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| TAYC > SEC Filings for TAYC > Form 8-K on 5-Sep-2008 | All Recent SEC Filings |
5-Sep-2008
Entry into a Material Definitive Agreement, Creation of a Direct Financi
On September 4, 2008, Taylor Capital Group, Inc. (the "Registrant") entered into a securities purchase agreement to sell $60 million of 8% non-cumulative convertible perpetual preferred stock, Series A, in a private placement to institutional and individual accredited investors. The Registrant previously announced on July 29, 2008 that it had entered into a non-binding letter of intent and exclusivity agreement with Harrison I. Steans and Jennifer W. Steans regarding this transaction. The investors in the preferred stock transaction will include Harrison I. Steans, Jennifer W. Steans, certain members of the Registrant's management, including the Registrant's Chairman and Chief Executive Officer, Bruce W. Taylor, and the Registrant's President, Mark A. Hoppe, and a number of Chicago-based investment firms and individuals. On September 4, 2008, the Registrant also entered into subscription agreements with respect to the sale of $60 million in principal amount of 10% subordinated notes to be issued by Cole Taylor Bank, the Registrant's wholly-owned subsidiary bank (the "Bank"), and detachable warrants to purchase shares of the Registrant's common stock as described below. The proceeds of these transactions will be used primarily to fund the Registrant's strategic growth initiative and to strengthen the balance sheet and regulatory capital of the Registrant and the Bank. A copy of the Registrant's press release, dated September 4, 2008, announcing its entry into these agreements is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The preferred stock private placement includes a total of 2,400,000 shares of 8% non-cumulative convertible perpetual preferred stock, Series A, with a purchase price and liquidation preference of $25.00 per share. The preferred stock will pay non-cumulative dividends at an annual rate of 8% of the liquidation preference beginning in January 2009 and will have a conversion price of $10.00 per share (subject to adjustment), which is equal to 118% of the closing price of the Registrant's common stock on July 25, 2008, the date on which the Registrant entered into the non-binding letter of intent and exclusivity agreement. The preferred stock will be convertible into an aggregate of six million shares of the Registrant's common stock at the option of the preferred stockholders at any time, and will be convertible at the option of the Registrant on the fifth anniversary of closing. The preferred stock will cease to pay dividends after the second anniversary of closing if the volume weighted average price of the Registrant's common stock on the Nasdaq Global Select Market exceeds 200% of the then-applicable conversion price for at least 20 trading days in any consecutive 30-day period, or after the third anniversary of closing if the volume weighted average price of the Registrant's common stock on the Nasdaq Global Select Market exceeds 130% of the then-applicable conversion price for at least 20 trading days in any consecutive 30-day period.
The Registrant has agreed to appoint Harrison I. Steans and Jennifer W. Steans to the Registrant's Board of Directors effective upon the closing of the preferred stock transaction, and the Board of Directors will be increased from 11 to 13 members at such time. With respect to future annual and stockholder meetings called for the purpose of electing directors, Financial Investments Corporation ("FIC"), a corporation indirectly controlled by Harrison I. Steans and Jennifer W. Steans, will have the right to nominate
The Registrant has also agreed that, following the closing of the preferred stock transaction and stockholder approval of a Third Amended and Restated Certificate of Incorporation of the Registrant, Mr. Steans would serve as Chairman of a newly created Executive Committee. The Executive Committee will serve for a period of up to five years from the initial issuance of the Series A preferred stock, and will be comprised of (i) Harrison I. Steans, Jennifer W. Steans, or a director designated for nomination by FIC (initially, Harrison I. Steans), (ii) a director designated for nomination by the Taylor family (initially, Bruce W. Taylor), and (iii) the most senior executive of the Registrant serving on the Registrant's Board of Directors who is not affiliated with either the Steans family or the Taylor family (initially, Mark A. Hoppe). The powers and authority of the Executive Committee will be set forth in a proposed Third Amended and Restated Certificate of Incorporation of the Registrant, which the Registrant's Board of Directors has approved and recommended for adoption by stockholders. The Registrant's Board of Directors has also approved, and recommended that stockholders adopt, a proposed Third Amended and Restated By-laws of the Registrant in connection with the transactions.
. . .
The information regarding the Registrant's subordinated debt transaction set forth in Item 1.01 above is incorporated by reference herein.
The information set forth in Item 1.01 above is incorporated by reference herein.
The Registrant offered the securities in the transactions described in Item 1.01
above in reliance on the exemptions from registration provided by
Section 3(a)(2) (with respect to the subordinated bank notes) and Section 4(2)
of the Act and Rule 506 of Regulation D thereunder. The Registrant relied on the
exemption from registration provided under Section 4(2) of the Act based in part
on representations made by the investors in the respective transaction
documents, including representations with respect to each investor's status as
an accredited investor and investment intent with respect to the
In connection with the transactions described in Item 1.01 above, the Registrant entered into an Employment Agreement with Bruce W. Taylor on September 4, 2008. The Employment Agreement will be effective upon the closing of the preferred stock transaction, and will be void if such transaction does not close before December 31, 2008. Under the Employment Agreement, Mr. Taylor will be paid an initial annual base salary of $525,200 (the "Base Salary"). The Base Salary will be reviewed on an annual basis by the Compensation Committee of the Board of Directors of the Registrant (the "Committee"), and may be increased, but not decreased (other than permitted proportionate reductions applicable to all similarly situated senior executives of the Registrant or the Bank, unless such reduction occurs during the two-year period commencing upon a "change in control" of the Registrant (as defined in the Employment Agreement)), by the Committee in its sole discretion. Mr. Taylor is also eligible for a performance-based annual cash bonus to be determined in accordance with the Registrant's annual incentive compensation program; provided, that Mr. Taylor's annual cash bonus level target is set at sixty percent of the Base Salary for the year 2008.
The Employment Agreement further provides that Mr. Taylor will be eligible to participate in the Registrant's 2002 Incentive Compensation Plan or any successor plan (the "Incentive Plan"). Mr. Taylor's annual targets under the Incentive Plan will be consistent with similar executive officers of the Registrant and the Bank, and any benefits to be received by Mr. Taylor under the Incentive Plan will depend on the satisfaction of other terms and conditions of the Incentive Plan. Under the Employment Agreement, Mr. Taylor is also eligible to receive additional benefits and participate in other Registrant benefit plans, including the Registrant's Deferred Compensation Plan, 401(k) profit sharing plan and health and welfare benefit plans, payment of club dues, automobile expenses and wealth management services, and is entitled to payment of legal fees and expenses incurred by Mr. Taylor in connection with the negotiation and preparation of the Employment Agreement, provided that such fees and expenses together with certain other fees and expenses of the Taylor family would not exceed $100,000.
The Employment Agreement provides that, in the event that Mr. Taylor's employment is terminated (i) by the Registrant other than for disability or "cause" (as defined in the
The Employment Agreement provides that Mr. Taylor will receive additional
severance payments if his employment is terminated other than for cause or
disability by the Registrant, or if his employment is terminated by him for good
reason, during the "Change in Control Period" (as defined in the Employment
Agreement). In such circumstance, Mr. Taylor will be entitled to receive (in
addition to the payments and benefits he would be entitled to receive pursuant
to the preceding paragraph) (i) subject to his provision of a release, an amount
equal to one-half times the sum of his Base Salary on the effective date of the
change in control or his Base Salary immediately prior to the date when the
notice of termination was given (whichever rate is greater) and (ii) the average
of (A) his prior year's bonus, and (B) the greatest of (1) his prior year's
bonus, (2) his actual bonus for the year in which his termination occurs, or
(3) his bonus at target for the year in which his termination occurs. In such
circumstance, Mr. Taylor shall also be entitled to continuation of medical
benefits for up to 36 months, and the vesting of his Incentive Plan benefits or
equity awards will be governed by the controlling plan documents. The Employment
Agreement also contains provisions related to circumstances where an excise tax
equalization gross-up payment for any severance or other payments may apply;
provided, however, that any such payment shall not exceed $350,000.
The Employment Agreement includes provisions with regard to non-solicitation of customers and employees of the Registrant and the Bank (including during the term of the Employment Agreement and for one year following the termination of Mr. Taylor's employment), and ownership of work product, non-disparagement and confidentiality.
The description of the terms of the Employment Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to such agreement, a copy of which is attached as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated by reference herein.
In connection with the transactions described in Item 1.01 above, on September 4, 2008 the Registrant also entered into a Consulting Agreement with Jeffrey W. Taylor, a member of the Registrant's Board of Directors and Executive Managing Director, Market Development and New Ventures of the Registrant. The Consulting Agreement, which has
The Consulting Agreement provides that the Bank will pay Mr. Taylor a monthly fee of $40,000 during the term of the Consulting Agreement and, upon a separation from service with the Registrant and the Bank, subject to his provision of a release, a final payment equal to $1,250,000, payable in a cash lump sum on the 70th day following the date such separation from service occurs; provided that such final payment shall not be required to be paid if the parties enter into a new consulting or employment agreement prior to the date on which such final payment is due. In addition, if Mr. Taylor dies during the term of the Consulting Agreement, the Bank will be obligated to pay Mr. Taylor's beneficiary $480,000 in 12 equal monthly installments and the final payment of $1,250,000.
The Consulting Agreement provides that during the health care continuation period under COBRA, if Mr. Taylor so elects, Mr. Taylor, his spouse and dependents shall be provided with medical and dental coverage at the cost applicable from time to time, to active senior executives of the Bank. After the COBRA continuation period, the Bank shall make commercially reasonable efforts to continue to cover Mr. Taylor and his family under the Bank's medical and dental plans at his cost until he attains eligibility for Medicare. If such continued coverage is not feasible, the Bank shall make commercially reasonable efforts to assist Mr. Taylor in securing medical and dental insurance coverage at his cost. The Consulting Agreement further provides for reimbursement of Mr. Taylor's reasonable business expenses during the term of the Consulting Agreement, Mr. Taylor will also be entitled to customary cash, equity and other compensation for board service on the same terms and conditions as other non-employee directors of the Registrant, though he will not be entitled to any compensation for his service as a director of the Bank. Mr. Taylor is entitled to payment of legal fees and expenses incurred by him in connection with the negotiation and preparation of the Consulting Agreement, provided that such fees and expenses together with certain other fees and expenses of the Taylor family would not exceed $100,000. Mr. Taylor also has two option grants of 20,000 shares of common stock each, one at an exercise price of $26.08, the other at $20.00 per share, which are anticipated to fully vest, and may be exercised through, March 17, 2014 and March 19, 2013, respectively.
The Consulting Agreement also provides that for so long as Mr. Taylor is a "Taylor family" nominee to the Registrant's Board of Directors in accordance with the Registrant's By-laws, the Registrant will use its best efforts to cause Mr. Taylor to be elected to its Board of Directors and as its Vice Chairman and will recommend that stockholders elect Mr. Taylor to the Board of Directors at each stockholders meeting at which directors are to be elected and in each proxy statement related thereto. The Consulting Agreement further provides that, if the Registrant fails to cause Mr. Taylor to be appointed to the Board, the Registrant will cause Mr. Taylor to be appointed an observer of its Board of Directors. . . .
(d) Exhibits
10.1 Voting Agreement, dated September 4, 2008, by and between the Registrant and the Taylor family stockholders listed on the signature page thereto.
10.2 Securities Purchase Agreement, dated September 4, 2008, by and among the Registrant and the investors listed on the Schedule of Buyers attached thereto (with other transaction documents attached as exhibits thereto, including the forms of Third Amended and Restated Certificate of Incorporation and Third Amended and Restated By-laws of Registrant, Certificate of Designation for the Series B Preferred Stock of the Registrant, Registration Rights Agreement, Management Services Agreement and FIC Warrant).
10.3 Form of Subscription Agreement and forms of subordinated note and warrant issued in connection with the Registrant's subordinated debt transaction.
10.4 Employment Agreement, dated September 4, 2008, by and among the Registrant, Cole Taylor Bank and Bruce W. Taylor.
10.5 Consulting Agreement, dated September 4, 2008, by and between Cole Taylor Bank and Jeffrey W. Taylor.
99.1 Press release, dated September 4, 2008, announcing the Registrant's entry into definitive agreements with respect to the sale of preferred stock and subordinated bank notes and warrants.
Certain statements included in this report are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995, including statements about the terms, timing, completion and effects of the proposed transactions. The Registrant may not be able to complete the transactions on the terms described above or other acceptable terms or at all because of a number of factors, including the failure to receive any required regulatory approvals or the failure to satisfy other closing conditions in the definitive agreement, and even if the transaction are consummated the Registrant's strategic growth initiative may not be successful. Factors that may affect the business or financial results or condition of the Registrant are described in the Registrant's filings with the SEC, including the risk factors and other disclosures in the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2007 filed with the SEC on March 13, 2008. Stockholders and other readers are urged to consider these risks carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this report and, except as required by the federal securities laws, the Registrant disclaims any obligation to publicly update such forward-looking statements to reflect subsequent events, circumstances or developments.
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