As filed with the Securities and Exchange Commission on January 12, 2001
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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FIDELITY FEDERAL BANCORP
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(Exact name of registrant as specified in its charter)
INDIANA 35-1894432
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
700 South Green River Road, Evansville, Indiana 47715
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(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Donald R. Neel, Timothy M. Harden, Esq.
Executive Vice President, John W. Tanselle, Esq.
CFO and Treasurer Krieg DeVault Alexander & Capehart, LLP
Fidelity Federal Bancorp One Indiana Square, Suite 2800
18 NW Fourth Street Indianapolis, Indiana 46204-2017
PO Box 1347 (317) 636-4341
Evansville, Indiana 47706-1347 (Copy to)
(812) 429-0921
(Name, address, including zip code,
of agent for service)
Approximate date of commencement of the proposed sale of the securities to the
public: As soon as practicable after the effective date of this Registration
Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class of Amount Proposed maximum Proposed maximum Amount of
securities to be offering price aggregate offering registration
to be registered registered per unit price fee
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<S> <C> <C> <C> <C>
Common Stock,
no par value 1,000,000 shares $1.375 $1,375,000 $383
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The proposed maximum offering price per share and in the aggregate is estimated
solely for purposes of calculating the registration fee in accordance with Rule
457(c) and is based on $1.375, which was the average of the high and low price
of the Company's Common Stock as reported by the NASDAQ SmallCap Market System
on January 10, 2001.
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The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Subject to Completion, dated _________, 2001
PROSPECTUS
FIDELITY FEDERAL BANCORP
1,000,000 shares of common stock
$_____ per share
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We are distributing, together with this prospectus, subscription rights
to purchase shares of our common stock to persons who own our common stock as of
the close of business on ___________, 2001, the record date. You will receive
__________ (_____) subscription right for each share of our common stock that
you own on the record date. Each subscription right will entitle you to purchase
one share of our common stock at the subscription price of $_____ per share.
The subscription rights are exercisable beginning on the date of this
prospectus and will expire at 5:00 p.m., Evansville, Indiana time, on
____________, 2001. If you timely exercise all of your subscription rights, you
may be entitled to exercise over-subscription privileges to purchase additional
shares of our common stock at the same subscription price, subject to the
limitations set forth in this prospectus.
We are undertaking this rights offering to raise additional capital
without diluting your ownership interests (if you exercise your subscription
rights), and without paying underwriting commissions and expenses. If you
exercise your subscription rights, you will be able to purchase shares of our
common stock without incurring broker's commissions. Directors, executive
officers and their affiliates have committed
___________________________________. Accordingly, we expect to receive proceeds
from the offering of at least $_____ million and up to $__ million, before
deducting expenses payable by us. We expect to issue at least ____________ and
up to ____________ shares of common stock in the offering.
We are not required to sell any minimum number of shares in order to
complete the rights offering. Shareholders who do not participate in the rights
offering will continue to own the same number of shares, but will own a smaller
percentage of the total shares outstanding. The subscription rights may not be
sold, transferred or assigned, and will not be listed for trading on any stock
exchange.
Shares of our common stock are currently listed for quotation on the
Nasdaq SmallCap Market under the symbol "FFED." On ____________, 2001, the
closing price of a share of our common stock on Nasdaq was $_____.
See "Risk Factors" beginning on page _____ to read about factors you
should consider before buying additional shares of our common stock.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ____________, 2001
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TABLE OF CONTENTS
Summary ...................................................................i
Questions and Answers About Fidelity Federal Bancorp...............i
Questions and Answers About the Rights Offering....................i
Risk Factors................................................................1
Risk Factors Relating to Our Common Stock..........................1
Risks Related to the Rights Offering...............................5
Special Note Regarding Forward-Looking Statements...........................7
Use of Proceeds.............................................................7
Dividend Policy.............................................................8
Price Range of Common Stock.................................................8
Capitalization..............................................................9
The Rights Offering........................................................10
Federal Income Tax Considerations..........................................17
Description of Capital Stock...............................................18
Determination of Offering Price............................................19
Plan of Distribution.......................................................20
Legal Matters..............................................................20
Experts ..................................................................20
Where You Can Find More Information........................................20
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Fidelity has not authorized any person to give you information that
differs from the information in this prospectus. You should rely solely on the
information contained in this prospectus. This prospectus is not an offer to
sell these securities, and we are not soliciting offers to buy these securities,
in any state where the offer or sale of these securities is not permitted. The
information in this prospectus is accurate only as of the date of this
prospectus, even if the prospectus is delivered to you after the prospectus
date, or you buy our common stock after the prospectus date.
Until ________, 2001, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus.
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PROSPECTUS SUMMARY
This section answers in summary form some questions you may have about Fidelity
Federal Bancorp and this rights offering. The information in this section is not
complete and does not contain all of the information that you should consider
before exercising your subscription rights. You should read the entire
prospectus carefully, including the "Risk Factors" section and the documents
listed under "Where You Can Find More Information." For convenience, references
in this prospectus to "we," "us," or "Fidelity" mean Fidelity Federal Bancorp.
QUESTIONS AND ANSWERS ABOUT FIDELITY FEDERAL BANCORP
Q: What is Fidelity Federal Bancorp?
A: Fidelity is a unitary savings and loan holding company which owns all
of the issued and outstanding stock of United Fidelity Bank, fsb, its
federally-chartered savings bank subsidiary. United Fidelity Bank
maintains four locations in Evansville, Indiana and also participates
in various real estate activities, including owning housing
developments through its wholly-owned subsidiaries.
Q: Where are we located?
A: Our principal executive offices are located at 18 NW Fourth Street,
Evansville, Indiana 47708. Our telephone number is (812) 424-0921.
Q: When were we formed?
A: We were incorporated under the laws of the State of Indiana in 1993.
United Fidelity Bank was formed in 1914.
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
Q: What is a rights offering?
A: A rights offering is an opportunity for you to purchase additional
shares of our common stock at a fixed price of $_____ per share and in
an amount proportional to your existing interest, which enables you to
maintain your current percentage ownership in Fidelity.
Q: What is a subscription right?
A: We are distributing to you, at no charge, one (1) subscription right
for every _____ shares of common stock that you owned on ____________,
2001, the record date. Each subscription right entitles you to
purchase one share of our common stock for $_____. When you "exercise"
a subscription right, that means that you choose to purchase the
common stock that the subscription right entitles you to purchase. You
may exercise any number of your subscription rights, or you may choose
not to exercise any subscription rights. Each right carries with it a
basic subscription privilege and an over-subscription privilege. You
cannot give or sell your subscription rights to anybody else; only you
can exercise them.
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Q: What is the basic subscription privilege?
A: The basic subscription privilege of each subscription right entitles
you to purchase one (1) share of our common stock at a subscription
price of $_____.
Q: What is the over-subscription privilege?
A: We do not expect that all of our shareholders will exercise all of
their basic subscription privileges. By extending over-subscription
privileges to our shareholders, we are providing for the purchase of
those shares which are not purchased through exercise of basic
subscription privileges. The over-subscription privilege entitles you,
if you fully exercise your basic subscription privilege, to subscribe
for additional shares of common stock not acquired by other holders of
rights at the same subscription price of $_____ per share. As described
below, there are limitations on your over-subscription privilege.
Q: What are the limitations on the over-subscription privilege?
A: We will issue up to 1,000,000 shares of common stock in the rights
offering. The number of shares available for over-subscription
privileges will be 1,000,000 minus the number of shares purchased upon
exercise of all basic subscription privileges. If the number of shares
available for sale pursuant to the exercise of all over-subscription
privileges is not sufficient to satisfy in full all over-subscription
privileges, the number of additional shares of our common stock that
you will be entitled to purchase if you exercise your
over-subscription privilege will be limited. In this situation, you
will be entitled to purchase upon the exercise of your
over-subscription privileges a number of shares equal to the product
of (i) the number of shares of our common stock owned by you on the
close of business on _____, 2001, divided by the total number of
shares of our common stock owned by all shareholders exercising their
over-subscription privileges on the close of business on __________
__, 2001, and (ii) the number of shares available for sale pursuant to
the exercise of all over-subscription privileges, rounded down to the
nearest whole number. However, in certain circumstances, in order to
comply with applicable state securities laws, we may not be able to
honor all over-subscription privileges even if we have shares
available.
Q: Why are we engaging in a rights offering?
A: We are undertaking this rights offering to raise additional capital
without diluting your ownership interests (if you exercise your
subscription privileges), and without paying underwriting commissions
and expenses. If you exercise your subscription privileges, you will be
able to purchase shares of our common stock without incurring broker's
commissions.
Q: What will we do with the proceeds of the rights offering?
A: We expect to use a portion of the proceeds to:
o redeem at maturity a portion of the $1.5 million in principal
amount of our 9.125% junior subordinated notes which come due in
April, 2001;
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o refinance certain letters of credit which we issued in connection
with the financing of affordable housing developments;
o to make interest payments on outstanding debt; and
o to increase the capital of United Fidelity Bank.
We may also use a portion of the proceeds to refinance other affordable
housing developments or for general corporate purposes. Although we
expect to use the proceeds in the manner discussed above, we reserve
the right to use the proceeds in any manner which we consider
appropriate.
Q: How many shares may I purchase?
A: You will receive one (1) subscription right for every _____ shares of
common stock that you owned on ____________, 2001, the record date. We
will not issue any fractional shares of common stock for the exercise
of any rights. Each subscription right entitles you to purchase one
share of common stock for $_____. If you exercise all of the
subscription rights that you receive, you may have the opportunity to
purchase additional shares of common stock. On the enclosed
subscription certificate, you may exercise your over-subscription
privilege by indicating the number of additional shares that you wish
to purchase for $_____ per share. However, we may not be able to honor
your over-subscription privilege for as many additional shares as you
request on your subscription certificate if the number of shares
available for sale pursuant to the exercise of all over-subscription
privileges is not sufficient to satisfy in full all over-subscription
privileges. Subject to state securities laws and regulations, we have
the discretion to issue less than the total number of shares that may
be available for over-subscription requests in order to comply with
state securities laws.
Q: Must all holders of rights pay the subscription price in cash?
A: All shareholders granted rights who wish to participate in the rights
offering must timely pay the subscription price by wire transfer,
certified or cashier's check drawn on a U.S. bank, or personal check
that clears before expiration of the rights.
Q: How did Fidelity arrive at the $_____ per share price?
A: We believe that this meets our objective of raising the maximum amount
of net proceeds while providing you with an opportunity to make an
additional investment in our common stock. In determining this price,
our board of directors considered several factors, including the
historic and current market price of the common stock, general
conditions in the securities market, our need for capital, alternatives
available to us for raising capital, the amount of proceeds desired,
and the need to offer shares at a price that would be attractive to our
investors relative to the then current trading price of our common
stock. We did not seek or obtain any opinion of financial advisors or
investment bankers in establishing the subscription price.
Q: How and by what date must I exercise my subscription price?
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A: You must properly complete the attached subscription certificate and
deliver it to us before 5:00 p.m., Evansville, Indiana time, on
____________, 2001. Our address, for delivery purposes, is on page
_____. Your subscription certificate must be accompanied by proper
payment for each share that you wish to purchase.
Q: What should I do if I want to participate in the rights offering but
my shares are held in the name of my broker or a custodian bank?
A: If you hold shares of Fidelity common stock through a broker, dealer or
other nominee, we will ask your broker, dealer or nominee to notify you
of the rights offering. If you wish to exercise your rights, you will
need to have your broker, dealer or nominee act for you. To indicate
your decision with respect to your rights, you should complete and
return to your broker, dealer or nominee the form entitled "Beneficial
Owner Election Form." You should receive this form from your broker,
dealer or nominee with the other rights offering materials.
Q: Has the Board of Directors made a recommendation regarding this rights
offering?
A: Our Board of Directors does not make any recommendation to you about
whether you should exercise any rights.
Q: How long will the rights offering last?
A: You will be able to exercise your subscription rights only during a
limited period. If you do not exercise your subscription rights before
5:00 p.m., Evansville, Indiana time, on ____________, 2001, your
subscription rights will expire. We may, in our discretion, decide to
extend the rights offering. In addition, if the commencement of the
rights offering is delayed, the expiration date will similarly be
extended.
Q: After I exercise my subscription rights, can I change my mind?
A: No. Once you send in your subscription certificate and payment, you
cannot revoke the exercise of your subscription rights, even if you
later learn information about us that you consider to be unfavorable.
You should not exercise your subscription rights unless you are certain
that you wish to purchase additional shares of our common stock at a
price of $_____ per share.
Q: Is exercising my subscription right risky?
A: The exercise or your subscription rights involves certain risks.
Exercising your subscription rights means buying additional shares of
our common stock, and should be carefully considered as you would view
other equity investments. Among other things, you should carefully
consider the risks described under the heading "Risk Factors,"
beginning on page 1.
Q: What happens if I choose not to exercise my subscription rights?
A: You will retain your current number of shares of common stock in
Fidelity even if you do not exercise your subscription rights.
However, if other shareholders exercise their subscription rights and
you do not, your relative percentage ownership of Fidelity will
decrease, and your
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relative voting rights and economic interests will be diluted. Because
our directors, executive officers, and their respective affiliates,
which own in the aggregate approximately 60.6% of our common stock
without giving effect to the shares that may be issued upon the
exercise of outstanding warrants and stock options, have agreed to
exercise their respective basic subscription privileges and
over-subscription privileges in the amount of $_____, your percentage
ownership in Fidelity will be reduced and your economic interest will
be diluted if you do not exercise your basic subscription privileges.
Q: Can I sell or give away my subscription rights?
A: No. Subscription rights are not transferable.
Q: Must I exercise any subscription rights?
A: No.
Q: What are the federal income tax consequences of exercising my
subscription rights?
A: The receipt and exercise of your subscription rights are intended to
be nontaxable. You should seek specific tax advice from your personal
tax advisor.
Q: When will I receive my new shares?
A: If you purchase shares of common stock through the rights offering, you
will receive shares as soon as practicable after ____________, 2001.
Subject to state securities laws and regulations, we have the
discretion to delay allocation and distribution of any shares you may
elect to purchase by exercise of your basic or over-subscription
privilege in order to comply with state securities laws.
Q: Can Fidelity cancel the rights offering?
A: Yes. Our board of directors may cancel the rights offering at any time
on or before ____________, 2001, for any reason. If we cancel the
rights offering, any money received from shareholders will be refunded
promptly, without interest.
Q: How much money will Fidelity receive from the rights offering?
A: Our gross proceeds from the rights offering will depend on the number
of shares that are purchased. If we sell all 1,000,000 shares which
may be purchased upon exercise of the rights offered by this
prospectus, then we will receive proceeds of $__ million, before
deducting expenses payable by us, estimated to be $__________. Since
our directors, executive officers, and their respective affiliates,
who currently own approximately 60.6% of our outstanding common stock,
without giving effect to the shares that may be issued upon the
exercise of outstanding warrants and stock options, have agreed to
exercise their basic subscription privileges and over-subscription
privileges in the amount of $_______, we expect to issue at least
_____ shares and to receive proceeds of at least $__________ from the
rights offering, before deducting expenses.
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Q: How many shares of common stock will be outstanding after the rights
offering?
A: The number of shares of common stock that will be outstanding after the
rights offering depends on the number of shares that are purchased. We
expect to issue at least __________ shares to Directors during this
rights offering, and if we sell all of the shares offered by this
prospectus, then we will issue 1,000,000 new shares of common stock. As
a result, we expect to have between approximately __________ and
5,607,659 shares of common stock outstanding immediately after the
rights offering.
Q: What if I have more questions?
A: If you have more questions about the rights offering, please contact
Mark A. Isaac, Vice President and Controller, at (812) 424-0921.
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RISK FACTORS
You should carefully consider the risks and uncertainties described
below and the other information in this prospectus before deciding whether to
invest in shares of our common stock. Additional risks and uncertainties not
presently known to us or that we currently deemed immaterial may also impair our
business operations. If any of the following risks identified actually occur,
our business, financial condition and operating results could be materially
adversely affected. In such case, the trading price of our common stock could
decline and you may lose part or all of your investment.
RISK FACTORS RELATING TO OUR COMMON STOCK
The success of our company, in part, is dependent upon United Fidelity Bank.
Our financial condition and results of operations are dependent upon
the successful operation of our savings bank subsidiary, United Fidelity Bank.
We do not generate sufficient income to service our indebtedness and are
dependent upon dividends, interest income and other fees and income paid to us
by United Fidelity Bank. At the present time, United Fidelity Bank is subject to
certain operating restrictions and cannot pay a dividend to us without approval
of the Office of Thrift Supervision.
United Fidelity Bank is subject to the restrictions and conditions of a
Supervisory Agreement with Office of Thrift Supervision.
United Fidelity Bank entered into a Supervisory Agreement with the OTS
on February 3, 1999, which requires it to take certain actions and restricts
certain of its operations.
If United Fidelity is unable to comply with the terms and conditions of
the Supervisory Agreement, the OTS could take additional regulatory action,
including the issuance of a cease and desist order requiring further corrective
action. Such corrective action could include, among other things, increasing the
allowance for loan and lease losses, obtaining additional or new management, and
further restrictions on dividends. Because we are dependent upon United Fidelity
Bank for our income, this could negatively impact the price of our stock and
prohibit the payment of future dividends.
We do not expect to pay cash dividends on our common stock.
We have not paid any cash dividends on our common stock since July 6,
1998 and do not anticipate paying cash dividends in the foreseeable future,
since we are dependent upon United Fidelity Bank for funds for dividends and,
under the terms of the Supervisory Agreement, United Fidelity cannot pay a
dividend to us without approval of the OTS. For the foreseeable future, we
anticipate that United Fidelity Bank will retain any earnings which it generates
or, subject to OTS approval, pay a portion of these earnings to us in order for
us to service our existing debt. If we generate any earnings, we expect that
these earnings will also be used to service our existing debt.
We may need additional funds for debt service.
We may need additional funds for servicing our debt because United
Fidelity Bank is restricted from paying dividends without prior approval of the
OTS. As of September 30, 2000 we had $2.1 million in available cash for debt
service and other needs. Debt service for calendar year 2001, net of
subordinated debt interest payments due to us from United Fidelity Bank, is
expected to be
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approximately $1.3 million. The OTS has not permitted United Fidelity Bank to
pay us dividends under the terms of the Supervisory Agreement. The OTS may agree
to allow the payment of dividends from United Fidelity Bank to us to assist in
debt service, although it has no obligation to do so and we can not and do not
offer any assurances that the OTS will do so. Also, the OTS could, if it
considers necessary for the safety and soundness of United Fidelity Bank,
prohibit the payment of dividends to us in the future.
Our accomplishments are largely dependent upon the skill and experience of our
senior management team.
The success of our business will depend upon the services of our senior
management team. Our business may suffer if we lose the services of any of these
individuals, including Bruce A. Cordingley and Donald R. Neel. We have entered
into a 3 year contract employment agreement with Mr. Neel. Mr. Cordingley's role
with Fidelity is not full time. He has no employment agreement with us, does not
receive a salary (other than board fees), and has substantial business interests
other than Fidelity. Our future success also depends on our ability to identify,
attract and retain qualified senior officers and other employees in our
identified market.
We may not continue to satisfy the requirements for continued listing of our
common stock on Nasdaq.
Our shares of common stock are traded on the Nasdaq SmallCap Market,
which has adopted rules that establish criteria for initial and continued
listing of securities. Under the Nasdaq rules for continued listing, a company
must satisfy certain requirements for continued listing on Nasdaq, including
among others a minimum bid price for the stock of $1.00. Our minimum bid was ___
in the calendar year 2001as of ____, 2001.
If we suffer substantial future losses from operations, our minimum bid
could decline below the Nasdaq listing criteria. If our common stock is delisted
by Nasdaq, trading in the common stock could thereafter be conducted on the
over-the-counter market or on an electronic bulletin board established for
securities that do not meet the Nasdaq listing requirements, which could
materially affect your ability to sell your shares in the secondary market.
Anti-takeover provisions in our charter documents may delay or prevent a
takeover of Fidelity.
Certain provisions of our charter documents may make it more difficult
for a third party to acquire control of us, even on terms that a stockholder
might consider favorable. Our amended and restated certificate of incorporation
authorizes our board of directors to issue preferred stock without stockholder
approval. The issuance of preferred stock could make it more difficult for a
third party to acquire us because the preferred stock could have dividend,
redemption, liquidation, conversion, voting or other rights that could adversely
affect the voting power or other rights of holders of our common stock. Our
board of directors does not currently have any intent to issue shares of
preferred stock.
The existence of controlling shareholders may limit your ability to influence
the outcome of matters requiring stockholder approval, could discourage
potential acquisitions of our business by third parties, and could impact the
price of our shares.
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Bruce A. Cordingley (one of our directors) and entities and individuals
affiliated with him own or control 37.6% of our issued and outstanding shares of
common stock, excluding options and warrants for the purchase of common stock.
He and his affiliates have agreed to purchase at least $__________ worth of our
common stock in the rights offering (if such shares are available pursuant to
the exercise of his subscription privilege and over-subscription privilege). Our
remaining directors, together with their respective affiliates, have agreed to
purchase at least $______ worth of our common stock in the rights offering (if
such shares are available pursuant to the exercise of their subscription
privileges and over-subscription privileges). As a result, unless all
shareholders exercise their basic subscription privileges, which we believe is
highly unlikely, Mr. Cordingley and his affiliates, and the remaining directors,
will increase their respective ownership interests in Fidelity as a result of
this rights offering. If no other shareholders exercise their subscription
rights, Mr. Cordingley and his affiliates and the remaining directors will in
aggregate own approximately ___% of our outstanding common stock.
Although we are not aware of any arrangement or understanding,
contractual or otherwise, that obligates our directors to act in concert with
respect to Fidelity, the level of stock ownership held by the directors may
allow them to elect all of their designees to the board of directors and to
control the outcome of virtually all matters submitted for a vote of our
shareholders. Either the equity interests of Mr. Cordingley and his affiliates,
or the combined equity interests of all of the directors in Fidelity, could have
the effect of delaying or preventing a change in control or otherwise
discouraging a potential acquirer from attempting to obtain control of Fidelity,
even on terms that a stockholder might consider favorable. This in turn could
harm the market price of our common stock or prevent our shareholders from
realizing a premium over the market price for their shares of common stock.
In addition, sales of a substantial amount of our common stock in the
public market, by our principal shareholders or otherwise, or the perception
that these sales may occur, could materially adversely affect the market price
of our common stock and impair our ability to raise funds in additional stock
offerings.
The existence of outstanding options could discourage potential acquisitions of
our business by third parties and could impact the price of our shares.
In May 2000 our shareholders approved a stock purchase agreement
between us and affiliates of Mr. Cordingley. Under the terms of the stock
purchase agreement, Mr. Cordingley and his affiliates have an option to purchase
from us up to $5 million worth of additional shares of common stock through May
19, 2003. For shares purchased on or prior to May 19, 2001 Mr. Cordingley and
his affiliates must pay $3.00 per share, and for shares purchased under the
terms of this option after May 19, 2001 Mr. Cordingley and his affiliates will
pay the "fair market value" of the shares, as defined in the Stock Purchase
Agreement. In addition, there currently are options outstanding to directors and
employees for 291,456 shares.
The existence of these option could have the effect of delaying or
preventing a change in control or otherwise discouraging a potential acquirer
from attempting to obtain control of Fidelity, even on terms that a stockholder
might consider favorable. This in turn could harm the market price of our common
stock or prevent our shareholders from realizing a premium over the market price
for their shares of common stock. Because our common stock has no pre-emptive
rights, this would also dilute your ownership position.
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The exercise price of the Company's outstanding options is greater than the
price of the shares in the rights offering.
The price of shares in the rights offering is less than the exercise
price per share for the Company's outstanding options; as such, the Company will
receive less for shares purchased in the rights offering by shareholders with
options than it would have received if these shareholders had purchased shares
from the Company by exercising their outstanding options at the higher exercise
price.
If this rights offering is completed, our book value per share will be reduced,
which can affect the market price of your shares.
Because the shares will be sold in the rights offering at less than the
book value of the Company, our book value per share will be reduced, which could
affect the market price of your shares.
We compete with many larger financial institutions that have far greater
financial resources than we have.
We encounter strong competition from other financial institutions
operating in our market and elsewhere. We compete with other competitors which
are larger than us and have greater financial and personnel resources than we
have. Because of this competition, we may have to pay higher rates of interest
to attract deposits. In addition, because of our smaller size, the amount we can
loan to one borrower is less than that for most of our competitors. This may
impact our ability to seek relationships with larger businesses in our market
area. Trends toward the consolidation of the banking industry and the lifting of
interstate banking and branching restrictions may make it more difficult for us
to compete effectively with large national and super-regional banking
institutions.
United Fidelity Bank's consumer loan concentration increases the risk of
defaults by our borrowers.
United Fidelity Bank makes various types of loans. Currently,
approximately 24% of our assets are comprised of consumer loans. These types of
loans are more risky than residential mortgage lending because of the impact on
these types of loans of unemployment rates and the general economy. For example,
delinquencies are typically low on these types of loans when unemployment rates
are low, and increase when unemployment rates increase. Because of this, the OTS
may require United Fidelity Bank to maintain a higher level of capital than a
similarly sized institution with a smaller exposure to this type of loan.
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RISKS RELATED TO THE RIGHTS OFFERING
If you do not participate in this rights offering or do not exercise all of your
subscription rights, you may suffer significant dilution of your percentage
ownership of our common stock.
This rights offering is designed to enable Fidelity to raise capital
while allowing all shareholders on the record date to maintain their relative
proportionate voting and economic interests. Mr. Cordingley and his affiliates,
and our remaining directors and their respective affiliates, have agreed to
purchase, if available at least $___ worth of stock in the rights offering
pursuant to the exercise their respective basic subscription privileges and
over-subscription privileges. To the extent that you do not exercise your
subscription rights and shares are purchased by other shareholders in the rights
offering, your proportionate voting interest will be reduced, and the percentage
that your original shares represent of our expanded equity after exercise of the
subscription rights will be disproportionately diluted. If no shareholders other
than Mr. Cordingley and his affiliates and the remaining directors and their
affiliates exercise their basic subscription privileges, Mr. Cordingley and his
affiliates' ownership interest in Fidelity will increase to approximately ____%
from approximately 37.6% and the ownership interest of the remaining directors
and their respective affiliates in Fidelity will increase to approximately ___%
from approximately 23.0%, and the ownership interest of the remaining
shareholders, who currently own in the aggregate approximately 39.4% of our
common stock, will decrease to approximately ___%, without giving effect to the
shares that may be issued upon the exercise of outstanding warrants and stock
options.
The price of our common stock may decline before or after the subscription
rights expire.
We cannot assure you that the public trading market price of our common
stock will not decline after you elect to exercise your subscription rights. If
that occurs, you will have committed to buy shares of common stock at a price
above the prevailing market price and you will have an immediate unrealized
loss. Moreover, we cannot assure you that following the exercise of subscription
rights you will be able to sell your shares of common stock at a price equal to
or greater than the subscription price. Until shares are delivered upon
expiration of the rights offering, you may not be able to sell the shares of our
common stock that you purchase in the rights offering. Certificates representing
shares of our common stock purchased will be delivered as soon as practicable
after expiration of the rights offering. We will not pay you interest on funds
delivered pursuant to the exercise of rights.
Once you exercise your subscription rights, you may not revoke the exercise.
Once you exercise your subscription rights, you may not revoke the
exercise, even if less than all of the shares that we are offering are actually
purchased. If we elect to withdraw or terminate the rights offering, we will
have no obligation with respect to the subscription rights except to return,
without interest, any subscription payments.
The subscription price is not an indication of the value of Fidelity.
The subscription price was set by our board of directors after
considering a variety of factors. We have neither sought nor obtained a
valuation opinion from an outside financial consultant or investment banker. The
subscription price does not necessarily bear any relationship to the book value
of our assets, past operations, cash flows, earnings, financial condition or any
other established criteria for value. You should not consider the subscription
price as an indication of the present or future value of
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Fidelity. Our board of directors has established the subscription price at
_______ to encourage all shareholders to exercise their subscription rights and
thereby raise capital without diluting the interests of current shareholders.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus, including the above risk
factors section, contains or incorporates by reference certain forward-looking
statements, within the meaning of the Private Securities Litigation Reform Act
of 1995, about our financial condition, results of operations and business that
are based on our current and future expectations. You can find many of these
statements by looking for wards such as "may," "will," "should," "expects,"
"plans," "anticipates,""believes," "estimates," "predicts," "potential," or
"continue," or the negative of such terms and other comparable terminology. Such
statements reflect our current views with respect to future events and are
subject to risks and uncertainties, including those discussed under "Risk
Factors"and elsewhere in this prospectus that could cause actual results to
differ materially from those contemplated in such forward-looking statements.
We believe it is important to communicate our expectations to our
investors. However, you are cautioned that no forward-looking statement is a
guarantee of future performance and you should not place undue reliance on these
forward-looking statements, which speak only as of the date of this prospectus.
There may be events in the future that we are not able to predict accurately or
over which we have no control. We do not undertake any obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date of this prospectus or to reflect the occurrence of
unanticipated events which may cause actual results to differ from those
expressed or implied by the forward-looking statements contained in this
prospectus.
The risk factors listed above, as well as any cautionary language in
this prospectus, provide examples of risks, uncertainties and events that may
cause our actual results to differ materially from the expectations we describe
in our forward-looking statements. Before you invest in our common stock, you
should be aware that the occurrence of the events described in these risk
factors and elsewhere in this prospectus could have a material adverse effect on
our business, operating results and financial condition.
USE OF PROCEEDS
Our net proceeds from the rights offering will depend upon the number
of shares that are purchased. If we sell all 1,000,000 shares which may be
purchased upon exercise of the rights offered by this prospectus, then we will
receive net proceeds of $___ million, before deducting expenses payable by us,
estimated to be $_____. Since our directors, executive officers, and their
affiliates, who currently own approximately 60.6% of our outstanding shares of
common stock, without giving effect to the shares that may be issued upon the
exercise of outstanding warrants and stock options, have agreed to exercise
their basic subscription privileges and over-subscription privileges in the
aggregate amount of $_____, we expect to issue at least ____ shares and to
receive proceeds of at least $______ from the rights offering, before deducting
expenses.
We expect to use a portion of the proceeds to:
o redeem at maturity a portion of the $1.5 million in principal
amount of our 9.125% junior subordinated notes which come due in
April, 2001;
o refinance certain letters of credit which we issued in connection
with the financing of affordable housing developments;
o to make interest payments on outstanding debt; and
o to increase the capital of United Fidelity Bank.
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We may also use a portion of the net proceeds to refinance affordable housing
developments or for general corporate purposes. Although we expect to use the
net proceeds in the manner discussed above, we reserve the right to use the net
proceeds in any manner which we consider appropriate.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock since July 6,
1998 and do not anticipate paying cash dividends in the foreseeable future,
since we are dependent upon United Fidelity Bank for funds for dividends and,
under the terms of the Supervisory Agreement, United Fidelity cannot pay a
dividend to us without approval of the OTS. For the foreseeable future, we
anticipate that United Fidelity Bank will retain any earnings which it generates
or, subject to OTS approval, pay a portion of these earnings to us in order for
us to service our existing debt. If we generate any earnings, we expect that
these earnings will also be used to service our existing debt. The declaration
and payment in the future of any cash dividends will be at the discretion of our
board of directors and will depend upon the earnings, capital requirements and
financial position of Fidelity, general economic conditions and other pertinent
factors.
PRICE RANGE OF COMMON STOCK
Our common stock is traded on the Nasdaq SmallCap Market under the
symbol "FFED". The following table sets forth the reported high and low bid
prices of our common stock for the periods indicated:
1998 High Low
---- --------- ---------
First Quarter $ 10 3/8 $ 8 3/4
Second Quarter 9 3/8 6 1/16
Third Quarter 61/2 31/2
Fourth Quarter 5 3 1/4
1999
----
First Quarter $ 4 $ 21/2
Second Quarter 3 7/8 2 3/4
Third Quarter 3 1/16 2 5/8
Fourth Quarter 2 7/8 1 1/4
2000
----
First Quarter $ 3 5/16 $ 1 1/4
Second Quarter 2 7/8 1 3/4
Third Quarter 2 5/8 2
Fourth Quarter 2 1/8 1 1/4
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The closing price of our common stock was $______ on ______, 2001,
the last full trading day before we publicly announced the rights offering. The
closing price of our common stock was $__________ on ____________, 2001, the
last full trading day before the date of this prospectus. We urge you to obtain
a current stock quote for our common stock.
CAPITALIZATION
The following table shows our capitalization as of September 30, 2000.
The table also shows our capitalization as adjusted for the completion of the
rights offering (including application of net proceeds from that transaction as
described on page __ under the heading "Use of Proceeds") at the subscription
price of $____ per share and assuming that all subscription rights are
exercised.
<TABLE>
<CAPTION>
September 30, 2000
-----------------------------------
Actual As Adjusted
--------------- ---------------
(dollars in thousands)
<S> <C> <C>
Borrowings
Notes payable, secured by specified
multifamily mortgages $ 2,474 $
Note Payable, secured by United stock 2,000
---------------
Junior subordinated notes, unsecured 2,970
---------------
Senior subordinated notes, unsecured 7,000
Federal Home Loan Bank advances 10,297
and other borrowings
Total Borrowings $ 24,741
Shareholders' Equity
Common Stock 4,608
Stock Warrants 11
Additional paid-in capital 13,673
Retained earnings (9,051)
Valuation Allowance for Securities (700)
--------------- ---------------
Total shareholders' equity 8,541
--------------- ---------------
Total capitalization $ $
=============== ===============
</TABLE>
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THE RIGHTS OFFERING
Before exercising any subscription rights, you should read carefully
the information set forth under "Risk Factors.
The Subscription Rights
We are distributing non-transferable subscription rights to
shareholders who owned shares of our common stock on ____________, 2001, the
record date, at no cost to the shareholders. We will give you one (1)
subscription right for each share of common stock that you owned on the record
date. Each subscription right will entitle you to purchase one share of common
stock for $____. If you wish to exercise your subscription rights, you must do
so before 5:00 p.m., ________ time, on ____________, 2001. After that date, the
subscription rights will expire and will no longer be exercisable.
Basic Subscription Privilege
Each subscription right will entitle you to receive, upon payment of
$____, one (1) share of common stock. You will receive the shares that you
purchase pursuant to your basic subscription privilege as soon as practicable
after ____________, 2001, whether you exercise your subscription rights
immediately prior to that date or earlier. You are not required to exercise any
or all of your rights unless you wish to purchase shares under your
over-subscription privilege described below, in which case you must exercise all
of your rights.
Over-Subscription Privilege
Subject to the limitations described below, each subscription right
also grants you an over-subscription privilege to purchase additional shares of
common stock that are not purchased by other shareholders. You are entitled to
exercise your over-subscription privilege only if you exercise your basic
subscription privilege in full. If you wish to exercise your over-subscription
privilege, you should indicate the number of additional shares that you would
like to purchase in the space provided on your subscription certificate.
You may not be able to purchase as many additional shares as you
requested on your subscription certificate if the number of shares available for
sale pursuant to the exercise of all over-subscription privileges is not
sufficient to satisfy in full all over-subscription privileges. If this occurs,
we will reallocate the number of additional shares of our common stock that you
will be entitled to purchase if you exercise your over-subscription privilege on
a pro rata basis with other shareholders exercising their over-subscription
privileges. You will be entitled to purchase a number of shares upon exercise of
your over-subscription privilege equal to the product of (i) the number of
shares of our common stock owned by you on the close of business on _____, 2001,
divided by the total number of shares of our common stock owned by all
shareholders exercising their over-subscription privileges on the close of
business on __________ __, 2001, and (ii) the number of shares available for
sale pursuant to the exercise of all over-subscription privileges, rounded down
to the nearest whole number. If this results in a number of shares greater than
the number of shares you requested, you will receive only the number of shares
that you requested, and the excess will be reallocated (one or more times as
necessary) among those shareholders whose subscriptions are not fully satisfied
on the same principle, until all available shares have been allocated or all
exercises of over-subscription privileges are satisfied.
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When you send in your subscription certificate, you must also send the
full purchase price for the number of additional shares that you have requested
to purchase (in addition to the payment due for shares purchased through your
basic subscription privilege). If the number of additional shares you are
eligible to purchase exceeds the number of shares you requested, you will
receive only the number of shares that you requested, and the remaining shares
will be divided among other shareholders exercising their over-subscription
privileges. In certain circumstances, however, in order to comply with
applicable state securities laws, we may not be able to honor all
over-subscription privileges even if we have shares available.
To determine if you have fully exercised your basic subscription
privilege, we will consider only the basic subscription privileges held by you
in the same capacity. For example, suppose you were granted rights to purchase
shares of Fidelity common stock you own individually and for shares of Fidelity
common stock you own jointly with your spouse. You only need to fully exercise
your basic subscription privilege with respect to your individually owned rights
in order to exercise your over-subscription privilege with respect to your
individually owned rights. You do not have to subscribe for any shares under the
basic subscription privilege owned jointly with your spouse to exercise your
individual over-subscription privilege.
When you complete the portion of the subscription certificate to
exercise the over-subscription privilege, you will be representing and
certifying that you have fully exercised your basic subscription privilege
received in respect of shares of Fidelity common stock you hold in that
capacity. You must exercise your over-subscription privilege at the same time
you exercise your basic subscription privilege in full.
If you own your shares of Fidelity common stock through your broker,
dealer or other nominee holder who will exercise your over-subscription
privilege on your behalf, the nominee holder will be required to certify to us:
o the number of shares held on ____________, 2001, the record date,
on your behalf;
o the number of rights you exercised under your basic subscription
privilege;
o that your entire basic subscription privilege held in the same
capacity has been exercised in full; and
o the number of shares of Fidelity common stock you subscribed for
pursuant to the over-subscription privilege.
Your nominee holder must also disclose to us certain other information
received from you.
If you exercised your over-subscription privilege and are allocated
less than all of the shares of Fidelity common stock for which you wished to
subscribe, the excess funds you paid for shares of Fidelity common stock that
are not allocated to you will be returned in full by mail, without interest or
deduction, as soon as practicable after the expiration date of the rights.
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Intended Purchases
Mr. Cordingley and his affiliates, and the other directors of Fidelity
and their respective affiliates, who currently own approximately 37.6% and
23.0%, respectively, of our outstanding shares of common stock, without giving
effect to the shares that may be issued upon the exercise of outstanding
warrants and stock options, have agreed to exercise their basic subscription
privileges and over-subscription privileges in the amount of at least $______.
As a result, we expect that at least ______ of the _____ shares offered in this
rights offering will be subscribed for.
No Recommendation to Rights Holders
Neither Fidelity nor its Board of Directors is making any
recommendations to you as to whether or not you should exercise your
subscription rights. You should make your decision based on your own assessment
of your best interests after reading this prospectus.
Expiration Date
The rights will expire at 5:00 p.m., _______ time, on ____________,
2001, unless we decide to extend the rights offering. If you do not exercise
your subscription rights prior to that time, your subscription rights will
expire and will no longer be exercisable. We will not be required to issue
shares of common stock to you if we receive your subscription certificate or
your payment after that time, regardless of when you sent the subscription
certificate and payment, unless you send the documents in compliance with the
guaranteed delivery procedures described below.
Withdrawal Right
Our board of directors may withdraw the rights offering in its sole
discretion at any time prior to or on ____________, 2001, for any reason
(including, without limitation, a change in the market price of our common
stock). If we withdraw the rights offering, any funds you paid will be promptly
refunded, without interest or penalty.
Determination of Subscription Price
We computed the price at which a share of stock could be purchased in
the rights offering by _________________________________________. Our board of
directors chose the $____ per share subscription price after considering a
variety of factors, including the following:
- the historic and current market price of the common stock;
- our need for capital;
- alternatives available to us for raising capital;
- the amount of proceeds desired; and
- the book value of our stock.
The $____ per share subscription price should not be considered an
indication of the actual value of Fidelity or of our common stock. We cannot
assure you that the market price of the common stock will not decline during or
after the rights offering. We also cannot assure you that you will be able to
sell shares of common stock purchased during the rights offering at a price
equal to or greater than $___ per share. We urge you to obtain a current quote
for our common stock before exercising your rights.
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Transferability of Subscription Rights
Both the basic subscription privileges and over-subscription privileges
are non-transferable and non-assignable. Only you may exercise these
subscription rights.
Exercise of Subscription Privileges
You may exercise your subscription privileges by delivering to us on or
prior to ____________, 2001:
- A properly completed and duly executed subscription certificate;
- Any required signature guarantees; and
- Payment in full of $_____ per share for the shares of common
stock subscribed for by exercising your basic subscription
privileges and, if desired, your over-subscription privileges.
You should deliver your subscription certificate and payment to us at
the address shown on page ___. We will not pay you interest on funds delivered
to us pursuant to the exercise of rights.
Method of Payment
Payment for the shares must be made in United States dollars and may be
made by bank certified check or cashier's check drawn upon a United States bank
or a postal, telegraphic or express money order payable to the order of Fidelity
Federal Bancorp. Payment for basic subscription privileges and over-subscription
privileges may also be effected through wire transfer as follows:
Bank Name:
Address:
ABA#:
Account #:
Account Name:
We will consider payment to have been received only upon:
o actual receipt of any certified check or cashier's check drawn
upon a U.S. bank or of any postal, telegraphic or express money
order;
o actual receipt of any funds transferred by wire transfer; or
o actual receipt of any funds through an alternative payment method
which we may approve.
Guaranteed Delivery Procedures
If you want to exercise your subscription rights, but time will not
permit your subscription certificate to reach us on or prior to ____________,
2001, you may exercise your subscription rights if you satisfy the following
guaranteed delivery procedures:
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(1) You send, and we receive, payment in full for each share of
common stock being subscribed for through the basic
subscription privilege and the over-subscription privilege, on
or prior to ____________, 2001;
(2) You send, and we receive, on or prior to ____________, 2001, a
notice of guaranteed delivery, substantially in the form
provided to you with your subscription certificate, from a
member firm of a registered national securities exchange or a
member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office
or correspondent in the United States. The notice of
guaranteed delivery must state your name, the number of
subscription rights that you hold, the number of shares of
common stock that you wish to purchase pursuant to the basic
subscription privilege and the number of shares, if any, you
wish to purchase pursuant to the over-subscription privilege.
The notice of guaranteed delivery must guarantee the delivery
of your subscription certificate to us within three Nasdaq
National Market trading days following the date of the notice
of guaranteed delivery; and
(3) You send, and we receive, your properly completed and duly
executed subscription certificate, including any required
signature guarantees, within three Nasdaq National Market
trading days following the date of your notice of guaranteed
delivery. The notice of guaranteed delivery may be delivered
to us in the same manner as your subscription certificate at
the addresses set forth on page ____, or may be transmitted to
us by facsimile transmission, to facsimile number (812) 421 -
2931, Attention: Mark A. Isaac, Vice President. You can obtain
additional copies of the form of notice of guaranteed delivery
by requesting them from us at the address set forth on page
______.
Signature Guarantee
Signatures on the subscription certificate do not need to be guaranteed
if either the subscription certificate provides that the shares of common stock
to be purchased are to be delivered directly to the record owner of such
subscription rights, or the subscription certificate is submitted for the
account of a member firm of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc., or a commercial
bank or trust company having an office or correspondent in the United States. If
a signature guarantee is required, signatures on the subscription certificate
must be guaranteed by an Eligible Guarantor Institution, as defined in Rule
l7Ad-15 of the Securities Exchange Act of 1934, as amended, subject to the
standards and procedures adopted by us. Eligible Guarantor Institutions include
banks, brokers, dealers, credit unions, national securities exchanges and
savings associations.
Notice to Beneficial Holders
If you are a broker, a trustee or a depositary for securities who holds
shares of Fidelity common stock for the account of others as a nominee holder,
you should notify the respective beneficial owners of such shares of the
issuance of the rights as soon as possible to find out such beneficial owners'
intentions. You should obtain instructions from the beneficial owner with
respect to the rights, as set forth in the instructions we have provided to you
for your distribution to beneficial owners. If the beneficial owner so
instructs, you should complete the appropriate subscription certificates and, in
the
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case of the over-subscription privilege, the related nominee holder
certification, and submit them to the Subscription Agent with the proper
payment. A nominee holder that holds shares for the account(s) of more than one
beneficial owner may exercise the number of rights to which all such beneficial
owners in the aggregate otherwise would have been entitled if they had been
direct record holders of Fidelity common stock on the record date, so long as
the nominee submits the appropriate subscription certificates and certifications
and proper payment to the Subscription Agent.
Beneficial Owners
If you are a beneficial owner of shares of Fidelity common stock or
rights that you hold through a nominee holder, we will ask your broker, dealer
or other nominee to notify you of this rights offering. If you wish to exercise
your rights, you will need to have your broker, dealer or other nominee act for
you. To indicate your decision with respect to your rights, you should complete
and return to your broker, dealer or other nominee the form entitled "Beneficial
Owner Election Form." You should receive this form from your broker, custodian
bank or other nominee with the other rights offering materials.
Ambiguities in Exercise of Subscription Rights
If you do not specify the number of subscription rights being exercised
on your subscription certificate, or if your payment is not sufficient to pay
the total purchase price for all of the shares that you indicated you wished to
purchase, you will be deemed to have exercised the maximum number of
subscription rights that could be exercised for the amount of the payment that
the Subscription Agent receives from you. If your payment exceeds the total
purchase price for all of the subscription rights shown on your subscription
certificate, your payment will be applied, until depleted, to subscribe for
shares of common stock in the following order:
(1) to subscribe for the number of shares, if any, that you
indicated on the subscription certificate that you wished to
purchase through your basic subscription privilege, until your
basic subscription privilege has been fully exercised; and
(2) to subscribe for additional shares of common stock pursuant to
the over-subscription privilege (subject to any applicable
limitation).
Any excess payment remaining after the foregoing allocation will be returned to
you as soon as practicable by mail, without interest or deduction.
Regulatory Limitation
We will not be required to issue you shares of common stock pursuant to
the rights offering if, in our opinion, you would be required to obtain prior
clearance or approval from any state or federal regulatory authorities to own or
control such shares if, at the time the subscription rights expire, you have not
obtained such clearance or approval.
State and Foreign Securities Laws
The rights offering is not being made in any state or other
jurisdiction in which it is unlawful to do so, nor are we selling or accepting
any offers to purchase any shares of common stock to you if you
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are a resident of any such state or other jurisdiction. We may delay the
commencement of the rights offering in certain states or other jurisdictions in
order to comply with the securities law requirements of such states or other
jurisdictions. It is not anticipated that there will be any changes in the terms
of the rights offering. In our sole discretion, we may decline to make
modifications to the terms of the rights offering requested by certain states or
other jurisdictions, in which case shareholders who live in those states or
jurisdictions will not be eligible to participate in the rights offering.
Our Decision Binding on You
All questions concerning the timeliness, validity, form and eligibility
of any exercise of subscription rights will be determined by us, and our
determinations will be final and binding. In our sole discretion, we may waive
any defect or irregularity, or permit a defect or irregularity to be corrected
within such time as we may determine, or reject the purported exercise of any
subscription right by reason of any defect or irregularity in such exercise.
Subscriptions will not be deemed to have been received or accepted until all
irregularities have been waived or cured within such time as we determine in our
sole discretion. We will be under no duty to notify you of any defect or
irregularity in connection with the submission of a subscription certificate or
incur any liability for failure to give such notification.
No Revocation of Exercise of Subscription Right
After you have exercised your basic subscription privilege or
over-subscription privilege, you may not revoke that exercise. You should not
exercise your subscription rights unless you are certain that you wish to
purchase additional shares of our common stock.
Shares of Common Stock Outstanding after the Rights Offering
Assuming we issue all of the shares of common stock offered in the
rights offering, approximately 5,607,659 shares of common stock will be issued
and outstanding. This would represent a 21.7% increase in the number of
outstanding shares of common stock. If you do not exercise your basic
subscription rights, the percentage of common stock that you hold will decrease
if shares are purchased by other shareholders in the rights offering.
Fees and Expenses
You are responsible for paying any commissions, fees, taxes or other
expenses incurred in connection with the exercise of the subscription rights. We
will not pay such expenses.
If You Have Questions
If you have questions or need assistance concerning the procedure for
exercising subscription rights or if you would like additional copies of this
prospectus, the instructions, or forms for use in connection with the rights
offering, you should contact Deb Fritz, Assistant Vice President, Shareholder
Relations, of Fidelity, at:
Fidelity Federal Bancorp
18 NW Fourth Street, PO Box 1347
Evansville, Indiana 47706-1347
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Telephone: (812) 429-0550 (extension 2226)
(800) 280-8280 (extension 2226)
IMPORTANT: Please carefully read the instructions accompanying the
subscription certificate and follow those instructions in detail. You are
responsible for choosing the payment and delivery method for your subscription
certificate, and you bear the risks associated with such delivery. If you choose
to deliver your subscription certificate and payment by mail, we recommend that
you use registered mail, properly insured, with return receipt requested. We
also recommend that you allow a sufficient number of days to ensure delivery to
us prior to ____________, 2001.
FEDERAL INCOME TAX CONSIDERATIONS
The following summarizes the material federal income tax considerations
of the rights offering to you and Fidelity. This summary is based on the
Internal Revenue Code of 1986, as amended, the Treasury regulations thereunder,
judicial authority and administrative rulings and practice, all of which are
subject to change at any time, possibly with retroactive effect. This summary
may not address federal income tax consequences applicable to shareholders
subject to special treatment under federal income tax law, such as financial
institutions, broker-dealers, life insurance companies or traders in securities
that elect to mark to market. Also, this discussion does not address applicable
tax consequences if you hold our common stock as part of a hedging, straddle,
constructive sale, conversion or other risk reduction transaction. In addition,
this summary does not address the tax consequences of the rights offering under
applicable state, local or foreign tax laws. This discussion assumes that your
shares of common stock and the subscription rights and shares issued to you
during the rights offering constitute capital assets (generally, property held
for investment) for federal income tax purposes.
Receipt and exercise of the subscription rights distributed pursuant to
the rights offering is intended to be nontaxable to shareholders, and the
following summary assumes you will qualify for such nontaxable treatment. If,
however, the rights offering does not qualify as nontaxable, you would be
treated as receiving a taxable distribution equal to the fair market value of
the subscription rights on their distribution date. The distribution would be
taxed as a dividend to the extent made out of Fidelity's current or accumulated
earnings and profits; any excess would be treated first as a return of your
basis (investment) in your Fidelity stock and then as a capital gain. Expiration
of the subscription rights would result in a capital loss.
You should consult your tax advisor to determine the tax consequences
to you of the rights offering in light of your particular circumstances,
including any state, local and foreign tax consequences.
Taxation of Shareholders
Receipt of a Subscription Right. You will not recognize any gain or
other income upon receipt of a subscription right.
Tax Basis and Holding Period of Subscription Rights. Your tax basis in
each subscription right will effectively depend on whether you exercise the
subscription right or allow the subscription right to expire.
If you exercise a subscription right, your tax basis in the
subscription right will be determined by allocating the tax basis of your common
stock on which the subscription right is distributed between the
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common stock and the subscription right, in proportion to their relative fair
market values on the date of distribution of the subscription right. However, if
the fair market value of your subscription rights is less than 15% of the fair
market value of your existing shares of common stock, then the tax basis of each
subscription right will be deemed to be zero, unless you elect, by attaching an
election statement to your federal income tax return for the taxable year in
which you receive the subscription rights, to allocate tax basis to your
subscription rights.
If you allow a subscription right to expire, it will be treated as
having no tax basis.
Your holding period for a subscription right will include your holding
period for the shares of common stock upon which the subscription right is
issued.
Expiration of Subscription Rights. You will not recognize any loss upon
the expiration of a subscription right.
Exercise of Subscription Rights. You generally will not recognize a
gain or loss on the exercise of a subscription right. The tax basis of any share
of common stock that you purchase through the rights offering will be equal to
the sum of your tax basis (if any) in the subscription right exercised and the
price paid for the share. The holding period of the shares of common stock
purchased through the rights offering will begin on the date that you exercise
your subscription rights.
Sale or Exchange of Shares Acquired Upon Exercise of Subscription Rights
If you sell or exchange shares of Fidelity common stock, you will
generally recognize gain or loss on the transaction. The gain or loss you
recognize is equal to the difference between the amount you realize on the
transaction and your basis in the shares you sold. Such gain or loss generally
will be capital gain or loss so long as you held the shares as a capital asset
at the time of the sale or exchange. Gain or loss from an asset held for more
than one year will generally be taxable as long-term capital gain or loss. If
you are an individual, any long-term capital gain is generally taxed at a
maximum federal income tax rate of 20%.
Taxation of Fidelity
We will not recognize any gain, other income or loss upon the issuance
of the subscription rights, the lapse of the subscription rights, or the receipt
of payment for shares of common stock upon exercise of the subscription rights.
DESCRIPTION OF CAPITAL STOCK
The following is a summary of the terms of our capital stock and
highlights some of the provisions of our amended and restated certificate of
incorporation and bylaws. Since we are only providing a general summary of
certain terms of our amended and restated certificate of incorporation and
bylaws, you should only rely on the actual provisions of the amended and
restated certificate of incorporation or the bylaws. If you would like to read
the certificate of incorporation or bylaws, they are on file with the Securities
and Exchange Commission.
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<PAGE>
Authorized and Outstanding Capital Stock
Our authorized capital stock consists of 15,000,000 shares of common
stock, no par value, and 5,000,000 shares of preferred stock. As of September
30, 2000, there were 4,607,659shares of common stock outstanding and
approximately 492 beneficial holders of common stock of record. All outstanding
shares of common stock are fully paid and non-assessable. We have two issues of
outstanding warrants to purchase 18,282 and 9,471 shares of our common stock at
a price of $6.22 and $8.93 per share, respectively. The warrants expire on April
30, 2004 and January 31, 2005, respectively. The warrants may be exercised in
whole or in part at any time prior to expiration. Fidelity has reserved 27,753
shares of common stock for the possible exercise of these warrants. None of the
warrants have been exercised as of September 30, 2000. As of September 30, 2000,
we also had outstanding, under our stock option plans, options to purchase
291,456 shares of our common stock. All of the options have an exercise price in
excess of $2.88 per share. We have reserved 291,456 shares of common stock for
the possible exercise of options under these option plans.
Common Stock
The holders of common stock are entitled to dividends in such amounts
and at such times as may be declared by the board of directors out of funds
legally available therefor. Holders of common stock are entitled to one vote per
share for the election of directors and other corporate matters. Such holders
are not entitled to vote cumulatively for the election of directors. In the
event of liquidation, dissolution or winding up of Fidelity, holders of common
stock would be entitled to share ratably in all of our assets available for
distribution to the holders of common stock. The common stock carries no
preemptive rights. All outstanding shares of common stock are, and the shares of
common stock to be sold by Fidelity in the rights offering when issued will be,
duly authorized, validly issued, fully paid and non-assessable.
Preferred Stock
Our board of directors is authorized to issue from time to time,
without stockholder authorization, in one or more designated series, shares of
preferred stock with such dividend, redemption, conversion and exchange
provisions as are provided in the particular series. The issuance of preferred
stock could have the effect of delaying or preventing a change in control of
Fidelity. Your rights as a holder of our common stock may be affected by any
preferred stock that we may issue. Our board of directors has no present plans
to issue any preferred stock.
Transfer Agent
We act as our own transfer agent for the common stock.
DETERMINATION OF OFFERING PRICE
Our board of directors decided to set a $____ per share subscription
price after considering a variety of factors described elsewhere in this
prospectus. The $____ per share price should not be considered an indication of
the actual value of Fidelity or of our common stock. We cannot assure you that
the market price of the common stock will not decline during or after the rights
offering. We also cannot assure you that you will be able to sell shares of
common stock purchased during the rights offering at a price equal to or greater
than $_____ per share. We have neither sought, nor obtained, any valuation
opinion from outside financial advisors or investment bankers.
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PLAN OF DISTRIBUTION
On or about ____________, 2001, we will distribute the subscription
rights, subscription certificates and copies of this prospectus to individuals
who owned shares of common stock on ____________, 2001. We have not employed any
brokers, dealers or underwriters in connection with the rights offering and will
not pay any underwriting commissions, fees or discounts in connection with the
rights offering. Certain of our directors or officers may assist in the rights
offering. These individuals will not receive any commissions or compensation
other than their normal directors' fees or employment compensation and will not
register with the Securities and Exchange Commission as brokers in reliance on
certain safe harbor provisions contained in Rule 3a4-1 under the Exchange Act.
If you wish to exercise your subscription rights and purchase shares of
common stock, you should complete the subscription certificate and return it
with payment for the shares, to us, at the address on page ___. If you have any
questions, you should contact Deb Fritz, Assistant Vice President, Shareholder
Relations, of Fidelity at:
Fidelity Federal Bancorp
18 NW Fourth Street, PO Box 1347
Evansville, Indiana 47706-1347
Telephone: (812) 429-0550 (extension 2226)
(800) 280-8280 (extension 2226).
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus
will be passed upon for us by Krieg DeVault Alexander & Capehart, LLP,
Indianapolis, Indiana.
EXPERTS
Olive LLP, independent auditors, have audited our financial statements
and schedule included in our Annual Report on Form 10-K for the year ended
December 31, 1999, as set forth in their report, which is incorporated by
reference into this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Olive LLP's
report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3, which
registers the securities that we are offering under this prospectus. The
registration statement, including the attached exhibits and schedules, contains
additional relevant information about us and the securities offered. The rules
and regulations of the SEC allow us to omit certain information included in the
registration statement from this prospectus.
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act of 1934. You
may read and copy this information at the following locations of the SEC:
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Judiciary Plaza
Public Referral Room
450 Fifth Street, NW
Washington, D.C. 20549
Seven World Trade Center
13th Floor
New York, New York 10048
Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60661
You may also obtain copies of this information by mail from the Public
Reference Room of the SEC, 450 Fifth Street, NW, Washington, D.C. 20549, at
prescribed rates. You may obtain information on the operation of the Public
Reference Room by calling the SEC at (800) SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, like us, who file
electronically with the SEC. The address of that site is http://www.sec.gov.
The SEC allows us to incorporate by reference information into this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be part of this prospectus, except
for any information that is superseded by subsequent incorporated documents or
by information that is included directly in this prospectus. Our descriptions in
this prospectus concerning the contents of any contract, agreement or document
are not necessarily complete. For those contracts, agreements or documents that
we filed as exhibits to the registration statement, you should read the exhibit
for a more complete understanding of the document or subject matter involved.
This prospectus includes by reference the documents listed below that
we previously have filed with the SEC and that are not delivered with this
document. They contain important information about Fidelity and its financial
condition.
Filing Date Filed
------ ----------
Current Report on Form 8-K January 5, 2000
Annual Report on Form 10-K for the year March 30, 2000
ended December 31, 1999
Amended Annual Report on Form 10-K for April 4, 2000
the year ended December 31, 1999
Proxy Statement on Schedule 14A April 20, 2000
Quarterly Report on Form 10-Q for the May 15, 2000
quarter ended March 31, 2000
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<PAGE>
Filing Date Filed
------ ----------
Current Report on Form 8-K May 24, 2000
Quarterly Report on Form 10-Q for the August 14, 2000
quarter ended June 30, 2000
Current Report on Form 8-K October 5, 2000
Quarterly Report on Form 10-Q for the November 14, 2000
quarter ended September 30, 2000
Our SEC file number is 0-22880.
We incorporate by reference additional documents that we may file with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended, between the date of this prospectus and the termination of
the offering of securities under this prospectus. These documents include our
periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and Current Reports on Form 8-K, as well as our proxy statements.
You may obtain any of these incorporated documents from us without
charge, excluding any exhibits to those documents unless the exhibit is
specifically incorporated by reference in such document. You may obtain
documents incorporated by reference in this prospectus by requesting them from
us in writing or by telephone at the following address:
Fidelity Federal Bancorp
18 NW Fourth Street
PO Box 1347
Evansville, Indiana 47706-1347
Attention: Mark A. Isaac, Vice President
Telephone: (812) 429 - 0921.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
-------- -------------------------------------------
The following are actual or estimated expenses incurred or to be
incurred by the Company in connection with this offering:
Fees Amount
---- ------
Filing Fee $ 383
Printing Expenses 2,000*
Legal Fees, Blue Sky Fees and Expenses 20,000*
Accounting Fees and Expenses 3,000*
Miscellaneous Expenses 500*
--------
Total $25,883
*Estimated.
Item 15. Indemnification of Directors and Officers.
------- -----------------------------------------
The Company's Articles of Incorporation provide that the Company will
indemnify any person who is or was a director or officer of the Company or of
any other corporation for which such director or officer is or was serving in
any capacity at the request of the Company against all liability and expense
that may be incurred in connection with any claim, action, suit or proceeding
with respect to which such director or officer is wholly successful or acted in
good faith in a manner such director or officer reasonably believed to be in, or
not opposed to, the best interests of the Company or such other corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe that such conduct was unlawful. A director or officer of the Company is
entitled to be indemnified as a matter of right with respect to those claims,
actions, suits or proceedings in which such director or officer has been wholly
successful. In all other cases, such director or officer, shall be entitled to
indemnification as a matter of right unless (i) the director or officer has
breached or failed to perform the person's duties in compliance with the
standard of conduct set forth above and (ii) such breach of failure to perform
constituted willful misconduct or recklessness as determined by the Board of
Directors of the Company, a committee of the Board of Directors, independent
legal counsel, or a committee of disinterested persons selected by the Board of
Directors. The foregoing is a summary of detailed provisions for indemnification
found at Article VI, Section 2 of the Articles of Incorporation of the Company
which are incorporated by reference into this Registration Statement as Exhibit
4(a).
<PAGE>
Item 16. Exhibits. The following exhibits are filed as part of this
-------- -------- Registration Statement:
Exhibit Number Exhibit
-------------- -------
4.1 Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3(a) of the Company's Annual Report on Form
10-K [Commission File No. 0-22880] for the year ended June 30,
1995) and Articles of Amendment.
4.2 By-Laws of the Company
5 Opinion of Krieg DeVault Alexander & Capehart, LLP re: legality
23.1 Consent of Krieg DeVault Alexander & Capehart, LLP (included in
Exhibit 5)
23.2 Consent of Olive LLP
24 Powers of Attorney (included in Signature Page)
99.1(a) Shareholder Rights Agreement
99.1(b) Instructions for Use of Shareholders Rights Agreement
99.2 Notice of Guaranteed Delivery
99.3 Letter to Record Holders
99.4 Letter to Beneficial Holders
99.5 Letter to Clients of Beneficial Holders
99.6 Beneficial Owner Election Form
99.7 Nominee Holder Certification
99.8 Substitute Form W-9
Item 17. Undertakings.
-------- ------------
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
<PAGE>
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURE PAGE
--------------
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Evansville, State of Indiana, on November 15,
2000.
FIDELITY FEDERAL BANCORP
By: /S/ DONALD R. NEEL
-------------------------
Donald R. Neel, Executive Vice President
and Chief Financial Officer
POWER OF ATTORNEY
-----------------
Each person signing below hereby makes, constitutes and appoints Bruce A.
Cordingley and Donald R. Neel, and each of them, his true and lawful
attorneys-in-fact to execute and file any and all amendments (including
post-effective amendments) to this Registration Statement on Form S-3 as such
attorney in-fact may deem appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated below as of November 15, 2000.
By /S/ BRUCE A. CORDINGLEY
----------------------------------------
Bruce A. Cordingley Director,
Chair of the Executive Committee
and Acting Principal Executive Officer
By /S/ DONALD R. NEEL
----------------------------------------
Donald R. Neel Director,
Executive Vice President, Treasurer and Chief
Financial Officer (Principal Accounting
Officer)
By /S/ CURT J. ANGERMEIER
----------------------------------------
Curt J. Angermeier Director
By /S/ WILLIAM R. BAUGH
----------------------------------------
William R. Baugh Director
By /S/ JACK CUNNINGHAM
----------------------------------------
Jack Cunningham Director and
Chairman of the Board
By
----------------------------------------
M. Brian Davis Director
By /S/ GERALD K. PEDIGO
----------------------------------------
Gerald K. Pedigo Director
By /S/ BARRY A. SCHNAKENBURG
----------------------------------------
Barry A. Schnakenburg Director
By /S/ PHILLIP J. STOFFREGEN
----------------------------------------
Phillip J. Stoffregen Director
