EXHIBIT 10.3

 

REPUBLIC BANCORP, INC

REPUBLIC BANK & TRUST COMPANY

 

AMENDED AND RESTATED OFFICER COMPENSATION

CONTINUATION AGREEMENT

 

This is an Amended and Restated Agreement, originally dated as of the 12th day
of January, 1995 is made by and between Republic Bancorp, Inc., a Kentucky
corporation (the “Company”), and Scott Trager (the “Executive”), who is
presently President, Louisville Region, of Republic Bank & Trust Company (the
“Bank”) (the “Agreement”), in consideration of the mutual covenants herein
contained and in further consideration of services performed and to be performed
by the Executive for the Company and/or its subsidiaries.  As of the date of
this Agreement, Bank is a wholly-owned subsidiary of the Company.  This
Agreement, as so amended and restated shall supersede the prior agreements and
all amendments thereto, effective as of the date of its adoption.  The Bank
joins in this Agreement to further accomplish the terms and objectives of this
Agreement.

 

Recitals

 

A.                                   The Company considers the establishment and
maintenance of sound and vital management of the Company and its subsidiaries to
be essential to protecting and enhancing the best interests of the Company and
its shareholders.

 

B.                                     The Company recognizes that, while not
anticipated, the possibility of a change of control may exist.  Such
possibility, and the uncertainty and questions which it may raise among
management of the Company and its subsidiaries may result in the departure or
distraction of key members of management to the detriment of the Company’s
shareholders.

 

C.                                     The Company’s Board of Directors has
determined that appropriate steps should be taken to encourage key members of
management of the Company and its subsidiaries, such as the Executive, to remain
in the employ of the Company and/or its subsidiaries and perform their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change of control of the Company.

 

NOW, THEREFORE, in consideration of the foregoing and of the covenants herein
contained, the parties hereto agree as follows:

 

Section 1 — Definitions

 

For purposes of this Agreement, the following words and terms shall have the
following meanings:

 

1.1                                 Termination by the Bank of the Executive’s
employment for “Cause” shall mean termination upon (A) the willful and continued
failure by the Executive substantially to perform the Executive’s duties with
the Bank (other than any such failure resulting from Disability or temporary
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the Board of Directors
of the Bank (the “Bank Board”), which demand specifically identifies the manner
in which the Bank Board believes that the Executive has not substantially
performed his duties; or (B) the willful engaging by the Executive in gross
misconduct materially and demonstrably injurious to the Bank or the Company. 
For purposes of this definition, no act, or failure to act, on the Executive’s
part shall be considered “willful” unless done, or omitted to be done, by the
Executive not in good faith and without reasonable belief that the Executive’s
action or omission was in the best interests of the Bank or the Company.

 

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

 

1.2                                 A “Change in Control” of the Company 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 Company or the Bank representing a greater
percentage of the combined voting power of the Company’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 Company’s or Bank’s
then outstanding stock to less than 25%; (iii) any person (including the Company
or the Bank) publicly announces an intention to take or to consider taking
actions which have consummated would constitute a Change in Control, or (iv) the
Company Board adopts a resolution to the effect that a Potential Change in
Control for purposes of this Plan has occurred.  For purposes of this paragraph,
“Trager Family Member” shall mean Bernard M. Trager, Jean S. Trager and any of
their 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 Bernard M. Trager, Jean S. Trager, or one or
more of their lineal descendants.

 

1.3                                 “Compensation” shall mean the Executive’s
annual base salary at the greater of (A) the highest rate in effect at any time
during the twelve months immediately preceding the applicable Date of
Termination, or (B) the rate in effect immediately prior to the applicable
Change in Control.

 

1.4                                 “Contract Period” shall mean the period
defined in Section 2 hereof.

 

1.5                                 “Date of Termination” shall mean (A) if the
Executive’s employment is terminated for Good Reason, as defined below, the date
specified in the Notice of Termination, as defined in this Section 1.8 below;
and (B) if the Executive’s employment is terminated for any other reason, the
date on which a Notice of Termination is given; provided that, if within 30 days
after any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).

 

1.6                                 “Disability” shall mean a physical or mental
incapacity of the Executive which entitles the Executive to benefits under any
long-term disability plan or wage continuation plan applicable to him and
maintained by the Company as in effect immediately prior to the applicable
Change in Control.

 

1.7                                 “Good Reason” shall mean:

 

(a)                                  Without the Executive’s express written
consent, the assignment to Executive of any duties inconsistent with, or the
reduction of powers or functions associated with, his positions, duties,
responsibilities and status with the Company immediately prior to a Change in
Control, or any removal of Executive from, or any failure to reelect Executive
to, any positions or offices Executive held immediately prior to a Potential
Change in Control, except in connection with the termination of Executive’s
employment at death, for Cause or on account of Retirement or Disability
pursuant to the requirements of this Agreement;

 

(b)

(i) the failure by the Company to continue in effect any employee welfare or
pension benefit plans within the meaning of Sections 3(1) and 3(2) of the
Employee Retirement Income Security Act of 1974 (the “Plans”), in which
Executive was participating immediately prior to a Potential Change in Control
(or substitute plans, programs or arrangements providing Executive with
substantially similar benefits),

 

(ii) the taking of any action, or the failure to take any action, by the Company
which could (A) adversely affect Executive’s participation in, or materially
reduce Executive’s benefits under, any of the Plans, (B) materially adversely
affect the basis for computing benefits under any of the Plans, or (C) deprive
Executive of any material fringe benefit enjoyed by Executive immediately prior
to a Potential Change in Control, or

 

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

 

(iii) the failure by the Company to provide Executive with the number of paid
vacation days to which Executive was entitled immediately prior to a Potential
Change in Control in accordance with the Company’s vacation policy applicable to
Executive then in effect;

 

except, in each case, in connection with the termination of Executive’s
employment at death, for Cause or on account of Retirement or Disability
pursuant to the requirements of this Agreement;

 

(c)                                  the failure by the Company to obtain an
assumption of the obligations of the Company under this Agreement by any
successor to the Company;

 

(d)                                 a reduction by the Bank in the Executive’s
base salary as in effect on the date hereof or as the same may be increased from
time to time, except as part of an across-the-board reduction of base salaries
applicable to all salaried employees of the Bank, provided the reduction (or
series of reductions) does not exceed 5% of the Executive’s base salary prior to
such change;

 

(e)                                  the relocation of the Bank’s principal
executive offices to a location outside the metropolitan Louisville area; or the
Company’s requiring the Executive to be based anywhere other than in the
metropolitan Louisville area, except for required travel on the Bank’s business
to an extent substantially consistent with similarly situated executives’
business travel obligations;

 

(f)                                    any purported termination of the
Executive’s employment during the contract period which is not effected pursuant
to a Notice of Termination satisfying the requirements of Section 3 below; and
for purposes of this Agreement, no such purported termination shall be
effective.

 

1.8                                 A “Notice of Termination” shall mean a
notice, from the Bank or from the Executive, which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated.

 

1.9                                 “Plans” shall have the meaning given in
Section 1.7(b).

 

1.10                           Any reference to “Subsidiaries” of the Company
shall include those subsidiaries owned by the Company directly or owned by the
Company indirectly through another company which is wholly-owned by the Company.

 

Section 2 — Application of Agreement

 

This Agreement shall apply only to termination of employment of the Executive
during a period (the “Contract Period”) commencing on the date immediately
preceding the date of a Change in Control and terminating on the second
anniversary of the date of that Change in Control; provided, however, that each
such Change in Control occurs during the period commencing as of January 1, 1995
and terminating at midnight on December 31, 1998 or as further extended pursuant
to the following sentence.  At midnight on December 31, 1998, and on each annual
anniversary of that time and date thereafter, such latter period shall be
automatically extended for two additional years, unless on or before such
anniversary the Company notifies the Executive in writing that it elects not to
extend such period.  There is one Contract Period for each Change in Control and
there may be multiple Change(s) in Control.  With respect to a termination
pursuant to Section 3.2 only, the Contract Period shall also include the period
from and after a Potential Change in Control.  If a Potential Change in Control
occurs but a Change in Control does not follow within one year of the Potential
Change in Control, the Contract Period shall expire on the one year anniversary
of the Potential Change in Control.

 

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

 

Section 3 — Termination

 

3.1                                 Procedure for Termination.  Any termination
by the Bank or by the Executive, pursuant to this Agreement, shall be
communicated by Notice of Termination to the other parties hereto.  The
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a resolution duly
adopted by the affirmative vote of not less than 51% of the entire membership of
the Board of Directors of the Company (the “Company Board”) at a meeting of the
Company Board called and held for that purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to be
heard before the Company Board), finding that in the good faith opinion of the
Company Board, the Executive was guilty of conduct set forth in Section 1.1 and
specifying the particulars thereof in detail.

 

3.2                                 Termination for Cause or Before Contract
Period.  Upon a termination of the Executive’s employment for Cause during the
Contract Period, the Executive shall have no right to receive any compensation
or benefits hereunder.  Upon a termination of the Executive’s employment without
Cause during the Contract Period, the Executive shall be entitled to receive the
benefits provided in Section 3.4 hereof.  This Agreement shall not apply to, and
the Executive shall have no right to receive any compensation or benefits
hereunder in connection with, any termination of the Executive’s employment by
the Company other than during a Contract Period, and Executive shall remain an
“at will” employee until a Contract Period begins.

 

3.3                                 Termination for Good Reason.  During the
Contract Period, the Executive shall be entitled to terminate his employment
with the Company and, if such termination is for Good Reason, to receive the
benefits provided in Section 3.4 hereof.  The Executive shall give the Company
Notice of Termination of his employment pursuant to this Section 3.3, and
termination of the Executive’s employment shall be effective five business days
after the Executive gives notice thereof to the Company.  This Agreement shall
not apply to, and the Executive shall have no right to receive any compensation
or benefits hereunder in connection with, any termination of the Executive’s
employment by the Executive other than during a Contract Period.  This Agreement
shall not apply to, and the Executive shall have no right to receive any
compensation or benefits hereunder in connection with, a termination of the
Executive’s employment on account of the Executive’s death, whether or not
during the Contract Period.

 

3.4                                 Compensation Upon Termination.  If during a
Contract Period the Executive’s employment shall be terminated by the Bank other
than pursuant to death or for Cause, or if the Executive shall terminate his
employment for Good Reason, then the Company shall continue to pay, or the
Company shall cause the Bank to continue to pay, for the remainder of the
Contract Period, the Executive’s Compensation in the same manner as if
employment had not terminated.

 

In addition to the severance benefit set forth in this Section 3.4, the Company
shall, or the Company shall cause the Bank to:

 

(1)                                  pay as incurred or reimburse Executive for
all legal fees and expenses incurred by the Executive resulting from termination
(including all such fees and expenses, if any, incurred in contesting any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement), as and when the Company is notified thereof, but in all events
within 2½ months following the calendar year in which such amounts are incurred;
and

 

(2)                                  maintain in full force and effect, for the
continued benefit of the Executive for the shorter of (i) until the Executive’s
death (provided that benefits payable to his beneficiaries shall not terminate
upon his death), or (ii) with respect to any particular Plan, the date he is
afforded a comparable benefit at a comparable cost to the Executive by a
subsequent employer, or (iii) the remainder of the Contract Period, all Plans in
which Executive was entitled to participate immediately prior to the Change of
Control (unless Plans generally available to employees of the Bank have been
modified since the Change in Control in which case the Plans to be continued
shall be those in effect at the Date of Termination, at the level most

 

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

 

comparable to that available to the Executive at the Change in Control).  In the
event that the Executive’s participation in any Plan of the Company is
prohibited, the Company shall arrange to provide the Executive with benefits
substantially similar to those which the Executive is entitled to receive under
that Plan, for such period.  To the extent such Plans or provisions for
comparable Plans constitute “deferred compensation” within the meaning of
Section 409A of the Code, the Company shall not delay or accelerate payment to
vendors or third parties for such coverage on Executive’s behalf, beyond the
normal periodic payment periods then applicable for the Plans for employees
generally.  On the last day of the Contract Period (even if enjoyment of a
benefit ceases earlier as provided above), the Executive shall have assigned to
him at no cost and with no apportionment of prepaid premiums, any assignable
insurance policy owned by the Bank or the Company relating specifically to the
Executive, and, if benefits hereunder cease before the end of the Contract
Period, the Company shall use its best efforts, without requirement to pay
additional cash premiums, to maintain any such policy in full force and effect
until such time, or allow the Executive to arrange to do so; and

 

(3)                                  cause all stock options and stock
appreciation rights and/or the rights held by the Executive with respect to
stock in the Company, immediately prior to the termination, if not otherwise
presently exercisable, to become presently exercisable.

 

3.5                                
Disability.                                          If during the Contract
Period, the Executive’s employment shall be terminated, either by the Bank or by
the Executive, due to the Executive’s Disability, the Company shall pay the
Executive the severance compensation provided for in Section 3.4 and the same
benefits as set forth in Section 3.4(1)-(3).

 

3.6                                 No Mitigation.                  The
Executive shall not be required to mitigate the amount of any payment provided
for in this Section 3 by seeking other employment or otherwise, nor shall the
amount of any payment provided for in this Section 3 be reduced by any
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.

 

3.7                                 Delay in Payments for Specified
Employees.       Notwithstanding the provisions of Section 3.4 hereof, if the
Executive is a “key employee” within the meaning of Section 416(i) (but without
regard to Section 416(i)(5)) of the Internal Revenue Code of 1986, as amended
(the “Code”), as of the last identification date thereof and determined in the
manner provided in Treasury Regulation §1.409-1(i) when  the Executive’s
separation from service occurs, and stock of the Company is at such separation
publicly traded on an established securities market or otherwise, any non-409A
exempt severance compensation payable pursuant to Section 3.4 and benefits in
subsection (1) and (2) shall not be paid earlier than 6 months following the
date of the Executive’s separation from service.  If the preceding sentence
applies to the Executive, then the  severance, reimbursements and benefits
required by Section 3.4 and subsections (1) and (2) shall not be provided until
6 months following the Executive’s separation from service, unless such benefits
or amounts do not constitute “deferred compensation” within the meaning given in
Section 409A of the Code.  For example, such benefits or amounts might not be
deferred compensation to the extent benefits provided can be excluded from the
Executive’s gross income as is reportable by the Company or the Bank on wage
reports, or if they would be deductible by the Executive under Code Section 162
or 167 (without regard to any limitations based on adjusted gross income), and
are provided or reimbursed prior to the end of the second calendar year
following the calendar year in which the separation occurs.  If a benefit cannot
be provided or paid for by the Company during the 6 month period following the
separation from service as a result of this timing restriction, the Company
shall pay to Executive the amount of compensation that would have been paid
during the 6 months, as well any amount he has expended for benefits during the
6 months delay, within 5 days after the 6 months delay period has expired, and
shall pay or provide for the reimbursements and benefits provided hereunder
otherwise at the time and in the manner provided in Section 3.4.

 

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

 

3.8                                 Meaning of “Termination” or “Separation from
Service.”  If and to the extent termination of employment, or separation from
service is required to trigger payment rights hereunder, such phrase shall have
the meaning given in Treasury Regulation §1.409A-1(h) as reasonably interpreted
by the Company. Specifically, these phrases mean the date the Company and the
Executive reasonably anticipate that (i) the Executive 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 (the “Employer
Group”), or (ii) the level of bona fide services performed after that date (as
an employee or independent contractor, except that service as a member of the
board of directors of an Employer Group entity is not counted unless termination
benefits under this Agreement are aggregated with benefits under any other
Employer Group plan or agreement in which Executive also participates as a
director) will permanently decrease to less than 20% of the average level of
bona fide services performed over the previous 36 months (or if shorter over the
duration of service).  The Employee will not be treated as having a termination
of employment or 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 Executive has a reemployment right with the
Company by statute or contract.  If a bona fide leave of absence extends beyond
six months, a termination of employment or 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 Executive’s statutory or contractual reemployment right
lapses, if later.

 

Section 4 — Miscellaneous

 

4.1                                 Successors Shall Assume.    The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company or the Bank, by agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company or the Bank
would be required to perform if no such succession had taken place.  Failure of
the Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terms as the
Executive would be entitled hereunder if the Executive terminated the
Executive’s employment for Good Reason, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.  As used in this Agreement, “Company” shall mean
the Company as defined in the preamble hereto and any successor to its business
and/or assets as aforesaid or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.  As used in this Agreement,
“Bank” shall mean the Bank as defined in the preamble hereto and any successor
to its business and/or assets as aforesaid or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.

 

4.2                                 Binding Effect.                 This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  If the Executive should die while any
amounts would still be payable to the Executive hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive’s devisee,
legatee, or other designee or, if there be no such designee, to the Executive’s
estate.

 

4.3                                 Reduction of Amounts
Payable.                      In no event shall any amount payable under any
provision of this Agreement equal or exceed an amount which would cause the
Company to forfeit, pursuant to Section 280G(a) of the Internal Revenue Code of
1986, as amended, its deduction for any or all such amounts payable.  Pursuant
to this Section 4.3, the Company’s Compensation Committee has the power to
reduce severance benefits payable under this Agreement, if such benefits alone
or in conjunction with termination benefits provided under any other Company
plan or program, would cause the Company to forfeit otherwise deductible
payments; provided, however that no benefits payable under this Agreement shall
be reduced pursuant to this Section 4.3 to less than $1.00 below the amount of
benefits which the Company can properly deduct under Section 280G(a) of the
Internal Revenue Code of 1986, as amended.

 

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

 

4.4                                 Notice.          Any notice or request
required or permitted to be given under this Agreement shall be in writing and
shall be deemed sufficiently given for all purposes if mailed by certified mail,
postage prepaid and return receipt requested, addressed to the intended
recipient at

 

(a)                                          the addresses set forth below:

 

(i)                                If to the Company:

Republic Bancorp, Inc.

601 W. Market St.

Louisville, Kentucky 40202

 

All notices to the Company shall be directed to the attention of the Chief
Executive Officer of the Company with a copy to the Secretary of the Company and
to the Secretary of the Bank.

 

 

(ii)

If to the Bank:

 

 

 

Republic Bank & Trust Company

 

 

 

601 W. Market Street

 

 

 

Louisville, Kentucky 40202

 

 

All notices to the Bank shall be directed to the attention of the Secretary of
the Bank with a copy to the Secretary of the Company.

 

 

(iii)

If to the Executive:

 

 

 

at his last known

 

 

 

address in the Bank’s

 

 

 

employment records

 

 

(b)                                 Such other address as any of the parties
shall specify by written notice to the other parties of this Agreement.

 

4.5                                 Payment Obligations Absolute.  The Company’s
obligation to pay the Executive the amounts provided for hereunder shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right which the Company may have against him or anyone else, except with
respect to tax withholding required pursuant to Section 4.11.  All amounts
payable by the Company hereunder shall be paid without notice or demand.  Except
as expressly provided herein, the Company waives all rights which it may now
have or may hereafter have conferred upon it, by statute or otherwise, to amend,
terminate, cancel or rescind this Agreement in whole or in part.  Each and every
payment made hereunder by the Company shall be final and the Company shall not
seek to recover all or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reason whatsoever.

 

4.6                                 Modifications and
Waivers.                                           No provisions of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the Executive and such
officer as may be specifically designated by the Board of Directors of the
Company.  No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or any prior or
subsequent time.

 

4.7                                 Entire Agreement. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.

 

4.8                                 Governing Law.            The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the Commonwealth of Kentucky.

 

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

 

4.9                                 Validity.    The invalidity or
unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

 

4.10                           Counterparts.                       This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.

 

4.11                           Payroll and Withholding Taxes.  The Company may
withhold from any amounts payable to the Executive hereunder all federal, state,
city or other taxes that the Company may reasonably determine are required to be
withheld pursuant to any applicable law or regulation.

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement, as of the
day and year first above written.

 

 

REPUBLIC BANCORP, INC.

 

 

 

 

/s/ Scott Trager

 

By: /s/ Steve Trager

Scott Trager

 

 

Title:

Vice Chairman, CEO Republic Bancorp, Inc.

 

 

Chairman & CEO: Republic Bank & Trust Company

 

 

 

Date: April 30, 2008

 

 

 

 

 

REPUBLIC BANK & TRUST COMPANY

 

 

 

 

 

By: /s/ Steve Trager

 

 

 

Title:

Vice Chairman, CEO Republic Bancorp, Inc.

 

 

Chairman & CEO: Republic Bank & Trust Company

 

 

 

Date: April 30, 2008

 

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