Exhibit 10.1

Execution Copy

EXCHANGE AGREEMENT

This Exchange Agreement (this “Agreement”) is made and entered into as of this
13th day of October, 2010 by and between Taylor Capital Group, Inc., a Delaware
corporation (the “Company”), and Prairie Capital IV, L.P. (“Prairie IV”) and
Prairie Capital IV QP, L.P. (“Prairie IV QP,” each of Prairie IV and Prairie IV
QP, a “Holder” and, together, the “Holders”).

RECITALS

WHEREAS, each of the Holders is the beneficial owner of 570,000 shares of common
stock of the Company, par value $0.01 per share (“Common Stock”).

WHEREAS, each of the Holders desires to exchange (i) 202,665 shares of Common
Stock beneficially owned by such Holder for (ii) 202,665 shares of Nonvoting
Convertible Preferred Stock, Series D (“Series D Preferred”), all upon the terms
and conditions set forth in this Agreement (the “Exchange Transaction”).

WHEREAS, contemporaneously with the Closing (as defined below), the parties
hereto will execute and deliver a Registration Rights Agreement, substantially
in the form attached hereto as Exhibit A (as the same may be amended,
supplemented, restated or modified and in effect from time to time, the
“Registration Rights Agreement”), pursuant to which the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the “Securities Act”), and
applicable state securities laws.

WHEREAS, the Exchange Transaction is being made in reliance upon the exemption
from registration provided by Section 3(a)(9) of the Securities Act.

WHEREAS, the Company, the Holders and certain other investors entered into that
certain Securities Purchase Agreement, dated as of May 21, 2010 (the “Purchase
Agreement”), pursuant to which (a) the Preferred Buyers (as defined in the
Purchase Agreement), including the Holders, agreed to purchase shares of a
series of convertible perpetual preferred stock of the Company designated as 8%
Non-Cumulative, Convertible Perpetual Preferred Stock, Series C (the “Series C
Preferred Shares”), which Series C Preferred Shares are convertible into shares
of Common Stock, in accordance with the Certificate of Designations of 8%
Non-Cumulative, Convertible Perpetual Preferred Stock, Series C of the Company
(the “Series C Certificate of Designations”); and (b) the Subdebt Buyers (as
defined in the Purchase Agreement), including the Holders, agreed to purchase 8%
subordinated notes due 2020 (the “Notes”), along with a detachable warrant
(each, a “2010 Warrant” and, together, the “2010 Warrants”) to acquire 25 shares
of Common Stock for each $1,000 in principal amount of the Notes purchased by
such Subdebt Buyer.

WHEREAS, the Company and each of the Holders desire, contemporaneously with the
Closing (as defined below), to change the Series C Preferred Shares to be
purchased by such Holder pursuant to the Purchase Agreement to Series E
Preferred Shares (as defined below) (the “Restructured Investment”).

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

 

NOW, THEREFORE, in consideration of the premises and the agreements set forth
below, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

Exchange

Section 1.1     Exchange of Common Stock. Upon the terms and subject to the
satisfaction or waiver of the conditions set forth in this Agreement, at the
Closing (as defined herein), the Company shall issue to each of the Holders, and
each of the Holders severally and not jointly agrees to acquire from the
Company, 202,665 shares of Series D Preferred (such Holder’s “Series D Preferred
Shares”) in exchange for 202,665 shares of Common Stock beneficially owned by
such Holder (such Holder’s “Exchanged Common Shares”). Pursuant to the Purchase
Agreement, at the Closing, the Company shall issue and sell to each of the
Holders, and each of the Holders severally and not jointly agrees to purchase
from the Company, (i) a Note in the original principal amount of $1,781,000,
substantially in the form attached hereto as Exhibit B (each, a “Prairie Note,”
and together, the “Prairie Notes”), (ii) a 2010 Warrant to acquire 44,525 shares
of the Common Stock, substantially in the form attached hereto as Exhibit C
(each, a “Prairie Warrant,” and together, the “Prairie Warrants”), and
(iii) 111,760 Series E Preferred Shares.

Section 1.2     Closing. Subject to the terms and conditions hereof, the closing
of the transactions contemplated by this Agreement (the “Closing”) shall take
place on the third business day after the conditions to the Closing have been
duly satisfied or waived (other than those conditions that by their terms are to
be satisfied at the Closing), or on such other date as the parties may agree in
writing (the “Closing Date”). The Closing shall take place at the offices of
Katten Muchin Rosenman LLP, 525 West Monroe St., Chicago, Illinois 60661, or at
such other place as the parties may agree in writing. At the Closing, (i) each
Holder shall deliver or cause to be delivered to the Company all of such
Holder’s right, title and interest in and to all of such Holder’s Exchanged
Common Shares, together with such other documents or instruments of conveyance
or transfer as may be necessary or desirable to transfer to and confirm in the
Company all right, title and interest in and to such Holder’s Exchanged Common
Shares, (ii) the Company shall issue to each Holder such Holder’s Series D
Preferred Shares, Series E Preferred Shares and Prairie Warrant, and (iii) an
aggregate amount of $9,150,000 shall be released to the Company from the escrow
account at Cole Taylor Bank (the “Escrow Account”), and the balance shall be
delivered in immediately available funds to such account(s) designated by the
Holders. Notwithstanding anything to the contrary in the Purchase Agreement, the
parties agree that (i) delivery of the funds from the Escrow Account, and of the
Exchanged Common Shares, in each case to the Company shall satisfy any
obligations hereunder or under the Purchase Agreement that the Holders have to
pay for such Holder’s Series D Preferred Shares, Series E Preferred Shares and
Prairie Warrant, and (ii) delivery of such Holder’s Series D Preferred Shares,
Series E Preferred Shares, Prairie Note and Prairie Warrant shall satisfy any
obligations hereunder or under the Purchase Agreement that the Company has to
deliver securities to the Holders.

 

- 2 -

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

 

Section 1.3   Conditions to Closing. (i) The obligations of each Holder
hereunder to consummate the transactions contemplated hereby 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 each Holder’s sole
benefit and may be waived by such Holder at any time in its sole discretion by
providing the Company with prior written notice thereof:

    (a)    The Company shall have duly executed and delivered to each of the
Holders each of the Transaction Documents (as defined below);

    (b)    The Company shall have executed and delivered to each Holder such
Holder’s Series D Preferred Shares, Series E Preferred Shares, Prairie Note and
Prairie Warrant;

    (c)    The representations and warranties of the Company in this Agreement
shall be true and correct on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company shall have performed, satisfied and
complied with all of the covenants, agreements and conditions on its part to be
performed, satisfied or complied with at or prior to the Closing Date;

    (d)    The Certificate of Designations of Nonvoting Convertible Preferred
Stock, Series D, and 8% Nonvoting, Non-Cumulative, Convertible Perpetual
Preferred Stock, Series E, of the Company (the “Certificate of Designations”)
shall have been duly filed with the Secretary of State of the State of Delaware
and shall be in full force and effect and shall not have been amended;

    (e)    There is no condition or requirement being imposed on the Holders by
any Bank Regulatory Authority in connection with the transactions contemplated
hereby other than those that the parties have specifically agreed to as of the
date of this Agreement;

    (f)    There is no condition or requirement being imposed on any other party
by any Bank Regulatory Authority in connection with the transactions
contemplated hereby that could have a materially adverse consequence for the
Holders or any of their affiliates;

    (g)    The Company shall have submitted, to the extent required, a
Notification: Listing of Additional Shares form (the “NASDAQ Application”)
(along with any required supporting documentation) for the shares of Common
Stock issuable upon conversion of all of the Series D Preferred Shares issued to
the Holders with the NASDAQ Stock Market and, if the NASDAQ Application is
submitted, received acceptance of such NASDAQ Application from the NASDAQ
Listing Department.

    (h)    All material governmental consents, orders and approvals legally
required for the consummation of the transactions contemplated hereby shall have
been obtained and be in full force and effect, including each of the Bank
Regulatory Approvals.

    (i)    No court or other Governmental Authority (as defined in the Purchase
Agreement) having jurisdiction over the Company or any of the Subsidiaries (as
defined in the Purchase Agreement) or any Holder 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 (1) has the
effect of making illegal or otherwise prohibiting or invalidating

 

- 3 -

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

consummation of any of the transactions contemplated hereby or by any of the
Transaction Documents (collectively, the “Transactions”) or any provision of
this Agreement or any of the other Transaction Documents or (2) seeks to
restrain, prohibit or invalidate the consummation of any of the Transactions or
to invalidate any provision of this Agreement or any of the other Transaction
Documents.

(j)     The Company shall have delivered to each Holder the opinions of Katten
Muchin Rosenman LLP, the Company’s outside counsel, dated as of the Closing
Date, in substantially the forms of Exhibit D and Exhibit E attached hereto.

(k)     The Company shall have delivered a certificate, executed by a duly
authorized executive officer of the Company and dated as of the Closing Date,
certifying (A) the resolutions adopted by the Board in a form attached hereto as
Exhibit F, (B) the Third Amended and Restated Bylaws of the Company (the
“Bylaws”) as in effect at the Closing, (C) the conditions set forth in
Section 1.3(c) have been satisfied, and (D) all Bank Regulatory Approvals, if
any, required to be obtained by the Company or any Subsidiary prior to
consummation of the Transactions have been obtained.

(l)     Since the date of this Agreement, there shall not have been a Material
Adverse Change (as defined in the Purchase Agreement).

(ii)     The obligations of the Company hereunder to consummate the transactions
contemplated hereby 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 Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Holder with prior written
notice thereof:

(a)     Each of the Holders shall have duly executed and delivered to the
Company each of the Transaction Documents to which it is a party;

(b)     Each of the Holders shall have delivered, or caused to be delivered, to
the Company such Holder’s Exchanged Common Shares; and

(c)     All material governmental consents, orders and approvals legally
required for the consummation of the transactions contemplated hereby shall have
been obtained and be in full force and effect, including each of the Bank
Regulatory Approvals.

(d)     No court or other Governmental Authority having jurisdiction over the
Company or any of the Subsidiaries or any Holder 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 (1) has the
effect of making illegal or otherwise prohibiting or invalidating consummation
of any of the Transactions or any provision of this Agreement or any of the
other Transaction Documents or (2) seeks to restrain, prohibit or invalidate the
consummation of any of the Transactions or to invalidate any provision of this
Agreement or any of the other Transaction Documents.

(e)     The Holders shall have authorized and directed the release of $9,150,000
from the Escrow Account and duly executed and delivered to the Company a letter
of direction,

 

- 4 -

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

in substantially the form attached hereto as Exhibit G, and such letter shall
not have been revoked by either of the Holders.

ARTICLE II

Representations and Warranties of the Holders

Each of the Holders, severally and not jointly, does hereby make the following
representations and warranties, each of which is true and correct on the date
hereof and the Closing Date and shall survive the Closing Date and the
transactions contemplated hereby to the extent set forth herein.

Section 2.1     Existence and Power.

    (a)    Such Holder is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has the power,
authority and capacity to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.

    (b)    The execution by such Holder of this Agreement and each of the other
Transaction Documents to which such Holder is a party and the consummation by
such Holder of the transactions contemplated hereby and thereby do not and will
not (i) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Holder is a party, or
(ii) subject to receipt of any Bank Regulatory Approvals, result in a violation
of any Requirement of Law applicable to such Holder, except, in the case of
clauses (i) and (ii) above, where such defaults, terminations, amendments,
accelerations, cancellations, or violations would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect (A) on the
transactions contemplated by this Agreement or the other Transaction Documents
or (B) on the authority or ability of such Holder to enter into and perform its
obligations under this Agreement and the other Transaction Documents. For
purposes hereof, “Bank Regulatory Approvals” means the approvals and consents of
each of the Bank Regulatory Authorities which are required to be obtained by any
party hereto (or deemed advisable by any party hereto in its sole discretion)
prior to consummation of the Transactions; “Bank Regulatory Authorities” means
the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the
Illinois Department of Financial and Professional Regulation; and “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.

Section 2.2     Valid and Enforceable Agreement; Authorization. This Agreement
has been duly executed and delivered by such Holder and constitutes a legal,
valid and binding obligation of such Holder, enforceable against such Holder in
accordance with its terms, except as such enforcement may be subject to
(a) bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors’ rights generally, and
(b) general principles of equity. As of the Closing Date, each of the other
Transaction Documents to which such Holder is a party will have been duly
executed and delivered by such

 

- 5 -

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

Holder and will constitute a legal, valid and binding obligation of such Holder,
enforceable against such Holder in accordance with its terms, except as such
enforcement may be subject to (x) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors’ rights generally, and (y) general principles of equity.

Section 2.3     Title to Exchanged Common Shares. Such Holder is a beneficial
owner of and has the investment power, including the power to dispose of, and
has good and valid title to, such Holder’s Exchanged Common Shares being
exchanged by such Holder as set forth on Exhibit H attached hereto, free and
clear of any mortgage, lien, pledge, charge, security interest, encumbrance,
title retention agreement, option, equity or other adverse claim thereto. Such
Holder has not, at any time, in whole or in part, (i) assigned, transferred,
hypothecated, pledged or otherwise disposed of such Holder’s Exchanged Common
Shares or its rights in such Holder’s Exchanged Common Shares being exchanged by
such Holder hereby, or (ii) given any Person any transfer order, power of
attorney or other authority of any nature whatsoever with respect to such
Holder’s Exchanged Common Shares. For purposes 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.

Section 2.4     No Public Market. Such Holder understands that no public market
now exists for the Series D Preferred Shares, and that the Company has made no
assurance that a public market will ever exist for the Series D Preferred
Shares.

Section 2.5     History of Exchanged Common Shares. Such Holder acquired such
Holder’s Exchanged Common Shares on May 13, 2010, and has held such Holder’s
Exchanged Common Shares continuously since such respective date.

Section 2.6     Restrictions on Series D Preferred Shares. Such Holder
understands, acknowledges and agrees that, upon issuance, such Holder’s Series D
Preferred Shares shall be subject to the same restrictions on transfer under
applicable securities laws, and bear the same restrictive legends, as such
Holder’s Exchanged Common Shares; provided, that, for purposes of Rule 144 under
the Securities Act, or any successor thereto (“Rule 144”), the holding period of
such Holder’s Exchanged Common Shares may be tacked onto the holding period of
such Holder’s Series D Preferred Shares.

ARTICLE III

Representations, Warranties and Covenants of the Company

The Company hereby makes the following representations, warranties and
covenants, each of which is true and correct on the date hereof and the Closing
Date and shall survive the Closing Date and the transactions contemplated hereby
to the extent set forth herein.

Section 3.1     Existence and Power.

    (a)     The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the power,
authority and capacity to own its properties, to carry on its business as
currently conducted and proposed to be

 

- 6 -

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

conducted, to execute and deliver this Agreement, the Registration Rights
Agreement and each of the other agreements entered into by the Company in
connection with the transactions contemplated by this Agreement (collectively,
the “Transaction Documents”), to perform the Company’s obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.

    (b)    Subject to (i) receipt of any Bank Regulatory Approvals to be
obtained by any party hereto prior to consummation of the transactions
contemplated hereby, (ii) the filing with the Secretary of State of the State of
Delaware of the Certificate of Designations prior to the issuance of the Series
D Preferred Shares or the Series E Preferred Shares, (iii) if required, the
filing of the NASDAQ Application with the NASDAQ Stock Market, and (iv) the
filings contemplated by the Registration Rights Agreement and Sections 3.5 and
3.6, the execution, delivery and performance of this Agreement and the other
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including the issuance of all of
the Series D Preferred Shares, the Series E Preferred Shares, the Prairie Notes
and the Prairie Warrants, the shares of Series D Preferred (the “Series D
Conversion Shares”) and the Series C Preferred Shares (the “Series C Conversion
Shares”) issuable upon conversion of the Series E Preferred Shares, and the
shares of Common Stock issuable upon conversion of the Series D Preferred
Shares, the Series D Conversion Shares and the Series C Conversion Shares and
upon exercise of the Prairie Warrants (the “Common Conversion Shares,
collectively with the Series D Conversion Shares and the Series C Conversion
Shares, the “Underlying Stock”), (A) do not require the consent, approval,
authorization, order, registration or qualification of, or filing with, any
governmental or self-regulatory authority or court, or body or arbitrator having
jurisdiction over the Company; (B) do not and will not conflict with or violate
any provision of the Third Amended and Restated Certificate of Incorporation of
the Company (the “Certificate of Incorporation”) or the Bylaws; and (C) do not
and will not conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party, or result in a violation of any Requirement of Law
applicable to the Company or any of its subsidiaries or any regulation of the
NASDAQ Stock Market applicable to the Company; except, in the case of clauses
(A) and (C) above, where the failure to make such filings or obtain such
consents, approvals, authorizations, orders, registrations or qualifications
would not, and where such defaults, terminations, amendments, accelerations,
cancellations, or violations would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect (I) on the business,
condition (financial or otherwise), properties or results of operations of the
Company and its subsidiaries, considered as one enterprise, (II) on the
transactions contemplated by this Agreement or the other Transaction Documents
or (III) on the authority or ability of the Company to enter into and perform
its obligations under this Agreement and the other Transaction Documents.

Section 3.2     Valid and Enforceable Agreement; Authorization. The execution,
delivery and performance of this Agreement and the other Transaction Documents
by the Company and the consummation by the Company of the Transactions,
including the issuance of the Series D Preferred Shares, the Series E Preferred
Shares, the Prairie Notes and the Prairie Warrants, and the reservation for
issuance and the issuance of the Underlying Stock upon conversion of the Series
D Preferred Shares, the Series E Preferred Shares, the Series D Conversion
Shares or the

 

- 7 -

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

Series C Conversion Shares, as applicable, or upon exercise of the Prairie
Warrants, have been duly authorized by the Board of Directors of the Company
(the “Board of Directors”), and no further consent, authorization or approval is
required therefor by the Company or the Board of Directors or the Company’s
stockholders under the Certificate of Incorporation, the Bylaws, or applicable
law. This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that such enforcement
may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors’ rights
generally, and (b) general principles of equity. As of the Closing Date, each of
the other Transaction Documents will have been duly executed and delivered by
the Company and will constitute a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
such enforcement may be subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors’ rights generally, and (b) general principles of equity.

Section 3.3     Valid Issuance of Securities.

(a)     Upon issuance to the Holders, each of the Series D Preferred Shares and
the Series E Preferred Shares will have been duly authorized and validly issued
without violation of the preemptive rights of any Person and will be fully paid
and nonassessable, free and clear of any liens or encumbrances, taxes or charges
with respect to the issuance thereof and shall be entitled to the rights and
preferences set forth in the Certificate of Designations. As of the Closing, a
number of (i) shares of Series D Preferred shall have been duly authorized and
reserved for issuance which equals at least the maximum number of shares of
Series D Preferred then issuable upon conversion of the Series E Preferred,
(ii) Series C Preferred Shares shall have been duly authorized and reserved for
issuance which equals at least the maximum number of Series C Preferred Shares
then issuable upon conversion of the Series E Preferred, and (iii) shares of
Common Stock shall have been duly authorized and reserved for issuance which
equals at least the maximum number of shares of Common Stock then issuable upon
conversion of the Series D Preferred Shares, the Series D Conversion Shares and
the Series C Conversion Shares. Upon issuance or conversion in accordance with
the Certificate of Designations or the Series C Certificate of Designations, as
applicable, the shares of Underlying Stock issuable upon conversion of the
Series D Preferred Shares, the Series D Conversion Shares, the Series C
Conversion Shares and the Series E Preferred, as applicable, will be validly
issued, fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens or encumbrances or charges with respect to the issuance
thereof, with the holders being entitled to all rights accorded to a holder of
Underlying Stock.

(b)     Upon issuance to the Holders, the Prairie Warrants will have been duly
authorized and validly issued without violation of the preemptive rights of any
Person and will be free and clear of any liens or encumbrances, taxes or charges
with respect to the issuance thereof and shall be entitled to the rights set
forth in the Prairie Warrants. As of the Closing, a number of shares of Common
Stock shall have been duly authorized and reserved for issuance which equals at
least the maximum number of shares of Common Stock then issuable upon exercise
of the Prairie Warrants. Upon issuance or exercise in accordance with the
Prairie Warrants, the shares of Common Stock issuable upon exercise of the
Prairie Warrants will be

 

- 8 -

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

validly issued, fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens or encumbrances or charges with respect to the
issuance thereof, with the holders being entitled to all rights accorded to a
holder of shares of Common Stock.

(c)     Subject to the accuracy of the representations and warranties of the
Holders in this Agreement, the issuance by the Company of the Series D Preferred
Shares is, and the issuance of the shares of Common Stock issuable upon
conversion of the Series D Preferred Shares will be, exempt from registration
under the Securities Act and state securities laws pursuant to the exemption
from registration set forth in Section 3(a)(9) of the Securities Act and similar
exemptions under state law.

Section 3.4     Legal Proceedings. There is no 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, to which the Company or any of its subsidiaries is a
party pending or, to the knowledge of the Company, threatened or contemplated,
before any court, administrative or regulatory body, governmental authority,
arbitrator, mediator or similar body that challenges the validity or propriety
of any of the transactions contemplated hereby.

Section 3.5     Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Series D Preferred Shares, the Series E Preferred Shares, the
Prairie Notes and the Prairie Warrants as required under Regulation D, as
promulgated by the United States Securities and Exchange Commission under the
Securities Act, and to provide a copy thereof to each Holder promptly after such
filing. The Company shall, on or before the Closing Date, take such action, at
the Company’s sole expense, as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Series D
Preferred Shares, the Series E Preferred Shares, the Prairie Notes and the
Prairie Warrants for sale to the Holders at the Closing pursuant to this
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 the Holders on or prior to the
Closing Date. At the Company’s sole expense, the Company shall make all filings
and reports relating to the offer and sale of the Securities required under
applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.

Section 3.6     Disclosure of Transactions and Other Material Information. As
soon as reasonably practicable, but in no event later than the fourth business
day following the date of this Agreement, the Company shall issue a press
release and file a Current Report on Form 8-K describing the terms of the
transactions contemplated by the Transaction Documents in the form required by
the Securities Exchange Act of 1934, as amended, and attaching the material
Transaction Documents as exhibits to such filing.

Section 3.7     Delivery of Certificates. Whenever any Holder Transfers (as
defined in the Certificate of Designations) any shares of Series D Preferred
and/or any Series E Preferred Shares (as defined below), as applicable, pursuant
to a Widely Dispersed Offering or Conversion Event (as defined in the
Certificate of Designations), the Company shall use reasonable best efforts to
cause the timely preparation and delivery of certificates (which shall not bear
any restrictive legends to the extent the applicable transactions were pursuant
to a Registration

 

- 9 -

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

Statement (as defined in the Registration Rights Agreement) or public sales
pursuant to Rule 144 as certified by the applicable Holder to the Company)
representing shares of Common Stock or Series C Preferred Shares, as applicable,
issued upon conversion of any shares of Series D Preferred and/or any Series E
Preferred Shares, as applicable, or upon the sale of any shares of Series D
Preferred and/or any Series E Preferred Shares, as applicable, pursuant to a
Widely Dispersed Offering or Conversion Event, and enable such securities to be
in such denominations and registered in such names as such transferring Holders
may request. Such reasonable best efforts shall include, but not be limited to,
using its reasonable best efforts to cause the Company’s counsel to deliver any
legal opinions required by the transfer agent or managing underwriter in order
to prepare and deliver such certificates and reflect such transfer and
conversion as well as taking such other actions as reasonably requested by a
Holder in order to give effect to the provisions of this Section 3.7. No Holder
shall be required to deliver or cause to be delivered any legal opinion in
connection with getting such securities properly certificated (without any
restrictive legends) in accordance with this Section 3.7.

ARTICLE IV

Restructured Investment

Section 4.1     The Company and each of the Holders hereby acknowledge and agree
(i) that each other party hereto desires to consummate the Restructured
Investment as of the Closing, and (ii) that, in lieu of the Company selling to
each Holder, and each Holder purchasing from the Company, such Holder’s Series C
Preferred Shares pursuant to the Purchase Agreement, the Company shall sell to
each Holder, and each Holder shall purchase from the Company, pursuant to (and
subject to the terms and conditions of) the Purchase Agreement and concurrently
with the Closing a number of shares of a series of convertible perpetual
preferred stock of the Company designated as 8% Nonvoting, Non-Cumulative,
Convertible Perpetual Preferred Stock, Series E (the “Series E Preferred
Shares”) equal to the number of Series C Preferred Shares such Holder originally
agreed to purchase from the Company, and which the Company agreed to sell to
such Holder, pursuant to the Purchase Agreement (collectively, the “Series E
Issuance”). The Company and each of the Holders hereby acknowledge and agree
that, the Company shall sell to each Holder, and each Holder shall purchase from
the Company, contemporaneously with the Series E Issuance, a Prairie Note in the
principal amount which the Company agreed to issue to such Holder, and such
Holder agreed to purchase from the Company, pursuant to the Purchase Agreement,
together with a Prairie Warrant to purchase a number of shares of Common Stock
which the Company originally agreed to issue to such Holder pursuant to the
Purchase Agreement. The Company and each of the Holders further acknowledge and
agree that, effective as of the date hereof, the defined terms used in the
Purchase Agreement shall be deemed to reflect the Restructured Investment as
contemplated hereby, including, for the avoidance of doubt, that references in
the Purchase Agreement to a Holder’s “Preferred Shares,” shall mean such
Holder’s Series E Preferred Shares. Each Holder shall be entitled to all of the
representations, warranties, covenants and protections set forth in the Purchase
Agreement with respect to the Series E Preferred Shares, the Prairie Notes and
the Prairie Warrants, in each case up to and including the date of the closing
of the transactions thereunder.

Section 4.2     Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Closing, by mutual written consent of the Company and
the Holders.

 

- 10 -

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

 

Section 4.3     Termination by Either Company or Holders. This Agreement may be
terminated by either the Company or the Holders at any time prior to Closing if
the Closing has not occurred on or before December 31, 2010 (the “Outside
Date”); provided, however, that the right to terminate this Agreement under this
clause will not be available to any party to this Agreement whose failure to
fulfill any of its obligations under this Agreement has been a principal cause
of, or resulted in, the failure of the Closing to have occurred by such date.

Section 4.4     Effect of Termination. In the event that this Agreement shall be
terminated pursuant to Section 4.2 or Section 4.3, all further obligations of
the parties under this Agreement shall terminate without further liability of
any party to another. A termination under Section 4.2 or Section 4.3 shall not
relieve any party of any liability for a breach of, or for any misrepresentation
under this 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 4.4 shall relieve either party to
this Agreement of liability for a breach of a covenant or obligation under this
Agreement prior to the Closing. In the event that this Agreement shall be
terminated pursuant to Section 4.2 or Section 4.3, all amounts in the Escrow
Account shall be released to such account(s) designated by the Holders.

ARTICLE V

Miscellaneous Provisions

Section 5.1     Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this 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
for each of the Company and the Holders shall be as set forth in the Purchase
Agreement.

Section 5.2     Entire Agreement. This Agreement, the Registration Rights
Agreement, the Purchase Agreement as affected hereby and the other documents and
agreements executed in connection with the transactions contemplated hereby
embody the entire agreement and understanding of the parties hereto with respect
to the subject matter hereof and supersede all prior and contemporaneous oral or
written agreements, representations, warranties, contracts, correspondence,
conversations, memoranda and understandings between or among the parties or any
of their agents, representatives or affiliates relative to such subject matter,
including any term sheets, emails or draft documents.

Section 5.3     Assignment; Binding Agreement. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the parties hereto and their successors and assigns.

Section 5.4     Counterparts. This Agreement may be executed in multiple
counterparts, and on separate counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. Any counterpart or other signature

 

- 11 -

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

hereupon delivered by facsimile or other electronic transmission shall be deemed
for all purposes as constituting good and valid execution and delivery of this
Agreement by such party.

Section 5.5     Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to
specific performance of the terms and provisions hereof, in addition to any
other remedy to which they are entitled at law or in equity.

Section 5.6     Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Delaware,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Delaware or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of
the state and federal courts sitting in the State of Delaware for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

Section 5.7     No Third Party Beneficiaries or Other Rights. Nothing herein
shall grant to or create in any Person not a party hereto, or any such Person’s
dependents or heirs, any right to any benefits hereunder, and no such party
shall be entitled to sue any party to this Agreement with respect thereto.

Section 5.8     Waiver; Consent. This Agreement may not be changed, amended,
terminated, augmented, rescinded or discharged (other than in accordance with
its terms), in whole or in part, except by a writing executed by the parties
hereto. No waiver of any of the provisions or conditions of this Agreement or
any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party hereto claimed to have given
such waiver or consented thereto. Except to the extent otherwise agreed in
writing, no waiver of any term, condition or other provision of this Agreement,
or any breach thereof shall be deemed to be a waiver of any other term,
condition or provision or any breach thereof, or any subsequent breach of the
same term, condition or provision, nor shall any forbearance to seek a remedy
for any noncompliance or breach be deemed to be a waiver of a party’s rights and
remedies with respect to such noncompliance or breach.

 

- 12 -

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

 

Section 5.9     Construction; Interpretation; Certain Terms. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Section, schedule,
exhibit, recital and party references are to this Agreement unless otherwise
stated. The words “hereof,” “herein,” “hereunder” and words of similar import
shall refer to this Agreement as a whole and not to any particular section or
provision of this Agreement, and reference to a particular section of this
Agreement shall include all subsections thereof. The term “including” as used in
this Agreement shall mean including, without limitation, and shall not be deemed
to indicate an exhaustive enumeration of the items at issue. All terms and words
used in this Agreement, regardless of the number or gender in which they are
used, shall be deemed to include any other number and any other gender as the
context may require. No party, nor its counsel, shall be deemed the drafter of
this Agreement for purposes of construing the provisions of this Agreement.

Section 5.10     No Broker. Each party hereto represents and warrants that it
has not engaged any third party as broker or finder or incurred or become
obligated to pay any broker’s commission or finder’s fee in connection with the
transactions contemplated by this Agreement other than such fees and expenses
for which it shall be solely responsible.

Section 5.11     Reasonable Best Efforts; Further Assurances. Each party hereto
shall use its reasonable best efforts to timely satisfy each of the conditions
to be satisfied by it as provided in Section 1.3 of this Agreement, except where
such party is entitled to act in its sole discretion. Each of the Holders and
the Company hereby agree to execute and deliver, or cause to be executed and
delivered, such other documents, instruments and agreements, and take such other
actions, as either party may reasonably request in connection with the
transactions contemplated by this Agreement. Notwithstanding the foregoing or
anything to the contrary herein or in the Purchase Agreement, no Holder shall be
required to take any action pursuant to this Section 5.11 or Section 4(f),
Section 4(g) or Section 7(j) of the Purchase Agreement that is materially
adverse to such Holder (as determined by such Holder in its sole discretion).

Section 5.12     Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

Section 5.13     Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.

*  *  *  *  *  *

 

- 13 -

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

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed as of the date first above written.

 

COMPANY: TAYLOR CAPITAL GROUP, INC.

By:

 

/s/ Mark A. Hoppe

Name:

 

Mark A. Hoppe

Title:

 

Chief Executive Officer

HOLDERS: PRAIRIE CAPITAL IV, L.P.

By:  

 

Daniels & King Capital IV, L.L.C.

Its:

 

General Partner

By:

 

/s/ C. Bryan Daniels

Name:

 

C. Bryan Daniels

Title:

 

Managing Member

PRAIRIE CAPITAL IV QP, L.P.

By:  

 

Daniels & King Capital IV, L.L.C.

Its:

 

General Partner

By:

 

/s/ C. Bryan Daniels

Name:

 

C. Bryan Daniels

Title:

 

Managing Member

 

[Signature Page to Exchange Agreement]

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

 

Exhibit H

 

      

HOLDER

  

EXCHANGED COMMON

SHARES

         

Prairie Capital IV, L.P.

  

202,665

         

Prairie Capital IV QP, L.P.

  

202,665

         

Total

  

405,330