-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FbdZ/O1u7rBtJr8iREKFhuTZ52ecb9oXPzeK5lOcqJvevLePZ7sJYV5rIcW68ffD +Wx7Y4fmYwx/+AI7j3PL5A== 0000926274-01-500295.txt : 20020413 0000926274-01-500295.hdr.sgml : 20020413 ACCESSION NUMBER: 0000926274-01-500295 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20011228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIDELITY FEDERAL BANCORP CENTRAL INDEX KEY: 0000910492 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 351894432 STATE OF INCORPORATION: IN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-73564 FILM NUMBER: 1825433 BUSINESS ADDRESS: STREET 1: 700 S GREEN RIVER ROAD STREET 2: SUITE 2000 CITY: EVANSVILLE STATE: IN ZIP: 47715 BUSINESS PHONE: 8124692100 MAIL ADDRESS: STREET 1: 18 NW FOURTH ST STREET 2: PO BOX 1347 CITY: EVANSVILLE STATE: IN ZIP: 47706-1347 S-3/A 1 ffb-s3a.txt As filed with the Securities and Exchange Commission on December 28, 2001 Registration No. 333-73564 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 FIDELITY FEDERAL BANCORP - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) INDIANA 35-1894432 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 18 N.W. Fourth Street, Evansville, Indiana 47706-1347 - -------------------------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Donald R. Neel, President, Chief Financial Timothy M. Harden, Esq. Officer and Treasurer John W. Tanselle, Esq. Fidelity Federal Bancorp Krieg DeVault LLP 18 NW Fourth Street One Indiana Square, Suite 2800 PO Box 1347 Indianapolis, Indiana 46204-2079 Evansville, Indiana 47706-1347 (317) 636-4341 (812) 424-0921 (Copy to) (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. [X] 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. [ ] 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. Prospectus FIDELITY FEDERAL BANCORP 9.00% JUNIOR SUBORDINATED NOTES DUE FEBRUARY 28, 2009 WARRANTS FOR 500,000 SHARES OF COMMON STOCK MATERIAL TERMS OF THE RIGHTS OFFERING We are distributing subscription rights to persons who own our common stock as of the close of business on December 19, 2001 to purchase $1,500,000 principal amount of our 9.00% unsecured junior subordinated notes due February 28, 2009 and 500,000 warrants representing the right to purchase 500,000 shares of our common stock. The subscription rights for the notes and the warrants are exercisable beginning on the date of this prospectus and will expire at 5:00 p.m., Central time, on February 28, 2002. You will receive one basic subscription right, rounded down to the nearest whole number, for every 3,991 shares of our common stock that you own on the close of business on December 19, 2001, the record date. Each basic subscription right will entitle you to purchase $1,000 principal amount of the notes. For each $1,000 principal amount of notes purchased, you will also receive warrant subscription rights to purchase up to 333 1/3 warrants, rounded down to the nearest whole number, at the price of $0.50 per warrant. Each warrant represents the right of the holder to purchase one share of common stock of Fidelity Federal at $3.00 per share, less the purchase price of the warrant. To the extent that you do not have a sufficient amount of shares to otherwise receive a basic subscription right, you will still receive one basic subscription right to subscribe for the purchase of a note in the minimum $1,000 principal issuance amount. The basic subscription right and the warrant subscription right also include the right to over-subscribe, subject to availability and proration, for additional notes or warrants if not all of the notes or the warrants offered are purchased pursuant to the basic and warrant subscription rights. MATERIAL TERMS OF THE NOTES Interest on the notes accrues at the rate of 9.00% per year, based upon a 360-day year, and is payable in cash or by check every March 1 and September 1, with the first payment on September 1, 2002. The notes will mature on February 28, 2009. We have the option to redeem the notes in whole or in part at any time after March 1, 2002 and prior to maturity. The redemption price will be equal to the principal amount of the note being redeemed, plus accrued but unpaid interest. If we redeem the notes between March 1, 2002 and March 1, 2004, we also will pay a redemption premium. The notes are unsecured, junior subordinated obligations of Fidelity Federal. MATERIAL TERMS OF THE WARRANTS You will receive 333 1/3 warrant subscription rights, rounded to the nearest whole number, for each $1,000 in principal amount of the notes purchased. Each warrant subscription right entitles you to purchase one warrant at the price of $0.50 per warrant. Each warrant represents the right to purchase one share of our common stock, subject to adjustment. Each warrant is exercisable at the holder's option at any time prior to February 28, 2012, at the exercise price of $3.00 per share, subject to adjustment, less the $0.50 purchase price of the warrant. The exercise price will be payable at the holder's option in cash or by surrender of any notes purchased in this rights offering, at their face amount plus any accrued interest. Shares of our common stock are currently listed for quotation on the Nasdaq SmallCap Market under the symbol "FFED." On December 27, 2001, the closing price of a share of our common stock on Nasdaq was $2.26. -------------------------------------------- None of the notes, warrants, or the common stock are savings or deposit accounts or other obligations of United Fidelity Bank or any non-bank affiliate of Fidelity Federal and they are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. -------------------------------------------- See "Risk Factors" beginning on page 1 to read about factors you should consider before exercising your subscription privileges to purchase notes or warrants. -------------------------------------------- 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 December 28, 2001
Table of Contents Prospectus Summary...................................................................................................i Questions and Answers About Fidelity Federal Bancorp........................................................i Questions and Answers About the Rights Offering...........................................................iii Risk Factors.......................................................................................................-1- Risk Factors Relating to the Rights Offering, the Notes, the Warrants and the Underlying Common Stock............................................................................................-1- Risk Factors Relating to Fidelity Federal.................................................................-5- Special Note Regarding Forward-Looking Statements..................................................................-7- We Are Subject to a Supervisory Agreement with the Office of Thrift Supervision....................................-7- Use of Proceeds....................................................................................................-9- We Do Not Anticipate Paying Dividends..............................................................................-9- Price Range of Common Stock.......................................................................................-10- Capitalization....................................................................................................-11- The Rights Offering...............................................................................................-12- Material Federal Income Tax Considerations........................................................................-18- Description of the Notes..........................................................................................-20- Description of the Warrants.......................................................................................-22- Description of Capital Stock......................................................................................-22- Plan of Distribution..............................................................................................-23- Legal Matters.....................................................................................................-24- Experts .........................................................................................................-24- Where You Can Find More Information...............................................................................-24-
-------------------------------------------- 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 February 6, 2002, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. Prospectus Summary This section answers in summary form some questions you may have about Fidelity Federal Bancorp and this rights offering and highlights some of the information in this prospectus. Because this section is a summary, it 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." Questions and Answers About Fidelity Federal Bancorp Q: What is Fidelity Federal Bancorp? A: Fidelity is a 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 one in Newburgh, Indiana and also participates in various real estate activities. 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. Q: When did we last raise capital? A: We last raised capital in November 2001. In that month, we closed our previous rights offering of our common stock to our shareholders. In that offering, we sold 379,353 shares, and raised total proceeds, after expenses, of approximately $888,000. We also raised approximately $1.5 million in June 2001 in a rights offering in which we offered and sold 1,000,000 shares. Q: What recent financial or operational challenges face us? A: In February 1999, United Fidelity Bank entered into a supervisory agreement with its regulator, the Office of Thrift Supervision, because of the then-deteriorating capital and financial condition of United Fidelity Bank and Fidelity. This deterioration was caused primarily by: o dwindling cash reserves at Fidelity; o low net interest margins; o a high level of debt at Fidelity which required debt service; o high non-interest expenses; and o a decline in the quality of United and Fidelity's multifamily housing loan and letter of credit portfolio. These factors caused significant losses and reductions of capital in 1998 and 1999. The majority of the multifamily housing portfolio consisted of letters of credit which backed bonds issued by i governmental authorities. Some of these letters of credit were issued by Fidelity and had fixed expiration dates. If the bonds were not successfully re-sold at these maturity dates, Fidelity would have been required to fund the letters of credit. The total letters of credit significantly exceeded the amount of Fidelity's available cash, creating, when coupled with the inability of United Fidelity Bank to pay dividends, significant liquidity risk for Fidelity. The letters of credit issued by United Fidelity Bank were collateralized in favor of the Federal Home Loan Bank by mortgage loans originated by United Fidelity Bank. The use of these mortgage loans as collateral substantially reduced the ability of United Fidelity Bank to borrow funds from the Federal Home Loan Bank in the event a liquidity shortfall occurred at United. In January 2000, United Fidelity Bank and Fidelity adopted a plan to substantially reduce its expenses, reduce Fidelity's high level of debt outstanding, and increase its net interest margin. At that point, United Fidelity Bank had accumulated approximately 15% of its total assets in cash and cash equivalents, significantly improving its liquidity position. In May 2000, Fidelity raised $3 million by issuing one million shares of common stock to Pedcor Investments, a limited liability company, and changed top management of United Fidelity Bank. In addition to the cash received for shares, Pedcor also agreed to provide $1.5 million in operating deficit guarantees on a portion of Fidelity and United Fidelity Bank's multifamily housing portfolio, and to manage that portion of the portfolio, in exchange for 460,000 shares of Fidelity common stock. As a part of this transaction, Fidelity also changed the management of Village Housing Corporation, a subsidiary of United Fidelity that owns general partnership interests in a portion of the multifamily housing portfolio. Village Housing's new management has obtained commitments for and completed alternative sources of financing for a significant portion of the portfolio. This refinancing has reduced the level of classified assets and letters of credit for United Fidelity Bank and has lessened its level of liquidity and credit risk. Q: What are the provisions of the supervisory agreement with the OTS? A: We describe the supervisory agreement in more detail at page 7 under "We Are Subject to a Supervisory Agreement with the Office of Thrift Supervision". In general, the supervisory agreement imposes operating restrictions on United Fidelity Bank and restricts its ability to grow and pay dividends without prior approval of the OTS. United Fidelity Bank believes that it currently is in substantial compliance with the supervisory agreement, including the capital targets established in its strategic plan. ii Questions and Answers About the Rights Offering Q: What is a rights offering? A: A rights offering is an opportunity for you to purchase the notes in an amount based on the number of shares of Fidelity common stock you own, and to purchase warrants for common stock in an amount based upon the amount of notes you purchase in the rights offering. Q: Why are we engaging in a rights offering? A: Because United Fidelity Bank is restricted in its ability to pay dividends to us, we believe it is in our best interests to raise additional capital. We have $1.5 million in debt which matures in January 2002, $1.5 million which matures in June 2003, and $6.0 million which matures in June 2005. We are undertaking this rights offering to raise additional capital, without paying underwriting commissions and expenses, for the purposes set forth under the following question entitled "What will we do with the proceeds of the rights offering?". Q: What will we do with the proceeds of the rights offering? A: We anticipate that we will use the proceeds to repay approximately $1.5 million on our line of credit which we drew upon, or anticipate we will draw upon, in connection with: o the refinancing of certain letters of credit; o the retirement of $1.0 million face value of our 10% subordinated debentures; and o the anticipated redemption at maturity of a portion of the $1.5 million of our 9.25% junior subordinated notes which come due on January 31, 2002. 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: What are the material terms of the notes? A: The notes have an interest rate of 9.00% per annum beginning on March 1, 2002, based upon a 360-day year, and mature on February 28, 2009. We have the option to redeem the notes in whole or in part at any time on or after March 1, 2002. If we redeem the notes in part, we will select the notes for redemption on a pro rata basis, by lot or by such other method as we in our sole discretion deem fair and appropriate. o If we redeem the notes on or after March 1, 2002 and before March 1, 2003, we also will pay a redemption premium equal to 2% of the principal amount of the notes that have been redeemed. o If we redeem the notes on or after March 1, 2003 and before March 1, 2004, we also will pay a redemption premium equal to 1% of the principal amount of the notes that have been redeemed. o If we redeem the notes on or after March 1, 2004, we will pay no redemption premium. iii Q: What are the material terms of the warrants? A: Each warrant represents the right of the holder to purchase one share of our common stock at the exercise price of $3.00 per share, subject to adjustment, less the purchase price of the warrant of $0.50. Each warrant is exercisable at the holder's option at any time prior to February 28, 2012. Q: What does it mean to exercise a subscription right? A: When you "exercise" a subscription right, that means that you choose to purchase the principal amount of the notes or the number of the warrants which that subscription right entitles you to purchase. You may exercise any number of your subscription rights, or you may choose not to exercise any subscription right. Both the basic subscription right and the warrant subscription right carries with it an over-subscription privilege. You must, however, fully exercise your basic subscription right or warrant subscription right if you wish to exercise your over-subscription privileges. You cannot give or sell your subscription rights to anybody else; only you can exercise them. Q: What is a basic subscription right? A: We are distributing to you, at no charge, one basic subscription right, rounded down to the nearest whole number, for every 3,991 shares of common stock that you owned on December 19, 2001, the record date. Each basic subscription right entitles you to purchase $1,000 principal amount of the notes. Q: What if I don't own enough shares to entitle me to a basic subscription right? A: If you do not own a sufficient number of shares to otherwise receive a basic subscription right, you will still receive a basic subscription right to allow you to purchase a note in the principal amount of $1,000. Q: What is the basic over-subscription privilege? A: We do not expect that all of our shareholders will exercise all of their basic subscription rights. By extending basic over-subscription privileges to our shareholders, we are providing for the purchase of those notes which are not purchased through exercise of basic subscription rights. The basic over-subscription privilege entitles you, if you fully exercise your basic subscription right, to subscribe for additional notes, in $1,000 increments, not acquired by other holders of basic subscription rights. As described below, there are limitations on your basic over-subscription privilege. Q: What are the limitations on the basic over-subscription privilege? A: In the rights offering, we will issue up to $1,500,000 aggregate principal amount of the notes. The principal amount of notes available for basic over-subscription privileges will be $1,500,000 minus the aggregate principal amount of the notes purchased upon exercise of all basic subscription rights. If the principal amount of the notes available for sale pursuant to the exercise of all basic over-subscription privileges is not sufficient to satisfy in full all basic over-subscription privileges, the additional principal amount of the notes that you will be entitled to purchase if you exercise your iv basic over-subscription privilege will be limited. In this situation, you will be entitled to purchase upon the exercise of your basic over-subscription privilege a principal amount of the notes equal to the product, rounded down to the nearest $1,000, of: o the number of shares of our common stock owned by you on the close of business on December 19, 2001, divided by the total number of shares of our common stock owned by all shareholders exercising their over-subscription privileges to purchase notes on the close of business on December 19, 2001; and o the principal amount of notes available for sale pursuant to the exercise of all over- subscription privileges. For example, if we sell $1,000,000 principal amount of the notes pursuant to the exercise of basic subscription rights, we then would have remaining $500,000 principal amount of the notes available for purchase by individuals exercising basic over-subscription privileges. If individuals exercising basic over-subscription privileges subscribe for $500,000 or less in principal amount of the notes by use of their basic over-subscription privileges, then all basic over-subscription privileges would be honored. If individuals exercising basic over-subscription privileges subscribe for more than $500,000 in principal amount of the notes by use of their basic over-subscription privileges, then basic over-subscription privileges would be limited. For example, assume that individuals exercising basic over-subscription privileges subscribe for $600,000 principal amount of the notes by use of their basic over-subscription privileges, you own 10,000 shares of our common stock and shareholders who are exercising their basic over-subscription privileges own 100,000 shares. In this example, your basic over-subscription privilege would be equal to $50,000 principal amount of the notes. This was calculated by dividing the number of shares you own, or 10,000, by the total number of shares owned by all shareholders exercising their basic over-subscription privileges with respect to the notes, or 100,000, and then multiplying this by the principal amount of the notes available for sale pursuant to the exercise of all basic over-subscription privileges, or $500,000. 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: What is a warrant subscription right? A: You will receive 333 1/3 warrant subscription rights, rounded down to the nearest whole number, for each $1,000 principal amount of notes you purchase in the rights offering. Each warrant subscription right entitles you to purchase one warrant at the price of $0.50 per warrant. Q: What is the warrant over-subscription privilege? A: We do not expect that all of our shareholders purchasing notes will exercise all of their warrant subscription rights. By extending warrant over-subscription privileges, we are providing for the purchase of those warrants which are not purchased through exercise of warrant subscription rights. The warrant over-subscription privilege entitles you, if you fully exercise your warrant subscription right, to subscribe at $0.50 per warrant for additional warrants not acquired by other holders of v warrant subscription rights. As described below, there are limitations on your warrant over- subscription privilege. Q: What are the limitations on the warrant over-subscription privilege? A: In the rights offering, we will issue up to 500,000 warrants. The number of warrants available for over-subscription privileges will be 500,000 minus the amount of warrants purchased upon exercise of all warrant subscription rights. If the number of warrants available for sale pursuant to the exercise of all warrant over-subscription privileges is not sufficient to satisfy in full all warrant over-subscription privileges, the additional number of warrants that you will be entitled to purchase if you exercise your warrant over-subscription privilege will be limited. In this situation, you will be entitled to purchase upon the exercise of your warrant over-subscription privileges a number of warrants equal to the product, rounded down to the nearest whole number, of: o the principal amount of notes you purchase in the rights offering, divided by the total principal amount of notes purchased by all shareholders in the rights offering who are exercising their warrant over-subscription privileges; and o the number of warrants available for sale pursuant to the exercise of all warrant over- subscription privileges. For example, if we sell 450,000 warrants pursuant to the exercise of warrant subscription rights, we then would have remaining 50,000 warrants available for purchase by individuals exercising warrant over-subscription privileges. If individuals exercising warrant over-subscription privileges subscribe for 50,000 or less warrants by use of their warrant over-subscription privileges, then all warrant over-subscription privileges would be honored. If individuals exercising warrant over-subscription privileges subscribe for more than 50,000 warrants by use of their warrant over-subscription privileges, then warrant over-subscription privileges would be limited. For example, assume that we sale 450,000 warrants pursuant to the exercise of warrant subscription rights, individuals exercising warrant over-subscription privileges subscribe for 75,000 warrants by use of their warrant over-subscription privileges, you purchased $10,000 in principal amount of notes in the rights offering and all shareholders who are exercising their warrant over-subscription privileges purchased $100,000 in principal amount of notes in the rights offering. In this example, your warrant over-subscription privilege would be equal to 5,000 warrants. This was calculated by dividing the principal amount of notes you purchased, or $10,000, by the total principal amount of notes purchased by all shareholders exercising their warrant over-subscription privileges, or $100,000, and then multiplying this by the number of warrants available for sale pursuant to the exercise of all warrant over-subscription privileges, or 50,000. 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. vi 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 and by what date must I exercise my subscription rights? A: You must properly complete the attached shareholder rights agreement and deliver it to us before 5:00 p.m., Central time, on February 28, 2002. Our address, for delivery purposes, is on page 24. Your shareholder rights agreement must be accompanied by proper payment for the notes and warrants 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., Central time, on February 28, 2002, your basic subscription rights and warrant subscription rights will expire. Q: After I exercise my subscription rights, can I change my mind? A: No. Once you send in your shareholder rights agreement and payment, you cannot revoke the exercise of either your basic subscription rights or your warrant subscription rights, even if you later learn information about us that you consider to be unfavorable, and we will have immediate use of the funds sent as payment. You should not exercise your subscription rights unless you are certain that you wish to purchase the notes or the warrants. Q: Is exercising my subscription rights risky? A: The exercise or your subscription rights involves certain risks. Exercising your subscription rights means buying the notes and, if you elect, the warrants, and should be carefully considered as you would view other investments. Among other things, you should carefully consider the risks described under the heading "Risk Factors," beginning on page 1. vii Q: Can I sell or give away my subscription rights? A: No. Neither the basic subscription rights nor warrant subscription rights are transferable. Q: Must I exercise any subscription rights? A: No. Q: What are the federal income tax consequences of owning the notes or the warrants? A: You should review the tax opinion of our legal counsel, Krieg DeVault LLP, under the heading "Material Federal Income Tax Considerations," beginning on page 18. You should seek specific tax advice from your personal tax advisor. Q: When will I receive my notes and warrants? A: If you purchase the notes and warrants through the rights offering, you will receive the notes and warrants as soon as practicable after February 28, 2002. Subject to state securities laws and regulations, we have the discretion to delay allocation and distribution of any notes and warrants you may elect to purchase by exercise of your basic subscription right, warrant subscription right, or any over-subscription privileges 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 in its discretion at any time on or before February 28, 2002. We don't expect to cancel the rights offering and are not aware of any facts or circumstances which would cause us to do so. We have reserved this right in the event we determine that facts of which we are currently unaware or future events would cause us to determine that the rights offering is not in the best interests of Fidelity. These reasons may include the institution or threat of litigation against us with respect to the rights offering. Q: Will Fidelity return money received from shareholders if it cancels the rights offering? A: If we cancel the rights offering, any money received from shareholders will be refunded promptly, without interest. However, there is no guarantee that we will have funds available to return to shareholders who have submitted payment for shares. In this event, we expect to draw upon an existing line of credit to borrow funds for this purpose. Q: How much money will Fidelity receive from the rights offering? A: Our gross proceeds from the rights offering will depend on the principal amount of the notes and the number of the warrants that are purchased. If we sell all notes and warrants which may be purchased upon exercise of the rights offered by this prospectus, then we will receive proceeds of $1,750,000, before deducting expenses payable by us, estimated to be approximately $40,000. Because our directors, executive officers and their respective affiliates, who currently own approximately 51.3% 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 a portion of their basic subscription rights and warrant subscription rights and over-subscription privileges, we expect to issue at least $755,000 principal amount of the notes and 270,000 warrants viii representing the right to purchase 270,000 shares of our common stock, and to receive proceeds of at least approximately $890,000 from the rights offering, before deducting expenses. Q: What if I have more questions? A: If you have more questions about the rights offering, please contact Mark A. Isaac, at (812) 424- 0921. ix 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 the rights offering. 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, we may be unable to satisfy the notes or the trading price of our common stock could decline and you may lose part or all of your investment. Risk Factors Relating to the Rights Offering, the Notes, the Warrants and the Underlying Common Stock We may not be able to pay interest on or repay the notes. a. We are a holding company and our operating company has no obligations to the holders of the notes. We conduct substantially all of our business through our operating company, United Fidelity Bank. Although we have the ability to raise capital, such as through the sale of additional shares of stock or the issuance of additional debt, our cash flow and, consequently, our ability to pay interest in cash to service our debt, including the notes, are largely dependent upon the cash flow of United Fidelity Bank and the payment of funds by United Fidelity Bank to us. United Fidelity Bank is a separate and distinct legal entity and has no obligation, contingent or otherwise, to pay any amounts due on the notes or to make cash available for that purpose. b. Our operating company is restricted in making dividends to us. The Office of Thrift Supervision has not permitted United Fidelity Bank to pay us dividends under the terms of a Supervisory Agreement entered into in February 1999. 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 cannot and do not offer any assurances that the OTS will do so. Also, the OTS could continue to prohibit the payment of dividends to us in the future if it considers such action necessary for the safety and soundness of United Fidelity Bank. If we do not receive any dividends from United Federal Bank, we may not be able to make payments on the notes. c. Our substantial amount of indebtedness could adversely affect our ability to repay the notes. We currently have a substantial amount of debt in relation to our shareholders' equity. At September 30, 2001, Fidelity Federal, on a non-consolidated basis, had total unsecured debt outstanding of $7.62 million, representing 31.9% of our total debt and equity capitalization, including total shareholders' equity of $10.95 million. Our high level of debt could affect our future prospects adversely by: o impairing our ability to borrow additional money; o requiring us to use a substantial portion of our cash flows from operations to pay interest or repay debt which will reduce the funds available to us for our operations, 1 capital expenditures and any acquisition opportunities; and o making us more vulnerable in the event of a downturn in general economic conditions. We cannot assure you that we will be able to meet our debt obligations. If we are unable to generate sufficient cash to meet our obligations or if we fail to satisfy the requirements of our debt agreements, we will be in default. A default would permit certain debt holders to require payment before the scheduled due date of the debt, resulting in further financial strain on us and causing additional defaults under our other indebtedness. Our ability to meet our debt and other obligations and to reduce our total debt depends on our future operating performance and on economic, financial, competitive, regulatory and other factors. In addition, we may need to incur additional indebtedness in the future. Many of these factors are beyond our control. Although we believe that our existing current assets combined with working capital from our operations and proceeds of future equity or debt financings will be adequate to meet our existing financial obligations, we cannot assure you that our business will generate sufficient cash flow or that future financings will be available to provide sufficient proceeds to meet these obligations. d. If we are unable to refinance our existing indebtedness, we may not be able to pay interest and to make principal repayments on the notes. We currently have substantial debt obligations that will mature before the maturity of the notes, which may affect our ability to make required payments on the notes. We may not be able to generate sufficient funds from operations to meet our debt service requirements or to repay all of those obligations as they are currently scheduled to become due. Accordingly, it may be necessary to refinance some of those obligations at or before their respective maturities. Our ability to refinance these obligations will depend on, among other factors, our financial condition at the time of the refinancing, any restrictions contained in financing agreements and market conditions. We may not be able to refinance those obligations. If we are unable to refinance those obligations, or are unable to obtain satisfactory terms, there could be an adverse effect on us, including on our ability to pay interest, and to make scheduled principal repayments on our indebtedness, including the notes. Our secured and other unsecured debt and the liabilities of our operating company are effectively senior to the notes. Our secured and other unsecured debt and all of the debt of United Fidelity Bank are effectively senior to the notes. United Fidelity Bank has no obligation to pay amounts due on the notes. At September 30, 2001, we had approximately $7.62 million of long-term, unsecured indebtedness. We and United Fidelity Bank may incur additional debt, subject to limitations, and that additional debt will rank senior to the notes. United Fidelity Bank may use the earnings it generates, as well as its existing assets, to fulfill its own direct debt service requirements, particularly because certain agreements may restrict its ability to pay dividends to us or because the debt of United Fidelity Bank may be secured by its assets. There is no public market for the notes or the warrants. There is no existing market for the notes or the warrants. We cannot be sure that any trading market 2 for the notes or the warrants will develop. If such a market were to develop, the notes or the warrants could trade at a discount from their initial offering price, depending on prevailing interest rates, the market for similar securities and other factors, including general economic conditions and our financial condition, performance and prospects. 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 you do not purchase warrants in the rights offering, you may suffer dilution of your percentage ownership of our common stock. Mr. Cordingley and his affiliates, and our remaining directors and their respective affiliates, have agreed to purchase, if available, at least 270,000 warrants in the rights offering pursuant to the exercise of their respective warrant subscription rights and warrant over-subscription privileges and if available may purchase more. To the extent that you do not exercise your warrant subscription rights (the amount of which is dependent upon the face amount of notes you purchase) and warrants are purchased and exercised 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. 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 notes or warrants that we are offering are actually purchased. United Fidelity Bank is subject to the restrictions and conditions of a Supervisory Agreement with the 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, including its ability to pay dividends. 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 or valuation allowance for letters of credit, obtaining additional or new management, and further restrictions on dividends. Because we are dependent upon United Fidelity Bank for our income, we may not be able to make payments on the notes and this could negatively impact the price of our stock and prohibit the payment of future dividends. Anti-takeover provisions in our charter documents may delay or prevent a takeover of Fidelity, which could prohibit you from receiving a price for your shares at a premium to current market price. 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 shareholder might consider favorable. Our amended and restated articles 3 of incorporation authorizes our board of directors to issue preferred stock without shareholder 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. Because of the existence of these provisions, you may not receive an acquisition offer for your shares, which typically is at a premium price to current market price, since third parties may be less inclined to make an offer to acquire control of us. The existence of controlling shareholders may limit your ability to influence the outcome of matters requiring shareholder approval, could discourage potential acquisitions of our business by third parties, and could impact the price of our shares. Bruce A. Cordingley, who is a director of Fidelity, and entities and individuals affiliated with him, own of record or control 45.1% and beneficially own 60.3% of our issued and outstanding shares of common stock. Our remaining directors, together with their respective affiliates, own of record approximately 6.2% and beneficially 7.7% 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 and their affiliates 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 and their affiliates 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 shareholder 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. Mr. Cordingley and his affiliates must 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 296,236 shares. The existence of these options 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 shareholder 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. 4 Risk Factors Related to Fidelity Federal 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. We must achieve sufficient earnings in order to realize our $7.9 million deferred income tax receivable. We currently have a deferred income tax receivable of approximately $7.9 million. In order to be able to utilize this asset within the federal and state carryforward periods, we must execute our current business plan and achieve sufficient annual earnings. If we are unable to achieve a sufficient level of net income, we may need to establish a valuation allowance for this deferred tax asset. This allowance would be the estimate of future expirations of existing federal and state tax carryforwards. Such an allowance would reduce the receivable and increase our expenses, thus reducing our earnings. 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 three year contract employment agreement with Mr. Neel, which expires on May 19, 2003, subject to renewal. Mr. Cordingley's role with Fidelity is not full time. He receives board fees, but he has no employment agreement with us, does not receive a salary 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. United Fidelity Bank's consumer loan concentration increases the risk of defaults by our borrowers, which may result in increased expenses and the need for additional capital. United Fidelity Bank makes various types of loans. Currently, approximately 30% 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. 5 We may need additional funds for debt service, which could result in dilution of your ownership position or result in additional interest expense. We may need additional funds for servicing our debt, which could result in dilution of your ownership position or result in additional interest expense, because United Fidelity Bank is restricted from paying dividends without prior approval of the OTS. As of September 30, 2001 we had $61,000 in available cash for debt service and other needs. Debt service for the remainder of calendar year 2001, net of subordinated debt interest payments due to us from United Fidelity Bank, is expected to be approximately $214,000, and debt service for calendar year 2002, net of subordinate debt interest payments due to us from United Fidelity Bank is expected to be approximately $3.4 million, consisting of interest payments of $400,000 and principal payments of $3.0 million, including $1.5 million of our 9.25% junior subordinated notes which come due on January 31, 2002. 6 Special Note Regarding Forward-Looking Statements Some of the information in this prospectus, including the risk factors listed above, 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 words 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. These statements are representative only on the date hereof. 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. We Are Subject to a Supervisory Agreement with the Office of Thrift Supervision United Fidelity Bank entered into a supervisory agreement with the OTS on February 3, 1999. The supervisory agreement currently requires United Fidelity Bank to: o reduce its level of classified assets and letters of credit to core capital and allowance for loan and lease losses to 50% or less; o refrain from making any commercial loans without OTS approval; o refrain from engaging in any "sub prime" lending activity; o not increase the size of the consumer loan portfolio in excess of 30% of United Fidelity's assets; o refrain from paying dividends without OTS approval; o adopt a strategic plan including: oo capital targets for tangible, leverage, core and total risk-based capital, oo establishment of concentration limits for all assets, and oo development of a plan to reduce its concentration of high risk assets; o refrain from making additional investments in equity securities or real estate for development without OTS approval; 7 o develop a plan to divest real estate held for development; o develop a plan to reduce employee turnover and obtain OTS approval before hiring any additional or replacing any directors or senior executive officers; o develop a conflicts of interests policy and refrain from engaging in any transaction with or distribution of funds to Fidelity or its subsidiaries or selling any assets to an affiliate without OTS approval; o develop a plan to increase liquidity and manage liquidity and cash flow; o refrain from increasing the level of executive compensation in excess of the greater of $5,000 or the annual cost of living; o not increase its assets in excess of net interest credited on its deposit liabilities without OTS approval; o not engage in new activities not included in its strategic plan without OTS approval; o maintain a fully-staffed and functioning internal audit department and internal loan review process; o adopt a policy to administer the general partnerships held by the subsidiaries of United Fidelity; and o adopt a policy to administer its mortgage brokerage activities. United Fidelity believes that it currently is in substantial compliance with all provisions of the supervisory agreement, except for the targeted capital levels set forth in United Fidelity's strategic plan. These target capital levels were established for the period ending December 31, 2001 and United Fidelity anticipates that it will meet the targeted capital levels at that time. 8 Use of Proceeds Our net proceeds from the rights offering will depend upon the principal amount of the notes and the number of the warrants that are purchased. If we sell all of the notes and warrants which may be purchased upon exercise of the rights offered by this prospectus, then we will receive proceeds of $1,750,000, before deducting expenses payable by us, estimated to be approximately $40,000. Since our directors, executive officers and their affiliates, who currently own approximately 51.3% 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 certain of their basic and over-subscription subscription privileges, we expect to issue at least $755,000 principal amount of the notes and 270,000 warrants representing the right to purchase 270,000 shares of our common stock and to receive proceeds of at least approximately $890,000 from the rights offering, before deducting expenses. We anticipate that we will use the proceeds to repay approximately $1.5 million on our line of credit which we drew upon, or anticipate we will draw upon, in connection with: o the refinancing of certain letters of credit; o the retirement of $1.0 million face value of our 10% subordinated debentures; and o the anticipated redemption at maturity of a portion of the $1.5 million of our 9.25% junior subordinated notes which come due on January 31, 2002. The interest rate on the line of credit which will be repaid currently is 5.75%. This line of credit matures on September 30, 2002. None of the proceeds are expected to be used to increase the capital of United Fidelity Bank. 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. We Do Not Anticipate Paying Dividends 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. 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 receipt of dividends from United Fidelity Bank, earnings, capital requirements and the financial position of Fidelity, general economic conditions and other pertinent factors. 9 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: 1999 High Low ---- -------- --------- First Quarter $ 4 $ 2 1/2 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 2001 ---- First Quarter $ 1.81 $ 1.31 Second Quarter 1.75 1.50 Third Quarter 3.70 1.75 Fourth Quarter (through December 27, 2001) 2.55 2.00 The closing price of our common stock was $2.26 on December 27, 2001. We urge you to obtain a current stock quote for our common stock. 10 Capitalization The following table shows our capitalization as of September 30, 2001. The table also shows our capitalization as adjusted for the completion of the rights offering and assuming that all subscription rights are exercised.
September 30, 2001 ----------------------------------- Actual As Adjusted --------------- --------------- (dollars in thousands) (unaudited) Borrowings Notes payable, secured by specified multifamily mortgages 2,477 2,477 Note Payable, secured by United stock 1,500 1,500 Junior subordinated notes, unsecured 1,618 3,118 Senior subordinated notes, unsecured 6,000 6,000 Line of credit, secured by United Fidelity note to Fidelity Federal 1,325 1,325 Other borrowings 8 8 --------------- --------------- Total Borrowings 12,928 14,428 Shareholders' Equity Common Stock 5,607 5,607 Stock Warrants 11 261 Additional paid-in capital 14,184 14,184 Retained earnings (8,834) (8,834) Accumulated other comprehensive loss (23) (23) --------------- --------------- Total shareholders' equity 10,945 11,195 --------------- --------------- Total capitalization $ 23,873 $ 25,623 =============== ===============
11 The Rights Offering Before exercising any subscription rights, you should read carefully the information set forth under "Risk Factors." What is a Subscription Right? We are distributing non-transferable subscription rights to shareholders who owned shares of our common stock on December 19, 2001, the record date, at no cost to the shareholders. We will give you one basic subscription right, rounded down to the nearest whole number, for every 3,991 shares of common stock that you owned on the record date. What is the Basic Subscription Right? Each subscription right will entitle you, for $1,000, to purchase $1,000 principal amount of the notes. If you do not have a sufficient number of shares to entitle you to otherwise receive a basic subscription right, you will still receive a basic subscription right to purchase a note in the principal amount of $1,000. You are not required to exercise any or all of your rights unless you wish to purchase notes under your basic over-subscription privilege described below, in which case you must exercise all of your basic subscription rights. What is the Basic Over-Subscription Privilege? Subject to the limitations described below, each basic subscription right also grants you a basic over-subscription privilege to purchase additional notes that are not purchased by other shareholders. You are entitled to exercise your basic over-subscription privilege only if you exercise your basic subscription right in full. If you wish to exercise your basic over-subscription privilege, you should indicate the principal amount of the notes that you would like to purchase in the space provided on your shareholder rights agreement. You may not be able to purchase any additional principal amount of the notes as you requested on your shareholder rights agreement if the principal amount of the notes available for sale pursuant to the exercise of all basic over-subscription privileges is not sufficient to satisfy in full all over-subscription privileges. If this occurs, we will reallocate the amount of additional notes that you will be entitled to purchase if you exercise your basic over-subscription privilege on a pro rata basis with other shareholders exercising their basic over-subscription privileges. In this situation, your basic over-subscription privilege will entitle you to purchase a principal amount of the notes equal to the product of: o the number of shares of our common stock owned by you on the close of business on December 19, 2001, divided by the total number of shares of our common stock owned by all shareholders exercising their basic over-subscription privileges on the close of business on December 19, 2001; and o the principal amount of notes available for sale pursuant to the exercise of all basic over- subscription privileges. If this results in a principal amount of notes greater than you requested, you will receive only the principal amount of notes that you requested, and the excess will be reallocated one or more times among those shareholders whose basic over-subscription privileges are not fully satisfied on the same principle, 12 until all available notes have been allocated or all exercises of basic over-subscription privileges are satisfied. What is the Warrant Subscription Right? Each warrant subscription right entitles you to purchase one warrant for $0.50. You will receive 333 1/3 warrant subscription rights, rounded down to the nearest whole number, for each $1,000 principal amount of notes you purchase in the rights offering. What Is the Warrant Over-subscription Privilege? Subject to the limitations described below, each warrant subscription right also grants you a warrant over-subscription privilege to purchase additional warrants at $0.50 per warrant that are not purchased by other shareholders. You are entitled to exercise your warrant over-subscription privilege only if you exercise your warrant subscription rights in full. If you wish to exercise your warrant over-subscription privilege, you should indicate the number of warrants that you would like to purchase in the space provided on your shareholder rights agreement. You may not be able to purchase any additional warrants if the number of warrants available for sale pursuant to the exercise of all warrant over-subscription privileges is not sufficient to satisfy in full all warrant over-subscription privileges. If this occurs, we will reallocate the amount of additional warrants that you will be entitled to purchase if you exercise your warrant over-subscription privilege on a pro rata basis with other shareholders exercising their warrant over-subscription privileges. In this situation, your warrant over-subscription privilege will entitle you to purchase an amount of warrants equal to the product, rounded down to the nearest whole number, of: o the principal amount of notes you purchase in the rights offering, divided by the total principal amount of notes purchased by all shareholders in the rights offering who are exercising their warrant over-subscription privileges; and o the number of warrants available for sale pursuant to the exercise of all warrant over- subscription privileges. If this results in a number of warrants greater than you requested, you will receive only that amount that you requested, and the excess will be reallocated one or more times among those shareholders whose subscriptions are not fully satisfied on the same principle, until all available warrants have been allocated or all exercises of warrant over-subscription privileges are satisfied. How Do I Exercise My Subscription Rights? You may exercise your subscription rights by delivering to us on or prior to February 28, 2002: o A properly completed and duly executed shareholder rights agreement; o Any required signature guarantees; and o Payment in full for the notes and warrants subscribed for by exercising your basic subscription right and warrant subscription right and, if desired, your over-subscription privileges. You should deliver your shareholder rights agreement and payment to us at the address shown on 13 page 24. We will not pay you interest on funds delivered to us pursuant to the exercise of rights. How Do I Exercise My Over-Subscription Privileges? When you send in your shareholder rights agreement, you must also send the full purchase price for the principal amount of notes and the number of warrants that you have requested to purchase, in addition to the payment due for the principal amount of notes and the number of warrants requested through your over-subscription privileges. If the principal amount of additional notes and the number of warrants you are eligible to purchase exceeds the principal amount of notes and the number of warrants you requested, you will receive only the principal amount of notes and the number of warrants that you requested, and the remaining principal amount of notes and warrants will be divided among other shareholders exercising their over-subscription privileges. To determine if you have fully exercised your basic subscription right and warrant subscription right, we will consider only the rights held by you in the same capacity. For example, suppose you were granted rights for 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 right and warrant subscription right 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 notes or warrants under the rights owned jointly with your spouse to exercise your individual over-subscription privileges. When you complete the portion of the shareholder rights agreement to exercise the over-subscription privilege, you will be representing and certifying that you have fully exercised your basic subscription rights and warrant subscription rights 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 right and warrant subscription right 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 privileges on your behalf, the nominee holder will be required to certify to us: o the number of shares held on December 19, 2001, the record date, on your behalf; o the number of rights you exercised under your basic subscription right and warrant subscription rights; o that your entire basic subscription right and warrant subscription right, as applicable, held in the same capacity has been exercised in full; and o the principal amount of notes or number of warrants 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 principal amount of notes or number of warrants for which you wished to subscribe, the excess funds you paid for notes or warrants 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. 14 How Do I Exercise My Rights if I Am a Beneficial Owner but not a Record Holder? If you are a beneficial owner of shares of Fidelity common stock 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. How Long Do I Have to Exercise My Rights? The rights will expire at 5:00 p.m., Central time, on February 28, 2002. If you do not exercise your subscription rights prior to that time, your basic subscription rights and warrant subscription rights will expire and will no longer be exercisable. We will not be required to issue notes and warrants to you if we receive your shareholder rights agreement or your payment after that time, regardless of when you sent the shareholder rights agreement and payment. You May Not Revoke the Exercise of a Subscription Right. After you have exercised your basic subscription right, warrant subscription right, or over subscription privilege, you may not revoke that exercise. You should not exercise your subscription rights and over-subscription privilege unless you are certain that you wish to purchase the notes and warrants. When Do I Need to Obtain a Signature Guarantee? Signatures on the shareholder rights agreement do not need to be guaranteed if either the shareholder rights agreement provides that the notes and warrants to be purchased are to be delivered directly to the record owner of such subscription rights, or the shareholder rights agreement 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 shareholder rights agreement must be guaranteed by a commercial bank, broker, dealer, credit union, national securities exchange or savings association. Are the Subscription Rights and Over-Subscription Privileges Transferable? The basic subscription rights, warrant subscription rights, and over-subscription privileges are non-transferable and non-assignable. Only you may exercise these subscription rights and over-subscription privileges. How Can I Pay for the Notes and Warrants I Purchase? Payment for the notes and warrants must be made in United States dollars. 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 payable to the order of Fidelity Federal Bancorp; o actual receipt of any funds transferred by wire transfer; or 15 o actual receipt of any funds through an alternative payment method which we may approve. Payment for notes and warrants also may be effected through wire transfer as follows: Wire to: Federal Home Loan Bank of Indianapolis ABA#: 074 001 019 Further Credit: United Fidelity Bank, fsb Account #: 8166-9994 Further Credit: Fidelity Federal Bancorp - Rights Offering Account #: 0-01-45004609 What if There Are Ambiguities in the Exercise of Subscription Rights? If you do not specify the number of subscription rights and over-subscription privileges being exercised on your shareholder rights agreement, or if your payment is not sufficient to pay the total purchase price for all of the notes and warrants that you indicated you wished to purchase, you will be deemed to have exercised the maximum number of subscription rights and over-subscription privileges that could be exercised for the amount of the payment that we receive from you. If your payment exceeds the total purchase price for all of the subscription rights shown on your shareholder rights agreement, your payment will be applied, until depleted, to subscribe for notes and warrants in the following order: (1) to subscribe for the principal amount of notes and the number of warrants, if any, that you indicated on the shareholder rights agreement that you wished to purchase through your basic subscription right and warrant subscription right, until your basic subscription right and warrant subscription right have been fully exercised; (2) to subscribe for additional principal amount of notes pursuant to the basic over- subscription privilege, subject to any applicable limitation; and (3) to subscribe for additional warrants pursuant to the warrant over-subscription privilege, subject to limitation. Any excess payment remaining after the foregoing allocation will be returned to you as soon as practicable by mail, without interest or deduction. Our Decision Is Binding on You. All questions concerning the timeliness, validity, form and eligibility of any exercise of subscription rights and over-subscription privileges 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 and over-subscription privilege by reason of any defect or irregularity in such exercise. Subscription rights and over-subscription privileges 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 shareholder rights agreement or incur any liability for failure to give such notification. 16 Notice to Nominee 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 shareholder rights agreements and, in the case of the over-subscription privilege, the related nominee holder certification, and submit them to us 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 shareholder rights agreements and certifications and proper payment to the subscription agent. We Are Making 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 or over-subscription privileges. You should make your decision based on your own assessment of your best interests after reading this prospectus. Fidelity Has Reserved the Right to Withdraw or Cancel the Rights Offering. Our board of directors may withdraw the rights offering in its sole discretion at any time prior to or on February 28, 2002. We don't expect to withdraw the rights offering. We reserved the right to do so in the event we later determine that facts of which we are currently unaware or future events would cause us to believe that the rights offering is not in the best interests of Fidelity. These reasons may include the institution or threat of litigation against us with respect to the rights offering. We currently are not aware of any facts or circumstances which would cause us to withdraw the rights offering. If we cancel the rights offering, any money received from shareholders will be refunded promptly, without interest. Because we will have immediate use of funds received in the rights offering, if we withdraw the rights offering there is no guarantee that we will have funds available to return to shareholders who have submitted payment for shares. In the event that we would have no funds available to return to shareholders, we expect to draw upon an existing line of credit to obtain the funds for this purpose. How Much Will Directors and Management Purchase? Mr. Cordingley and his affiliates, and the other directors of Fidelity and their respective affiliates, who currently own of record approximately 45.1% and 6.2%, respectively, and beneficially own approximately 60.3% and 7.7%, respectively, of our outstanding shares of common stock, have agreed to exercise their basic subscription rights, warrant subscription rights, and over-subscription privileges in the amount of at least $755,000 principal amount of the notes and at least 270,000 warrants representing the right to purchase 270,000 shares of our common stock. As a result, we expect that at least $755,000 principal amount of the notes offered and 270,000 of the 500,000 warrants offered in this rights offering will be subscribed for and sold. 17 Regulatory Limitation. We will not be required to issue you notes or warrants 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 notes or warrants 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 notes or warrants to you if you 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. 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 notes and warrants available. 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. 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 Telephone: (812) 424-0921, extension 2226 (800) 280-8280, extension 2226 Important: Please carefully read the instructions accompanying the shareholder rights agreement and follow those instructions in detail. You are responsible for choosing the payment and delivery method for your shareholder rights agreement, and you bear the risks associated with such delivery. If you choose to deliver your shareholder rights agreement 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 February 28, 2002. Material Federal Income Tax Considerations The following discussion is the opinion of our tax counsel, Krieg DeVault LLP, as to the application of existing material federal income tax law to the facts as presented in this prospectus relating to the rights 18 offering. Krieg DeVault's opinion 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. Moreover, there can be no assurance that this opinion will not be challenged by the Internal Revenue Service or that a court considering the issues will not hold contrary to such opinion. This discussion 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 Fidelity common stock as part of a hedging, straddle, constructive sale, conversion or other risk reduction transaction. This summary assumes that investors will hold their notes and warrants as "capital assets" (generally property held for investment) under the Internal Revenue Code of 1986. In addition, this discussion does not address the tax consequences of the rights offering under applicable state, local or foreign tax laws. 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. Upon the exercise of a warrant, a holder will not recognize gain or loss and will have a tax basis in the common stock received equal to the tax basis of the warrant plus the exercise price. The holding period for the common stock will begin on the day after the date of exercise. A holder will recognize capital gain or loss upon the sale, exchange or other disposition of a note, warrant or share of common stock, equal to the difference between the amount realized from such sale and the holder's tax basis in the security that was sold. Such gain or loss will be long-term if the security disposed of has been held for more than one year. In the event that a warrant lapses unexercised, a holder will recognize a capital loss in an amount equal to his tax basis in the warrant. Such loss will be long-term if the warrant has been held for more than one year. 19 Description of the Notes Principal, Interest Rate and Maturity The notes will mature on February 28, 2009. The aggregate principal amount of the notes is $1,500,000. However, we may issue additional notes from time to time, without the consent of the holders of the notes. Interest on the notes will: o accrue at the rate of 9.00% per year, beginning on March 1, 2002, based upon a 360-day year; o be payable semiannually, in arrears, on each March 1 and September 1, with the initial interest payment payable on September 1, 2002; and o be payable to the person in whose name the notes are registered at the close of business on February 15 and August 15 preceding the applicable interest payment date, which we refer to as "regular record dates." Optional Redemption We may redeem the notes, in whole or in part, at any time on or after March 1, 2002 and prior to maturity. The redemption price will be equal to the following: o If we redeem the notes, in whole or in part, on or after March 1, 2002 and before March 1, 2003, we also will pay a redemption premium equal to 2% of the principal amount of the notes that have been redeemed. o If we redeem the notes, in whole or in part, on or after March 1, 2003 and before March 1, 2004, we also will pay a redemption premium equal to 1% of the principal amount of the notes that have been redeemed. o If we redeem the notes on or after March 1, 2004, we will pay no redemption premium. If we redeem the notes in part, we will select the notes for redemption on a pro rata basis, by lot or by such other method as we in our sole discretion deem fair and appropriate. We will only redeem the notes in multiples of $1,000 in original principal amount. A note in principal amount equal to the unredeemed portion of the original note will be issued upon the cancellation of the original note. Ranking of the Notes The notes rank pari passu with each other and with Fidelity Federal's 12% junior subordinated notes due April 2004, which means they rank proportionately, similarly and at an equal level. In addition, the notes are unsecured obligations of Fidelity and fully subordinated to all other indebtedness of Fidelity, including any future issues of subordinated notes or debentures of Fidelity but not to common stock or preferred stock of Fidelity. 20 We presently have the following unsecured debt as of September 30, 2001: Junior subordinated notes, 12%, interest paid semi- $124,000 annually, due April 2004, unsecured Junior subordinated notes, 9.25%, interest paid 1,494,000 semi-annually, due January 2002, unsecured Senior subordinated notes, 10.00%, interest paid 6,000,000 semi-annually, due January 2005, unsecured ---------- Total unsecured debt $7,618,000 ========== The notes are not directly subordinated to indebtedness of United Fidelity Bank or its subsidiaries. However, there are no contractual limitations on the amount of indebtedness which may be incurred by United Fidelity Bank or its subsidiaries which could impact the ability of United Fidelity Bank to pay dividends to us, from which we would make payments on the notes. Sinking Fund We are not obligated to make mandatory redemption or sinking fund payments with respect to the notes. Payment We will pay interest on the notes to the persons in whose names the notes are registered at the close of business on the regular record date for each interest payment. However, we will pay the interest payable on the notes at their stated maturity to the persons to whom we pay the principal amount of the notes. The initial payment of interest on the notes will be payable on September 1, 2002. We will pay principal, premium, if any, and interest on the notes at the offices of Fidelity or at any other office maintained by us for such purposes. We may pay interest by cash or by check mailed to the address of the person entitled to the payment as it appears in the security register. Non-Payment If we fail to pay the interest on, or principal of the notes when due, and which failure continues for thirty days, the principal and interest of the notes may be declared due and payable by the holder and payment may be enforced in accordance with Indiana law. Waiver No holder of any note and no director, officer, employee, agent, manager, partner or other interest holder of Fidelity shall have any liability for any obligation of Fidelity under the notes or for any claim based on, in respect of or by reason of such obligations. Each holder, by accepting a note, waives and releases all such liability. Such waiver and release shall be part of the consideration for the issuance of the notes. Notwithstanding the foregoing, this shall not be construed as a waiver or release of any claim under the federal securities laws. 21 Payment for Warrant Exercise The holders of the notes will be able to surrender the notes at the principal amount of their notes surrendered, plus accrued interest, in payment of the exercise price of any of their warrants issued in connection with this rights offering. Form, Exchange and Transfer of the Notes We will issue the notes in registered form, without coupons. We will only issue the notes in denominations of integral multiples of $1,000. Holders may present the notes for exchange or for registration of transfer at our principal executive offices or at any other office or agency maintained by Fidelity for such purpose. We will exchange or transfer the notes if the notes are duly endorsed by, or accompanied by a written instrument of transfer in a form satisfactory to us. We will not charge a service charge for any exchange or registration of transfer of the notes. However, we may require payment of a sum sufficient to cover any tax or other governmental charge payable for the registration of transfer or exchange. Title We may treat the person in whose name a note is registered on the applicable record date as the owner of the note for all purposes, whether or not it is overdue. Description of the Warrants We are issuing up to an aggregate of 500,000 warrants, each of which represents the right to subscribe to purchase one share of our common stock, subject to adjustment. The warrant purchase price is $0.50. Warrants may be exercised on or before February 28, 2012, by paying the exercise price of $3.00 per share, subject to adjustment, less the warrant purchase price of $0.50. If the warrants are adjusted, as discussed below, no fractional shares will be issued. The number of shares of common stock which may be purchased upon exercise of the warrants, and the exercise price for such shares, will be adjusted to reflect the effect of any issuance of our common stock: o to Fidelity's shareholders as a stock dividend or distribution, or o as a result of a combination, subdivision or certain reclassifications of our common stock. As a result, the number of shares which may be purchased upon exercise of the warrants may be more or less than one (and will be rounded down to the nearest whole number, but in no event less than one) and the exercise price may be higher or lower than $2.50. The $2.50 was calculated by subtracting the $0.50 warrant purchase price from the $3.00 warrant exercise price. Individuals exercising warrants may pay all or a part of the exercise price of any of their warrants by surrendering the notes purchased in the rights offering. The notes will be valued for this purpose at the principal amount of the notes surrendered, plus accrued interest. 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 articles of incorporation and by-laws. Since we are only providing a general summary of certain terms of our amended and restated articles of incorporation and by-laws, you should only rely on the actual provisions 22 of the amended and restated articles of incorporation or the by-laws. If you would like to read the articles of incorporation or by-laws, they are on file with the Securities and Exchange Commission. 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 December 19, 2001, there were 5,987,011 shares 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 December 19, 2001. As of December 19, 2001, we also had outstanding, under our stock option plans, options to purchase 296,236 shares of our common stock. We have reserved 469,872 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. Preferred Stock Our board of directors is authorized to issue from time to time, without shareholder 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 our common stock. Plan of Distribution On or about December 28, 2001, we will distribute the subscription rights, shareholder rights agreements and copies of this prospectus to individuals who owned shares of common stock on December 19, 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 Securities Exchange Act of 1934. 23 If you wish to exercise your subscription rights and purchase the notes and the warrants, you should complete the shareholder rights agreement and return it with payment for the notes and the warrants, to us, at the address below. 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) 424-0921, extension 2226 (800) 280-8280, extension 2226 Legal Matters The validity of the notes, the warrants and the shares of common stock offered by this prospectus and the tax matters discussed under "Material Federal Income Tax Considerations" has been passed upon for us by Krieg DeVault LLP, Indianapolis, Indiana. Experts BKD LLP (formerly known as 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, 2000, 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 the report of BKD LLP (formerly known as Olive LLP), given on their authority as experts in accounting and auditing. Where You Can Find More Information We file reports and other information with the SEC. You may read and copy any document we file with the SEC at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain further information regarding the operation of the SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings are also available to the public on the SEC's Internet site located at http://www.sec.gov. The SEC allows us to "incorporate by reference" into this prospectus information we file with the SEC. This means we can disclose important information to you by referring you to the documents containing such information. The information we incorporate by reference is considered to be part of this prospectus, unless we update or supersede that information by the information contained in this prospectus or information we file subsequently that is incorporated by reference into this prospectus. We are incorporating by reference into this prospectus the following documents that we have filed with the SEC, and our future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the rights offering is completed: o our annual report on Form 10-K for the fiscal year ended December 31, 2000; o our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2001; o our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2001; o our quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2001; and o our definitive proxy statement filed March 29, 2001 in connection with our 2001 annual shareholder meeting. Our SEC file number is 0-22880. 24 This prospectus is part of a registration statement on Form S-3 we have filed with the SEC relating to the securities that we are offering under this prospectus. As permitted by SEC rules, this prospectus does not contain all of the information included in the registration statement and the accompanying exhibits and schedules we file with the SEC. You should read the registration statement and the exhibits and schedules for more information about us and the notes and the warrants. The registration statement, exhibits and schedules are also available at the SEC's Public Reference Room or through its Internet site. This document incorporates by reference important business, financial and other information about us that is not included in or delivered with this document. Documents incorporated by reference and any other copies of our filings with the SEC are available from us upon written or oral request and without charge to each person, including any beneficial owner, to whom a prospectus is delivered, excluding all exhibits unless specifically incorporated by reference as exhibits in this document. Written and telephone requests for any of these documents should be directed to us as indicated below: Fidelity Federal Bancorp 18 NW Fourth Street P.O. Box 1347 Evansville, Indiana 47706-1347 Attn.: Mark A. Isaac, Vice President Telephone: (812) 424-0921 25 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 (in $) ---- ------ Filing Fee 750.00 Printing Expenses 2,000* Legal Fees, Blue Sky Fees and Expenses 30,000* Accounting Fees and Expenses 3,000* Miscellaneous Expenses 500* ------ Total 36,250* ====== *Estimated. Item 15. Indemnification of Directors and Officers. - ------- ----------------------------------------- Chapter 23-1-37 of the Indiana Business Corporation Law gives corporations the power to indemnify officers and directors under certain circumstances. 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 3.1. The Company also has policies insuring its officers and directors against certain liabilities for action taken in such capacities, including liabilities under the Securities Act of 1933, as amended. See "Item 17. Undertakings" for a description of the SEC's position regarding the indemnification of directors and officers for liabilities arising under the Securities Act of 1933, as amended. 1 Item 16. Exhibits. - ------- -------- The exhibits to this registration statement are listed in the attached Exhibit Index. 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 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. 2 SIGNATURES 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 December 27, 2001. FIDELITY FEDERAL BANCORP By: /s/ DONALD R. NEEL ------------------------------------- Donald R. Neel, President, Chief Financial Officer and Treasurer 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 December 27, 2001. By: /s/ BRUCE A. CORDINGLEY --------------------------------------- Bruce A. Cordingley, Director and Chair of the Executive Committee (Acting Principal Executive Officer) By: /s/ DONALD R. NEEL --------------------------------------- Donald R. Neel, Director, President, Chief Financial Officer and Treasurer (Principal Accounting Officer and Principal Financial Officer) By: /s/ WILLIAM R. BAUGH* --------------------------------------- William R. Baugh, Director By: /s/ GERALD K. PEDIGO* --------------------------------------- Gerald K. Pedigo, Director By: /s/ PAUL E. BECKER* --------------------------------------- Paul E. Becker, Director By: /s/ BARRY A. SCHNAKENBURG* --------------------------------------- Barry A. Schnakenburg, Director By: /s/ PHILLIP J. STOFFREGEN* --------------------------------------- Phillip J. Stoffregen, Director By: /s/ JACK CUNNINGHAM* --------------------------------------- Jack Cunningham, Director and Chairman of the Board *By: /s/ DONALD R. NEEL --------------------------------------- Attorney-in-fact 3 EXHIBIT INDEX
Exhibit Number Document Description Report or Registration Statement - -------------- -------------------- -------------------------------- * 3.1 Articles of Incorporation; Articles of Annual Report on Form 10-K for the fiscal Amendment of the Articles of year ended June 30, 1995; Registration Incorporation Statement on Form S-3, dated January 12, 2001, SEC File No. 333-53668 * 3.2 By-Laws of the Company Registration Statement on Form S-3, dated January 12, 2001, SEC File No. 333-53668 ** 5.1 Opinion of Krieg DeVault LLP regarding legality of shares ** 8.1 Opinion of Krieg DeVault LLP regarding tax matters ** 23.1 Consent of Krieg DeVault LLP (contained in Exhibits 5.1 and 8.1) ** 23.2 Consent of BKD LLP *** 24.1 Power of Attorney (included on the signature page of the registration statement) *** 99.1(a) Shareholder Rights Agreement *** 99.1(b) Instructions for Use of Shareholders Rights Agreement ** 99.2 Letter to Record Shareholders ** 99.3 Letter to Nominee Holders ** 99.4 Letter to Clients of Nominee Holders ** 99.5 Beneficial Owner Election Form ** 99.6 Nominee Holder Certification ** 99.7 Substitute Form W-9 *** 99.8 Form of 9.00% Junior Subordinated Note due 2009 *** 99.9 Form of Warrant
* Incorporated herein by reference as indicated. ** Previously filed. *** Filed herewith. 4 EX-99.1A 3 ex99-1a.txt Exhibit 99.1(a) FIDELITY FEDERAL BANCORP EVANSVILLE, INDIANA SHAREHOLDER RIGHTS AGREEMENT Fidelity Federal Bancorp is conducting a rights offering in which it will offer subscription rights to purchase $1,500,000 principal amount of its 9.00% unsecured junior subordinated notes due 2009 and warrants representing the right to purchase 500,000 shares of its common stock. The terms of the rights offering entitle the holders of our common stock as of the close of business on the record date of December 19, 2001 to receive one (1) basic subscription right, rounded down to the nearest whole number, for every 3,991 shares of our common stock held. Each subscription right you have entitles you to purchase $1,000 principal amount of notes. This is your basic subscription right. For each $1,000 principal amount of notes purchased, you will receive warrant subscription rights to purchase 333 1/3 warrants at the price of $0.50 per warrant. Each warrant represents the right of the holder to purchase one (1) share of common stock of Fidelity Federal at $3.00 per share, less the purchase price of the warrant of $0.50. This is your warrant subscription right. Basic Subscription Right As a holder of our common stock as of the close of business on the record date of December 19, 2001 you will receive one (1) basic subscription right, rounded down to the nearest whole number, for every 3,991 shares of our common stock held. Each basic subscription right you have entitles you to purchase $1,000 principal amount of notes. To the extent that you do not have a sufficient amount of shares to otherwise receive a basic subscription right, you will still receive one basic subscription right for the purchase of a note in the minimum $1,000 principal issuance amount. If any notes are not purchased by the exercise of the basic subscription right, you may be able to purchase additional notes by the exercise of your basic over-subscription privilege subject to availability and proration. Your basic over-subscription privilege entitles you to over-subscribe for additional notes, if you exercised your basic subscription right in full. This limitation is described in our prospectus delivered to you dated December 28, 2001 in the section entitled "The Rights Offering" under the subsections "What is the Basic Over-Subscription Privilege?" and "How Do I Exercise My Over-Subscription Privilege?". We will only permit you to exercise your basic over-subscription privilege if: o you specify below your intent to exercise your basic over-subscription privilege, subject to the terms and conditions of the rights offering, and o the aggregate payment delivered or transmitted by you exceeds the aggregate price you must pay to purchase all notes you are entitled to purchase upon the exercise of your basic subscription right. Set forth below is the number of shares which you own of record as of December 19, 2001. For every 3,991 shares you own on December 19, 2001, you receive one (1) basic subscription right. To determine your basic subscription right, divide the number of shares set forth below by 3,991 and round down to the nearest whole number. For example, if you own 5,000 shares of record, your basic subscription privilege would be 1, calculated by dividing 5,000 by 3,991, which equals 1.2, and rounding down to the nearest whole number, or 1. Remember, to the extent that you do not have a sufficient amount of shares to otherwise receive a basic subscription right, you will still receive one basic subscription right for the purchase of a note in the minimum $1,000 principal issuance amount. -1- Warrant Subscription Right For each $1,000 principal amount of notes purchased in this rights offering you will receive warrant subscription rights to purchase 333 1/3 warrants at the price of $0.50 per warrant. Each warrant subscription right represents the right of the holder to purchase one warrant at $0.50 per warrant. Each warrant represents the right of the holder to purchase one (1) share of common stock of Fidelity Federal at $3.00 per share, less the purchase price of the warrant. If any warrants are not purchased by the exercise of the warrant subscription right, you may be able to purchase additional warrants by the exercise of your warrant over-subscription right privilege subject to availability and proration. Your warrant over-subscription privilege entitles you to over-subscribe for additional warrants only if you exercise your warrant subscription right in full. This limitation is described in our prospectus delivered to you dated December 28, 2001 in the section entitled "The Rights Offering" under the subsections "What is the Warrant Subscription Right?" and "What is the Warrant Over-Subscription Privilege?" You do not have to exercise your basic subscription right in full in order to exercise your warrant over-subscription right. We will only permit you to exercise your warrant over-subscription privilege if: o you specify below your intent to exercise your warrant over-subscription privilege, subject to the terms and conditions of the rights offering, and o the aggregate payment delivered or transmitted by you exceeds the aggregate price you must pay to purchase all warrants you are entitled to purchase upon the exercise of your warrant subscription privilege. The number of warrant subscription rights evidenced by this shareholder rights agreement and which you are entitled to exercise pursuant to your warrant subscription privilege is determined by the number $1,000 principal amount of the notes purchased. For example, if you purchase $100,000 principal amount of notes, you would receive the right to purchase 33,333 warrants. This is determined by multiplying the number of $1,000 principal amount notes purchased, or 100, by 3331/3, and rounding down to the nearest whole number of 33,333. Miscellaneous For a more complete description of the terms and conditions of the rights offering, please refer to the prospectus, which is incorporated herein by reference. Copies of the prospectus are available upon request from Fidelity Federal Bancorp, 18 NW Fourth Street, P.O. Box 1347, Evansville, Indiana 47706-1347, Attention Mark A. Isaac, Vice President, Telephone: (812) 424-0921. We must receive this shareholders rights agreement with payment in full by 5:00 p.m., Central time, on the expiration date of the rights offering, which is February 28, 2002. Any subscription rights not exercised on or prior to February 28, 2002 will expire and no longer be exercisable. Any exercise of a subscription right for notes in the rights offering is irrevocable. We will issue the notes and warrants purchased in the rights offering as soon as practicable following the expiration date. We encourage you to review the prospectus and instructions before exercising your subscription rights. The subscription rights are not assignable or transferable. -2- Rights Holder Representations And Acknowledgments As an inducement to Fidelity to accept this shareholder rights agreement, the undersigned hereby acknowledges, understands and agrees as follows: (a) The undersigned was a shareholder of record or the beneficial owner of shares of Fidelity on December 19, 2001. (b) The shareholder rights agreement and the exercise of rights evidenced by the shareholder rights agreement may be rejected, in whole or in part, at the sole discretion of Fidelity. In the event that this shareholder rights agreement, and the exercise of rights evidenced by the shareholder rights agreement, is rejected by Fidelity for whatever reason, all funds that the undersigned has paid pursuant to this shareholder rights agreement will be promptly returned, without interest thereon, as soon as practicable after such rejection. (c) The representations, warranties, agreements and information provided by the undersigned herein shall be relied upon by Fidelity when issuing notes and warrants upon the exercise of the basic subscription right and basic over-subscription privilege and the warrant subscription right and the warrant over-subscription privilege, as the case may be, of the undersigned. (d) This shareholder rights agreement shall be binding upon and inure to the benefit of the undersigned's heirs, successors and representatives. The undersigned shall not transfer or assign his interest under this shareholder rights agreement. (e) This shareholder rights agreement shall be construed in accordance with and governed by the laws of the State of Indiana, without regard to choice of law principles. (f) All information contained in this shareholder rights agreement with respect to the undersigned shall be true, accurate and complete on the date of this agreement and on the date that this agreement is accepted by Fidelity. The undersigned shall indemnify and hold harmless Fidelity and its directors, officers, employees and agents from and against all claims, losses, damages and liabilities, including without limitation reasonable attorneys' fees and costs, resulting from or arising out of any misrepresentation or any inaccuracy in or breach of any statement or provision by the undersigned contained in this shareholder rights agreement. [THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK] -3- Exercise of Rights The undersigned hereby irrevocably exercises one or more subscription rights to subscribe for $1,000 principal amount notes or warrants of Fidelity as indicated below, on the terms and subject to the conditions specified in the prospectus of Fidelity dated December 28, 2001, receipt of which is hereby acknowledged. (a) Basic Subscription Rights. Number of $1,000 principal amount notes subscribed for pursuant to the basic subscription privilege. Remember, you need one (1) subscription right to subscribe for one note: ____________ x $1,000 = $_______________ payment. (b) Basic Over-Subscription Privilege. Number of $1,000 principal amount notes subscribed for pursuant to the over-subscription privilege: ____________ x $1,000 = $_______________ payment. By exercising the over-subscription privilege, the undersigned represents and certifies that the undersigned has fully exercised its basic subscription privilege. (c) Warrant Subscription Right. Number of warrants subscribed for pursuant to the warrant subscription privilege. Remember, you may subscribe for 333 1/3 warrants for each $1,000 principal amount notes subscribed for. Further, you may only subscribe for warrants if you have subscribed for at least $1,000 principal amount of notes. ____________ x $0.50 = $_______________ payment. (d) Warrant Over-Subscription Privilege. Number of warrants subscribed for pursuant to the warrant over- subscription privilege. ____________ x $0.50 = $_______________ payment. By exercising the over-subscription privilege, the undersigned represents and certifies that the undersigned has fully exercised its warrant subscription privilege. (e) Total Subscription: This is equal to the sum of the payments calculated on lines (a), and (b). The total subscription is $_______________ payment. If you do not specify the number of subscription rights and over-subscription privileges being exercised, or if your payment is not sufficient to pay the total purchase price for all of the notes and warrants that you indicated you wished to purchase, you will be deemed to have exercised the maximum number of subscription rights and over- subscription privileges that could be exercised for the amount of the payment that we receive from you. If your payment exceeds the total purchase price for all of the subscription rights shown on this shareholder rights agreement, your payment will be applied, until depleted, to subscribe for notes and warrants in the following order: (1) to subscribe for the principal amount of notes and the number of warrants, if any, that you indicated on the shareholder rights agreement that you wished to purchase through your basic subscription right and warrant subscription right, until your basic subscription right and warrant subscription right have been fully exercised; -4- (2) to subscribe for additional principal amount of notes pursuant to the basic over-subscription privilege, subject to any applicable limitation; and (3) to subscribe for additional warrants pursuant to the warrant over-subscription privilege, subject to limitation. Any excess payment remaining after the foregoing allocation will be returned to you as soon as practicable by mail, without interest or deduction. Method of Payment (Check And Complete Appropriate Box(es)): ---------------------------------------------------------- [ ] Check, bank draft, or money order payable to "Fidelity Federal Bancorp"; or [ ] Wire transfer of immediately available funds directed to: Wire to: Federal Home Loan Bank of Indianapolis ABA#: 074 001 019 Further Credit: United Fidelity Bank, fsb Account #: 8166-9994 Further Credit: Fidelity Federal Bancorp - Rights Offering Account #: 0-01-45004609 IN WITNESS WHEREOF, the undersigned (has/have) executed this Shareholder Rights Agreement this _______ day of _________________________, 2002. Rights holder's Signature(s) ____________________________ Rights holder's Signature(s) ____________________________ (If held jointly) Telephone No. (_____) _____-__________ -5- Delivery Instructions Address for mailing of notes and warrants in accordance with the prospectus if other than shown on the first page hereof: Name: __________________________________________________________________________ Address: _______________________________________________________________________ Rights holder's Signature(s): __________________________________________________ Rights holder's Signature(s): __________________________________________________ (If held jointly) Signatures Guaranteed by: ______________________________________________________ Note: If the addressee above is not a commercial bank, broker, dealer, credit union, national securities exchange or savings association or the shareholder named on this shareholder rights agreement, then the shareholder completing this shareholder rights agreement must have a commercial bank, broker, dealer, credit union, national securities exchange or savings association guarantee such rights holder's signature. -6- EX-99.1B 4 ex99-1b.txt Exhibit 99.1(b) INSTRUCTIONS FOR USE OF FIDELITY FEDERAL BANCORP SHAREHOLDER RIGHTS AGREEMENT CONSULT THE COMPANY OR YOUR BANK OR BROKER AS TO ANY QUESTIONS The following instructions relate to a rights offering (the "Rights Offering") by Fidelity Federal Bancorp (the "Company"), to the holders of its common stock (the "Common Stock"), as described in the Company's prospectus dated December 28, 2001 (the "Prospectus"). Holders of record of shares of the Common Stock at the close of business on December 19, 2001 (the "Record Date") are receiving one (1) subscription right, rounded down to the nearest whole number, for every 3,991 shares of the Common Stock held by them on the Record Date (the "Basic Subscription Right"). Each Basic Subscription Right is exercisable, upon payment of $1,000 in cash (the "Basic Subscription Price"), to purchase $1,000 principal amount of notes. For each $1,000 principal amount of notes purchased you will receive warrant subscription rights to purchase 333 1/3 warrants at the price of $0.50 per warrant (the "Warrant Subscription Price"). Each warrant represents the right of the holder to purchase one (1) share of common stock of Fidelity Federal at $3.00 per share less the purchase price of the warrant (the "Warrant Subscription Right"). In addition, subject to availability and proration, and the limitations described in the Prospectus, each rights holder who fully exercises the Basic Subscription Right as to notes, or the Warrant Subscription Right as to warrants, may also subscribe at the Basic Subscription Price or at the Warrant Subscription Price, as the case may be, for additional notes or warrants (respectively, the Basic Over-Subscription Privilege" and the "Warrant Over-Subscription Privilege"). Only the notes and warrants not subscribed for through the exercise of the Basic Subscription Right and the Warrant Subscription Right by the Expiration Date, as defined below, will be available for purchase pursuant to the Basic Over-Subscription Privilege or the Warrant Over-Subscription Privilege. Nominee holders of Common Stock that hold, on the Record Date, shares for the account(s) of more than one beneficial owner may exercise the number of Basic Subscription Rights and Warrant Subscription Rights (collectively, the "Rights") to which all such beneficial owners in the aggregate would otherwise have been entitled if they had been direct record holders of Common Stock on the Record Date; provided such nominee holder makes a proper showing to the Company, as determined in the Company's sole and absolute discretion. The Rights will expire at 5:00 p.m., Central time, on February 28, 2002 (the "Expiration Date"). You should calculate the number of Rights to which you are entitled in the manner set forth on the face of your Shareholder Rights Agreement. You should indicate your elections with regard to the exercise of your Rights by completing the appropriate form or forms on your Shareholder Rights Agreement and returning it to the Company in the envelope provided. Your Shareholder -1- Rights Agreement must be received by the Company, including final clearance of any checks on or before 5:00 p.m., Central time, on February 28, 2002. You may not revoke any exercise of your Rights. 1. Subscription Privilege. ---------------------- To exercise Rights, complete the Shareholder Rights Agreement and deliver your properly completed and executed Shareholder Rights Agreement, together with payments in full to the Company of both the Basic Subscription Price for each $1,000 principal amount of notes subscribed for pursuant to the Basic Subscription Right and the Basic Over-Subscription Privilege, and the Warrant Subscription Price for each Warrant Subscription Right and the Warrant Over-Subscription Privilege (collectively, the "Total Subscription Price") to the Company. Payment of the Total Subscription Price must be made in U.S. dollars for the full number of notes and warrants being subscribed for by (a) check or bank draft (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, or (b) wire transfer of same day funds to the account maintained by the Company for such purpose at the Federal Home Loan Bank of Indianapolis, ABA# 074 001 019 further credit United Fidelity Bank, fsb (marked: Fidelity Federal Bancorp - Rights Offering). The Subscription Price will be deemed to have been received by the Company only upon (i) the clearance of any uncertified check, (ii) the receipt by the Company of any certified check or bank draft drawn upon a U.S. bank or of any postal, telegraphic or express money order, (iii) receipt by the Company of any funds transferred by wire transfer, or (iv) receipt of funds by the Company through an alternative payment method approved by the Company. If paying by uncertified personal check, please note that the funds paid thereby may take five business days or more to clear. Accordingly, Rights holders who wish to pay the Total Subscription Price by means of an uncertified personal check are urged to make payment sufficiently in advance of the Expiration Date to ensure that such payment is received and clears by such date and are urged to consider payment by means of certified or cashier's check, money order or wire transfer of funds. Banks, brokers, trusts, depositories or other nominee holders of the Rights who exercise the Basic Subscription Right and the Basic Over-Subscription Privilege, or the Warrant Subscription Right and the Warrant Over-Subscription Privilege on behalf of beneficial owners of Rights will be required to certify to the Company on a Nominee Holder Certification Form, in connection with the exercise of either the Basic Over-Subscription Privilege or the Warrant Over-Subscription Privilege, as to the aggregate number of Rights that have been exercised, and the number of notes or warrants that are being subscribed for pursuant to the over-subscription privileges by each beneficial owner of Rights on whose behalf such nominee holder is acting. -2- The address and facsimile numbers of the Company are as follows: Fidelity Federal Bancorp 18 NW Fourth Street PO Box 1347 Evansville, Indiana 47706-1347 Attention: Mark A. Isaac, Vice President Telephone: (812) 424-0921 Facsimile: (812) 421-2931 Delivery of the Shareholders Rights Agreement to an address other than as set forth above or transmission via a facsimile machine other than as set forth above does not constitute a valid delivery. The telephone numbers of the Company, for inquiries, information or requests for additional documentation are as follows: Fidelity Federal Bancorp Attention: Mark A. Isaac, Vice President 18 NW Fourth Street, PO Box 1347 Evansville, Indiana 47706-1347 Telephone: (812) 424-0921 If you do not specify the number of subscription rights and over-subscription privileges being exercised, or if your payment is not sufficient to pay the total purchase price for all of the notes and warrants that you indicated you wished to purchase, you will be deemed to have exercised the maximum number of subscription rights and over-subscription privileges that could be exercised for the amount of the payment that we received from you. If your payment exceeds the total purchase price for all of the subscription rights shown on this shareholder rights agreement, your payment will be applied, until depleted, to subscribe for notes and warrants in the following order: (1) to subscribe for the principal amount of notes and the number of warrants, if any, that you indicated on the shareholder rights agreement that you wished to purchase through your basic subscription right and warrant subscription right, until your basic subscription right and warrant subscription right have been fully exercised; (2) to subscribe for additional principal amount of notes pursuant to the basic over-subscription privilege, subject to any applicable limitation; and (3) to subscribe for additional warrants pursuant to the warrant over-subscription privilege, subject to limitation. -3- Any excess payment remaining after the foregoing allocation will be returned to you as soon as practicable by mail, without interest or deduction. 2. Conditions to Completion of the Rights Offering. ------------------------------------------------ There are no conditions to the completion of the Rights Offering. However, the board of directors of the Company may withdraw the Rights Offering in its sole discretion at any time prior to or on February 28, 2002 for any reason (including, without limitation, a change in the market price of the Company's common stock). If the board of directors of the Company withdraws the Rights Offering, any funds you paid will be promptly refunded, without interest or penalty. 3. Delivery of notes and warrants. ------------------------------- The following deliveries and payments will be made to the address shown on the face of your Shareholders Rights Agreement unless you provide instructions to the contrary on the Shareholders Rights Agreement. (a) Basic Subscription Right and Warrant Subscription Right. As soon as practicable after the valid exercise of the Rights, the Company will mail to each exercising Rights holder certificates representing notes and warrants purchased pursuant to the Basic Subscription Right and Warrant Subscription Right. (b) Basic Over-Subscription Privilege and Warrant Over-Subscription Privilege. As soon as practicable after the Expiration Date, the Company will mail to each Rights holder who validly exercises the Basic or Warrant Over-Subscription Privilege the number of notes and warrants allocated to such Rights holder pursuant to the respective over-subscription privilege. (c) Cash Payments. As soon as practicable after the Expiration Date, the Company will mail to each Rights holder who exercises the over-subscription privilege with respect to notes or warrants any excess funds, without interest or deduction, received in payment of the Subscription Price for each note or warrant that was subscribed for by, but not allocated to, such Rights holder pursuant to the relevant over-subscription privilege. 4. Execution. ---------- (a) Execution by Registered Holder(s). The signature on the Shareholder Rights Agreement must correspond with the name of the registered holder exactly as it appears on the Shareholders Rights Agreement without any alteration or change whatsoever. If the Shareholder Rights Agreement is registered in the names of two or more joint owners, all of such owners must sign. Persons who sign the Shareholder Rights Agreement in a representative or other fiduciary capacity must -4- indicate their capacity when signing and, unless waived by the Company in its sole and absolute discretion, must present to the Company satisfactory evidence of their authority to so act. (b) Execution by Person Other than Registered Holder. If the Shareholder Rights Agreement is executed by a person other than the holder named on the face of the Shareholder Rights Agreement, proper evidence of authority of the person executing the Shareholder Rights Agreement must accompany the same unless, for good cause, the Company dispenses with proof of authority. (c) Signature Guarantees. Your signature must be guaranteed by an Eligible Institution if you wish to specify special delivery instructions pursuant to the Shareholder Rights Agreement. 5. Method of Delivery. ------------------- The method of delivery of Shareholder Rights Agreements and payment of the Subscription Price to the Company will be at the election and risk of the Rights holder, but, if sent by mail, it is recommended that they be sent by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure delivery to the Company and the clearance of any checks sent in payment of the Subscription Price prior to the Expiration Date. 6. Substitute Form W-9. -------------------- Each Rights holder who elects to exercise Rights through the Company should provide the Company with a correct Taxpayer Identification Number ("TIN") and, where applicable, certification of such Rights holder's exemption from backup withholding on Substitute Form W-9. Each foreign Rights holder who elects to exercise the Rights through the Company should provide the Company with certification of foreign status on Form W-8. Copies of Form W-8 and additional copies of Substitute Form W-9 may be obtained upon request from the Company at the address, or by calling the telephone number indicated above. Failure to provide the information on the form may subject such holder to 31% federal income tax withholding with respect to interest and dividends that may be paid by the Company on notes and warrants purchased upon the exercise of Rights (for those holders exercising Rights). -5- EX-99.8 5 ex99-8.txt Exhibit 99.8 Form of Note - Face FIDELITY FEDERAL BANCORP 9.00% JUNIOR SUBORDINATED NOTE DUE 2008 Registered Number Registered Amount: o $ o CUSIP: o Fidelity Federal Bancorp, an Indiana corporation (herein called the "Company", which term includes any successor corporation), for value received, hereby promises to pay to o or registered assigns, the principal sum of o Dollars ($ o ) on February 28, 2009, and to pay interest thereon from March 1, 2002 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on March 1 and September 1 in each year, commencing September 1, 2002, at the rate of 9.00% per annum, based upon a 360-day year, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest, which shall be on February 15 or August 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Payment of the principal of (and premium, if any) and interest on this Security will be made at the offices of Fidelity Federal Bancorp, 18 NW Fourth Street, PO Box 1347, Evansville, Indiana 47706-1347 (the "Registrar and Paying Agent"), and at any other office or agency maintained by the Company for such purpose, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Note Register. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. REGISTRAR'S CERTIFICATE FIDELITY FEDERAL BANCORP OF AUTHENTICATION This is one of those Notes authorized By: ---------------------------------- by the Company as its 9.00% Junior Subordinated Notes due 2008 And: --------------------------------- FIDELITY FEDERAL BANCORP By: ------------------------------------ Authorized Representative Page 1 Form of Note - Reverse This Note is one of a duly authorized issuance by the Company designated as its 9.00% Junior Subordinated Notes due 2009 (herein called the "Notes"), limited in aggregate principal amount to $1,500,000; provided, however, the Company may issue additional Notes from time to time without the consent of holders of the Notes. The Notes are not redeemable at the option of the Company, in whole or in part, at any time after March 1, 2002 and prior to maturity. The Notes are redeemable at the option of the Company, in whole or in part, at any time upon not less than 15 and not more than 30 days' notice mailed to each Holder of Notes to be redeemed at his address appearing in the Note Register, at face value plus accrued and unpaid interest to the date of redemption. If Notes are redeemed, in whole or in part, on or after March 1, 2002 and before March 1, 2003, the Company also will pay to the Holder thereof a redemption premium equal to two percent (2%) of the principal amount of the Note that has been redeemed. If Notes are redeemed, in whole or in part, on or after March 1, 2003 and before March 1, 2004, the Company also will pay to the Holder thereof a redemption premium equal to one percent (1%) of the principal amount of the Note that has been redeemed. In the event Notes are redeemed in part only, the Notes will be selected for redemption on a pro rata basis, by lot or by such other method as the Company in its sole discretion deems fair and reasonable. The Notes will only be redeemed in multiples of $1,000 in original principal amount. A Note in principal amount equal to the unredeemed portion of the original Note will be issued upon cancellation of the original Note. The Company is not obligated to make mandatory redemption or sinking fund payments with respect to the Notes. The Notes rank pari passu with each other and with the Company's 12.00% Junior Subordinated Notes due April 2004, which means they rank proportionately, similarly and at an equal level. The indebtedness evidenced by the Notes are a direct, unsecured obligation of the Company and, except as noted above, are fully subordinated to all other indebtedness and obligations of the Company, including any future issues of subordinated notes or debentures of the Company but not to common stock or preferred stock of the Company. The Notes are not savings or deposit accounts or other obligations of United Fidelity Bank or any non-bank affiliate of the Company and are not insured by the Federal Deposit Insurance Corporation or any governmental agency. If the Company shall fail to pay the interest on, or principal of this Note when due, and which failure continues for a period of thirty (30) days, the principal of and interest on this Note may be declared due and payable by the Holder thereof and payment may be enforced in accordance with applicable Indiana law. No Holder of any Note and no director, officer, employee, agent, manager, partner or other interest holder of the Company shall have any liability for any obligation of the Company under the Notes or for any claim based on, in respect of or by reason of such obligations. Each Holder, by accepting a Note, waives and releases all such liability. Such waiver and release shall be part of the consideration for the issuance of the Notes. Notwithstanding the foregoing, nothing in this provision shall be construed as a waiver or release of any claims under the Federal securities laws. A Holder of any Note may surrender such Note at the principal amount of such Note surrendered, plus accrued and unpaid interest, in payment of the exercise price of any warrants for the purchase of common stock of the Company issued in connection herewith. Page 2 The exchange or transfer of this Note is registrable in the Note Register, upon surrender of this Note for exchange or for registration of transfer at the offices of the Fidelity Federal Bancorp, 18 NW Fourth Street, PO Box 1347, Evansville, Indiana 47706-1347, or at any other office or agency maintained by the Company for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof and are exchangeable for a like aggregate principal amount of Notes of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. In the event any Note is mutilated, lost, stolen or destroyed, the Company may cause a new Note to be authenticated of like date, maturity and denomination as that mutilated, lost, stolen, or destroyed, provided that, in the case of any mutilated Note, such mutilated Note shall first be surrendered to the Company, and in the case of any lost, stolen or destroyed Note, there shall be first furnished to the Company evidence of such loss, theft or destruction satisfactory to the Company, together with indemnity satisfactory to it. In the event any such lost, stolen, or destroyed Note shall have matured, instead of issuing a duplicate Note the Company may, upon receiving indemnity satisfactory to it, pay the same without surrender thereof. The Company may charge the Holder of such Note with its reasonable fees and expenses in connection with the above. Prior to due presentment of this Note for registration of transfer, the Company and any agent of the Company may treat the person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. Page 3 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TENANT - as tenants by the entireties JTTEN - as joint tenants with rights of survivorship and not as tenants in common UNIF TRANF MIN ACT - Custodian ----------------- -------------------- (Cust) (Minor) under Uniform Transfers to Minors Act --------------------------------------- (State) Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE / / - ------------------------------------------- Please print or typewrite name and address including postal zip code of assignee - -------------------------------------------------------------------------------- the within Note and all rights thereunder, hereby irrevocably constituting and appointing attorney ------------------------------------------------------------ to transfer said Note on the books of the Company, with full power of substitution in the premises. Dated: ------------------------- THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE NOTICE: The signature to this assignment must correspond with GUARANTOR INSTITUTION, (BANKS, STOCKBROKERS, SAVINGS the name(s) as written upon the face of the within instrument AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBER- in every particular, without alteration or enlargement or any SHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION change whatever. PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. Page 4 EX-99.9 6 ex99-9.txt Exhibit 99.9 WARRANTS TO PURCHASE SHARES OF COMMON STOCK OF FIDELITY FEDERAL BANCORP Number of Warrants: o Registered Number: CUSIP: o o This Warrant Certificate certifies that ______________ or registered assigns (the "Holder"), is the owner of ______________ Warrants (subject to adjustment as provided herein), each of which represents the right to subscribe for and purchase from Fidelity Federal Bancorp, an Indiana corporation (the "Company"), one share of the common stock, no par value, of the Company (the common stock, including any stock into which it may be changed, reclassified or converted, is herein referred to as the "Common Stock") at the purchase price (the "Exercise Price") of $3.00 per share (subject to adjustment as provided herein), less the purchase price of the Warrant ($0.50 per Warrant). This Warrant Certificate represents only Warrants issued pursuant to a Shareholder Rights Agreement dated ______________ between the Company and ______________ (the "Agreement"). The Warrants represented by this Warrant Certificate are subject to the following provisions, terms and conditions: 1. EXERCISE OF WARRANTS Exercise of Warrants. The Warrants may be exercised by the Holder, in whole or in part (but not as to a fractional share of Common Stock), by surrender of this Warrant Certificate at the office of Fidelity Federal Bancorp, 18 NW Fourth Street, PO Box 1347, Evansville, Indiana 47706-1347 (the "Transfer Agent") (or such other office or agency of the Company as may be designated by notice in writing to the Holder at the address of such Holder appearing on the books of the Company), with the appropriate form attached hereto duly exercised, at any time within the period beginning on the date hereof and expiring at 5 p.m., Central time, on February 28, 2012 (the "Exercise Period") and by payment to the Company of the purchase price for such shares by certified check or bank draft or by surrender of the Company's 9.00% Junior Subordinated Notes due 2009 at their face amount plus accrued and unpaid interest, held by such Holder, at the Holder's option. The Company agrees that the shares of Common Stock so purchased shall be and are deemed to be issued to the Holder as the record owner of such shares of Common Stock as of the close of business on the date on which the Warrant Certificate shall have been surrendered and payment made for such shares of Common Stock. Certificates representing the shares of Common Stock so purchased, together with any cash for fractional shares of Common Stock paid pursuant to Section 2E hereof, shall be delivered to the Holder promptly and in no event later than ten (10) days after the Warrants shall have been exercised, and, unless the Warrants have expired, a new Warrant Certificate representing the number of Warrants represented by the surrendered Warrant Certificate, if any, that shall not have been exercised shall also be delivered to the Holder within such time. 2. ADJUSTMENTS A. Adjustments. The Exercise Period and the number of shares of Common Stock issuable upon exercise of each Warrant shall be subject to adjustment from time to time as follows: (1) Stock Dividends; Stock Splits; Reverse Stock Splits; Reclassifications. In case the Company shall (i) pay a dividend with respect to its capital stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of any class of Common Stock or (iv) issue any shares of its capital stock in a reclassification of the Common Stock (including any such reclassification in connection with a merger, consolidation or other business combination in which the Company is the continuing corporation) (any one of which actions is herein referred to as an "Adjustment Event"), the number of shares of Common Stock purchasable upon exercise of each Warrant immediately prior to the record date for such Adjustment Event shall be adjusted so that the Holder shall thereafter be entitled to receive the number of shares of Common Stock or other securities of the Company (such other securities thereafter enjoying the rights of shares of Common Stock under this Warrant Certificate) that such Holder would have owned or have been entitled to receive after the happening of such Adjustment Event, had such Warrant been exercised immediately prior to the happening of such Adjustment Event or any record date with respect thereto. An adjustment made pursuant to this Section 2A(1) shall become effective immediately after the effective date of such Adjustment Event retroactive to the record date, if any, for such Adjustment Event. (2) Adjustment of Exercise Price. Whenever the number of shares of Common Stock purchasable upon exercise of each Warrant is adjusted pursuant to Section 2A(1), the Exercise Price for each share of Common Stock payable upon exercise of each Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of each Warrant immediately prior to such adjustment, and the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter. (3) De Minimis Adjustments. No adjustment in the number of shares of Common Stock purchasable hereunder shall be required unless such adjustment would require an increase or decrease of at least one percent (1.0%) in the number of shares of Common Stock purchasable upon an exercise of each Warrant; provided, however, that any adjustment which by reason of this Section 2A(3) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations shall be made to the nearest full share. (4) Duty to Make Fair Adjustments in Certain Cases. If any event occurs as to which in the opinion of the Board of Directors of the Company the other provisions of this Section 2A are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Warrants in accordance with the essential intent and principles of such provisions, the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid. B. Notice of Adjustment. Whenever the number of shares of Common Stock purchasable upon the exercise of each Warrant or the Exercise Price is adjusted, as herein provided, the Company shall promptly notify the Holder in writing (such writing referred to as an "Adjustment Notice") of such adjustment or adjustments setting forth the number of shares of Common Stock purchasable upon the exercise of each Warrant and the Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. C. Statement on Warrant Certificates. The form of this Warrant Certificate need not be changed because of any change in the Exercise Price or in the number of shares purchasable upon the exercise of a Warrant. However, the Company may at any time in its sole discretion make any change in the form of the Warrant Certificate that it may deem appropriate and that does not affect the substance thereof and any Warrant Certificate thereafter issued, whether in exchange or substitution for any outstanding Warrant Certificate or otherwise, may be in the form so changed. D. Notice to Holder of Record Date; Dissolution; Liquidation or Winding Up. The Company shall cause to be mailed (by first class mail, postage prepaid) to the Holder notice of the record date for any dividend, distribution or payment, in cash or in kind (including, without limitation, evidence of indebtedness and assets), with respect to shares of Common Stock at least 20 calendar days before any such date. In case at any time after the date thereof, there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company, then the Company shall cause to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's address as shown on the books of the Company, at the earliest practicable time (and, in any event, not less than 20 calendar days before any date set for definitive action), notice of the date on which such dissolution, liquidation or winding up shall take place, as the case may be. The notices referred to above shall also specify the date as of which the holders of the shares of Common Stock of record or other securities underlying the Warrants shall be entitled to receive such dividend, distribution or payment, money or the property deliverable upon such dissolution, liquidation or winding up, as the case may be (the "Entitlement Date"). In the case of any dissolution, liquidation or winding up of the Company, the Holder shall receive on the Entitlement Date the cash or other property, less the Exercise Price for the Warrants then in effect, that such Holder would have been entitled to receive had the Warrants been exercisable and exercised immediately prior to such dissolution, liquidation or winding up (or, if appropriate, the record date therefore) and any right of a Holder to exercise the Warrants shall terminate. E. Fractional Interest. The Company shall not be required to issue fractional shares of Common Stock on Exercise of the Warrants. If more than one Warrant shall be presented for exercise in full at the same time by the same Holder, the number of full shares of Common Stock which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of whole shares of Common Stock purchasable on exercise of the Warrants so presented. If any fraction of a share of Common Stock would, except for the provisions of this Section 2E, be issuable on the exercise of the Warrants (or specified proportion thereof), the Company shall pay an amount in cash calculated by it to be equal to the then fair value of one share of Common Stock, as determined bythe Board of Directors of the Company in good faith, multiplied by such fraction computed to the nearest whole cent. 3. NO VOTING RIGHTS This Warrant Certificate shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. 4. EXERCISE OR TRANSFER OF WARRANTS OR COMMON STOCK The Holder of this Warrant Certificate agrees to be bound by the provisions contained in the Agreement with respect to the limitations, including the limitations imposed for Secrities Act compliance, on the transfer of the Warrants and the shares of Common Stock or other securities issuable upon exercise of the Warrants. 5. WARRANTS TRANSFERABLE Subject to the provisions of Section 4, this Warrant Certificate and the Warrants it evidences are transferable, in whole or in part, without charge to the Holder, at the office or agency of the Company referred to in Section 1, by the Holder in person or by duly authorized attorney, upon surrender of this Warrant Certificate properly endorsed. Each taker and Holder of this Warrant Certificate, by taking or holding the same, consents and agrees that this Warrant Certificate, when endorsed in blank, shall be deemed negotiable, and that the Holder, when this Warrant Certificate shall have been so endorsed, may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant Certificate, or to the transfer hereof on the books of the Company, any notice to the contrary notwithstanding; but until such transfer on such books, the Company may treat the registered older hereof as the owner for all purposes. 6. CLOSING OF BOOKS The Company will at no time close its transfer books against the transfer of any Warrant or of any shares of Common Stock or other securities issuable upon the exercise of any Warrant in any manner which interferes with the timely exercise of the Warrants. 7. WARRANTS EXCHANGEABLE, LOSS, THEFT, ETC. The Warrant Certificate is exchangeable, upon the surrender hereof by any Holder at the office or agency of the Company referred to in Section 1, for new Warrant Certificates of like tenor representing in the aggregate the right to subscribe for and purchase the number of shares of Common Stock which may be subscribed for and purchased hereunder, each such new Warrant to represent the right to subscribe for and purchase such number of shares of Common Stock as shall be designated by said Holder hereof at the time of such surrender. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction or mutilation, upon surrender or cancellation of this Warrant Certificate, the Company will issue to the Holder hereof a new Warrant Certificate of like tenor, in lieu of this Warrant Certificate, representing the right to subscribe for and purchase the number of shares of Common Stock which may be subscribed for and purchased hereunder. 8. MERGERS, CONSOLIDATIONS, ETC. A. If the Company shall merge or consolidate with another corporation, the Holder of this Warrant shall thereafter have the right, upon exercise hereof and payment of the Exercise Price, to receive solely the kind and amount of shares of stock (including, if applicable, Common Stock), other securities, property, cash, or combination thereof receivable by a holder of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such merger or consolidation (assuming, if applicable, that the holder of such Common Stock failed to exercise its rights of election, if any, as to the kind or amount of shares of stock, other securities, property, cash or combination thereof receivable upon such merger or consolidation). B. In case of any reclassification or change of the shares of Common Stock issuable upon exercise of this Warrant (other than elimination of par value, a change in par value, or from par value to no par value, or as the result of a subdivision or combination of shares (which is provided for elsewhere herein), but including any reclassification of the shares of Common Stock into two or more classes or series of shares) or in the case of any merger or consolidation of another corporation into the Company in which the Company is the surviving corporation and in which there is a reclassification or change of the shares of Common Stock (other than elimination of par value, a change in par value, or from par value to no par value, or as the result of a subdivision or combination of shares (which is provided for elsewhere herein), but including any reclassification of the shares of Common Stock into two or more classes or series of shares) this Warrant shall thereafter have the right, upon exercise hereof and payment of the Exercise Price, to receive solely the kind and amount of shares (including, if applicable, Common Stock), other securities, property, cash, or combination thereof receivable upon such reclassification, change, merger or consolidation by a holder of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such reclassification, change, merger or consolidation (assuming, if applicable, that the holder of such Common Stock failed to exercise its rights of election, if any, as to the kind or amount of shares of stock, other securities, property, cash or combination thereof receivable upon such reclassification, change, merger or consolidation). 9. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANTS The rights and obligations of the Company, the Holder, and of the holders of shares of Common Stock or other securities issued upon exercise of the Warrants, contained in Section 4 of this Warrant Certificate, shall survive exercise of the Warrants. SUBSCRIPTION AGREEMENT Dated: _____________ Fidelity Federal Bancorp By: _____________________ Attest: _____________________________________________ (secretary) To: Fidelity Federal Bancorp Date: __________________ The undersigned, pursuant to the provisions set forth in the attached Warrant Certificate and the Agreement, hereby agrees to subscribe for and purchase__________ shares of the Common Stock covered by such Warrant Certificate, and tenders payment herewith in full thereof at the price per shares provided by such Warrant Certificate. Holder: __________________________________________________ By: ______________________________________________________ Its ______________________________________________________ Address: _________________________________________________ ASSIGNMENT FORM ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common TENANT - as tenants by the entireties JTTEN - as joint tenants with rights of survivorship and not as tenants in common UNIF TRANF MIN ACT - Custodian --------------------- -------------------- (Cust) (Minor) under Uniform Transfers to Minors Act ------------------------------------------------ (State) Additional abbreviations may also be used though not in the above list. ----------------------------------------------------------------------- FOR VALUE RECEIVED, the undersigned registered holder of the attached Warrant Certificate hereby sells, assigns, and transfers unto the Assignee(s) named below (including the undersigned with respect to any Warrants that are evidenced by the Warrant Certificate that are not being assigned hereby) all of the right of the undersigned under the Warrant Certificate, with respect to the number of Warrants set forth below: Social Security or other Names of identifying number of Numbers of Assignee(s) Address Assignee(s) Warrants - ----------- ------- ------------------------ -------- and does hereby irrevocably constitute and appoint ________________________ The undersigned's attorney in fact to make ________________________ such transfer on the books of maintained for the purpose, with full power of substitution in the premises. Date: ___________________ _______________________________________ __________________________________ THE SIGNATURE(S) SHOULD BE NOTICE: The signature to this GUARANTEED BY AN ELIGIBLE assignment must correspond with GUARANTOR INSTITUTION, (BANKS, the name(s) as written upon the STOCKBROKERS, SAVINGS face of the within instrument in AND LOAN ASSOCIATIONS AND CREDIT every particular, without UNIONS WITH MEMBERSHIP IN AN APPROVED alteration or enlargement or any SIGNATURE GUARANTEE change whatever. MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. -----END PRIVACY-ENHANCED MESSAGE-----