EXHIBIT 10.5 FIDELITY SOUTHERN CORPORATION EXECUTIVE CONTINUITY AGREEMENT

 

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                                                                    EXHIBIT 10.5

 

                          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

David Buchanan (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 Policy" means the Flexible Premium

                  Adjustable Life Insurance, Universal Life policy issued by

                   Great-West Life & Annuity Insurance Company ("Great-West") in

                  the face amount of $500,000 payable to beneficiaries

                  designated by the Executive or his estate or trust in lieu

                  thereof.

 

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

                  Section 4(b).

 

            (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,

                  Fidelity Bank or any Affiliate, other than for Cause,

                  Disability or death, or by Executive for Good Reason and

                  ending on the date twelve (12) months thereafter.

 

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            (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 Policy.

 

      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) one year 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.

 

            (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

 

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                  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 Policy.

 

            (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.

 

      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

 

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                  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 one year 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) the

                  Executive's Final Compensation over (ii) the aggregate amount

                   payable under Section 14. The Salary Continuance Benefit will

                  be payable in twenty four (24) 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 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

 

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                  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 effect for the

                   Executive or Fidelity Southern the Bank or any Affiliate due

                  to such participation, Fidelity Southern or the Bank will

                  provide or will cause an Affiliate to provide substantially

                  identical benefits directly or through an i