations set forth in the representations and warranties as
to “materiality,” “Material Adverse Effect” and words of similar import, (1)
with respect to any De Minimis Claim and (2) unless and until the aggregate
amount of all Losses incurred with respect to all claims (other than De Minimis
Claims) pursuant to Section 4.5(b)(1) exceed the Threshold Amount, in which
event such Investor shall be responsible for the entire amount of such
Losses.


    
      
         


      

      
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    (f)           The
obligations of the Indemnifying Party under this Section 4.5 shall survive the
transfer or redemption of the Common Stock issued pursuant to this Agreement, or
the Closing or termination of this Agreement; provided that in the event of
any transfer of the Common Stock to a third party that is not an Affiliate of
the transferor, the Indemnifying Party shall have no obligations under this
Section 4.5 to
such transferee.  The indemnity provided for in this Section 4.5 shall be the sole
and exclusive monetary remedy of Indemnified Parties after the Closing for any
inaccuracy of any of the representations and warranties contained in
Sections 2.2 and Sections 2.3 of this Agreement or any other breach of
any covenant or agreement contained in this Agreement; provided that nothing herein
shall limit in any way any such parties’ remedies in respect of fraud,
intentional misrepresentation or omission or intentional misconduct by the other
party in connection with the transactions contemplated hereby.  No
party to this Agreement (or any of its Affiliates) shall, in any event, be
liable or otherwise responsible to any other party (or any of its Affiliates)
for any consequential or punitive damages of such other party (or any of its
Affiliates) arising out of or relating to this Agreement or the performance or
breach hereof.  The indemnification rights contained in this
Section 4.5 are
not limited or deemed waived by any investigation or knowledge by the
Indemnified Party prior to or after the date hereof.

     

    (g)           Any
indemnification payments pursuant to this Section 4.5 shall be treated as
an adjustment to the Investment Amount for the Purchased Shares for U.S. federal
income and applicable state and local Tax purposes, unless a different treatment
is required by applicable law.

     

    4.6           Registration Rights.
At the Closing, the Company will enter into the Registration Rights Agreement
for the benefit of the Investor, substantially in the form attached as Exhibit C
hereto.


    
      
         


      

      
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    4.7           Gross-Up
Rights

     

    (a)           Sale of New
Securities.  For so long as the Investor, together with its
Affiliates, owns 5% or more of all of the outstanding shares of Common Stock
(counting for such purposes all shares of Common Stock into or for which the
securities of the Company owned by the Investor are directly or indirectly
convertible or exercisable and excluding as shares owned and shares outstanding
all Common Shares issued by the Company after the Closing Date) (before giving
effect to any issuances triggering provisions of this Section), if, at any time
after the date hereof, the Company makes any public or nonpublic offering or
sale of any equity security (including Common Stock, preferred stock or
restricted stock), or any securities, options or debt that is convertible or
exchangeable into equity or that includes an equity component (such as, an
“equity kicker”) (including any hybrid security) (any such security, a “New Security”) (other than
(i) any Common Stock or other securities issuable upon the exercise or
conversion of any securities of the Company issued or agreed to be issued as of
the date hereof; (ii) pursuant to the granting or exercise of employee stock
options or other stock incentives pursuant to the Company’s stock incentive
plans approved by the Board of Directors or the issuance of stock pursuant to
the Company’s employee stock purchase plan approved by the Board of Directors or
similar plan where stock is being issued or offered to a trust, other entity or
otherwise, for the benefit of any employees, officers or directors of the
Company, in each case in the ordinary course of providing incentive
compensation; (iii) issuances of capital stock as full or partial consideration
for a merger, acquisition, joint venture, strategic alliance, license agreement
or other similar nonfinancing transaction; or (iv) any capital stock issued or
issuable (x) in connection with any expedited issuance of new securities
undertaken at the written direction of the applicable regulator of the Company
or any insured depository institution subsidiary of the Company, or (y) in
connection with the issuance of any new securities issued pursuant to the
Troubled Asset Relief Program or any similar United States Government program),
then the Investor shall be afforded the opportunity to acquire from the Company
for the same price (net of any underwriting discounts or sales commissions) and
on the same terms (except that, to the extent permitted by law and the Articles
of Incorporation and bylaws of the Company, the Investor may elect to receive
such securities in nonvoting form, convertible into voting securities in a
widely dispersed or public offering) as such securities are proposed to be
offered to others, up to the amount of New Securities in the aggregate required
to enable it to maintain its proportionate Common Stock-equivalent interest in
the Company immediately prior to any such issuance of New Securities; provided, that except in the
case of (1) any transfer of Common Stock to Affiliates of the Investor and (2) a
sale, in one transaction or a series of related transactions, of shares of
Common Stock to a third party purchaser or group in an amount that exceeds ten
percent (10%) of the total number of shares of Common Stock outstanding, such
right to acquire such securities is not transferable.  The amount of
New Securities that the Investor shall be entitled to purchase in the aggregate
shall be determined by multiplying (x) the total number or principal amount of
such offered New Securities by (y) a fraction, the numerator of which is the
number of shares of Common Stock held by the Investor, and the denominator of
which is the number of shares of Common Stock then outstanding.


     

    (b)           Notice.  In
the event the Company proposes to offer or sell New Securities, it shall give
the Investor written notice of its intention, describing the price (or range of
prices), anticipated amount of securities, timing, and other terms upon which
the Company proposes to offer the same (including, in the case of a registered
public offering and to the extent possible, a copy of the prospectus included in
the registration statement filed with respect to such offering), no later than
two business days, as the case may be, after the initial filing of a
registration statement with the SEC with respect to an underwritten public
offering, after the commencement of marketing with respect to a Rule 144A
offering or after the Company proposes to pursue any other
offering.  The Investor shall have 5 business days from the date of
receipt of such a notice to notify the Company in writing that it intends to
exercise its rights provided in this Section 4.7 and, as to the amount of New
Securities the Investor desires to purchase, up to the maximum amount calculated
pursuant to Section 4.7(a).  Such notice shall constitute a nonbinding
indication of interest of the Investor to purchase the amount of New Securities
so specified at the price and other terms set forth in the Company’s notice to
it.  The failure of the Investor to respond within such 5 business day
period shall be deemed to be a waiver of the Investor’s rights under this
Section 4.7 only with respect to the offering described in the applicable
notice.


    
      
         


      

      
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    (c)           Purchase
Mechanism.  If the Investor exercises its rights provided in
this Section 4.7, the closing of the purchase of the New Securities with respect
to which such right has been exercised shall take place within 30 calendar days
after the giving of notice of such exercise, which period of time shall be
extended for a maximum of 180 days in order to comply with applicable laws and
regulations (including receipt of any applicable regulatory or shareholder
approvals).  The Company and the Investor agree to use commercially
reasonable efforts to secure any regulatory or shareholder approvals or other
consents, and to comply with any law or regulation necessary in connection with
the offer, sale and purchase of, such New Securities.

     

    (d)           Failure of
Purchase.  In the event that the Investor fails to exercise its
rights provided in this Section 4.7 within said 5 business day period or, if so
exercised, the Investor is unable to consummate such purchase within the time
period specified in Section 4.7(c) because of the Investor’s failure to obtain
any required regulatory or shareholder consent or approval, the Company shall
thereafter be entitled (during the period of 60 days following the conclusion of
the applicable period) to sell or enter into an agreement (pursuant to which the
sale of the New Securities covered thereby shall be consummated, if at all,
within 90 days from the date of said agreement) to sell the New Securities not
elected to be purchased pursuant to this Section 4.7 by the Investor or which
the Investor is unable to purchase because of such failure to obtain any such
consent or approval, at a price and upon terms no more favorable in the
aggregate to the purchasers of such securities than were specified in the
Company’s notice to the Investor.  Notwithstanding the foregoing, if
such sale is subject to the receipt of any regulatory or shareholder approval or
consent or the expiration of any waiting period, the time period during which
such sale may be consummated shall be extended until the expiration of five
business days after all such approvals or consents have been obtained or waiting
periods expired, but in no event shall such time period exceed 180 days from the
date of the applicable agreement with respect to such sale.  In the
event the Company has not sold the New Securities or entered into an agreement
to sell the New Securities within said 60-day period (or sold and issued New
Securities in accordance with the foregoing within 90 days from the date of said
agreement (as such period may be extended in the manner described above for a
period not to exceed 180 days from the date of said agreement)), the Company
shall not thereafter offer, issue or sell such New Securities without first
offering such securities to the Investor in the manner provided
above.


     

    (e)           Non-Cash
Consideration.  In the case of the offering of securities for a
consideration in whole or in part other than cash, including securities acquired
in exchange therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the Board of Directors; provided, however, that such fair value
as determined by the Board of Directors shall not exceed the aggregate market
price of the securities being offered as of the date the Board of Directors
authorizes the offering of such securities.

     

    (f)           Cooperation.  The
Company and the Investor shall cooperate in good faith to facilitate the
exercise of the Investor’s rights under this Section 4.7, including to secure
any required approvals or consents.


    
      
         


      

      
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    4.8           Anti-Takeover Matters;
Takeover Laws; No Rights Triggered.  If any Takeover Law may
become, or may purport to be, applicable to the transactions contemplated or
permitted by this Agreement or to the Investor and/or its Affiliates generally
following the Closing, the Company and the members of the Board of Directors
shall grant such approvals and take such actions as are necessary so that the
transactions contemplated or permitted by this Agreement, and the Other
Securities Purchase Agreements may be consummated, as promptly as practicable,
on the terms contemplated by this Agreement and the other respective Transaction
Documents, as the case may be, and otherwise act to eliminate or minimize the
effects of any Takeover Law on any of the transactions contemplated or permitted
by this Agreement and the Other Securities Purchase Agreements and on the
Investor and its Affiliates.

     

    (a)           Oregon Business Combination
Statute.  The Company represents that the Board of Directors
has duly adopted an irrevocable resolution as follows (the “Business Combination Exemption
Resolution”):

     

    “RESOLVED,
that pursuant to Section 60.835 of the Oregon Business Corporation Act (“OBCA”),
the Board of Directors of the Corporation, for the specific purpose of
establishing an irrevocable exemption from Section 60.835 of the OBCA, hereby
approves thereunder (i) the entering into, and all of the transactions relating
to and contemplated or permitted by, the Securities Purchase Agreement, between
the Corporation and BOTC Holdings LLC, including, without limitation, (A) the
assignment of any rights thereunder, (B) any person or entity becoming an
“interested shareholder” as defined in Section 60.825 of the OBCA including,
without limitation, BOTC Holdings LLC, any present or future affiliates or
associates of BOTC Holdings LLC, any trust BOTC Holdings LLC has or may
establish (whether individually or in another capacity) (collectively, the
“Covered Persons”) and
(C) the transfer of any shares of common stock or other securities of the
Corporation in accordance with the terms and conditions of the Securities
Purchase Agreement, (ii) any transaction in which any Covered Person becomes an
“interested shareholder” as defined in Section 60.825 of the OBCA or acquires
additional shares of common stock or other securities of the Corporation
thereafter and (iii) any “business combination” as defined in Section 60.825 of
the OBCA involving any Covered Person.”


     

    (b)           Business Combination
Exemption.  The Company represents that the Business
Combination Exemption Resolution adopted by the Company is a valid action of the
Board of Directors of the Company, binding on the Company, and constitutes a
valid and irrevocable exemption by the Company from Section 60.835 of the Oregon
Business Corporation Act as to any transaction, person or entity described in
such resolution.

     

    4.9           Additional Regulatory
Matters.

     

    (a)           The
Company and the Investor agree to cooperate and use their reasonable best
efforts to ensure that neither the Investor nor any of its Affiliates will be
deemed to control the Company or otherwise be deemed a “bank holding company”
for purposes of the BHC Act.


    
      
         


      

      
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    (b)           The
Company shall not knowingly take any action which would reasonably be expected
to pose a substantial risk that any of the Investor or its Affiliates will be
deemed to control the Company or otherwise be deemed a “bank holding company”
for purposes of the BHC Act, including undertaking any redemption,
recapitalization, or repurchase of Common Stock, of securities or rights,
options, or warrants to purchase Common Stock, or securities of any type
whatsoever that are, or may become, convertible into or exchangeable into or
exercisable for Common Stock in each case, where the Investor is not given the
right to participate in such redemption, recapitalization, or repurchase to the
extent of the Investor’s pro
rata proportion.

     

    (c)           Notwithstanding
anything in this Agreement to the contrary, neither the Investor nor any
Affiliate of the Investor shall be required (i) to become a "bank holding
company" within the meaning of the BHC Act, a "savings and loan holding company"
within the meaning of the Home Owners' Loan Act, or a similarly regulated entity
under any similar or successor law; (ii) to support or maintain the
capital, liquidity, or financial condition of the Company or the Company's
subsidiaries (other than through the investment expressly contemplated herein);
(iii) to modify or limit its operations or commercial practices (except as
they relate to the Company and the Company Subsidiaries); (iv) to modify or
limit its governance, structure, or compensation arrangements; (v) to
modify the terms of this Agreement, including, for the avoidance of doubt, the
terms or the amount of the Purchased Shares to be delivered by the Company under
this Agreement; (vi) to become subject to or otherwise permit or accept any
other condition, limitation, restriction, or restraint that would reasonably be
expected to adversely affect (with respect to the Investor or its Affiliates)
any material financial term of the transactions contemplated by this Agreement
or the anticipated benefits or burdens to the Investor and its Affiliates of the
transactions contemplated hereby; (vii) to propose, agree, or accept any of the
items described in clauses (i) through (vi) as a condition to receiving any
regulatory or governmental approval or consent (each of clauses (i) through
(vii), a “Burdensome
Condition”).


     

    4.10         VCOC
Investor.  The Investor and, at the Investor’s request, each
Affiliate thereof that directly or indirectly has an interest in the Investor,
the Company or the Company Bank, in each case that is intended to qualify as a
“venture capital operating company” as defined in the regulations (the “Plan Asset Regulations”)
issued by the Department of Labor at Section 2510.3 101 of Part 2510 of Chapter
XXV, Title 29 of the Code of Federal Regulations, as the same may be amended
from time to time (a “VCOC” and each such person a
“VCOC Investor”), will
have customary and appropriate VCOC rights (including consultation rights,
inspection and access rights, and rights to receive materials for all meetings
of the Board of Directors or the board of directors of the Company Bank (as well
as committees of each such board), and the right to audited and unaudited
financial statements, annual budget and other financial and operations
information, including advance notification of and consultation with respect to
significant corporate actions) relating to inspection, information and
consultation with respect to the Company or the Company Bank; provided that this Section
4.10 shall not entitle the Investor to designate any members of the Board of
Directors or of the board of directors of the Company Bank. The Company shall,
and shall cause the Company Bank to, consider in good faith the recommendations
of any VCOC Investor or its designated representative in connection with the
matters on which it is consulted as described above, recognizing that the
ultimate discretion with respect to all such matters shall be retained by the
Company or the Company Bank, as applicable. In the event the Company or the
Company Bank ceases to qualify as an “operating company” (as defined in the
first sentence of 2510.3-101(c)(1) of the Plan Asset Regulations) or the
investment in the Company or the Company Bank by a VCOC Investor does not
qualify as a venture capital investment as defined in the Plan Asset
Regulations, then the Company and the Investor will, and the Company will cause
the Company Bank to, cooperate in good faith to take all reasonable actions
necessary to preserve the VCOC status of each VCOC Investor, it being understood
that such reasonable actions shall not require a VCOC Investor to purchase or
sell any investments.  The Company shall, and shall cause the Company
Bank to, enter into an agreement with each VCOC Investor that provides the
rights set forth in this Section 4.10, effective as of the
Closing.  Notwithstanding the foregoing, neither the Company nor the
Company Bank shall be obligated to (1) honor a request from a VCOC Investor to
visit and inspect any of the offices and properties of the Company and/or the
Company Bank and inspect and copy the books and records of the Company and/or
the Company Bank more frequently than once per quarter or (2) make appropriate
officers and directors of the Company and/or the Company Bank available to a
VCOC Investor for consultation with such VCOC Investor or its designated
representatives with respect to matters relating to the business and affairs of
the Company and the Company Bank more frequently than once per
quarter.


    
      
         


      

      
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    4.11         MFN
Provision.  If
the Company, in connection with the Other Private Placements, enters into an
agreement that contains terms more favorable to any investor than the terms
provided to the Investor under this Agreement, then the Company will modify or
revise the terms of this Agreement in order for the transaction contemplated
hereby to reflect any more favorable terms provided to any other investor in
connection with the Other Private Placements.

     

    4.12         Continued Listing
Authorization.  The Company shall take all steps necessary to
prevent the Common Stock from being delisted from the NASDAQ, including,
effecting a reverse stock split of the Common Stock, if necessary, to comply
with NASDAQ Listing Rule 5450(a)(1).  If the Company effects a reverse
stock split of the Common Stock prior to the Closing, the Per Share Purchase
Price and the number of shares of Common Stock to be authorized following the
amendment to the Articles of Incorporation described in Section 3.1(b) shall be
adjusted proportionately.

     

    4.13         Corporate
Opportunities.  To the fullest extent permitted by applicable
law or regulation, including but not limited to the laws and regulations of the
State of Oregon, neither the Investor nor any of its Affiliates or any Persons
associated with the Investor, nor the Investor Nominee or the Board Observer
shall be obligated to refer or present any particular business opportunity to
the Company or the Company Bank.  The Investor shall have the right to
take such opportunity for its own account (individually or as a partner,
shareholder, member, participant or fiduciary) or recommend to others such
particular opportunity, unless such opportunity is presented to the Investor
Nominee or Board Observer as a business opportunity for the Company or the
Company Bank or the Investor Nominee or Board Observer learns of such
opportunity in his capacity as a director or Board Observer, even if such
opportunity is of a character that, if referred or presented to the Company or
the Company Bank, as applicable, could be taken by the Company or the Company
Bank, as applicable; provided that in the case where such opportunity is
presented to the Investor Nominee or Board Observer as a business opportunity
for the Company or the Company Bank or the Investor Nominee or Board Observer
learns of such opportunity in his capacity as a director or Board Observer, such
Investor Nominee or Board Observer shall present such business opportunity to
the Company or the Company Bank, as applicable, and if the Company or the
Company Bank, as applicable, does not decide to pursue such business opportunity
within 30 days of notice thereof, or subsequently determines to abandon the
pursuit of such business opportunity, the Investor Nominee or Board Observer
(and the Investor or its Affiliates or other Persons associated with it) shall
have the right to take for their own account or to recommend to others such
business opportunity.  The Company shall take all action necessary to
implement this provision including, if necessary, amending its Articles of
Incorporation.


    
      
         


      

      
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    ARTICLE
V

    
 

    Termination

     

    5.1           Termination.  This
Agreement may be terminated prior to the Closing:

     

    (a)           by
mutual written consent of the Investor and the Company;

     

    (b)           by
the Company, upon written notice to the Investor, in the event that the
conditions of Closing set forth in Section 1.2(b)(2) are not satisfied on or
before February 4, 2011 (the “Outside
Date”);


     

    (c)           by
the Investor, upon written notice to the Company, in the event that the
conditions of Closing set forth in Section 1.2(b)(1) are not satisfied on or
before the Outside Date;

     

    (d)           by
the Company or the Investor, upon written notice to the other party, in the
event that any Governmental Entity shall have issued any order, decree or
injunction or taken any other action restraining, enjoining or prohibiting any
of the transactions contemplated by this Agreement, and such order, decree,
injunction or other action shall have become final and
nonappealable;

     

    (e)           by
the Investor, if the Investor or its Affiliates receives written notice from or
is otherwise advised by the Federal Reserve that the Federal Reserve will not
issue a non-objection letter with respect to the CBC Act notice filed by the
Investor or that it will not issue such letter without the imposition of a
Burdensome Condition, or otherwise indicates that it will deem the Investor or
any of its Affiliates to control the Company for purposes of the BHC
Act;

     

    (f)           by the Investor, if the
Investor or any of its Affiliates receives notice from or is otherwise advised
by the FDIC that the contribution by the Company to its principal depository
institution
subsidiary contemplated by Section 1.2(b)(1)(vi) would not satisfy the
“Leverage
Capital Ratio” and other capital
requirements of the FDIC set forth in paragraph 4 of the Order, or comparable
requirements in any other enforcement order issued by a
federal or state banking regulator between the date of this agreement and the
Closing;

     

    (g)           by
the Investor, if a “change in control” within the meaning of any Benefit Plan
occurs on or after the date hereof but prior to the Closing Date;
or

     

    (h)           by
the Investor, if the promissory notes issued pursuant to the Trust Preferred
Securities Exchange Agreements, by their terms, no longer may be paid in full
upon the consummation of the transactions contemplated hereby and by the Other
Securities Purchase Agreements for an aggregate amount equal to not more than
the Discounted TRuPS Amount.


    
      
         


      

      
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    5.2           Effects of
Termination.  In the event of any termination of this Agreement
as provided in Section 5.1, this Agreement (other than Section 3.2,
Section 4.5, this Section 5.2 and Article VI (other than Section 6.1) and all
applicable defined terms, which shall remain in full force and effect) shall
forthwith become wholly void and of no further force and effect; provided that nothing herein
shall relieve any party from liability for willful breach of this
Agreement.

     

    ARTICLE
VI

    
 

    Miscellaneous

     

    6.1           Survival.  Each
of the representations and warranties set forth in this Agreement shall survive
the Closing under this Agreement but only for a period of 24 months following
the Closing Date (or until final resolution of any claim or action arising from
the breach of any such representation and warranty, if notice of such breach was
provided prior to the end of such period) and thereafter shall expire and have
no further force and effect; provided that the
representations and warranties in Sections 2.2(a), 2.2(b), 2.2(c), 2.2(d)
and 2.3(a) shall survive indefinitely and the representations and warranties in
Sections 2.2(i),
2.2(p) and 2.2(u) shall survive until 90 days after the expiration of the
applicable statutory periods of limitations.  Except as otherwise
provided herein, all covenants and agreements contained herein shall survive for
the duration of any statutes of limitations applicable thereto or until, by
their respective terms, they are no longer operative.

     

    6.2           Amendment.  No
amendment or waiver of this Agreement will be effective with respect to any
party unless made in writing and signed by an officer of a duly authorized
representative of such party.

     

    6.3           Waivers.  No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  The conditions to each
party’s obligation to consummate the Closing are for the sole benefit of such
party and may be waived by such party in whole or in part to the extent
permitted by applicable law.  No waiver of any party to this Agreement
will be effective unless it is in a writing signed by a duly authorized officer
of the waiving party that makes express reference to the provision or provisions
subject to such waiver.

     

    6.4           Counterparts and
Facsimile.  For the convenience of the parties hereto, this
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
will together constitute the same agreement.  Executed signature pages
to this Agreement may be delivered by facsimile and such facsimiles will be
deemed as sufficient as if actual signature pages had been
delivered.


    
      
         


      

      
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    6.5           Governing
Law.  This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.  The parties hereto
irrevocably and unconditionally agree that any suit or proceeding arising out of
or relating to this Agreement and the transactions contemplated hereby will be
tried exclusively in the U.S. District Court for the Southern District of New
York or, if that court does not have subject matter jurisdiction, in any state
court located in The City and County of New York and the parties agree to submit
to the jurisdiction of, and to venue in, such courts.

     

    6.6           Waiver of Jury
Trial.  EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

     

    6.7           Notices.  Any
notice, request, instruction or other document to be given hereunder by any
party to the other will be in writing and will be deemed to have been duly given
(a) on the date of delivery if delivered personally or by telecopy or facsimile,
upon confirmation of receipt, (b) on the first business day following the date
of dispatch if delivered by a recognized next-day courier service, or (c) on the
third business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid.  All
notices hereunder shall be delivered as follows:

     

    (a)           If
to the Investor:

     

    BOTC
Holdings LLC

    c/o
Lightyear Capital LLC

    375 Park
Avenue, 11th
Floor

    New York,
NY 10152

    Attn:
Lori J. Forlano

    Facsimile:  (212)
328-0516

     

    with a
copy to:

     

    Simpson
Thacher & Bartlett LLP

    425
Lexington Avenue

    New York,
New York 10017

    Attn:  Caroline
B. Gottschalk, Esq.

    Facsimile:  (212)
455-2502

    


    (b)           If
to the Company:

     

    Cascade
Bancorp

    1100 N.W.
Wall Street

    Bend,
Oregon  97701

    Attn:  Chief
Executive Officer

    Facsimile:  (541)
617-3149


    
      
         


      

      
        -51-

        
          

        

      

      
         


      

    

     

    with copy
to:

     

    Davis
Wright Tremaine LLP

    1201
Third Avenue, Suite 2200

    Seattle,
Washington  98101

    Attn:  David
R. Wilson

    Facsimile:  (206)
757-7274

     

    6.8           Entire Agreement,
Etc.  This Agreement (including the Exhibits, Schedules, and
Disclosure Schedule hereto) constitutes the entire agreement, and supersedes all
other prior agreements, understandings, representations and warranties, both
written and oral, between the parties, with respect to the subject matter
hereof; the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and their
permitted assigns.  For the avoidance of doubt, the Company agrees
that the Investor may assign its rights and obligations under this Agreement, in
whole or in part, to one or more Affiliates, parallel investment funds,
co-investment funds or successor investment funds and that such assignees shall
be included in the term “Investor.”

     

    6.9           Other
Definitions.  Wherever
required by the context of this Agreement, the singular shall include the plural
and vice versa, and the masculine gender shall include the feminine and neuter
genders and vice versa, and references to any agreement, document or instrument
shall be deemed to refer to such agreement, document or instrument as amended,
supplemented or modified from time to time.  All article, section,
paragraph or clause references not attributed to a particular document shall be
references to such parts of this Agreement, and all exhibit, annex and schedule
references not attributed to a particular document shall be references to such
exhibits, annexes and schedules to this Agreement.  When used
herein:

     

    (1)           the
term “subsidiary” means
those corporations, banks, savings banks, associations and other persons of
which such person owns or controls 25% or more of the outstanding equity
securities either directly or indirectly through an unbroken chain of entities
as to each of which 25% or more of the outstanding equity securities is owned
directly or indirectly by its parent or otherwise controlled by such parent and
any entity that would be a “subsidiary” for purposes of the BHC Act; provided, however, that there shall not
be included any such entity to the extent that the equity securities of such
entity were acquired in satisfaction of a debt previously contracted in good
faith or are owned or controlled in a bona fide fiduciary
capacity;

     

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

     

    (3)           the
word “or” is not exclusive;


    
      
         


      

      
        -52-

        
          

        

      

      
         


      

    

     

    (4)           the
words “including,” “includes,” “included” and “include” are deemed to be
followed by the words “without
limitation”;

     

    (5)           the
terms “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
section, paragraph or subdivision;

     

    (6)           the
words “it” or “its” are deemed to mean
“him” or “her” and “his” or “her,” as applicable, when
referring to an individual;

     

    (7)           “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 or the State of Oregon
generally are authorized or required by law or other governmental actions to
close;

     

    (8)           “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;

     

    (9)           “Beneficially Own,” “Beneficial Owner” and “Beneficial Ownership” are
defined in Rules 13d-3 and 13d-5 of the Exchange Act; and

     

    (10)          “knowledge of the Company” or
“Company’s knowledge”
means the actual knowledge after due inquiry of the executive officers of the
Company.

     

    6.10         Captions.  The
article, section, paragraph and clause captions herein are for convenience of
reference only, do not constitute part of this Agreement and will not be deemed
to limit or otherwise affect any of the provisions hereof.

     

    6.11         Severability.  If
any provision of this Agreement or the application thereof to any person
(including the officers and directors of the Investor and the Company) or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid or unenforceable, will remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original intent
of the parties.

     

    6.12           No Third-Party
Beneficiaries.  Nothing contained in this Agreement, expressed
or implied, is intended to confer or shall confer upon any person other than the
express parties hereto, any benefit right or remedies, except that the
provisions of Sections 4.2, 4.3, 4.5, 4.7 and 4.10 shall inure to the benefit of
the persons referred to in those Sections.  The representations and
warranties set forth in Article II and the covenants set forth in Articles III
and IV have been made solely for the benefit of the parties to this Agreement
and (a) may be intended not as statements of fact, but rather as a way of
allocating the risk to one of the parties if those statements prove to be
inaccurate; (b) have been qualified by reference to the Disclosure Schedule of
each party, each of which contains certain disclosures that are not reflected in
the text of this Agreement; and (c) may apply standards of materiality in a way
that is different from what may be viewed as material by shareholders of, or
other investors in, the Company.


    
      
         


      

      
        -53-

        
          

        

      

      
         


      

    

     

    6.13         Public
Announcements.  Subject to each party’s disclosure obligations
imposed by law or regulation, each of the parties hereto will cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement and any of the
transactions contemplated by this Agreement or the Other Securities Purchase
Agreements, and no party hereto will make any such news release or public
disclosure without first consulting with the other party hereto and receiving
its consent (which shall not be unreasonably withheld, conditioned, or delayed),
and each party shall coordinate with the other with respect to any such news
release or public disclosure.

     

    6.14         Specific
Performance.  The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms.  It is accordingly
agreed that the parties shall be entitled to seek specific performance of the
terms hereof, this being in addition to any other remedies to which they are
entitled at law or equity.

     

    *  *  *
 

    
      
         


      

      
        -54-

        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, this
Agreement has been duly executed and delivered by the duly authorized officers
of the parties hereto as of the date first herein above written.

     

    
      
        
          
            	
                    CASCADE
      BANCORP

                  
	 
      	 
      
	
                    By:

                  	/s/
      Patricia L. Moss  
	 
      	
                    Name:

                  	
                    Patricia
      L. Moss

                  
	 
      	
                    Title:

                  	
                    Chief
      Executive Officer

                  


          

        

      

    

    


    [Signature
Page to Amended and Restated Securities Purchase Agreement]

    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      
        
          
            	 
      	
                    BOTC
      HOLDINGS LLC

                  
	 
      	 
      
	
                    By:

                  	/s/
      Lori Forlano  
	 
      	
                    Name:
      /s/ Lori Forlano

                  
	 
      	
                    Title:
      Authorized Person

                  


          

        

      

    

     

    [Signature
Page to Amended and Restated Securities Purchase Agreement]

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
A:  Form of Opinion of Counsel

     

    ____________
[●], 2010

     

    To the
Investors listed on Schedule A

    attached
hereto

     

    Ladies
and Gentlemen:

     

    We have
acted as counsel to Cascade Bancorp, an Oregon corporation (the “Company”), for purposes of
rendering an opinion of counsel in connection with the Company’s issuance on the
date hereof to the Investors listed on Schedule A attached hereto (collectively,
the “Investors” and
each individually, an “Investor”) of  [●]
shares of common stock, no par value, of the Company (the “Common Stock”) pursuant to
Securities Purchase Agreements, dated as of [_____], 2010, between the Company
and each Investor (the “Agreements”) (the “Offering”).   This
opinion is being furnished in connection with Closing of the transactions
contemplated by the Agreement.  Capitalized terms used herein which
are not otherwise defined shall have the meanings given to them in the
Agreements.

     

    The law
covered by the opinions expressed herein is limited to Oregon Revised Statute
and the federal laws of the United States of America.

    


    This
opinion letter is to be interpreted in accordance with the Guidelines for the
Preparation of Closing Opinions issued by the Committee on Legal Opinions of the
American Bar Association’s Business Law Section as published in 57 Business
Lawyer 875 (February 2002) and the State on the Role of Customary Practice in
the Preparation and Understanding of Third-Party Legal Opinions published in 63
The Business Lawyer 1277 (August 2008).


     

    
      	
              A.

            	
              Assumptions

            


    

     

    For
purposes of this opinion letter, we have relied with your permission on the
following assumptions:

     

    
      	
              A-1

            	
              As
      to matters of fact material to the opinions expressed herein, we have
      relied upon the statements or certificates of the Company and you pursuant
      to the Agreement and upon certificates and statements of government
      officials and of officers of the Company. In addition, we have examined
      originals or copies of documents, corporate records and other writings
      that we consider relevant for the purposes of this opinion. In such
      examination, we have assumed that the signatures on documents and
      instruments examined by us are authentic, that each is what it purports to
      be, and that all documents and instruments submitted to us as copies or
      facsimiles conform with the originals, which facts we have not
      independently verified.

            


    

     

    
      
         


      

      
        Exhibit
– 1

        
          

        

      

      
         


      

    

     

    
      	
              A-2

            	
              In
      making our examination of documents, we have further assumed that (i) each
      party to such documents (other than the Company in connection with the
      Agreement) had the power, legal competence and capacity to enter into and
      perform all of such party’s obligations thereunder, (ii) each party to
      such documents (other than the Company in connection with the Agreement)
      has duly authorized, executed and delivered such documents, (iii) each of
      such documents is enforceable against and binding upon the parties thereto
      (other than the Company in connection with the Agreement), (iv) there is
      no fact or circumstance relating to you or your business that might
      prevent you from enforcing any of the rights provided for in the
      Agreement, (v) there has not been any mutual mistake of fact or
      misunderstanding, fraud, duress or undue influence, (vi) the conduct of
      the parties to the Agreement has complied with any requirement of good
      faith, fair dealing and conscionability, and (vi) you, and any agent
      acting for you in connection with the transactions contemplated by the
      Agreement, have acted in good faith and without notice of any defense
      against the enforcement of any rights created by the Agreement. We have
      also assumed that there are no extrinsic agreements or understandings
      among the parties to the Agreement that would modify or interpret the
      terms of the Agreement or the respective rights or obligations of the
      parties thereunder.

            


    

     

    
      
        	
                B.

              	
                Opinions

              


      

    

     

    Based
upon the foregoing, and subject to the assumptions, exceptions, limitations and
qualifications stated herein, it is our opinion that:

     

    
      
        	
                B-1

              	
                The
      Company has been duly organized and is validly existing as a corporation
      under the laws of the State of
Oregon.

              


      

    

     

    
      
        	
                B-2

              	
                All
      of the issued shares of capital stock of the Company, including the shares
      of Common Stock issued pursuant to the Agreement, have been duly
      authorized and, when issued
      pursuant to the Agreement upon receipt of the consideration provided for
      therein, will be validly issued, fully paid and
    nonassessable.

              


      

    

     

    
      
        	
                B-3

              	
                It
      is not necessary to register the shares of Common Stock issued pursuant to
      the Agreement under the Securities
      Act of 1933 in connection with the offer, sale and delivery of the shares
      of Common Stock by the Company to the Investors in accordance with
      the Agreement.

              


      

    

     

    
      
        	
                B-4

              	
                The
      Company’s authorized equity capitalization consists of [●] shares of
      common stock and [●] shares of
      preferred stock, no par
value.

              


      

    

     

    
      
        	
                B-5

              	
                The
      Company has the requisite corporate power and authority to execute and
      deliver the Agreement and to perform its obligations thereunder and to
      consummate the transactions contemplated thereby.  The Agreement
      has been duly
      authorized, executed and delivered by the Company and constitutes the
      legal, valid and binding obligation of the Company enforceable against the
      Company in accordance with its
terms.

              


      

    


    
      
         


      

      
        Exhibit
– 2

        
          

        

      

      
         


      

    

     

    
      
        	
                B-6

              	
                The
      sale and issuance of the shares of Common Stock will not be subject to any
      preemptive rights, rights of first offer or similar rights of any person
      under (a) the certificate of incorporation of the Company as currently in
      effect (the “Charter”), (b) the
      bylaws of the Company as currently in effect (the “Bylaws”), or (c) any
      Company Significant Agreement.

              


      

    

     

    
      
        	
                B-7

              	
                The
      sale and issuance of the Common Stock, in accordance with the Agreement
      and the execution, delivery and performance by the Company of its
      obligations under the Agreement will not violate (a) the Charter, (b) the
      Bylaws, (c) applicable laws of the State of Oregon, (d) applicable federal
      laws of the United States or (e) any Company Significant
      Agreement.

              


      

    

     

    
      
        	
                B-8

              	
                No
      consent, approval, authorization or order of, or filing with, any Federal
      or Oregon governmental authority or regulatory body is required to be
      obtained or made by the Company for the consummation by the Company of the
      transactions contemplated by the Agreement, including, without limitation,
      each Other Private Placement, in connection with the offering, issuance
      and sale of the Common Stock, except for the filing of a Form D pursuant
      to federal and applicable state blue sky laws and such as have been
      obtained.

              


      

    

     

    
      
        	
                B-9

              	
                The
      only vote of the shareholders of the Company required to approve (i) the
      amendment of the Articles of Incorporation to increase the number of
      authorized shares of Common Stock to at least such number as shall be
      sufficient to permit the issuance of Common Stock contemplated by the
      Agreement and the Other Securities Purchase Agreements is that more votes
      are cast for such proposal than are cast against such proposal and (ii)
      the issuance of such authorized shares of Common Stock for purposes of
      rule 5635 of NASDAQ’s listing rules is a majority of the votes cast on
      such proposal.

              


      

    

     

    
      
        	
                B-10

              	
                The
      certificate of amendment to the Company’s Articles of Incorporation
      relating to the increase in the number of authorized shares of Common
      Stock as described in B-9 above has been duly approved by the requisite
      vote of the Company’s shareholders and has been duly filed with the
      Secretary of State of the State of Oregon and is effective as an amendment
      to the Company’s Articles of
Incorporation.

              


      

    

     

    
      
        	
                B-11 

              	
                The
      certificate of amendment to the Company’s Articles of Incorporation
      relating to the reverse stock split effected by the Company on _____ has
      been duly approved by the requisite vote of the Company’s shareholders and
      has been duly filed with the Secretary of State of the State of Oregon and
      is effective as an amendment to the Company’s Articles of
      Incorporation.

              


      

    

     

    C.           Qualifications


    
      
         


      

      
        Exhibit
– 3

        
          

        

      

      
         


      

    

     

    
      	
              C-1

            	
              In
      giving our opinion in B-1 with respect to the valid existence of the
      Company, we are relying solely and without independent investigation on
      our review and examination of the certificate of the Secretary of State of
      the State of Oregon.

            


    

     

    
      	
              C-2

            	
              Insofar as
      performance by the Company of its obligations under the Agreement is
      concerned, we express no opinion as to bankruptcy, insolvency, fraudulent
      transfer, reorganization, moratorium and similar laws of general
      applicability relating to or affecting creditors’ rights and to general
      equitable principles, whether considered in proceedings at law or
      equity.

            


    

     

    D.           Exclusions

     

    In
addition to the foregoing, the opinions expressed above are specifically subject
to the following exclusions:

     

    
      	
              D-1

            	
              We
      have assumed, and express no opinion with respect to, (a) the correctness,
      accuracy and completeness of representations and warranties made by you
      and set forth in the Agreement or otherwise made, orally or in writing, in
      connection with the offering of the Common Stock and (b) the validity of
      any wire transfers, drafts or checks tendered by
  you.

            


    

     

    
      	
              D-2

            	
              We
      express no opinion as to whether the members of the Company’s Board of
      Directors have complied with their fiduciary duties in connection with the
      authorization and performance of the
Agreement.

            


    

     

    The
opinions set forth in Part B may be relied upon by you only in connection with
the Agreement and the transactions described therein, and may not be used or
relied upon by you for any other purpose or by any other person for any purpose
whatsoever without, in each instance, our prior written consent.

     

    This
letter speaks as of the time of its delivery on the date set forth herein. We
undertake no obligation to advise you as to subsequent occurrences or
discoveries.

    


    
      
        
          	
                  Very
      truly yours,

                
	 
      
	 
	
                  Davis
      Wright Tremaine LLP

                


        

      

    

     

    
      
         


      

      
        Exhibit
– 4

        
          

        

      

      
         


      

    


    EXHIBIT
B:  Form of Officer’s Certificate from the Company

     

    OFFICER’S
CERTIFICATE

     

    _______________
[●], 2010

    


    The
undersigned, the Chief Executive Officer of Cascade Bancorp, an Oregon
corporation (the “Company”), pursuant to
Section 1.2(b)(1)(ix) of the Securities Purchase Agreement, dated as of
[__________, 2010] (the “Agreement”) between the
Company and BOTC Holdings LLC (the “Investor”), hereby certifies
to the Investor that:

     

    1.           The
Company has performed all obligations required to be performed by it at or prior
to or contemporaneously with the Closing under the Agreement.

     

    2.           The
representations and warranties of the Company set forth in Section 2.2 and
Section 4.8 of the Agreement were true and correct in all respects as of the
date of the Agreement and are true and correct as of the Closing (except to the
extent such representations and warranties are made as of a specific date, in
which case such representations and warranties were true and correct in all
respects as of such date).

     

    Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Agreement.

     

    


    [Signature
Page Follows]

    


    Exhibit
B

    [Company
Officer’s Certificate]

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the undersigned has executed and delivered this certificate
solely in such respective capacity and not in an individual capacity as of this
___ day of ___________, 2010.

     

    
      
        
          	
                  By:

                	 
      
	 
      	
                  Name:  Patricia
      L. Moss

                
	 
      	
                  Title:  Chief
      Executive Officer

                


        

      

    

    


    Exhibit
B

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
C:  Form of Registration Rights Agreement

    


    Exhibit
C

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    CASCADE
BANCORP

     

    REGISTRATION
RIGHTS AGREEMENT


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Table of
Contents

    


    
      
        
          
            
              
                
                  
                    
                      
                        	 
      	 
      	
                                Page

                              
	 	 
	
                                SECTION
      1 DEFINITIONS

                              	
                                1

                              
	 	 	 
	
                                1.1

                              	
                                Certain
      Definitions

                              	
                                1

                              
	 	 
	
                                SECTION
      2 Registration

                              	
                                3

                              
	 	 	 
	
                                2.1

                              	
                                Registration

                              	
                                3

                              
	
                                2.2

                              	
                                Expenses
      of Registration

                              	
                                5

                              
	
                                2.3

                              	
                                Obligations
      of the Company

                              	
                                5

                              
	
                                2.4

                              	
                                Suspension
      of Sales

                              	
                                8

                              
	
                                2.5

                              	
                                Termination
      of Registration Rights

                              	
                                8

                              
	
                                2.6

                              	
                                Free
      Writing Prospectuses

                              	
                                9

                              
	
                                2.7

                              	
                                Indemnification.

                              	
                                9

                              
	
                                2.8

                              	
                                Assignment
      of Registration Rights

                              	
                                10

                              
	
                                2.9

                              	
                                Holdback

                              	
                                10

                              
	
                                2.10

                              	
                                Rule
      144; Rule 144A Reporting

                              	
                                10

                              
	
                                2.11

                              	
                                Forfeiture

                              	
                                11

                              
	 	 
	
                                SECTION
      3 Miscellaneous

                              	
                                11

                              
	 	 	 
	
                                3.1

                              	
                                Governing
      Law

                              	
                                11

                              
	
                                3.2

                              	
                                Waiver
      of Jury Trial

                              	
                                11

                              
	
                                3.3

                              	
                                Successors
      and Assigns

                              	
                                11

                              
	
                                3.4

                              	
                                Entire
      Agreements Amendment; Waiver

                              	
                                12

                              
	
                                3.5

                              	
                                Additional
      Parties

                              	
                                12

                              
	
                                3.6

                              	
                                Notices,
      Etc

                              	
                                12

                              
	
                                3.7

                              	
                                Delays
      or Omissions

                              	
                                12

                              
	
                                3.8

                              	
                                Rights;
      Separability

                              	
                                12

                              
	
                                3.9

                              	
                                Information
      Confidential

                              	
                                13

                              
	
                                3.10

                              	
                                Expenses

                              	
                                13

                              
	
                                3.11

                              	
                                Legend
      on Certificates

                              	
                                13

                              
	
                                3.12

                              	
                                Captions

                              	
                                13

                              
	
                                3.13

                              	
                                Counterparts;
      Facsimile

                              	
                                13

                              


                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        i

        
          

        

      

      
         


      

    


    REGISTRATION
RIGHTS AGREEMENT

     

    THIS REGISTRATION RIGHTS
AGREEMENT (this “Agreement”)
is made and entered into as of the ____ day of _____________, 2010 by and among
Cascade Bancorp, an Oregon corporation (the “Company”),
and the persons identified on the signature pages hereof (the “Shareholders”).

     

    Recitals

     

    WHEREAS, the Shareholders have
entered into separate Securities Purchase Agreements with the Company
(collectively, the “Securities
Purchase Agreements”), pursuant to which each Shareholder has purchased
shares of common stock of the Company (the “Common
Stock”); and

     

    WHEREAS, as a condition to the
closing of the Shareholders’ acquisition of the Common Stock pursuant to the
Securities Purchase Agreements, the Shareholders and the Company have agreed to
enter into this Registration Rights Agreement.

     

    NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein, all parties
hereto agree as follows:

     

    SECTION
1

     

    DEFINITIONS

     

    1.1           Certain Definitions. As used in this
Agreement, the following terms shall have the following respective
meanings:

     

    “Affiliate”
means, with respect to any person, any person directly or indirectly
controlling, controlled by or under common control with, such other
person.  For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management and/or policies of
such person, whether through the ownership of voting securities, by contract or
otherwise or for purposes of the Bank Holding Company Act of 1956, as amended or
the Change in Bank Control Act of 1978, as amended.

     

    “Holder”
means any Shareholder and any other holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been transferred in
compliance with Section 2.8
hereof.

     

    “Holders’
Counsel” means one counsel for the selling Holders chosen by Holders
representing a majority interest in the Registrable Securities being
registered.


    
      
         


      

      
        -1-

        
          

        

      

      
         


      

    

     

    “Register,”
“registered,”
and “registration”
shall refer to a registration effected by preparing and filing (a) a
registration statement in compliance with the Securities Act and applicable
rules and regulations thereunder, and the declaration or ordering of
effectiveness of such registration statement or (b) a prospectus and/or
prospectus supplement in respect of an appropriate effective registration
statement on Form S-3 or other form approved by the holders of a majority of
Registrable Securities available for sales of securities pursuant to Rule 415
under the Securities Act.

     

    “Registrable
Securities” means (A) all Common Stock held by the Holders from time
to time, and (B) any equity securities issued or issuable directly or
indirectly with respect to the securities referred to in the foregoing clause
(A) by way of conversion, exercise or exchange thereof or stock dividend or
stock split or in connection with a combination of shares, recapitalization,
reclassification, merger, amalgamation, arrangement, consolidation or other
reorganization, provided that, once issued,
such securities will not be Registrable Securities when (i) they are sold
pursuant to an effective registration statement under the Securities Act,
(ii) they shall have ceased to be outstanding; or (iii) they have been sold
in a private transaction in which the transferor’s rights under this Agreement
are not assigned to the transferee of the securities.  No Registrable
Securities may be registered under more than one registration statement at one
time.

     

    “Registration
Expenses” means all expenses incurred by the Company in effecting any
registration pursuant to this Agreement (whether or not any registration or
prospectus becomes effective or final) or otherwise complying with its
obligations under this Agreement, including, without limitation, all
registration, filing and listing fees (including filings made with the Financial
Industry Regulatory Authority), printing expenses (including printing of
prospectuses and certificates for the securities), the Company’s expenses for
messenger and delivery services and telephone, fees and disbursements of counsel
for the Company, blue sky fees and expenses, expenses incurred by the Company in
connection with any “road show,” the fees and disbursements of Holders’ Counsel,
and expenses of the Company’s independent accountants in connection with any
regular or special reviews or audits incident to or required by any such
registration, but shall not include Selling Expenses and the compensation of
regular employees of the Company, which shall be paid in any event by the
Company.

     

    “Rule 144,”
“Rule
144A,” “Rule 158,”
“Rule
159A,” “Rule 405”
and “Rule
415” mean, in each case, such rule promulgated under the Securities Act
(or any successor provision), as the same shall be amended from time to
time.

     

    “Scheduled
Black-out Period” means the period from and including the last day of a
fiscal quarter of the Company to and including the business day after the day on
which the Company publicly releases its earnings for such fiscal
quarter.

     

    “SEC” means
the Securities and Exchange Commission.

     

    “Securities
Act” means the Securities Act of 1933, as amended, or any successor
statute.

     

    “Selling
Expenses” means all discounts, selling commissions and stock transfer
taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of Holders’ Counsel included in Registration Expenses), other than $25,000 of
fees and disbursements of Holders’ Counsel, which shall be reimbursed by the
Company pursuant to Section 2.2.


    
      
         


      

      
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    SECTION
2

     

    REGISTRATION

     

    2.1            Registration.  Subject to the terms
and conditions of this Agreement, the Company covenants and agrees that as
promptly as practicable after the date of this Agreement (and in any event no
later than the date that is 30 days after the date hereof (the “Registration Deadline”)), the
Company shall have prepared and filed with the SEC a Shelf Registration
Statement (defined below) covering all Registrable Securities (or otherwise
designate an existing Shelf Registration Statement filed with the SEC to cover
the Registrable Securities), and, to the extent the Shelf Registration Statement
has not theretofore been declared effective or is not automatically effective
upon such filing, the Company shall use reasonable best efforts to cause such
Shelf Registration Statement to be declared or become effective not later than
the Registration Deadline and to keep such Shelf Registration Statement
continuously effective and in compliance with the Securities Act and usable for
resale of such Registrable Securities for a period from the date of its initial
effectiveness until such time as there are no Registrable Securities remaining
(including by refiling such Shelf Registration Statement (or a new Shelf
Registration Statement) if the initial Shelf Registration Statement
expires).  If the Company is a well-known seasoned issuer (as defined
in Rule 405 under the Securities Act) at the time of filing of the Shelf
Registration Statement with the SEC, such Shelf Registration Statement shall be
designated by the Company as an automatic Shelf Registration
Statement.

     

    (a)           Any
registration pursuant to this Section 2.1 shall be effected by means of a shelf
registration under the Securities Act (a “Shelf
Registration Statement”) in accordance with the methods and distribution
set forth in the Shelf Registration Statement and Rule 415.  If the
Shareholders or any other Holder of Registrable Securities to whom the
registration rights conferred by this Agreement have been transferred in
compliance with this Agreement intends to distribute any Registrable Securities
by means of an underwritten offering it shall promptly so advise the Company and
the Company shall take all reasonable steps to facilitate such distribution,
including the actions required pursuant to Section 2.3; provided, that the Company
shall not be required to facilitate an underwritten offering of Registrable
Securities unless the expected gross proceeds from such offering exceed
$1,000,000.  The lead underwriters in any such distribution shall be
selected by the holders of a majority of the Registrable Securities to be
distributed and be reasonably acceptable to the Company.

     

    (b)           The
Company shall not be required to effect a registration (including a resale of
Registrable Securities from an effective Shelf Registration Statement) or an
underwritten offering pursuant to this Section
2:  (i) with respect to securities that are not Registrable
Securities; (ii) during any Scheduled Black-out Period; or (iii) if the Company
has notified the Shareholders and all other Holders that in the good faith
judgment of the Board of Directors, it would be materially detrimental to the
Company or its security holders for such registration or underwritten offering
to be effected at such time, in which event the Company shall have the right to
defer such registration or underwritten offering for a period of not more than
30 days after receipt of the request of the Shareholders or any other Holder;
provided that such
right to delay a registration or underwritten offering shall be exercised by the
Company (A) only if the Company has generally exercised (or is concurrently
exercising) similar black-out rights against holders of similar securities that
have registration rights and (B) not more than twice in any 12-month period and
not more than 60 days in the aggregate in any 12-month period.


    
      
         


      

      
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    (c)           After
the Closing Date, whenever the Company proposes to register any of its equity
securities, other than a registration pursuant to Section 2.1 or a Special
Registration, and the registration form to be filed may be used for the
registration or qualification for distribution of Registrable Securities, the
Company will give prompt written notice to the Shareholders and all other
Holders of its intention to effect such a registration (but in no event less
than 15 days prior to the anticipated filing date) and (subject to Section
2.1(e)) will include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within ten business days after the date of the Company’s notice (a “Piggyback
Registration”).  Any such person that has made such a written
request may withdraw its Registrable Securities from such Piggyback Registration
by giving written notice to the Company and the managing underwriter, if any, on
or before the fifth day prior to the planned effective date of such Piggyback
Registration. The Company may terminate or withdraw any registration under this
Section 2.1(c)
prior to the effectiveness of such registration, whether or not the Shareholders
or any other Holders have elected to include Registrable Securities in such
registration.  “Special
Registration” means the registration of (i) equity securities and/or
options or other rights in respect thereof solely registered on Form S-4 or Form
S-8 (or successor form) or (ii) shares of equity securities and/or options or
other rights in respect thereof to be offered to directors, members of
management, employees, consultants, customers, lenders or vendors of the Company
or its subsidiaries or in connection with dividend reinvestment
plans.

     

    (d)           If
the registration referred to in Section 2.1(c) is proposed to
be underwritten, the Company will so advise the Shareholders and all other
Holders as a part of the written notice given pursuant to Section 2.1(c).  In
such event, the right of the Shareholders and all other Holders to registration
pursuant to this Section 2 will be conditioned upon such persons’ participation
in such underwriting and the inclusion of such persons’ Registrable Securities
in the underwriting, and each such person will (together with the Company and
the other persons distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company.  If any
participating person disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Holders.

     

    (e)           The
Company represents and warrants that it has not granted to any holder of its
securities and agrees that it shall not grant “piggyback” registration rights to
one or more third parties to include their securities in the Shelf Registration
Statement or in an underwritten offering under the Shelf Registration Statement
pursuant to Section 2.1(a).  If a
Piggyback Registration under Section 2.1(c) relates to an
underwritten primary offering on behalf of the Company, and the managing
underwriters advise the Company that in their reasonable opinion the number of
securities requested to be included in such offering exceeds the number which
can be sold without adversely affecting the marketability of such offering
(including an adverse effect on the per share offering price), the Company will
include in such registration or prospectus only such number of securities that
in the reasonable opinion of such underwriters can be sold without adversely
affecting the marketability of the offering (including an adverse effect on the
per share offering price), which securities will be so included in the following
order of priority: (i) first, in the case of a Piggyback Registration under
Section 2.1(c),
the securities the Company proposes to sell, (ii) second, Registrable Securities
of the Shareholders and all other Holders who have requested registration of
Registrable Securities pursuant to Section 2.1(a) or 2.1(c) of this
Agreement, as applicable, pro
rata on the basis of the aggregate number of such securities or shares
proposed to be sold by each such Holder and (iii) third, any other securities of
the Company that have been requested to be so included, subject to the terms of
this Agreement.


    
      
         


      

      
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    2.2           Expenses of Registration. All Registration
Expenses incurred in connection with any registration, qualification or
compliance hereunder shall be borne by the Company.  The Company shall
bear its internal expenses (including, without limitation, all salaries and
expenses of their officers and employees performing legal, accounting or other
duties) and expenses of any person, including special experts, retained by the
Company.  The Company shall also reimburse the Shareholders for the
reasonable fees and disbursements of legal counsel to the Shareholders in an
amount not to exceed $25,000 per registration.  All Selling Expenses
incurred in connection with any registrations hereunder shall be borne by the
holders of the securities so registered pro rata on the basis of the
aggregate offering or sale price of the securities so registered.

     

    2.3           Obligations of the
Company. The Company shall use
its reasonable best efforts for so long as there are Registrable Securities
outstanding, to take such actions as are under its control to remain a
well-known seasoned issuer (as defined in Rule 405 under the Securities Act) if
it becomes eligible for such status in the future (and not become an ineligible
issuer (as defined in Rule 405 under the Securities Act)).  In
addition, whenever required to effect the registration of any Registrable
Securities or facilitate the distribution of Registrable Securities pursuant to
an effective Shelf Registration Statement, the Company shall, as expeditiously
as reasonably practicable:

     

    (a)           Prepare
and file with the SEC a prospectus supplement with respect to a proposed
offering of Registrable Securities pursuant to an effective registration
statement, subject to this Section 2.3, and keep such
registration statement effective or such prospectus supplement current until the
securities described therein are no longer Registrable Securities.

     

    (b)           Prepare
and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.

     

    (c)           Furnish
to the Holders and any underwriters such number of copies of the applicable
registration statement and each such amendment and supplement thereto (including
in each case all exhibits) and of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned or to be distributed by
them.


    
      
         


      

      
        -5-

        
          

        

      

      
         


      

    

     

    (d)           Use
its reasonable best efforts to register and qualify the securities covered by
such registration statement under such other securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the Holders or any managing
underwriter(s), to keep such registration or qualification in effect for so long
as such registration statement remains in effect, and to take any other action
which may be reasonably necessary to enable such seller to consummate the
disposition in such jurisdictions of the securities owned by such Holder; provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.

     

    (e)           Notify
each Holder at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result of
which the applicable prospectus, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.

     

    (f)           Give
written notice to the Holders:

     

    (i)           When
any registration statement filed pursuant to Section 2  or any amendment
thereto has been filed with the SEC (except for any amendment effected by the
filing of a document with the SEC pursuant to the Securities Exchange Act of
1934 (the “Exchange
Act”)) and when such registration statement or any post-effective
amendment thereto has become effective;

     

    (ii)           of
any request by the SEC for amendments or supplements to any registration
statement or the prospectus included therein or for additional
information;

     

    (iii)          of
the issuance by the SEC of any stop order suspending the effectiveness of any
registration statement or the initiation of any proceedings for that
purpose;

     

    (iv)           of
the receipt by the Company or its legal counsel of any notification with respect
to the suspension of the qualification of the Common Stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;

     

    (v)           of
the happening of any event that requires the Company to make changes in any
effective registration statement or the prospectus related to the registration
statement in order to make the statements therein not misleading (which notice
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made); and


     

    (vi)           if
at any time the representations and warranties of the Company contained in any
underwriting agreement contemplated by Section 2.3(j) cease to be true
and correct.


    
      
         


      

      
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    (g)           Use
its reasonable best efforts to prevent the issuance or obtain the withdrawal of
any order suspending the effectiveness of any registration statement referred to
in Section 2.3(f)(iii) at the
earliest practicable time.

     

    (h)           Upon
the occurrence of any event contemplated by Section 2.3(e) or 2.3(f)(v),
promptly prepare a post-effective amendment to such registration statement or a
supplement to the related prospectus or file any other required document so
that, as thereafter delivered to the Holders and any underwriters, the
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.  If the
Company notifies the Holders in accordance with Section 2.3(f)(v) to suspend
the use of the prospectus until the requisite changes to the prospectus have
been made, then the Holders and any underwriters shall suspend use of such
prospectus and use their reasonable best efforts to return to the Company all
copies of such prospectus (at the Company’s expense) other than permanent file
copies then in such Holder’s or underwriter’s possession.  The total
number of days that any such suspension may be in effect in any 180-day period
shall not exceed 30 days.

     

    (i)           Use
best efforts to procure the cooperation of the Company’s transfer agent in
settling any offering or sale of Registrable Securities, including with respect
to the transfer of physical stock certificates into book-entry form in
accordance with any procedures reasonably requested by the Holders or any
managing underwriter(s).

     

    (j)           If
an underwritten offering is requested pursuant to Section 2.1(a), enter into an
underwriting agreement in customary form, scope and substance and take all such
other actions reasonably requested by the Holders of a majority of the
Registrable Securities being sold in connection therewith or by the managing
underwriter(s), if any, to expedite or facilitate the underwritten disposition
of such Registrable Securities, and in connection therewith in any underwritten
offering (including making members of management and executives of the Company
available to participate in “road shows,” similar sales events and other
marketing activities), (i) make such representations and warranties to the
Holders that are selling shareholders and the managing underwriter(s), if any,
with respect to the business of the Company and its subsidiaries, and the Shelf
Registration Statement, prospectus and documents, if any, incorporated or deemed
to be incorporated by reference therein, in each case, in customary form,
substance and scope, and, if true, confirm the same if and when requested, (ii)
furnish the underwriters with opinions of counsel to the Company, addressed to
the managing underwriter(s), if any, covering the matters customarily covered in
such opinions requested in underwritten offerings, (iii) obtain “comfort”
letters from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any business
acquired by the Company for which financial statements and financial data are
included in the Shelf Registration Statement) who have certified the financial
statements included in such Shelf Registration Statement, addressed to each of
the managing underwriter(s), if any, such letters to be in customary form and
covering matters of the type customarily covered in “comfort” letters, (iv) if
an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures customary in underwritten offerings,
and (v) deliver such documents and certificates as may be reasonably requested
by the Holders of a majority of the Registrable Securities being sold in
connection therewith, their counsel and the managing underwriter(s), if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.


    
      
         


      

      
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    (k)           Make
available for inspection by a representative of Holders that are selling
shareholders, the managing underwriter(s), if any, and any attorneys or
accountants retained by such Holders or managing underwriter(s), at the offices
where normally kept, during reasonable business hours, financial and other
records, pertinent corporate documents and properties of the Company, and cause
the officers, directors and employees of the Company to supply all information
in each case reasonably requested (and of the type customarily provided in
connection with due diligence conducted in connection with a registered public
offering of securities) by any such representative, managing underwriter(s),
attorney or accountant in connection with such Shelf Registration
Statement.

     

    (l)           Cause
all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed or, if no similar
securities issued by the Company are then listed on any securities exchange, use
its reasonable best efforts to cause all such Registrable Securities to be
listed on the New York Stock Exchange or NASDAQ, as determined by the
Company.

     

    (m)           If
requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, or the managing underwriter(s),
if any, promptly include in a prospectus supplement or amendment such
information as the Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith or managing underwriter(s), if
any, may reasonably request in order to permit the intended method of
distribution of such securities and make all required filings of such prospectus
supplement or such amendment as soon as practicable after the Company has
received such request.

     

    (n)           Timely
provide to its Shareholders earning statements satisfying the provisions of
Section 11(a) of
the Securities Act and Rule 158 thereunder.

     

    2.4          Suspension of Sales. During any Scheduled
Black-out Period and upon receipt of written notice from the Company that a
registration statement, prospectus or prospectus supplement contains or may
contain an untrue statement of a material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that circumstances exist that make inadvisable use of
such registration statement, prospectus or prospectus supplement, each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities until termination of such Scheduled Black-out Period or until such
Holder has received copies of a supplemented or amended prospectus or prospectus
supplement, or until such Holder is advised in writing by the Company that the
use of the prospectus and, if applicable the prospectus supplement may be
resumed.  The total number of days that any such suspension may be in
effect in any 180-day period shall not exceed 30 days.


     

    2.5          Termination of Registration
Rights. A Holder’s registration
rights as to any securities held by such Holder (and its Affiliates, partners,
members and former members) shall not be available unless such securities are
Registrable Securities.

     

    
      
         


      

      
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    2.6           Free Writing Prospectuses. No Holder shall use any
free writing prospectus (as defined in Rule 405) in connection with the sale of
Registrable Securities without the prior written consent of the
Company.

     

    2.7           Indemnification.

     

    (a)           The
Company agrees to indemnify each Holder and, if a Holder is a person other than
an individual, such Holder’s officers, directors, members, managers, employees,
agents, representatives and Affiliates, and each person, if any, that controls a
Holder within the meaning of the Securities Act (each, an “Indemnitee”),
against any and all Losses, joint or several, arising out of or based upon any
untrue statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto or any documents
incorporated therein by reference or contained in any free writing prospectus
(as such term is defined in Rule 405) prepared by the Company or authorized by
it in writing for use by such Holder (or any amendment or supplement thereto);
or any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, that the Company
shall not be liable to such Indemnitee in any such case to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon (i) an untrue statement or omission
made in such registration statement, including any such preliminary prospectus
or final prospectus contained therein or any such amendments or supplements
thereto or contained in any free writing prospectus (as such term is defined in
Rule 405) prepared by the Company or authorized by it in writing for use by such
Holder (or any amendment or supplement thereto), in reliance upon and in
conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished in writing to the
Company by such Indemnitee for use in connection with such registration
statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto, or
(ii)  offers or sales effected by or on behalf such Indemnitee “by
means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in
Rule 405) that was not authorized in writing by the Company.

     

    (b)           If
the indemnification provided for in Section 2.7(a) is unavailable
to an Indemnitee with respect to any Losses or is insufficient to hold the
Indemnitee harmless as contemplated therein, then the Company, in lieu of
indemnifying such Indemnitee, shall contribute to the amount paid or payable by
such Indemnitee as a result of such Losses in such proportion as is appropriate
to reflect the relative fault of the Indemnitee, on the one hand, and the
Company, on the other hand, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable
considerations.  The relative fault of the Company, on the one hand,
and of the Indemnitee, on the other hand, shall be determined by reference to,
among other factors, whether the untrue statement of a material fact or omission
to state a material fact relates to information supplied by the Company or by
the Indemnitee and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
the Company and each Holder agree that it would not be just and equitable if
contribution pursuant to this Section 2.7(b) were determined
by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in Section 2.7(a).  No
Indemnitee guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of
the Securities Act) shall be entitled to contribution from the Company if the
Company was not guilty of such fraudulent misrepresentation.


    
      
         


      

      
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    2.8           Assignment of Registration
Rights. The rights of a Holder
to registration of Registrable Securities pursuant to Section 2 may be assigned by
such Holder to a transferee or assignee of Registrable Securities to which there
is transferred to such transferee no less than $1,000,000 in Registrable
Securities; provided,
however, that the
transferor shall, within ten days after such transfer, furnish to the Company
written notice of the name and address of such transferee or assignee and the
number and type of Registrable Securities that are being assigned.

     

    Notwithstanding
the foregoing, the rights of a Shareholder to registration of Registrable
Securities pursuant to Section 2 may be assigned to any Affiliate of the
Shareholder (including without limitation any Affiliated fund) under common
control with the Shareholder's ultimate parent, general partner or investment
advisor or (B) any limited partner or shareholder of the Shareholder or
limited partner or shareholder of the Shareholder's Affiliates to which
there is transferred any Registrable Securities, regardless of amount; provided, however, that the transferor
shall, within ten days after such transfer, furnish to the Company written
notice of the name and address of such transferee or assignee and the number and
type of Registrable Securities that are being assigned.

     

    2.9           Holdback. With respect to any
underwritten offering of Registrable Securities by the Shareholders or other
Holders pursuant to Section 2.1, the Company agrees not to effect (other than
pursuant to such registration or pursuant to a Special Registration) any public
sale or distribution, or to file any Shelf Registration Statement (other than
such registration or a Special Registration) covering any of its equity
securities, or any securities convertible into or exchangeable or exercisable
for such securities, during the period not to exceed 30 days prior and 90 days
following the effective date of such offering or such longer period up to 180
days as may be requested by the managing underwriter.  The Company
also agrees to cause each of its directors and senior executive officers to
execute and deliver customary lockup agreements in such form and for such time
period up to 180 days as may be requested by the managing
underwriter.


     

    2.10         Rule 144; Rule 144A
Reporting. With a view to making
available to the Shareholders and other Holders the benefits of certain rules
and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees
to:

     

    (a)           make
and keep public information available, as those terms are understood and defined
in Rule 144(c)(1) or any similar or analogous rule promulgated under the
Securities Act, at all times after the effective date of this
Agreement;

     

    (b)           file
with the SEC, in a timely manner, all reports and other documents required of
the Company under the Exchange Act, and if at any time the Company is not
required to file such reports, make available, upon the request of any Holder,
such information necessary to permit sales pursuant to Rule 144A (including the
information required by Rule 144A(d)(4) and the Securities
Act);


    
      
         


      

      
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    (c)           so
long as any Shareholders or other Holders own any Registrable Securities,
furnish to the Shareholders or such other Holders forthwith upon request: a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 under the Securities Act, and of the Exchange Act; a
copy of the most recent annual or quarterly report of the Company; and such
other reports and documents as the Shareholders or other Holders may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration; and

     

    (d)           take
such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act.

     

    2.11         Forfeiture.  At any time, any Holder
may elect in writing to forfeit its rights set forth in this Section 2 from that
date forward; provided,
that a Holder forfeiting such rights shall nonetheless be entitled to
participate under Section 2.1 in any Pending Underwritten Offering to the same
extent that such Holder would have been entitled to if the Holder had not
withdrawn; and provided, further, that no such
forfeiture shall terminate a Holder’s rights or obligations under Section 2.7
with respect to any prior registration or Pending Underwritten
Offering.  “Pending
Underwritten Offering” means, with respect to any Holder forfeiting its
rights pursuant to this Section 2.11, any underwritten offering of Registrable
Securities in which such Holder has advised the Company of its intent to
register its Registrable Securities either pursuant to Section 2.1(a) or Section
2.1(c)  prior to the date of such Holder’s forfeiture.

     

    SECTION
3

     

    MISCELLANEOUS

     

    3.1           Governing Law. This Agreement will be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such
State.  The parties hereto irrevocably and unconditionally agree that
any suit or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby will be tried exclusively in the U.S. District
Court for the Southern District of New York or, if that court does not have
subject matter jurisdiction, in any state court located in The City and County
of New York and the parties agree to submit to the jurisdiction of, and to venue
in, such courts.

     

    3.2           Waiver of Jury Trial.  EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     

    3.3           Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.


    
      
         


      

      
        -11-

        
          

        

      

      
         


      

    

     

    3.4           Entire Agreements Amendment;
Waiver. This Agreement
constitutes the full and entire understanding and agreement among the parties
with regard to the subjects hereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by a written instrument
signed by the Company and the Holders of two-thirds of the Registrable
Securities and each Holder of at least 10% of the Company’s securities;
provided, that no amendment shall by its terms diminish or negatively affect a
Holders’ rights in a manner differently from any other Holder without such
Holder’s consent.  Any such amendment, waiver, discharge or
termination shall be binding on all the Holders of Registrable Securities, but
in no event shall the obligation of any Holder of Registrable Securities
hereunder be materially increased, except upon the written consent of such
Holder of Registrable Securities.

     

    3.5           Additional
Parties.  Any person that
acquires Registrable Securities pursuant to the terms of this Agreement and upon
execution of a signature page to this Agreement shall be deemed a Holder
hereunder. The addition of such other Holders shall not be deemed an amendment
under Section 3.4 of this Agreement and no approval of any existing Shareholder
or party to this Agreement other than the Company shall be required to effect
such action.  All Shareholders consent to the provisions of this
Section 3.5.

     

    3.6           Notices, Etc. All notices and other
communications hereunder shall be in writing and shall be deemed duly given
(i) on the date of delivery if delivered personally, or if by facsimile,
upon written confirmation of receipt by facsimile, e-mail or otherwise,
(ii) on the first (1st)
business day following the date of dispatch if delivered utilizing a next-day
service by a recognized next-day courier service or (iii) on the earlier of
confirmed receipt or the fifth (5th)
business day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid.  All
notices hereunder shall be delivered, (x) if to a Holder, as indicated on
the signature page attached hereto, or at such other address as such Holder or
permitted assignee shall have furnished to the Company in writing, or
(y) if to the Company, at [_______________________________],
Attention:  [__________], or at such other address as the Company
shall have furnished to each Holder in writing.

     

    3.7           Delays or Omissions. No failure or delay of
any party in exercising any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power, or
any course of conduct, preclude any other or further exercise thereof or the
exercise of any other right or power.  The rights and remedies of the
parties hereunder are cumulative and are not exclusive of any rights or remedies
which they would otherwise have hereunder.  Any agreement on the part
of any party to any such waiver shall be valid only if set forth in a written
instrument executed and delivered by a duly authorized officer on behalf of such
party.

     

    3.8           Rights; Separability. Unless otherwise
expressly provided herein, a Holder’s rights hereunder are several rights, not
rights jointly held with any of the other Holder.  In case any
provision of the Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.


    
      
         


      

      
        -12-

        
          

        

      

      
         


      

    

     

    3.9           Information Confidential.  Each Holder
acknowledges that the information received by them pursuant hereto is
confidential and for its use only on behalf of the Company, and it will not use
such confidential information in violation of the Exchange Act or reproduce,
disclose or disseminate such information to any other person (other than its
partners, parent, subsidiaries, employees or agents having a need to know the
contents of such information, and its attorneys), except in connection with the
exercise of rights under this Agreement, unless the Company or some other party
other than the Holder has made such information available to the public
generally, or such Holder is required to disclose such information by a
governmental body (or order thereof) or pursuant to any law, statute, rule or
regulation.


     

    3.10         Expenses.  If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys’ fees, costs and necessary disbursements in
addition to any other relief to which such party may be
entitled.

     

    3.11         Legend on Certificates.  Each certificate
representing any Registrable Securities shall be endorsed by the Company with a
legend reading substantially as follows:

     

    “The
Shares evidenced hereby are subject to a  Registration Rights
Agreement by and among the Company and the Holders (as defined therein) (the
“Agreement”) (a copy of which may be obtained upon written request from the
issuer), and by accepting any interest in such Shares the person accepting such
interest shall be deemed to agree to and shall become bound by all the
provisions of the Agreement.”

     

    3.12        Captions. The article, section,
paragraph and clause captions herein are for convenience of reference only, do
not constitute part of this Agreement and will not be deemed to limit or
otherwise affect any of the provisions hereof.

     

    3.13        Counterparts; Facsimile. This Agreement may be
executed by facsimile and in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one
instrument.  Such facsimile signatures shall be deemed original
signatures for all purposes.

     

    [Signatures
Begin On Next Page]



    
      
         


      

      
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    IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date and year, first above
written.

     

    
      
        
          
            	
                    CASCADE
      BANCORP

                  
	 
      
	
                    By:

                  	 
      


          

        

      

    

    


    
      
        
          
            	
                    Name:

                  	 
      


          

        

      

    

    


    
      
        
          
            	
                    Title:

                  	 
      


          

        

      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
      
        
          
            
              
                
                  
                    
                      	
                              IF
      SHAREHOLDER IS A BUSINESS

                              ENTITY
      OR TRUST:

                            	 
      	
                              IF
      SHAREHOLDER IS AN

                              INDIVIDUAL:

                            
	 
      	 
      	 
      
	
                              Print
      Name

                            	 
      	 
      
	
                              of
      Entity:

                            	 
      	 
      	
                              Signature

                            


                    

                  

                

              

              


              
                
                  
                    
                      
                        
                          
                            
                              
                                	 	 	 
	 	 	
                                        Please
      type or print name

                                      
	
                                        Signature
      of authorized representative of

                                        entity
      or trustee:

                                      	 
      	 
      
	 
      	 
      	 
      
	
                                        By:

                                      	 
      	 
      	
                                      


                              

                            

                          

                        

                      

                    

                  

                

              

              
                
                  
                    	
                            Name:

                          	 
      	 
      	
                            Shareholder’s
      Address:

                          


                  

                

              

              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      	
                                              Title:

                                            	 
      	 
      	 
      
	 	 	 	 


                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

              


              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	
                                            Shareholder’s
      Address: