Document:

exv10w6

 

EXHIBIT 10.06

EXECUTION COPY

December 14, 2007

Mr. Ralph B. Mandell

70 West Madison Street

Suite 200

Chicago, Illinois 60602

Dear Ralph:

     Please find enclosed a term sheet agreement setting forth the terms of your employment and
going forward compensation with PrivateBancorp, Inc. (“PrivateBancorp”). This term sheet agreement
will replace your existing employment agreement with PrivateBancorp, dated July 1, 2001 upon your
acceptance by signature below. As we discussed, your future compensation includes certain
significant equity awards.

     This offer has been approved by the Board of PrivateBancorp and will remain open for your
acceptance until 5:00 p.m. (C.S.T.) December 28, 2007. Please signify your acceptance of this
offer by signing as indicated below. If you do not sign and return your acceptance of the term
sheet agreement by such date and time, the special retention performance share unit award that was
granted on November 1, 2007 will be forfeited and you will not be entitled to enhanced vesting and
exercise protections under the special retention performance stock option and time-vested stock
option awards; your 37,500 share succession restricted stock unit award is not subject to that
condition. You may return this offer letter to the following confidential fax (ATT: Chris Zinski,
General Counsel) at 312.683.1493.

Sincerely,

/s/ James M. Guyette

James M. Guyette

Chairman, Compensation Committee

Accepted:    /s/ Ralph B. Mandell 
         
          
         
          
         Date:   December 14,
2007     
              
       

          Ralph B. Mandell

 

 

EXECUTION COPY

RALPH B. MANDELL

	 	 	 
	Term; Position;
Reporting Relationship

	 	For the term ending December 31, 2012, you will
be employed as Chairman of PrivateBancorp, Inc.
(“PrivateBancorp”), unless sooner terminated as
provided below.
	 
	 	 
	 

	 	During the term, you will be renominated as a
member of the Board of Directors of
PrivateBancorp (“Board”) and the Board of
Directors of The PrivateBank and Trust Company
(the “Bank”), at such time and from time to time
as your Board term may expire; and
	 
	 	 
	 

	 	During the term, you will report to the Board.
	 
	 	 
	Base Salary

	 	During your employment, $660,000 per year,
effective as of January 1, 2007, increasing to
not less than $710,000 per year on January 1,
2008, to not less than $760,000 per year on
January 1, 2009, to $2,000,000 on January 1,
2010, and decreasing to $1,000,000 on January 1,
2011, provided you are employed on such dates,
subject to increase, but not decrease, from time
to time (other than permitted proportionate
reductions applicable to all similarly situated
senior executives of the Bank, unless such
reduction occurs during the two-year period
commencing upon the occurrence of a Change in
Control), in the sole discretion of the
Compensation Committee of the Board, and any such
increased (or decreased) amount shall mean “Base
Salary” for purposes of this term sheet
agreement.
	 
	 	 
	Annual Bonus

	 	During your employment during fiscal years 2007,
2008 and 2009: 185% of Base Salary at target, in
accordance with the annual bonus plan applicable
to senior executives as in effect from time to
time (subject to Section 162(m) of the Internal
Revenue Code (“Code”) while applicable to you).
	 
	 	 
	Annual Equity Awards

	 	During your employment, you will receive annual
equity awards under the PrivateBancorp 2007
Long-Term Incentive Compensation Plan approved by
the Board on October 31, 2007 (“Plan”), at the
same time as annual equity awards are granted to
senior executives (but not later than December 31
of each such fiscal year), for each of the 2007,
2008 and 2009 fiscal years, having a value of
$600,000 per year (based on the FAS 123R value
assigned to such award by PrivateBancorp)
(“Annual Equity Awards”).
	 
	 	 
	 

	 	Your Annual Equity Awards will be granted
one-half as time-vested stock options and
one-half as time-vested restricted stock. It is
anticipated that the Plan will be submitted to
the shareholders for approval at the 2008 annual
meeting. If the Plan is not approved by
shareholders, your Annual Equity Awards will be
granted in unit form payable in cash (or in
shares in the event such approval is thereafter
obtained). Your Annual Equity Awards will have
the same terms as apply to annual equity awards
of such type (restricted stock or options, as the
case may be) awarded to other executives;

 

 

	 	 	 
	 

	 	provided, your Annual Equity Awards will fully
vest (and stock options will be exercisable and
any restricted stock units will be payable,
subject to compliance with Section 409A of the
Code) on the first anniversary of the grant date
or as further provided below.
	 
	 	 
	 

	 	The treatment of your Annual Equity Awards upon a
termination of your employment is governed by the
terms under Attachment A.
	 
	 	 
	 

	 	You will be eligible for any additional future
equity awards from time to time, in accordance
with the terms of PrivateBancorp’s incentive
plans as then in effect, in such amount, if any,
and on such terms as is determined in the sole
discretion of the Compensation Committee.
	 
	 	 
	Special Retention 

Equity Award

	 	On November 1, 2007, you received an award of
112,500 stock options and 45,000 performance
share units (each such unit representing one
share of PrivateBancorp common stock) under the
Plan (“Special Retention Equity Award”). The
stock options have an exercise price of $26.10
and a 10-year term. Vested performance share
units will be payable in shares of PrivateBancorp
common stock within 30 days after the date on
which such performance share units vest;
provided, the vested units and any exercise of
vested stock options will be payable in cash if
the Plan is not approved by shareholders. The
award of performance share units and one-half of
the stock options (“performance stock options”)
are subject to performance vesting requirements
and continued service during the performance
period generally applicable to such awards, and
the other one-half of the stock options
(“time-vesting stock options”) are subject to
time vesting requirements only, all as more
particularly described on Attachment B hereto.
	 
	 	 
	 

	 	The treatment of your Special Retention Equity
Award upon a termination of your employment is
governed by the terms under Attachment A.
	 
	 	 
	 

	 	Upon the occurrence of a Change of Control during
your employment, you will become fully vested in
your Special Retention Equity Award, the vested
performance share units thereunder will be
immediately payable and the stock options
thereunder will be fully exercisable (except, as
may apply, such payment or exercise will be
postponed until the earliest date permitted under
Section 409A of the Code).
	 
	 	 
	 

	 	To the extent that PrivateBancorp has or
hereafter enters into a broker-assisted (FRB Reg.
T) cashless exercise program for stock option
awards to employees of the Bank, the stock
options under the Special Retention Equity Award
will be included in such program.
	 
	 	 
	 

	 	The performance share units and stock options
under the Special Retention Equity Award are
otherwise subject to the terms and conditions of
the Plan.
	 
	 	 
	 

	 	If you have not entered into this term sheet
agreement within 30 days after the date
irrevocably offered to you, (i) the performance
share units under the Special Retention Equity
Award will be immediately forfeited and (ii) you

2

 

	 	 	 
	 

	 	will not be entitled to post-termination vesting
and an extended exercise period for your
performance-vesting and time-vesting stock
options under the Special Retention Equity Award,
provided in each case under Attachment A.
	 
	 	 
	 

	 	“Change of Control” is defined on Attachment C.
	 
	 	 
	Succession Equity Award

	 	On November 1, 2007, you were granted a
time-vesting equity award for 37,500 restricted
stock units pursuant to the Plan, each such unit
representing one share of PrivateBancorp common
stock, vesting at the rate of 12,500 restricted
stock units on each of December 31, 2007,
December 31, 2008 and December 31, 2009, provided
you are employed on such date for such units to
so vest (“Succession Equity Award”). Vested
restricted stock units under your Succession
Equity Award will be payable to you in shares of
PrivateBancorp common stock (or in cash if the
Plan is not approved by shareholders prior to the
date on which payment is due to you) on the
payroll payment date for the second complete
payroll occurring in the fiscal year following
the date of vesting, and having such other terms
and conditions as are set forth in the restricted
stock unit award agreement delivered to you;
provided, (x) in the case of any vesting
occurring as a result of the termination of your
employment, payment will be postponed beyond the
above payment date, to the extent necessary to
satisfy Section 409A(a)(1)(B)(i) of the Code
because you are a “specified employee” (within
the meaning of Treasury Regulation Section
1.409A-1(i)) on the date of such termination,
until the earlier of (i) the date that is six
months following your termination of employment
or (ii) the date of your death following such
employment termination, or, if applicable, until
such later date that is not earlier than six
months following a later date constituting a
“separation from service” under Treasury
Regulation Section 1.409A-1(h), and (y) in the
case of any vesting occurring as a result of the
occurrence of a Change of Control, payment will
be made in such event as provided below.
	 
	 	 
	 

	 	The treatment of your Succession Equity Award
upon a termination of your employment is governed
by the terms under Attachment A.
	 
	 	 
	 

	 	Your Succession Equity Award will become fully
vested and payable upon a Change of Control
during your employment (except, as may apply,
such payment will be postponed until the earliest
date permitted under Section 409A of the Code).
	 
	 	 
	Benefits; Perquisites

	 	During your employment, you will continue to be
eligible to participate in the Bank’s medical and
dental insurance plans, participate in the
flexible benefits plan and the PrivateBancorp,
Inc. Savings, Retirement and Employee Stock
Ownership Plan (KSOP), and be eligible for life
insurance, accidental death and dismemberment
insurance and long term disability insurance
benefits provided to senior executives of
PrivateBancorp as in effect from time to time.

3

 

	 	 	 
	 

	 	During your employment, you will also be
furnished with such perquisites which may from
time to time be provided by PrivateBancorp and
the Bank which are suitable to your position and
adequate for the performance of your duties
hereunder and reasonable in the circumstances.
Such perquisites include, but are not limited to,
reimbursement for dues at one approved country
club and one approved luncheon club in the
Chicago Metropolitan area.
	 
	 	 
	Vacation

	 	During your employment, you will be eligible for
vacation consistent with recent past practice.
	 
	 	 
	Severance Benefits

	 	During your employment, upon an involuntary
termination of your employment by PrivateBancorp
without Cause or a voluntary termination of
employment by you for Good Reason prior to
December 31, 2012 (except as provided under
Change of Control Severance, below), you will
receive:
	 
	 	 
	 

	 	(i) A pro rata bonus based on your prior year’s
earned bonus (if any) and the number of days
elapsed during the year in which the date of
termination occurs (the “Pro Rata Bonus”);
	 
	 	 
	 

	 	(ii) If such termination occurs prior to January
1, 2010, severance payments equal to 150% of the
sum of (A) your Base Salary (disregarding any
reduction of your Base Salary constituting Good
Reason), plus (B) the average of the sum of the
bonus amounts earned by you with respect to the
3 calendar years immediately preceding the
calendar year in which your date of termination
occurs, payable in substantially equal monthly
installments for a period of 18 months in
accordance with regular payroll practices;
provided, such amount under this clause (ii) will
not be less than $3,000,000. If such termination
occurs on or after January 1, 2010 and prior to
July 1, 2010, severance payments equal to
$3,000,000 payable in substantially equal monthly
installments until December 31, 2012 in
accordance with regular payroll practices. If
such termination occurs on or after July 1, 2010,
severance payments equal to the product of (x)
$3,000,000 multiplied by (y) the fraction the
numerator of which is the number of days from and
after the date of termination through December
31, 2012 and the denominator of which is 915,
payable in substantially equal monthly
installments until December 31, 2012 in
accordance with regular payroll practices.
	 
	 	 
	 

	 	(iii) Continuation for 18 months, but not later
than December 31, 2012, of your right to
maintain COBRA continuation coverage under the
applicable Bank plans at premium rates on the
same “cost-sharing” percentage basis as the
applicable premiums paid for such coverage by
active Bank employees as of your date of
termination; and
	 
	 	 
	 

	 	(iv) Base Salary earned but not paid and
vacation accrued and unused through your
termination date, any annual bonus that is earned
in a fiscal

4

 

	 	 	 
	 

	 	year preceding the fiscal year of
your termination but not paid as of the
termination date, and such other earned but
unpaid amounts under the employee benefit plans
in which you participate as of the termination
date that are payable to you in accordance with
the terms thereof, (collectively “Accrued
Obligations”).
	 
	 	 
	 

	 	Any payments and benefits to you under this
Severance Benefits section of this term sheet
agreement shall not be reduced by the amount of
any compensation or benefits earned as a result
of your subsequent employment.
	 
	 	 
	 

	 	If you are a “specified employee” of
PrivateBancorp and its affiliates (as defined in
Treasury Regulation Section 1.409A-1(i)), then
you shall receive payments during the 6 month
period immediately following your date of
termination equal to the lesser of (x) the amount
payable under this severance provision or (y) two
(2) times the compensation limit in effect under
Code Section 401(a)(17) for the calendar year in
which your date of termination occurs (with any
amounts that otherwise would have been payable
under this severance provision during such 6
month period being paid on the first regular
payroll date following the 6 month anniversary of
the date of termination). Additionally, each
installment payment under this section is
intended to be treated as one of a series of
separate payments for purposes of Section 409A of
the Code and Treasury Regulation Section
1.409A-2(b)(2)(iii).
	 
	 	 
	 

	 	As a condition to a right to any payment or
benefit under this Severance Benefits section,
such termination of employment must constitute a
“separation from service” under Treasury
Regulation Section 1.409A-1(h).
	 
	 	 
	Change of Control
Severance

	 	Upon an involuntary termination of your
employment by PrivateBancorp without Cause or a
voluntary termination of your employment by you
for Good Reason occurring within six months prior
to, or two years after, a Change of Control, and
that also is prior to December 31, 2009, you will
receive:
	 
	 	 
	 

	 	(i) The Pro Rata Bonus;
	 
	 	 
	 

	 	(ii) Severance equal to 300% of the sum of
(A) your Base Salary (disregarding any reduction
of your Base Salary constituting Good Reason),
plus (B) the greater of (x) your prior year’s
bonus or (y) the average of the sum of the bonus
amounts earned by you with respect to the
3 calendar years immediately preceding the
calendar year in which your date of termination
occurs, payable in a single lump sum payment
within 30 days after the date of termination, or
if your termination of employment occurs within
six months prior to a Change of Control, then
within 5 business days after the Change of
Control you will receive a single lump sum
payment equal to (p) the amounts due you under
this clause (ii) reduced by (q) the sum of all
amounts paid to you under clause (ii) of the
Severance Benefits

5

 

	 	 	 
	 

	 	section of this term sheet
agreement, so that no amount of the lump sum
payment under this clause (ii) is duplicative;
provided, such amount under this clause (ii) (and
for a termination within six months prior to a
Change of Control, the sum of amounts under this
clause (ii) and clause (ii) of the Separation
Benefits section of this term sheet agreement
will not be less than $3,000,000.
	 
	 	 
	 

	 	(iii) Continuation for 36 months of your right to
maintain COBRA continuation coverage under the
applicable Bank plans at premium rates on the
same “cost-sharing” percentage basis as the
applicable premiums paid for such coverage by
active Bank employees as of your date of
termination;
	 
	 	 
	 

	 	(iv) Outplacement for 24 months; and
	 
	 	 
	 

	 	(v) The Accrued Obligations.
	 
	 	 
	 

	 	Any payments and benefits to you under this
Change of Control Severance section of this term
sheet agreement shall not be reduced by the
amount of any compensation or benefits earned as
a result of your subsequent employment.
	 
	 	 
	 

	 	As a condition to a right to any payment or
benefit under this Change of Control Severance
section, such termination of employment must
constitute a “separation from service” under
Treasury Regulation Section 1.409A-1(h).
	 
	 	 
	Code Section 280G

	 	During your employment and thereafter, if any
payments or benefits constitute “excess parachute
payments” (as defined in Code Section 280G), you
will be fully grossed up.
	 
	 	 
	Full Satisfaction;
Release of Claims

	 	Any employment termination payments made and
benefits provided to you under this term sheet
agreement shall be in lieu of any employment
termination or severance payments or benefits for
which you may be eligible under any of the
employee benefit plans, policies or programs of
PrivateBancorp or its affiliates.
	 
	 	 
	 

	 	As a condition precedent to the payment of all
amounts, benefits and vesting of your Annual
Equity Awards, Special Retention Equity Award and
Succession Equity Award, other than your Accrued
Obligations, pursuant to PrivateBancorp’s
involuntary termination of your employment
without Cause or your voluntary termination of
your employment for Good Reason at any time, you
shall execute a waiver and general release of
claims, substantially in the form customarily
obtained by the Bank from its terminating
executive employees, which waiver and general
release of claims is not revoked during any
applicable seven (7) day revocation period. For
the avoidance of doubt, such waiver and general
release will not adversely affect your ability to
enforce the terms of this term sheet

6

 

	 	 	 
	 

	 	agreement,
your indemnification rights under
PrivateBancorp’s by-laws and this term sheet
agreement, your rights to coverage under the
PrivateBancorp’s directors and officers liability
insurance; your and your covered dependents’
rights to COBRA continuation coverage, your
rights to vested employee benefits, and other
rights that cannot be waived by operation of law.
	 
	 	 
	Restrictive Covenants

(confidentiality, 

non-competition, 

non-solicitation)

	 	You will not at any time during or following your
employment with PrivateBancorp, directly or
indirectly, disclose or use on your behalf or
another’s behalf, publish or communicate, except
in the course of your employment and in the
pursuit of the business of PrivateBancorp and the
Bank or any of its subsidiaries or affiliates,
any proprietary information or data of
PrivateBancorp and the Bank or any of its
subsidiaries or affiliates, which is not
generally known to the public or which could not
be recreated through public means and which
PrivateBancorp and the Bank may reasonably regard
as confidential and proprietary. You recognize
and acknowledge that all knowledge and
information which you have or may acquire in the
course of your employment, such as, but not
limited to, the business, developments,
procedures, techniques, activities or services of
PrivateBancorp or the Bank or the business
affairs and activities of any customer,
prospective customer, individual firm or entity
doing business with PrivateBancorp or the Bank
are their sole valuable property, and shall be
held by you in confidence and in trust for their
sole benefit. All records of every nature and
description which come into your possession,
whether prepared by you, or otherwise, shall
remain the sole property of PrivateBancorp or the
Bank and upon termination of your employment, as
the case may be, for any reason, said records
shall be left with PrivateBancorp or the Bank as
part of its property.
	 
	 	 
	 

	 	During the period of your employment and for a
period of 1 year after your termination of
employment for any reason, you will not (except
in your capacity as an employee) directly or
indirectly, for your own account, or as an agent,
employee, director, owner, partner, or consultant
of any corporation, firm, partnership, joint
venture, syndicate, sole proprietorship or other
entity:
	 
	 	 
	 

	 	(i) engage, directly or indirectly, in any
business which has a place of business (whether
as a principal, division, subsidiary, affiliate,
related entity, or otherwise) located within the
area encompassed within a 50 mile radius
surrounding your office, as of the date of
termination of your employment, that provides
banking products, or that provides non-banking
products or services of a type that accounted for
more than 10% of PrivateBancorp’s gross revenues
for the fiscal year immediately preceding such
date of termination, that PrivateBancorp or the
Bank or any of their subsidiaries or affiliates
provide as of such date of termination;
	 
	 	 
	 

	 	(ii) solicit or induce, or attempt to solicit or
induce any client or customer of

7

 

	 	 	 
	 

	 	PrivateBancorp
or the Bank or any of their subsidiaries or
affiliates not to do business with PrivateBancorp
or the Bank or any of its subsidiaries or
affiliates; or
	 
	 	 
	 

	 	(iii) solicit or induce, or attempt to solicit
or induce, any employee or agent of
PrivateBancorp or the Bank or any of their
subsidiaries or affiliates to terminate his or
her relationship with PrivateBancorp or the Bank
or any of their subsidiaries or affiliates.
	 
	 	 
	 

	 	The foregoing provisions shall not be deemed to
prohibit your ownership, not to exceed 5% of the
outstanding shares, of capital stock of any
corporation whose securities are publicly traded
on a national or regional securities exchange or
in the over-the-counter market.
	 
	 	 
	 

	 	You agree that, as PrivateBancorp’s and the
Bank’s sole remedy for any breach (or threatened
breach) of the non-competition covenant at
subparagraph (i) above, respecting your
performance share units and stock options under
your Special Retention Equity Award above:
	 
	 	 
	 

	 	(x) you will immediately forfeit all unexercised
stock options and unpaid performance share units
(whether then vested or unvested) then held by
you and all shares of stock of PrivateBancorp (or
any successor) acquired upon the exercise of
vested stock options and payment of performance
share units and then held by you;
	 
	 	 
	 

	 	(y) you will immediately repay to PrivateBancorp
a cash sum in the principal amount equal to all
gross proceeds (before-tax) realized by you upon
the sale or other disposition of shares of stock
of PrivateBancorp (other than shares relating to
open market purchases by you) occurring at any
time during the period commencing on the date
that is three years before the date of
termination of your employment and ending on the
date that the noncompetition covenant lapses
(“Refund Period”) , together with interest
accrued thereon, from the date of such breach or
threatened breach, at the prime rate (compounded
calendar monthly) as published from time to time
in The Wall Street Journal, electronic edition
(“Interest”); and
	 
	 	 
	 

	 	(z) you will repay to PrivateBancorp a cash sum
equal to fair market value of all shares of stock
of PrivateBancorp (other than shares relating to
open market purchases by you) and all stock
options transferred by you as gifts at any time
during the Refund Period, together with Interest,
and for which purpose, “fair market value” per
share of stock shall be the closing price of one
share of PrivateBancorp common stock on the date
such gift occurs and per stock option shall be
the positive difference, if any, between the fair
market value of a share of stock, above, and the
stock option exercise price.
	 
	 	 
	 

	 	You further agree that a breach (or threatened
breach) of the confidentiality and/or
non-solicitation covenants in subparagraphs (ii)
and (iii) above will

8

 

	 	 	 
	 

	 	result in irreparable harm
to the business of PrivateBancorp and the Bank, a
remedy at law in the form of monetary damages for
any breach (or threatened breach) by you of these
covenants is inadequate, in addition to any
remedy at law or equity for such breach,
PrivateBancorp and the Bank shall be entitled to
institute and maintain appropriate proceedings in
equity, including a suit for injunction to
enforce the specific performance by you of such
obligations and to enjoin you from engaging in
any activity in violation thereof, and the
covenants on your part contained above shall be
construed as agreements independent of any other
provisions in this term sheet agreement, and the
existence of any claim, setoff or cause of action
by you against PrivateBancorp or the Bank,
whether predicated on this term sheet or
otherwise, shall not constitute a defense or bar
to the specific enforcement by PrivateBancorp or
the Bank of said covenants.
	 
	 	 
	 

	 	In the event of a breach or a violation by you of
any of the covenants and provisions above, the
running of the non-compete period (but not your
obligations thereunder) shall be tolled during
the period of the continuance of any actual
breach or violation.
	 
	 	 
	 

	 	You agree that the covenants above are reasonable
with respect to their duration, geographical area
and scope. If the final judgment of a court of
competent jurisdiction declares that any term or
provision above is invalid or unenforceable, you
agree that the court making the determination of
invalidity or unenforceability shall have the
power to reduce the scope, duration or area of
the term or provision, to delete specific words
or phrases, or to replace an invalid or
unenforceable term or provision with a term or
provision that is valid and enforceable and that
comes closest to expressing the intention of the
invalid or unenforceable term or provision, and
this term sheet agreement shall be enforceable as
so modified after the expiration of the time
within which the judgment may be appealed.
	 
	 	 
	Indemnification

	 	You will continue to be indemnified in accordance
with PrivateBancorp’s and the Bank’s bylaws
during your employment and thereafter respecting
your acts or omissions occurring during your
employment. You will also continue to be covered
by PrivateBancorp’s and the Bank’s directors and
officers liability insurance coverage as in
effect from time to time.
	 
	 	 
	Fee Reimbursement

	 	You will be reimbursed for reasonable additional
professional fees incurred by you to review this
term sheet agreement.
	 
	 	 
	Code Section 409A

	 	It is intended that any amounts payable under
this term sheet agreement and PrivateBancorp’s,
the Bank’s and your exercise of authority or
discretion hereunder shall comply with Section
409A of the Code (including the Treasury
regulations and other published guidance relating
thereto) so as not to subject you to the payment
of any interest or additional tax imposed under
Section 409A of the Code. To the extent any
amount payable under this term sheet agreement
would trigger the additional tax imposed by Code

9

 

	 	 	 
	 

	 	Section 409A, this term sheet agreement shall be
modified to avoid such additional tax.
	 
	 	 
	Board Approval

	 	PrivateBancorp represents and warrants to you
that it has taken all corporate action necessary
to authorize and to enter into this term sheet
agreement.
	 
	 	 
	Amendment

	 	This term sheet agreement shall not be amended or
modified except by written instrument executed by
PrivateBancorp and you.
	 
	 	 
	Entire Understanding;
Amendment

	 	This term sheet agreement constitutes the entire
understanding between PrivateBancorp, the Bank,
and you relating to your employment hereunder and
supersedes and cancels all prior written and oral
understandings and agreements with respect to
such matters entered into prior to the date of
your acceptance of this term sheet agreement,
including, for the avoidance of doubt, your
current employment agreement with Private Bancorp
dated as of July 1, 2001, and except for the
terms and provisions of any employee benefit or
other compensation plans (or any agreements or
awards thereunder), referred to in this term
sheet agreement or as otherwise expressly
contemplated by this term sheet agreement.
	 
	 	 
	Binding Agreement

	 	This term sheet agreement shall be binding upon
and inure to the benefit of the heirs and
representatives of you and the successors and
assigns of PrivateBancorp and the Bank.
	 
	 	 
	Governing Law

	 	Illinois.
	 
	 	 
	Recapture of Certain
Incentive Compensation

	 	If PrivateBancorp is required to prepare an
accounting restatement due to the material
noncompliance of PrivateBancorp, during your
employment, as a result of misconduct, with any
financial reporting requirement under the
securities laws, you shall reimburse
PrivateBancorp, promptly upon notice and demand,
for (i) any bonus or other incentive-based or
equity-based compensation received from
PrivateBancorp during the twelve month period
following the first public issuance or filing
with the Securities and Exchange Commission,
whichever occurs first, of the financial document
embodying such financial reporting requirement;
and (ii) any profits realized from the sale of
securities of PrivateBancorp during that twelve
month period.

10

 

ATTACHMENT A

EQUITY TREATMENT UPON TERMINATION

     Anything in this term sheet agreement to the contrary notwithstanding, the following terms
govern the treatment of your Annual Equity Awards, Special Retention Equity Award and Succession
Equity Award (collectively, “Equity Awards”):

     1. “Good Leaver” Termination.

          (a) If, prior to the date on which all of the Equity Awards are fully vested, your employment
terminates due to your death or Disability (as defined in the applicable Equity Award agreement),
involuntary termination by PrivateBancorp without Cause, or voluntary termination by you for Good
Reason or due to your Retirement, the unvested Equity Awards, other than the time-vesting portion
of the stock option under your Special Retention Equity Award, will continue to vest through the
first vesting date occurring on or following the date of such termination, subject to the
applicable terms of each such Equity Award, as if your employment had continued until such vesting
date. The foregoing to the contrary notwithstanding, respecting your Succession Equity Award, if
you cease to be Retired, the continued vesting of that Award will cease and you will forfeit any
then-unvested restricted stock units under that Award.

          (b) In the event of such termination of employment, other than due to Retirement, the
time-vesting portion of the stock option under your Special Retention Equity Award will immediately
fully vest.

          (c) In the event of a termination of employment due to Retirement, you will become vested in a
pro rata portion of the time-vesting portion of the stock option under your Special Retention
Equity Award then outstanding equal to the number of completed months during the vesting period
divided by the number of full months necessary to achieve full vesting of such stock option.

          (d) Upon such termination of employment, your vested Equity Awards granted as stock options
will be exercisable for one year after your date of termination or, if later, one year after the
date on which such stock options become vested after your date of termination (but not beyond the
last day of the stock option term).

     2. For Cause Termination. If, prior to the date on which all of the Equity Awards are
fully vested, your employment is involuntarily terminated by PrivateBancorp due to Cause, you will
immediately forfeit upon such termination (i) all unexercised vested and unvested Equity Awards
granted as stock options, (ii) all unpaid vested and unvested Equity Awards granted as restricted
stock units or performance share units, and (iii) all unvested other Equity Awards.

     3. Resignation Without Good Reason or Retirement. If, prior to the date on which all
of the Equity Awards are fully vested, your employment is voluntarily terminated by you other than
for Good Reason and other than due to your Retirement, (i) you will immediately forfeit upon such
termination all unvested Equity Awards and (ii) all vested Equity Awards granted as stock options
will be exercisable for 90 days following such termination.

11

 

     4. Other Awards. Any equity or other long-term incentive award, granted to you before
or after the date of this term sheet agreement, not constituting an Equity Award will be governed
by the terms of such award.

     5. Definitions. “Cause,” “Good Reason,” “Retirement” and “Retired” are defined on
Attachment C.

12

 

ATTACHMENT B

PRIVATEBANCORP, INC. RETENTION EQUITY DESIGN PROPOSAL

 

EQUITY GRANT FEATURE

 

PERFORMANCE SHARES

 

PERFORMANCE STOCK OPTIONS

TIME-VESTING

STOCK OPTIONS

	1.	 	Allocation of Total Award

	•	 	50% of value of the Awards.

	•	 	25% of value of the Awards.

	•	 	25% of value of the Awards.

	2.	 	Time Vesting

	•	 	N/A

	•	 	N/A

	•	 	20% per fiscal year of service, 1/1/2008-12/31/2012.

	3.	 	Performance Vesting

	•	 	Based on stock price performance objectives: 20% compound annual stock price growth 2008-2012.
	 
	•	 	Stock price base is $27.91.
	 
	•	 	20% of the Award vests per year, based on attainment of stock price objective for that year. Objective must be met for 20 consecutive trading days during that fiscal year to vest.
	 
	•	 	Employed on 12/31 of performance year.
	 
	•	 	If the PIPE (or other investment) does not close by 3/31/08 for at least $150 million capital gross proceeds, the performance restrictions will lapse as to 25% of the Performance Shares and such shares shall be time-vested restricted stock vesting at the rate of 20% per fiscal year of service.

	•	 	Based on EPS performance objectives: 20% compound annual EPS growth 2008 — 2012.
	 
	•	 	Earnings base is $1.65.
	 
	•	 	20% of the Award vests per year, based on attainment of EPS objective for that year.
	 
	•	 	Employed on 12/31 of performance year.

	•	 	None

	4.	 	“Catch-Up” Performance Vesting

	•	 	As of 12/31 each year: To extent not vested, Award will vest for prior years if later year stock price objective is attained.
· Must be employed on 12/31 of year objective is attained.

	•	 	As of 12/31/2012: To extent not vested, Award will vest:

	 	 	 
	Cum. Cmpd.	 	Vested % of
	Growth	 	Award
	15.0% ($12.80)
	 	50%
	17.5% ($13.75)
	 	75%
	20.0% ($14.74)
	 	100%

	•	 	Must be employed on 12/31/2012.

	•	 	N/A

13

 

 

 

EQUITY GRANT FEATURE

 

PERFORMANCE SHARES

 

PERFORMANCE STOCK OPTIONS

TIME-VESTING
STOCK OPTIONS

	5.	 	Minimum 25% Vesting

	•	 	As of 12/31/2012: To the extent less is vested, 25% of total Award will be vested (including previously vested shares).
	 
	•	 	Must be employed on 12/31/2012.

	•	 	As of 12/31/2012: To the extent less is vested, 25% of total Award will be vested (including previously vested options).
	 
	•	 	Must be employed on 12/31/2012.

	•	 	N/A

	6.	 	“Good Leaver” Treatment

	•	 	See Attachment A.

	•	 	See Attachment A.

	•	 	See Attachment A.

14

 

ATTACHMENT C

DEFINITIONS

     “Cause” shall mean (A) your willful and continued (for a period of not less than ten (10) business days after written notice thereof during which you may remedy such failure if capable of remedy) failure to perform substantially the duties of your employment (other than as a result of physical or mental incapacity, or while on vacation or other approved absence) which are within your control (mere in
ability to achieve financial or other performance targets or objectives, alone, shall not constitute such a willful and continued failure); or (B) your willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to PrivateBancorp or the Bank; or (C) your conviction of a felony involving moral turpitude, but specifically excluding any conviction based entirely on vicarious liability (with “vicarious liability” meaning liability based on acts of P
rivateBancorp or the Bank for which you are charged solely as a result of your offices with PrivateBancorp or the Bank and in which you were not directly involved and did not have prior knowledge of such actions or intended actions); provided, however, that no act or failure to act, on your part, shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of PrivateBancorp or the Ban
k; and provided further that no act or omission by you shall constitute Cause hereunder unless PrivateBancorp or the Bank has given detailed written notice thereof to you, and you have failed to remedy such act or omission.

     “Good Reason” shall mean the occurrence, other than in connection with a discharge, of any of the following without your consent: (A) you are not re-elected or are removed from the positions with PrivateBancorp set forth in the subsection relating to Position, other than as a result of your election or appointment to positions of equal or superior scope and responsibility; or (B) you shall fail to be
 vested by PrivateBancorp with the power and authority of any of said positions, excluding for this purpose any isolated action not taken in bad faith and which is remedied by PrivateBancorp promptly after receipt of written notice thereof given by you; or (C) any failure by PrivateBancorp to comply with any of the provisions of this Agreement, other than any isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by PrivateBancorp promptly after receipt of writ
ten notice thereof given by you; or (D) PrivateBancorp requiring you to be based at an office or location which is more than 50 miles from your offices as of November 1, 2007.

     “Retirement” and “Retired” means your voluntary termination of employment prior to December 31, 2012 other than for Good Reason and in which you fully retire from the banking industry and all other businesses the performance of services for which would violate your noncompetition covenant (determined without regard for the one-year restriction period under such noncompetition covenant).

     “Change of Control” shall be deemed to have occurred upon the happening of any of the following events:

     (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), other than (A) a trustee or other fiduciary holding securities under an employee benefit plan of PrivateBancorp or any of its subsidiaries, or (B) a corporation owned directly or indirectly by the stockholders of

15

 

PrivateBancorp in substantially the same proportions as their ownership of stock of PrivateBancorp, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of PrivateBancorp representing 30% or more of the total voting power of the then outstanding shares of capital stock of PrivateBancorp entitled to vote
generally in the election of directors (the “Voting Stock”), provided, however, that the following shall not constitute a change in control: (1) such person becomes a beneficial owner of 30% or more of the Voting Stock as the result of an acquisition of such Voting Stock directly from PrivateBancorp, or (2) such person becomes a beneficial owner of 30% or more of the Voting Stock as a result of the decrease in the number of outstanding shares of Voting Stock caused by the repurchase of shares by PrivateBancorp; provided, further, that in
 the event a person described in clause (1) or (2) shall thereafter increase (other than in circumstances described in clause (1) or (2)) beneficial ownership of stock representing more than 1% of the Voting Stock, such person shall be deemed to become a beneficial owner of 30% or more of the Voting Stock for purposes of this paragraph (i), provided such person continues to beneficially own 30% or more of the Voting Stock after such subsequent increase in beneficial ownership, or

     (ii) Individuals who, as of October 31, 2007, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board, provided that any individual becoming a director, whose election or nomination for election by PrivateBancorp’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as through such individual were a member of the Incumbent Board, but excluding for this purpose, any individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of PrivateBancorp (as such terms are used in Rule 14a-11 promulgated under the Exchange Act); or

     (iii) Consummation of a reorganization, merger or consolidation or the sale or other disposition of all or substantially all of the assets of PrivateBancorp (a “Business Combination”), in each case, unless (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Voting Stock immediately prior to such Business Combination beneficially
 own, directly or indirectly, more than 50% of the total voting power represented by the voting securities entitled to vote generally in the election of directors of the corporation resulting from the Business Combination (including, without limitation, a corporation which as a result of the Business Combination owns PrivateBancorp or all or substantially all of PrivateBancorp’s assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership immediately prior to the Business Combination of the Voting Stock of PrivateBancorp, and (2) at least a majority of the members of the board of directors of the corporation resulting from the Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or action of the Incumbent Board, providing for such Business Combination; or

     (iv) Approval by the stockholders of PrivateBancorp of a plan of complete liquidation or dissolution of PrivateBancorp; or

     (v) (I) a sale or other transfer of the voting securities of the Bank, whether by stock, merger, joint venture, consolidation or otherwise, such that following said transaction

16

 

PrivateBancorp does not directly, or indirectly through majority owned subsidiaries, retain more than 50% of the total voting power of the Bank represented by the voting securities of the Bank entitled to vote generally in the election of the Bank’s directors; or (II) a sale of all or substantially all of the assets of the Bank other than to PrivateBancorp or any subsidiary of PrivateBancorp.

17exv10w7

 

EXHIBIT 10.7

October 30, 2007

Mr. Larry Richman

1021 E. Olive Street

Arlington Heights, IL 60004

Dear Mr. Richman:

     It is my pleasure to extend to you an offer of employment as President and Chief Executive
Officer of PrivateBancorp, Inc. and Chairman, President and Chief Executive Officer of The
PrivateBank and Trust Company upon the terms set forth in the attached term sheet agreement. As we
discussed, your compensation includes a significant equity award in order to induce you to join the
bank and forego other employment opportunities. We are very excited about the prospect of having
you join our team. We would like you to start as soon as possible, but in no event later than
November 15, 2007.

     To the extent that we enter into employment arrangements with any of your direct reports
having terms and conditions (other than base salary, target bonus, any buy-out of forfeitures, and
benefits and perquisites directly relating to the level of your compensation) that are more
favorable than the terms and conditions in this term sheet agreement, we will update your term
sheet agreement to reflect those more favorable terms. In this regard, Joan Schellhorn, our Chief
Human Resources Officer, will follow-up with you as appropriate.

     This offer has been approved by the Board of PrivateBancorp, Inc. and will remain open for
your acceptance until 5:00 p.m. (Central time) on November 15, 2007. If you accept this offer
prior to November 5, 2007, you will not commence your duties as Chief Executive Officer until that
date. Please signify your acceptance of this offer by signing as indicated below. You may return
this offer letter to the following confidential fax 312.683.1493.

Sincerely,

/s/ Ralph B. Mandell

Ralph B. Mandell

Chairman of the Board

President and Chief Executive Officer

	 	 	 	 	 	 	 	 	 
	Accepted:

	 	/s/ Larry Richman 	 	 	 	Date:	 	October 31, 2007 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Larry Richman	 	 	 	 	 	 

 

 

EXECUTION VERSION

LARRY RICHMAN

	 	 	 
	Position; Reporting
Relationship

	 	President and Chief Executive Officer of
PrivateBancorp, Inc. (the “Holding
Company”) and Chairman, President and Chief
Executive Officer of The PrivateBank and
Trust Company (the “Bank”). You will also
be appointed to be a member of the Boards
of the Holding Company and of the Bank.
	 
	 	 
	 

	 	You will initially report to Ralph Mandell
and the Special Committee appointed by the
Holding Company Board. On or before the
annual shareholders meeting in April 2008
you will begin reporting solely to the
respective Boards.
	 
	 	 
	Base Salary

	 	$785,000 per year subject to increase, but
not decrease from time to time (other than
permitted proportionate reductions
applicable to all similarly situated senior
executives of the Bank, unless such
reduction occurs during the two-year period
commencing upon the occurrence of a Change
in Control), in the sole discretion of the
Bank, and any such increased (or decreased)
amount shall mean “Base Salary” for
purposes of this term sheet agreement.
Your initial Base Salary reflects your base
salary with your immediate predecessor
employer of $775,000, plus $10,000 to
reflect that the Bank does not provide cars
or car allowances to its employees.
	 
	 	 
	Annual Bonus

	 	125% of base salary at target. 
	 
	

	 	The Compensation Committee does not intend
to propose a 2008 annual bonus plan that
will limit the bonus payable to the target
amount.
	 
	 	 
	Inducement Equity Award

	 	As a material inducement for you to join
the Holding Company and the Bank, you will
receive an initial award of 375,000 stock
options and 150,000 shares of restricted
stock with an estimated combined value of
approximately $9,200,000 (based on the FAS
123R value assigned to such award by the
Holding Company) that is expected to be
granted during November 2007, but in no
event later than December 31, 2007. The
stock options will have a 10-year term.
The award of restricted stock and one-half
of the stock options (“performance stock
options”) will be subject to performance
vesting requirements and continued service
during the performance period generally
applicable to such awards, and the other
one-half of the stock options
(“time-vesting stock options”) will be
subject to time vesting requirements only,
all as more particularly described on
Attachment A hereto.

 

 

	 	 	 
	 

	 	If, prior to the date on which your initial
equity award is fully vested, your
employment is terminated due to your death
or Disability (as defined in the award
agreement), your employment is
involuntarily terminated by the Bank
without Cause or voluntarily terminated by
you for Good Reason, the unvested portion
of the restricted stock and the stock
options will become immediately fully
vested and the stock options will become
exercisable. Upon such termination of
employment, the vested stock options will
be exercisable for 1 year after the date of
termination (but not beyond the last day of
the stock option term).
	 
	 	 
	 

	 	You will become fully vested in your
initial equity award upon the occurrence of
a Change of Control.
	 
	 	 
	 

	 	To the extent that the Bank has or
hereafter enters into a broker-assisted
(FRB Reg. T) cashless exercise program for
stock option awards to employees of the
Bank, the initial stock option award will
be included in such program.
	 
	 	 
	 

	 	The restricted shares and stock options
will be subject to the terms and conditions
of an equity incentive plan and award
agreements to be adopted by the Board of
Directors of the Holding Company; provided,
however, that with respect to the terms and
conditions described above, if there is a
conflict between this term sheet agreement
and the equity incentive plan and/or an
award agreement thereunder, the document
that is more favorable to you will
control.
	 
	 	 
	 

	 	You will be eligible for future equity
awards from time to time, in accordance
with the terms of the Holding Company’s
incentive plans as then in effect, in such
amount, if any, as is determined in the
sole discretion of the Compensation
Committee.
	 
	 	 
	 

	 	“Cause,” “Good Reason” and “Change of
Control” are defined on Attachment B.
	 
	 	 
	Buy-Out

	 	You have advised the Holding Company and
the Bank that your previous employer owes
you $2,500,000 in respect of long-term
incentive plan units that are fully vested
and payable to you on January 2, 2008. To
the extent that you substantiate such
obligation to you and your previous
employer does not pay that amount to you by
January 31, 2008, on February 1, 2008 the
Bank will pay such amount to you to make
you whole; provided, that you will refund
to the Bank all amounts you thereafter
recover from your previous employer, you
will exercise all reasonable efforts to
collect such amount from your previous
employer (provided that the Bank reimburses
you for the expenses you incur in
connection with such collection efforts),
and in all events the Bank will be
subrogated to all rights you have in such
amount payable by your previous employer
and the Bank will have a right to offset
other compensation payable to

2

 

	 	 	 
	 

	 	you by the
amount you recover from your previous
employer in such circumstances.
	 
	 	 
	Benefits; Perquisites

	 	On the first of the month after your start
date, you are eligible to participate in
the Bank’s medical and dental insurance
plans as well as participate in the
flexible benefits plan and the
PrivateBancorp, Inc. Savings, Retirement
and Employee Stock Ownership Plan (KSOP).
Our KSOP currently provides the additional
benefit after a year of service of a
company match of $.50 on the dollar on your
elected contributions of up to the first 6%
of compensation. Life insurance and
accidental death and dismemberment
insurance (both at two times your Base
Salary, subject to applicable maximum
coverage provisions) are provided by the
Bank. The long term disability insurance
is also provided by the Bank.
	 
	 	 
	 

	 	You will also be furnished with such
perquisites which may from time to time be
provided by the Holding Company and the
Bank which are suitable to your position
and adequate for the performance of your
duties hereunder and reasonable in the
circumstances. Such perquisites include,
but are not limited to, reimbursement for
dues at one approved country club and one
approved luncheon club in the Chicago
Metropolitan area.
	 
	 	 
	Vacation

	 	Standard Bank vacation policy, but not less
than 4 weeks per calendar year.
	 
	 	 
	Severance Benefits
(Termination without Cause
or for Good Reason) (prior
to, or more than 2 years
after, a Change of Control)

	 	Upon an involuntary termination of your
employment by the Bank without Cause or
voluntary termination of employment by you
for Good Reason, you will receive:

(i) A pro rata bonus based on your prior
year’s bonus (if any) (assumed to be the
target bonus until the 2008 bonus, if any,
is payable) and the number of days elapsed
during the year in which the date of
termination occurs (the “Pro Rata Bonus”);
	 
	 	 
	 

	 	(ii) Severance payments equal to 150% of
the sum of (A) your Base Salary
(disregarding any reduction of your Base
Salary constituting Good Reason), plus
(B) the average of the sum of the bonus
amounts earned by you with respect to the
3 calendar years (or such fewer number of
years as you have been employed — assuming
target bonus until the 2008 bonus, if any,
is payable) immediately preceding the
calendar year in which your date of
termination occurs, payable in
substantially equal monthly installments
for a period of 18 months in accordance
with the Bank’s regular payroll practices;

3

 

	 	 	 
	 

	 	(iii) Continuation for 18 months of your
right to maintain COBRA continuation
coverage under the applicable Bank plans at
premium rates on the same “cost-sharing”
percentage basis as the applicable premiums
paid for such coverage by active Bank
employees as of your date of termination;
	 
	 	 
	 

	 	(iv) Payment of all Buy-Out amounts, in the
manner and at the time provided in this
term sheet agreement, that remain unpaid as
of your termination date; and
	 
	 	 
	 

	 	(v) Base Salary earned but not paid and
vacation accrued and unused through your
termination date, any annual bonus that is
earned in a fiscal year preceding the
fiscal year of your termination but not
paid as of the termination date, and such
other earned but unpaid amounts under the
employee benefit plans in which you
participate as of the termination date that
are payable to you in accordance with the
terms thereof, (collectively “Accrued
Obligations”).
	 
	 	 
	 

	 	Any payments and benefits to you under this
Severance Benefits section of this term
sheet agreement shall not be reduced by the
amount of any compensation or benefits
earned as a result of your subsequent
employment.
	 
	 	 
	 

	 	If you are a “specified employee” of the
Holding Company and its affiliates (as
defined in Treasury Regulation Section
1.409A-1(i)), then you shall receive
payments during the 6 month period
immediately following your date of
termination equal to the lesser of (x) the
amount payable under this severance
provision or (y) two (2) times the
compensation limit in effect under Code
Section 401(a)(17) for the calendar year in
which your date of termination occurs (with
any amounts that otherwise would have been
payable under this severance provision
during such 6 month period being paid on
the first regular payroll date following
the 6 month anniversary of the date of
termination).
	 
	 	 
	Change of Control Severance

	 	For the period commencing six months prior
to a Change of Control and ending on the
second anniversary of such Change of
Control that occurs on or before that date,
upon an involuntary termination of your
employment by the Bank without Cause or
voluntary termination of employment by you
for Good Reason at or after a Change of
Control, you will receive:
	 
	 	 
	 

	 	(i) The Pro Rata Bonus;
	 
	 	 
	 

	 	(ii) Severance equal to 300% of the sum of
(A) your Base Salary (disregarding any
reduction of your Base Salary constituting

4

 

	 	 	 
	 

	 	Good Reason), plus (B) the greater of (x)
your prior year’s bonus or (y) the average
of the sum of the bonus amounts earned by
you with respect to the 3 calendar years
(or such fewer number of years as you have
been employed — assuming target bonus until
your first annual bonus has been paid)
immediately preceding the calendar year in
which your date of termination occurs,
payable in a single lump sum payment within
30 days after the date of termination, or
if your termination of employment occurs
within six months prior to a Change of
Control, then within 5 business days after
the Change of Control you will receive a
single lump sum payment equal to (p) the
amounts due you under this clause (ii)
reduced by (q) the sum of all amounts paid
to you under clause (ii) of Severance
Benefits (above in this term sheet
agreement), so that no amount of the lump
sum payment under this clause (ii) is
duplicative;
	 
	 	 
	 

	 	(iii) Continuation for 36 months of your
right to maintain COBRA continuation
coverage under the applicable Bank plans at
premium rates on the same “cost-sharing”
percentage basis as the applicable premiums
paid for such coverage by active Bank
employees as of your date of termination;
	 
	 	 
	 

	 	(iv) Payment of all Buy-Out amounts in a
single lump sum within 30 days after the
date of termination and otherwise in the
manner provided in this term sheet
agreement, that remain unpaid as of your
termination date;
	 
	 	 
	 

	 	(v) Outplacement for 24 months; and
	 
	 	 
	 

	 	(vi) The Accrued Obligations.
Any payments and benefits to you under this
Change of Control Severance section of this
term sheet agreement shall not be reduced
by the amount of any compensation or
benefits earned as a result of your
subsequent employment.
	 
	 	 
	Code Section 280G

	 	If any payments or benefits constitute
“excess parachute payments” (as defined in
Code Section 280G), you will be fully
grossed up.
	 
	 	 
	Full Satisfaction; Release
of Claims

	 	Any termination payments made and benefits
provided to you under this term sheet
agreement shall be in lieu of any
termination or severance payments or
benefits for which you may be eligible
under any of the plans, policies or
programs of the Bank or its affiliates.

5

 

	 	 	 
	 

	 	As a condition precedent to the payment of
all amounts, benefits and vesting of your
initial equity award, other than your
Accrued Obligations, pursuant to your
involuntary termination of employment
without Cause or your voluntary termination
of employment for Good Reason at any time,
you shall execute a waiver and general
release of claims, substantially in the
form customarily obtained by the Bank from
its terminating executive employees, which
waiver and general release of claims is not
revoked during any applicable seven (7) day
revocation period. For the avoidance of
doubt, such waiver and general release will
not adversely affect your ability to
enforce the terms of this term sheet
agreement, your indemnification rights
under the Bank’s by-laws and this term
sheet agreement, your rights to coverage
under the Bank’s directors and officers
liability insurance; your and your covered
dependents’ rights to COBRA continuation
coverage, your rights to vested employee
benefits, and other rights that cannot be
waived by operation of law.
	 
	 	 
	Restrictive Covenants

(confidentiality, 

non-competition, 

non-solicitation)

	 	You will not at any time during or
following your employment with the Holding
Company and the Bank, directly or
indirectly, disclose or use on your behalf
or another’s behalf, publish or
communicate, except in the course of your
employment and in the pursuit of the
business of the Holding Company and the
Bank or any of its subsidiaries or
affiliates, any proprietary information or
data of the Holding Company and the Bank or
any of its subsidiaries or affiliates,
which is not generally known to the public
or which could not be recreated through
public means and which the Holding Company
and the Bank may reasonably regard as
confidential and proprietary. You
recognize and acknowledge that all
knowledge and information which you have or
may acquire in the course of your
employment, such as, but not limited to,
the business, developments, procedures,
techniques, activities or services of the
Holding Company or the Bank or the business
affairs and activities of any customer,
prospective customer, individual firm or
entity doing business with the Holding
Company or the Bank are their sole valuable
property, and shall be held by you in
confidence and in trust for their sole
benefit. All records of every nature and
description which come into your
possession, whether prepared by you, or
otherwise, shall remain the sole property
of the Holding Company or the Bank and upon
termination of your employment for any
reason, said records shall be left with the
Holding Company or the Bank as part of its
property.
	 
	 	 
	 

	 	During the period of your employment with
the Holding Company and the Bank and for a
period of 1 year after termination of your
employment for any reason, you will not

6

 

	 	 	 
	 

	 	(except in your capacity as an employee of
the Holding Company and the Bank) directly
or indirectly, for your own account, or as
an agent, employee, director, owner,
partner, or consultant of any corporation,
firm, partnership, joint venture,
syndicate, sole proprietorship or other
entity:
	 
	 	 
	 

	 	(i) engage, directly or indirectly, in any
business which has a place of business
(whether as a principal, division,
subsidiary, affiliate, related entity, or
otherwise) located within the area
encompassed within a 50 mile radius
surrounding your office as of your date of
termination that provides that provides
banking products, or that provides
non-banking products or services of a type
that accounted for more than 10% of the
Holding Company’s gross revenues for the
fiscal year immediately preceding your date
of termination, that the Holding Company or
the Bank or any of their subsidiaries or
affiliates provide as of your date of
termination, provided that this subsection
(i) shall not become applicable unless you
are employed by the Bank at any time on
December 31, 2008;
	 
	 	 
	 

	 	(ii) solicit or induce, or attempt to
solicit or induce any client or customer of
the Holding Company or the Bank or any of
their subsidiaries or affiliates not to do
business with the Bank or Holding Company
or any of its subsidiaries or affiliates;
provided that, respecting any such client
or customer of the Holding Company or the
Bank that was a client or customer of your
immediate prior employer on the date
hereof, and for which you or one of your
direct or indirect reports were the primary
relationship manager, this subsection (ii)
shall not become applicable unless you are
employed by the Holding Company or the Bank
at any time on December 31, 2008; or
	 
	 	 
	 

	 	(iii) solicit or induce, or attempt to
solicit or induce, any employee or agent of
the Holding Company or the Bank or any of
their subsidiaries or affiliates to
terminate his or her relationship with the
Holding Company or the Bank or any of their
subsidiaries or affiliates.
	 
	 	 
	 

	 	The foregoing provisions shall not be
deemed to prohibit your ownership, not to
exceed 5% of the outstanding shares, of
capital stock of any corporation whose
securities are publicly traded on a
national or regional securities exchange or
in the over-the-counter market.
	 
	 	 
	 

	 	You agree that, as the Holding Company’s
and the Bank’s sole remedy for any breach
(or threatened breach) of the non-
competition covenant at subparagraph (i)
above, respecting your

7

 

	 	 	 
	 

	 	initial restricted
stock and stock option award above:
	 
	 	 
	 

	 	(x) you will immediately forfeit all
unexercised stock options (whether then
vested or unvested) then held by you, all
shares of stock of the Holding Company (or
any successor) acquired upon the exercise
of vested stock options and then held by
you, and all shares of restricted stock
(whether vested or unvested, restricted or
unrestricted) then held by you;
	 
	 	 
	 

	 	(y) you will immediately repay to the
Holding Company a cash sum in the principal
amount equal to all gross proceeds
(before-tax) realized by you upon the sale
or other disposition of shares of stock of
the Holding Company (other than shares
relating to open market purchases by you)
occurring at any time during the period
commencing on the date that is three years
before the date of termination of your
employment and ending on the date that the
noncompetition covenant lapses (“Refund
Period”) , together with interest accrued
thereon, from the date of such breach or
threatened breach, at the prime rate
(compounded calendar monthly) as published
from time to time in The Wall Street
Journal, electronic edition (“Interest”);
and
	 
	 	 
	 

	 	(z) you will repay to the Holding Company a
cash sum equal to fair market value of all
shares of stock of the Holding Company
(other than shares relating to open market
purchases by you) and all stock options
transferred by you as gifts at any time
during the Refund Period, together with
Interest, and for which purpose, “fair
market value” per share of stock shall be
the closing price of one share of Holding
Company common stock on the date such gift
occurs and per stock option shall be the
positive difference, if any, between the
fair market value of a share of stock,
above, and the stock option exercise price.
	 
	 	 
	 

	 	You further agree that a breach (or
threatened breach) of the confidentiality
and/or non-solicitation covenants in
subparagraphs (ii) and (iii) above will
result in irreparable harm to the business
of the Holding Company and the Bank, a
remedy at law in the form of monetary
damages for any breach (or threatened
breach) by you of these covenants is
inadequate, in addition to any remedy at
law or equity for such breach, the Holding
Company and the Bank shall be entitled to
institute and maintain appropriate
proceedings in equity, including a suit for
injunction to enforce the specific
performance by you of such obligations and
to enjoin you from engaging in any activity
in violation thereof, and the covenants on
your part contained above shall be
construed as agreements independent of any
other provisions in this term sheet
agreement, and the existence of any

8

 

	 	 	 
	 

	 	claim,
setoff or cause of action by you against
the Holding Company or the Bank, whether
predicated on this term sheet or otherwise,
shall not constitute a defense or bar to
the specific enforcement by the Holding
Company or the Bank of said covenants.
	 
	 	 
	 

	 	In the event of a breach or a violation by
you of any of the covenants and provisions
above, the running of the non-compete
period (but not your obligations
thereunder) shall be tolled during the
period of the continuance of any actual
breach or violation.
	 
	 	 
	 

	 	You agree that the covenants above are
reasonable with respect to their duration,
geographical area and scope. If the final
judgment of a court of competent
jurisdiction declares that any term or
provision above is invalid or
unenforceable, you agree that the court
making the determination of invalidity or
unenforceability shall have the power to
reduce the scope, duration or area of the
term or provision, to delete specific words
or phrases, or to replace an invalid or
unenforceable term or provision with a term
or provision that is valid and enforceable
and that comes closest to expressing the
intention of the invalid or unenforceable
term or provision, and this term sheet
agreement shall be enforceable as so
modified after the expiration of the time
within which the judgment may be appealed.
	 
	 	 
	Your Representations

	 	You represent that except as otherwise
previously disclosed to the Company in
writing, you are not a party to any
confidentiality, non-competition or
non-solicitation agreement or
understanding, whether written or oral,
with any prior employer that would prevent
you from entering into an employment
relationship with the Holding Company or
the Bank , or prevent or restrict your
ability to fulfill your obligations as an
employee of the Holding Company or the
Bank. You further represent that you have
not and will not take or retain any
confidential information or trade secrets
(whether in hard copy or electronic format)
from any previous or current employer prior
to assuming your position at the Holding
Company and the Bank.
	 
	 	 
	Indemnification

	 	You will be indemnified in accordance with
the Company’s bylaws. You will be
indemnified for any claims that might be
brought by your prior employer (or any
successor and/or any affiliate thereof)
relating to your negotiation or acceptance
of employment with the Holding Company and
the Bank (including any alleged conflict of
interest created by such negotiation or
acceptance) or the performance of your
duties for the Holding Company and the
Bank. You will also be covered by the
Holding Company and the Bank’s directors
and officers liability insurance

9

 

	 	 	 
	 

	 	coverage
as in effect from time to time.
	 
	 	 
	Fee Reimbursement

	 	You will be reimbursed for up to $10,000 of
the professional fees incurred by you
relating to the negotiation and
documentation of your employment
arrangements.
	 
	 	 
	Code Section 409A

	 	It is intended that any amounts payable
under this term sheet agreement and the
Holding Company’s, the Bank’s and your
exercise of authority or discretion
hereunder shall comply with Section 409A of
the Code (including the Treasury
regulations and other published guidance
relating thereto) so as not to subject you
to the payment of any interest or
additional tax imposed under Section 409A
of the Code. To the extent any amount
payable under this term sheet agreement
would trigger the additional tax imposed by
Code Section 409A, this term sheet
agreement shall be modified to avoid such
additional tax.
	 
	 	 
	Board Approval

	 	The Holding Company and the Bank represent
and warrant to you that they have taken all
corporate action necessary to authorize and
to enter into this term sheet agreement.
	 
	 	 
	Amendment

	 	This term sheet agreement shall not be
amended or modified except by written
instrument executed by the Bank and you.
	 
	 	 
	Binding Agreement

	 	This term sheet agreement shall be binding
upon and inure to the benefit of the heirs
and representatives of you and the
successors and assigns of the Holding
Company and the Bank.
	 
	 	 
	Governing Law

	 	Illinois.

10

 

ATTACHMENT A

PRIVATEBANCORP, INC. INDUCEMENT EQUITY DESIGN PROPOSAL

EQUITY GRANT FEATURE

PERFORMANCE SHARES

PERFORMANCE STOCK OPTIONS

TIME-VESTING
STOCK OPTIONS

	1.	 	Allocation of Total Award

	•	 	50% of value of the Awards.

	•	 	25% of value of the Awards.

	•	 	25% of value of the Awards.

	2.	 	Time Vesting

	•	 	N/A

	•	 	N/A

	•	 	20% per fiscal year of
service, 1/1/2008-12/31/2012.

	3.	 	Performance Vesting

	•	 	Based on stock price performance
objectives: 20% compound annual stock price
growth 2008-2012.
	 
	•	 	Stock price base is 10-day average
price prior to date of Award.
	 
	•	 	20% of the Award vests per year,
based on attainment of stock price objective
for that year. Objective must be met for 20
consecutive trading days during that fiscal
year to vest.
	 
	•	 	Employed on 12/31 of performance
year.
	 
	•	 	If the PIPE (or other investment)
does not close by 3/31/08 for at least $150
million capital gross proceeds, the
performance restrictions will lapse as to
25% of the Performance Shares and such
shares shall be time-vested restricted stock
vesting at the rate of 20% per fiscal year
of service.

	•	 	Based on EPS performance objectives: 20%
compound annual EPS growth 2008 — 2012.
	 
	•	 	Earnings base is the sum of EPS for 4
quarters 12/06 — 9/07.
	 
	•	 	20% of the Award vests per year, based on
attainment of EPS objective for that year.
	 
	•	 	Employed on 12/31 of performance year.

	•	 	None

	4.	 	“Catch-Up” Performance
Vesting

	•	 	As of 12/31 each year: To extent not
vested, Award will vest for prior years if
later year stock price objective is
attained.
	 
	•	 	Must be employed on 12/31 of year
objective is attained.

	•	 	As of 12/31/2012: To extent not vested,
Award will vest:

	 	 	 
	Cum. Cmpd.	 	Vested % of
	Growth *	 	Award
	15.0% ($12.87)
	 	50%
	17.5% ($13.82)
	 	75%
	20.0% ($14.82)
	 	100%

 

			
	*	 	Estimated EPS targets

	•	 	Must be employed on 12/31/2012.

	•	 	N/A

11

 

EQUITY GRANT FEATURE

PERFORMANCE SHARES

PERFORMANCE STOCK OPTIONS

TIME-VESTING
STOCK OPTIONS

	5.	 	Minimum 25% Vesting

	•	 	As of 12/31/2012: To the extent less
is vested, 25% of total Award will be vested
(including previously vested shares).
	 
	•	 	Must be employed on 12/31/2012.

	•	 	As of 12/31/2012: To the extent less is
vested, 25% of total Award will be vested
(including previously vested options).
	 
	•	 	Must be employed on 12/31/2012.

	•	 	N/A

	6.	 	“Good Leaver” Treatment

	•	 	Full accelerated vesting.

	•	 	Full accelerated vesting.
	 
	•	 	1 year to exercise from date of
termination.

	•	 	Full accelerated vesting.
	 
	•	 	1 year to exercise from
date of termination.

12

 

ATTACHMENT B

DEFINITIONS

     “Cause” shall mean (A) your willful and continued (for a period of not less than ten (10)
business days after written notice thereof during which you may remedy such failure if capable of
remedy) failure to perform substantially the duties of your employment (other than as a result of
physical or mental incapacity, or while on vacation or other approved absence) which are within
your control (mere inability to achieve financial or other performance targets or objectives,
alone, shall not constitute such a willful and continued failure); or (B) your willful engaging in
illegal conduct or gross misconduct which is materially and demonstrably injurious to the Holding
Company or the Bank; or (C) your conviction of a felony involving moral turpitude, but specifically
excluding any conviction based entirely on vicarious liability (with “vicarious liability” meaning
liability based on acts of the Holding Company or the Bank for which you are charged solely as a
result of your offices with the Holding Company or the Bank and in which you were not directly
involved and did not have prior knowledge of such actions or intended actions); provided, however,
that no act or failure to act, on your part, shall be considered “willful” unless it is done, or
omitted to be done, by you in bad faith or without reasonable belief that your action or omission
was in the best interests of the Holding Company or the Bank; and provided further that no act or
omission by you shall constitute Cause hereunder unless the Holding Company or the Bank has given
detailed written notice thereof to you, and you have failed to remedy such act or omission.

     “Good Reason” shall mean the occurrence, other than in connection with a discharge, of any of
the following without your consent: (A) you are not re-elected or are removed from the positions
with the Holding Company or the Bank set forth in the subsection relating to Position, other than
as a result of your election or appointment to positions of equal or superior scope and
responsibility; or (B) you shall fail to be vested by the Holding Company or the Bank with the
power and authority of any of said positions, excluding for this purpose any isolated action not
taken in bad faith and which is remedied by the Holding Company or the Bank promptly after receipt
of written notice thereof given by you; or (C) any failure by the Holding Company or the Bank to
comply with any of the provisions of this Agreement, other than any isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the Holding Company or the
Bank promptly after receipt of written notice thereof given by you; or (D) the Holding Company or
the Bank requiring you to be based at an office or location which is more than 50 miles from your
offices as of the Effective Date. In addition, any termination by you during the ninety (90) day
period beginning on the first anniversary of the date of a Change in Control shall be deemed to be
for “Good Reason.”

     “Change of Control”1 shall be deemed to have occurred upon the happening of any of
the following events:

 

			
	1	 	This definition is based on the existing stock
incentive plan’s definition. It remains subject to review and approval by the
Board.

13

 

          (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (“Exchange Act”)), other than (A) a trustee or other fiduciary holding
securities under an employee benefit plan of PrivateBancorp, Inc. (the “Company”) or any of its
subsidiaries, or (B) a corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the Company, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities
of the Company representing 30% or more of the total voting power of the then outstanding shares
of capital stock of the Company entitled to vote generally in the election of directors (the
“Voting Stock”), provided, however, that the following shall not constitute a change in control:
(1) such person becomes a beneficial owner of 30% or more of the Voting Stock as the result of an
acquisition of such Voting Stock directly from the Company, or (2) such person becomes a beneficial
owner of 30% or more of the Voting Stock as a result of the decrease in the number of outstanding
shares of Voting Stock caused by the repurchase of shares by the Company; provided, further, that
in the event a person described in clause (1) or (2) shall thereafter increase (other than in
circumstances described in clause (1) or (2)) beneficial ownership of stock representing more than
1% of the Voting Stock, such person shall be deemed to become a beneficial owner of 30% or more of
the Voting Stock for purposes of this paragraph (i), provided such person continues to beneficially
own 30% or more of the Voting Stock after such subsequent increase in beneficial ownership, or

          (ii) Individuals who, as of the [date of the award], constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board, provided that any
individual becoming a director, whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds (2/3) of the directors then comprising
the Incumbent Board shall be considered as through such individual were a member of the Incumbent
Board, but excluding for this purpose, any individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the election of the directors
of the Company (as such terms are used in Rule 14a-11 promulgated under the Exchange Act); or

          (iii) Consummation of a reorganization, merger or consolidation or the sale or other
disposition of all or substantially all of the assets of the Company (a “Business Combination”), in
each case, unless (1) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Voting Stock immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the total voting power represented by
the voting securities entitled to vote generally in the election of directors of the corporation
resulting from the Business Combination (including, without limitation, a corporation which as a
result of the Business Combination owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially the same proportions
as their ownership immediately prior to the Business Combination of the Voting Stock of the
Company, and (2) at least a majority of the members of the board of directors of the corporation
resulting from the Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or action of the Incumbent Board, providing for such Business
Combination; or

          (iv) Approval by the stockholders of the Company of a plan of complete liquidation or
dissolution of the Company; or

          (v) (I) a sale or other transfer of the voting securities of the Bank, whether by stock,
merger, joint venture, consolidation or otherwise, such that following said transaction the Company

14

 

does not directly, or indirectly through majority owned subsidiaries, retain more than 50% of
the total voting power of the Bank represented by the voting securities of the Bank entitled to
vote generally in the election of the Bank’s directors; or (II) a sale of all or substantially all
of the assets of the Bank other than to the Company or any subsidiary of the Company.

15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]