EXHIBIT 10.2 REPUBLIC BANCORP, INC. AND SUBSIDIARIES NON-EMPLOYEE DIRECTOR AND KEY EMPLOYEE DEFERRED COMPENSATION PLANExecutive Compensation Plan Agreement |
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EXHIBIT 10.2
REPUBLIC BANCORP, INC.
AND SUBSIDIARIES
NON-EMPLOYEE DIRECTOR AND KEY EMPLOYEE
DEFERRED COMPENSATION PLAN
(as adopted
November 18, 2004 and then
amended and restated March 16, 2005)
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. 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 (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 or the Subsidiary (as the case may be for a particular Participant)
(the “Committee”) as being eligible for the Plan (the “Key
Employee Participants” and, together with Director Participants, the
“Participants”). The initial Key Employee Participants (if
any) are listed in Exhibit A attached hereto. 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”). A Director Participant’s
election to defer a portion of his Board Fees shall be made in writing and
shall be effective upon receipt and acceptance by the Company. A new
written election must be submitted to the Company in 2005 with respect to any
Board Fees to be earned in 2006, and 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 within 30 days of his being
eligible to participate in the Plan, 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 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 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 (“Base
Compensation”) and up to 100% of his annual incentive compensation with
respect to services for that upcoming year (even if the bonus is otherwise
payable in a later calendar year) (“Bonus Compensation”)
(collectively, “Annual Compensation”). A Key Employee
Participant’s election to defer a portion of his Annual Compensation
shall be made in writing and shall be effective upon receipt and acceptance by
the Company. A new written election must be submitted to the Company in
2005 with respect to any Annual Compensation to be earned in 2006, and such election
shall remain in effect for subsequent years unless a new written election is
submitted in accordance with this Section 3(b). Except in the case
of a newly eligible Key Employee Participant who may file an election to defer
Annual Compensation earned with respect to services performed after such
election within 30 days of his designation by the Committee as being eligible
to participate in the Plan, an election to defer Annual 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
Annual Compensation to be earned in such year. Notwithstanding the
foregoing, if Bonus Compensation qualifies as “performance-based
compensation” under Section 409A, an election to defer Bonus
Compensation may be made as late as June 30th of the year with
respect to which such Bonus Compensation relates, provided that there is no
minimum amount payable or substantially certain to be paid at the date such
election is actually made. 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.
4.
Duration of Deferral. Each Participant’s election shall
specify the period of the deferral, which shall be a specified period of years
ranging from two to five years from the beginning of the year of
deferral. A Participant may later elect to lengthen the period of a
deferral; provided, however, that any delayed payment date election shall not
take effect for 12 months following the election and the election must be made
at least 12 months before the previously-scheduled payment date with respect to
the deferral, 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-schedule payment date.
5.
Deferred Compensation Account. The Company shall maintain a bookkeeping
account to which deferred compensation of each Participant shall be credited at
the end of each calendar month after such compensation is earned (each a
“Deferred Compensation Account”). At the end of each fiscal
quarter, the amounts credited to each Deferred Compensation Account 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.
6.
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 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.
7.
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.
8.
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.
9.
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; 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 pursuant to
Section 4; 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, a de minimis payout
of a Participant’s entire Deferred Compensation Account upon his Termination
of Employment or Service if the payment is not greater than $10,000 and the
payout is made on or before the later of December 31 of the year of his
Termination of Employment or 2½ months after his Termination of
Employment
(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 Key Employees. Notwithstanding anything to the contrary in
this Section 9, in the case of a distribution to a Participant who is a
“key employee” where the timing of such distribution is based on
such Participant’s Termination of Employment, the date of distribution to
such Participant shall be at least six (6) months after the date of such
Participant’s Termination of Employment (or, if earlier, the date of the
Participants death or Disability). A “key employee” shall be
a key employee as defined in Section 416(i) of the Code without regard to
paragraph 5 thereof.
10.
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 then due
to be withheld from the amount that would otherwise be deferred and credited
hereunder, and credit the net after such tax withholding to the
Participant’s Deferred Compensation Account. The Company shall, to
the extent permitted by law, have the right to deduct any such taxes 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.
11. 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
