SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO. ]
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to §240.14a-11(c) or Section 240.14a-12
Fidelity Federal Bancorp
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(Name of Registrant as Specified in Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:________________________________________________
2) Form Schedule or Registration Statement No.:___________________________
3) Filing Party:__________________________________________________________
4) Date Filed:____________________________________________________________
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[LOGO OF FIDELITY FEDERAL BANCORP]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held November 17, 1999
Notice is hereby given that the Annual Meeting of Shareholders of
Fidelity Federal Bancorp ("Fidelity") will be held on November 17, 1999, at 8:30
o'clock a.m., local time, at the downtown office of United Fidelity Bank, fsb
("United"), 18 N.W. Fourth Street, Evansville, Indiana.
The purposes of the meeting are:
(1) To elect one director to the Board of Directors to serve
for the ensuing term of three years and until his successor
is duly elected and qualified;
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Other than with respect to procedural matters incident to the conduct
of the meeting, management is not aware of any other matters which may properly
come before the meeting. The Board of Directors of Fidelity has fixed the close
of business on September 22, 1999, as the record date for determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting and at
any adjournment of the Annual Meeting.
By Order of the Board of Directors
/s/ JACK CUNNINGHAM
JACK CUNNINGHAM
Chairman of the Board of Directors
October 12, 1999
IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED, REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN
TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
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The date of this Proxy Statement is October 12, 1999.
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TABLE OF CONTENTS
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Page
INTRODUCTORY STATEMENT 1
Proposals Presented 1
Voting Rights 1
Beneficial Ownership 3
Proxies 4
Solicitation of Proxies 4
ELECTION OF DIRECTORS 4
INFORMATION CONCERNING NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS 5
Certain Transactions and Other Matters Between Management
and Fidelity 7
Board Meetings 7
Board Committees 7
EXECUTIVE COMPENSATION AND OTHER INFORMATION 8
Five-Year Total Shareholder Return 8
Compensation Committee Report 9
Compensation Committee Insider Participation 10
Summary Compensation Table 11
1993 Directors' Stock Option Plan 11
1995 Key Employees' Stock Option Plan 11
Option Grants in Last Fiscal Year 12
Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Table 12
Other Employee Benefit Plans 13
Compensation of Directors 14
Employment Contracts and Termination of Employment and
Change of Control Arrangements 14
Security Ownership of Management 15
Section 16(a) Beneficial Ownership Reporting Compliance 16
INDEPENDENT AUDITORS OF FIDELITY 17
POSSIBLE CHANGE OF CONTROL 17
SHAREHOLDER PROPOSALS 17
ADDITIONAL INFORMATION 18
OTHER MATTERS 18
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF FIDELITY FEDERAL BANCORP
TO BE HELD ON NOVEMBER 17, 1999
INTRODUCTORY STATEMENT
This Proxy Statement is being furnished to the shareholders of Fidelity
Federal Bancorp ("Fidelity") in connection with the solicitation of proxies by
the Board of Directors of Fidelity for use at the Annual Meeting of Shareholders
to be held on November 17, 1999, at 8:30 a.m., local time, at the downtown
office of United Fidelity Bank, fsb ("United"), 18 N.W. Fourth Street,
Evansville, Indiana and any adjournment thereof (the "Annual Meeting").
Fidelity is a unitary savings and loan holding company based in
Evansville, Indiana which owns all of the issued and outstanding stock of
United, its savings bank subsidiary. United maintains four locations in
Evansville. United also participates in various real estate activities including
owning and managing housing developments through its wholly-owned subsidiaries:
Village Capital Corporation, Village Housing Corporation, and Village Management
Corporation. United also offers an array of insurance products through Village
Insurance Corporation.
PROPOSALS PRESENTED
At the Annual Meeting, shareholders of Fidelity will be asked to
consider and vote upon the election of one director to the Board of Directors of
Fidelity to serve for an ensuing term of three years in accordance with
Fidelity's Articles of Incorporation (which call for staggered terms for
Fidelity's Board of Directors).
If any other matters should properly come before the meeting, it is
intended that the proxies will be voted, with respect to these matters, in
accordance with the recommendations of the Board of Directors. Except with
respect to procedural matters incident to the conduct of the meeting, management
of Fidelity does not know of any additional matters that may properly come
before the Annual Meeting.
The Proxy Statement, the attached Notice and the enclosed proxy card
are being first mailed to shareholders of Fidelity on or about October 12, 1999.
VOTING RIGHTS
Only holders of shares of common stock of Fidelity of record at the
close of business on September 22, 1999 (the "Record Date") will be entitled to
notice of and to vote at the Annual Meeting. At the close of business on the
Record Date there were 3,147,662 shares of common stock of Fidelity issued and
outstanding. Such shares were held of record by approximately 506 shareholders.
There are no other outstanding securities of Fidelity entitled to vote. The
presence, either in person or by proxy, of the holders of a majority of the
shares of Common Stock issued and outstanding as of the Record Date is necessary
to constitute a quorum at the Annual Meeting. The inspectors of election will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as unvoted for purpose of
determining the approval of any matters submitted to the shareholders for a
vote. If a broker indicates on the proxy that it does not have discretionary
authority to vote certain shares on a particular matter, those shares will not
be considered as present and entitled to vote with respect to that matter. The
nominee for election as director of Fidelity named in this Proxy Statement will
be elected by a plurality of the votes cast. Action on the other items or
matters to be presented at the Annual Meeting will be approved if the votes cast
in favor of the action exceed the votes cast opposing the action.
Fidelity shareholders of record on the Record Date are entitled to one
vote per share on any matter that may properly come before the Annual Meeting,
except for the ability to cumulate votes with
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respect to the election of directors. The Articles of Incorporation of Fidelity
provide that shareholders are entitled to cumulate votes for the election of
directors. As such, each shareholder is entitled to vote, in person or by proxy,
the number of shares owned by the shareholder for each nominee. Alternatively,
each shareholder is entitled to cumulate votes for nominees and give one nominee
a number of votes equal to the number of directors to be elected (1 for the
Annual Meeting) multiplied by the number of votes to which that shareholder's
shares are entitled, or distribute such votes the same principal among any
number of the nominees as such shareholder deems appropriate. However, a
shareholder may only cumulate votes for a nominee or nominees whose names have
been properly placed in nomination prior to the Annual Meeting. The nominees
receiving the highest number of votes, up to the number of directors to be
elected, shall be elected. Voting on all other matters to be submitted at the
Annual Meeting is non-cumulative.
The proxies will have full discretion and authority to vote
cumulatively and to allocate votes among all or any of the nominees as the Board
of Directors may determine. Such grant of discretion and authority to the proxy
holders to vote cumulatively may be withheld by checking the box marked
"withhold authority" on the enclosed proxy card. Ballots will be available at
the Annual Meeting for shareholders desiring to vote in person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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BENEFICIAL OWNERSHIP
The following table sets forth information regarding the beneficial
ownership of Fidelity's common stock as of September 15, 1999 by the only
persons known by Fidelity to beneficially own 5% or more of the issued and
outstanding shares of common stock of Fidelity.
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NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) PERCENT OF CLASS
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M. Brian Davis
700 S. Green River Road, Suite 2000
Evansville, IN 47716 795,206 (2) 24.62%
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Bruce A. Cordingley
8888 Keystone Crossing, Suite 900
Indianapolis, IN 46240 320,667 (3) 10.03%
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Barry A. Schnakenburg
8701 Petersburg Road
Evansville, IN 47711 256,708 (4) 8.12%
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First Financial Fund, Inc.
c/o Wellington Management
75 State St
Boston, MA 02109 202,900 (5) 6.49%
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Wellington Management
75 State St
Boston, MA 02109 202,900 (6) 6.49%
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Rahmi Soyugenc
119 LaDonna Blvd.
Evansville, IN 47711 171,720 5.5%
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(1) This information is based on Schedule 13D and 13G Reports filed by the
beneficial owner with the Securities and Exchange Commission ("SEC")
pursuant to applicable provisions of the Securities Exchange Act of
1934 ("Exchange Act"), as of September 15, 1999, and any other
information provided to Fidelity by the beneficial owner. It does not
reflect any changes in those shareholdings which may have occurred
since that date. Beneficial ownership is direct except as otherwise
indicated by footnote.
(2) Includes 3,796 shares owned by the spouse of Mr. Davis, 16,226 shares
which Mr. Davis holds as custodian for his minor daughter (Elizabeth
Davis); 15,294 shares which Mr. Davis holds as custodian for his minor
son (Christopher Davis); and 5,580 shares which Mr. Davis holds as
custodian for his minor daughter (Gabrielle Davis). Also includes
39,916 shares which Mr. Davis has the right to acquire pursuant to the
exercise of stock options granted under the 1993 Directors' Stock
Option Plan and 42,720 shares which Mr. Davis has the right to acquire
pursuant to the exercise of stock options granted under Fidelity's 1995
Key Employees' Stock Option Plan. Also includes 99,018 shares of
Fidelity owned by Maybelle R. Davis, the mother of Mr. Davis, as to
which shares Mr. Davis has authority to vote pursuant to a power of
attorney.
(3) Includes 196,783 shares held by Pedcor Investments, a limited liability
company, of which Mr. Cordingley is a 41.985% owner and a co-chief
executive officer and President; 6,835 shares held by the spouse of Mr.
Cordingley; and 52,966 shares held by Gerald Pedigo, who together with
Mr. Cordingley and others has filed a Schedule 13D as a "group" under
Section 13(d)(3) of the Securities Exchange Act of 1934. The total also
includes 39,916 shares which Mr. Cordingley has the right to acquire
pursuant to the exercise of stock options granted under Fidelity's 1993
Directors' Stock Options Plan and 8,587 shares which Mr. Cordingley,
Pedcor Investments, and
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Mr. Cordingley's wife are entitled to purchase upon exercise of 31
warrants acquired pursuant to the 1994 Rights Offering.
(4) Includes 5,775 shares held by the spouse of Mr. Schnakenburg, 24,948
shares held by U.S. Industries Group, Inc., 52,263 shares held by
Barry, Inc. and 40,378 shares held by BOAH Associates. The total also
includes 13,497 shares which Mr. Schnakenburg has the right to acquire
through the exercise of stock options granted under Fidelity's 1993
Directors' Stock Option Plan. The total also includes 74,109 shares of
Fidelity pursuant to which Mr. Schnakenburg may exercise voting and
investment power pursuant to a power of attorney.
(5) First Financial Fund, Inc., reports that it had sole voting power and
shared dispositive power with respect to the reported shares. These
shares are also included in the shares beneficially owned by Wellington
Management Company, as investment adviser to First Financial Fund,
Inc., as explained in footnote 6.
(6) Wellington Management Company ("WMC"), in its capacity as investment
adviser, may be deemed to have beneficial ownership of these shares,
which are owned by First Financial Fund, Inc. As of June 30, 1999, WMC
reported that it had no voting power as to these shares, and shared
dispositive power with First Financial Fund, Inc. (see footnote 5) as
to all 202,900 shares.
PROXIES
Each properly executed and returned proxy will be voted at the Annual
Meeting in accordance with the instructions thereon. If no instructions are
given, the proxy will be voted by the individuals designated as proxies in their
discretion and with authority to cumulate votes.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by (i) attending the Annual Meeting, filing a written notice of
revocation with the Secretary of the Annual Meeting and voting in person; (ii)
executing a written instrument to that effect and delivering it to the Secretary
of Fidelity prior to the Annual Meeting; or (iii) duly executing and delivering
a later dated proxy to the Secretary of Fidelity prior to the Annual Meeting.
SOLICITATION OF PROXIES
In addition to use of the mails, proxies may be solicited personally or
by telephone or telegraph by officers, directors and certain employees who will
not be specially compensated for such activity. Fidelity will request brokerage
houses, nominees, fiduciaries and other custodians to forward soliciting
materials to beneficial owners. Fidelity will bear all expenses in connection
with the solicitation of proxies for the Annual Meeting.
ELECTION OF DIRECTORS
The Board of Directors of Fidelity is currently composed of eight
members. Fidelity's Articles of Incorporation divide the Board of Directors into
three classes, as nearly equal in size as possible, with one class of Directors
elected each year for a three-year term. The terms of Jack Cunningham and Robert
F. Doerter expire at the 1999 Annual Meeting of Shareholders. Mr. Cunningham has
been nominated for re-election to a three-year term to expire at the 2002 Annual
Meeting of Shareholders. Mr. Doerter met with the Executive Committee of the
Board of Directors to declare his intention to retire from the Board and not
stand for re-election. The Board of Directors, in accordance with the Articles
of Incorporation of Fidelity, has decided to amend the by-laws of Fidelity to
reduce the number of directors to seven upon completion of Mr. Doerter's term.
Upon completion of Mr. Doerter's term and the reduction of the size of
the Board of Directors to seven members, three directors will have terms
expiring in 2000, three directors will have terms expiring in 2001, and one
director will have a term expiring in 2002. In order to make the number of
directors in
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each class as equal as possible, as required by Fidelity's articles of
incorporation, at the next meeting of shareholders of Fidelity following the
meeting on November 17, 1999 at which directors are elected, one individual will
be elected to a term to expire in 2002 (a two year term) and two individuals
will be elected to terms to expire in 2003 (a three year term).
If for any reason Mr. Cunningham becomes unable or is unwilling to
serve at the time of the Annual Meeting, the person named in the enclosed proxy
card will have discretionary authority to vote for a substitute nominee or
nominees. It is not anticipated that Mr. Cunningham will be unavailable for
election.
At the Annual Meeting, proxies cannot be voted for a greater number of
persons than the number of nominees named.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF MR. CUNNINGHAM.
INFORMATION CONCERNING NOMINEES,
DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------
The following sets forth information as to the nominee for election at
the Annual Meeting, each Director continuing in office after the Annual Meeting,
and each executive officer of Fidelity as of June 30, 1999, including their
ages, present principal occupations, other business experience during the last
five years, directorships in other publicly held companies, and the year they
were first elected or appointed to the Board of Directors (if applicable). Each
individual's service with Fidelity began at the formation of Fidelity in 1993,
unless otherwise noted. In addition, all current Directors of Fidelity are also
current Directors of United. Mr. Cunningham is currently a member of the Board
of Directors.
There are no arrangements or understandings between any of the
Directors, executive officers or any other person pursuant to which any Director
or executive officer has been selected for his or her respective position.
CURT J. ANGERMEIER Age - 45, term expires in 2000.
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Mr. Angermeier was appointed to the Board of Directors of Fidelity on March 21,
1996. Mr. Angermeier is a practicing attorney, concentrating on insurance law
matters. Mr. Angermeier is a member of the Indiana Bar Association, Indiana
Defense Lawyers Association and the Evansville Bar Association.
WILLIAM R. BAUGH Age - 78, term expires in 2001.
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Mr. Baugh is a Director of Fidelity and has been Chairman Emeritus of the Board
of Directors since October 1994. Mr. Baugh served as Chairman of the Board of
Directors of Fidelity from its formation in 1993 until October 1994. He has been
a Director of United since 1955, was Chairman of the Board of United from 1979
until October 1994, and was President of United from 1970 until 1981 and from
1983 until 1986.
BRUCE A. CORDINGLEY Age - 52, term expires in 2001.
- -------------------
Mr. Cordingley is a Director of Fidelity and served as Chairman of the Board of
Directors from October 1994 until April 1998, and served as Chief Executive
Officer of Fidelity from June 1995 to March 1996. He continues to serve as a
Director of Fidelity and as a Director of Village Management Corporation and
Village Housing Corporation (the two service corporation subsidiaries of United
involved in the management and ownership of affordable housing units) and
Village Insurance Corporation. Mr. Cordingley has been a Director of United
since 1992. Mr. Cordingley is an attorney and was a partner in the law firm of
Ice, Miller, Donadio and Ryan in Indianapolis, Indiana from 1973 to February
1992. Mr. Cordingley is President of Pedcor Investments, a limited liability
company, located in Indianapolis,
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Indiana, the principal business of which is real estate-oriented investment and
development. Mr. Cordingley is also a Director of International City Bank, N.A.
(Long Beach, California).
JACK CUNNINGHAM Age - 69, term expires in 1999.
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Mr. Cunningham is a Director of Fidelity and has served as Chairman of Fidelity
and United since April 1998. Mr. Cunningham served as Secretary of Fidelity and
United from April 1998 until December 1998. He served as President of Fidelity
from May 1994 through October 1994 and as President of United from May 1994
through December 1994. Mr. Cunningham again served as President and CEO of
United from March 1997 until January 1998. Mr. Cunningham is Chairman of the
Board of Village Management Corporation and Village Housing Corporation (the two
service corporation subsidiaries of United involved in the management and
ownership of affordable housing units), Village Capital Corporation, and Village
Insurance Corporation. Mr. Cunningham has been a Director of United since 1985
and an officer of United since 1974.
M. BRIAN DAVIS Age - 44, term expires in 2001.
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Mr. Davis is a Director of Fidelity and has served as its President and Chief
Executive Officer since November 1996. Mr. Davis is also a Director of United
and has served as its Chief Executive Officer since January 1998. Mr. Davis
previously served as Chief Operating Officer of Fidelity from June 1995 to
November 1996. Mr. Davis is also a Director of Village Management Corporation
and Village Housing Corporation (the two service corporation subsidiaries of
United involved in the management and ownership of affordable housing units).
Mr. Davis is the President of Village Management Corporation, Village Insurance
Corporation, Village Housing Corporation, and Village Capital Corporation. Mr.
Davis has been a Director of United since 1992. Mr. Davis is a partner in the
Davis Brothers Real Estate Partnership, located in Evansville, Indiana, which
has developed and managed commercial real estate throughout the Midwest. He is
also currently President of Southern Investment Corporation, a real estate
investment company.
BARRY A. SCHNAKENBURG Age - 51, term expires in 2000.
- ---------------------
Mr. Schnakenburg is a Director of Fidelity and has served as a Director of
United since 1990. Mr. Schnakenburg currently serves as a Director of Village
Capital Corporation and as a Director and the Executive Vice-President and Chief
Operating Officer of Village Insurance Corporation. Mr. Schnakenburg has served
as the President of U.S. Industries Group, Inc. for the past 10 years. U.S.
Industries Group, Inc. is a sheet metal and roofing contractor located in
Evansville, Indiana.
DONALD R. NEEL Age - 36, term expires in 2000.
- --------------
Mr. Neel is a Director of Fidelity and serves as Executive Vice-President, Chief
Financial Officer, and Treasurer of Fidelity, and as Executive Vice President
and Chief Operating Officer of United. Mr. Neel also serves as Treasurer of
Village Management Corporation, Village Insurance Corporation, and as Executive
Vice President and Treasurer of Village Capital Corporation and Village Housing
Corporation. Prior to joining United and Fidelity in 1993, Mr. Neel served as
Vice-President and Controller of INB Banking Company, Southwest (successor to
Peoples Bank) from May 1987 through April 1993.
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CERTAIN TRANSACTIONS AND OTHER MATTERS BETWEEN MANAGEMENT AND FIDELITY
Directors and executive officers of Fidelity and United and their
associates are customers of, and have had transactions with, Fidelity and United
in the ordinary course of business. Comparable transactions may be expected to
take place in the future. Directors of Fidelity may not obtain extensions of
credit from Fidelity or United. Loans made to non-director officers were made in
the ordinary course of business on substantially the same terms as those
prevailing at the time for comparable transactions with other persons. These
loans did not involve more than the normal risk of collectibility or present
other unfavorable features.
The Office of Thrift Supervision ("OTS"), the primary federal banking
regulatory agency of United, by regulation has provided that each director,
officer, or affiliated person of a savings association, such as United, has a
fundamental duty to avoid placing himself in a position which creates, or which
leads to or could lead to, a conflict of interest or appearance of a conflict of
interest having an adverse effect upon, among other things, the interests of the
members of the savings association or the association's soundness. In addition,
the OTS by regulation has stated that the fiduciary relationship owed by a
director or officer of a savings association, such as United, includes the duty
to protect the association and that the OTS would consider this duty to be
breached if such individual would take advantage of a business opportunity for
his own or another person's personal benefit or profit when the opportunity is
within the corporate powers of the savings association (or its service
corporation) and when the opportunity is of a present or potential practical
advantage to the savings association. The members of the Board of Directors of
Fidelity and United are aware of these regulations and requirements of the OTS
and believe they have conducted, and intend to continue to conduct themselves in
compliance with these requirements at all times.
BOARD MEETINGS
Fidelity had 12 Board of Directors meetings during its fiscal year
ended June 30, 1999. Each of the incumbent Directors of Fidelity attended at
least 75% of the meetings of the Board of Directors and any committees upon
which he served during the period which such individual served.
BOARD COMMITTEES
The Board of Directors has a Nominating Committee which consists of M.
Brian Davis (Chairman), Barry A. Schnakenburg, and Donald R. Neel. The
Nominating Committee, whose purpose is to nominate directors for election to the
Board of Directors, met twice during the fiscal year ended June 30, 1999. Under
Fidelity's by-laws, no nominations for director, except those made by the
Nominating Committee, shall be voted upon at the Annual Meeting unless other
nomination by shareholders are made in writing and delivered to the Secretary of
Fidelity not later than the close of business on the tenth day following the
date the notice of the Annual Meeting was mailed to shareholders. Shareholders
who wish to recommend nominees must do so in writing to the Secretary of
Fidelity as described above.
The Board of Directors also has an Audit Committee consisting of Curt
J. Angermeier (Chairman), William R. Baugh, Robert F. Doerter and Barry A.
Schnakenburg. The Audit Committee, whose purpose is to review audit reports,
loan review reports, and related matters to ensure effective compliance with
regulatory and internal policies and procedures, met four times during the
fiscal year ended June 30, 1999. The members of the Audit Committee also serve
as the committee authorized to direct the grant of options to eligible Key
Employees under the 1993 Directors' Stock Option Plan and the 1995 Key
Employees' Stock Option Plan.
The Executive Committee of the Board of Directors serves as the
Compensation Committee. The Executive Committee is currently composed of Jack
Cunningham (Chairman), M. Brian Davis, Barry A. Schnakenburg, and Bruce A.
Cordingley. The Executive Committee met eleven times during the fiscal
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year ended June 30, 1999. Mr. Davis meets with the Compensation Committee but
abstains and recuses himself from discussions related to his compensation.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
--------------------------------------------
FIVE-YEAR TOTAL SHAREHOLDER RETURN
The following indexed graph indicates Fidelity's total return to its
shareholders on its common stock for the past five years, assuming dividend
reinvestment, as compared to total return for the NASDAQ Market Index and the
Peer Group Index (which is a line-of-business index prepared by an independent
third party consisting of savings and loan holding companies or federally
chartered savings institutions with the same SIC number as Fidelity and which
have been publicly traded for at least six years). The comparison of total
return on investment for each of the periods assumes that $100 was invested on
July 1, 1994, in each of Fidelity, the NASDAQ Market Index, and the Peer Group
Index. The period prior to November 8, 1993 (the date Fidelity became the sole
shareholder of United pursuant to a reorganization in which Fidelity exchanged
one share of its common stock for each one share of common stock of United
outstanding) reflects the stock of United.
COMPARATIVE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG FIDELITY FEDERAL BANCORP,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[CHART APPEARS HERE]
ASSUMES $100 INVESTED ON JULY 1, 1994
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED JUNE 30, 1999
1994 1995 1996 1997 1998 1999
-------------------------------------------------------
Fidelity Federal 100 181.69 189.05 184.83 129.60 59.82
SIC Code Index 100 116.53 146.85 230.16 324.00 267.05
NASDAQ Market Index 100 117.28 147.64 177.85 235.75 330.37
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COMPENSATION COMMITTEE REPORT
Decisions on compensation of Fidelity's executives are made by the
Executive Committee of the Board of Directors of Fidelity, which also serves as
the Compensation Committee. All decisions of the Executive Committee relating to
the compensation of Fidelity's officers are reviewed by the full board. Set
forth below is a report submitted by Messrs. Cordingley, Davis, Cunningham and
Schnakenburg, in their capacity as the Board's Executive Committee, addressing
Fidelity's compensation policies for the fiscal year ended June 30, 1999 as they
affected Fidelity's executive officers.
Compensation Policies Toward Executive Officers.
------------------------------------------------
The Executive Committee's executive compensation policies are designed
to provide competitive levels of compensation to the executive officers and to
reward officers for satisfactory individual performance and for satisfactory
performance of Fidelity as a whole. There are no established goals or standards
relating to performance of Fidelity which have been utilized in setting
compensation of individual employees.
Base Salary.
------------
Each executive officer is reviewed individually by the Executive
Committee, which includes an analysis of the performance of Fidelity. In
addition, the review includes, among other things, an analysis of the
individual's performance during the past fiscal year, focusing primarily upon
the following aspects of the individual's job or characteristics of the
individual exhibited during the most recent fiscal year: quality and quantity of
work; supervisory skills; dependability; initiative; attendance; overall skill
level; and overall value to Fidelity.
Other Compensation Plans.
-------------------------
At various times in the past Fidelity has adopted certain broad based
employee benefit plans in which the senior executives are permitted to
participate on the same terms as non-executive employees who meet applicable
eligibility criteria, subject to any legal limitations on the amount that may be
contributed or the benefits that may be payable under the plans.
Benefits.
---------
Fidelity provides medical, defined benefit, and defined contribution
plans to the senior executives that are generally available to the other
Fidelity employees. The amount of perquisites, as determined in accordance with
the rules of the SEC relating to executive compensation, did not exceed 10% of
salary and bonus for fiscal year 1999.
Mr. Davis' 1999 Compensation.
-----------------------------
Regulations of the Securities and Exchange Commission require that the
Executive Committee disclose the Committee's basis for compensation reported for
any individual who served as the Chief Executive Officer during the last fiscal
year. Mr. Davis' salary is determined in the same manner as discussed above for
other senior executives. Mr. Davis did not participate in the deliberations of
the Executive Committee with respect to his compensation level. See
"Compensation Committee Insider Participation."
9
<PAGE>
Current Members of the 1999 Executive Committee:
Bruce A. Cordingley
M. Brian Davis
Jack Cunningham
Barry A. Schnakenburg
COMPENSATION COMMITTEE INSIDER PARTICIPATION
During the past fiscal year, Mr. Davis, a current officer of Fidelity,
and Messrs. Cunningham and Cordingley, former officers of Fidelity, served on
the Executive Committee. Mr. Davis did not participate in any discussion or
voting with respect to his salary as an executive officer and was not present in
the room during the discussion by the Executive Committee of his compensation.
The following table sets forth, for the fiscal years ended June 30,
1999, 1998 and 1997, the cash compensation paid by Fidelity or its subsidiaries,
as well as certain other compensation paid or awarded during those years, to the
Chief Executive Officer of Fidelity at any time during the fiscal year ended
June 30, 1999 and the executive officers of Fidelity whose salary and bonus
exceeded $100,000 during the fiscal year ended June 30, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------------------------------
OTHER
ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL COMPEN- RESTRICTED UNDERLYING COMPEN-
POSITION YEAR SALARY BONUS SATION STOCK AWARDS OPTIONS/ LTIP SATION
(1)(2) SARS PAYOUTS (3)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M. Brian Davis, 1999 $233,692 $0 $19,200 0 0 0 $2,841
President, CEO and 1998 226,646 0 19,200 0 15,000 0 2,343
Director 1997 220,783 0 15,600 0 0 0 1,671
Donald R. Neel, 1999 116,892 0 14,400 0 5,923 0 1,888
Exec. Vice 1998 103,164 0 8,400 0 7,500 0 1,547
President, CFO, 1997 0 0 0
Treasurer and
Director
</TABLE>
(1) While officers enjoy certain perquisites, such perquisites do not
exceed the lesser of $50,000 or 10% of such officer's salary and bonus
and are not required to be disclosed by applicable rules of the SEC.
(2) Consists of Directors' fees paid to Mr. Davis and to Mr. Neel for the
fiscal years indicated.
(3) Includes Company contributions under Fidelity's Retirement Savings
401(k) Plan.
10
<PAGE>
1993 DIRECTORS' STOCK OPTION PLAN
The 1993 Directors' Stock Option Plan ("Directors' Plan") expired on
August 1, 1998. It provided for the grant of non-qualified stock options to
individuals who are directors of Fidelity or any of its subsidiaries to acquire
shares of common stock of Fidelity for a price of not less than $2 above the
average of the high and low bid quotations as reported by NASDAQ for the common
stock of Fidelity for the five trading days immediately preceding the date the
option is granted.
No additional options may be granted under the plan; however,
outstanding options shall remain in effect until they have been exercised,
terminated, forfeited, or have expired. As such, options will be outstanding
under the Directors' Plan through November 19, 2007. The number of shares and
option exercise prices under the Directors' Plan have been adjusted to reflect a
twenty percent stock dividend distributed in 1994, a 2.1 for 1 stock split in
1995, and a 10% stock dividend in 1996. As of September 15, 1999 there were
options for 118,283 shares outstanding.
1995 KEY EMPLOYEES' STOCK OPTION PLAN
The Key Employees' Plan provides for the grant of incentive stock
options and non-qualified stock options to acquire shares of common stock of
Fidelity for a price of not less than the fair market value of the share on the
date which the option is granted. A total of 236,500 shares were reserved for
issuance under the Key Employees Plan. The option price per share for each
incentive stock option granted to an employee must not be less than the fair
market value of the share of common stock on the date the option is granted. The
option price per share for an incentive stock option granted to an employee
owning 10% or more of the common stock of Fidelity must not be less than 110% of
the fair market value of the share on the date that the option is granted. The
option price per share for non-qualified stock options will be determined by the
Administrative Committee of the Key Employees' Plan, but may not be less than
100% of the fair market value of a share of common stock on the date of the
grant of the option.
The Key Employees' Plan will expire on March 15, 2005, except
outstanding options will remain in effect until they have been exercised,
terminated, forfeited, or have expired. As such, options may be outstanding
under the Key Employees' Plan through March 15, 2015. The number of shares and
option exercise prices under the Key Employees' Plan have been adjusted to
reflect a 2.1 for 1 stock split in 1995, and a 10% stock dividend in 1996.
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table provides details regarding stock options granted to
Mr. Neel during the fiscal year ended June 30, 1999. No options were granted to
Mr. Davis during last fiscal year. These options granted to Mr. Neel will vest
only in the event of continuous employment through June 2000. In addition, in
accordance with the rules of the Securities and Exchange Commission, there are
shown the hypothetical gains or "options spreads" that would exist for
respective options. These gains are based on assumed rates of annual compound
stock price appreciation of five percent (5%) and ten percent (10%) from the
date the options were granted over the full option term. Gains are reported net
of the option exercise price, but before any effect of taxes. In assessing these
values, it should be kept in mind that no matter what value is placed on a stock
option on the date of grant, its ultimate value will be dependent on the market
value of Fidelity's stock at a future date, and that value would depend on the
efforts of such executive to foster the future success of Fidelity for the
benefit of all shareholders. The amounts reflected in the table may not
necessarily be achieved.
11
<PAGE>
INDIVIDUAL GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE
SHARES TOTAL OPTIONS MARKET PRICE AT ASSUMED RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE OR ON DATE OF PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN BASE PRICE GRANT EXPIRATION OPTION TERM
NAME GRANTED FISCAL YEAR (%) ($/SHARE) ($/SHARE) DATE 5%($) 10%($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald R. Neel 5,923 26.3% $ 2.88 $2.50 01/28/09 $10,728 $ 27,186
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
TABLE
The following table shows for the named executive officers the shares
covered by both exercisable and non-exercisable stock options as of June 30,
1999. Neither Mr. Davis nor Mr. Neel exercised any options during the last
fiscal year. The exercise price of all options held by Messrs. Davis and Neel
exceed the fiscal year-end price of Common Stock.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED STOCK OPTIONS
6/30/99
-----------------------------------------
NAME EXERCISABLE UNEXERCISABLE
-----------------------------------------------------------
M. Brian Davis 39,916 0(1)
27,720 0(2)
9,000 6,000(3)
Donald R. Neel 4,500 3,000(3)
0 5,923(4)
(1) The bid value of Fidelity's Common Stock at June 30, 1999 ($2.88 per
share), was less than the exercise price ($6.22 per share).
(2) The bid value of Fidelity's Common Stock at June 30, 1999 ($2.88 per
share), was less than the exercise price ($10.60 per share).
(3) The bid value of Fidelity's Common Stock at June 30, 1999 ($2.88 per
share), was less than the exercise price ($10.81 per share).
(4) The bid value of Fidelity's Common Stock at June 30, 1999 ($2.88 per
share), was the same as the exercise price ($2.88 per share).
12
<PAGE>
OTHER EMPLOYEE BENEFIT PLANS
Pension Plan
------------
Fidelity currently participates in a defined benefit pension plan
sponsored by the Financial Institutions Retirement Fund, a non-profit, tax
qualified, tax-exempt pension plan and trust in which Federal Home Loan Banks,
savings and loan associations and similar institutions participate ("Pension
Plan"). All employees of Fidelity or its subsidiaries (which excludes
non-employee Directors of Fidelity) (i) who have not attained age sixty (60)
prior to being hired, and (ii) who work a minimum of 1000 hours per year are
covered by the Pension Plan and become participants upon completion of one year
of service and attainment of age 21. Participants are not required or allowed to
make contributions to the Pension Plan.
A participant in the Pension Plan is entitled to receive benefits based
upon years of service for Fidelity or its subsidiaries and a percentage of the
individual's average annual salary during the five (5) consecutive years of
service which produce the highest such average without deduction for Social
Security benefits. For purposes of computing benefits, "salary" includes an
employee's regular base salary or wage inclusive of bonuses and overtime but is
exclusive of special payments such as fees, deferred compensation, severance
payments and contributions by Fidelity to the Pension Plan.
Participants become fully vested in their benefits after completion of
five (5) years of service. Upon attaining age sixty-five (65), participants
become one hundred percent (100%) vested in their benefits provided by Fidelity
under the Pension Plan, regardless of the number of their years of service.
Benefits are payable at normal retirement age (age 65). The Pension Plan also
contains provisions for the payment of benefits on the early retirement, late
retirement, death or disability of a participant.
The regular benefit under the Pension Plan to be paid on a
participant's retirement is a monthly pension for the life of a participant with
minimum guaranteed benefit of twelve (12) times the participant's annual
retirement benefit under the Pension Plan. Thus, the regular form of all
retirement benefits includes not only a retirement allowance, but also a lump
sum retirement death benefit which is twelve (12) times the annual retirement
benefit less the sum of such retirement benefits made before death. The Pension
Plan provides that married participants will receive the regular retirement
benefit in the form of an actuarially equivalent joint and survivor annuity.
Optional forms of payments are available to all participants; however, married
participants must obtain written spousal consent to the distribution of benefits
in a form other than a joint and survivor annuity.
According to the Pension Plan sponsor, the actuaries for the Pension
Plan have determined that no contributions were required to be made to the
Pension Plan by Fidelity for the plan year ended June 30, 1999.
The following table shows estimated annual benefits payable at normal
retirement to persons in specified remuneration classifications. The benefit
amounts presented in the totals are annual pension amounts for the life of the
participant, with a minimum guaranteed benefit of twelve (12) times the annual
retirement benefit under the Pension Plan, for a participant at normal
retirement (age 65) with the years of service set forth below with no deduction
for Social Security or other offset amounts. The maximum compensation which may
be taken into account for any purpose under the Pension Plan is limited by the
Internal Revenue Code to $160,000 for 1999. As of July 1, 1999, M. Brian Davis
had four and one-half years of service and Donald R. Neel had six years of
service under the Pension Plan.
13
<PAGE>
ANNUAL BENEFIT OF NORMAL RETIREMENT YEARS OF SERVICE
<TABLE>
<CAPTION>
HIGHEST FIVE-YEAR
AVERAGE ANNUAL
SALARY 10 15 20 25 30 35 40
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$50,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
$75,000 15,000 22,500 30,000 37,500 45,000 52,500 60,000
$100,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
$125,000 25,000 37,500 50,000 62,500 75,000 87,500 100,000
$150,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000
$175,000 35,000 52,500 70,000 87,500 105,000 122,500 140,000
</TABLE>
Retirement Savings Plan.
------------------------
In 1994 Fidelity adopted a defined contribution plan under Internal
Revenue Code Section 401(k) in which substantially all employees may
participate. Under this plan, employees may contribute up to 15% of pay, and
contributions up to 6% are supplemented by Company contributions. Fidelity
contributions are made at the rate of 25(cent) for each dollar contributed by
the participant. Participants may elect to have all or a portion of their
contributions made on a tax-deferred basis pursuant to provisions in the plan
meeting the requirements of Section 401(k) of the Internal Revenue Code.
Fidelity's expense for the plan was $17,000 for the fiscal year ended June 30,
1999.
COMPENSATION OF DIRECTORS
The Directors of Fidelity and United, who are the same individuals, are
compensated for their services in the amount of $1,000 per month (or $12,000 per
year) plus an additional $200 per month if the Director attends that month's
regularly scheduled Board meeting. Executive Committee members receive an
additional $400 per month for their services. The maximum compensation received
by any Director for his or her service on the Board was $19,200 for the current
year.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
On December 1, 1997, Fidelity entered into severance agreements with
Messrs. Davis and Neel. Each of these agreements provides that it will terminate
on December 1, 1999, but may be extended annually for an additional year. These
contracts have not been extended at this point. Each agreement provides that if
during the two year period following a change in control (as defined in the
agreement), the executive is terminated for any reason other than cause (as
defined in the agreement), disability, retirement or death, or if the executive
resigns due to a reduction in his duties or responsibilities, a reduction in his
compensation or benefits, or a requirement that he be based at a location other
than Evansville, the executive is entitled to an amount equal to 2.99 times his
average annual base salary and bonus, plus an amount computed by the actuary for
Fidelity's retirement plan equal to the present value of the executive's accrued
benefit (as defined in the plan) computed as if the executive had remained
employed by Fidelity for two years after his termination of employment. In
addition, Fidelity must maintain for the benefit of the executive for three
years following termination all employee welfare plans and programs in which he
was entitled to participate prior to termination, and reimburse the executive
for the cost of obtaining such benefits for the first 24 months following
termination. No payments may be made pursuant to the agreement if such payments
would, among other things, be considered by a federal or state regulatory
authority having jurisdiction over Fidelity an unsafe or unsound practice. From
time to time Fidelity has entered into change of control agreements with other
members of management. These agreements have been filed with the Securities and
Exchange Commission as an exhibit on Form 10-K.
14
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of September 15,
1999, with respect to the common stock of Fidelity beneficially owned by each
Director of Fidelity and by all executive officers and directors as a group.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES BENEFICIALLY PERCENT OF CLASS (1)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
William R. Baugh (2) 28,970 .86%
Bruce A. Cordingley (3) 320,667 10.03
Jack Cunningham (4) 46,735 1.48
M. Brian Davis (5) 795,206 24.62
Robert F. Doerter (6) 10,563 .27
Barry A. Schnakenburg (7) 256,708 8.12
Curt J. Angermeier (8) 30,878 .98
Donald R. Neel (9) 18,250 .58
All Executive Officers and Directors
as a Group (8 Persons) 1,507,977 45.28
</TABLE>
(1) The information contained in this column is based upon information
furnished to Fidelity as of September 15, 1999, by the individuals
named above. The nature of beneficial ownership for shares shown in
this column represent sole or shared voting and investment unless
otherwise noted. At September 15, 1999, Fidelity had 3,147,662 shares
of common stock outstanding.
(2) Includes 28,970 shares beneficially owned by Mr. Baugh. Also includes
1,970 shares which Mr. Baugh has the right to acquire pursuant to the
exercise of stock options granted under the 1993 Directors' Stock
Option Plan.
(3) Includes 196,783 shares held by Pedcor Investments, a limited liability
company, of which Mr. Cordingley is a 41.985% owner and a co-chief
executive officer and President; 6,835 shares held by the spouse of Mr.
Cordingley; and 52,966 shares held by Gerald Pedigo, who together with
Mr. Cordingley and others has filed a Schedule 13D as a "group" under
Section 13(d)(3) of the Securities Exchange Act of 1934. The total also
includes 39,916 shares which Mr. Cordingley has the right to acquire
pursuant to the exercise of stock options granted under Fidelity's 1993
Directors' Stock Options Plan; and 8,587 shares which Mr. Cordingley,
Pedcor Investments, and Mr. Cordingley's wife are entitled to purchase
upon exercise of 31 warrants acquired pursuant to the 1994 Rights
Offering.
(4) Includes 9,744 shares held in the name of Mr. Cunningham's wife and
17,074 shares which Mr. Cunningham has the right to acquire pursuant to
the exercise of stock options granted under Fidelity's 1993 Directors'
Stock Option Plan.
(5) Includes 3,796 shares owned by the spouse of Mr. Davis, 16,226 shares
which Mr. Davis holds as custodian for his minor daughter (Elizabeth
Davis); 15,294 shares which Mr. Davis holds as custodian for his minor
son (Christopher Davis); and 5,580 shares which Mr. Davis holds as
custodian for his minor daughter (Gabrielle Davis). Also includes
39,916 shares which Mr. Davis has the right to acquire pursuant to the
exercise of stock options granted under the 1993 Directors' Stock
Option Plan and 42,720 shares which Mr. Davis has the right to acquire
pursuant to the exercise of stock options granted under Fidelity's 1995
Key Employees' Stock Option Plan.
15
<PAGE>
Also includes 99,018 shares of Fidelity owned by Maybelle R. Davis, the
mother of Mr. Davis, as to which shares Mr. Davis has authority to vote
pursuant to a power of attorney.
(6) Includes 8,593 shares beneficially owned by Mr. Doerter. The total also
includes 1,970 shares which Mr. Doerter has the right to acquire
pursuant to the exercise of stock options granted under the 1993
Directors' Stock Option Plan.
(7) Includes 5,775 shares held by the spouse of Mr. Schnakenburg, 24,948
shares held by U.S. Industries Group, Inc., 52,263 shares held by
Barry, Inc. and 40,378 shares held by BOAH Associates. The total also
includes 13,497 shares which Mr. Schnakenburg has the right to acquire
through the exercise of stock options granted under Fidelity's 1993
Directors' Stock Option Plan. The total also includes 74,109 shares of
Fidelity pursuant to which Mr. Schnakenburg may exercise voting and
investment power pursuant to a Power of Attorney.
(8) Includes 19,401 shares held in a Family Trust of Mr. Angermeier. The
total also includes 3,940 shares which Mr. Angermeier has the right to
acquire pursuant to the exercise of stock options granted under the
1993 Directors' Stock Option Plan.
(9) Includes 4,827 shares beneficially owned by Donald R. Neel, Executive
Vice-President, Chief Financial Officer and Treasurer of Fidelity. Also
includes 13,423 shares which Mr. Neel has the right to acquire pursuant
to the exercise of the stock options granted under Fidelity's 1995 Key
Employees' Stock Option Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Fidelity's directors and
executive officers, and persons who own more than 10% of a registered class of
Fidelity's equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of Fidelity common stock and other equity
securities of Fidelity. Officers, directors and greater than 10% shareholders
are required by SEC regulations to furnish Fidelity with copies of all Section
16(a) forms they file. To the best knowledge of Fidelity, during the most recent
fiscal year ended June 30, 1999, there were no late filings with respect to the
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners.
16
<PAGE>
INDEPENDENT AUDITORS OF FIDELITY
--------------------------------
The Board of Directors of Fidelity appointed the firm of Olive LLP,
Certified Public Accountants as independent auditors for Fidelity for the fiscal
year ending June 30, 1999. Representatives of Olive LLP are expected to be
present at the meeting and available to respond to appropriate questions. They
will be given an opportunity to make a statement if they desire to do so. In
connection with the proposed transaction with Lincolnshire discussed below under
"Possible Change in Control," the Board of Directors is considering the
selection of an independent auditor for the current fiscal year but has not yet
made this selection. It anticipates it will appoint an independent auditor for
the current fiscal year no later than ____, 1999.
POSSIBLE CHANGE IN CONTROL
--------------------------
On July 16, 1999, Fidelity signed a letter of intent to sell shares of
its common stock to an affiliate of Lincolnshire Equity Fund II
("Lincolnshire"). If this proposed transaction is consummated, the number of
shares to be sold to Lincolnshire will equal approximately 51% of the
fully-diluted common stock of Fidelity. The stock will be sold at a price of
$4.40 per share, resulting in additional capital of approximately $14 million.
Consummation of the proposed transaction is subject to several
conditions, including receipt of all required regulatory approvals and
elimination of the restrictions imposed by the Supervisory Agreement entered
into between United and the Office of Thrift Supervision. Fidelity also will
need to obtain shareholder approval to increase the number of shares of its
common stock in order to consummate the sale of the shares to Lincolnshire. It
is expected that one or two representatives of Lincolnshire will be added to the
Board of Directors of Fidelity after the purchase by Lincolnshire of the shares.
An additional proxy statement will be sent to shareholders in the future with
respect to this proposed transaction. No action will be taken on this matter at
the annual meeting.
SHAREHOLDERS PROPOSALS
----------------------
Any proposal which a shareholder intends to bring before the next
Annual Meeting of Shareholders to be held in 2000 must be received by Fidelity
no later than June 15, 2000 for inclusion in next year's proxy statement. Such
proposals should be addressed to Jack Cunningham, Chairman of Fidelity, at 700
S. Green River Road, Suite 2000, PO Box 5584, Evansville, Indiana 47715. If a
shareholder proposal is introduced at the 2000 Annual Meeting of Shareholders
without any discussion of the proposal in Fidelity's proxy statement, and if the
shareholder does not notify Fidelity on or before August 29, 2000, as required
by SEC Rule 14a-4(c)(1), of the intent to raise such proposal at the Annual
Meeting of Shareholders, then proxies received by Fidelity for the 2000 Annual
Meeting will be voted by the persons named as proxies in their discretion with
respect to such proposal. Notice of such proposals is to be given to Jack
Cunningham, Chairman of Fidelity in writing at 700 S. Green River Road, Suite
2000, PO Box 5584, Evansville, Indiana 47715.
17
<PAGE>
ADDITIONAL INFORMATION
----------------------
The 1999 Annual Report to Shareholders, containing financial statements
for the year ended June 30, 1999, and other information concerning the
operations of Fidelity is enclosed herewith, but is not to be regarded as proxy
soliciting material.
UPON WRITTEN REQUEST, FIDELITY FEDERAL BANCORP WILL PROVIDE WITHOUT CHARGE
TO EACH SHAREHOLDER A COPY OF FIDELITY'S ANNUAL REPORT ON FORM 10-K
WHICH IS REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED JUNE 30, 1999. ALL REQUESTS SHOULD BE ADDRESSED TO:
DEBBIE FRITZ, SHAREHOLDER RELATIONS
FIDELITY FEDERAL BANCORP
700 S. GREEN RIVER ROAD, SUITE 2000
PO BOX 5584
EVANSVILLE, INDIANA 47716-5584
OTHER MATTERS
-------------
The Annual Meeting is called for the purposes set forth in the Notice.
The Board of Directors of Fidelity does not know of any matters for action by
shareholders at the Annual Meeting other than the matters described in the
Notice. However, the enclosed Proxy will confer discretionary authority with
respect to matters which are not known to the Board of Directors at the time of
the printing hereof and which may properly come before the Annual Meeting. It is
the intention of the persons named in the Proxy to vote pursuant to the Proxy
with respect to such matters in accordance with the recommendations of the Board
of Directors.
By Order of the Board of Directors
/s/ Jack Cunningham
Jack Cunningham
Chairman
18
<PAGE>
Fidelity Federal Bancorp
Annual Meeting of Shareholders
November 17, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF FIDELITY FEDERAL BANCORP
The undersigned shareholder of Fidelity Federal Bancorp, an Indiana
corporation ("Fidelity"), hereby appoints _________________, with full power to
act alone, the true and lawful attorney-in-fact and proxy of the undersigned,
with the full power of substitution and revocation, and hereby authorizes him to
represent and to vote all shares of Common Stock of Fidelity held of record on
September 22, 1999, which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Fidelity to be held at the downtown office of United
Fidelity Bank, fsb, 18 N.W. Fourth Street, Evansville, Indiana on November 17,
1999, at 8:30 a.m., local time, and at any adjournment thereof, with all powers
the undersigned would possess if personally present as follows:
Please specify choices by clearly marking the appropriate line.
Election of Directors
- ---------------------
Nominee: Jack Cunningham
FOR the nominee listed above
---
WITHHOLD AUTHORITY to vote for the nominee listed above
---
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEE OF THE BOARD OF DIRECTORS. IF ANY OTHER BUSINESS IS PRESENTED AT THE
MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
MANAGEMENT.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears
hereon. If signing as a representative,
please include capacity.
:
-----------------------------------------------------------,
Signature of Shareholder (if jointly held)
Dated: , 1999
------------------------------------------------------
Tax Identification Number:
----------------------------------,
:
-----------------------------------------------------------,
Signature of Shareholder (if jointly held)
Dated: , 1999
------------------------------------------------------
Tax Identification Number:
----------------------------------,
