Exhibit 10.5
CONSULTING
AGREEMENT
THIS CONSULTING
AGREEMENT (this “
Agreement ”) is made and entered into as of the 4th
day of September, 2008 by and among Taylor Capital Group, Inc.
(“ TCGI ”), Cole Taylor Bank (the “
Bank ”), and Jeffrey W. Taylor (“
Consultant ”) (together, the “ Parties
”). This Agreement shall become effective only upon the
Closing on the Closing Date (as such terms are defined in the
Securities Purchase Agreement) contemplated by that certain
Securities Purchase Agreement dated as of September 4, 2008 by
and among TCGI, the Bank and each of the preferred stock investors
listed on the Schedule of Buyers attached thereto (the “
Securities Purchase Agreement ”). Prior to such
Closing and notwithstanding any provision in this Agreement to the
contrary, this Agreement shall not be effective and Consultant
shall have no rights of any kind hereunder. In the event that the
Closing contemplated by the Securities Purchase Agreement does not
occur on or before December 31, 2008, this Agreement shall not
become effective and shall be void and of no effect.
RECITALS:
A. The Bank desires to retain
Consultant to perform the services described below, and TCGI
desires for Consultant to serve as Vice Chairman of the Board of
Directors of TCGI and as a member of the Board of Directors of the
Bank during the Term, and Consultant desires to provide such
services and to act in such capacity on the terms and conditions
set forth in this Agreement; and
B. The Parties desire to enter into
this Agreement to set forth the terms and conditions of
Consultant’s engagement and certain other agreements which
will survive the Term, as set forth below.
NOW, THEREFORE
, in consideration of the premises,
the mutual covenants, promises, and agreements hereinafter set
forth, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties
hereto, intending to be legally bound, agree as set forth
herein.
1. ENGAGEMENT
. For a term of twelve
(12) months, commencing on the date hereof (the “
Term ”), the Bank engages Consultant to assist the
Bank in developing, maintaining and strengthening relationships
with the Customers (as defined in Section 7(b)(i)) of the Bank
and within the community that the Bank serves to further the
Bank’s business interests and growth strategy, in accordance
with the terms and conditions herein. Unless as otherwise provided
under this Agreement or as required by law, neither TCGI nor the
Bank may terminate this Agreement for any reason whatsoever
(whether for cause, disability, failure to perform or otherwise)
prior to the end of the Term.
1.1 Duties
. During the Term, Consultant shall
make himself available to TCGI and the Bank at such times as are
mutually agreeable, and shall, upon the reasonable request of TCGI
or the Bank, furnish to it reasonable services of an advisory and
consulting nature with respect to such operating matters as TCGI or
the Bank may reasonably call upon Consultant to furnish. The
Consultant shall have no obligation to spend a specified amount of
hours per month or in the aggregate during the Term in the
performance of his duties hereunder. Consultant may perform his
consulting obligations from any location chosen by the Consultant
including by telephone, electronic mail or facsimile and shall be
entitled to maintain use of his current office at the Bank’s
premises during the Term. During the Term, subject to
the prior consent of TCGI’s
Board of Directors (which consent shall not be unreasonably
withheld), the Consultant is free to perform work on behalf of
himself, or persons or entities other than TCGI and the Bank;
provided that in any event such work shall not conflict with the
interests of the Bank or TCGI or interfere with Consultant’s
obligations hereunder. Consultant will report periodically on his
activities to the Board of Directors of TCGI as requested by
TCGI’s Executive Committee.
1.2 Independent Contractor;
Performance of Services . In providing services under this Agreement,
Consultant shall be acting solely as an independent contractor and
not as an employee of the Bank. Consultant shall have no right or
authority to bind, assume or create any obligation or
responsibility on behalf of TCGI or the Bank or to make any
representations on their behalf, except as authorized by the Board
of Directors of TCGI or the Bank, as applicable. Consultant shall
be responsible for compliance with all laws, rules and regulations
relating to the services rendered hereunder, including without
limitation, payment of taxes and any related reporting
obligations.
2.1 Monthly Fee
. On the last business day of each
month during the Term, the Bank will pay to Consultant a monthly
fee of Forty Thousand Dollars ($40,000) for that month’s
service; provided, however, that, to the extent the first day or
last day of the Term does not fall on the first or last day of a
month, respectively, the monthly fee for such month shall be
prorated based on the number of days included in the Term in such
month with such payment to be made to the Consultant as of the last
day of the first month in which the first day of the Term falls and
the last day of the last month that includes the last day of the
Term, respectively.
2.2 Final Payment
.
(a) Following the
expiration of the Term, which shall be Consultant’s
“separation from service” (as defined in Treasury
Regulation Section 1.409A-1(h)) with TCGI and the Bank, unless
the Parties hereto have entered into a new consulting or employment
agreement as of such separation from service, subject to the terms
of this Agreement, and provided that Consultant shall have executed
a release in substantially the form attached hereto as Exhibit
A , and such release shall have become irrevocable within sixty
(60) days after Consultant’s date of separation from
service, the Bank shall pay Consultant One Million Two Hundred and
Fifty Thousand Dollars ($1,250,000) (the “ Final
Payment ”), which Final Payment shall be payable in a
cash lump sum on the seventieth (70 th ) day after such date of
separation from service (the “ Final Payment Date
”); provided further, that if the Consultant is a
“specified employee” (as defined in Section 409A
of the Internal Revenue Code of 1986, as amended (“
Section 409A ”) and Treasury Regulation
Section 1.409A-1(i)) on the date of his separation from
service, the Final Payment shall be made on the first business day
following the six-month anniversary of his separation from service.
However, if the Parties enter into a new consulting or employment
agreement prior to the Final Payment Date, then the Final Payment
shall not be due, payable or paid to Consultant.
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(b) If Consultant dies during the
Term, the Bank shall pay to Consultant’s beneficiary (as
determined under Section 19.10) (i) $480,000 in twelve
(12) equal monthly installments beginning on the first
business day of the month following the month in which the
Consultant dies, and (ii) the Final Payment of $1,250,000 in a
cash lump sum payment no later than 30 days after the date of his
death.
2.3 Employee Benefit Plans
. Beginning on the date
hereof, Consultant shall be eligible to elect continued coverage
for himself, his spouse, and his eligible dependents under the
group medical and dental plans available to similarly situated
senior executives of the Bank pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“ COBRA
”). If Consultant elects continuation coverage for medical
coverage, dental coverage or both, the Bank shall subsidize the
premium charged so that the amount of such premium payable by
Consultant for continued coverage for himself, his spouse, and his
eligible dependents shall equal the amount payable by active senior
executives of the Bank for similar coverage as adjusted from time
to time. Subsequent to the continuation period provided to
Consultant under COBRA continuation of coverage provisions in the
Bank’s group medical and dental plans, the Bank shall make
commercially reasonable efforts (which shall not be materially
costly) to continue to cover Consultant, his spouse and his
eligible dependents under the Bank’s group medical and dental
plans at Consultant’s cost, until Consultant attains
eligibility for Medicare. If such continued coverage should not be
feasible under the Bank’s medical and dental plans pursuant
to the preceding sentence, then the Bank shall make commercially
reasonable efforts (which shall not be materially costly) to assist
Consultant in securing medical and dental insurance coverage,
provided that the costs of any such coverage shall be borne
entirely by Consultant, and neither the Bank nor TCGI shall have
any liability with respect to the provision of any such coverage to
Consultant.
To the extent necessary to avoid the
application of Section 409A with respect to amounts reimbursed
or paid under this Section 2.3, the amount of reimbursement or
in kind benefit provided during one calendar year shall not affect
the amount of reimbursement or benefit provided during a subsequent
calendar year, the reimbursement or benefit may not be exchanged or
substituted for other forms of compensation to Consultant, and any
premium payments will be paid by the Bank by their due date, as
determined by the insurer, and any reimbursement made to the
Consultant will be made within 30 days of Consultant’s
submissions of appropriate documentation; provided, however, in no
event will any such reimbursement or payment be made later than the
last day of Consultant’s taxable year following the taxable
year in which he incurred the expense giving rise to such
reimbursement.
2.4 Business Expenses
. The Bank will reimburse
Consultant for all reasonable business expenses incurred by him in
his position as Consultant only (and not as a director), during the
Term upon receipt of expense vouchers in a form satisfactory to the
Bank in accordance with the Bank’s policies in existence from
time to time.
2.5 TCGI Director Fees
Only . For so long as
the Consultant is a director (but not an employee of TCGI or the
Bank at such time) of TCGI or the Bank, he shall be entitled to and
shall receive customary cash, equity and other compensation for
board service on the same terms and conditions as other
non-employee directors of
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TCGI. For the avoidance of doubt,
though Consultant may serve as both a director of the Bank and TCGI
in accordance with this Agreement, Consultant shall only be paid
customary cash, equity and other compensation for board service as
a non-employee director of TCGI and shall not be entitled to any
compensation for service as a director of the Bank. If the
Consultant is an employee of TCGI or the Bank at any time that he
serves as a director of TCGI or the Bank, he shall not be entitled
to or paid any compensation described under this
Section 2.5.
3. RETURN OF PROPERTY
. At the time that
Consultant’s engagement terminates, or at any other time that
TCGI or the Bank so requests, Consultant will promptly return and
turn over to TCGI or the Bank all property of the Bank, its
Customers (as defined in Section 7(b)(i)) and TCGI, including
but not limited to, all Confidential Information in
Consultant’s possession or control, whether in written form,
stored electronically or in physical form. Consultant will not keep
any copies of such materials.
4. WORKS BELONG TO THE BANK
AND TCGI . The Bank
has retained Consultant to provide services for the Bank, so all
work product primarily relating to the business of the Bank that
Consultant develops during the Term and/or has developed during his
prior retention or employment with the Bank or TCGI (“
Work ”) shall be the sole property of the Bank and/or
TCGI, as appropriate. The Bank and/or TCGI shall be the sole
owner(s) of all patents, copyrights and other rights relating to
Works. Consultant acknowledges that all Works are works for hire
that become property of the Bank and/or TCGI, and Consultant
assigns to the Bank and/or TCGI as applicable, any and all rights
that Consultant may have or acquire in all Works. Consultant also
acknowledges that any business he generates during the Term and/or
any business he has generated and/or has developed during his prior
retention or employment with the Bank or TCGI, shall belong to the
Bank and/or TCGI as applicable.
5. COOPERATION
. Consultant agrees that
both during and after the Term, he shall, at the reasonable request
of TCGI or the Bank, render all reasonable assistance and perform
all lawful reasonable acts that TCGI or the Bank considers
necessary or advisable in connection with any litigation, other
legal proceedings or regulatory matters involving TCGI or the Bank
or any present or former director, officer, member, manager,
shareholder, executive, agent, representative, consultant, Customer
(as defined in Section 7(b)(i)) or vendor of TCGI or the Bank.
Consultant also agrees that, in addition to the other obligations
set forth in this Agreement, during the Term and for as long
thereafter as shall be deemed reasonably necessary by TCGI or the
Bank, he will consult, assist and reasonably cooperate with TCGI
and the Bank in any negotiation, transaction, inquiry, regulatory
review, investigation or other action arising out of matters in
which he was involved while engaged by TCGI or the Bank or
otherwise employed by TCGI or the Bank or as to which he may have
pertinent information. Consultant agrees that he will make himself
reasonably available for preparation for hearings, interviews,
proceedings, litigation or other matters. TCGI and the Bank agree
to make reasonable efforts to provide Consultant with reasonable
notice in the event his assistance, cooperation or participation is
required. TCGI or the Bank will reimburse reasonable out-of-pocket
expenses incurred by Consultant as a direct result of his
cooperation hereunder, provided that such expenses are supported by
appropriate documentation in accordance with TCGI’s policies
and have prior approval by either TCGI or the Bank. Notwithstanding
anything to the contrary herein provided, the amount of
reimbursement provided during one calendar year shall not affect
the amount of reimbursement provided during a subsequent calendar
year, the reimbursement may not be
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exchanged or substituted for other forms of
compensation to Consultant, and any reimbursement will be paid
within 30 days of Consultant’s submissions of appropriate
documentation, provided, however, in no event later than the last
day of Consultant’s taxable year following the taxable year
in which he incurred the expense giving rise to such reimbursement.
The reimbursement provisions of this Section 5 shall be in
effect for the lifetime of Consultant.
6. COMMENTS CONCERNING THE
BANK OR TCGI . Consultant agrees that, during and after the
Term, he will not, directly or indirectly, individually or in
concert with others, engage in any conduct or make any statement
calculated or likely to have the effect of defaming or disparaging
or otherwise reflecting poorly upon the Bank, TCGI and/or its or
their respective Customers, executives, officers, directors,
shareholders, managers, members, suppliers, or joint venturers
concerning their products, reputations, services, good will, or
business opportunities; provided however, that nothing in this
Agreement is intended to preclude Consultant from providing
truthful and non-malicious testimony if properly subpoenaed to
testify under oath.
7. CONFIDENTIALITY AND
NON-SOLICITATION PROVISIONS .
(a) Confidential Information
. Consultant acknowledges that he is or will be in a position of
trust and in the course of his retention, he continues to be given
access to Confidential Information (as defined below) of TCGI, the
Bank and its or their Customers. This Confidential Information is
not generally known, has been generated at great effort and
expense, and has been maintained in a confidential manner by TCGI
and/or the Bank. Consultant agrees to keep all Confidential
Information strictly confidential. Consultant will not use, copy,
take, disclose or remove Confidential Information (i) during
his employment or retention, except as expressly authorized by and
for the benefit of the Bank or TCGI, and (ii) at any time
after his retention ends for as long as such Confidential
Information has not become generally known in the banking industry
through proper means. Consultant will not claim any rights to or
lien on any Confidential Information. Consultant will immediately
notify TCGI or the Bank of any unauthorized possession, use or
disclosure, or threat thereof, of any Confidential Information by
anyone. “ Confidential Information ” means any
other non-public confidential or proprietary information of TCGI,
the Bank and/or its or their Customers (whether reduced to writing
or not) including, but not limited to: (A) Customer files,
presentations, contracts, loan commitments, credit or loan
proposals, credit information, term sheets and other information
relating to TCGI’s or the Bank’s business or its or
their Customers; (B) employee personnel files and expense
records; (C) marketing databases and marketing proposals or
strategies; (D) financial analyses; and (E) any other
information belonging to TCGI, the Bank or its or their Customers
that would be protected by law, whether or not it constitutes a
“trade secret” within the meaning of the Illinois Trade
Secrets Act (765 ILCS 1065/1 et seq.), as amended. Confidential
Information shall not include: (1) information disclosed
publicly in published materials or (2) information that has
become generally known in the banking industry through proper
means. Notwithstanding the foregoing, nothing herein shall prohibit
the Consultant from disclosing any Confidential Information as is
required by law, provided that, unless prohibited from
doing
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so by law, prior to any such
disclosure, Consultant shall promptly and without delay, provide
notice of such anticipated disclosure to TCGI and the
Bank.
(b) Non-Interference . Except
with the prior written consent of TCGI and the Bank, during
Consultant’s retention and for a period of twelve
(12) months after his separation from service for any reason,
Consultant agrees that he will not, directly or indirectly, either
for himself or for any other business or person:
(i) Solicit or attempt to solicit
for the purpose of doing business in a competitive manner with any
of the Bank’s or TCGI’s Customers with whom the Bank or
TCGI has a protectable relationship or with whom Consultant has had
substantial contact, or about whom Consultant obtained Confidential
Information during his employment or retention. For purposes of
this Agreement, the term “ Customer ” includes
any person, firm or entity (A) who, at the time of
Consultant’s employment or retention with TCGI or the Bank,
maintained any depository account at the Bank; or (B) to whom
the Bank has extended credit (whether new or existing) during the
six (6) month period immediately preceding the
Consultant’s separation from service; or (C) who
otherwise actually used any of the Bank’s financial products
or services during the six (6) month period immediately
preceding the Consultant’s separation from
service.
(ii) Solicit or negotiate with, for
the purpose of doing business in a competitive manner with, hiring,
o
