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EXHIBIT 99.4
STOCK PLEDGE AGREEMENT
This is a Stock Pledge Agreement ("Agreement") dated as of January 29,
1999 between Republic Bank & Trust Company Employee Stock Ownership Plan (the
"Pledgor"), and Republic Bancorp, Inc., of Louisville, Kentucky (the "Secured
Party").
RECITALS
A. The Pledgor is an employee stock ownership trust under section
4975(e)(7) of the Internal Revenue Code of 1986, as (the "Code") and under
Section 407(d)(6) of the Employee Retirement Income Security Act of 1974, as
("ERISA").
B. This Agreement is entered into pursuant to a Plan Loan Agreement of
even date herewith (the "Plan Loan Agreement") between the Secured Party and the
Pledgor, pursuant to which the Secured Party has agreed to make a term loan to
the Pledgor in an amount equal to $3,873,000 (the "Exempt Loan"). The Exempt
Loan is intended to be an "exempt loan" as defined in Treas. Reg. Section
54.4975-7(b)(1)(iii). The Pledgor intends to use the proceeds of the Exempt Loan
to purchase 300,000 shares of the Class A Common Stock of Republic Bancorp, Inc.
C. The Pledgor desires to enter into this Stock Pledge Agreement in
order to secure the payment and performance of its obligations under the ESOP
Loan Agreement and the ESOP Note. The terms used in this Stock Pledge Agreement
and not otherwise defined shall have the meanings given them in the ESOP Loan
Agreement.
AGREEMENT
1. DEFINITIONS. As used in this Stock Pledge Agreement:
(a) "Default" shall have the meaning given it in paragraph 10
of this Agreement.
(b) "Plan" shall mean the Republic Bancorp, Inc. Employee
Stock Ownership Plan.
(c) "ESOP Note" shall mean that certain ESOP Promissory Note
of even date herewith, made by the Pledgor, payable to the order of the Secured
Party and in the principal amount of $3,873,000, or any note executed or
delivered in renewal, replacement, extension, payment, substitution or novation
of such note.
(d) "Pledged Stock" shall mean shares of the issued and
outstanding Class A common stock of Republic Bancorp. Inc., purchased by the
Pledgor with the proceeds of the Exempt Loan.
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(e) "Secured Obligations" shall mean the obligations secured
by this Stock Pledge Agreement, as described in paragraph 3 of this Stock Pledge
Agreement.
(f) "Uniform Commercial Code" shall mean the Uniform
Commercial Code as in effect in the Commonwealth of Kentucky.
2. GRANT OF SECURITY INTEREST.
(a) The Pledgor grants the Secured Party a security interest
in and pledges to the Secured Party the following:
(1) the Pledged Stock;
(2) Contributions (other than contributions of
employer securities, as defined in Section 409(1) of the Code) that are
made to the Pledgor to meet its obligations under the Exempt Loan; and
(3) Earnings attributable to the property referred
to in subparagraphs (1) and (2) above.
(b) To the extent permitted under Treasury Reg. 54.497-7(b)(5)
and subject to paragraphs 11(c) and 14 below, the Pledgor further grants to the
Secured Party a security interest in the stock rights, rights to subscribe,
liquidating dividends, stock dividends, dividends paid in stock, new securities
or any other property to which the Pledgor is or may hereafter become entitled
to receive on account of the Pledged Stock. If the Pledgor receives additional
property of such nature, it shall immediately deliver such property to the
Secured Party to be held by the Secured Party in the same manner as the Pledged
Stock.
(c) The Pledged Stock and all of the property delivered to the
Secured Party pursuant to this Section 2 is sometimes referred to as the
"Collateral." To the extent permitted under Treasury Reg. Section
54.497-7(b)(5), and subject to paragraphs 11(c) and 14 below, the Pledgor grants
to the Secured Party a further security interest in accordance with this
Agreement in the proceeds or products of any sale or other disposition of the
Collateral.
(d) The Exempt Loan shall be without recourse against the
Pledgor, and no person entitled to payment under the Exempt Loan shall have any
right to assets of the Pledgor other than the Collateral.
(e) The term "Collateral" shall not include any of the shares
or earnings attributable to such shares that have been released pursuant to
paragraph 8 below.
3. OBLIGATIONS SECURED. The security interest created hereby secures
payment and performance of (a) the indebtedness evidenced by the ESOP Note, and
all obligations contained in
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the ESOP Note, (b) all of the obligations, agreement, covenants and
representations of the Pledgor to the Secured Party under the ESOP Loan
Agreement whether or not, either on the date of this Stock Pledge Agreement or
thereafter, evidenced by any note, instrument or other writing, and (c) any and
all indebtedness, obligation or liability of the Pledgor to the Secured Party,
however evidenced, whether existing on the date of this Stock Pledge Agreement
or arising thereafter, direct or indirect, absolute or contingent, arising out
of or in connection with the ESOP Loan Agreement. The payments made by the
Pledgor with respect to the Exempt Loan during a Plan Year (as such term is
defined in the Plan) shall not exceed an amount equal to the sum of such
contributions and earnings received during or prior to the Plan Year less such
payments in prior Plan Years.
4. REPRESENTATIONS AND WARRANTIES. To induce the Secured Party to enter
into this Stock Pledge Agreement, all of the representations and warranties made
by the Pledgor in the ESOP Loan Agreement are incorporated herein by reference,
and the Pledgor further represents and warrants as follows:
(a) The Pledgor has the full right, power and authority to
enter into, execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly executed and delivered by the Pledgor and, assuming
due execution and delivery of this Agreement by the Secured Party, this
Agreement constitutes the legal, valid and binding obligation of the Pledgor,
enforceable against it in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally now or hereafter in effect, and
subject to the availability of equitable remedies.
(b) Upon its acquisition of the Collateral, the Pledgor shall
have good and marketable title to the Collateral, and the Collateral shall not
be subject to any lien, charge, pledge, encumbrance, claim or security interest
other than the security interest created by this Stock Pledge Agreement.
(c) Except for this Agreement, the Pledgor shall not enter
into any stock restriction or purchase agreement with respect to the Collateral
which would in any way restrict the sale, pledge or other transfer of the
Collateral or of any interest in or to the Collateral.
(d) The Pledged Stock constitutes 100 percent of the stock
purchased with the proceeds of the Exempt Loan.
5. DURATION OF SECURITY INTEREST. The Secured Party, its successors and
assigns, shall hold the Collateral and security interest created hereby upon the
terms of this Stock Pledge Agreement, and this security interest shall continue
until the Secured Obligations have been paid in full.
6. MAINTAINING FREEDOM FROM LIENS. The Pledgor shall keep the
Collateral free and clear of liens and shall pay all amounts, including taxes,
assessments or charges, which might result in a lien against the Collateral if
left unpaid unless the Pledgor at its own expense is contesting such amount in
good faith by an appropriate proceeding timely instituted which shall operate to
prevent
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the collection or satisfaction of the lien or amount so contested. If the
Pledgor fails to pay such amounts and is not contesting the validity or amount
thereof in accordance with the next preceding sentence, the Secured Party may,
but is not obligated to, pay such amounts, and such payment shall be conclusive
evidence of the legality or validity thereof. The Pledgor shall promptly
reimburse the Secured Party for any such payments, and until reimbursement, such
payments shall be a part of the Secured Obligations.
7. CERTAIN RIGHTS AND REQUIREMENTS RESPECTING COLLATERAL.
(a) The Pledgor shall continue to be the owner of the
Collateral so long as no Default has occurred and is continuing and may collect
and retain all dividends now or hereafter payable on or on account of the
Pledged Stock, and, so long as no Default has occurred, may exercise its voting
rights with respect to the Pledged Stock in accordance with the terms of the
Plan.
(b) The Pledgor shall not sell, transfer or attempt to sell or
transfer the Collateral, or any part thereof or interest therein, without the
prior express written consent of the Secured Party. Any such consent of the
Secured Party shall not constitute the release by the Secured Party of its
interest in the Collateral, and any such sale or transfer consented to shall
transfer the Collateral subject to the security interest of the Secured Party.
(c) Notwithstanding any other provision of the Stock Pledge
Agreement, the following rules shall apply to the Exempt Loan: (1) The loan must
provide for annual payment of principal and interest at a cumulative rate that
is not less rapid at any time than level annual payments of such amounts for 10
years. (2) Interest included in any payment is disregarded only to the extent
that it would be determined to be interest under standard loan amortization
tables. (3) The Exempt Loan shall not be renewed, extended, or refinanced if the
sum of the expired duration of the Exempt Loan, the renewal period, the
extension period, and the duration of a new exempt loan would exceed 10 years.
8. RELEASE OF SECURITY.
(a) As used in this paragraph, the term "Plan Year" shall
have the meaning set forth in the Plan.
(b) Within 90 days after the end of each Plan Year, the
Trustee of the Pledgor shall calculate the number of shares of Pledged Stock to
be released from the Secured Party's security interest (the "Released Shares").
(c) In accordance with Treas. Reg. Section 54.4975-7(b)(8)
(ii), for each Plan Year during the term of the Exempt Loan, the number of
Released Shares shall equal the number of shares of Pledged Stock held
immediately before release for the current Plan Year multiplied by a fraction.
The numerator of the fraction shall be the amount of principal paid on the Plan
Note for the Plan Year. The denominator of the fraction shall be the sum of the
numerator plus the principal to be paid
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on the Plan Note for all future years. The number of future years shall be
determined without taking into account any possible extensions or renewal
periods.
(d) Within 10 days after calculating the number of Released
Shares, the Trustee shall notify the Secured Party of the number of Released
Shares and shall deliver to the Secured Party a duly executed blank stock power
with respect to the number of shares of Pledged Stock in which the Secured Party
will still have a security interest after the release of the Released Shares.
(e) Within 20 days after receipt of the notice and stock power
from the Trustee, the Secured Party shall, against delivery of the new
certificate referred to in subparagraph (f) below, deliver to the Trustee (1)
the certificate representing the Pledged Stock (which includes the Released
Shares), (2) the blank stock power in its possession with respect to the Pledged
Stock (which includes the Released Shares), and (3) a duly executed release
which releases the Released Shares as collateral.
(f) Against delivery by the Secured Party of the documents
referred to in paragraph (e), the Trustee shall deliver to the Secured Party a
new stock certificate evidencing the shares of Pledged Stock which have not been
released as collateral.
9. DELIVERY OF CERTIFICATES AND STOCK POWERS. The Pledgor has,
contemporaneously with the execution of this Stock Pledge Agreement, delivered
to the Secured Party the Pledged Stock and an executed blank stock power for the
Pledged Stock.
10. DEFAULT. At the option of the Secured Party, the occurrence of an
Event of Default (as such term is defined in the ESOP Loan Agreement) under
paragraph 8.01 of the ESOP Loan Agreement, shall constitute a default under this
Stock Pledge Agreement (a "Default").
11. REMEDIES.
(a) Subject to the limitations of paragraphs 11(c) and 14 of
this Stock Pledge Agreement, upon any Default, the Secured Party may exercise
its rights under this Stock Pledge Agreement, and, in addition to exercising all
other rights and remedies, proceed to exercise with respect to the Collateral
all rights, options and remedies of a secured party upon default as provided for
under the Uniform Commercial Code.
(b) Subject to the limitations of paragraphs 11(c) and 14 of
this Stock Pledge Agreement, the rights of the Secured Party upon any Default
shall include, without limitation, the following:
(i) The right to the immediate possession of the
Collateral (except the Released Shares) not then in the Secured Party's
possession without requirement of notice or demand or of any legal
process.
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(ii) The right to proceed by appropriate legal
process at law or in equity to enforce any provision of this Stock
Pledge Agreement or in aid of the execution of any power of sale, or
for foreclosure of the security interest of the Secured Party, or for
the sale of the Collateral under the judgment or decree of any court.
(c) Notwithstanding any provision of this Stock Pledge
Agreement to the contrary, in the event of a Default, the value of the assets of
the Pledgor paid to the Secured Party in satisfaction of the Exempt Loan shall
not exceed the amount of the then current installment of principal and accrued
interest on the Exempt Loan then in default.
12. EXERCISE OF REMEDIES. The rights and remedies of the Secured Party
shall be deemed to be cumulative, and any exercise of any right or remedy shall
not be deemed to be an election of that right or remedy to the exclusion of any
other right or remedy. Notwithstanding the foregoing, the Secured Party shall be
entitled to recover from the Pledgor by the cumulative exercise of all remedies
no more than the sum of (a) the outstanding principal amount of the Exempt Loan,
(b) all accrued but unpaid interest with respect to the principal amount of the
Exempt Loan and (c) the costs, fees and expenses the Secured Party is otherwise
entitled to recover under the Plan Loan Agreement.
13. RETURN OF PLEDGED STOCK. The Secured Party may at any time deliver
the Pledged Stock, or any part thereof, to the Pledgor. The receipt by the
Pledgor of the Pledged Stock, or any part thereof, shall be a complete and full
discharge of the Secured Party, and the Secured Party shall be discharged from
any liability or responsibility with respect thereto.
14. INTERPRETATION AND LIMITATIONS.
(a) The Pledgor and the Secured Party intend that (1) the
Exempt Loan shall qualify as an "exempt loan" as defined in Treas. Reg. Section
54.4975-7(b)(1)(iii); and (2) the Pledgor shall meet the requirements of Section
4975(e)(7) of the Code and Section 407(d)(6) of ERISA; and notwithstanding any
provision of this Stock Pledge Agreement, the applicable provisions of the Code
and ERISA, and the regulations thereunder, shall be deemed incorporated in this
Stock Pledge Agreement to the extent necessary to carry out that intent.
(b) No provision of this Stock Pledge Agreement shall be
construed to have a meaning that results in, or if the provision is unambiguous,
it shall not be enforced to the extent it would result in (1) the failure of the
ESOP Loan to qualify as an "exempt loan" as defined in Treas. Reg. Section
54.4975-7(b)(1)(iii); or (2) failure of the Pledgor to meet the requirements of
Section 4975(e)(7) of the Code and Section 407(d)(6) of ERISA.
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15. NOTICE.
(a) Any requirement of the Uniform Commercial Code of
reasonable notice shall be met if such notice is given at least 10 days before
the time of sale, disposition or other event or thing giving rise to the
requirement of notice.
(b) All notices or communications under this Stock Pledge
Agreement shall be in writing and shall be given in accordance with, and shall
be subject to, Section 10.15 of the ESOP Loan Agreement.
16. FURTHER ASSURANCES. The Pledgor shall sign any such other documents
or instruments, and take such other actions, as the Secured Party may reasonably
request to more fully create and maintain, or to verify, ratify or perfect the
security interest intended to be created in this Stock Pledge Agreement.
17. MISCELLANEOUS.
(a) Failure by the Secured Party to exercise any right shall
not be deemed a waiver of that right, and any single or partial exercise of any
right shall not preclude the further exercise of that right. Every right of the
Secured Party shall continue in full force and effect until such right is
specifically waived in a writing signed by the Secured Party.
(b) If any part, term or provision of this Stock Pledge
Agreement is held by any court to be prohibited by any law applicable to this
Stock Pledge Agreement, the rights and obligations of the parties shall be
construed and enforced to the greatest extent allowed by law, or if such part,
term or provision is totally unenforceable, as if this Stock Pledge Agreement
did not contain that particular part, term or provision.
(c) The headings in this Stock Pledge Agreement have been
included for ease of reference only, and shall not be considered in the
construction or interpretation of this Stock Pledge Agreement.
(d) This Stock Pledge Agreement shall inure to the benefit of
the Secured Party, its successors and assigns, and all obligations of the
Pledgor shall bind its successors and assigns.
(e) To the extent allowed under the Uniform Commercial Code,
this Stock Pledge Agreement shall in all respects be governed by and construed
in accordance with the laws of the Commonwealth of Kentucky.
(f) If any term, condition or provision of this Stock Pledge
Agreement conflicts in any way with any term, condition or provision of the ESOP
Loan Agreement, the term, condition or provision of this Stock Pledge Agreement
shall govern.
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(g) This Stock Pledge Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior understandings with respect to the subject matter hereof.
No change, modification, addition or termination of this Stock Pledge Agreement
shall be unenforceable unless in writing and signed by the party against whom
enforcement is sought.
(h) This Stock Pledge Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed an original, and such
counterparts together shall be sufficiently evidenced by any such original
counterpart.
IN WITNESS WHEREOF, the Pledgor and the Secured Party have signed this
Stock Pledge Agreement on January 29, 1999.
REPUBLIC BANCORP, INC. EMPLOYEE STOCK
OWNERSHIP TRUST, by Republic Bank & Trust
Company, solely in its capacity as Trustee
By /S/ E. XXXXXXX XXXXXX
Title: Executive Vice President
("Pledgor")
REPUBLIC BANCORP, INC.
By /S/ XXXX X. XXXX
Title: Senior Vice President
("Secured Party")
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