Exhibit 10.3

READ CAREFULLY AND COMPLETE SECTION 2(l) BEFORE SIGNING

SUBSCRIPTION AGREEMENT

TAYLOR CAPITAL GROUP, INC.

COLE TAYLOR BANK

ALL SUBSCRIPTIONS ARE SUBJECT TO ACCEPTANCE BY TAYLOR CAPITAL GROUP, INC. AND
COLE TAYLOR BANK. ALL INFORMATION REQUIRED TO BE PROVIDED HEREIN BY SUBSCRIBERS
FOR DETERMINING PURCHASER QUALIFICATION WILL BE KEPT STRICTLY CONFIDENTIAL.

Taylor Capital Group, Inc.

Cole Taylor Bank

9550 West Higgins Road

Rosemont, Illinois 60018

Attn: Bruce W. Taylor

Ladies and Gentlemen:

 

1. Subscription; Funding Obligation.

 

  a) Cole Taylor Bank, an Illinois-chartered member bank (the “Bank”), has
offered to a limited number of accredited investors the opportunity to purchase
in the aggregate up to $60,000,000 in principal amount of 10% subordinated notes
(“Notes”) to be issued by the Bank. Upon issuance of the Notes, each Person who
purchases any Notes will receive a detachable warrant (the “Warrant” and,
collectively with the Notes, the “Offered Securities”) to acquire fifteen
(15) shares of common stock (the “Common Stock”) of Taylor Capital Group, Inc.,
a Delaware corporation (the “Holding Company” and, together with the Bank, the
“Companies” and each of the Companies, individually, a “Company”), at $10 per
share of Common Stock for each $1,000 in face amount of the Notes purchased by
such Buyer (the “Warrant Shares” and, collectively with the Offered Securities,
the “Securities”). The undersigned (“Subscriber”) hereby irrevocably subscribes
to purchase the dollar amount of Notes as set forth on the signature page of
this subscription agreement (this “Subscription Agreement”), and upon issuance
of the Notes at Closing, Subscriber will receive a Warrant to acquire the
corresponding number of shares of Common Stock as set forth on the signature
page of this Subscription Agreement.

 

  b)

Subscriber acknowledges that the Holding Company has entered into a securities
purchase agreement (the “Securities Purchase Agreement”) with respect to the
private placement of either shares of Series A Non-Cumulative Convertible
Perpetual Preferred Stock of the Holding Company (the “Preferred Shares”), or in
some cases, shares of

--------------------------------------------------------------------------------

 

Series B Convertible Preferred Stock of the Holding Company (the “Designated
Preferred”) that upon the approval of the stockholders of the Holding Company
are exchangeable for Preferred Shares, for an aggregate purchase price of
$60,000,000 (the “Preferred Stock Transaction”). The Preferred Stock Transaction
is contemplated to close on or before September 30, 2008, subject to the
satisfaction or waiver of the conditions to closing set forth in the Securities
Purchase Agreement. Subscriber may obtain a copy of the Securities Purchase
Agreement and other documents relating to the Preferred Stock Transaction upon
written request of the Holding Company.

 

  c) As described in Section 5 below, the closing of the Preferred Stock
Transaction is a condition to closing the sale of the Offered Securities. No
more than ten (10), nor less than five (5), Business Days prior to the
contemplated closing of the Preferred Stock Transaction, the Holding Company
will give written notice to the Buyers, including Subscriber, of the pending
closing of the Preferred Stock Transaction and wire transfer instructions for a
closing escrow account. Subscriber hereby warrants that, within three
(3) Business Days of such written notice from the Holding Company, Subscriber
shall deliver payment in full for the Offered Securities for which Subscriber
has subscribed hereunder (the “Purchase Price”), by wire transfer of immediately
available funds to the closing escrow account identified in the notice. If the
Closing has not occurred within ten (10) Business Days after such funds are so
delivered, the funds so delivered by Subscriber will be promptly refunded to
Subscriber upon request.

 

  d) The closing (the “Closing”) of the acquisition of the Offered Securities by
the Buyers (the “Sub Debt Transaction”) shall occur at the offices of Katten
Muchin Rosenman LLP, 525 West Monroe Street, Chicago, Illinois 60661. The date
and time of the Closing (the “Closing Date”) shall be 10:00 a.m., Chicago time,
on the date of (or, if such date is not a Business Day, the first Business Day
after) the satisfaction (or waiver) of the conditions to the Closing set forth
in Section 5 below (other than any such condition required to be satisfied at
the Closing) or such other date and time as is mutually agreed to by the Holding
Company and a Majority of Holders (as defined herein). At the Closing, the
Companies and the Buyers shall make certain deliveries, as specified herein, and
all such deliveries, regardless of chronological sequence, shall be deemed to
occur contemporaneously and simultaneously on the occurrence of the last
delivery and none of such deliveries shall be effective until the last of the
same has occurred.

 

  e) Subscriber acknowledges that the Companies have the right, in their sole
discretion, to accept or reject this Subscription Agreement, in whole or in
part, and this Subscription Agreement is not binding on the Companies until the
date, if any, on which it has been accepted by the Companies, which acceptance
shall be noted by execution by each of the Companies of this Subscription
Agreement where indicated on the signature page hereof.

 

2. Representations and Warranties of Subscriber. To induce the Companies to
accept this Subscription Agreement, Subscriber hereby represents and warrants
to, and agrees with, each Company that:

 

  a)

Subscriber has received a copy of the Form of Note, the Form of Warrant and this
Subscription Agreement and all exhibits and supplements thereto and any
amendments thereof (the “Subscription Materials”) regarding an investment in the
Offered

 

2

--------------------------------------------------------------------------------

 

Securities, has read the Subscription Materials carefully, is fully familiar
with the contents of the Subscription Materials and hereby adopts, accepts and
agrees to be bound by the terms of the Subscription Materials if and when this
Subscription Agreement is accepted by each Company.

 

  b) The Offered Securities were not offered to Subscriber by any means of
general solicitation or general advertising. Subscriber has received no oral or
written representations, warranties or communications with respect to the
offering of Offered Securities other than those contained in the Subscription
Materials, and, in entering into this transaction, Subscriber is not relying
upon any information other than that contained in the Subscription Materials or
that resulting from Subscriber’s own investigation of the Offered Securities and
the Companies. Subscriber’s own investigation has included such review as
Subscriber has considered necessary or appropriate of the Holding Company’s
annual report on Form 10-K for the year ended December 31, 2007 and quarterly
reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008,
each as filed with the Securities and Exchange Commission (the “SEC”), and the
Holding Company’s other filings with the SEC under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), since December 31, 2007 and prior to
the date of Subscriber’s execution and delivery hereof (such annual report,
quarterly reports and other filings, the “Company 2008 SEC Filings”). It never
has been represented, guaranteed or warranted, whether express or implied, by
either of the Companies, any officer, director, shareholder, partner, employee
or agent of either of the Companies, any broker or dealer, or any other person
that either of the Companies or Subscriber will realize any amount or type of
consideration, profit or loss as a result of activities of the Companies or
Subscriber’s investment in the Securities. With respect to tax and other
economic considerations involved in an investment in the Securities, Subscriber
is not relying on any Company. Subscriber has carefully considered and has, to
the extent Subscriber believes such discussion necessary, discussed with
Subscriber’s professional legal, tax, accounting and financial advisers the
suitability of an investment in the Offered Securities for Subscriber’s
particular tax and financial situation and has determined that the Offered
Securities included in Subscriber’s offer to purchase hereunder are a suitable
investment for Subscriber. Subscriber hereby acknowledges and agrees that Keefe,
Bruyette & Woods, Inc. has acted as financial advisor to the Holding Company
(and not as an underwriter or placement agent for the Offered Securities) and
has not acted as an advisor to, and does not represent, Subscriber.

 

  c) Subscriber has had an opportunity to ask questions of and receive answers
from each Company or the representatives of each Company concerning the terms of
this investment, all such questions have been answered to the full satisfaction
of Subscriber, and Subscriber has had the opportunity to request and obtain any
additional information Subscriber deemed necessary to verify the information
contained in the Subscription Materials.

 

  d)

Subscriber has the knowledge and experience in financial and business matters to
be capable of evaluating the merits and risks of an investment in the
Securities. Subscriber recognizes that an investment in the Securities involves
substantial risks, and has taken full cognizance of and understands all of the
risk factors related to the purchase of Offered Securities, including, but not
limited to, those set forth in the Company 2008

 

3

--------------------------------------------------------------------------------

 

SEC filings. Subscriber has determined that the purchase of the Securities is
consistent with Subscriber’s investment objectives. Subscriber is able to bear
the economic risks of an investment in the Securities, and at the present time
could afford a complete loss of such investment.

 

  e) Subscriber is acquiring the Offered Securities, and will acquire the
Warrant Shares, for Subscriber’s own account, for investment purposes only, and
not with a view towards the sale or other distribution thereof, in whole or in
part. Subscriber will not sell, hypothecate or otherwise transfer Subscriber’s
Securities except pursuant to, and in compliance with the “plan of distribution”
set forth in, an effective registration statement for such Offered Securities
under the Securities Act and such state or other laws as may be applicable, or
upon receipt by the Holding Company of a written opinion of counsel in form and
substance reasonably acceptable to the Holding Company that such registration is
not required for such sale, hypothecation or other transfer; provided, however
that no such opinion shall be required in connection with (i) a transaction
pursuant to Rule 144 in which Subscriber provides the Holding Company with
certifications reasonably requested by the Holding Company regarding compliance
with the terms and provisions of Rule 144 or (ii) a distribution of any Offered
Securities to an Affiliate of Subscriber, so long as such Affiliate does not pay
any consideration in connection with such distribution (other than issuance of
equity interests in such Affiliate) and Subscriber provides the Holding Company
with certifications reasonably requested by the Holding Company in connection
therewith. Subscriber acknowledges that the Warrants contain additional
restrictions and limitations on transfer. The undersigned acknowledges that any
certificate or certificates evidencing the Securities shall bear the following
or a substantially similar legend and such other legends as may be required by
state blue sky laws:

“[THESE SECURITIES] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER THE SECURITIES ACT OF ANY STATE. [EXCEPT AS OTHERWISE
PROVIDED [IN THE SECURITIES OR ]THE SUBSCRIPTION AGREEMENT, THESE SECURITIES]
MAY NOT BE OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR [THESE SECURITIES] UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND SUCH STATE OR OTHER LAWS AS MAY BE APPLICABLE, OR RECEIPT BY THE COMPANY OF
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE HOLDING COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.”

 

  f) Subscriber understands that, in connection with the offering described in
the Subscription Materials, the Securities have not been registered under the
1933 Act, nor under the securities laws of any state or other jurisdiction. The
offering and sale of the Securities is intended to be exempt from registration
under the 1933 Act by virtue of Section 4(2) of the 1933 Act and the provisions
of Regulation D thereunder and applicable state securities laws. The Securities
have not been approved or disapproved by the Securities and Exchange Commission
or by any other federal or state agency, and no such agency has passed on the
accuracy or adequacy of the Subscription Materials, nor made any finding or
determination as to the fairness or suitability of an investment in the
Securities.

 

4

--------------------------------------------------------------------------------

  g) Subscriber acknowledges that, so long as the indebtedness evidenced by the
Notes is deemed to be Tier 2 Capital (or the equivalent) of the Bank under the
applicable rules and regulations promulgated by the Board of Governors of the
Federal Reserve System (or successor thereto), the indebtedness evidenced by the
Notes shall be subordinated and junior in right of payment to the Bank’s
obligations to the general creditors and depositors of the Bank.

 

  h) Subscriber understands that there are restrictions on the transferability
of the Securities; there may be no public market for the Securities; and it may
not be possible for Subscriber to liquidate Subscriber’s investment in any of
the Securities. Accordingly, Subscriber may have to hold the Securities, and
bear the economic risk of this investment, indefinitely.

 

  i) Subscriber, if a natural person, has reached the age of maturity in the
state or other jurisdiction in which Subscriber resides and is legally competent
to execute this Subscription Agreement and to make the representations and
warranties contained herein. If Subscriber is other than a natural person:
(i) Subscriber is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is formed; (ii) Subscriber has all the
requisite right, power, authority and capacity to enter into this Subscription
Agreement and to consummate the transactions contemplated hereby;
(iii) Subscriber has taken all necessary action to authorize the execution,
delivery and performance of this Subscription Agreement; (iv) this Subscription
Agreement shall constitute a legal, valid and binding obligation of Subscriber
enforceable in accordance with its terms; and (v) Subscriber has not been
organized or reorganized for the specific purpose of acquiring the Securities,
unless each beneficial owner of such entity is an “accredited investor” within
the meaning of Rule 501(a) of Regulation D promulgated under the Act
(“Accredited Investor”) and has submitted information substantiating such
qualification.

 

  j) Subscriber is an Accredited Investor, in each of the categories initialed
by Subscriber in paragraph (1) below. Failure so to qualify as an Accredited
Investor will disqualify Subscriber from investing in the Securities.

 

  k) The information contained in this Subscription Agreement is true, correct
and complete in all respects as of the date hereof.

 

  l) Subscriber has initialed each of the following categories that describes
Subscriber’s financial condition or status:

 

____

Initial

     (i)    Subscriber is a director or executive officer of one or more of the
Companies.

____

Initial

     (ii)    Subscriber is a natural person whose individual net worth or joint
net worth with his or her spouse, as of the date hereof, exceeds $1,000,000.

 

5

--------------------------------------------------------------------------------

____

Initial

     (iii)    Subscriber is a natural person who had an individual income in
excess of $200,000 (or joint income with his or her spouse in excess of
$300,000) in 2006 and 2007 and has a reasonable expectation of reaching the same
income (or joint income) level in 2008.

____

Initial

     (iv)    Subscriber lawfully acts on behalf of a trust, with total assets in
excess of $5,000,000, not formed for the specific purpose of acquiring the
securities offered, whose purchase is directed by a “sophisticated person”
(i.e., a person who has such knowledge and experience in financial and business
matters that he (she) is capable of evaluating the merits and risks of an
investment in the Securities).

____

Initial

     (v)    Subscriber is a bank as defined in Section 3(a)(2) of the Act, or
any savings and loan association or other institution as defined in section
3(a)(5)(A) of the Act whether acting in its individual or a fiduciary capacity.

____

Initial

     (vi)    Subscriber is a broker or dealer registered pursuant to Section 15
of the Exchange Act.

____

Initial

     (vii)    Subscriber is an insurance company as defined in Section 2(13) of
the Act.

____

Initial

     (viii)    Subscriber is an investment company registered under the
Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act.

____

Initial

     (ix)    Subscriber is a Small Business Investment Bank licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958.

____

Initial

     (x)    Subscriber is a plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, and such plan has
total assets in excess of $5,000,000.

____

Initial

     (xi)    Subscriber is a private business development company as defined in
Section 202(a)(22) of the Investment Advisors Act of 1940.

____

Initial

     (xii)    Subscriber is an organization described in Section 501(c)(3) of
the Code, a corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000.

 

6

--------------------------------------------------------------------------------

____

Initial

     (xiii)    Subscriber is an entity in which all of the equity owners are
Accredited Investors. If this item is applicable, please give the name of each
equity owner and the category or categories (as listed above) applicable to
each:         Name    Category         ___________________________   
___________________________         ___________________________   
___________________________         ___________________________   
___________________________

 

____

Initial

     (xiv)    Subscriber is an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 (“ERISA”), and (A) the
investment decision is made by a plan fiduciary, as defined in Section 3(21) of
ERISA, which is either a bank, savings and loan association, insurance company,
or registered investment advisor, or (B) the employee benefit plan has total
assets in excess of $5,000,000 or (C) the employee benefit plan is a
self-directed plan with investment decisions made solely by persons that are
Accredited Investors.

 

3. Representations and Warranties of the Companies. Each of the Holding Company
and the Bank represents and warrants to Subscriber as set forth below, except
(i) to the extent set forth in the disclosure schedules hereto delivered to
Subscriber prior to the execution of this Subscription Agreement, and (ii) other
than with respect to Sections 3(a), (b), (c), (d) and (e) of this Subscription
Agreement, to the extent disclosed in the Company 2008 SEC Filings at least two
Business Days prior to the date of this Subscription Agreement, and publicly
available as of the date of this Subscription Agreement (excluding any
cautionary, predictive or forward-looking statements set forth in any section of
such Company 2008 SEC Filings, including “Risk Factors” and “Cautionary Note
Regarding Forward-Looking Statements”) (the “Available Company SEC Documents”).
Each exception set forth in a disclosure schedule is identified by reference to,
or has been grouped under a heading referring to, a specific individual section
or subsection of this Subscription Agreement and relates only to such section or
subsection; provided, however, that the inclusion of any item referenced in one
section or subsection shall be deemed to refer to any other section or
subsection, whether or not an explicit cross-reference appears, to the extent
that the applicability of such item to the other section is readily apparent.

 

  a)

Organization and Qualification. Except as set forth on Schedule 3(a), the
Holding Company and each of the Subsidiaries (i) have been duly incorporated or
organized and are validly existing in good standing under the laws of their
respective jurisdictions of incorporation or organization, and (ii) are duly
qualified to conduct business and are in good standing as foreign corporations
or organizations in each jurisdiction in which their respective ownership or
lease of property or the nature of their respective businesses requires such
qualification, except where the failure to be so qualified would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect. True and correct copies of the Organizational Documents of the Holding
Company and each of the Subsidiaries, as amended and currently in effect, have
been made available by the Holding Company to Subscriber. The Holding Company
and each of the Subsidiaries has all requisite power and authority to carry on
the businesses in

 

7

--------------------------------------------------------------------------------

 

which it is engaged (as described in the Available Company SEC Documents) and to
own or lease its properties. Schedule 3(a) correctly identifies each Subsidiary
of the Holding Company, identifying separately those subsidiaries that are
directly owned by the Bank.

 

  b) Bank Holding Company; State Banking Corporation Status. The Holding Company
is duly registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended, and meets in all material respects the applicable
requirements for qualification as such. The Bank holds the requisite authority
from the Illinois Department of Financial and Professional Regulation to conduct
business as a state-chartered banking corporation under the laws of the State of
Illinois.

 

  c) Authorized Capital Stock.

 

  i) The authorized capital stock of the Holding Company consists of:
(A) 18,000,000 shares of Common Stock, and (B) 5,000,000 shares of preferred
stock, none of which are issued and outstanding. As of the date of this
Subscription Agreement, of the shares of Common Stock currently authorized:
(x) 11,011,184 shares are outstanding, (y) 2,773,243 shares are reserved for
issuance pursuant to the Taylor Capital Group, Inc. 2002 Incentive Compensation
Plan, and (z) no shares were reserved for issuance pursuant to securities (other
than the Preferred Shares, the Designated Preferred and the Warrants)
exercisable or exchangeable for, or convertible into, shares of Common Stock.

 

  ii) In the event the Preferred Shares are issued at the closing of the
Preferred Stock Transaction, upon the filing of the amended and restated
certification of incorporation contemplated in connection with the Preferred
Stock Transaction (the “Restated Charter”), the authorized capital stock of the
Holding Company shall consist of: (A) 45,000,000 shares of Common Stock, and
(B) 10,000,000 shares of preferred stock, 2,400,000 of which shall be designated
as the Preferred Shares. In the event that Designated Preferred are issued at
the closing of the Preferred Stock Transaction, then, upon the filing of the
Restated Charter and the exchange of Designated Preferred for Preferred Shares,
the authorized capital stock of the Holding Company shall consist of:
(A) 45,000,000 shares of Common Stock, and (B) 10,000,000 shares of preferred
stock, 2,400,000 of which shall be designated as Preferred Shares and 2,400,000
of which shall be designated as the Designated Preferred.

 

  iii) The issuance of the Warrants and Warrant Shares as contemplated herein
will not cause the number of shares of Common Stock issuable pursuant to any
outstanding Convertible Securities or Stock Purchase Rights to increase as a
result of any anti-dilution provisions relating thereto. There are no authorized
or outstanding bonds, debentures, notes or other obligations of the Holding
Company the holders of which have the right to vote with the holders of Common
Stock on any matter.

 

  iv)

All outstanding shares of Capital Stock (including any outstanding restricted
stock) have been duly authorized and validly issued and are fully-paid and
nonassessable and have been offered and issued without violation of any
preemptive rights of any Person or any applicable registration requirements of
applicable securities laws. All outstanding Stock Purchase Rights have been
issued in compliance, in all material respects, with any applicable registration
requirements of applicable securities laws,

 

8

--------------------------------------------------------------------------------

 

and all shares of Common Stock issued upon exercise thereof will have been, upon
such issuance, duly authorized and validly issued without violation of any
preemptive rights of any Person and will be fully-paid and nonassessable.

 

  v) There are no outstanding securities or instruments of the Holding Company
or any of its Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or arrangements by which
the Holding Company or any of its Subsidiaries is or may become bound to redeem
any security of the Holding Company or any equity security, or security
convertible into or exercisable for, any equity security of any of its
Subsidiaries.

 

  vi) The authorized capital stock of the Bank consists of 1,500,000 shares of
common stock, par value $10.00 per share, 1,500,000 shares of which are issued
and outstanding, and each of which is owned directly by the Holding Company.

 

  d) Authorization; Enforcement; Validity.

 

  i) The Holding Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Subscription Agreement
and the Warrants, including the issuance of the Warrant Shares upon exercise of
the Warrants. The execution, delivery and performance by the Holding Company of
this Subscription Agreement and the Warrants, and the issuance of the Warrant
Shares upon exercise of the Warrants, have been duly authorized by the Board and
no further corporate action on the part of the Holding Company is required in
connection with the authorization thereof. No filing, consent, or authorization
is required by the Holding Company, the Board or its stockholders with respect
to the Sub Debt Transaction. This Subscription Agreement has been duly executed
and delivered by the Holding Company and constitutes, and, upon execution and
delivery thereof by the Holding Company as contemplated herein, the Warrants
will constitute, legal, valid and binding obligations of the Holding Company,
enforceable against the Holding Company in accordance with their respective
terms, except as such enforceability may be limited by general principles of
equity, applicable bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies or as indemnification or contribution may be limited by the securities
laws and public policy relating thereto.

 

  ii)

The Bank has the requisite corporate power and authority to execute, deliver and
perform its obligations under this Subscription Agreement and the Notes. The
execution, delivery and performance by the Bank of this Subscription Agreement
and the Notes have been duly authorized by the Bank Board and no further
corporate action on the part of the Bank is required in connection with the
authorization thereof. No filing, consent, or authorization is required by the
Bank, the Bank Board or the Holding Company, as its sole stockholder, with
respect to the Sub Debt Transaction. This Subscription Agreement has been duly
executed and delivered by the Bank and constitutes, and, upon execution and
delivery thereof by the Bank as contemplated herein, the Notes will constitute,
legal, valid and binding obligations of the Bank, enforceable against the Bank
in accordance with their respective terms, except as

 

9

--------------------------------------------------------------------------------

 

such enforceability may be limited by general principles of equity, applicable
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies or as indemnification or
contribution may be limited by the securities laws and public policy relating
thereto.

 

  e) Issuance of Securities. As of the Closing, a number of shares of Common
Stock shall have been duly authorized and reserved for issuance as Warrant
Shares which equals at least the maximum number of shares of Common Stock then
issuable upon exercise of the Warrants issued to the Buyers at Closing. Upon
issuance, the Offered Securities will be free from all preemptive or similar
rights, taxes, Liens or charges with respect to the issue thereof. Upon
issuance, the Warrant Shares will be validly issued, fully paid and
nonassessable and free from all preemptive or similar rights, taxes, Liens or
charges with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. Subject to the accuracy of the
representations and warranties of each Buyer in his, her or its Subscription
Agreement, the offer, sale and issuance of the Offered Securities hereunder is
exempt from registration under the 1933 Act (pursuant to the exemption provided
by Section 4(2) thereof) and all applicable state securities laws.

 

  f) No Defaults or Consents.

 

  i) Neither the execution, delivery or performance of this Subscription
Agreement or the Warrants by the Holding Company, nor the issuance of the
Warrant Shares upon exercise of any Warrants, will (A) conflict with or violate
any provision of the Second Amended and Restated Certificate of Incorporation of
the Holding Company or the Second Amended and Restated Bylaws of the Holding
Company (the “Bylaws”), (B) except as set forth on Schedule 3(f)(i)(B), result
in a breach of, constitute (with or without due notice or lapse of time or both)
a default under, violate, result in the acceleration of, create in any party any
right to accelerate, terminate, modify or cancel, or require any notice,
consent, approval or waiver under, any material Contractual Obligation or any
Requirement of Law material to the operation of the Holding Company or any of
its properties and assets; (C) result in the imposition of any Lien upon any
material properties or assets of the Holding Company, which Lien would
materially detract from the value or materially interfere with the use of such
properties or assets, (D) result in the Holding Company being required to
redeem, repurchase or otherwise acquire any outstanding equity or debt
interests, securities or obligations in the Holding Company or any options or
other rights exercisable for any of same, or (E) cause the accelerated vesting
of any employee stock options or restricted stock awards.

 

  ii)

Neither the execution, delivery or performance of this Subscription Agreement or
the Notes by the Bank will (A) conflict with or violate any provision of the
Bank’s Certificate of Incorporation or its Bylaws (the “Bank Bylaws”),
(B) except as set forth on Schedule 3(f)(ii)(B), result in a breach of,
constitute (with or without due notice or lapse of time or both) a default
under, violate, result in the acceleration of, create in any party any right to
accelerate, terminate, modify or cancel, or require any notice, consent,
approval or waiver under, any material Contractual Obligation or any Requirement
of Law material to the operation of the Bank or any of its properties and

 

10

--------------------------------------------------------------------------------

 

assets; (C) result in the imposition of any Lien upon any material properties or
assets of the Bank, which Lien would materially detract from the value or
materially interfere with the use of such properties or assets, (D) result in
the Bank being required to redeem, repurchase or otherwise acquire any
outstanding equity or debt interests, securities or obligations in the Bank or
any options or other rights exercisable for any of same, or (E) cause the
accelerated vesting of any employee stock options or restricted stock awards.

 

  iii) Except as expressly contemplated hereby or by the Notes or the Warrant,
none of the Holding Company, the Bank or any of the other Subsidiaries is
required to obtain any consent, authorization or approval of, or make any
filing, notification or registration with, any Governmental Authority or any
self-regulatory organization in order for the Holding Company and the Bank to
execute, deliver and perform this Subscription Agreement and to consummate the
transactions contemplated hereby.

 

  g) Deposit Accounts. Depending on their nature and size, the deposit accounts
of the Bank are insured up to the regulatory maximum amount provided by the FDIC
and no proceedings for the modification, termination or revocation of any such
insurance are pending or, to the Knowledge of the Holding Company, threatened or
contemplated.

 

  h) No Restrictions. Except as set forth on Schedule 3(h), neither the Holding
Company nor any of the Subsidiaries is currently prohibited, directly or
indirectly, under any order of the Federal Reserve Board (other than orders,
regulations or policy statements applicable to bank holding companies and their
subsidiaries generally), or any agreement or other instrument to which it is a
party or is subject, from paying any dividends, from making any other
distribution on its capital stock, from repaying any loans or advances or from
transferring any of its properties or assets.

 

  i) Absence of Certain Changes or Events. Since December 31, 2007, (i) there
has not been any Material Adverse Effect or any event, condition, change or
development, or worsening of any existing event, condition, change or
development that would reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect, (ii) the Holding Company and the Subsidiaries
have conducted their respective businesses only in the ordinary course
consistent with past practices, and (iii) neither the Holding Company nor any of
its Subsidiaries has revalued any material assets of the Holding Company or any
Subsidiary resulting in a material impairment charge. Since December 31, 2007,
neither the Holding Company nor any of the Subsidiaries has (i) made or declared
any distribution in cash or in kind to its stockholders, (ii) sold or otherwise
disposed of any material asset outside of the ordinary course of business, or
(iii) except as disclosed in Schedule 3(i)(iii), made or committed to make
capital expenditures in excess of $1,000,000 with respect to any individual
expenditure or in excess of $6,000,000 million for all capital expenditures in
the aggregate. Neither the Holding Company nor any of the Subsidiaries has taken
any steps to seek protection pursuant to any bankruptcy law nor does the Holding
Company have any knowledge or reason to believe that its creditors intend to
initiate involuntary bankruptcy proceedings or any actual knowledge of any fact
which would reasonably lead a creditor to do so. The Holding Company and the
Subsidiaries, individually and on a consolidated basis, are not as of the date
hereof, and after giving effect to the transactions contemplated hereby to occur
at the Closing will not be, Insolvent.

 

11

--------------------------------------------------------------------------------

  j) Governmental Permits, Etc.

 

  i) The Holding Company and the Subsidiaries hold all Company Permits that are
required for the conduct of the businesses of the Holding Company and the
Subsidiaries as currently being conducted, each as amended through the date
hereof, other than such Miscellaneous Permits the absence of which would not
reasonably be expected, individually or in the aggregate to have a Material
Adverse Effect.

 

  ii) The Regulatory Permits are in full force and effect and have not been
pledged or otherwise encumbered, assigned, suspended, modified, conditioned, or
restricted in any material respect, canceled or revoked, and the Holding Company
and each of the Subsidiaries and, to the Knowledge of the Holding Company, each
of their respective executive officers and directors, have operated at all times
in the past five (5) years, and are operating, in compliance in all material
respects with all terms thereof or any renewals thereof applicable to them. To
the Knowledge of the Holding Company, no event has occurred, nor has any notice
been received, with respect to any of the Regulatory Permits which allows or
results in, or after notice or lapse of time or both would reasonably be
expected to result in, revocation, suspension, or termination, modification, or
the imposition of any condition or restriction, thereof or would reasonably be
expected to result in any other material impairment of the rights of the holder
of any such Regulatory Permit.

 

  iii) To the Knowledge of the Holding Company, in the past five (5) years, no
Governmental Authority or self-regulatory organization has initiated any
material proceeding or investigation (other than examinations conducted in the
ordinary course) into the business or operations of the Holding Company or any
Subsidiary, or any executive officer or director thereof, or has instituted any
proceeding seeking to revoke, cancel or limit any Company Permit, and neither
the Holding Company or any Subsidiary, nor any executive officer or director
thereof has received any notice of any unresolved material violation by any
Governmental Authority or self-regulatory organization with respect to any
report or statement relating to any examination of the Holding Company or any
Subsidiary. Without limiting the generality of the foregoing, neither the
Holding Company nor any Subsidiary nor, to the Knowledge of the Holding Company,
any of their respective executive officers or directors or Persons performing
similar duties has been enjoined, indicted, convicted or made the subject of a
disciplinary proceeding, censure, consent decree, memorandum of understanding,
cease and desist or administrative order on account of any violation of any
Requirement of Law applicable to the Holding Company or any of the Subsidiaries.

 

  iv) Neither the Holding Company or any Subsidiary, nor, to the Knowledge of
the Holding Company, any executive officer or director thereof is a party or
subject to any agreement, consent, decree or order or other understanding or
arrangement with, or any directive of any Governmental Authority or
self-regulatory organization which imposes any material restrictions on or
otherwise adversely affects in any material way the conduct of any of the
business of the Holding Company and the Subsidiaries.

 

12

--------------------------------------------------------------------------------

  k) Governmental and Regulatory Proceedings. There is no Action or Proceeding
to which the Holding Company or the Bank is a party pending or, to the Knowledge
of the Holding Company, threatened or contemplated, before any Governmental
Authority, Regulatory Agency or self-regulatory organization (i) that challenges
the validity or propriety of the Sub Debt Transaction or (ii) if determined
adversely to the Holding Company or the Bank would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. To the
Knowledge of the Holding Company, no executive officer, director or employee of
the Holding Company or the Bank is the subject of any Action or Proceeding
involving a claim of material breach of fiduciary duty relating to the Holding
Company or the Bank or is or may be permanently or temporarily enjoined by any
order, judgment or decree of any Governmental Authority or self-regulatory
organization from engaging in or continuing to conduct any of the businesses of
the Holding Company or the Bank. Since January 1, 2006, the Holding Company has
not received a stop order or other order suspending the effectiveness of any
registration statement filed by the Holding Company under the Exchange Act or
the 1933 Act and, to the Knowledge of the Holding Company, the SEC has not
issued any such order since such date. No order, judgment or decree of any
Governmental Authority, Regulatory Agency or self-regulatory organization has
been issued in any Action or Proceeding to which the Holding Company or the Bank
is or was a party that would reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.

 

  l) Holding Company SEC Reports. The Holding Company has timely filed all
forms, reports, schedules, proxy statements, registration statements and other
documents (including all exhibits thereto) required to be filed with the SEC
since January 1, 2006 pursuant to the federal securities laws and the SEC rules
and regulations thereunder, together with all certifications required pursuant
to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) (as they have been
amended since the time of their filing, and including the exhibits thereto,
collectively, the “Company SEC Reports”). The Company SEC Reports (including,
without limitation, any financial statements or schedules included or
incorporated by reference therein) at the time they became effective, in the
case of registration statements, or when filed, in the case of any other Company
SEC Report, complied in all material respects with the applicable requirements
of the 1933 Act and the Exchange Act, as the case may be, and the rules and
regulations of the SEC under all of the foregoing. None of the Company SEC
Reports, including any financial statements or schedules included or
incorporated by reference therein, as of their respective dates, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except as
set forth in Schedule 3(l), none of the Subsidiaries is required to file any
reports, forms or other documents with the SEC. There are no outstanding or
unresolved comments in comment letters received from the SEC staff with respect
to any of the Company SEC Reports.

 

13

--------------------------------------------------------------------------------

  m) Financial Statements. The audited consolidated financial statements
(including the related notes) included in the Company SEC Reports and in the
reports filed by the Holding Company with the Federal Reserve Board, as of their
respective dates, complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC and Federal
Reserve Board with respect thereto, present fairly, in all material respects,
the consolidated financial condition and results of operations, changes in
stockholders’ equity and cash flows of the Holding Company and its Subsidiaries,
at the dates and for the periods indicated, and were prepared in conformity with
generally accepted accounting principles in the United States (“GAAP”) applied
on a consistent basis throughout the periods involved. The unaudited
consolidated financial statements (including the related notes) included in the
Company SEC Reports, as of their respective dates, complied in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, present fairly, in all material
respects, the consolidated financial condition and results of operations,
changes in stockholders’ equity and cash flows of the Holding Company and its
Subsidiaries, at the dates and for the periods indicated, and were prepared in
conformity with GAAP applied on a consistent basis, except that such unaudited
consolidated financial statements may omit statements of changes in financial
position and certain footnote disclosures required by GAAP as permitted by Form
10-Q under the Exchange Act and are subject to normal year-end audit
adjustments. Neither the Holding Company nor any Subsidiary has any Liabilities
or obligations that are of a nature (whether known, unknown, accrued, absolute,
contingent or otherwise and whether due or to become due) that would be required
to be reflected or reserved against on a consolidated balance sheet of the
Holding Company and its Subsidiaries prepared in accordance with GAAP, or in the
notes thereto, other than any Liabilities to the extent (i) reserved against,
reflected or disclosed on the most recent consolidated balance sheet of the
Holding Company and its Subsidiaries contained in the Available Company SEC
Documents, including the notes to financial statements contained therein,
(ii) incurred in the ordinary course of business consistent with past practice
since the date of the most recent financial statements included in the Available
Company SEC Documents, or (iii) that, individually or in the aggregate, have not
had and would not reasonably be expected to have a Material Adverse Effect.

 

  n) Listing Compliance. The Common Stock is listed on the NASDAQ Global Select
Market (the “Nasdaq”) and, to the Knowledge of the Holding Company, there are no
proceedings to revoke or suspend such listing. The Holding Company has taken no
action designed to, or that would reasonably be expected to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or the
listing of the Common Stock on Nasdaq. The Holding Company is in compliance with
the requirements of Nasdaq for continued listing of the Common Stock thereon and
any other Nasdaq listing and maintenance requirements. In the past five
(5) years, trading in the Common Stock has not been suspended by the SEC or
Nasdaq (other than temporary suspensions, in each case during the course of one
trading day, to allow dissemination of material information).

 

  o) Sarbanes-Oxley; Disclosure and Internal Controls.

 

  i) The Holding Company is in compliance in all material respects with all of
the provisions of the Sarbanes-Oxley Act that are applicable to it or any of the
Subsidiaries.

 

14

--------------------------------------------------------------------------------

  ii) The Holding Company maintains a system of disclosure controls and
procedures as defined in Rule 13a-15 under the Exchange Act that are designed to
provide reasonable assurance that information required to be disclosed by the
Holding Company in reports that the Holding Company is required to file under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to the Holding Company’s management, including the
Holding Company’s Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosures. As of
June 30, 2008, to the Knowledge of the Holding Company, such controls and
procedures were effective, in all material respects, to provide such reasonable
assurance.

 

  iii) The Holding Company and its consolidated Subsidiaries have established
and maintained a system of internal control over financial reporting (within the
meaning of Rule 13a-15 under the Exchange Act) (“Internal Control Over Financial
Reporting”). The Holding Company’s certifying officers have evaluated the
effectiveness of the Holding Company’s Internal Control Over Financial Reporting
as of the end of the period covered by the most recently filed annual report on
Form 10-K of the Holding Company under the Exchange Act (the “Evaluation Date”).
The Holding Company presented in such annual report the conclusions of the
certifying officers about the effectiveness of the Holding Company’s Internal
Control Over Financial Reporting based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no changes in the Holding
Company’s Internal Control Over Financial Reporting that have materially
affected, or are reasonably likely to materially affect, the Holding Company’s
Internal Control Over Financial Reporting. The Holding Company has devised and
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that: (A) transactions are executed in accordance with
management’s general or specific authorization; (B) transactions are recorded as
necessary to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets; (C) access to assets is permitted
only in accordance with management’s general or specific authorization; and
(D) the recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

  p) Integration; Other Issuances of Securities. The Holding Company has not
made, nor will the Holding Company make, any offers or sales of any security, or
solicited or will solicit any offers to buy any security under circumstances
that would require registration under the 1933 Act of the issuance of the
Offered Securities to the Buyers.

 

  q)

Tax Matters. Since January 1, 2006, the Holding Company and the Subsidiaries
have made or filed all federal, state and foreign income and all other material
Tax Returns required by any jurisdiction to which they are subject (unless and
only to the extent that the Holding Company or any of the Subsidiaries has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported Taxes) and have paid all Taxes that are material in amount, shown
or determined to be due on such Tax Returns, except those being contested in
good faith, and have set aside on their books provisions reasonably adequate for
the payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. To the Knowledge of the

 

15

--------------------------------------------------------------------------------

 

Holding Company, there are no unpaid Taxes in any material amount claimed to be
due by any Taxing Authority, and to the Knowledge of the Holding Company, there
is no basis for any such claim. Neither the Holding Company nor any Subsidiary
has executed a waiver with respect to the statute of limitations relating to the
assessment or collection of any Tax. Except as disclosed in Schedule 3(q), none
of the Holding Company’s, or any of the Subsidiaries’, Tax Returns is presently
being audited by any Taxing Authority.

 

  r) Title to Assets. Except as set forth on Schedule 3(r), the Holding Company
and the Subsidiaries have good and marketable title in and to all property owned
by them and that is material to their businesses, free and clear of all Liens,
except for Liens reflected in the most recent consolidated balance sheet of the
Holding Company included in the Available Company SEC Documents, or that do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by them. Any material
property and facilities held under lease by the Holding Company and the
Subsidiaries are held under valid, subsisting and enforceable leases concerning
which the Holding Company and the Subsidiaries are in material compliance.

 

  s) Compliance. The Holding Company and the Subsidiaries are not: (i) in
violation of any of their respective Organizational Documents, (ii) in default
under or in violation of (and, to the Knowledge of the Holding Company, no event
has occurred that has not been waived that, with notice or lapse of time or
both, would result in a default by the Holding Company or the Subsidiaries
under), nor has the Holding Company or the Subsidiaries received notice of a
claim that it is in default under or that it is in violation of, any Company
Contract to which it is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (iii) in violation
of any order of any court, arbitrator or Governmental Authority, or (iv) in
violation of any applicable Requirement of Law, and with respect to clauses
(ii), (iii) or (iv) above, other than where such violation or default would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. The Holding Company and each of the Subsidiaries and the conduct
and operation of their respective businesses is and has been in compliance with
each Requirement of Law that affects or relates to this Subscription Agreement,
the Notes or the Warrant or any of the transactions contemplated by such
documents, other than where the failure to be or to have been in compliance
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.

 

  t) Transactions with Affiliates. Since January 1, 2006, all transactions
required to be disclosed by the Holding Company pursuant to Item 404 of
Regulation S-K promulgated under the 1933 Act have been disclosed in an
Available Company SEC Document. Other than the Transactions, no transactions, or
series of related transactions, is currently proposed, by the Holding Company or
any of the Subsidiaries or, to the Knowledge of the Holding Company, by any
other Person, to which the Holding Company or any of the Subsidiaries would be a
participant that would be required to be disclosed under Item 404 of Regulation
S-K promulgated under the 1933 Act if consummated.

 

16

--------------------------------------------------------------------------------

  u) Investment Company. The Holding Company is not, and after giving effect to
the Sub Debt Transaction will not be, an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.

 

  v) No Corrupt Practices. Neither the Holding Company nor any Subsidiary, nor
to the Knowledge of the Holding Company any director, officer, employee, agent
or other Person acting on behalf of the Holding Company or any Subsidiary has,
in the course of his or its actions for, or on behalf of the Holding Company or
any of the Subsidiaries (i) used any corporate funds for any unlawful
contribution gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employees from corporate funds; (iii) violated
or is in violation of in any material respect any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended, or (iv) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.

 

  w) No Brokers. Except as disclosed on Schedule 3(w), no broker, investment
banker or other Person is entitled to any broker’s, finder’s or other similar
fee or commission in connection with the execution and delivery of this
Subscription Agreement or the Offered Securities or the consummation of the Sub
Debt Transaction based upon arrangements made by or on behalf of the Holding
Company or the Bank, and the Companies shall indemnify and hold Subscriber
harmless against any claim for any such fee or commission based on any such
arrangements.

 

  x) Reports. The Holding Company and each of the Subsidiaries have, filed all
reports, forms, correspondence, registrations and statements, together with any
amendments required to be made with respect thereto (“Reports”), that they were
required to file since January 1, 2006 with (i) any Bank Regulatory Authority
and (ii) any other federal, state or foreign governmental or regulatory agency
or authority (the agencies and authorities identified in clauses (i) through
(ii), are, collectively, the “Regulatory Agencies”), and all other reports and
statements required to be filed by them since January 1, 2006, including any
report or statement required to be filed pursuant to the laws, rules or
regulations of the United States, any state, or any Regulatory Agency and have
paid all fees and assessments due and payable in connection therewith, except
where the failure to file such report, registration or statement or to pay such
fees and assessments would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect. Any such Report and any statement
regarding the Holding Company or any Subsidiaries made in any Report filed with
or otherwise submitted to any Regulatory Agency complied in all material
respects with relevant legal requirements, including as to content.

 

4. Covenants.

 

  a)

Form D and Blue Sky. The Holding Company agrees to file a Form D with respect to
the Offered Securities as required under Regulation D and to provide a copy
thereof to Subscriber promptly after such filing. The Holding Company shall, on
or before the Closing Date, take such action, at the Holding Company’s sole
expense, as the Holding Company shall reasonably determine is necessary in order
to obtain an exemption for or

 

17

--------------------------------------------------------------------------------

 

to qualify the Note and the Warrant for sale to Subscriber at the Closing
pursuant to this Subscription Agreement under applicable securities or “Blue
Sky” laws of the states of the United States (or to obtain an exemption from
such qualification) and shall provide evidence of any such action so taken to
Subscriber on or prior to the Closing Date. At the Holding Company’s sole
expense, the Holding Company shall make all filings and reports relating to the
offer and sale of the Offered Securities required under applicable securities or
“Blue Sky” laws of the states of the United States following the Closing Date.

 

  b) Listing. The Company shall promptly secure the listing of all of the
Warrant Shares on Nasdaq (subject to official notice of issuance) and shall use
its reasonable best efforts to maintain such listing of all Warrant Shares from
time to time issuable upon exercise of the Warrants, unless a Majority of
Holders otherwise agrees in writing. Unless a Majority of Holders otherwise
agrees in writing, neither the Holding Company nor any of its Subsidiaries shall
take any action that would be reasonably expected to result in the delisting or
suspension of the Common Stock on Nasdaq and, in the event that the Common Stock
is delisted or suspended from trading on Nasdaq without the prior written
consent of a Majority of Holders, the Holding Company shall use its reasonable
best efforts to cause the Common Stock to be listed and authorized for trading
on a national securities exchange or automated quotation system.

 

  c) Inspection Rights. At any time following the Closing, so long as Subscriber
and its Affiliates hold Notes in the principal amount of at least $12,000,000,
the Bank will permit Subscriber, as well as any agents or representatives of
Subscriber, to inspect, at reasonable hours and upon reasonable notice, the
Bank’s books and records, provided that the Bank shall have the right to require
that Subscriber or its agents or representatives execute and deliver a
confidentiality agreement on customary terms as a condition to any such
inspection.

 

  d) Pro Rata Treatment.

 

  i) All payments on account of principal of or interest on any Notes, fees or
any other obligations owing to or for the account of any one or more of the
Buyers shall be apportioned ratably among the Notes in proportion to the
respective unpaid principal amounts thereof.

 

  ii) Subscriber agrees that if it shall receive any amount hereunder,
applicable to the payment of any of the amounts due under the Notes that exceeds
its ratable share (according to the proportion of (x) the unpaid principal
amount of Notes held by Subscriber at such time to (y) the aggregate unpaid
principal amount of all Notes) of payments on account of such obligations then
or therewith obtained by all the Buyers to which such payments are required to
have been made, such Subscriber shall forthwith pay over to the other Buyers
such excess amount in the proportions necessary to cause the total payments to
be apportioned to the Notes ratably as required in this Section 4(d).

 

  e)

Transfer Agent Instructions. The Holding Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at DTC,
registered in the name of Subscriber or

 

18

--------------------------------------------------------------------------------

 

its nominee(s), for the Warrant Shares in such amounts as specified from time to
time by Subscriber to the Holding Company upon exercise of the Warrant (the
“Irrevocable Transfer Agent Instructions”). The Holding Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 4(e) will be given by the Holding Company to its transfer agent
with respect to the Securities, and that the Securities shall otherwise be
freely transferable on the books and records of the Holding Company, as
applicable, and to the extent provided in this Subscription Agreement and the
Offered Securities. If Subscriber effects a sale, assignment or transfer of the
shares of Common Stock in accordance with Section 2(e), the Holding Company
shall permit the transfer and shall promptly instruct its transfer agent to
issue one or more certificates or credit shares to the applicable balance
accounts at DTC in such name and in such denominations as specified by such
Subscriber to effect such sale, transfer or assignment. In the event that such
sale, assignment or transfer involves Warrant Shares sold, assigned or
transferred pursuant to, and in accordance with the plan of distribution set
forth in, an effective registration statement, as certified by Subscriber, or
pursuant to Rule 144 as set forth in an opinion delivered as required by
Section 2(e), the transfer agent shall issue such Warrant Shares to Subscriber,
assignee or transferee, as the case may be, without any restrictive legend.

 

  f) Use of Proceeds. The net proceeds received by the Holding Company and the
Bank from the issuance and sale of the Offered Securities shall be used to
increase the regulatory capital of the Bank.

 

  g) Stockholder Meeting. The Holding Company shall take all action necessary to
duly call, give notice of, convene and hold a special meeting of stockholders
(the “Stockholder Meeting”) for the purpose of obtaining the Stockholder
Approval (the date such approval is obtained, the “Stockholder Approval Date”)
as promptly as reasonably practicable after the SEC confirms that it has no
further comments on the Proxy Statement (as defined below) or the Holding
Company otherwise determines in good faith that such Proxy Statement will not be
reviewed by the SEC, but in any event no later than the date of the stockholders
meeting to be held in connection with the Preferred Stock Transaction. In the
event that the Holding Company does not obtain the Stockholder Approval at the
Stockholder Meeting, the Holding Company agrees that, upon the request of a
Majority of Holders, it will seek to obtain the Stockholder Approval at any
subsequent meeting of stockholders of the Holding Company until the Stockholder
Approval is obtained. Without limiting the generality of the foregoing, the
Holding Company will comply with the terms of Section 4(h) hereof with respect
to each such meeting of stockholders as if it were the Stockholder Meeting. When
the Stockholder Vote has occurred and/or the Stockholder Approval has been
obtained, the Holding Company shall promptly notify Subscriber thereof, and such
notice shall serve as conclusive evidence that the Stockholder Vote has occurred
for the purposes of determining the exercisability of the Warrants.

 

  h) Proxy Material.

(i) In connection with the Stockholder Meeting, the Holding Company will (A) as
promptly as reasonably practicable after the date of this Agreement prepare and
file with the SEC a proxy statement (as it may be amended or supplemented from
time to time, the

 

19

--------------------------------------------------------------------------------

“Proxy Statement”) related to the consideration of the Stockholder Approval
Matters at the Stockholder Meeting, (B) respond as promptly as reasonably
practicable to any comments received from the SEC with respect to such, (C) as
promptly as reasonably practicable prepare and file any amendments or
supplements necessary to be filed in response to any SEC comments or as
otherwise required by law, (D) mail to its stockholders as promptly as
reasonably practicable the Proxy Statement and all other customary proxy or
other materials for meetings such as the Stockholder Meeting, (E) to the extent
required by applicable law, as promptly as reasonably practicable prepare, file
and distribute to the Holding Company stockholders any supplement or amendment
to the Proxy Statement if any event shall occur which requires such action at
any time prior to the Stockholder Meeting, and (F) otherwise use commercially
reasonable efforts to comply with all requirements of law applicable to any
Stockholder Meeting. Subscriber shall cooperate with the Holding Company in
connection with the preparation of the Proxy Statement and any amendments or
supplements thereto, including promptly furnishing the Holding Company upon
request with any and all information as may be required to be set forth in the
Proxy Statement or any amendments or supplements thereto under applicable law.
The Proxy Statement shall include the recommendation of the Board of Directors
of the Holding Company that stockholders vote in favor of the approval of the
Stockholder Approval Matters at the Stockholder Meeting.

(ii) If, at any time prior to the Stockholder Meeting, any information relating
to the Holding Company or Subscriber or any of their respective Affiliates
should be discovered by the Holding Company or Subscriber which should be set
forth in an amendment or supplement to the Proxy Statement so that the Proxy
Statement shall not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, the party that discovers such information shall promptly
notify the other parties and, to the extent required by applicable law, the
Holding Company shall disseminate an appropriate amendment thereof or supplement
thereto describing such information to the Holding Company’s stockholders.

(iii) The Holding Company agrees that (A) none of the information included or
incorporated by reference in the Proxy Statement or any other document filed
with the SEC in connection with the transactions contemplated by this Agreement
(all such other documents, the “Other Filings”) shall, in the case of the Proxy
Statement, at the date it is first mailed to the Holding Company’s stockholders
or at the time of the Stockholder Meeting or at the time of any amendment or
supplement thereof, or, in the case of any Other Filing, at the date it is first
mailed to the Holding Company’s stockholders or at the date it is first filed
with the SEC, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading, except that no covenant is made by the Holding Company with
respect to statements made or incorporated by reference therein based on
information supplied by the Buyers or any of their Affiliates or representatives
in connection with the preparation of the Proxy Statement or the Other Filings
for inclusion or incorporation by reference therein, and (B) the Proxy Statement
and the Other Filings that are filed by the Holding Company shall comply as to
form in all material respects with the requirements of the Exchange Act.

 

20

--------------------------------------------------------------------------------

(iv) Subscriber covenants that none of the information supplied in writing by or
on behalf of Subscriber expressly for inclusion in the Proxy Statement or the
Other Filings will, in the case of the Proxy Statement, at the date it is first
mailed to the Holding Company’s stockholders or at the time of the Stockholder
Meeting or at the time of any amendment or supplement thereof, or, in the case
of any Other Filing, at the date it is first mailed to the Holding Company’s
stockholders or at the date it is first filed with the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.

 

  i) The Companies and the Buyers shall use commercially reasonable efforts (in
the case of the Companies, after consultation with their independent registered
public accountants and financial advisor) to agree, prior to the Closing, upon
an allocation (for federal income tax purposes and otherwise) to the Notes and
the Warrant of the purchase price paid by each Buyer. A written agreement upon
such an allocation, executed by each of the Companies and a Majority of Holders
shall constitute such agreement of the Companies and Buyers, and such agreement
shall be binding upon Subscriber and each of the other Buyers. If no such
agreement is so executed prior to the Closing, the allocation (for federal
income tax purposes and otherwise) to the Notes and the Warrant of the purchase
price paid by each Buyer shall be determined in good faith by the Audit
Committee of the Board (after consultation with the Companies’ independent
registered public accountants and financial advisor) promptly following the
Closing based upon a good faith determination of the fair market value of the
Notes and the Warrants, and such determination shall be binding upon Subscriber
and each of the other Buyers. In any event, the Holding Company shall promptly
notify Subscriber of such agreement or determination, as applicable.

 

  j) Reasonable Best Efforts; Cooperation. Each party shall use its reasonable
best efforts to satisfy on the timely basis each of the covenants and conditions
to be satisfied by it as provided in Sections 4 and 5 of this Subscription
Agreement. Each party shall refrain from taking any action which would render
any representation or warranty contained in Sections 2 or 3 of this Subscription
Agreement inaccurate in any material respect as of the Closing Date. Each party
shall promptly notify the other of (i) any event or matter that would reasonably
be expected to cause any of its representations or warranties to be untrue in
any material respect as of the Closing Date or that would reasonably be expected
to cause any of the conditions to closing provided in Section 5 not to be
satisfied in the manner contemplated herein, or (ii) any action, suit or
proceeding that shall be instituted or threatened against such party to
restrain, prohibit or otherwise challenge the legality of any of the
transactions contemplated by this Subscription Agreement. The parties shall
cooperate fully with each other and assist each other in defending any lawsuits
or other legal proceedings, whether judicial or administrative, brought against
either party challenging this Subscription Agreement or any of the transactions
contemplated by this Subscription Agreement, including seeking to have any stay
or temporary restraining order entered by any court, Bank Regulatory Authority
or other Governmental Authority vacated or reversed.

 

21

--------------------------------------------------------------------------------

  k) Noncircumvention. The Companies shall not, and shall not permit their
respective Subsidiaries, by amendment of their respective Organizational
Documents or through any reorganization, transfer of assets, consolidation,
merger, scheme of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of the Subscription Agreements, the Notes, or the Warrants, and
will at all times in good faith carry out all of the provisions of the
Subscription Agreements, the Notes and the Warrants.

 

5. Conditions of Sale and Purchase.

 

  a) Conditions to Obligations of the Companies. The obligations of the
Companies hereunder to issue and sell Offered Securities to Subscriber at the
Closing are subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the
Companies’ sole benefit and may be waived by the Companies at any time in their
sole discretion by providing each Buyer with prior written notice thereof:

 

  i) Subscriber shall have deposited its portion of the Purchase Price by wire
transfer of immediately available funds in accordance with the notice given in
pursuant to Section 1(c) of this Subscription Agreement.

 

  ii) No court or other Governmental Authority having jurisdiction over the
Holding Company or the Bank or any Buyer shall have instituted, enacted, issued,
promulgated, enforced or entered any Requirement of Law (whether temporary,
preliminary or permanent) that is then in effect and that (x) has the effect of
making illegal or otherwise prohibiting or invalidating consummation of the Sub
Debt Transaction or any provision of this Subscription Agreement or of any of
the Offered Securities or (y) seeks to restrain, prohibit or invalidate the
consummation of the Sub Debt Transaction or to invalidate any provision of this
Subscription Agreement or of any of the Offered Securities.

 

  iii) Each Buyer shall have performed, satisfied and complied in all material
respects with the covenants and agreements contained in this Subscription
Agreement and required to be performed, satisfied or complied with by such Buyer
at or prior to the Closing.

 

  b) Conditions to Obligations of Subscriber. The obligation of Subscriber
hereunder to purchase the Offered Securities at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for Subscriber’s sole benefit and
may be waived by Subscriber at any time in its sole discretion by providing the
Companies with prior written notice thereof, provided further that Subscriber
agrees that the conditions set forth in clauses (iii), (iv) and (vi) below may
be waived by the Majority of Holders in their discretion on behalf of all Buyers
at any time by providing the Companies with prior written notice thereof:

 

  i) The Bank shall have duly executed and delivered the Notes in such amounts
as are set forth on the signature page of this Subscription Agreement.

 

  ii) The Holding Company shall have duly executed and delivered the Warrants in
such amounts as are set forth on the signature page of this Subscription
Agreement.

 

22

--------------------------------------------------------------------------------

  iii) (A) Each of the representations and warranties of the Companies contained
in Sections 3(a), (b), (c), (d) and (e) of this Subscription Agreement shall be
true and correct in all material respects (except that each of such
representations and warranties that is qualified as to materiality shall be true
and correct in all respects) on and as of the Closing Date as if made on and as
of such date, other than representations and warranties which address matters
only as of a certain date, which shall be true and correct as of such certain
date and (B) the other representations and warranties of the Companies shall be
true and correct on and as of the Closing Date as if made on and as of such
date, other than representations and warranties which address matters only as of
a certain date, which shall be true and correct as of such certain date, except
for such failures to be true and correct as individually or in the aggregate,
did not, and would not reasonably be expected to result in, a Material Adverse
Effect. For purposes of determining the satisfaction of clause (B) of this
condition, the representations and warranties of the Companies shall be deemed
not qualified by any references therein to materiality generally or to a
Material Adverse Effect (or qualifiers similar to the foregoing). The Holding
Company shall have delivered a certificate, executed by duly authorized
executive officers of each of the Holding Company and the Bank and dated as of
the Closing Date, certifying that the condition set forth in this
Section 5(b)(iii) has been satisfied.

 

  iv) The Companies shall have delivered the opinion of Katten Muchin Rosenman
LLP, the Companies’ outside counsel, dated as of the Closing Date, and in
substantially the form of Exhibit B attached hereto.

 

  v) The Preferred Stock Transaction shall have closed.

 

  vi) Since the date of this Subscription Agreement, there shall not have been a
Material Adverse Change.

 

  vii) No court or other Governmental Authority having jurisdiction over the
Holding Company or the Bank or any Buyer shall have instituted, enacted, issued,
promulgated, enforced or entered any Requirement of Law (whether temporary,
preliminary or permanent) that is then in effect and that (x) has the effect of
making illegal or otherwise prohibiting or invalidating consummation of any of
the Sub Debt Transaction or any provision of this Subscription Agreement or any
of the Offered Securities or (y) seeks to restrain, prohibit or invalidate the
consummation of any of the Sub Debt Transaction or to invalidate any provision
of this Subscription Agreement or any of the Offered Securities.

 

  viii) The Holding Company shall have received subscriptions for the purchase
of, and funds shall have been deposited into the Closing Escrow Account
sufficient to pay the aggregate purchase price for, an aggregate of at least
$30,000,000 in principal amount of Notes (including the Notes being purchase by
Subscriber) and, concurrently with the Closing, the Bank shall issue an
aggregate of at least $30,000,000 in principal amount of Notes (including the
Notes being purchased by Subscriber) in connection with the Subscription
Agreements.

 

  ix) Each of the Holding Company and the Bank shall have performed, satisfied
and complied in all material respects each of its respective covenants and
agreements contained in this Subscription Agreement and required to be
performed, satisfied or complied at or prior to the Closing.

 

23

--------------------------------------------------------------------------------

6. Termination.

 

  a) Termination by Mutual Consent. This Subscription Agreement may be
terminated at any time prior to the Closing, by mutual written consent of the
Holding Company and either (i) Subscriber or (ii) a Majority of Holders.

 

  b) Termination by Either Holding Company or Subscribers. This Subscription
Agreement may be terminated by either the Holding Company or Subscriber at any
time prior to Closing: if the Closing has not occurred on or before December 31,
2008 (the “Outside Date”); provided, however, that the right to terminate this
Subscription Agreement under this clause will not be available to any party to
this Subscription Agreement whose failure to fulfill any of its obligations
under this Subscription Agreement has been a principal cause of, or resulted in,
the failure of the Closing to have occurred by such date or who otherwise has
breached an obligation under this Subscription Agreement.

 

  c) Effect of Termination. In the event that this Subscription Agreement shall
be terminated pursuant to this Section 6, all further obligations of the parties
under this Subscription Agreement shall terminate without further liability of
any party to another. A termination under this Section 6 shall not relieve any
party of any liability for a breach of, or for any misrepresentation under this
Subscription Agreement, or be deemed to constitute a waiver of any available
remedy (including specific performance if available) for any such breach or
misrepresentation. Nothing in this Section 6(c) shall relieve either party to
this Subscription Agreement of liability for a breach of a covenant or
obligation under this Subscription Agreement prior to the Closing.

 

7. Miscellaneous.

 

  a)

Subject to the terms of this Section 7(a), Subscriber hereby agrees that the
affirmative approval of a Majority of Holders shall have full power and
authority to: (i) waive any of the conditions set forth in clauses (iii),
(iv) or (vi) of Section 5(b) hereof; and (ii) amend or modify any of the
provisions of the Subscription Agreements, the Notes or the Warrants; provided,
however, that prior to the Closing any such amendment or modification pursuant
to this clause (ii) that (A) changes the purchase price, maturity date or
interest rate of the Notes, or the exercise price, number of Warrant Shares or
term of the Warrants, or (B) materially and adversely affects any other
significant rights of Subscriber under this Subscription Agreement or any of the
Offered Securities, shall require the written consent of Subscriber (it being
understood and agreed that the application of any provision of this Subscription
Agreement or the Offered Securities in accordance with its terms shall not be
deemed an amendment or modification for purposes of this provision). For the
avoidance of doubt, the foregoing sentence does not grant, and shall not be
deemed to grant, any power or authority to Buyers representing the Majority of
Holders or any other Person to exercise, waive or take other action with respect
to rights provided to Subscriber after the Closing pursuant to and in accordance
with any of the Offered Securities other than as set forth in the Offered
Securities. Each party hereto acknowledges that this Section 7(a) is intended to
promote the efficient negotiation and handling of matters arising under or in
connection with this Subscription

 

24

--------------------------------------------------------------------------------

 

Agreement and the Closing pursuant to this Section 7(a). The Holding Company
shall be entitled to rely upon, without independent investigation, any act,
notice, instruction or communication from Buyers representing the Majority of
Holders on behalf of all Buyers consistent with this Section 7(a) and shall not
be liable in any manner whatsoever for any action taken or not taken in reliance
upon the actions taken or not taken or communications or writings given or
executed by Buyers representing the Majority of Holders in accordance with this
Section 7(a). Subject to the provisions of this Section 7(a), Subscriber hereby
agrees that Buyers representing the Majority of Holders will have full power and
authority in Subscriber’s name, place and stead, to execute, certify,
acknowledge, deliver, file and record all agreements, certificates, instruments
and other documents and any amendment thereto, and take any other action which
Buyers representing the Majority of Holders deem necessary or appropriate in
connection with the power and authority granted under this Section 7(a). All
actions, decisions and instructions of Buyers representing the Majority of
Holders in accordance with the power and authority granted under the terms of
this Section 7(a) shall be conclusive and binding upon all Buyers and shall be
deemed authorized, approved, ratified and confirmed by Subscriber, having the
same force and effect as if performed pursuant to the direct authorization of
Subscriber. The provisions of this Section 7(a) shall be binding upon the
executors, heirs, legal representatives, personal representatives, successor
trustees, and successors of Subscriber, and any references in this Subscription
Agreement to Subscriber shall mean and include the successors to Subscriber’s
rights hereunder, whether pursuant to testamentary disposition, the laws of
descent and distribution or otherwise. No Buyer shall be liable to any other
Buyer by reason of any action taken by, or failure to act of, a Majority of
Holders in connection with this Subscription Agreement or any of the Offered
Securities.

 

  b) Subscriber understands the meaning of the representations and warranties
contained herein and understands and acknowledges that the Companies are relying
upon the representations and warranties of Subscriber contained in this
Subscription Agreement in determining whether the offering described herein is
eligible for exemption from the registration requirements contained in the 1933
Act and in any applicable state securities law and in determining whether to
accept the subscriptions tendered hereby. Subscriber hereby agrees to indemnify
and hold harmless each Company and its respective officers, directors,
employees, representatives, advisors and agents, from and against any and all
losses, damages or liabilities (including without limitation reasonable
attorneys’ fees and costs) due to or arising out of a breach of any
representation or warranty of Subscriber set forth in this Subscription
Agreement.

 

  c) In the event that this Subscription Agreement is accepted, Subscriber
agrees that the representations, warranties, acknowledgments and agreements made
by Subscriber herein shall survive such acceptance. If there is more than one
signatory hereto, the representations, warranties, acknowledgments, agreements
and indemnities of Subscriber are made jointly and severally.

 

  d)

The representations, warranties, covenants and agreements of the Companies set
forth in this Subscription Agreement, the Notes, the Warrant or any other
exhibit, schedule, certificate or instrument attached or delivered pursuant
hereto or thereto (except covenants and agreements which are expressly required
to be performed and are

 

25

--------------------------------------------------------------------------------

 

performed in full on or prior to the Closing Date) shall survive the Closing and
the consummation of the transactions contemplated by this Subscription Agreement
(i) in the case of representations and warranties other than pursuant to
Sections 3(a), (b), (c), (d) and (e) of this Subscription Agreement (which shall
survive indefinitely), for a period ending on the last to occur of (A) the date
six months after Stockholder Approval is obtained, (B) June 30, 2009, and
(C) the date 60 days after the filing by the Holding Company of its Form 10-K
for the year ending December 31, 2008 including audited financial statements for
such fiscal year, and (ii) in the case of covenants and agreements, for a period
ending when no Offered Securities are outstanding. Notwithstanding anything to
the contrary in the previous sentence, any claim for indemnification hereunder
asserted in writing on or before the applicable deadline described in the
preceding sentence shall survive, and the representation, warranty, covenant
and/or agreement referenced in such claim shall survive for purposes of such
claim, until finally resolved or judicially determined. Subscriber agrees that
any claim by the Buyers with respect to any breach of any such representations,
warranties, covenants and/or agreements of either or both of the Companies may
only be made by a Majority of Holders on behalf of all Buyers, and the amount,
net of fees and expenses reasonably incurred in connection with the making,
pursuing and resolution of such claim, of any recovery pursuant thereto shall be
shared ratably among all of the Buyers. Notwithstanding anything to the contrary
contained herein or in the Notes or the Warrant, the rights and benefits
provided under this Section 7(d) with respect to any breach of a representation
or warranty shall not be assignable by Subscriber, and no Person other than
Subscriber shall have any rights or remedies with respect to a breach of a
representation or warranty hereunder.

 

  e) Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Subscription Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:

If to the Holding Company or the Bank:

 

Taylor Capital Group, Inc. 9550 West Higgins Road Rosemont, Illinois 60018
Telephone:    (847) 653-7978 Facsimile:    (847) 653-7890 Attention:    Mr.
Bruce W. Taylor

With a copy (for informational purposes only) to:

 

Katten Muchin Rosenman LLP 525 West Monroe Street Chicago, Illinois 60661
Telephone:    (312) 902-5200 Facsimile:    (312) 902-1061 Attention:    Jeffrey
R. Patt, Esq.

 

26

--------------------------------------------------------------------------------

If to Subscriber, to its address and facsimile number set forth on the signature
page to this Subscription Agreement, with a copy to Subscriber’s counsel as set
forth on the signature page to this Subscription Agreement, or to such other
address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party
five (5) Business Days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by an
overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or deposit with an overnight courier service in accordance
with clause (A), (B) or (C) above, respectively.

 

  f) Subscriber agrees to notify the Companies promptly of any changes in the
information contained in this Subscription Agreement that occur after the date
hereof but prior to acceptance hereof by the Companies.

 

  g) Subscriber agrees not to transfer or assign any interest in the Securities
to the extent expressly prohibited herein or therein.

 

  h) This Subscription Agreement and the representations and warranties
contained herein shall be binding upon the heirs, executors, administrators and
other successors of Subscriber and shall inure to the benefit of and be
enforceable by each Company and its respective successors and assigns. This
Subscription Agreement does not create any rights enforceable by any person not
a party to this Subscription Agreement.

 

  i) This Subscription Agreement shall be construed in accordance with the laws
of the State of Illinois without regard to conflict of laws principles. The
parties hereto irrevocably consent to the jurisdiction of the courts of the
State of Illinois located in the City of Chicago and of any federal court
located in the City of Chicago, State of Illinois in connection with any action
or proceeding arising out of or relating to this Subscription Agreement, any
document or instrument delivered pursuant to, in connection with or
simultaneously with this Subscription Agreement, or a breach of this
Subscription Agreement or any such document or instrument.

 

  j) This Subscription Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

  k) This Subscription Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof, may be amended only by
a writing executed by all of the parties hereto, and supersede any and all prior
agreements and understandings between the parties hereto with respect to the
subject matter hereof.

 

27

--------------------------------------------------------------------------------

SUBSCRIBER SIGNATURE PAGE AND QUESTIONNAIRE

 

1. NAME OF SUBSCRIBER:

(please print)

 

 

    

Date:                      ,

2008

    

 

If Joint Ownership, check one:   If fiduciary, partnership or corporation, etc.,
check one:     Joint Tenants with        Trust         Right of Survivorship    
   Estate     Tenants in Common        Corporation     Community Property       
Partnership          Limited Liability Company          Power of Attorney      
   Uniform Gift to Minors Act Custodian          Individual Retirement Account  
     Other:                                      
                                    

 

 

 

 

 

 

Signature of Individual

Subscriber

 

Signature of Joint Investor (if any)

(All joint owners must sign)

  If Subscriber is an Entity,

Name of Entity

    By:   

 

    Title:   

 

 

2. SUBSCRIBER HEREBY SUBSCRIBES TO INVEST $         IN THE NOTES FOR WHICH
SUBSCRIBER ALSO WILL RECEIVE WARRANTS TO PURCHASE                      SHARES OF
COMMON STOCK OF THE HOLDING COMPANY

 

28

--------------------------------------------------------------------------------

3. ADDRESS:

                                       
                                         
                                         
                                         
                                         
                                              

                                       
                                         
                                         
                                         
                                         
                                              

With copies to:

                                       
                                         
                                         
                                         
                                         
                                              

                                       
                                         
                                         
                                         
                                         
                                              

 

4. TELEPHONE:

 

Office:   

 

   Home:   

 

  

 

5.      TAXPAYER IDENTIFICATION NUMBER OR SOCIAL SECURITY NUMBER:

  

 

        

 

29

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned accepts this subscription and agrees to all
of the terms and conditions set forth above as of the      day of September,
2008.

 

COLE TAYLOR BANK By:  

 

  Mark A. Hoppe, Chief Executive Officer TAYLOR CAPITAL GROUP, INC. By:  

 

  Bruce W. Taylor, Chief Executive Officer

 

30

--------------------------------------------------------------------------------

EXHIBITS

 

Exhibit A    Defined Terms Exhibit B    Form of Company Counsel Opinion

 

31

--------------------------------------------------------------------------------

EXHIBIT A

DEFINED TERMS

“1933 Act” has the meaning set forth in Section 2(e).

“Action or Proceeding” means any suit, action, proceeding (including any
compliance, enforcement or disciplinary proceeding), arbitration, formal or
informal inquiry, audit, inspection, investigation or formal order of
investigation of complaint.

“Affiliate” has the meaning set forth in Rule 12b-2 under the Exchange Act as in
effect as on the date hereof.

“Available Company SEC Documents” has the meaning set forth in the preamble to
Section 4.

“Bank” has the meaning set forth in Section 1(a).

“Bank Board” means the board of directors of the Bank.

“Bank Bylaws” has the meaning set in Section 3(f)(ii).

“Board” means the board of directors of the Holding Company.

“Business Day” means any day other than a Saturday or Sunday, a legal holiday or
any other day on which the SEC is closed.

“Business Entity” means any corporation, partnership, limited liability company,
joint venture, association, partnership, business trust or other business
entity.

“Buyer” means, prior to the Closing, each Person that has subscribed to purchase
any Notes and, on and after the Closing, each Person that owns any Notes.

“Bylaws” has the meaning set forth in Section 3(f)(i).

“Closing” has the meaning set forth in Section 1(d).

“Closing Date” has the meaning set forth in Section 1(d).

“Common Stock” has the meaning set forth in Section 1(a).

“Companies” has the meaning set forth in Section 1(a).

“Company 2008 SEC Filings” has the meaning set forth in Section 2(b).

“Company Permits” means all Regulatory Permits and all Miscellaneous Permits.

“Company SEC Reports” has the meaning set forth in Section 3(h).

“Contractual Obligation” means, as to any Person, any obligation arising out of
any indenture, mortgage, deed of trust, contract, agreement, insurance policy,
instrument or other undertaking to which such Person is a party or by which it
or any of its property is bound (including, without limitation, any debt
security issued by such Person).

--------------------------------------------------------------------------------

“Convertible Securities” means securities or obligations that are convertible
into or exchangeable for shares of Capital Stock.

“Designated Preferred” has the meaning set forth in Section 1(b).

“Evaluation Date” has the meaning set forth in Section 3(k)(iii).

“Exchange Act” has the meaning set forth in Section 2(b).

“GAAP” has the meaning set forth in Section 3(i).

“Governmental Authority” means any government or political subdivision or
department thereof, any governmental or regulatory body, commission, board,
bureau, agency or instrumentality, or any court or arbitrator or alternative
dispute resolution body, in each case whether federal, state, local, foreign or
supranational.

“Holding Company” has the meaning set forth in Section 1(a).

“Internal Control Over Financial Reporting” has the meaning set forth in
Section 3(k)(iii).

“Knowledge of the Holding Company” means the actual knowledge of any Person
serving on the senior management team of the Holding Company or the Bank
(including the Chairman and Chief Executive Officer, President and Chief
Financial Officer), after reasonable inquiry.

“Liens” means any security interests, liens, claims, pledges, mortgages,
options, rights of first refusal, agreements, limitations on voting rights,
charges, easements, servitudes, encumbrances and other restrictions of any
nature whatsoever.

“Majority of Holders” means (i) on any date during the period from the date
hereof through the Closing, the holders of at least a majority in interest of
the Buyers as represented by the principal amount of Notes for which such Buyers
have subscribed, and (ii) on any date after the Closing, the holders of at least
a majority of the principal amount of Notes on such date or, to the extent the
matter relates solely to the Warrants, the holders of at least a majority in
interest of the Warrants on such date as represented by the number of underlying
Warrant Shares.

“Material Adverse Change” or “Material Adverse Effect” means any fact, event,
change, effect, condition, factor or circumstance that individually or in the
aggregate with all other facts, changes, events, effects, conditions, factors
and circumstances (i) is or is reasonably likely to be materially adverse to the
business, financial condition, results of operations, assets, or liabilities of
the Holding Company and its Subsidiaries taken as a whole or (ii) prevents in
any material respect the Holding Company’s or the Bank’s ability to perform its
obligations under this Subscription Agreement and the Offered Securities;
provided that a “Material Adverse Effect” or “Material Adverse Change” shall not
be deemed to include any effects to the extent relating to or resulting from
(A) changes in accounting principles generally accepted in the United States or
regulatory accounting requirements applicable to banks or their holding
companies generally (except in each such case for any changes which
disproportionately affect the business, financial condition, results of
operations, assets, or liabilities of the Holding Company and its Subsidiaries,
taken as a whole, as compared to other industry participants); (B) changes in
laws, rules or regulations of general applicability or interpretations thereof
(except in each such case for any changes which disproportionately affect the
business, financial condition, results of operations, assets, or liabilities of
the Holding Company and its Subsidiaries, taken as a whole, as compared to other
industry participants), (C) changes in general economic or market

 

33

--------------------------------------------------------------------------------

conditions in the United States, including the credit and securities markets,
(D) changes in general economic or market conditions in the regions in which the
Holding Company and/or its Subsidiaries operate or conduct business or in the
markets in which the Holding Company and/or its Subsidiaries conduct lending
operations, including the commercial and residential real estate lending markets
in the Chicago area (except in each such case for any changes which
disproportionately affect the business, financial condition, results of
operations, assets, or liabilities of the Holding Company and its Subsidiaries,
taken as a whole, as compared to other industry participants), (E) any changes
in the market price or trading volume of the Holding Company’s securities (but
not any effect, event, development or change underlying such decrease to the
extent that such effect, event, development or change otherwise would constitute
a Material Adverse Effect), (F) the announcement or disclosure of the sale of
the Offered Securities, (G) any action taken by the Holding Company or the Bank
that is expressly required by the terms of this Subscription Agreement, (H) the
failure of the Bank to remain “well capitalized” under applicable capital
guidelines for banks as of September 30, 2008 prior to giving effect to the sale
of Series A Preferred or Designated Preferred, as applicable; provided, however
that this exception (H) shall not apply in the event that (i) the Bank has
publicly disclosed that it is not “well-capitalized” prior to the Closing Date
or (ii) the Bank would not be “well capitalized” after giving effect to this
Transaction, the Preferred Stock Transaction and the application of the net
proceeds therefrom, or (I) the failure of the Holding Company to remain “well
capitalized” under applicable capital guidelines for bank holding companies as
of September 30, 2008 prior to giving effect to the sale of Series A Preferred
or Designated Preferred, as applicable.

“Miscellaneous Permits” means all licenses, permits, certificates, franchises,
ordinances, registrations, qualifications, and other rights, privileges,
applications or authorizations filed with, granted or issued by any Governmental
Authority other than Regulatory Permits.

“Nasdaq” has the meaning set forth in Section 3(j).

“Notes” has the meaning set forth in Section 1(a).

“Offered Securities” has the meaning set forth in Section 1(a).

“Organizational Documents” means, as to any Person (other than an individual),
the articles or certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation, limited liability
company operating agreement, and all other organizational documents of such
Person, its certificate or articles of incorporation, by-laws and other
organizational documents.

“Other Filings” has the meaning set forth in Section 4(h)(iii).

“Outside Date” has the meaning set forth in Section 6(b).

“Person” means any individual, Business Entity, unincorporated association or
Governmental Authority.

“Preferred Shares” has the meaning set forth in Section 1(b).

“Preferred Stock Transaction” has the meaning set forth in Section 1(b).

“Proxy Statement” has the meaning set forth in Section 4(h)(i).

“Purchase Price” has the meaning set forth in Section 1(c).

 

34

--------------------------------------------------------------------------------

“Regulatory Agencies” has the meaning set forth in Section 3(q).

“Regulatory Permits” means all licenses, permits, certificates, franchises,
ordinances, registrations, qualifications, and other rights, privileges,
applications or authorizations filed with, granted or issued by the SEC, any
Bank Regulatory Authority, any state securities or blue sky regulatory authority
in which the Holding Company or the Bank maintains offices, or any
self-regulatory organization.

“Reports” has the meaning set forth in Section 3(q).

“Representatives” has the meaning set forth in Section 4(k).

“Requirement of Law” means any judgment, order (whether temporary, preliminary
or permanent), writ, injunction, decree, statute, rule, regulation, notice, law
or ordinance and shall also include any rules, regulations and interpretations
of any applicable self -regulatory organizations.

“Restated Charter” has the meaning set forth in Section 3(c)(ii).

“Sarbanes-Oxley Act” has the meaning set forth in Section 3(h).

“Securities” has the meaning set forth in Section 1(a).

“Securities Purchase Agreement” has the meaning set forth in Section 1(b).

“Stock Purchase Rights” has the meaning set forth in Section 3(c)(iii).

“Stockholder Approval” has the meaning set forth in the Warrant.

“Stockholder Approval Date” has the meaning set forth in Section 4(g).

“Stockholder Approval Matters” has the meaning set forth in the Warrant.

“Stockholder Meeting” has the meaning set forth in Section 4(g).

“Stockholder Vote” has the meaning set forth in the Warrant.

“Sub Debt Transaction” has the meaning set forth in Section 1(d).

“Subscriber” has the meaning set forth in Section 1(a).

“Subscription Agreement” has the meaning set forth in Section 1(a).

“Subscription Agreements” means this Subscription Agreement and the other
Subscription Agreements entered into by the Holding Company, the Bank and the
Buyers in connection with the Sub Debt Transaction.

“Subscription Materials” has the meaning set forth in Section 2(a).

 

35

--------------------------------------------------------------------------------

“Subsidiaries” means the subsidiaries of the Holding Company set forth on
Schedule 3(a) which includes any Business Entity of which the Holding Company
(either alone or through or together with one or more other Subsidiaries)
(x) owns, directly or indirectly, more than 20% of the stock or other equity
interests the holders of which are generally entitled to vote for the election
of the board of directors or other governing body of such Business Entity,
(y) is a general partner, managing member, trustee or other Person performing
similar functions or (z) has control (as defined in Rule 405 under the 1933
Act).

“Tax” means any tax, governmental fee or other like assessment or charge of any
kind whatsoever (including, but not limited to, any tax imposed under Subtitle A
of the Internal Revenue Code of 1986, as amended, and any net income,
alternative or add-on minimum tax, gross income, gross receipts, sale, bulk
sales, use, real property, personal property, ad valorem, value added, transfer,
franchise, profits, license, withholding tax on amounts paid, withholding,
payroll, employment, excise severance, stamp, capital stock, occupation,
property, environmental or windfall profits tax, premium, custom, duty or other
tax or assessment), together with any interest, penalty, addition to tax or
additional amount thereto, imposed by any Governmental Authority.

“Taxing Authority” means any Governmental Authority (domestic or foreign)
responsible for the imposition of any Tax.

“Tax Return” means any return, report or similar statement (including the
attached schedules) required to be filed with respect to any Tax, including,
without limitation, any information return, claim for refund, amended return or
declaration of estimated Tax.

“Warrant” has the meaning set forth in Section 1(a).

“Warrants” means the Warrant and the other warrants to purchase shares of Common
Stock issued in the Sub Debt Transaction.

“Warrant Shares” has the meaning set forth in Section 1(a).

 

36

--------------------------------------------------------------------------------

THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER THE SECURITIES ACT OF ANY STATE. EXCEPT AS OTHERWISE
PROVIDED IN THE SUBSCRIPTION AGREEMENT REFERENCED IN THIS SUBORDINATED NOTE,
THIS SUBORDINATED NOTE MAY NOT BE OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THIS SUBORDINATED NOTE UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND SUCH STATE OR OTHER LAWS AS MAY BE APPLICABLE, OR
RECEIPT BY COLE TAYLOR BANK OF AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY
AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE
CORPORATION. THIS OBLIGATION IS SUBORDINATED TO THE CLAIMS OF THE DEPOSITORS AND
THE GENERAL AND SECURED CREDITORS OF COLE TAYLOR BANK AND IS NOT SECURED.

10% SUBORDINATED NOTE DUE 2016

 

$[        ]    September [    ], 2008

FOR VALUE RECEIVED, the undersigned, Cole Taylor Bank (the “Bank”), hereby
promises to pay to the order of [                    ], (“Purchaser”), at its
offices at              (or at such other place as the holder may from time to
time designate) the principal sum of [         ($        )] on September     ,
2016 (the “Maturity Date”) or any earlier date of acceleration of the Maturity
Date, and to pay interest on the outstanding principal amount of this 10%
Subordinated Note Due 2016 (this “Note”) from September     , 2008, quarterly on
the fifteenth day of the last month of each calendar quarter, commencing on
December 15, 2008 (each, an “Interest Payment Date”), at a rate per annum of 10%
prior to the Maturity Date and, if the outstanding principal amount of this Note
is not paid in full on the Maturity Date, at a rate equal to 15% per annum on
and after the Maturity Date until the principal hereof shall have been paid or
duly provided for. Unless expressly prohibited by applicable law, any accrued
interest that is not paid when due shall bear interest until paid in full at a
rate equal to 10% per annum prior to the Maturity Date and at a rate equal to
15% per annum on and after the Maturity Date.

This Note is the Note referred to in the Subscription Agreement (as may be
amended, modified, or restated from time to time), dated                     ,
by and among the Bank, Taylor Capital Group, Inc. and Purchaser (the
“Subscription Agreement”). All of the other 10% Subordinated Notes due 2016 of
the Bank of even date herewith (as may be amended, modified or restated from
time to time) are collectively referred to herein as the “Other Notes,” and this
Note and the Other Notes are collectively referred to herein as the “Notes.”
This Subscription Agreement and the Subscription Agreements with respect to the
Other Notes are collectively referred to herein as the “Subscription
Agreements”. Capitalized terms used in this Note are defined in the Subscription
Agreement, unless otherwise expressly stated herein. This Note is entitled to
the benefits of the Subscription Agreement and is subject to all of the
agreements,

--------------------------------------------------------------------------------

terms and conditions contained therein, all of which are incorporated herein by
this reference. This Note may not be prepaid at any time prior to the third
anniversary of the date of this Note. This Note may be prepaid, in whole or in
part, without premium or penalty, at any time from and after the third
anniversary of the date of this Note on the following terms and conditions:
(a) the Bank shall give the holder at least three Business Days’ prior written
notice of its intent to make each prepayment; and (b) each prepayment shall be
made in immediately available funds and shall be made by paying the principal
amount to be prepaid, together with unpaid accrued interest thereon to the date
of prepayment. Notwithstanding the foregoing, the Bank may not make any
prepayment of this Note unless (i) all accrued interest that is then due and
payable under the Notes shall have been paid in full, (ii) the Bank
simultaneously prepays the same percentage of the outstanding principal amount
of each Other Note, and (iii) the Bank shall have received the prior written
approval of the Board of Governors of the Federal Reserve System or its
designee, or any successor thereto (the “Federal Reserve Board”), if required.

Interest on the principal amount of this Note from time to time outstanding
shall be computed on the basis of the actual number of days elapsed over a
360-day year, consisting of twelve (12) 30-day months. In no event, however,
shall interest exceed the maximum rate permitted by law.

In the event the Bank can pay some, but not all, of the aggregate interest
payable on the outstanding Notes on any Interest Payment Date, or of the
aggregate outstanding principal of the Notes on the Maturity Date, or of any
fees or other obligations payable under the Notes on the due date therefor, the
Bank shall apportion the aggregate payment made by it on such Interest Payment
Date, Maturity Date or other due date ratably among the Notes in proportion to
the respective outstanding principal balances thereof; provided that the
foregoing shall not affect any right of the holder of this Note to receive
payment in full of such interest, principal or other amount on such Interest
Payment Date, Maturity Date or other due date, as the case may be, or otherwise
limit any rights and remedies of the holder of this Note with respect thereto.

Any of the following events shall represent an event of default under this Note
(each, an “Event of Default”): (i) a court or administrative or governmental
agency or body with proper jurisdiction to do so shall enter a decree or order
for the appointment of the Federal Deposit Insurance Corporation (the “FDIC”),
the Illinois Department of Financial and Professional Regulation (the “DFPR”),
any successor agency to the FDIC or the DFPR, or any other governmental agency
or body with proper jurisdiction, as applicable, as receiver of the Bank;
(ii) the Bank shall consent to the appointment of the FDIC, the DFPR, any
successor agency to the FDIC or the DFPR, or any other governmental agency or
body with proper jurisdiction, as applicable, as receiver for it; (iii) the Bank
breaches the Dividend Covenant or the Organic Change Covenant (each as defined
below); (iv) the Bank fails to pay, when due, any principal of this Note or
fails to pay any interest due on this Note within five (5) business days of the
Interest Payment Date applicable thereto (a “Payment Default”); or (v) the Bank
shall have failed to keep or perform any of its other material agreements,
undertakings, obligations or covenants under the Note or the Subscription
Agreements in any material respect and such failure continues for a period of
thirty (30) days after notice thereof executed by the holders of Notes
representing at least a majority of the principal amount then outstanding under
all of the Notes (a “Majority of Holders”).

--------------------------------------------------------------------------------

Upon the occurrence of an Event of Default described in subsection (i) or
(ii) of the immediately preceding paragraph, the principal of, interest accrued
on, and other obligations payable under this Note, will immediately become due
and payable, without presentment, demand, protest or notice of any kind.
Notwithstanding anything to the contrary herein, other than the occurrence of an
Event of Default described in subsection (i) or (ii) of the immediately
preceding paragraph, as long as this Note is deemed to be Tier 2 Capital (or the
equivalent) of the Bank under the applicable rules and regulations promulgated
by the Federal Reserve Board (except to the extent not so deemed due to the
limitation imposed by the second sentence of 12 C.F.R. §250.166(e)(1), which
limits the capital treatment of subordinated debt during the five years
immediately preceding the maturity date of the subordinated debt), there is no
right of acceleration for any default or Event of Default, including a default
in the payment of principal or interest or the performance of any other covenant
or obligation by the Bank, under this Note or the Subscription Agreement. If the
Bank receives a written notification from the Federal Reserve Board that the
indebtedness evidenced by the Notes no longer constitutes Tier 2 Capital of the
Bank (the “Federal Reserve Notice”), other than due to the limitation imposed by
the second sentence of 12 C.F.R. §250.166(e)(1), which limits the capital
treatment of subordinated debt during the five years immediately preceding the
maturity date of the subordinated debt, the Bank shall immediately notify the
holder of this Note. At any time after receipt of the Federal Reserve Notice,
and so long as the determination set forth in such Federal Reserve Notice
remains in effect, if any Event of Default shall occur hereunder and be
continuing, then (x) if such Event Default is a Payment Default, the holder of
this Note may declare this Note and any amounts due to the holder of this Note
hereunder immediately due and payable, whereupon this Note and such amounts
payable hereunder shall immediately become due and payable, and (y) in the case
of any other Event of Default, a Majority of Holders may declare the Notes and
any amounts due to the holders of the Notes hereunder or thereunder immediately
due and payable, whereupon the Notes and such amounts payable hereunder or
thereunder shall immediately become due and payable, but in each case under
clause (x) or (y), without presentment, demand, protest or notice of any kind.
Upon the occurrence of an Event of Default, it is specifically understood and
agreed that, notwithstanding the curing of such Event of Default, the Bank shall
not be released from any of its covenants hereunder unless and until this Note
is paid in full. Notwithstanding the foregoing, nothing herein shall limit the
rights of the holder of this Note to exercise any and all remedies available to
such holder under applicable law; provided, however, that, except in connection
with a Payment Default, no action may be initiated to enforce the rights of the
holder of this Note pursuant hereto or under the Subscription Agreement without
the prior written consent of a Majority of Holders.

If the Bank fails to make any principal or interest payment when and as required
hereby, the Bank shall not, until such principal or interest payment has been
made, (i) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any of its equity securities, (ii) make loans or advances to the Company,
(iii) make any payments of interest, principal or premium on, or repay,
repurchase or redeem any indebtedness of the Bank payable to the Company or
(iv) purchase, redeem or otherwise acquire, directly or indirectly, any of its
equity securities, in each case without the consent of a Majority of Holders
(such negative covenant, the “Dividend Covenant”).

This Note is a debt of the Bank only and is not an obligation of Taylor Capital
Group, Inc.

--------------------------------------------------------------------------------

The indebtedness of the Bank evidenced by this Note, including the principal,
interest and premium, if any, is not secured by any assets or commitments of the
Bank, and until such time as the Bank receives a Federal Reserve Notice, the
indebtedness evidenced by this Note shall be subordinated and junior in right of
payment to the Bank’s obligations to the general creditors and depositors of the
Bank, and upon dissolution or liquidation of the Bank, no payment of principal
or interest shall be due and payable until all general creditors and depositors
of the Bank shall have been paid in full. Purchaser and each other holder of
this Note, by the acceptance hereof, agree to be bound by the foregoing
provisions.

Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Bank’s assets to another Person or other
transaction that is effected in such a way that holders of all of the common
equity of the Bank are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for such
common equity is referred to herein as an “Organic Change.” Prior to the
consummation of any (i) sale of all or substantially all of the Bank’s assets to
an acquiring Person or (ii) other Organic Change following which the Bank is not
a surviving entity, the Bank shall secure from the Person purchasing such assets
or the successor resulting from such Organic Change (in each case, the
“Acquiring Entity”) a written agreement, in form and substance satisfactory to a
Majority of Holders, to deliver to the holder of this Note, in exchange for this
Note, a security of the Acquiring Entity evidenced by a written instrument
substantially similar in form and substance to this Note (such covenant, the
“Organic Change Covenant”).

The written consent of the Bank and a Majority of Holders shall be required for
any amendment to the Notes (including this Note), and upon receipt of such
consent, each Note (including this Note) shall be deemed amended thereby. No
such amendment shall be effective except to the extent it applies on an
equivalent basis to all of the Notes. No consideration shall be offered or paid
to any holder of the Notes to amend or consent to an amendment or other
modification of any provision of the Notes unless the same consideration is
offered to all of the holders of the Notes.

The holder of this Note may assign or transfer some or all of its rights
hereunder, subject to compliance with the provisions of Section 2(e) of the
Subscription Agreement, without the consent of the Bank. The holder of this Note
shall promptly provide notice to the Bank of the name and address of the
assignee or transferee and the principal amount of this Note assigned or
transferred, as applicable. Notwithstanding the foregoing, if this Note has been
prepaid in part, the holder of this Note may not transfer this Note unless such
holder first physically surrenders this Note to the Bank, whereupon the Bank
will forthwith issue and deliver upon the order of the holder of this Note a new
Note of like tenor, registered as such holder may request, representing in the
aggregate the remaining principal represented by this Note. The holder of this
Note and any assignee, by acceptance of this Note, acknowledge and agree that
following any prepayment of any portion of this Note, the principal of this Note
may be less than the principal amount stated on the face hereof.

The Bank shall maintain, at one of its offices in the United States, a register
for the recordation of the names and addresses of each holder of the Notes, and
the principal amount of the Notes owed to each such holder pursuant to the terms
hereof and of the Other Notes from time to time (the “Register”). The entries in
the Register shall be conclusive absent manifest

--------------------------------------------------------------------------------

error, and the Bank and the holders of the Notes shall treat each Person whose
name is recorded in the Register pursuant to the terms hereof as the holder of
this Note for all purposes, notwithstanding notice to the contrary. The Register
shall be available for inspection by any holder of the Notes, at any reasonable
time and from time to time upon reasonable prior notice. The Notes are intended
to be obligations in “registered form” for purposes of Sections 871 and 881 of
the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder, and the provision of this Note shall be interpreted
consistently therewith.

The Bank shall pay all taxes (other than transfer taxes) and all other expenses
and charges payable in connection with the preparation, execution and delivery
of this Note.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF ILLINOIS OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF ILLINOIS. ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
NOTE SHALL BE BROUGHT EXCLUSIVELY IN ANY STATE OR FEDERAL COURT IN THE CITY OF
CHICAGO, STATE OF ILLINOIS, THE PARTIES WAIVE ANY RIGHT TO A JURY TRIAL.

The Bank expressly waives any presentment, demand, protest, notice of default,
notice of intention to accelerate, notice of acceleration or notice of any other
kind.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

--------------------------------------------------------------------------------

This Note is executed as of the date first written above.

 

COLE TAYLOR BANK By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES ACT OF ANY STATE. EXCEPT AS OTHERWISE PROVIDED
IN THIS WARRANT AND THE SUBSCRIPTION AGREEMENT REFERENCED IN THIS WARRANT, THIS
WARRANT MAY NOT BE OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE WARRANT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH
STATE OR OTHER LAWS AS MAY BE APPLICABLE, OR RECEIPT BY THE COMPANY OF AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED. THIS WARRANT IS SUBJECT TO OTHER RESTRICTIONS ON TRANSFER AS
SET FORTH IN SECTION 5 HEREOF.

TAYLOR CAPITAL GROUP, INC.

Incorporated Under the Laws of the State of Delaware

STOCK PURCHASE WARRANT

 

Warrant No. W-_

   Original Issue Date:                     , 2008

THIS CERTIFIES THAT, for value received,             , or its assigns (the
“Holder”), is entitled to subscribe for and purchase during the period specified
in Section 1 hereof              fully paid and non-assessable shares of Common
Stock, $.01 par value (“Common Stock”), of TAYLOR CAPITAL GROUP, INC., a
Delaware corporation (the “Company”), at a per share price equal to the Warrant
Price, subject to the provisions and upon the terms and conditions hereinafter
set forth. Capitalized terms used herein, but not otherwise defined, shall have
meanings provided in Section 10 of this Warrant.

This Warrant was originally issued pursuant to the Subscription Agreement (as
may be amended, modified or restated from time to time), dated             , by
and among the Company, Cole Taylor Bank, a wholly-owned subsidiary of the
Company (the “Bank”), and the initial Holder (the “Subscription Agreement”). The
Holder acknowledges that this Warrant was issued in connection with a private
placement (the “Debt Placement”) of up to $60 million in subordinated notes (the
“Notes”) by the Bank, in which each investor in the Debt Placement is receiving
a warrant on the same terms as this Warrant to purchase fifteen (15) shares
(subject to adjustment as provided herein) of Common Stock for every $1,000 in
face amount of subordinated notes purchased in the Debt Placement. Accordingly,
the Company is issuing, in the aggregate, warrants to purchase an aggregate of
up to 900,000 shares (subject to adjustment as provided herein) of Common Stock
on the terms set forth below (collectively, including this Warrant, the
“Aggregate Warrants”) in connection with the Debt Placement. Notwithstanding
that this Warrant was issued in connection with, and as part of, the Debt
Placement, this Warrant is detachable from the Notes purchased in the Debt
Placement and transferable separate from such Notes, but subject to the terms,
conditions, limitations and restrictions set forth in Section 5 of this Warrant
and Section 2(e) of the Subscription Agreement.

--------------------------------------------------------------------------------

1.

Duration. The right to subscribe for and purchase shares of Common Stock
represented hereby shall commence on the later of (a) the date of the
Stockholder Vote and (b) the one hundred eightieth (180th) day after the
Original Issue Date, and shall expire at 5:00 p.m., Chicago time, on the fifth
anniversary of the Original Issue Date specified above (the “Expiration Date”);
provided, that if the Stockholder Vote is not held on or prior to December 31,
2008, the Expiration Date shall be extended by the number of days after
December 31, 2008 and prior to the date the Stockholder Vote is held; and
provided further, that if the Expiration Date would otherwise occur on a day on
which banking institutions are required or authorized by law to close in
Chicago, Illinois (a “Bank Holiday”), then the Expiration Date shall be the next
succeeding day which shall not be a Bank Holiday. From and after the Expiration
Date, this Warrant shall be null, void and of no further force or effect.

 

2. Method of Exercise; Payment; Issuance of New Warrant.

 

  a) The holder hereof may exercise this Warrant, in whole or in part, at the
times and subject to the conditions set forth in Section 1 hereof, by the
surrender of this Warrant (with the subscription form attached hereto duly
executed) at the principal office of the Company, together with payment in the
aggregate amount equal to the Warrant Price multiplied by the number of shares
of Common Stock being purchased. At the option of Holder, payment of the Warrant
Price may be made either (i) in cash, by wire transfer of immediately available
United States federal funds or by bank certified, treasurer’s or cashier’s check
payable to the order of the Company, (ii) by cashless exercise in accordance
with Section 2(b), or (iii) by any combination of the foregoing methods.

 

  b) In lieu of exercising this Warrant in cash, the Holder may elect to receive
shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with notice of such election, in which event the Company shall issue to
the holder hereof a number of shares of Common Stock computed using the
following formula:

 

  X =        Y (A - B)                    A      

Where

 

X —      The number of shares of Common Stock to be received upon such cashless
exercise of this Warrant pursuant to this Section 2(b) (the “Net Number”). Y —  
   The total number of shares for which this Warrant is exercised pursuant to
such cashless exercise. A —      The Market Value (as defined below) of one
share of Common Stock. B —      The Exercise Price (as adjusted to the date of
such calculations).

Any reference in this Warrant to “exercise” of this Warrant, and the use of the
term “exercise” herein, shall be deemed to include, without limitation, any
cashless exercise pursuant to this Section 2(b).

--------------------------------------------------------------------------------

  c) Notwithstanding anything contained herein to the contrary, in the event
that a Conversion Date occurs, the Company at any time within ninety (90) days
after any such Conversion Date, may, at the Company’s sole election, effective
immediately upon notice delivered to the Holder, convert this Warrant, and
thereby extinguish all exercise rights of the Holder hereunder, by issuance to
the Holder of the Net Number of shares of Common Stock, determined according to
Section 2(b) above, then issuable upon exercise of this Warrant in full in a
“cashless exercise,” provided that the Company exercises such election with
respect to all of the Aggregate Warrants then outstanding.

 

  d) In the event of any exercise of the rights represented by this Warrant in
accordance with Section 2(a), (i) stock certificates for the shares of Common
Stock so purchased shall be delivered to the Holder, and, in the event the
Warrant has not been exercised in full, a new Warrant representing the number of
shares with respect to which this Warrant shall not then have been exercised
shall also be delivered to the Holder, and (ii) stock certificates for the
shares of Common Stock so purchased shall be dated the date of exercise of this
Warrant (with the required payment of the aggregate Warrant Price unless payable
by cashless exercise pursuant to Section 2(b) or (c)), and the Holder exercising
this Warrant shall be deemed for all purposes to be the holder of the shares of
Common Stock so purchased as of the date of such exercise (with the required
payment of the aggregate Warrant Price unless payable by cashless exercise in
accordance with Section 2(b) or (c)). Such stock certificates (and new Warrant,
if applicable) shall be delivered to the holder hereof within a reasonable time,
not exceeding five Business Days, after this Warrant shall have been so
exercised. Each stock certificate so delivered shall be in such denominations as
may be requested by the Holder and shall be registered in the name of the Holder
or such other name (upon compliance with the transfer requirements hereinafter
set forth) as shall be designated by said Holder. The Company shall pay all
taxes (other than income taxes, franchise taxes or other taxes levied on gross
earnings, profits or the like of the Holder) and other expenses and charges
payable in connection with the issuance and delivery of shares of Common Stock
(and new Warrants, if applicable) upon any exercise of this Warrant, except
that, in case such shares of Common Stock shall be registered in a name or names
other than the Holder or its nominee, funds sufficient to pay all stock transfer
taxes which shall be payable in connection with the execution and delivery of
such stock certificates shall be paid by the Holder to the Company at the time
of the exercise of this Warrant.

 

  e) Notwithstanding any other provision hereof, if any exercise of any portion
of a Warrant is made in connection with a registered public offering or the sale
of the Company (regardless of how structured), such exercise may be conditioned,
at the election of the Holder, upon the consummation of such public offering or
sale of the Company, in which case such exercise shall not be deemed to be
effective until immediately prior to the consummation of such transaction.

 

  f) If a fractional share of Common Stock would be issuable upon exercise of
this Warrant, the Company shall, as soon as reasonably practicable after the
date of exercise, deliver to the Holder a check payable to the Holder, in lieu
of such fractional share, in an amount equal to the Market Value of such
fractional share of Common Stock.

--------------------------------------------------------------------------------

3. Adjustment of Warrant Price and Number of Shares.

 

  a) The Warrant Price and the number of shares of Common Stock purchasable upon
the exercise of this Warrant shall be subject to adjustment from time to time
upon the happening of certain events occurring after the original issuance date,
as follows:

 

  i) Reclassification, Consolidation or Merger. In case of any reclassification
or change of outstanding Common Stock issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another Company
(other than a merger with another corporation in which the Company is the
surviving corporation and which does not result in any reclassification or
change other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or
combination of outstanding Common Stock issuable upon such conversion) the
rights of the holders of this Warrant shall be adjusted in the manner described
below:

 

  (1) In the event that the Company is the surviving corporation, the Warrant
shall, without payment of additional consideration therefor, be deemed modified
so as to provide that upon exercise thereof the holder of this Warrant shall
procure, in lieu of each share of Common Stock theretofore issuable upon such
exercise, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, change, consolidation or merger
by the holder of each share of Common Stock issuable upon such exercise had
exercise occurred immediately prior to such reclassification, change,
consolidation or merger. This Warrant (as adjusted) shall be deemed to provide
for further adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 3. The provisions of
this clause (1) shall similarly apply to successive reclassifications, changes,
consolidations and mergers.

 

  (2) In the event that the Company is not the surviving entity, the surviving
entity shall, without payment of any additional consideration therefor, issue
new Warrants, providing that upon exercise thereof the holder thereof shall
procure in lieu of each share of Common Stock theretofore issuable upon exercise
of this Warrant the kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change, consolidation or
merger by the holder of each share of Common Stock issuable upon exercise of
this Warrant had such exercise occurred immediately prior to such
reclassification, change, consolidation or merger. Such new Warrants shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 3. The provisions of
this clause (2) shall similarly apply to successive reclassifications, changes,
consolidations and mergers. The Company shall not enter into any transaction
subject to the provisions of this Section 3(a)(i)(2) unless the surviving entity
in such transaction agrees in writing to issue new Warrants in accordance with
the terms and conditions of this Section 3(a)(i)(2) and comply with the terms
and conditions of such new Warrants.

--------------------------------------------------------------------------------

  ii) Subdivision or Combination of Shares. If the Company, at any time while
any of this Warrant is outstanding, shall subdivide or combine its Common Stock,
the Warrant Price shall be proportionately reduced, in case of subdivision of
shares, as of the effective date of such subdivision, or shall be
proportionately increased, in the case of combination of shares, as of the
effective date of such combination. In the event that a record date is set with
respect to any such subdivision, and this Warrant is exercised after such record
date but prior to the effective date of such subdivision, upon the effectiveness
of such subdivision, the Company shall issue the Holder additional shares of
Common Stock as if the Common Stock issued upon such exercise of the Warrant
were outstanding on the record date with respect to such subdivision, without
the payment of any additional consideration.

 

  iii) Certain Dividends and Distributions. If the Company, at any time while
any of this Warrant is outstanding, shall:

 

  (1) Stock Dividends. Pay a dividend payable in, or make any other distribution
of Common Stock, the Warrant Price shall be adjusted, as of the date such
payment or dividend or other distribution, to that price determined by
multiplying the Warrant Price by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately prior to such
dividend or distribution and (2) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution (plus in the event that the Company paid cash for fractional
shares, the number of additional shares which would have been outstanding had
the Company issued such fractional shares in connection with such dividend or
distribution); provided that in the event that a record date is set with respect
to any such dividend and distribution, and this Warrant is exercised after such
record date but prior to the payment or other distribution of such dividend or
other distribution, upon such payment or other distribution, the Company shall
issue the Holder additional shares of Common Stock as if the Common Stock issued
upon such exercise of the Warrant were outstanding on the record date with
respect to such dividend or other distribution, without the payment of any
additional consideration.

 

  (2) Liquidating Dividends, etc. Make a distribution of its property to the
holders of its Common Stock as a dividend in liquidation or partial liquidation
or by way of return of capital or other than as a dividend payable out of funds
legally available for dividends under the laws of the State of Delaware, the
holders of this Warrant shall, upon exercise hereof, be entitled to receive, in
addition to the number of shares of Common Stock receivable hereupon, and
without payment of any consideration therefor, a sum equal to the amount of such
property as would have been payable to them as owners of that number of shares
of Common Stock of the Company receivable upon such exercise, had they been the
holders of record of such Common Stock on the record date for such distribution;
and an appropriate provision therefor shall be made a part of any such
distribution.

--------------------------------------------------------------------------------

  (3) Purchase Rights. If at any time the Company grants, issues or sells any
options, warrants, convertible securities or other rights to purchase stock,
warrants, options, securities or other property pro rata to the record holders
of Common Stock (the “Purchase Rights”), then the Holder of this Warrant shall
be entitled to acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which such Holder could have acquired if such Holder
had held the number of shares of Common Stock acquirable upon complete exercise
of this Warrant immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for
the grant, issue or sale of such Purchase Rights.

 

  iv) Adjustment of Number of Shares. Upon each adjustment in the Warrant Price
pursuant to any provision of this Section 3(a), the number of shares of Common
Stock issuable upon exercise hereof shall be adjusted, to the nearest one
hundredth of a whole share, to the product obtained by multiplying the number of
shares issuable upon exercise hereof immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.

 

  b) Notice of Adjustments. Whenever any Warrant Price shall be adjusted
pursuant to Section 3 hereof, the Company shall make a certificate signed by its
President or a Vice President and by its Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board made any determination hereunder), and the Warrant Price after giving
effect to such adjustment, and shall cause copies of such certificate to be
delivered (by first-class mail, postage prepaid) or facsimile to the holder of
this Warrant at its address or facsimile number shown on the books of the
Company. The Company shall make such certificate and deliver it to each Holder
promptly after each adjustment.

 

  c) Default in Obligations Regarding Par Value. If the Company shall default in
its obligation pursuant to the last sentence of Section 4(a) hereof such that
the par value per share of Common Stock would be greater than the Warrant Price
that, absent the limitation contained in the last sentence of Section 4(a),
would have been in effect pursuant to this Section 3, then the Warrant Price
shall be an amount equal to the par value per share of Common Stock but the
number of shares the holder of this Warrant shall be entitled to purchase shall
be such greater number of shares of Common Stock as would have resulted from the
Warrant Price that, absent the limitation contained in the last sentence of
Section 4(a), would have been in effect pursuant to this Section 3. The
foregoing adjustment shall not constitute a waiver of any claim arising against
the Company by reason of its default under the agreement contained in the last
sentence of Section 4(a) of this Warrant.

--------------------------------------------------------------------------------

4. Covenants.

 

  a) The Company covenants and agrees that all shares of Common Stock issued
upon exercise of this Warrant will, upon issuance, be fully paid and
nonassessable and free from preemptive rights and any liens and charges with
respect to the issuance thereof. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized, and reserved for the
purpose of issue upon exercise of the purchase rights evidenced by this Warrant,
a sufficient number of shares of Common to provide for the exercise in full of
such purchase rights (including any and all shares as to which the right to
acquire such shares has not been forfeited pursuant to Section 1 hereof).
Furthermore, and without limiting the generality of the foregoing, the Company
covenants and agrees that it will from time to time take all such action as may
be required to assure that the par value per share of Common Stock is at all
times equal to or less than the effective Warrant Price.

 

  b) The Company agrees that it shall not close its books against the transfer
of this Warrant or of any shares of Common Stock issued or issuable upon the
exercise of this Warrant in any manner which interferes with the timely exercise
of this Warrant.

 

  c) The Company shall cooperate with the Holder if the Holder is required to
make any governmental filings or obtain any governmental approvals prior to, or
in connection with, the exercise of Warrants (including making any filings
required to be made by the Company). The Company shall take all such actions as
may be reasonably necessary to ensure that all shares of Common Stock issuable
upon exercise of the Warrants may be issued in accordance with the terms and
conditions of the Warrants without violation of any applicable law or regulation
of any governmental entity or self regulatory organization or any requirement of
any securities exchange or trading system on which the shares of Common Stock
are listed or eligible for trading (except for official notice of issuance,
which (to the extent required) shall be delivered immediately by the Company
upon each such issuance).

 

  d) If any securities issuable upon exercise of this Warrant are then
convertible into or exchangeable for any other stock or securities of the
Company (“Other Securities”), the Company shall, at the Holder’s option and upon
exercise of this Warrant by the Holder as provided herein, together with any
notice, statement or payment required to effect such conversion or exchange,
deliver to the Holder (or such other Person specified by such Holder) a
certificate or certificates representing the Other Securities into which the
securities issuable upon such exercise of this Warrant are convertible or
exchangeable, registered in such name or names and in such denomination or
denominations as the Holder has specified.

 

  e)

The Company shall not by any action, including, without limitation, amending its
charter documents or through any reorganization, reclassification, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or other
similar voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and

--------------------------------------------------------------------------------

 

in the taking of all such actions as may be necessary or appropriate to protect
the rights of the Holder against impairment. Without limiting the foregoing, the
Company shall take all action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of Common Stock upon the exercise of this Warrant, free and clear of all
mortgages, pledges, hypothecations, claims, charges, security interests,
encumbrances, adverse claims, options, liens, put or call rights, rights of
first offer or refusal, proxies, voting rights or other restrictions or
limitations of any nature whatsoever (collectively, “Liens”), other than Liens
created by the actions of the Holder.

 

  f) The Company shall provide each Holder with not less than 10 days prior
written notice in the event that the Company closes its books or sets a record
date (i) with respect to either a dividend or distribution upon the Common Stock
or a subscription offer to the holders of Common Stock or (ii) for determining
rights to vote with respect to any merger, consolidation, reorganization,
restructuring or similar transaction (including, without limitation, the
dissolution or liquidation of the Company). The Company shall also provide the
Holder not less than 20 days prior written notice of the consummation of any
such transaction.

 

5. Transfer and Exchange.

 

  a) This Warrant shall not be transferable without the prior written consent of
the Company at any time prior to the first anniversary of the Original Issue
Date. On and after the first anniversary of the Original Issue Date, but prior
to the second anniversary of the Original Issue Date, this Warrant shall be
transferable in part with respect to up to 50% of the shares of Common Stock
issuable upon exercise of this Warrant as of the Original Issue Date. On and
after the second anniversary of the Original Issue Date, this Warrant shall be
transferable with respect to all of the shares of Common Stock issuable upon
exercise of this Warrant. Notwithstanding the foregoing, the Holder may transfer
this Warrant to an Affiliate at any time without the prior written consent of
the Company, provided that any such transfer shall remain subject to the further
terms, conditions, limitations and restrictions set forth in clauses (b) through
(g) of this Section 5 and Section 2(e) of the Subscription Agreement. In
addition to the restrictions and limitations set forth in this Section 5(a), any
transfer of this Warrant shall be subject to the further terms, conditions,
limitations and restrictions set forth in clauses (b) through (g) of this
Section 5 and Section 2(e) of the Subscription Agreement. For the avoidance of
doubt, nothing in this Section 5(a) shall prohibit or otherwise affect the right
to transfer any shares of Common Stock received upon the exercise of this
Warrant (it being understood that the restrictions set forth in this
Section 5(a) shall apply only to the Warrant itself, and not any shares issuable
upon the exercise thereof).

 

  b)

The transfer of this Warrant and all rights hereunder, in whole or in part, is
registrable at the office or agency of the Company referred to below by the
Holder, in person or by his duly authorized attorney, upon surrender of this
Warrant properly endorsed. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant, when endorsed in blank,
shall be deemed negotiable, and that the Holder, when this Warrant shall have
been so endorsed, may be treated by the Company and all other

--------------------------------------------------------------------------------

 

Persons dealing with this Warrant as the absolute owner and holder hereof for
any purpose and as the Person entitled to exercise the rights represented by
this Warrant, or to the registration of transfer hereof on the books of the
Company; and until due presentment for registration of transfer on such books
the Company may treat the Holder as the owner and holder for all purposes, and
the Company shall not be affected by notice to the contrary.

 

  c) The Holder of this Warrant, by the acceptance hereof, represents that it is
acquiring this Warrant, and upon exercise hereof will acquire the Warrant and
the shares of Common Stock issuable upon exercise hereof (collectively,
including this Warrant, the “Warrant Securities”), for its own account and not
with a view towards, or for resale in connection with, the public sale or
distribution of the Warrant Securities, except pursuant to sales registered or
exempted under the Securities Act. The Holder further represents, by acceptance
hereof, that, as of this date, such Holder is an “accredited investor” as such
term is defined in Rule 501(a)(3) of Regulation D promulgated by the Securities
and Exchange Commission under the Securities Act (an “Accredited Investor”). The
delivery of this Warrant for exercise shall constitute confirmation at such time
by the Holder of the representations concerning the Warrant Securities set forth
in the first two sentences of this Section 5(c), unless contemporaneous with the
delivery of this Warrant for exercise, the Holder notifies the Company in
writing that it is not making such representations (a “Representation Notice”).
If the Holder delivers a Representation Notice in connection with an exercise,
it shall be a condition to such Holder’s exercise of this Warrant and the
Company’s obligations set forth in Section 2 in connection with such exercise,
that the Company receive such other representations as the Company considers
reasonably necessary to assure the Company that the issuance of its securities
upon exercise of this Warrant shall not violate any United States or state
securities laws, and the time periods for the Company’s compliance with its
obligations set forth in Section 2 shall be tolled until such Holder provides
the Company with such other representations.

 

  d)

The Holder, by acceptance of this Warrant, understands that the Warrant
Securities are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being or will be acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations neither this Warrant nor the shares of Common Stock
issuable upon its exercise may be resold without registration under the
Securities Act or under certain other limited circumstances. The Holder further
agrees, by acceptance of this Warrant that it will not offer or sell this
Warrant or any shares of Common Stock issued upon exercise hereof in the absence
of an effective registration statement for the Warrant or such shares of Common
Stock, as applicable, under the Securities Act and such state or other laws as
may be applicable, or receipt by the Company of a written opinion of counsel
(provided that such counsel, and the form and substance of such opinion are
reasonably acceptable to the Company) that such registration is not required;
provided, however that no such opinion shall be required in connection with
(i) a transaction pursuant to Rule 144 in which the Holder provides the Company
with certifications reasonably requested by the Company regarding compliance
with the terms and provisions of Rule 144 or (ii) a distribution of any Warrant
Securities to an Affiliate of the Holder, so long as such Affiliate does not pay
any consideration in

--------------------------------------------------------------------------------

 

connection with such distribution (other than issuance of equity interests in
such Affiliate) and the Holder provides the Company with certifications
reasonably requested by the Company in connection therewith. Furthermore, it is
agreed that each Warrant and any shares of Common Stock will include the
appropriate variant of the following legend:

[THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE HAVE] [THIS WARRANT HAS] NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES ACT OF ANY STATE. [EXCEPT AS OTHERWISE PROVIDED IN THE WARRANT UPON
EXERCISE OF WHICH THE SHARES WERE ORIGINALLY ISSUED AND THE SUBSCRIPTION
AGREEMENT REFERENCED IN SUCH WARRANT, THE SHARES][EXCEPT AS OTHERWISE PROVIDED
IN THIS WARRANT AND THE SUBSCRIPTION AGREEMENT REFERENCED IN THIS WARRANT, THIS
WARRANT] MAY NOT BE OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR [THE SHARES][THIS WARRANT] UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND SUCH STATE OR OTHER LAWS AS MAY BE APPLICABLE, OR RECEIPT BY THE
COMPANY OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. THIS WARRANT IS SUBJECT TO OTHER RESTRICTIONS ON
TRANSFER AS SET FORTH IN SECTION 5 HEREOF.

The Holder of this Warrant and/or any Common Stock issued upon exercise hereof
shall be entitled to receive, without expense to such Holder, a new certificate
or Warrant, as the case may be, not bearing the above restrictive legend if
(1) the Warrant Securities represented thereby shall have been effectively
registered under the Securities Act and sold by the Holder thereof in accordance
with such registration, (2) such Warrant Securities shall have been sold without
registration under the Securities Act in compliance with Rule 144, as certified
in writing by the Holder to the Company, or (3) the Company is reasonably
satisfied that the Holder of such Warrant Securities shall, in accordance with
the terms of Rule 144, be entitled to sell such Warrant Securities pursuant
thereto without any restriction or limitation and without satisfaction of any
current public information requirement thereunder.

 

  e) Register. The Company shall maintain, at the principal office of the
Company, a register for the Warrants, in which the Company shall record the name
and address of the Person in whose name a Warrant has been issued, as well as
the name and address of each transferee and each prior owner of such Warrant.
Within 10 days after the Holder shall by written notice request the same, the
Company will deliver to such Holder a certificate, signed by one of its
officers, listing the name and address of every other Holder of this Warrant, as
such information appears in said register at the close of business on the day
before such certificate is signed.

 

  f)

Warrants Exchangeable for Different Denominations. This Warrant is exchangeable,
upon the surrender hereof by the Holder at the office or agency of the Company
referred to in paragraph 5(e), for new Warrants of like tenor representing in
the aggregate the right

--------------------------------------------------------------------------------

 

to subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by the
Holder at the time of such surrender.

 

  g) Cancellation; Payment of Expenses. Upon the surrender of this Warrant in
connection with any exchange, transfer or replacement, this Warrant shall be
promptly cancelled by the Company. The Company shall pay all taxes (other than
transfer taxes and income taxes, franchise taxes or other taxes levied on gross
earnings, profits or the like of the Holder) and all other expenses and charges
payable in connection with the preparation, execution and delivery of this
Warrant.

 

6. Notices. All notices, requests and other communications required or permitted
to be given or delivered to the Company or the holders of Warrants shall be in
writing, and shall be deemed properly given if hand delivered or sent by
overnight courier with adequate evidence of delivery or sent by registered or
certified mail, return receipt requested and, if to a Warrant Holder, at such
Warrant holder’s address as shown on the books of the Company or its transfer
agent, and if to the Company at:

Taylor Capital Group, Inc.

9550 West Higgins Road

Rosemont, IL 60018

Attention: Chief Financial Officer

or such other addresses or Persons as the recipient shall have designated to the
sender by written notice given in accordance with this Section. Any notice,
request or other communication hereunder shall be deemed given when delivered in
person, on the next business day after being sent by overnight courier, or on
the second business day after being sent by registered or certified mail.

 

7. Governing Law. This Warrant shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to its principles
of conflicts of laws.

 

8. Remedies and Limitation of Liability.

 

  a) The Company stipulates that the remedies at law of the Holder in the event
of any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will not be
adequate, and that such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.

 

  b) No provision hereof, in the absence of affirmative action by the Holder to
purchase Common Stock upon the exercise of this Warrant, and no enumeration of
the rights or privileges of the Holder, shall give rise to any liability of a
Holder for the Warrant Price or any other amounts.

--------------------------------------------------------------------------------

9. Miscellaneous.

 

  a) Amendments. This Warrant and any provision hereof may be amended or waived
only by an instrument in writing signed by either (i) the Holder of this
Warrant, or (ii) the holders of a majority of the Aggregate Warrants then
outstanding as measured by the number of shares of Common Stock issuable upon
full exercise of all such Aggregate Warrants then outstanding (the “Majority
Holders”), and in each case, signed by the Company if it is to be bound thereby;
and each Holder acknowledges and agrees that it shall be bound by any such
amendment or waiver so approved by the Majority Holders, provided that no such
amendment or waiver shall be effective except to the extent it applies on an
equivalent basis to all of the outstanding Aggregate Warrants. No consideration
shall be offered or paid to any Holder to amend or consent to a waiver,
amendment or other modification of any provision of the Agreement unless the
same consideration is offered to all of the holders of the outstanding Aggregate
Warrants.

 

  b) Descriptive Headings. The descriptive headings of the several paragraphs of
this Warrant are inserted for purposes of reference only, and shall not affect
the meaning or construction of any of the provisions hereof.

 

10. Definitions. For the purposes of this Warrant the following terms have the
following meanings:

“Closing Price” shall mean, with respect to a share of Common Stock, the closing
sale price (or if no closing sale price is reported, the last reported sale
price) for such security on the Nasdaq Global Select Market (or any successor
thereto) as reported by Bloomberg Financial Markets (“Bloomberg”), or if the
Nasdaq Global Select Market is not the principal trading market for such
security, the closing sale price (or if no closing sale price is reported, the
last reported sale price) of such security on the principal securities exchange
or trading market where such security is listed or traded, as reported by
Bloomberg, or if the Common Stock is not listed or traded on any national
securities exchange or trading market, then the last reported sale price of the
Common Stock at 4:00 p.m., New York City time, in the over-the-counter market on
the electronic bulletin board as reported by Bloomberg, or, if no such sale
price is reported for such security by Bloomberg, the average of the bid prices
at 4:00 p.m., New York City time, of any market makers for the Common Stock as
reported on the domestic over the counter market by the National Quotation
Bureau, Inc. or any similar successor organization. If the Closing Price cannot
be calculated for such security on any day (either because the Common Stock is
listed on any domestic securities exchange or quoted on the domestic over the
counter market, or otherwise), the Closing Price of such security on such date
shall be the fair market value as mutually determined by the Company and the
Majority Holders. If the Company and such Majority Holders are unable to agree,
then the Closing Price for such day shall be determined by a nationally
recognized investment banking firm or other nationally recognized financial
advisor, unaffiliated with the Company, selected by the Company and the Majority
Holders for such purpose, taking into consideration, among other factors, the
earnings history, book value and prospects of the Company, with the
determination of such investment banking firm or financial advisor to be final
and binding, and the cost and expenses thereof to be paid by the Company.

“Conversion Date” means the earliest to occur of the following:

1. the first date on which the average of VWAP of the Common Stock has exceeded
200% of the Warrant Price for at least 20 Trading Days within any period of 30
consecutive Trading Days occurring after the second anniversary of the Original
Issue Date; or

--------------------------------------------------------------------------------

2. the first date on which the average of the VWAP of the Common Stock has
exceeded 130% of the Warrant Price for at least 20 Trading Days within any
period of 30 consecutive Trading Days occurring after the third anniversary of
the Original Issue Date.

“Market Value” shall mean, in respect of a share of Common Stock on any date
herein specified, the arithmetic average of the Closing Price on ten
(10) consecutive Trading Days immediately preceding such date; provided,
however, that in the event that any of the actions specified in Sections
3(a)(ii) or 3(a)(iii)(1) become effective on or after the first day of such
fifteen day period the Company, then in calculating the Market Value, the
Closing Prices for all Trading Days occurring on or after the effectiveness of
such action shall be adjusted in the same manner as the Warrant Price is
adjusted pursuant to such Sections hereof.

“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization or a
government or any department or agency thereof or any other legal entity.

“Securities Act” shall mean the Securities Act of 1933, as amended prior to or
after the date hereof, or any federal statute or statutes which shall be enacted
to take the place of such Act, together with all rules and regulations
promulgated thereunder.

“Stockholder Approval” shall mean the date on which, in accordance with
applicable law, the rules of the NASDAQ Stock Market and the Company’s
certificate of incorporation and by-laws, the Company’s stockholders approve the
Company’s issuance of the Aggregate Warrants and the shares of Common Stock
issuable upon exercise thereof, including the issuance thereof to officers,
directors and employees of, and consultants to, the Company (the “Stockholder
Approval Matters”).

“Stockholder Vote” means the first vote of the Company’s stockholders, at a
meeting at which a quorum is present, with respect to approval of the
Stockholder Approval Matters (regardless of whether the Stockholder Approval is
obtained at such meeting).

“Trading Day” means any day on which the Common Stock is traded on its principal
market; provided that “Trading Day” shall not include any day on which the
Common Stock is scheduled to trade, or actually trades, on such exchange or
market for less than 4.5 hours.

“VWAP” per share of the Common Stock on any Trading Day means the per share
volume-weighted average price as displayed under the heading Bloomberg VWAP on
Bloomberg page C UN <equity> AQR (or its equivalent successor if such page is
not available) in respect of the period from the official open of trading on the
relevant Trading Day until the official close of trading on the relevant Trading
Day (or if such volume-weighted average price is unavailable, the market price
of one share of Common Stock on such Trading Days determined, using a
volume-weighted average method, by a nationally recognized investment banking
firm (unaffiliated with the Company) retained for this purpose by the Company).

“Warrants” shall mean this Warrant, and any Warrants issued in substitution or
replacement thereof, including without limitation, upon a permitted transfer
hereof.

--------------------------------------------------------------------------------

“Warrant Price” shall mean $10.00 [Insert in any warrant issued to any officer,
director or employee of, or consultant to, the Company (excluding any Person
that becomes a director of the Company at the Closing of the Preferred Stock
Transaction) or any of its subsidiaries (or any affiliate of any such person or
trust for the benefit of any such person): (or, at any time prior to Stockholder
Approval, $            ) [the closing bid price of the Common Stock on the
Trading Day immediately prior to the date of execution and delivery of the
Subscription Agreement by the Holder and the Company (or the closing bid price
on the Trading Day on which the Subscription Agreement is executed and delivered
by the Holder and the Company, if it occurs after 4:00 p.m., New York City time]
per share, subject to adjustment pursuant to the provisions of Section 3 hereof.

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and issued
on the date set forth below.

 

Dated:                     , 2008   TAYLOR CAPITAL GROUP, INC.   By:  

 

  Name:     Title:  

--------------------------------------------------------------------------------

EXHIBIT A

SUBSCRIPTION FORM

[To be executed only upon exercise of Warrant]

The undersigned registered owner of the attached Warrant irrevocably exercises
such Warrant for the purchase of      shares of Common Stock of
                     and herewith makes payment therefor, all at the price and
on the terms and conditions specified in such Warrant, and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to                      whose address is                             
and, if such shares of Common Stock shall not include all of the shares of
Common Stock issuable as provided in such Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Common Stock issuable hereunder
be delivered to the undersigned.

The Warrant Price with respect to the shares of Common Stock is being paid by:

             Wire Transfer in the amount of $            

             Bank certified, treasurer’s or cashier’s check in the amount of
$            

             Cashless exercise

 

 

(Name of Registered Owner)

 

(Signature of Registered Owner)

 

(Street Address)

 

(City)        (State)    (Zip Code)

 

NOTICE:      The signature on this subscription must correspond with the name as
written upon the face of the attached Warrant in every particular, without
alteration or enlargement or any change whatsoever.

--------------------------------------------------------------------------------

ACKNOWLEDGED AND ACCEPTED: [Purchaser] By:  

 

Name:  

 

Title: