EXHIBIT 10.3 FIDELITY SOUTHERN CORPORATION EXECUTIVE CONTINUITY AGREEMENT

 

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                                                                    EXHIBIT 10.3

 

                          FIDELITY SOUTHERN CORPORATION

 

                         EXECUTIVE CONTINUITY AGREEMENT

 

      This Executive Continuity Agreement (this "Agreement') is made as of March

17, 2005, between Fidelity Southern Corporation ("Fidelity Southern") and Bank

(together with Fidelity Southern collectively referred to as "Fidelity") and

James B. Miller, Jr. (the "Executive").

 

      The purpose of this Agreement is to encourage the Executive to continue

employment with Fidelity after a Change of Control of Fidelity Southern or Bank

by providing reasonable employment security to the Executive and to recognize

the prior service of the Executive in the event of termination of employment

under defined circumstances after any such Change of Control. This Agreement

supersedes and replaces all prior similar written and oral agreements between

the Executive and Fidelity and is in addition to any employment agreement

entered into between Fidelity and the Executive on or after the date hereof.

 

      Section 1. Definitions. For purposes of this Agreement:

 

            (a)    "Affiliate" means any entity that is, directly or indirectly

                  through one or more intermediaries, controlled by Fidelity

                  Southern or the Bank, as the case may be.

 

            (b)    "Annual Base Salary" shall have the meaning set forth in

                  Section 3.

 

            (c)    "Bank" shall mean Fidelity Bank and the successors of all or

                  substantially all of its business.

 

            (d)    "Beneficiary" means the person or entity designated by the

                  Executive, by a written instrument delivered to Fidelity

                  Southern, to receive any benefits payable under this Agreement

                  in the event of the Executive's death. If the Executive fails

                  to designate a Beneficiary, or if no beneficiary survives the

                  Executive, such Benefits on the death of the Executive will be

                  paid to the Executive's estate.

 

            (e)    "Board" means the Board of Directors of Fidelity Southern.

 

            (f)    "Cause" means:

 

                  (1)    The willful and continued failure by the Executive to

                        substantially perform the material duties of the

                        Executive with Fidelity and/or any Affiliate (other than

                        any such failure resulting from the disability of the

                        Executive) for a continuous period of three months,

                        after a written demand for such performance is delivered

                        to the Executive at the direction of the Board by the

                         Chief Executive Officer of Fidelity Southern or by any

                        person designated by the board of Fidelity Southern or

                        the Bank, which written demand specifically identifies

                        the material duties of which Fidelity believes that the

                        Executive has not substantially performed; or

 

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                  (2)    The willful engaging by the Executive in gross

                        misconduct materially and demonstrably injurious to

                        Fidelity. No act, or failure to act, on the Executive's

                        part shall be considered "willful" unless done, or

                        omitted to be done, by Executive in the absence of good

                         faith and without a reasonable belief that the action or

                        failure to act of the Executive was in the best interest

                        of Fidelity or any Affiliates.

 

            (g)    "Change of Control" means the occurrence hereafter of any

                  event described in (1), (2) or (3) below.

 

                  (1)    Any "person" (as such term is used in Sections 13(d)(3)

                        or 14(d)(2) of the Securities Exchange Act of 1934, as

                         amended, the "Act) acquires "beneficial ownership" (as

                        such term is defined in Rule 13d-3 promulgated under the

                        Act), directly or indirectly, of equity securities of

                         Fidelity Southern or the Bank representing more than

                        fifty percent (50%) of the combined voting power

                        represented by the outstanding voting securities of

                        Fidelity Southern or the Bank, as the case may be

                        ("Voting Power").

 

                  (2)    Individuals who constitute the membership of the Board

                        or the board of the Bank on the date of this Agreement

                        (each being hereinafter referred to as the "Incumbent

                        Board') cease at any time hereafter, to constitute at

                        least a majority of the Board or the board of the Bank,

                        provided that any director whose nomination was approved

                        by a majority of the Incumbent Board will be considered

                        a member of the Incumbent Board, excluding any such

                        individual not otherwise a member of the Incumbent Board

                        whose initial assumption of office is in connection with

                        an actual or threatened election contest relating to the

                        election of the directors of Fidelity Southern or the

                         Bank.

 

                  (3)    The effective date of a complete liquidation or

                        dissolution of Fidelity Southern or the Bank, or of the

                        sale or other disposition of all or substantially all of

                        the assets of Fidelity Southern or the Bank, as approved

                        by the shareholders of Fidelity Southern or the Bank, as

                        the case may be, or the acquisition by a person, other

                         than Fidelity Southern, of beneficial ownership,

                        directly or indirectly, of equity securities of the Bank

                        representing more than fifty percent (50%) of the

                        combined voting power represented by the Bank's then

                        outstanding voting securities.

 

                        If a Change of Control occurs on account of a series of

                        transactions, the Change of Control is deemed to have

                         occurred on the date of the last of such transactions

                        which results in the Change of Control.

 

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                  (h)    "Change of Control Period" shall have the meaning set

                        forth in Section 4(a).

 

                  (i)    "Code" means the Internal Revenue Code of 1986, amended.

 

                  (j)    "Commencement Date" shall have the meaning set forth in

                        Section 3(a).

 

                  (k)    "Compensation" means the total compensation paid to the

                        Executive by Fidelity Southern, the Bank and/or by any

                        Affiliate which is or will be reportable as income under

                         the Code on Internal Revenue Service Form W-2, (i) plus

                        any amount contributed by the Executive pursuant to a

                        salary reduction agreement, which is not includible in

                        gross income under Code Sections 125 or 402(a) (8) or

                        under any other program that provides for pre-tax salary

                        reductions and compensation deferrals; (ii) plus any

                        amount of the Executive's compensation which is deferred

                        under any plan or program of Fidelity; and (iii) reduced

                        by any income reportable on Form W-2 that is

                        attributable to the exercise of any stock option.

 

                   (l)    "Disability" means a complete inability of the Executive

                        substantially to perform the employment duties for

                        Fidelity Southern or Bank or any Affiliate for a period

                         of at least one hundred and eighty (180) consecutive

                        days.

 

                  (m)    "Employment Period" shall have the meaning set forth in

                        Section 3(a).

 

                  (n)    "Final Compensation" means the highest of (i) the

                        Executive's Compensation for the 12 full calendar months

                        immediately preceding the Change of Control; or (ii) the

                        Executive's annual base salary rate payable by Fidelity

                        Southern, the Bank and any Affiliate, in effect

                        immediately preceding the Change of Control; or (iii)

                        the Executive's aggregate annual base salary as set by

                         Fidelity Southern, the Bank and any Affiliate, effective

                        at any time during the Employment Period.

 

                  (o)    "Good Reason" will exist with respect to the Executive

                        if, without the Executive's express written consent the

                        following events occur after a Change of Control which

                        are not corrected within thirty (30) days after receipt

                        of written notice from Executive to Fidelity Southern:

 

                        (1)    there is a material change in the Executive's

                              position or responsibilities (including reporting

                              responsibilities) which, in the Executive's

                               reasonable judgment, represents an adverse change

                              from the Executive's status, title, position or

                              responsibilities immediately prior to the Change

                               of Control;

 

                        (2)    the assignment to the Executive of any duties or

                              responsibilities which are inconsistent with the

                              position or responsibilities of the Executive

                               immediately prior to the Change of Control;

 

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                        (3)    any removal of the Executive from or failure to

                              reappoint or reelect the Executive to any of the

                              positions the Executive held immediately prior to

                              the Change of Control;

 

                        (4)    there is a reduction in the Executive's rate of

                               annual base salary or a change in the manner the

                              incentive compensation of the Executive is

                              calculated and such change will result in a

                              reduction of the incentive compensation of

                              Executive;

 

                        (5)    the requiring of the Executive to relocate his

                              principal business office of the Executive to any

                              place outside a fifteen (15) mile radius from the

                              Executive's current place of employment in

                              Atlanta, Georgia, (reasonable required travel on

                              Fidelity's business which is materially greater

                              than such travel requirements prior to the Change

                              of Control shall not constitute a relocation of

                              the Executive's principal business office);

 

                         (6)    the failure of Fidelity to continue in effect any

                              Compensation, Welfare Plan or Individual Life

                              Insurance Policy in which the Executive is

                              participating immediately prior to the Change of

                              Control without substituting plans providing the

                              Executive with substantially similar or greater

                              benefits, or the taking of any action by Fidelity

                              which would materially and adversely affect the

                              Executive's participation in or materially reduce

                              the Executive's benefits under any of such plans

                              or deprive the Executive of any material fringe

                              benefit enjoyed by the Executive immediately prior

                              to the Change of Control; or

 

                        (7)    the material breach of any provision of this

                              Agreement which is not timely connected by

                              Fidelity upon thirty (30) days prior written

                              notice from the Executive.

 

                   (p)    "Individual Life Insurance Policies" means the Split

                        Dollar Insurance Plan ("Split Dollar Plan") in the face

                        amount of $400,000 dated October 3, 1984 (including all

                        amendments and replacement and substitute policies, as

                        hereafter mutually agreed in writing) and three Flexible

                        Premium Adjustable Life Insurance, Universal Life

                        policies, one issued by Great-West Life & Annuity

                        Insurance Company ("Great-West") in the face amount of

                        $6 million, one issued by Life Investors Insurance

                        Company of America in the face amount of $800,000 and

                        one issued by Mass Mutual Financial Group in the face

                        amount of $800,000 each of which is payable to

                        beneficiaries designated by the Executive, his estate or

                         trust in lieu thereof.

 

                  (q)    "Salary Continuance Benefit" means the benefit provided

                        in Section 4(b).

 

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                  (r)    "Severance Benefit" means a Salary Continuance Benefit

                        and/or a Welfare Continuance Benefit.

 

                  (s)    "Severance Period" means the period beginning on the

                        date the Executive's employment is terminated by

                         Fidelity Southern, Bank or any Affiliate, other than for

                        Cause, Disability or death, or by Executive for Good

                        Reason and ending on the date eighteen (18) months

                        thereafter.

 

                   (t)    "Voting Power" shall have the meaning set forth in

                        Section 1(g)(1).

 

                  (u)    "Welfare Continuance Benefit" means the benefit provided

                        in Section 4(c).

 

                  (v)    "Welfare Plan" means any medical, prescription, dental,

                        disability, salary continuation, employee life,

                        accidental death, travel accident insurance or any other

                        welfare benefit plan, as defined in Section 3(l) of the

                        Employee Retirement Income Security Act of 1974, as

                        amended ("ERISA") made available by Fidelity Southern,

                        the Bank or any Affiliate in which the Executive is

                        eligible to participate; provided, however, that the

                        term "Welfare Plan" shall not include the Individual

                        Life Insurance Policies.

 

      Section 2. Employment After Change of Control.

 

      If the Executive is employed by Fidelity Southern, the Bank or an

      Affiliate on the Commencement Date, such employer will continue to employ

      the Executive for the Employment Period.

 

      Section 3. Compensation During Employment Period.

 

            (a)    During the period commencing one year prior to a Change of

                  Control ("Commencement Date") and ending upon the earlier of

                  (i) three years after a Change of Control or (ii) upon

                   termination of employment of Executive for any reason by

                  Executive or by Fidelity Southern or the Bank or any Affiliate

                  ("Employment Period"), the Executive will receive an annual

                  base salary ("Annual Base Salary"), at least equal to the

                  greater of (i) the annual base salary payable to the Executive

                  by Fidelity Southern, the Bank and/or Affiliates in respect of

                  the twelve full calendar month period immediately preceding

                  the Commencement Date or (ii) the annual base salary rate of

                  the Executive payable on and after the Commencement Date and

                  prior to the Change of Control. During the Employment Period,

                  the Annual Base Salary will be increased at any time and from

                  time to time so as to be substantially consistent with

                  increases in base salaries generally awarded in the ordinary

                  course of business to other peer executives of Fidelity

                  Southern, the Bank and Affiliates. Any increase in Annual Base

                  Salary will not serve to limit or reduce any other obligation

                  to the Executive under this Agreement. The Annual Base Salary

                  in effect on the Commencement Date will not be reduced

                  thereafter nor shall any such increase during the Employment

                  Period be reduced thereafter.

 

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            (b)    During the Employment Period, the Executive will be entitled

                  to participate in all incentive plans (including, without

                  limitation, stock option, stock purchase, savings,

                  supplemental medical and retirement plans) and other programs

                  and practices applicable generally to other peer executives of

                  Fidelity Southern, the Bank or any Affiliates, but in no event

                   will such plans and other programs, practices, including

                  policies to provide the Executive with incentive

                  opportunities, savings opportunities and retirement and other

                  benefit opportunities, in each case, less favorable, in the

                  aggregate, than those provided by Fidelity Southern, the Bank

                  or any Affiliates for the Executive under such plans,

                  practices, policies and program as in effect at any time on

                  and after the Commencement Date and prior to the Change of

                  Control.

 

            (c)    In addition the method of the calculation of the Executive's

                  total incentive compensation for each fiscal year, or part

                  thereof, during the Employment Period will not be changed in

                  any manner which will result in less total incentive

                  compensation being paid or payable to Executive by Fidelity

                  Southern, the Bank and Affiliates in respect of the Employment

                  Period (or any portion thereof) from the maximum amount that

                  would have been paid using the method of calculating incentive

                  compensation under the incentive compensation programs in

                  effect on and after the Commencement Date and prior to the

                  Change of Control. The parties agree that Executive shall be

                  entitled to incentive compensation for services rendered

                  during part of a fiscal year regardless of the reason for the

                  termination of employment of Executive.

 

            (d)    During the Employment Period the Executive and the eligible

                  Members of the Executive's family ("Dependents") who

                  participated (or otherwise provided coverage) on the

                  Commencement Date and continue to be eligible for

                  participation in any Welfare Plan, will receive all such

                  benefits under the Welfare Plans to the extent applicable

                  generally to other peer executives of Fidelity Southern, the

                  Bank and Affiliates similarly situated, but in no event will

                   the Welfare Plans provide benefits for the Executive and

                  Beneficiaries that are less favorable, in the aggregate, than

                  the most favorable benefits provided under the Welfare Plans

                  in effect at any time during the Employment Period.

 

            (e)    During the Employment Period, Fidelity Southern will maintain

                  in place the Individual Life Insurance Policies.

 

            (f)    During the Employment Period, the Executive will be entitled

                  to fringe benefits in accordance with the most favorable

                  plans, practices, programs and policies of Fidelity Southern,

                  the Bank and any Affiliate in effect for which the Executive

                   qualifies or qualified at any time during the Employment

                  Period including, if more favorable to the Executive, as in

                  effect at any time on or after the Change of Control with

                  respect to other peer executives of Fidelity Southern, the

                  Bank or any Affiliate.

 

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      Section 4. Benefits Upon Termination of Employment.

 

            (a)    Provided the Executive executes a "Release" (as defined below)

                  and does not revoke such Release, the Executive will be

                  entitled to a Salary Continuance Benefit and a Welfare

                  Continuance Benefit as hereafter set forth if (i) the

                  employment of the Executive with Fidelity Southern, the Bank

                  or any Affiliate is terminated by Fidelity Southern, the Bank

                  or any Affiliate, other than for Cause, Disability or death,

                  during the period commencing upon the Commencement Date and

                  ending three years after a Change of Control ("Change of

                  Control Period"); or (ii) the Executive terminates his

                  employment with Fidelity Southern, the Bank or any Affiliate

                  for Good Reason during the Change of Control Period. Any

                  termination by the Executive will be communicated by Notice of

                  Termination to Fidelity Southern given in accordance with

                  Section 23(b). For purposes of this Agreement, a "Notice of

                  Termination" means a written notice which (i) indicates the

                  specific termination provision in this Section relied upon;

                  (ii) to the extent applicable, sets 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; and (iii), if applicable, indicates the date of

                  termination, which shall not be more than 30 days and more

                  than 60 days after the giving of such notice. The term

                  "Release" means a general release that releases Fidelity

                   Southern, the Bank, their Affiliates, shareholders, directors,

                  officers, employees, employee benefit plans, representatives,

                  and agents and their successors and assigns from any and all

                  employment related claims the Executive or the Executive's

                  successors and beneficiaries might then have against them

                  (excluding any claims for vested benefits under any employee

                  pension plan of Fidelity Southern, the Bank or the

                  Affiliates).

 

            (b)    The Salary Continuance Benefit will be the excess of (i) three

                  times the Executive's Final Compensation over (ii) the

                  aggregate amount payable under Section 14. The Salary

                  Continuance Benefit will be payable in seventy-two (72) equal

                  semi-monthly installments commencing on the 15th or last day

                  of the month immediately following the date of termination of

                  employment, whichever date occurs first, and then continuing

                  on the 15th and last day of each calendar month thereafter

                  until all such installments are paid. The Salary Continuance

                  Benefit will be made net of all required Federal and State

                  withholding taxes and similar required withholdings and

                  authorized deductions. The Salary Continuance Benefit shall be

                  payable to the estate of the Executive upon the death of the

                  Executive after the amounts become payable.

 

            (c)    During the Severance Period, the Executive and the Executive's

                  Dependents will continue to be covered by all Welfare Plans in

                  which the Executive or Dependents were participating

                  immediately prior to the date of the Executive's termination

                  of employment, subject to the eligibility

 

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                  requirements of such Welfare Plans on the date of termination

                  of employment (the "Welfare Continuance Benefit"). Any changes

                  to any Welfare Plan during the Severance Period will be

                   applicable to the Executive and Dependents as if he continued

                  to be an employee of Fidelity Southern, the Bank or any

                  Affiliate. Fidelity Southern or the Bank will pay or they

                  shall cause an Affiliate to pay, all or a portion of the cost

                  of the Welfare Continuance Benefit for the Executive and

                  Dependents under the Welfare Plans on the same basis as

                  applicable, from time to time, to active employees covered

                  under the Welfare Plans and the Executive will pay any

                  additional costs comparable to those costs paid by active

                  executives. If such participation in any one or more of the

                   Welfare Plans included in the Welfare Continuance Benefit is

                  not possible under the terms of the Welfare Plan or any

                  provision of law would create any adverse tax