PROPOSAL TWO: APPROVAL OF THE AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR AND KEY EMPLOYEE DEFERRED COMPENSATION PLAN
The Republic Bancorp, Inc. Non-Employee Director and Key Employee Deferred Compensation Plan (the “Deferred Compensation Plan”) was adopted by the Board of Directors on November 18, 2004 and became effective on April 14, 2005. The Deferred Compensation Plan was last amended and restated March 19, 2008.
On January 24, 2018, the Board of Directors approved an amendment and restatement of the Deferred Compensation Plan to (i) allow director participants to elect to defer payment (and income taxation) of stock grants received from the Company or the Company to make non-elective stock contributions to the Plan on behalf of Directors, (ii) add a fixed, initial deferral period for key employee participant salary deferrals and limit those deferrals to base compensation, and (iii) add a Company matching program for key employee participants whereby the Company will contribute to each key employee participant’s deferred compensation account a matching contribution equal to up to 100% of the amount of compensation deferred by such participant under the Deferred Compensation Plan, subject to an annual dollar cap that the Company will establish each year.
You are being asked to approve the amended and restated Deferred Compensation Plan. If shareholders approve the amended and restated Deferred Compensation Plan, it will become effective as of the date of such shareholder approval. The Deferred Compensation Plan is subject to approval in a shareholder vote at the Annual Meeting in which the votes cast in favor of the approval of the Deferred Compensation Plan exceed the votes cast against approval.
The Deferred Compensation Plan provides non-employee directors and key employees the ability to defer payment (and income taxation) of director fees and base salary and have those deferred amounts then paid later in Company stock based on the shares that could have been acquired as the deferrals were made. A copy of the amended and restated Deferred Compensation Plan is attached as Annex A.
The following summary of the material provisions of the Deferred Compensation Plan, as proposed to be amended, does not purport to be complete and is qualified in its entirety by reference to the Deferred Compensation Plan. For purposes of this summary, any reference to the Company includes the Company and its subsidiaries.
Administration
The Board of Directors of the Company has the exclusive discretionary authority to determine the amount of benefits under the Deferred Compensation Plan and will make factual determinations and construe the terms of the Deferred Compensation Plan. In the case of the administration of the Deferred Compensation Plan with respect to key employee participants only, the authority of the Board of Directors described may be exercised by the Compensation Committee of the Board of Directors (the “Compensation Committee”). All determinations and decisions made by the Board of Directors of the Company and the Compensation Committee are final and binding upon the Company and all participants.
Eligibility
The non-employee current members of the Board of Directors of the Company and its subsidiaries, including emeritus members of the Board, are eligible to participate in the Deferred Compensation Plan; as of the Record Date, the number of such persons was 13. In addition, the Compensation Committee may designate key employees as eligible to participate in the Deferred Compensation Plan; the Compensation Committee has not yet designated any such key employees. As of the Record Date, the approximate number of persons eligible to be designated was fewer than 30.
Deferral of Compensation
A director participant may elect to defer up to 100% of the director’s annual board and committee meeting fees by submitting written notice of such election to the Company at least 10 days before the beginning of the calendar year to which the election will apply. In addition, director participants will be permitted to separately elect to defer stock grants, if any are made to such director, in 2019 and later tax years following the same election process as when deferring director fees. Each director participant must specify an initial deferral period for each of their deferred director fees and stock grants, ranging from two to five years, and has the ability to extend the deferral in additional five-year increments. Each director participant will at all times have a nonforfeitable interest in his or her deferred compensation account.
The Company may also determine to automatically credit stock grants to the deferred compensation account of director participants to whom an award is made, as a non-elective credit. The Company will designate the initial deferral period for those credits at the time the award is made, but the director participant has the ability to extend the deferral in additional five-year increments.
The Deferred Compensation Plan provides that, subject to limits established by the Compensation Committee, Key employee participants may elect to defer up to 50% of base salary by submitting written notice of such election to the Company at least 10 days before the beginning of the calendar year to which the election will apply, or, for newly-eligible key employees, within 30 days after they are made eligible. Key employee participant deferrals and related company match amounts will automatically be deferred for an initial period of five years from the beginning of the year in which the deferral is made, but the key employee participant has the ability to extend the deferral in additional five-year increments. Each key employee participant will at all times have a nonforfeitable interest in the portion of his or her deferred compensation account that is comprised of deferred base salary.
Company Match
The Company will credit to the deferred compensation account of each key employee participant an amount equal to 100% (or such lesser percentage as may be determined by the Compensation Committee) of the amount of compensation deferred by the participant under the Deferred Compensation Plan in the prior month, up to an annual dollar limit established by the Compensation Committee for each year. The Company match amount will be unvested and subject to forfeiture when made and will become vested on December 31
st
of the year that is five years from the beginning of the year that the Company match is made. If the key employee participant terminates employment with the Company for any reason other than death or total and permanent disability before the date when the Company match amount vests, the entire amount of the Company match will be forfeited. If the key employee participant dies or becomes totally and permanently disabled while employed, all Company match amounts will become fully vested. Further, all Company match amounts that have not yet been forfeited will become fully vested upon the happening of a change in control (as defined in the Deferred Compensation Plan).
Investment Account
The Company will maintain a bookkeeping account for each participant, and at the end of each fiscal quarter, credits in accounts will be converted to stock units equal to the amount of compensation deferred or match or other credit made in the quarter divided by the quarter-end fair market value of the Company’s Class A voting common stock (“Common Stock”). The fair market value of the Company’s Common Stock on a given date is the closing sale price of the Common Stock on such date as reported by the NASDAQ Stock Exchange. If no trades were reported on that date, the fair market value will be set as the closing price on the most recent trading day immediately preceding the date of determination as reported by the NASDAQ Stock Exchange. On February 28, 2018, the closing price of the Company’s Class A Common Stock as reported on the NASDAQ Stock Exchange was $37.25 per share.
Dividend Equivalents
Stock units standing to the credit of each participant’s account will be credited with an amount equal to the cash dividends that would have been paid on the number of stock units in the account if the stock units were deemed to be outstanding shares of stock. Any dividends so credited will be converted into additional stock units at the end of the fiscal quarter in which the dividends were paid. Dividends on share equivalents related to key employee participant matching contributions will be vested only if and when the related match is vested.
Payment of Deferral Account
Participants will be entitled to receive a distribution of the participant’s account upon the earliest to occur of (i) the end of the deferral period, (ii) the participant’s death or total and permanent disability, (iii) a change in control of the Company, or (iv), upon approval of the Compensation Committee, a de minimis payout of the participant’s entire account upon termination of service if the payment is not greater than the limit set forth under Section 402(g) of the Internal Revenue Code (now $18,500). All distributions will be paid in a single lump sum of shares of Company Common Stock equal to the number of stock units credited to the account with any amount in excess of whole shares paid in cash. Shares of Company Class A Common Stock already reserved under the Company’s then-effective Stock Incentive Plan, as previously approved by shareholders, will be used to satisfy any obligations to distribute stock under the Deferred Compensation Plan, but the stock, when issued under this Deferred Compensation Plan, will not bear the
restrictions on transfer which may be set forth in the Stock Incentive Plan. In no event will the accounts, plus the stock awarded under the Stock Incentive Plan as previously approved by shareholders in 2015, exceed 3,000,000 shares of Class A Common Stock, without shareholder approval. No additional shares of Company Common Stock will be reserved for issuance as a result of the approval of the Deferred Compensation Plan.
Tax Treatment of Deferrals
Participant deferrals to the Deferred Compensation Plan are not subject to federal income tax when deferred, but will be taxable at distribution. However, for key employee participants, any deferrals are included in the participant’s income for purposes of FICA and other employment taxes at the time of deferral. The Deferred Compensation Plan is designed and will be administered in accordance with the requirements of Section 409A of the Internal Revenue Code to accomplish this desired tax result.
Non-assignability
Participants may not assign, transfer or pledge any portion of their accounts and any attempt to do so shall not be recognized.
Amendment and Termination
The Board of Directors of the Company may amend in any way or terminate, in whole or in part, at any time and from time to time the Deferred Compensation Plan. However, no amendment or termination of the Deferred Compensation Plan may reduce the number of stock units credited to accounts before the effective date of such amendment or termination, nor, except to the extent permitted under Internal Revenue Code Section 409A, pay benefits at an earlier date than otherwise scheduled.
Plan Benefits
The amount of benefits payable in the future under the Deferred Compensation Plan is not determinable because such benefits depend on the amount of deferrals by participants and the Company board and committee meetings attended. To date, 34,512 shares have been issued under the Deferred Compensation Plan in distributions and another 63,898 share equivalents are recorded as due to be distributed to director participants at a future date. No key employee participants have yet been made eligible to participate in the Deferred Compensation Plan.
The Board of Directors recommends that shareholders vote “FOR” the approval of the Amended and Restated Non-Employee Director and Key Employee Deferred Compensation Plan as disclosed in this Proxy Statement.
PROPOSAL THREE: APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN
On January 24, 2018, the Board of Directors adopted the Republic Bancorp, Inc. Employee Stock Purchase Plan (the “ESPP”),
subject to approval in a shareholder vote at the Annual Meeting in which the votes cast in favor of the approval of the ESPP exceed the votes cast against approval. You are being asked to approve the ESPP. If shareholders approve the ESPP, it will become effective as of the date of such shareholder approval.
The maximum aggregate number of shares of the Company’s Class A voting common stock (“Common Stock”) that may be purchased under the ESPP will be 250,000 shares, subject to adjustment as provided for in the ESPP. The share pool for the ESPP represents approximately 1.3% of the total number of shares of the Company’s Class A Common Stock outstanding as of the Record Date.
The purpose of the ESPP is to provide eligible employees of the Company an opportunity to use payroll deductions to purchase shares of Company’s Common Stock with an incentive based on the purchase price being at a discount from its market price, and thereby acquire an ownership interest in the Company. The ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code.
Summary of Employee Stock Purchase Plan
The following summary of the material provisions of the ESPP does not purport to be complete and is qualified in its entirety by reference to the ESPP. For purposes of this summary, any reference to the Company includes the Company and its designated subsidiaries. For purposes of the ESPP, designated subsidiaries include any subsidiary (within the meaning of Section 424(f) of the Internal Revenue Code) of the Company that has been designated by the Committee as eligible to participate in the ESPP. A copy of the ESPP is attached as Annex B.
Eligibility and Participation
Generally, any person who (i) is employed by the Company as of the commencement of an offering period under the ESPP; (ii) has been continuously employed by the Company as of the commencement of an offering period under the ESPP for a period of at least two years (or such lesser amount of time as determined by the Committee); and (iii) is customarily employed for at least (A) 20 hours per week (or such lesser amount as determined by the Committee) and (B) more than five months in a calendar year (or such lesser period as determined by the Committee) is eligible to participate in the offering period.
The Committee may determine that employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the Internal Revenue Code are not eligible to participate in an offering period.
No employee may participate in an offering period if, upon the employee’s purchase of the largest number of shares available to the employee for purchase during the offering period, the employee would own (or be deemed to own under certain attribution rules in the Internal Revenue Code) stock and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of the Company’s stock.
As of the Record Date, approximately 1,000 employees would be eligible to participate in the ESPP.
Administration
The Board of Directors or a committee appointed by the Board (the “Committee”) will administer the ESPP, and will have full and exclusive authority to interpret the terms of the ESPP, determine eligibility to participate, determine which Company subsidiaries are eligible to participate, amend and revoke rules for participation, suspend or terminate the ESPP, and exercise such powers and perform such actions as its deems necessary to carry out the intent of the ESPP, subject to the conditions of the ESPP. All determinations and decisions made by the Board of Directors or the Committee are final and binding upon the Company and all participants.
Authorized Shares and Adjustments
Subject to adjustment as provided in the ESPP, a total of up to 250,000 shares of Company’s Class A Common Stock may be made available for sale under the ESPP.
In the event of a stock dividend, split-up, share combination, recapitalization or other change in the Company’s capitalization, an appropriate and proportionate adjustment will be made in the number and kind of shares which may be delivered under the ESPP. Appropriate adjustments also may be made in the event of a merger, reorganization, consolidation, separation or liquidation of the Company.
Offering Periods
Pursuant to the terms of the ESPP, on the first trading day of an offering period, each eligible employee will be granted an option to purchase shares of the Company’s Class A Common Stock on the last day of such offering period. The Committee will determine the length of each offering period, provided that no offering period may exceed 27 months in length.
Contributions and Payroll Deductions
The ESPP permits each participant to purchase shares of the Company’s Class A Common Stock through payroll deductions of either a fixed dollar amount or percentage of their eligible compensation; provided, however, that a participant may not purchase more than a specific maximum number of shares or maximum amount of compensation, which limit will be determined the Committee before the commencement of the offering period. In no event may
participants elect to purchase Common Stock with a fair market value in excess of $25,000 (determined as of the first day of the offering period) in a single calendar year. No interest will accrue on a participant’s contributions to purchase stock under the ESPP. During an offering period, a participant may withdraw by submitting written notice of withdrawal to the Company and may decrease (but not increase) their contributions.
Purchases
Unless a participant terminates employment or withdraws from the ESPP or an offering period before the last trading day of an offering period, the participant’s option will automatically be exercised on the last trading day of each offering period. The number of shares of the Company’s Class A Common Stock purchased will be determined by dividing the payroll contributions accumulated in the participant’s account by the applicable purchase price, subject to the maximum share limit discussed above.
The purchase price of the shares cannot be less than 85% of the lower of the fair market value of the Company’s Class A Common Stock on the first trading day of each offering period or on the last trading day of each offering period. The fair market value of the Company’s Class A Common Stock on a given date is the closing sale price of the Class A Common Stock on such date as reported by the NASDAQ Stock Exchange. If no trades were reported on that date, the fair market value will be set as the closing price on the most recent trading day immediately preceding the date of determination as reported by the NASDAQ Stock Exchange. On February 28, 2018, the closing price of the Company’s Class A Common Stock as reported on the NASDAQ Stock Exchange was $37.25 per share.
Withdrawals
A participant may end their participation in the ESPP at any time during an offering period and all, but not less than all, of their accrued contributions not yet used to purchase shares of the Company’s Common Stock will be returned to them. If a participant withdraws from an offering period, they must re-enroll in the ESPP before a future offering period begins in order to re-commence participation.
Termination of Employment
If a participant ceases to be an employee of the Company for any reason, they will be deemed to have elected to withdraw from the ESPP and their contributions not yet used to purchase shares of the Company’s Common Stock will be returned to them, without interest. The transfer of an employee between any of the Company or certain of its designated subsidiaries will not be deemed to be a withdrawal from the ESPP.
Change in Control
The ESPP provides that in the event of a change of control (as defined in the ESPP), the Committee can take any one or more of the following actions: (i) determine that a successor corporation may assume or substitute each outstanding option with comparable rights of the successor corporation; (ii) end the offering period then in progress and return all contributions not yet used to purchase shares of the Company’s Common Stock, without interest; or (iii) notify each participant that the purchase date for the offering period then in progress will be shortened, and a new purchase date will be set, upon which date all options will be exercised automatically unless before such date the participant has withdrawn from the offering period.
Transferability
A participant may not assign, transfer, pledge or otherwise dispose of in any way (other than by will or the laws of descent and distribution) their rights with regard to options granted under the ESPP or contributions credited to their account.
The Committee may impose restrictions on Common Stock acquired by employees pursuant to an offering under the ESPP, which would prevent the participant from selling, assigning, transferring or otherwise disposing of the Common Stock.
Term, Amendment and Termination
Subject to applicable law, the Board of Directors, in its sole discretion, may amend, modify, or terminate the ESPP at any time and for any reason, without shareholder approval, but no amendment may be made without
shareholder approval (i) to the extent shareholder approval is required by applicable law or listing requirements or (ii) that would increase the total number of shares of stock which may be issued under the ESPP.
The ESPP will become effective when approved by shareholders. The ESPP does not have a termination date, but instead will terminate when all Class A Common Stock authorized for issuance under the ESPP has been issued, unless terminated earlier by the Board of Directors.
Certain Federal Tax Information
The following summary briefly describes U.S. federal income tax consequences of options granted under the ESPP, but is not a detailed or complete description of all U.S. federal tax laws or regulations that may apply, and does not address any local, state or foreign country laws. Therefore, you should not rely on this summary for individual tax compliance, planning or decisions. Participants in the ESPP should consult their own professional tax advisors concerning tax aspects of options granted under the ESPP.
The ESPP is intended to qualify as an “employee stock purchase plan” meeting the requirements of Section 423 of the Internal Revenue Code. Under these provisions, a participant will not recognize taxable income until they sell or otherwise dispose of the shares purchased under the ESPP.
If a participant disposes of the shares acquired under the ESPP more than two years from the option grant date and more than one year from the date the stock is purchased, then the participant must treat as ordinary income the amount by which the lesser of (i) the fair market value of the shares at the time of disposition, or (ii) the fair market value of the shares at the option grant date, exceeds the price the employee paid for the shares. Any gain in addition to this amount will be treated as a long-term capital gain. If a participant holds shares at the time of their death, the holding period requirements are automatically deemed to have been satisfied. The Company will not be allowed a deduction for any amount if the holding period requirements are satisfied.
If a participant disposes of shares before expiration of two years from the date of grant and one year from the date of exercise (other than after death), then the participant must treat as ordinary income the excess of the fair market value of the shares on the purchase date over the purchase price. Any additional gain will be treated as long-term or short-term capital gain or loss, as the case may be. The Company will be allowed a deduction equal to the amount of ordinary income recognized by the participant.
New Plan Benefits
As of the date of this proxy statement, no employee has been granted any rights to purchase shares under the proposed ESPP. Accordingly, the benefits to be received pursuant to the ESPP by the Company’s officers and employees are not determinable at this time.
The Board of Directors recommends that shareholders vote ”FOR” the approval of the Employee Stock Purchase Plan as disclosed in this Proxy Statement.
PROPOSAL FOUR: RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
On January 24, 2018, the Audit Committee selected Crowe Horwath LLP to serve as Republic’s independent registered public accounting firm and auditors for the fiscal year ending December 31, 2018. On behalf of Republic’s Board of Directors, the Audit Committee of the Board retained Crowe Horwath LLP to audit the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting for 2018. Crowe Horwath LLP was chosen based on its performance in prior years, its responsiveness, technical expertise and the appropriateness of fees charged.
Crowe Horwath LLP has served as Republic’s independent registered public accounting firm since the 1996 fiscal year. The Company’s independent registered public accounting firm leases space from Jaytee-Springhurst, LLC, a limited liability company whose sole managing member is Jaytee, a Kentucky limited partnership of which the CHAIR/CEO and PRES of Republic are partners. The Company and Crowe Horwath LLP have determined that such leases constitute arm’s length transactions and comply with all applicable independence standards. Crowe Horwath LLP representatives are expected to attend the 2018 Annual Meeting and will be available to respond to appropriate shareholder questions and will have the opportunity to make a statement if they desire to do so.
We are asking our shareholders to ratify the selection of Crowe Horwath LLP as our independent registered public accounting firm for 2018. Although ratification is not required by the Company’s Bylaws or otherwise, the Board is submitting the selection of Crowe Horwath LLP to our shareholders as a matter of good corporate practice. If the selection is not ratified, the Audit Committee will consider whether or not it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of Republic and its shareholders.
The Board of Directors recommends a vote “FOR” the proposal to ratify the selection of Crowe Horwath LLP as the Company’s independent registered public accounting firm for 2018.
AUDIT FEE TABLE
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Year
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Audit Fees
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Audit Related Fees
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Tax Fees
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All Other Fees
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2017
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$
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350,000
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$
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—
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$
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—
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$
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47,000
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2016
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$
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372,600
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$
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5,000
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$
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—
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$
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53,100
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The Audit Committee has approved all services provided by Crowe Horwath LLP during 2017. Additional details describing the services provided in the categories in the above table are as follows:
Audit Fees
Crowe Horwath LLP charged $350,000 in fiscal year 2017 and $372,600 in fiscal year 2016 for audit fees. These include professional services in connection with the audit of the Company’s annual financial statements and its internal control over financial reporting. They also include reviews of the Company’s financial statements included in the Company’s Quarterly and Annual Reports on Form 10-Q and Form 10-K and for services that are normally provided by the accounting firm in connection with statutory and regulatory filings or engagements for the fiscal years shown.
Audit Related Fees
Fees for audit related services provided by Crowe Horwath LLP, as disclosed in the above “Audit Fee Table,” primarily include assistance with the review of various accounting standards.
All Other Fees
Fees for all other services provided by Crowe Horwath LLP, as disclosed in the above “Audit Fee Table,” relate to a 401(k) benefit plan audit, a mandated U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) compliance audit fees associated with the Company’s participation in an insurance captive, in 2017 and in 2016, and industry training performed for bank management in 2016.
The Audit Committee of the Board of Directors has determined that the provision of the services covered under the caption “Audit Related Fees” above is compatible with maintaining the independent registered public accounting firm’s independence.
Pre-Approval Policies and Procedures
The Audit Committee’s charter provides that the committee will pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 which are approved by the Audit Committee before the completion of the audit. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals are presented to the full Audit Committee at its next scheduled meeting.
SHAREHOLDERS’ COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders who want to communicate in writing with the Board of Directors, or specified directors individually, may send proposed communications to Republic’s Corporate Secretary at 601 West Market Street, Louisville, Kentucky 40202. The proposed communication will be reviewed by the Audit Committee and the General Counsel. If the communication is appropriate and serves to advance or improve the Company or its performance, contains no objectionable material or language, is not unreasonable in length and is directly applicable to the business of Republic, it is expected that the communication will receive favorable consideration for presentation to the Board of Directors or appropriate director(s).
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the Annual Meeting other than as specified in this proxy statement. If, however, any other matters should properly come before the 2018 Annual Meeting, it is intended that the persons named in the enclosed proxy, or their substitutes, will vote such proxy in accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS
Shareholders who desire to present proposals at the 2019 Annual Meeting must forward them in writing to the Secretary of Republic so that they are received at 601 West Market Street, Louisville, Kentucky 40202 no later than November 9, 2018, in order to be considered for inclusion in Republic’s proxy statement for such meeting. Shareholder proposals submitted after January 19, 2019, will be considered untimely, and the proxy solicited by Republic for next year’s Annual Meeting may confer discretionary authority to vote on any such matters without a description of them in the proxy statement for that meeting. In accordance with Republic’s bylaws, shareholders must provide advance notice of director nominations to be made at the Annual Meeting no later than January 19, 2019.
ANNUAL REPORT
Republic’s 2017 Annual Report on Form 10-K, with certain exhibits, is enclosed with this proxy statement. The 2017 Annual Report on Form 10-K does not form any part of the material for the solicitation of proxies.
Any shareholder who wishes to obtain a copy, without charge, of Republic’s Annual Report on Form 10‑K for its fiscal year ended December 31, 2017, which includes financial statements and financial statement schedules, and is required to be filed with the Securities and Exchange Commission, may contact Kevin Sipes, Chief Financial Officer, at 601 West Market Street, Louisville, Kentucky 40202, or at telephone number (502) 560-8628.
By Order of The Board of Directors
Steven E. Trager, Chairman and Chief Executive Officer
Louisville, Kentucky
March 9, 2018
Please vote at www.investorvote.com/RBCAA or mark, date, sign, and return the enclosed proxy as promptly as possible, whether or not you plan to attend the 2018 Annual Meeting in person. If you do attend the 2018 Annual Meeting, you may still vote in person, since the proxy may be revoked at any time prior to its exercise by delivering a written revocation of the proxy to the Secretary of Republic.
ANNEX A
REPUBLIC BANCORP, INC. AND SUBSIDIARIES
NON-EMPLOYEE DIRECTOR AND KEY EMPLOYEE
DEFERRED COMPENSATION PLAN
(as adopted November 18, 2004 and then
amended and restated on March 16, 2005, March 19, 2008 and again on January 24, 2018)
1.
General
. This Republic Bancorp, Inc. And Subsidiaries Non-Employee Director and Key Employee Deferred Compensation Plan (the “
Plan
”) is intended to more closely align board and executive compensation at Republic Bancorp, Inc. (the “Company”) and subsidiaries with the interests of the Company’s shareholders, by making available to eligible participants tax-deferred investments in Company stock. It is intended that the Plan be in compliance with Code Section 409A (“
Section 409A
”). It is also intended that the Plan be an unfunded arrangement maintained for non-employee directors and for a select group of management or highly compensated employees. Effective upon the time that a Key Employee Participant (as defined below) is first named on
Exhibit A
attached hereto, the Plan shall be considered a “top hat plan” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“
ERISA
”). Capitalized terms used herein and not defined where used shall have the meanings set forth in Section 23.
2.
Eligibility
. Eligibility in the Plan shall be granted to the members of the Board of Directors of the Company or of its Subsidiaries who are not also employees of the Company or of its Subsidiaries and any Director Emeritus, as defined in Section 23 (collectively referred to as the “
Director Participants
”). In addition, eligibility in the Plan may be granted to the employees of the Company or of its Subsidiaries who have been designated by the Compensation Committee of the Board of Directors of the Company (the “
Committee
”) as being eligible for the Plan (the “
Key Employee Participants
” and, together with Director Participants, the “
Participants
”). The Committee shall have full power and discretion to name additional employees of the Company as Key Employee Participants and to remove such employees as Key Employee Participants at such times as it shall decide in its sole discretion, provided that any such removal shall not affect a Participant’s Deferral Elections already made until the next period for which such elections could otherwise be changed or revoked hereunder.
3.
Election
.
(a)
Director Participant Elections
. Each Director Participant may elect to defer under the Plan up to 100% of his annual board and committee meeting fees (collectively, “
Board Fees
”). In addition, stock grants (if any) made to Directors in 2019 or later tax years may be separately elected to be deferred. A Director Participant’s election to defer a portion of his Board Fees and/or stock grants shall be made in writing and shall be effective upon receipt and acceptance by the Company. Such election shall remain in effect for subsequent years unless a new written election is submitted in accordance with this Section 3(a). Except in the case of a newly eligible Director Participant (who may file an election to defer as set out in 3(c) below), an election to defer (or to change or revoke an ongoing deferral election) shall be made no later than 10 days preceding commencement of a calendar year with respect to any deferral of Board Fees or stock grants to be earned in such year, provided, however, that such elections shall be made at an earlier time if required under Section 409A. Any election may be changed in writing, but only as to fees or grants to be earned at and after commencement of the next succeeding calendar year, and shall become irrevocable 10 days before that succeeding calendar year.
(b)
Key Employee Participant Elections
. Each Key Employee Participant may elect to defer under the Plan up to 50% of his base salary (“
Compensation
”). A Key Employee Participant’s election to defer a portion of his Compensation shall be made in writing and shall be effective upon receipt and acceptance by the Company. A written election, once made, shall remain in effect for subsequent years unless a new written election is submitted in accordance with this Section 3(b) for a subsequent calendar year. Except in the case of a newly eligible Key Employee Participant an election to defer Compensation (or to change or revoke an ongoing deferral election) shall be made no later than 10 days preceding commencement of a calendar year with respect to any deferral of Compensation to be earned in such year. Any election may be changed in writing, but only as to compensation that relates to services rendered after commencement of the next succeeding calendar year, and shall become irrevocable 10 days before the succeeding calendar year.
(c)
Newly-Eligible Participants
. Subject to the same percentage limitations as set out in 3(a) or (b) above, a newly-eligible Participant may file an election to defer Board Fees, stock grants or Compensation (as the case may be) earned with respect to services performed after such election within 30 days after the effective date (which shall always be a future date) of becoming eligible to participate in the Plan. The rules of the prior sentence regarding new enrollments shall not apply unless the Participant can be treated as initially eligible in accordance with Reg. Sec. 1.409A-2(a)(7), which generally provides that this special election period shall not apply to Participants in this Plan who were, prior to eligibility hereunder, made eligible in any other plans of the Employer that must be aggregated with this Plan under Code Section 409A, and shall not apply to a Participant whose eligibility to defer under this Plan started, then ceased, then was renewed again, unless that Participant was not able to defer under this and all aggregated plans (if any) for the previous 24 months or longer.
(d)
Company Match for Key Employee Participants
.
(i)
Company Match
. As of the end of each month beginning with May 2018, the Company shall also credit to the Deferred Compensation Account of each Key Employee Participant a matching contribution equal to 100% (or such lesser percentage as may be prescribed by the Committee on a prospective basis by notice to Participants) of the amount of Compensation deferred by each such Participant under this Plan in the prior month, up to a dollar cap established by the Committee for each year (the “
Company Match
”).
(ii)
Vesting of Company Match
. The Company Match, and earnings thereon, credited to a Participant’s Deferred Compensation Account shall become nonforfeitable and vest on the last day of each calendar year in accordance with the following schedule:
|
Period since beginning of year to
which Match relates:
|
Vested Percentage
|
|
Less than 5 years
|
0%
|
|
5 years or more
|
100%
|
So, for example, if a Company Match of $20,000 is made with respect to deferrals made in 2018, on December 31, 2022, that Company Match shall be 100% vested, if the Key Employee Participant remains employed on such date. Any unvested Company Match amounts, and earnings thereon, credited to the Participant’s Deferred Compensation Account shall be forfeited upon termination of employment for any reason prior to the vesting date set out above, unless such termination occurs on account of death or Disability, in which case, the Company Match and related earnings shall be 100% vested. Further, all Company Match and related earnings will be 100% vested if an Participant has not yet forfeited such amounts, upon the happening of a Change in Control. Each year’s Company Match and related earnings thereon shall be accounted for separately hereunder, and the payment date thereof, as well as its vesting, shall be determined as hereinafter provided.
4.
Director Stock Credits
. The Company may, upon a grant of stock to Directors, conclude at the time of such award to automatically credit such stock grant to the Deferred Compensation Account of all (but not less than all) Directors to whom the award is made, as a nonelective credit hereunder (“
Stock Credit
”).
5.
Duration of Deferral
. Each Director Participant’s annual election shall specify the period of the deferral for their elective amounts for any year, which election may be different for any stock grants the Director electively defers, than for Board Fees deferred. The duration of deferral of any Stock Credits shall be designated by the Company at the time the nonelective awards are made. In each case, the period of deferral shall be a specified period of years ranging from two to five years from the beginning of the year of deferral. Key Employee deferrals and related Company Match for each year shall be automatically deferred for a period of five years from the beginning of the year to which such amounts relate.
6.
Subsequent Change in Duration of Deferral
.
A Participant may later elect to lengthen the period of a deferral of either or both (separate elections) of their own elective deferrals or Stock Credits (for Directors) or Company Match (for Key Employees); provided, however, that any delayed payment date election shall not take effect for 12 months following the date the change election is made, and the election must be made at least 12 months before, and shall be irrevocable after such 12
th
prior month, the previously-scheduled payment date with respect to the year’s elective and/or
Stock Credit or Company Match amounts, and, provided further, that each such change in payment date must provide for an additional deferral of the payment date for five years later than the previously-scheduled payment date.
7.
Deferred Compensation Account
. The Company shall maintain a bookkeeping account and relevant subaccounts to which deferred compensation and any Stock Credits or Company Match amounts of each Participant shall be credited at the end of each calendar month after such compensation is deferred (each a “
Deferred Compensation Account
”). At the end of each fiscal quarter, the amounts credited to each Deferred Compensation Account and subaccount shall be converted into whole stock units (“
Stock Units
”) equivalent in value to shares of Class A common stock of the Company (“
Stock
”). The conversion of deferred compensation into Stock Units will be made on the basis of the Fair Market Value of the Stock on the last business day of each fiscal quarter. Any fractional units shall be credited as cash and converted to Stock Units only as and when the accumulated cash credited to that Participant is sufficient to convert to a whole Stock Unit at the end of a quarter.
8.
Dividend Equivalent
. During the term of deferral, the Stock Units standing to the credit of each Participant’s Deferred Compensation Account shall be credited with an amount equal to the cash dividends that would have been paid on the number of Stock Units in such Deferred Compensation Account if such Stock Units were deemed to be outstanding shares of Stock (“
Dividend Equivalents
”). Dividend Equivalents credited to Stock Units shall be converted to additional whole Stock Units and credited to the Participant’s Deferred Compensation Account at the end of each fiscal quarter. The conversion of Dividend Equivalents into Stock Units shall be made on the basis of the Fair Market Value of the Stock on the last business day of each fiscal quarter. Any fractional units shall be credited as cash and converted to Stock Units only as and when the accumulated cash credited to that Participant is sufficient to convert to a whole Stock Unit at the end of a quarter.
9.
Changes in Stock
. In the event of a stock dividend, stock split, reverse stock split or similar change in capitalization affecting the Stock, the Committee shall make appropriate adjustments in the number of Stock Units credited to each Participant’s Deferred Compensation Account. The adjustment by the Committee shall be final, binding and conclusive.
10.
Rights of Participants
. Participation in the Plan, and any actions taken pursuant to the Plan, shall not create or be deemed to create a trust or fiduciary relationship of any kind between the Company, its Subsidiaries and the Participant. The Company or its Subsidiaries (as the case may be) may, but shall have no obligation to, establish any separate fund, reserve, or escrow or to provide security with respect to any amounts deferred under the Plan. Any assets of the Company or its Subsidiaries which are set aside in any separate fund, reserve or escrow shall continue for all purposes to be a part of the general assets of the Company or its Subsidiaries, with title to the beneficial ownership of any such assets remaining at all times in the Company and its Subsidiaries. No Participant, nor his legal representatives, nor any of his beneficiaries shall have any right, other than the right of an unsecured general creditor of the Company or its Subsidiaries, in respect of the Deferred Compensation Account established hereunder, and such persons shall have no property interest whatsoever in any specific assets of the Company or its Subsidiaries. A Participant shall have no rights as a stockholder of the Company, and shall not be entitled to vote, with respect to the Stock Units credited to his Deferred Compensation Account.
11.
Distributions
.
(a)
Normal Distributions
.
(i)
Director Participants
. Each Director Participant (or his beneficiary in the event of his death) shall be entitled to receive the value of all Stock Units standing to the credit of his Deferred Compensation Account upon the earliest to occur of: (A) the payment date last selected pursuant to Section 4 for an annual subaccount thereof; and (B) the Director Participant’s death or Disability.
(ii)
Key Employee Participants
. Each Key Employee Participant (or his beneficiary in the event of his death) shall be entitled to receive the value of all Stock Units standing to the credit of his Deferred Compensation Account upon the earliest to occur of: (A) the payment date last selected (or automatically designated, with respect to Company Stock amounts) pursuant to Section 4 for each annual subaccount thereof; and (B) the Key Employee Participant’s death or Disability.
(b)
Early Distributions
. A Participant will only be permitted to receive a distribution of his Deferred Compensation Account prior to the times specified in Section 9(a) above in the event of: (i) a Change in Control of the Company or Subsidiary for which that Participant works or performs Director services; or (ii) upon approval by the Committee (without the involved Participant being allowed to elect whether to exercise this discretion with respect to such Participant's Account), a de minimis payout of a Participant’s entire Deferred Compensation Account upon his Separation from Service if the payment is not greater than the then-limit under 402(g) of the Code (now $18,500, but indexed annually by the IRS) and the payout is made on or before the later of December 31 of the year of his Separation from Service or 2½ months after his Separation from Service.
(c)
Form of Distribution
. All distributions shall be paid in a single lump of whole shares of Stock equal to the number of Stock Units in the Deferred Compensation Account, with any amount in excess of whole shares then credited to the account paid in cash. All distributions under the Plan shall be the obligation of the Company or Subsidiary for which the Participant provides services.
(d)
Delay in Distribution to Specified Participants
. Notwithstanding anything to the contrary in this Section 11, in the case of a distribution to a Participant who is a “specified participant” where the timing of such distribution is based on such Participant’s Separation from Service other than on account of death, the date of distribution to such Participant shall be at least six (6) months after the date of such Participant’s Separation from Service (or, if earlier, the date of the Participant’s Disability). A “specified participant” shall mean a “key employee” (which can include Directors) within the meaning of Code Section 416(i) (but without regard to Code Section 416(i)(5)), as of the last identification date thereof and determined in the manner provided in Treasury Regulation §1.409-1(i), if, when the Participant’s Separation from Service occurs, stock of the Company is publicly traded on an established securities market or otherwise.
12.
Tax Withholding
.
(a)
Payment by Participant
. Each Participant shall, no later than the date as of which his Stock Units or payments received thereunder first become includible in the gross income of the Participant for Federal income or employment tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld with respect to such income. With respect to Key Employee Participants, the Company will withhold any such taxes due upon initial deferral hereunder from other Compensation. For taxes due upon vesting of Company Match amounts, such taxes shall be debited from other wages or amounts then due the Participant, and each Participant consents to such withholding from other amounts then due the Participant. Only if and to the extent no other (or insufficient) Compensation payable in cash is then due a Participant at the time Company Match amounts become vested hereunder, will the Company debit any taxes required to be withheld from the Deferred Compensation Account, and then only to the extent allowed by Code Section 409A. The Company shall, to the extent permitted by law, have the right to deduct any taxes due at vesting or payment from any payment of any kind otherwise due to the Participant. The Company’s obligation to make any payments to any Participant is subject to and conditioned on tax obligations being satisfied by the Participant. The Company shall report amounts deferred hereunder to the Internal Revenue Service in accordance with the requirements of Section 409A.
(b)
Payment in Stock
. Subject to approval by the Committee, a Participant may elect to have the minimum required Federal, state, other income and statutory withholding obligation due when payments are made under the Plan satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to the Plan a number of shares with an aggregate fair market value (as of the date the withholding is effected) that would satisfy the withholding amount due, or (ii) transferring to the Company shares of Stock owned by the Participant, and that have been held by the Participant for at least six months (12 months in the case of Stock acquired upon exercise of an incentive stock option), with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. Notwithstanding the preceding sentence, any such right to pay withholding amounts due by delivery of already-owned stock shall be ineffective and void from its inception if such right is deemed to be a feature allowing deferral of compensation within the meaning of Section 409A.
13.
Beneficiary
. If a Participant dies before he has received full payment of the amount credited to his Deferred Compensation Account, such unpaid portion shall be paid to the Participant’s primary or contingent beneficiary as designated by the Participant in writing. If no beneficiary has been designated or if a designated beneficiary has predeceased the Participant, such unpaid portion shall be paid first to the Participant’s spouse, or, if there is no spouse, to the Participant’s children per stirpes, or, if there are no spouse or children, to the Participant’s estate.
14.
No Assignment
. The deferred compensation payable under this Plan shall not be subject to alienation, assignment, garnishment, execution, or levy of any kind, and any attempt to cause any compensation to be so subjected shall not be recognized.
15.
Expenses
. All expenses incurred in the establishment and maintenance of or attributable to a Participant’s Deferred Compensation Account shall be borne by the Company and shall not reduce the amount credited to such Deferred Compensation Account.
16.
Amendment and Termination
. This Plan may be amended in any way or may be terminated, in whole or in part, at any time, and from time to time, by the Board of Directors of the Company. The foregoing provisions of this paragraph notwithstanding, no amendment or termination of the Plan shall adversely reduce the number of Stock Units credited to the Deferred Compensation Accounts prior to the effective date of such amendment or termination or, except to the extent permitted under Section 409A upon Plan termination or following a Change in Control, accelerate the timing of payment from the Deferred Compensation Accounts. Notwithstanding the foregoing, the Board of Directors of the Company specifically reserves the right to amend the Plan as necessary to comply with Section 409A.
17.
Plan Administration
. The Board of Directors of the Company shall have the exclusive discretionary authority to determine the amounts of benefits under the Plan, make factual determinations, construe and interpret terms of the Plan, supply omissions and determine any questions which may arise in connection with its operation and administration. Its decisions or actions in respect thereof, including any determination of any amount credited or charged to the Participants’ Deferred Compensation Accounts or the amount or recipient of any payment to be made therefrom, shall be conclusive and binding for all purposes upon the Company and upon any and all Participants, their beneficiaries, and their respective heirs, distributees, executors, administrators and assignees. In the case of the administration of the Plan with respect to Key Employee Participants only, the authority of the Board of Directors of the Company described herein may be exercised by the Committee.
18.
Binding Effect
. The terms of this Plan shall be binding upon and shall inure to the benefit of the Company and its successors or assigns and each Participant and his Beneficiaries, heirs, executors, and administrators.
19.
Limitation of Liability
. Subject to its obligation to pay the vested credits to the Participant’s Deferred Compensation Account at the time distribution is required hereunder, neither the Company, any person acting on behalf of the Company, the Board of Directors, nor the Committee shall be liable for any act performed or the failure to perform any act with respect to the terms of the Plan, except in the event that there has been a judicial determination of willful misconduct on the part of the Company, such person, the Board of Directors or the Committee.
20.
Governing Law
. This Plan, and all actions taken hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Kentucky, except as such laws may be superseded by ERISA.
21.
Reporting
. The Company shall provide statements to Participants showing the amounts standing to the credit of their Deferred Compensation Accounts no less frequently than once a year.
22.
Claims Procedure
.
(a) All claims for benefits under this Plan shall be filed in writing with the Board of Directors of the Company in accordance with such procedures as the Board shall reasonably establish.
(b) The Board of Directors of the Company shall, within 90 days (45 days for payment based on Disability) after a submission of a claim, provide adequate notice in writing to any claimant whose claim for benefits under the Plan has been denied. Such notice shall contain the specific reason or reasons for the denial and references to specific Plan provisions on which the denial is based. The Board shall also provide the claimant with a description of any material or information which is necessary in order for the claimant to perfect his claim and an explanation of why such information is necessary. If special circumstances require an extension of time for processing the claim, the Board shall furnish the claimant a written notice of such extension prior to the expiration of the 90-day period (30 days for a Disability claim, and an additional 30-day extension is available). The extension notice shall indicate the reasons for the extension and the expected date for a final decision, which date shall not be more than 180 days (105 days for Disability) from the initial claim.
(c) The Board of Directors of the Company shall, upon written request by a claimant within 60 (180 for a disability claim) days of receipt of the notice that his claim has been denied, afford a reasonable opportunity to such claimant for a full and fair review by the Board of the decision denying the claim. The Board will afford the claimant an opportunity to review pertinent documents and submit issues and comments in writing. The claimant shall have the right to be represented.
(d) The Board of Directors of the Company shall, within 60 days (45 days for a disability claim) of receipt of a request for a review, render a written decision on its review. If special circumstances require extra time for the Board to review its decision, the Board will attempt to make its decision as soon as practicable, and in no event will the Board take more than 120 days (105 days for Disability claims) to send the claimant a written notice of its decision.
23.
Source of Shares
. Shares of Stock reserved under the Company’s then-effective Stock Incentive Plan shall be used to satisfy any obligations to distribute Stock under this Plan, but the Stock when issued under this Plan shall not bear the restrictions on transfer which may be set forth in such Stock Incentive Plan.
24.
Effective Date
. This Plan was originally effective as of January 1, 2005; the effective date of this restatement shall be January 24, 2018.
25.
Definitions
.
(a) “
Change in Control
” shall have the meaning provided in regulations or guidance under Code Section 409A from time to time, which currently provide that it shall mean the occurrence of a “
Change in Ownership
,” “
Change in Effective Control
” or “
Change in Asset Control
” as each is defined below, subject to the requirements in subsection (i) below.
(i)
General Requirements
.
(A) The Change in Control must relate to (A) a corporation for whom the Participant is performing services at the time of the Change in Control, (B) a corporation that is liable for the payment of the deferred compensation (or all corporations liable for the payment if more than one corporation is liable), or (C) a corporation that is a majority shareholder of a corporation identified in (A) or (B), or any corporation in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in (A) or (B).
(B) A majority shareholder is a shareholder owning more than 50% of the total fair market value and total voting power of such corporation.
(C) For purposes of this definition, Code Section 318(a) applies to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined by Treas. Reg. Sections 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option.
(D) For purposes of this definition, Persons will not be considered to be acting as a group solely because they purchase assets or purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock or assets, or similar business transaction with the corporation. If a Person owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation only to the extent of the ownership in that corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.
(ii)
Change in Ownership
. A Change in Ownership occurs on the date that any one Person, or more than one person acting as a group (as defined above in subsection (a)(i)(D)), acquires ownership of stock
of the corporation that, together with stock held by such Person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the corporation. However, if any one Person or more than one Person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of the corporation, the acquisition of additional stock by the same Person or Persons is not considered to cause a Change in Ownership of the corporation (or to cause a Change in the Effective Control of the corporation). An increase in the percentage of stock owned by any one Person, or Persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this Section. A Change in Ownership occurs only when there is a transfer of stock of the corporation (or issuance of stock of the corporation) and stock in the corporation remains outstanding after the transaction.
(iii)
Change in Effective Control
. Notwithstanding that the corporation has not undergone a Change in Ownership, a Change in Effective Control of the corporation occurs on the date that either:
(A) Any one Person, or more than one Person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) ownership of stock of the corporation possessing 35 percent or more of the total voting power of the stock of the corporation; or
(B) A majority of members of the Board of Directors of the corporation is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election, provided that for purposes of this paragraph (B) the term corporation refers solely to the relevant corporation identified above in subsection (a)(i)(A) for which no other corporation is a majority shareholder for purposes of that paragraph.
A Change in Effective Control also may occur in any transaction in which either of the two corporations involved in the transaction has a Change in Control under subsections (a)(ii) or (a)(iv) of this definition.
If any one Person, or more than one Person acting as a group, is considered to effectively control a corporation (within the meaning of this subsection (a)(iii)), the acquisition of additional control of the corporation by the same Person or Persons is not considered to cause a Change in Effective Control of the corporation (or to cause a Change in Ownership of the corporation within the meaning of subsection (a)(ii)).
(iv)
Change in Asset Control
. A Change in Asset Control of the corporation occurs on the date that any one Person, or more than one Person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
(A) There is no Change in Control under this subsection (iv) when there is a transfer to an entity that is controlled by the shareholders of the corporation immediately after the transfer, as provided in this subsection (iv). A transfer of assets by the corporation is not treated as a Change in Assets Control if the assets are transferred to:
(1) A shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock;
(2) An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the corporation;
(3) A Person, or more than one Person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the corporation; or
(4) A Person, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a Person described subsection (iv)(A)(3).
(B) For purposes of this subsection (iv) and except as otherwise provided, a Person’s status is determined immediately after the transfer of the assets.
(b) “
Code
” shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
(c) “
Director Emeritus
” shall mean a former member of the Board of Directors of the Company who is not also an employee of the Company and who has been classified as a “Director Emeritus” by the Board of Directors of the Company and serves as such on the board of directors of a Subsidiary of the Company.
(d) “
Disability
” shall mean when a Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or is receiving income replacement benefits for a period of not less than 3 months under an accident and health plan maintained by the Company or a Subsidiary.
(e) “
Fair Market Value
” shall mean, as of any date, the value of a share of Stock determined as follows:
(i) If the Stock is listed on any established stock exchange or a national market system, including, without limitation, the National Market of the National Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq”) System, its Fair Market Value shall be the closing market price of the Stock as reported on the date of determination, or, if no trades were reported on that date, the closing price on the most recent trading day immediately preceding the date of the determination, as quoted on such system or exchange, or the exchange with the greatest volume of trading in Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(ii) If the Stock is quoted on the Nasdaq System (but not on the National Market thereof) or regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(iii) In the absence of such markets for the Stock, the Fair Market Value shall be determined in good faith by the Committee, considering any and all information they determine relevant, including, without limitation, the valuation methods permitted in Treas. Reg. Section 20.2031-2 (estate tax regulations) or a third-party appraisal.
(f) “
Person
” shall mean an individual, a partnership, a corporation, a limited liability company, a limited liability partnership, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or any other business entity.
(g) “
Subsidiary
” or “
Subsidiaries
” shall mean any corporation which at the time qualifies as a subsidiary of the Company under the definition of “subsidiary corporation” in Code Section 424(f).
(h) “
Separation from Service
” means,
(i) with respect to a Key Employee Participant, the date the Company and the Key Employee Participant reasonably anticipate that (i) the Key Employee Participant will not perform any further services for the Company or any other entity considered a single employer with the Company under Section 414(b) or (c) of the Code, or (ii) the level of bona fide services performed after that date (as an employee or independent contractor), will permanently decrease to less than 50% of the average level of bona fide services performed over the previous 36 months (or if shorter over the duration of service). The Key Employee Participant will not be treated as having a Separation from Service while on military leave, sick leave or other bona fide leave of
absence if the leave does not exceed six months or, if longer, the period during which the Employee has a reemployment right with the Company by statute or contract. If a bona fide leave of absence extends beyond six months, a Separation from Service will be deemed to occur on the first day after the end of such six-month period, or on the day after the Employee’s statutory or contractual reemployment right lapses, if later. The Company will determine whether a Separation from Service has occurred based on all relevant facts and circumstances, in accordance with Treasury Regulation §1.409A-1(h).
(ii) with respect to a Director Participant, the date the Director’s term as a Director expires, the Director resigns, or the Director is removed, provided that the Company and Director in good faith believe at that time that the Director’s status will not be renewed and that no other service relationship (as an employee or independent contractor) will continue or begin. If the parties anticipate that some service relationship will continue after a Director’s term expires and is not renewed, in all events the “Separation from Service” is deemed to occur 12 months after the date on which a Director Participant ceases to serve as a member of the Board of Directors of the Company or a Subsidiary, as long as the Director Participant does not actually perform services for the Company or a Subsidiary (as a director, employee or independent contractor) during such 12 month period, as provided under Treasury Regulation §1.409A-1(h)(2)(ii).
Notwithstanding the above, the services of a person as a Director are not taken into account for purposes of determining if that same person has a Separation from Service as a Key Employee, or vice versa, unless benefits under this Agreement are aggregated with benefits under any other Employer Group plan or agreement in which the Participant also participates in the other capacity, as more specifically provided in Treas. Reg 1.409A-1(c)(2)(ii) and (h)(5).
|
Board Approval as restated:
|
January 24, 2018 _____
[secretary to initial]
|
ANNEX B
REPUBLIC BANCORP, INC.
EMPLOYEE STOCK PURCHASE PLAN
Section 1 --
PURPOSE
Republic Bancorp, Inc. (the “
Corporation
”) hereby establishes this employee stock purchase plan (the “
Plan
”) for the benefit of its employees and the employees of Related Companies which the Board allows to participate, as set forth below.
The purpose of the Plan is to provide employees with an opportunity to participate in the growth of the Corporation and to further align the interests of the employees with the interests of the Corporation through the purchase of shares of the Corporation’s common stock. The Plan is intended to be an employee stock purchase plan under Section 423 of the Code.
Section 2 --
DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings below unless the context clearly indicates otherwise:
2.1 “
Board
” means the Board of Directors of the Corporation.
2.2 “
Change of Control
” of the Corporation shall mean (i) an event or series of events which have the effect of any "person" as such term is used in Section 13(d) and 14(d) of the Exchange Act, becoming the "beneficial owner" as defined in Rule 13d-3 under the Exchange Act, directly or indirectly, of securities of the Corporation or a Related Corporation for which the Eligible Employee works representing a greater percentage of the combined voting power of the Corporation's or Bank's then outstanding stock, than the Trager Family Members as a group; (ii) an event or series of events which have the effect of decreasing the Trager Family Members' percentage ownership of the combined voting power of the Corporation's or Related Corporation’s then outstanding stock to less than 25%; or (iii) the business of the Corporation or Related Corporation is disposed of pursuant to a partial or complete liquidation, sale of assets, or otherwise. For purposes of this paragraph, "Trager Family Member" shall mean Jean S. Trager and any of her lineal descendants, and any corporation, partnership, limited liability company or trust, the majority owners or beneficiaries of which are directly or indirectly through another entity, Jean S. Trager or one or more of her lineal descendants, including specifically but without limitation, The Jaytee Properties Limited Partnership and Teebank Family Limited Partnership.
2.3 “
Common Stock
” or “
Stock
” means the Corporation’s Class A voting common stock, no par value.
2.4 “
Code
” means the Internal Revenue Code of 1986, as it may be amended from time to time.
2.5 “
Committee
” means the Board,
unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 6.2.
2.6 “
Eligible Employee
” means any employee of the Corporation, or any Related Corporation which is made eligible to participate herein, who is eligible to participate in an Offering Period in accordance with Section 3.1.
2.7 “
Fair Market Value
” means as of any date, the value of a share of Stock determined as follows:
(a) If the Stock is listed on any established stock exchange or a national market system, including, without limitation, The NASDAQ Stock Exchange, its Fair Market Value shall be the closing market price of the Stock as reported on the date of determination, or, if no trades were reported on that date, the closing price on the most recent trading day immediately preceding the date of the determination, as quoted on such system or exchange, or the exchange with the greatest volume of trading in Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(b) If the Stock is quoted on The NASDAQ Stock Exchange or regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Stock for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
In the absence of such markets for the Stock, the Fair Market Value shall be determined in good faith by the Committee, by reasonable application of a reasonable valuation method, considering any and all information the Committee determines relevant.
2.8
“
Offering
” means the grant of Purchase Rights to purchase shares of Common Stock under the Plan to Eligible Employees.
2.9
“
Offering Date
”
means a date selected by the Committee for an Offering Period to commence.
2.10
“
Offering Period
” means the period beginning on an Offering Date and ending on a Purchase Date as set by the Committee pursuant to Section 5.1 during which Eligible Employees may set aside funds via payroll deductions to purchase Common Stock under the Plan.
2.11
“
Participant
” means an Eligible Employee who has elected to participate in the Plan and who has not ceased participation herein, or who has not declined participation under any auto-enrollment feature adopted by the Committee for an Offering Period.
2.12 “
Purchase Date
”
means the last day of an Offering Period established by the Committee on which Purchase Rights shall be exercised and as of which purchases of shares of Common Stock shall be carried out in accordance with such Offering.
2.13 “
Purchase Right
”
means an option to purchase shares of Common Stock granted pursuant to the Plan.
2.14 “
Related Corporation
”
means any “parent corporation” or “subsidiary corporation” of the Corporation whether now or subsequently established, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.
Section 3 --
ELIGIBILITY AND PARTICIPATION
3.1
Initial Eligibility
.
Employees of the Corporation or, as the Committee may designate as provided in Section 6.1(ii), to Employees of a Related Corporation. Except as provided in Section 3.2, an Employee shall not be eligible to be granted Purchase Rights under the Plan unless, on the Offering Date, such Employee has been in the employ of the Corporation or the Related Corporation, as the case may be, for such continuous period preceding such Offering Date as the Committee may require, but in no event shall the required period of continuous employment be greater than two years. In addition, the Committee may provide that no Employee shall be eligible to be granted Purchase Rights under the Plan unless, on the Offering Date, such Employee's customary employment with the Corporation or the Related Corporation is for more than 20 hours per week and/or for more than five months per calendar year or such other criteria as the Committee may determine consistent with Section 423 of the Code.
3.2
Limitation on Eligibility
. Notwithstanding Section 3.1, no Eligible Employee may participate in the Plan for an Offering Period if, upon the employee’s purchase of the largest amount of shares available to him for purchase during the Offering Period, the employee would own Stock, and/or hold outstanding options to purchase Stock, possessing 5% or more of the total combined voting power or value of all classes of stock of the Corporation (for purposes of this paragraph, the rules of Code Section 424(d) shall apply in determining stock ownership for any employee). In addition,
the Committee may provide in an Offering that Employees who are highly compensated employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to participate.
Section 4 --
SHARES AVAILABLE UNDER THE PLAN
4.1
Shares Available
. Subject to adjustments pursuant to Section 4.3, the maximum number of shares of Common Stock that may be purchased under the Plan is 250,000.
4.2
Source of Shares
. Shares of Common Stock issued under the Plan may be issued from authorized and unissued Common Stock or from any other proper source.
4.3
Adjustments in Authorized Shares
. In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, share combination, or other change in the corporate structure of the Corporation affecting the number of shares of Stock or the kind of shares or securities an appropriate and proportionate adjustment shall be made in the number and kind of shares which may be delivered under the Plan (both in the aggregate or under individual limits), and in the number and kind of or price of share subject to outstanding Purchase Rights; provided that the number of shares subject to any Purchase Right shall always be a whole number. Any adjustment shall be made in such a manner so as not to constitute a "modification" within the meaning of Code Section 424(h). If the Corporation shall at any time merge or consolidate with or into another corporation or association, each Participant will thereafter receive, upon the Purchase Date, the securities or property to which a holder of the number of shares of Stock then deliverable would have been entitled upon such merger or consolidation, and the Corporation shall take such steps in connection with such merger or consolidation as may be necessary to assure that the provisions of this Plan shall thereafter be applicable, as nearly as is reasonably possible, in relation to any securities or property deliverable at any subsequent Purchase Date. A sale of all or substantially all the assets of the Corporation for a consideration (apart from the assumption of obligations) consisting primarily of securities shall be deemed a merger or consolidation for the foregoing purposes.
Section 5 --
STOCK PURCHASES UNDER THE PLAN
5.1
Offering Periods
. The Committee shall, from time to time in its discretion, designate Offering Periods during which all Eligible Employees may elect to purchase Stock under the Plan, provided that no Offering Period shall have a duration of longer than 27 months.
5.2
Offering Terms
. Each Offering shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate, but shall comply with the requirement of Section 423(b)(5) of the Code that all Eligible Employees granted Purchase Rights shall have the same rights and privileges. The terms and conditions of an Offering shall be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but must be consistent with the terms of the Plan.
The Committee may designate a maximum number of shares of Common Stock that may be purchased by each Eligible Employee during the Offering Period or restrict purchases by Eligible Employees to maximum dollar amount or percentage of Compensation, provided that no Eligible Employee may elect to purchase Common Stock with a Fair Market Value in excess of $25,000
(determined at the time such rights are granted, and which, with respect to the Plan, shall be determined as of their respective Offering Dates) for any calendar year.
During each Offering Period, each Eligible Employee may elect to purchase Common Stock in accordance with the rules set by the Committee for that Offering Period.
The Committee may specify a maximum aggregate number of shares of Common Stock that may be purchased by all Participants pursuant to an Offering. If the aggregate purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under the Offering would exceed any such maximum aggregate number, then, in the absence of any Committee action otherwise, a pro rata allocation of the shares of Common Stock available shall be made in as nearly a uniform manner as shall be practicable and equitable.
5.3
Contributions; Payroll Deductions
.
5.3.1 Eligible Employees shall accumulate funds (“
Contributions
”) to purchase Stock during an Offering Period by payroll deduction. An Eligible Employee shall signify his election to participate in the Plan for the Offering Period by completing a form (electronically or otherwise, as determined by the Committee) (the “
Subscription Agreement
”) within a period before the Offering Period begins as established by the Committee.
Each Participant's Contributions shall be credited to a bookkeeping account for such Participant under the Plan and shall be deposited with the general funds of the Corporation.
5.3.2 No interest shall be paid on Contributions during an Offering Period.
5.3.3
Each such Subscription Agreement shall authorize an amount of Contributions expressed as either a fixed dollar amount or percentage of the submitting Participant's earnings (as defined in each Offering) during the Offering (not to exceed any maximum that may be specified by the Committee). To the extent provided in the Offering, a Participant may thereafter revoke the election and reduce future Offering Period Contributions to zero, but
may not otherwise make a change or increase Contributions until a future Offering Period begins. Subscription Agreements may carry over into future Offering Periods, or new Subscriptions shall be required for each Offering Period, as determined by the Committee.
5.3.4
During an Offering, a Participant may cease making Contributions and withdraw from the Offering by delivering to the Corporation a notice of withdrawal in such form as the Corporation may provide. Such withdrawal may be elected at any time prior to the end of the Offering, except as provided otherwise in the Offering. Upon such withdrawal from the Offering by a Participant, the Corporation shall distribute to such Participant all of his or her accumulated Contributions (reduced to the extent, if any, such Contributions have been used to acquire shares of Common Stock for the Participant) under the Offering, and such Participant's Purchase Right in that Offering shall thereupon terminate. A Participant's withdrawal from an Offering shall have no effect upon such Participant's eligibility to participate in any other Offerings under the Plan, but such Participant shall be required to deliver a new Subscription Agreement in order to participate in subsequent Offerings.
5.4
Purchase Price
. Purchases of Common Stock under the Plan shall occur on the Purchase Date. The purchase price (the “
Purchase Price
”) of each share of Common Stock shall be set by the Committee when it designates the Offering Period and may not be lower than the lesser of (i) 85% of the Fair Market Value of the Common Stock on the first day of the Offering Period and (ii) 85% of the Fair Market Value of the Common Stock on the Purchase Date.
5.5
Issuance of Common Stock
. The purchase of Common Stock pursuant to the Plan will be effective as of the Purchase Date and the shares of Common Stock purchased will be deemed outstanding as of such date and will be registered in book entry form on the registration books maintained by the Corporation’s transfer agent.
5.6
Termination of Employment of the Participant Before Purchase Date
. In the event a Participant ceases to be an employee of the Corporation or a Related Corporation (except in the case of transfer from one of such companies to another) for any reason prior to the end of an Offering Period, all Contributions shall be returned to the Participant or, if the Participant is deceased, to his or her spouse, or if there is no spouse or the spouse does not claim the refund, to the Participant’s estate, and no Common Stock shall be issued to such Participant or the Participant’s heirs under this Plan.
5.7
Optional Actions at a Change in Control
. In the event of a Change of Control, the Committee may take one or more of the following actions with respect to any or all outstanding Purchase Rights: the Committee may (i) end the Offering Period and return all Contributions to Participants, (ii) after giving Participants notice, end the Offering Period at a future date so specified in such notice, and, to the extent Participants do not elect to withdraw, issue Stock for their Contributions as of the Purchase Date established by that shortened Offering Period, or (iii) determine that outstanding Purchase Rights shall be assumed by, or replaced with comparable rights by, the surviving corporation, (or a parent or subsidiary of the surviving corporation). Such surrender or termination shall take place as of the date of the Change of Control or such other date as the Committee may specify.
Section 6 –
ADMINISTRATION
6.1
Governance
.
The Board (or, to the extent it appoints a committee, the Committee) shall administer the Plan and shall have the power, subject to, and within the limitations of, the express provisions of the Plan:
(i) To determine how and when Purchase Rights to purchase shares of Common Stock shall be granted and the provisions of each Offering of such Purchase Rights (which need not be identical).
(ii) To designate from time to time which Related Corporations of the Corporation shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and Purchase Rights and factual matters related thereto, and to establish, amend and revoke rules and regulations for its administration. The Committee, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective.
(iv) To settle all controversies regarding the Plan and Purchase Rights granted under it.
(v) To suspend or terminate the Plan at any time as provided in Section 8.
(vi) Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Corporation and its Related Corporations and to carry out the intent that the Plan be treated as an Employee Stock Purchase Plan.
The Board or the Committee may, without regard to whether Participant’s rights are adversely affected, change the duration of Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Corporation’s processing of properly completed withholding elections, and establish reasonable waiting and adjustment periods and/or accounting and crediting procedures.
6.2
Board Delegation to Committee
. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, restore in the Board some or all of the powers previously delegated.
6.3
Exculpation
. No member of the Board or the Committee, nor any officer or employee acting on their behalf, shall be liable for actions, determinations or interpretations made in good faith with respect to the Plan. All members of the Board and the Committee and each officer or employee of the Corporation acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Corporation with respect to any such action, determination or interpretation.
6.4
Decisions Binding
. All determinations and decisions made by the Board or the Committee pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Corporation, its shareholders, Participants and their estates and beneficiaries.
Section 7 --
NO ASSIGNMENT
No Participant may assign or transfer any rights under the Plan to any other person, nor delegate any duties of the Participant. Any attempted assignment or delegation by the Participant is void and shall have no effect.
Section 8 --
AMENDMENT, MODIFICATION AND TERMINATION
The Board may, at any time, amend, modify or terminate the Plan without the consent of any Participant or Eligible Employee; provided, however, that the Board may not (i) increase the number of share of Stock available for issuance hereunder without approval of the Corporation’s shareholders, other than in accordance with Section 4.3, and (ii) make any other changes herein to
the extent stockholder approval is required by applicable law or listing requirements.
Section 9 --
GENERAL PROVISIONS
9.1
Not a Contract of Employment
. Neither the Plan, nor any action taken under the Plan, shall be construed as conferring upon any Eligible Employee any right to continue as an employee of the Corporation or a Related Corporation.
9.2
Withholding
. The Corporation shall be entitled to take whatever steps it deems necessary to satisfy its federal, state and local taxes withholding obligations under applicable law, if any, with respect to the Plan.
9.3
Securities Restrictions on Sale of Stock
. The Committee may require Participants receiving Common Stock under the Plan to represent to and agree with the Corporation in writing that the Participant is acquiring the shares for investment without a view to distribution thereof. No shares shall be issued or transferred unless the Committee determines, in its sole discretion, that such issuance or transfer complies with all relevant provisions of law, including
but not limited to, the (i) limitations, if any, imposed in the state of issuance or transfer, (ii) restrictions, if any, imposed by the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, and the rules and regulations promulgated thereunder, and (iii) requirements of any stock exchange upon which the Corporation’s shares may then be listed. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.
9.4
Restrictions on Stock Acquired Pursuant to Plan
. The Committee may impose such restrictions as it deems advisable on a Participant selling, assigning, transferring or otherwise disposing of any Stock acquired hereunder, as described in the Offering.
9.5
Governing Law
. This Plan shall be governed by, and construed in accordance with, the laws of the Commonwealth of Kentucky without regard to its conflicts of laws rules.
9.6
Gender and Number
. Except where otherwise indicated by the context, reference to the masculine gender shall include the feminine gender, the plural shall include the singular and the singular shall include the plural.
9.7
Severability
. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
9.8
Not a Shareholder
. No person entitled to purchase Common Stock with respect to an Offering Period hereunder will have any rights as a shareholder of the Corporation with respect to the Common Stock to be purchased during an Offering Period until such person has become the holder of record of such shares of Common Stock on the Corporation’s corporate records.
9.9
Tax Report
. The Corporation shall reflect the purchase of Stock hereunder on an informational report as required by Code Section 6039 no later than January 31 of the year following such purchase.
9.10
Headings
. The headings in this Plan have been inserted solely for convenience of reference and shall not be considered in the interpretation or construction of this Plan.
Section 10 --
EFFECTIVE DATE AND TERM OF PLAN
The Plan shall be effective on the date (the “
Effective Date
”) when the Board adopts the Plan subject to approval of the Plan by the shareholders of the Corporation within 12 months after the Effective Date. The Plan shall begin on the Effective Date and shall continue until all Common Stock authorized for issuance under Section 4 has been issued under the Plan or until the Board terminates the Plan, if sooner.
IN WITNESS WHEREOF,
the Corporation has caused this Plan to be executed by the undersigned officer this
______
day of
__________
, 2018.
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REPUBLIC BANCORP, INC.
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By:
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Title:
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Date:
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Adopted by the Board of Directors: January 24, 2018
Approved by Stockholders: __________, 2018
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NNNNNNNNNNNN . + NNNNNN C 1234567890 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by Internet • Go to www.investorvote.com/RBCAA • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Important Notice Regarding the Availability of Proxy Materials for the Republic Bancorp, Inc. Shareholder Meeting to be Held on April 19, 2018. Under Securities and Exchange Commission rules, you are receiving this notice that the proxy materials for the 2018 Annual Meeting of Shareholders are available on the Internet. Follow the instructions below to view the materials and vote online or request a copy. The items to be voted on and location of the annual meeting are on the reverse side. Your vote is important! This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting. The proxy statement and annual report to shareholders are available at: www.investorvote.com/RBCAA Easy Online Access — A Convenient Way to View Proxy Materials and Vote When you go online to view materials, you can also vote your shares. Step 1: Go to www.investorvote.com/RBCAA. Step 2: Click on the icon on the right to view current meeting materials. Step 3: Return to the investorvote.com window and follow the instructions on the screen to log in. Step 4: Make your selection as instructed on each screen to select delivery preferences and vote. � When you go online, you can also help the environment by consenting to receive electronic delivery of future materials. Obtaining a Copy of the Proxy Materials – If you want to receive a copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy as instructed on the reverse side on or before April 6, 2018 to facilitate timely delivery. + 2 N O T C O Y 02RMPB NNNNNNNNN Shareholder Meeting Notice1234 5678 9012 345 IMPORTANT ANNUAL MEETING INFORMATION
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. Republic Bancorp, Inc.’s 2018 Annual Meeting of Shareholders will be held on April 19, 2018 at Republic Bank Building, Lower Level, 9600 Brownsboro Road, Louisville, Kentucky 40241, at 9:00 a.m., Eastern Daylight Savings Time. Proposals to be voted on at the meeting are listed below along with the Board of Directors’ recommendations. The Board recommends a vote FOR all Director nominees, FOR Proposals 2, 3 and 4: 1. Election of Directors: Craig A. Greenberg, Michael T. Rust, R. Wayne Stratton, Susan Stout Tamme, A. Scott Trager, Steven E. Trager, Mark A. Vogt. Approval of the Amended and Restated Non-Employee Director and Key Employee Deferred Compensation Plan. Approval of the Employee Stock Purchase Plan. Ratification of Crowe Horwath LLP as the independent registered public accountants for the year ending December 31, 2018. 2. 3. 4. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. PLEASE NOTE – YOU CANNOT VOTE BY RETURNING THIS NOTICE. To vote your shares you must vote online or request a paper copy of the proxy materials to receive a proxy card. If you wish to attend and vote at the meeting, please bring this notice with you. Here’s how to order a copy of the proxy materials and select a future delivery preference: Paper copies: Current and future paper delivery requests can be submitted via the telephone, Internet or email options below. Email copies: Current and future email delivery requests must be submitted via the Internet following the instructions below. If you request an email copy of current materials you will receive an email with a link to the materials. PLEASE NOTE: You must use the number in the shaded bar on the reverse side when requesting a set of proxy materials. g Internet – Go to www.investorvote.com/RBCAA. Follow the instructions to log in and order a copy of the current meeting materials and submit your preference for email or paper delivery of future meeting materials. Telephone – Call us free of charge at 1-866-641-4276 and follow the instructions to log in and order a paper copy of the materials by mail for the current meeting. You can also submit a preference to receive a paper copy for future meetings. Email – Send email to investorvote@computershare.com with “Proxy Materials Republic Bancorp, Inc.” in the subject line. Include in the message your full name and address, plus the number located in the shaded bar on the reverse side, and state in the email that you want a paper copy of current meeting materials. You can also state your preference to receive a paper copy for future meetings. To facilitate timely delivery, all requests for a paper copy of the proxy materials must be received by April 6, 2018. g g 02RMPB Shareholder Meeting Notice
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MMMMMMMMMMMM . MMMMMMMMMMMMMMM C123456789 000004 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext ENDORSEMENT_LINE______________ SACKPACK_____________ Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 9:00 a.m., Eastern Daylight Savings Time, on April 19, 2018. MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Vote by Internet • Go to www.investorvote.com/RBCAA • Or scan the QR code with your smartphone • Follow the steps outlined on the secure website Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone • Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proposals — The Board recommends a vote FOR all Director nominees, and FOR Proposals 2, 3 and 4. 1. Election of Directors: + For Withhold For Withhold For Withhold 01 - Craig A. Greenberg 02 - Michael T. Rust 03 - R. Wayne Stratton 04 - Susan Stout Tamme 05 - A. Scott Trager 06 - Steven E. Trager 07 - Mark A. Vogt For Against Abstain ForAgainst Abstain 2. Approval of the Amended and Restated Non-Employee Director and Key Employee Deferred Compensation Plan. 3. Approval of the Employee Stock Purchase Plan. 4. Ratification of Crowe Horwath LLP as the independent registered public accountants for the year ending December 31, 2018. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. Non-Voting Items Change of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MMMMMMMC 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 U P X3 6 4 0 9 8 1 02RMKB MMMMMMMMM C B A Annual Meeting Proxy Card1234 5678 9012 345 X IMPORTANT ANNUAL MEETING INFORMATION
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. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Republic Bancorp, Inc. Notice of 2018 Annual Meeting of Shareholders Republic Bank Building, Lower Level, 9600 Brownsboro Road, Louisville, Kentucky 40241 Proxy Solicited by Board of Directors for Annual Meeting – April 19, 2018 R. Wayne Stratton and Craig A. Greenberg, or either of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of Republic Bancorp, Inc. to be held on April 19, 2018 or at any postponement or adjournment thereof. Shares represented by this proxy will be voted as directed by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees, and FOR Proposals 2, 3 and 4. For participants in the Republic Bancorp 401(k) Retirement Plan (the “Plan”), the Plan Trustee shall vote the shares for which it has not received voting direction from the Plan participants utilizing the same voting percentages derived from the Plan participants who did direct how their shares are to be voted. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.)
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