SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. [ ])
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
FIDELITY D & D BANCORP, INC.
----------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No filing fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[FIDELITY D & D BANCORP, INC. LETTERHEAD]
March 31, 2001
Dear Fellow Shareholders of Fidelity D & D Bancorp, Inc.:
On behalf of the Board of Directors, I am pleased to invite you to
attend our Annual Meeting of Shareholders to be held on Tuesday, May 1, 2001, at
3:00 p.m., Eastern Daylight Time, at the main office of Fidelity D & D Bancorp,
Inc., at Blakely and Drinker Streets, Dunmore, Pennsylvania 18512. At the annual
meeting, you will have the opportunity to ask questions and to make comments.
Enclosed with this proxy statement are your proxy and the company's 2000 Annual
Report.
The principal business of the meeting is to elect 10 directors,
including 4 Class A Directors, 3 Class B Directors and 3 Class C Directors, for
staggered terms of office; to approve and adopt the Fidelity D & D Bancorp, Inc.
2000 Independent Directors Stock Option Plan and the Fidelity D & D Bancorp,
Inc. 2000 Stock Incentive Plan; to ratify the selection of the independent
auditors for 2001; and to transact any other business that is properly presented
at the annual meeting. The notice of meeting and proxy statement accompanying
this letter describe the specific business to be acted upon in more detail.
I am delighted you have chosen to invest in the company, and I hope
that, whether or not you plan to attend the annual meeting, you will vote as
soon as possible by completing, signing and returning the enclosed proxy in the
envelope provided. The prompt return of your proxy will save the company
expenses involved in further communications. Your vote is important. Voting by
written proxy will ensure your representation at the annual meeting if you do
not attend in person.
I look forward to seeing you on May 1, 2001, at the company's annual
meeting.
Sincerely,
/s/ Michael F. Marranca
Michael F. Marranca, President
and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 1, 2001
TO THE SHAREHOLDERS OF FIDELITY D & D BANCORP, INC.:
NOTICE IS HEREBY GIVEN that Fidelity D & D Bancorp, Inc. will hold its
Annual Meeting of Shareholders on Tuesday, May 1, 2001, at 3:00 p.m., Eastern
Daylight Time, at the main office of Fidelity D & D Bancorp, Inc., at Blakely
and Drinker Streets, Dunmore, Pennsylvania 18512, to consider and vote upon the
following proposals:
1. Election of 4 Class A Directors to serve for a two-year term
and until their successors are properly elected and qualified;
2. Election of 3 Class B Directors to serve for a one-year term
and until their successors are properly elected and qualified;
3. Election of 3 Class C Directors to serve for a three-year term
and until their successors are properly elected and qualified;
4. Approval and adoption of the Fidelity D & D Bancorp, Inc. 2000
Independent Directors Stock Option Plan;
5. Approval and adoption of the Fidelity D & D Bancorp, Inc. 2000
Stock Incentive Plan;
6. Ratification of the selection of Parente Randolph, P.C.,
Certified Public Accountants, as independent auditors for the
company for the fiscal year ending December 31, 2001; and
7. The transaction of any other business properly before the
annual meeting and any adjournment or postponement of the
meeting.
Shareholders as of the close of business on March 23, 2001, are
entitled to notice of the meeting and may vote at the annual meeting, either in
person or by proxy.
Management welcomes your attendance at the annual meeting. Whether or
not you expect to attend the annual meeting in person, you are requested to
complete, sign, date and promptly return the enclosed proxy in the accompanying
postage-paid envelope. The prompt return of your proxy will save expenses
involved in further communications. Even if you return a proxy, you may vote in
person if you give written notice to the Secretary of the company and attend the
annual meeting. Promptly returning your completed proxy will ensure that your
shares are voted in accordance with your wishes and will guarantee the presence
of a quorum.
The Board of Directors is distributing this proxy statement, form of
proxy, and Fidelity D & D Bancorp, Inc.'s 2000 Annual Report on or about March
31, 2001.
By Order of the Board of Directors,
/s/ John F. Glinsky, Jr.
John F. Glinsky, Jr.
Secretary
Dunmore, Pennsylvania
March 31, 2001
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY AND MAIL
IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID RETURN ENVELOPE.
FIDELITY D & D BANCORP, INC.
Blakely and Drinker Streets
Dunmore, Pennsylvania 18512
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 1, 2001
The company is mailing this proxy statement to shareholders
on or about March 31, 2001.
TABLE OF CONTENTS
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PAGE
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GENERAL INFORMATION.........................................................1
Date, Time and Place of the Annual Meeting.........................1
Description of the Company.........................................1
VOTING PROCEDURES...........................................................1
Solicitation and Voting of Proxies.................................1
Quorum and Vote Required for Approval..............................3
Revocability of Proxy..............................................3
Methods of Voting..................................................4
ELECTION OF DIRECTORS (PROPOSAL NOS. 1, 2, AND 3)...........................4
Qualification and Nomination of Directors..........................4
BOARD OF DIRECTORS AND MANAGEMENT...........................................6
Governance.........................................................6
Information as to Directors and Nominees...........................6
Family Relationships...............................................8
Executive Officers of the Company..................................9
Executive Officers of the Bank.....................................9
Committees of the Company's and Bank's Board of Directors..........9
Audit Committee Report............................................11
Compensation of Directors.........................................13
Nominating Directors..............................................14
EXECUTIVE COMPENSATION.....................................................15
Summary Compensation Table........................................15
Stock Option Grants in Fiscal Year 2000...........................16
Exercises of Stock Options in Fiscal Year 2000 and
Fiscal Year-End Option Values............................17
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS WITH MANAGEMENT............17
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK BY
SIGNIFICANT SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS........18
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE....................21
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION....................21
Chief Executive Officer Compensation..............................22
Executive Officers................................................22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION ...............23
SHAREHOLDER PERFORMANCE GRAPH.............................................. 24
PROPOSAL NO. 4: APPROVAL AND ADOPTION OF
THE FIDELITY D & D BANCORP, INC. 2000 INDEPENDENT
DIRECTORS STOCK OPTION PLAN........................................25
Term...............................................................25
Eligibility and Grants.............................................25
Transferability....................................................26
Administration.....................................................26
Amendment..........................................................26
Federal Income Tax Consequences of the Plan........................27
Cancellation of Prior Options......................................27
Registration under the Securities Act of 1933......................27
New Plan Benefits..................................................27
Proposed Shareholders' Resolution..................................28
PROPOSAL NO. 5: APPROVAL AND ADOPTION OF
THE FIDELITY D & D BANCORP, INC. 2000 STOCK INCENTIVE PLAN.........29
Term...............................................................29
Amendment..........................................................29
Administration.....................................................30
Eligibility........................................................30
Awards.............................................................30
Federal Income Tax Consequences....................................30
Cancellation of Prior Options......................................32
Registration under the Securities Act of 1933......................32
New Plan Benefits..................................................32
Proposed Shareholders' Resolution..................................33
PROPOSAL NO. 6: RATIFICATION OF INDEPENDENT AUDITORS........................34
LEGAL PROCEEDINGS...........................................................34
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING...............................35
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING.......................35
ADDITIONAL INFORMATION......................................................35
APPENDIX A THE FIDELITY D & D BANCORP, INC. 2000 INDEPENDENT DIRECTORS STOCK
OPTION PLAN
APPENDIX B THE FIDELITY D & D BANCORP, INC. 2000 STOCK INCENTIVE PLAN
APPENDIX C AUDIT COMMITTEE CHARTER
GENERAL INFORMATION
DATE, TIME AND PLACE OF THE ANNUAL MEETING
Fidelity D & D Bancorp, Inc. is furnishing this proxy statement in
connection with the solicitation by the Board of Directors of proxies to be
voted at the Annual Meeting of Shareholders of the company. The annual meeting
will be held at the main office of Fidelity D & D Bancorp, Inc., Blakely and
Drinker Streets, Dunmore, Pennsylvania 18512, on Tuesday, May 1, 2001, at 3:00
p.m., Eastern Daylight Time. The telephone number for the company is (570)
342-8281. Please direct all inquiries to Michael F. Marranca, President and
Chief Executive Officer of the company.
DESCRIPTION OF THE COMPANY
Fidelity D & D Bancorp, Inc., a Pennsylvania corporation and registered
bank holding company, was organized in 1999 and became the holding company for
The Fidelity Deposit and Discount Bank on June 30, 2000. The Fidelity Deposit
and Discount Bank, its wholly-owned, sole subsidiary, was formed in 1902 as a
commercial banking institution under the laws of Pennsylvania. In 1997, the bank
became a bank and trust company. The bank offers a full range of traditional
banking services, a trust department, and alternative financial products.
The Board of Directors is enclosing a copy of the annual report for the
fiscal year ended December 31, 2000, with this proxy statement. You may obtain
additional copies of the company's annual report for the 2000 fiscal year at no
cost by contacting Robert P. Farrell, Treasurer, Fidelity D & D Bancorp, Inc.,
Blakely and Drinker Streets, Dunmore, Pennsylvania 18512, telephone (570)
342-8281.
Since we have not authorized anyone to provide you with different
information, you should rely only on the information contained in this document
or on documents that we refer you to. Although we believe we have provided you
with all the information helpful to you in your decision to vote, events may
occur at Fidelity D & D Bancorp, Inc. subsequent to printing this proxy
statement that might affect your decision or the value of your stock.
VOTING PROCEDURES
SOLICITATION AND VOTING OF PROXIES
The Board of Directors is sending this proxy statement and proxy form
to shareholders on or about March 31, 2001. The Board of Directors of Fidelity D
& D Bancorp, Inc. is soliciting this proxy for use at the 2001 Annual Meeting of
Shareholders of Fidelity D & D Bancorp, Inc. The directors, officers and other
employees of the company or the bank may solicit proxies in person or by
telephone, telecopy, telegraph or mail, but only for use at the 2001 Annual
Meeting. The company will pay the cost of preparing, assembling, printing,
mailing and soliciting proxies and any additional material that the company
sends to shareholders. The company will make arrangements with brokerage houses
and other custodians, nominees and fiduciaries to forward proxy solicitation
materials to the owners of stock held by these persons. The company will
reimburse these persons for their reasonable forwarding expenses.
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Only shareholders of record as of the close of business on Friday,
March 23, 2001 (the voting record date) may vote at the annual meeting. On all
matters to come before the annual meeting, shareholders may cast one vote for
each share held. Cumulative voting rights do not exist with respect to the
election of directors.
By properly completing a proxy, the shareholder appoints the proxy
holders named on the proxy form to vote his or her shares as specified on the
proxy. Any proxy not specifying to the contrary will be voted as follows:
FOR the election of Paul A. Barrett, John T. Cognetti, John F. Glinsky,
Jr. and Michael J. McDonald as Class A Directors of the company for
terms expiring in 2003;
FOR the election of Samuel C. Cali, Mary E. McDonald and David L.
Tressler, Sr. as Class B Directors of the company for terms expiring in
2002;
FOR the election of Brian J. Cali, Patrick J. Dempsey and Michael F.
Marranca as Class C Directors of the company for terms expiring in
2004;
FOR the approval and adoption of the Fidelity D & D Bancorp, Inc. 2000
Independent Directors Stock Option Plan;
FOR the approval and adoption of the Fidelity D & D Bancorp, Inc. 2000
Stock Incentive Plan; and
FOR the ratification of the selection of Parente Randolph, P.C.,
Certified Public Accountants, as the independent auditors of the
company for the 2001 fiscal year.
If a shareholder is a participant in the Fidelity D & D Bancorp, Inc.
Dividend Reinvestment Plan, the enclosed proxy will also serve as a proxy for
the shares held in the plan. The Fidelity Deposit and Discount Bank, as the
administrator of the plan, will not provide plan participants with separate
proxies covering the shares held in the Dividend Reinvestment Plan. Each holder
of common stock is entitled to one vote, in person or by proxy, for each whole
share of common stock held as of the record date. If your proxy is signed but
does not indicate your voting preferences, the plan agent will vote your shares
in favor of the proposals and for all nominees. If you do not return a proxy,
your shares will not be voted.
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QUORUM AND VOTE REQUIRED FOR APPROVAL
The company's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of common stock. At the close of business on March 23, 2001,
the company had issued and outstanding 1,808,899.5083 shares of common stock,
without par value. The company's Articles of Incorporation also authorize the
issuance of up to 5,000,000 shares of preferred stock. The company has not
issued any preferred shares.
To hold the annual meeting, a "quorum" of shareholders must be present.
Under Pennsylvania law and the bylaws of the company, the presence, in person or
by proxy, of the holders of a majority of the outstanding shares entitled to
vote is necessary to constitute a quorum for the transaction of business at the
meeting. Votes withheld and abstentions will be counted in determining the
presence of a quorum for the particular matter. The company will not count
broker non-votes in determining the presence of a quorum. A broker non-vote
occurs when a broker nominee, holding shares for a beneficial owner, does not
vote on a particular proposal because the nominee does not have discretionary
voting power with respect to that item, and has not received instructions from
the beneficial owner. Those shareholders present, in person or by proxy, may
adjourn the meeting to another time and place if a quorum is lacking.
Assuming the presence of a quorum, the nominees in each class of
directors receiving the highest number of votes, cast by shareholders entitled
to vote for the election of directors, shall be elected. Votes withheld from a
nominee and broker non-votes will not be cast for a nominee. The corporation's
Articles of Incorporation do not permit cumulative voting in the election of
directors.
Assuming the presence of a quorum, a majority of votes cast at the
meeting shall be required to approve and adopt the Fidelity D & D Bancorp, Inc.
2000 Independent Directors Stock Option Plan and the Fidelity D & D Bancorp,
Inc. 2000 Stock Incentive Plan and to ratify the selection of the independent
auditors. Abstentions and broker non-votes are not deemed to constitute votes
cast and, therefore, do not count either for or against ratification.
Abstentions and broker non-votes, however, have the practical effect of reducing
the number of affirmative votes required to achieve a majority for the matter by
reducing the total number of shares voted from which the required majority is
calculated.
REVOCABILITY OF PROXY
Shareholders who sign and return proxies to the company may revoke them
at any time before they are voted by:
o Delivering written notice of the revocation to John F.
Glinsky, Jr., Secretary of Fidelity D & D Bancorp, Inc., at
Blakely and Drinker Streets, Dunmore, Pennsylvania 18512; or
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o Delivering a properly executed proxy bearing a later date to
John F. Glinsky, Jr., Secretary of Fidelity D & D Bancorp,
Inc., at Blakely and Drinker Streets, Dunmore, Pennsylvania
18512; or
o Attending the meeting and voting in person after giving
written notice to John F. Glinsky, Jr., Secretary of the
company.
YOU HAVE THE RIGHT TO VOTE AND, IF DESIRED, TO REVOKE YOUR PROXY ANY
TIME BEFORE THE ANNUAL MEETING. SHOULD YOU HAVE ANY QUESTIONS, PLEASE CALL JOHN
F. GLINSKY, CORPORATE SECRETARY, AT (570) 342-8281.
METHODS OF VOTING
Voting by Proxy
o Mark your selections.
o Date your proxy and sign your name exactly as it appears on your proxy.
o Mail to Fidelity D & D Bancorp, Inc. in the enclosed, postage-paid
envelope.
Voting in Person
o Attend the annual meeting and show proof of eligibility to vote.
o Obtain a ballot.
o Mark your selections.
o Date your ballot and sign your name exactly as it appears in the
transfer books of the company.
ELECTION OF DIRECTORS
(PROPOSAL NOS. 1, 2 AND 3)
QUALIFICATION AND NOMINATION OF DIRECTORS
The company's by-laws provide that the Board of Directors shall consist
of at least 3 directors and shall be classified into 3 classes, each class to be
elected for a term of 3 years. Accordingly, the terms of the classes will expire
at successive annual meetings. The Board may fix the number of directors and
their respective classifications within the foregoing limits. A majority of the
Board may also fill vacancies on the Board, and the person appointed to fill the
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vacancy shall serve until the expiration of the term of office of the class of
directors to which he or she was appointed.
The company was first organized in 1999. With the exceptions of Mary E.
McDonald and Brian J. Cali, all of the directors were appointed by the company's
first shareholders, also its incorporators, to serve until the 2001 annual
meeting of shareholders. In October of 2000, the Board appointed Mary E.
McDonald to fill the vacancy caused by the death of her husband, Dr. Herbert M.
McDonald, and in February of 2001, the Board appointed Brian J. Cali as a
director to fill the vacancy caused by the retirement of Patrick A. Calvey, Jr.
Under Section 9.3 of the company's by-laws, at the 2001 annual meeting, the
shareholders shall elect:
o 4 Class A directors to serve until 2003,
o 3 Class B directors to serve until 2002, and
o 3 Class C directors to serve until 2004.
These classes and terms of office are the same as the classes and terms
of office of the bank's Board of Directors. As a result, the directors of the
company and the bank, who are the same individuals, will serve the same terms of
office and in the same classes.
The Board of Directors has nominated the below-named individuals for
the position of director of the company, to serve for the terms described below
or until his or her earlier death, resignation or removal from office. Each of
the nominees is currently serving as a director of the company and has consented
to serve the applicable term if re-elected. If any of the nominees should be
unavailable to serve for any reason, the remaining members of the Board of
Directors may fill the vacancy until the expiration of the term of the class to
which he or she was appointed.
The proxy holders will vote the proxies for the election of each of the
nominees named below, unless you indicate that your vote should be withheld from
any or all of them. Each nominee elected as a director will continue in office
until his successor has been duly elected and qualified, or until his death,
resignation or retirement.
The Board of Directors is proposing the following nominees for election
as at the annual meeting, all of whom currently serve as directors of the
company:
NOMINEES FOR CLASS A DIRECTORS (TO SERVE UNTIL 2003 IF RE-ELECTED)
o Paul A. Barrett
o John T. Cognetti
o John F. Glinsky, Jr.
o Michael J. McDonald
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NOMINEES FOR CLASS B DIRECTORS (TO SERVE UNTIL 2002 IF RE-ELECTED)
o Samuel C. Cali
o Mary E. McDonald
o David L. Tressler, Sr.
NOMINEES FOR CLASS C DIRECTORS (TO SERVE UNTIL 2004 IF RE-ELECTED)
o Brian J. Cali
o Patrick J. Dempsey
o Michael F. Marranca
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE
NAMED NOMINEES FOR DIRECTORS.
BOARD OF DIRECTORS AND MANAGEMENT
GOVERNANCE
The Board of Directors of Fidelity D & D Bancorp, Inc. oversees all
business, property and affairs of the company. The Chairman and officers keep
the members of the Board informed of the company's business through discussions
at Board meetings and by providing materials to them. The directors of the
company also serve as the directors of The Fidelity Deposit and Discount Bank,
pursuant to election by the bank's sole shareholder, Fidelity D & D Bancorp,
Inc. During fiscal 2000, the Board of Directors of the company held 17 meetings.
The Board of Directors of the bank held 35 regular meetings and one annual
meeting.
Each of the directors attended at least 75% of the total number of
Board of Directors' meetings and committee meetings for the company and 75% of
Board of Directors' meetings and committee meetings for the bank, except Patrick
J. Dempsey, who attended 74% of the meetings of the bank's Board of Directors
and committee meetings.
INFORMATION AS TO DIRECTORS AND NOMINEES
The following biographies contain selected information with respect to
the directors of the company, all of whom are also nominees for director. The
information includes each person's age as of March 23, 2001, and principal
occupation for at least the past 5 years.
6
NOMINEES FOR CLASS A DIRECTORS (TO SERVE UNTIL 2003 IF RE-ELECTED)
PAUL A. BARRETT Mr. Barrett, age 68, has been a director of the
company since 1999. Mr. Barrett has served as a
member of the bank's Board of Directors since
1988. Mr. Barrett is an attorney with the firm
of O'Malley & Harris, P.C., in Scranton,
Pennsylvania.
JOHN T. COGNETTI Mr. Cognetti, age 51, has been a director of
the company since 1999. Mr. Cognetti has served
as a member of the bank's Board of Directors
since 1988. Mr. Cognetti is the President of
The Hinerfeld Realty Co. in Scranton,
Pennsylvania, and the former Chief Executive
Officer of Cognetti Enterprises, Inc., a real
estate firm, now dissolved.
JOHN F. GLINSKY, JR. Mr. Glinsky, age 70, has been the secretary and
a director of the company since 1999. Mr.
Glinsky has served as a member of the bank's
Board of Directors since 1972. He has served as
Secretary of the bank's Board of Directors
since 1981. Mr. Glinsky is the proprietor and
Funeral Director of John F. Glinsky Funeral
Home in Throop, Pennsylvania.
MICHAEL J. MCDONALD Mr. McDonald, age 46, has been a director of
the company since 1999 and of the bank since
1994. He is an attorney with the firm of Foley,
McLane, Foley, McDonald and MacGregor in
Scranton, Pennsylvania.
NOMINEES FOR CLASS B DIRECTORS (TO SERVE UNTIL 2002 IF RE-ELECTED)
SAMUEL C. CALI Mr. Cali, age 84, has served as the company's
Chairman of the Board of Directors since 1999.
Mr. Cali is the retired proprietor of S.C. Cali
Agency, an insurance agency located in Dunmore,
Pennsylvania. He has been a director of the
bank since 1958 and has served as Chairman of
the bank's board of directors since June 1986.
MARY E. MCDONALD Mrs. McDonald, age 67, has been a director of
the company and the bank since October 3, 2000.
The Board of Directors appointed Mrs. McDonald
to the Board to fill the vacancy caused by the
death of her husband, Dr. Herbert M. McDonald,
who had served as a director of the bank since
1976. Mrs. McDonald is a retired educator and
an active community leader.
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DAVID L. TRESSLER, SR. Mr. Tressler, age 64, has been a director of
the company since 1999. Mr. Tressler has been a
member of the bank's board of directors since
1998. He is the Executive Director and Chief
Executive Officer of Northeastern Pennsylvania
Physicians Organization in Clarks Summit,
Pennsylvania, and a former Executive Director
for the Center For Public Initiatives in
Scranton.
NOMINEES FOR CLASS C DIRECTORS (TO SERVE UNTIL 2004 IF RE-ELECTED)
BRIAN J. CALI Mr. Cali, age 48, has been a director of the
company and the bank since February of 2001.
The board elected Mr. Cali as a Class C
Director to fill the vacancy on the Board
caused by the retirement of Patrick A. Calvey,
Jr. Mr. Cali is a self-employed attorney
practicing in Dunmore.
PATRICK J. DEMPSEY Mr. Dempsey, age 67, has been a director of the
company since 1999. Mr. Dempsey has also served
as a member of the bank's board of directors
since 1985. He is the President and General
Manager of Dempsey Uniform & Supply, Inc. and
the President and General Manager of Gonzaga
Realty, Inc., both located in Dunmore.
MICHAEL F. MARRANCA Mr. Marranca, age 68, has been a director of
the company and the company's President and
Chief Executive Officer since its inception in
1999. He has been a member of the bank's board
of directors since 1976. He has been employed
by the bank since 1967 and has served as the
bank's President and Chief Executive Officer
since 1988.
FAMILY RELATIONSHIPS
Director Mary E. McDonald is the aunt of Director Michael J.
McDonald. Director Brian J. Cali is the son of Samuel C. Cali, Chairman of the
Board.
8
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth selected information, as of March 23,
2001, about the executive officers of the company, each of whom is elected by
the Board of Directors annually and each of whom holds office at the discretion
of the Board of Directors. All of the officers have been principally employed by
the bank for more than 5 years.
Position Held
Name Position Since Age
---- -------- ----- ---
Michael F. Marranca President and Chief 1999 68
Executive Officer
Kevin R. Messett Senior Vice President 1999 45
Robert P. Farrell Treasurer 1999 48
EXECUTIVE OFFICERS OF THE BANK
The following table provides selected information, as of March 23,
2001, about the executive officers of the bank, each of whom is elected by the
bank's Board of Directors annually and each of whom holds office at the
discretion of the Board of Directors.
Position Held Bank
Name Position Since Employee Since Age
---- -------- ----- -------------- ---
Michael F. Marranca President and Chief 1976 1967 68
Executive Officer
Kevin R. Messett Executive Vice President(1) 1999 1991 45
Robert P. Farrell Cashier/Comptroller 1989 1987 48
John J. Keeler Vice President 1990 1990 49
Joel W. Gillick Vice President 2000 1996 32
COMMITTEES OF THE COMPANY'S AND BANK'S BOARDS OF DIRECTORS
During 2000, the company's Board of Directors maintained 2 standing
committees, and the bank's Board of Directors maintained 9 standing committees.
The function of each of these committees is described below. Samuel C. Cali,
Chairman of the Board, serves as the Chairman of all committees.
9
Committees of the Company's Board of Directors
- ----------------------------------------------
NOMINATING: This committee nominates qualified members to the Board of
Directors.
EMPLOYEE STOCK INCENTIVE: This committee determines which key employees are
eligible for participation in the company's stock option plan.
Committees of the Bank's Board of Directors
- -------------------------------------------
EXECUTIVE: This committee acts with limited powers on behalf of the Board
whenever the Board is not in session. It meets only as needed and acts only by
unanimous vote. If any non-employee director wants a matter to be addressed by
the Board rather than the Executive Committee, then such matter is submitted to
the Board.
LOAN: This committee oversees the lending activities of the bank to ensure
compliance with regulatory requirements. It reviews loan applications and makes
recommendations to management.
AUDIT/COMPLIANCE: This committee reviews auditing, accounting, financial
reporting, internal and external control functions. It recommends our
independent accountant and reviews their services. All members are non-employee
directors.
ASSET/LIABILITY (ALCO): This committee monitors and helps maintain the bank's
risk position with respect to assets and liabilities and recommends allocation
of funds for interest rate sensitivity, time deposits, liquidity, federal funds,
loans, investments and tax positioning. It reviews the Asset/Liability Policy,
develops procedures, and recommends policy changes. It also serves as the bank's
Investment Committee.
HUMAN RESOURCES: This committee assures equitable employment exchange by
ensuring that sound human resource management systems are developed and
maintained.
CREDIT ADMINISTRATION: This committee analyzes a comprehensive set of credit
administration reports that provide detailed information relating to the overall
quality of the loan portfolio.
TRUST: This committee reviews the Bank Trust Department's policies, performance,
compliance and profitability. It exercises fiduciary discretion in making
decisions and advising trust management when requested.
10
COMMITTEES OF THE BOARDS OF DIRECTORS
AS OF DECEMBER 31, 2000
- --------------------------------------------------------------------------------------------------------------------------
EMPLOYEE
HUMAN CREDIT STOCK
EXEC. LOAN AUDIT ALCO RESCS. ADM. NOM. (1) TRUST INCENT.
----- ---- ----- ---- ------ ---- ----- - ----- -------
- --------------------------------------------------------------------------------------------------------------------------
Samuel C. Cali X X X X X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Michael F. X X X X X X X
Marranca
- --------------------------------------------------------------------------------------------------------------------------
Mary E. X X X X X X
McDonald
- --------------------------------------------------------------------------------------------------------------------------
John F. X X X X X X
Glinsky, Jr.
- --------------------------------------------------------------------------------------------------------------------------
Patrick A. X X X X X X X X
Calvey, Jr.
(replaced by
Brian J. Cali in
February 2001)
- --------------------------------------------------------------------------------------------------------------------------
Patrick J. X X X X X X X
Dempsey
- --------------------------------------------------------------------------------------------------------------------------
Paul A. Barrett X X X X X X
- --------------------------------------------------------------------------------------------------------------------------
John T. Cognetti X X X X X X X
- --------------------------------------------------------------------------------------------------------------------------
Michael J. X X X X X X X
McDonald
- --------------------------------------------------------------------------------------------------------------------------
David L. X X X X X X
Tressler, Sr.
- --------------------------------------------------------------------------------------------------------------------------
MEETINGS HELD IN 0 0 4 1 1 1 1 3 1
2000
- --------------------------------------------------------------------------------------------------------------------------
(1) Refers to both the Nominating Committee of the company and the
Nominating Committee of the bank, each of which held one meeting in
2000.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the corporation's financial reporting
process on behalf of the Board of Directors. A copy of the Committee's written
charter, adopted by the Board of Directors, is attached to this proxy statement
as Appendix "C." Management has the primary responsibility for the financial
statements and the reporting process, including the systems of internal control.
In fulfilling its oversight responsibilities, the Committee reviewed and
discussed the audited financial statements in the annual report for fiscal year
2000 with management, including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial statements.
11
The Committee reviewed with the independent auditors, who are
responsible for expressing an opinion of the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the corporation's
accounting principles and such other matters as are required to be discussed
with the Committee under generally accepted auditing standards. In addition, the
Committee has reviewed and discussed with the independent auditors the auditors'
independence from management and the corporation, including the matters in the
independent auditors' written disclosure and letter received by the Committee,
as required by the Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees).
The Committee discussed with the corporation's internal and independent
auditors the overall scope and plans for their respective audits of the 2000
financial statements. The Committee met with the internal and independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of the corporation's internal controls and the
overall quality of the corporation's financial reporting. The Committee
discussed with the independent auditors any matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication on Audit Committees). The
Committee held four meetings during fiscal year 2000.
Based upon the review and discussions referred to above, the Audit
Committee's review of management's representations, and the report of the
independent accountants to the Audit Committee, the Audit Committee recommended
to the Board of Directors that the audited financial statements for the year
ended December 31, 2000, be included in the corporation's Annual Report on Form
10-K and filed with the Securities and Exchange Commission.
Aggregate fees billed to the corporation and the bank by Parente
Randolph, P.C., the independent auditors, for services rendered during the year
ended December 31, 2000, were as follows:
Audit Fees $53,305.00
Financial Information Systems $ 0
Design and Implementation Fees
All Other Fees $42,668.35
The Committee has considered whether the independent accountants'
provision of non-audit services is compatible with maintaining the independent
auditors' independence.
The Audit Committee is comprised of 9 directors, all of whom are
considered "independent" as defined in the National Association of Securities
Dealers' listing standards.
12
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
The foregoing report has been furnished by the current members of the
Audit Committee.
MEMBERS OF THE AUDIT COMMITTEE
Paul A. Barrett John F. Glinsky, Jr.
Brian J. Cali Mary E. McDonald
Samuel J. Cali Michael J. McDonald
John T. Cognetti David L. Tressler, Sr.
Patrick J. Dempsey
COMPENSATION OF DIRECTORS
Directors receive no remuneration for attendance at meetings of the
company's Board of Directors. However, the bank pays each non-employee member of
its Board a regular quarterly fee. During 2000, the bank paid a quarterly
retainer of $7,000 to each non-employee bank director for his or her services.
The bank does not compensate employee directors for attendance at Board of
Directors meetings or committee meetings. Directors must attend at least two
meetings per month from three regularly scheduled Board or committee meetings.
In the aggregate, the bank paid its directors $252,000 for all services rendered
in 2000.
In addition, under the 1998 Independent Directors Stock Option Plan,
non-employee directors of the bank were eligible to receive stock option awards
during 2000. Beginning in 1999, at the beginning of each year, the bank has
granted its non-employee directors, in the aggregate, options to purchase 4,500
shares. On January 3, 2000, the bank awarded its non-employee directors options
to purchase 4,500 shares of common stock under the plan at an exercise price of
$35.13, as adjusted for the two-for-one stock exchange upon the bank's
reorganization into a holding company structure. The Board of Directors adopted
the company's 2000 Independent Directors Stock Option Plan in December of 2000,
which if approved by shareholders, will replace the 1998 Independent Directors
Stock Option Plan. The Board of Directors has directed that the 2000 Independent
Directors Stock Option Plan be presented to shareholders for approval at the
2001 Annual Meeting. See "Proposal No. 4: Approval and Adoption of the Fidelity
D & D Bancorp, Inc. 2000 Independent Directors Stock Option Plan" below for more
information about this plan.
13
NOMINATING DIRECTORS
The company's Nominating Committee selects individuals for nomination
by the Board of Directors of the company. Under Section 9.1 of the company's
by-laws, shareholders may also nominate individuals for the position of
director. The shareholder must notify the Secretary of the company in writing no
less than 60 days prior to the date of the Annual Meeting of Shareholders. The
notice should contain the following information:
o The proposed nominee's name and address;
o The proposed nominee's age;
o The number of shares of the company owned by the proposed nominee;
o The total number of shares that to the knowledge of the notifying
shareholder will be voted for the proposed nominee;
o The name and residence address of the notifying shareholder; and
o The number of shares of the company owned by the notifying shareholder.
You may obtain a copy of the company's by-laws by writing to John F.
Glinsky, Jr., Secretary, Fidelity D & D Bancorp, Inc., Blakely and Drinker
Streets, Dunmore, Pennsylvania 18512.
14
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the annual compensation for services in
all capacities to the company and the bank for the fiscal years ended December
31, 2000, 1999, and 1998, for those persons who were at December 31, 2000:
o The Chief Executive Officer; and
o The 4 other most highly compensated executive officers of the
company to the extent such person's total annual salary and
bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Other Restricted Underlying
Annual Stock Options/ LTIP All other
Name and Principal Salary Bonus Compen- Award(s) SARs Payouts Compensation
Position Year ($) ($) sation ($) (#) ($) ($)(1)(2)
-------- ---- --- --- ------ --- --- --- ---------
Michael F. Marranca 2000 187,000 8,000 0 0 700 0 26,312 (1)
President and Chief 1999 181,000 25,000 0 0 700 0 29,394 (1)
Executive Officer 1998 171,560 12,000 0 0 0 0 31,326 (1)
Kevin R. Messett, 2000 100,000 5,000 0 0 500 0 13,730 (2)
Executive Vice 1999 92,016 19,000 0 0 500 0 15,744 (2)
President 1998 85,200 4,000 0 0 0 0 15,025 (2)
(1) Figure includes the company's contributions to the 401(k) and deferred
profit sharing plan of $10,726.20, $17,113, and $18,934 on behalf of Mr.
Marranca for 2000, 1999, and 1998, respectively. It also includes
membership dues of $8,664, $8,577 and $9,237 paid on behalf of Mr.
Marranca in 2000, 1999, and 1998, respectively. In addition to annual
salary, Mr. Marranca receives some or all of the following benefits:
medical, dental, life and disability insurance, and other customary
benefits. Figure includes payments made by the company, on behalf of Mr.
Marranca, of $6,921.36, and $3,704, and $3,155 in 2000, 1999, and 1998,
respectively.
(2) Figure includes the company's contributions to the 401(k) and deferred
profit sharing plan of $5,426.95, $10,854, and $9,778 on behalf of Mr.
Messett for 2000, 1999, and 1998, respectively. It also includes
membership dues of $2,458, $2,310 and $2,620 paid on behalf of Mr. Messett
in 2000, 1999, and 1998, respectively. In addition to annual salary, Mr.
Messett receives some or all of the following benefits: medical, dental,
life and disability insurance, and other customary benefits. Figure
includes payments made by the company, on behalf of Mr. Messett, of
$5,845, $2,580, and $2,627 in 2000, 1999, and 1998, respectively.
15
STOCK OPTION GRANTS IN FISCAL YEAR 2000
The following table sets forth certain information for any stock
options which the bank granted the executives named in the Summary Compensation
Table during 2000:
OPTION/SAR GRANTS IN FISCAL YEAR 2000
INDIVIDUAL GRANTS
================================================================================
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term(3)
----------------- -----------
Number of
Securities Exercise % of Total Options/ SARs or Base
Name and Principal Underlying Options/ Granted to Employees in Price Expiration
Position with Bank SARs Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
------------------ ---------------- ----------- ------ ---- ----- ------
(a) (b) (c) (d) (e) (f) (g)
Michael F. Marranca,
President and Chief
Executive Officer 700 (1) 20.59% $35.125(2) 01/03/10 15,463 38,184
Kevin R. Messett, Executive
Vice President 500 (1) 14.71% $35.125(2) 01/03/10 11,045 26,989
- ------------
(1) Options were granted on January 3, 2000, under the bank's 1998 Stock
Incentive Plan and became exercisable after July 3, 2000. The securities
have been adjusted for the two-for-one stock exchange on June 30, 2000.
(2) The exercise or base price per share has been adjusted to reflect the
two-for-one stock exchange on June 30, 2000.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses
associated with the exercise of the option or the sale of the underlying
shares. The actual gain, if any, on the exercise of stock options will
depend on the future performance of the common stock, the option holder's
continued employment throughout the option period, and the date on which
the options are exercised.
16
EXERCISES OF STOCK OPTIONS IN FISCAL YEAR 2000 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information relating to stock
options held by the executives named in the Summary Compensation Table. As noted
below, these executives did not exercise any of their stock options in 2000.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR(1) VALUES
================================================================================
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Acquired Options/SARs in-the-Money
Name and Principal --------------- Value at FY-End (#) Options/SARs at FY-End ($)
Position with Bank on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
----------------- ---------------- ------------ -------------------------- -------------------------
(a) (b) (c) (d) (e)
Michael F. Marranca,
President and Chief
Executive Officer 0 0 1,400 / 0(2) 4,812.50/ --(3)
Kevin R. Messett,
Executive Vice President
0 0 1,000 / 0(2) 3,437.50 / --(3)
- -------
(4) A "SAR" is a stock appreciation right. The bank has not granted any SAR's.
(2) Half of the options were granted on January 4, 1999, under the bank's 1998
Stock Incentive Plan and became exercisable after July 4, 1999. The
remaining options were granted on January 3, 2000, under the 1998 Stock
Incentive Plan and became exercisable after July 3, 2000. The options have
been adjusted to reflect the two-for-one stock exchange that occurred on
June 30, 2000.
(3) The stock-exchange adjusted exercise price for the options granted in 1999
is $31.00. The stock-exchange adjusted exercise price for the options
granted in 2000 is $35.125. The market value of the company's stock was
$36.50 per share as of December 31, 2000.
CERTAIN BUSINESS RELATIONSHIPS AND TRANSACTIONS
WITH MANAGEMENT
The company has not entered into any material transactions nor
proposed any material transactions with any director or executive officer of the
company, or any associate of the foregoing persons. The company has engaged in
and intends to continue to engage in banking and financial transactions in the
ordinary course of business with directors and officers of the company and their
associates on comparable terms with similar interest rates as those prevailing
from time to time for other customers of the company.
17
Total loans outstanding from the Bank at December 31, 2000, to the
company's officers and directors as a group, members of their immediate families
and companies in which they had an ownership interest of 10% or more amounted to
$6,975,140.73, or approximately 18.59% of the total equity capital of the
company. The company made these loans in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and they
did not involve more than the normal risk of collection or present other
unfavorable features.
The largest aggregate amount of indebtedness outstanding during 2000
to the above described group was approximately $8,457,059.17. The aggregate
amount of indebtedness outstanding as of the latest practicable date, February
28, 2001, to the above group was approximately $7,017,707.71.
During 2000, the law firm of O'Malley & Harris, P.C. performed legal
services on behalf of the company and the bank. Director Paul A. Barrett is
employed as an attorney at this firm. The amount of fees paid by the company and
the bank to the law firm in 2000 accounted for less than 5% of the law firm's
gross revenues for 2000. The company and the bank intend to continue to hire
this firm for legal services in the future.
Further, in 2000, the bank paid $20,967.83 to American Janitor and
Paper Supply Co., Inc. for janitorial supplies and $14,138.59 to Dempsey Uniform
& Linen Supply, Inc. for linens for the bank. Patrick A. Calvey, Jr., a director
of the company during 2000, is an officer of American Janitor and Paper Supply
Co. Director Patrick Dempsey is the President and owner of Dempsey Uniform &
Linen Supply, Inc. All of these products and services were sold or provided
according to the customary price or fee schedule of the seller or service
provider.
BENEFICIAL OWNERSHIP OF THE COMPANY'S
COMMON STOCK BY SIGNIFICANT SHAREHOLDERS,
DIRECTORS AND EXECUTIVE OFFICERS
As of March 23, 2001, we know of no shareholder who owns more than 5%
of the company's outstanding common stock, either on the company's records or
indirectly as a beneficial owner.
The following table provides information, as of March 23, 2001, with
respect to the following beneficial owners of the company's common stock:
o Each director or nominee for director of the company,
o Each executive officer of the company, and
o All executive officers and directors as a group.
18
We determined beneficial ownership by applying the General Rules and
Regulations of the SEC, which state that a person may be credited with the
ownership of common stock:
o Owned by or for the person's spouse, minor children or any other
relative sharing the person's home,
o Of which the person shares voting power, which includes the
power to vote or to direct the voting of the stock, and
o Of which the person has investment power, which includes the
power to dispose or direct the disposition of the stock.
Also, a person who has the right to acquire shares within 60 days
after March 23, 2001, will be considered to own the shares. As of March 23,
2001, the number of common stock issued and outstanding was approximately
1,808,899.508. The calculation of percentages is based upon this number, plus
14,400 shares of common stock subject to exercisable options, for a total of
1,823,299.508 shares.
AMOUNT AND NATURE OF PERCENTAGE OF COMPANY'S
NAME OF INDIVIDUAL AND BENEFICIAL OWNERSHIP OF COMMON STOCK BENEFICIALLY
POSITION WITH COMPANY COMPANY'S COMMON STOCK (1) OWNED
Paul A. Barrett 37,093 (2) 2.03%
Director
Samuel C. Cali 53,612 (3) 2.94%
Chairman of the Board
Brian J. Cali 35,489 (4) 1.95%
Director and Nominee
John T. Cognetti 6,798 (5) *
Director and Nominee
Patrick J. Dempsey 32,922 (6) 1.81%
Director and Nominee
John F. Glinsky, Jr 34,955 (7) 1.92%
Secretary, Director and Nominee
Michael F. Marranca 51,232 (8) 2.81%
President and Chief Executive Officer,
Director and Nominee
Mary E. McDonald 85,754 (9) 4.70%
Director and Nominee
Michael J. McDonald 42,361 (10) 2.32%
Director and Nominee
19
AMOUNT AND NATURE OF PERCENTAGE OF COMPANY'S
NAME OF INDIVIDUAL AND BENEFICIAL OWNERSHIP OF COMMON STOCK BENEFICIALLY
POSITION WITH COMPANY COMPANY'S COMMON STOCK (1) OWNED
David L. Tressler, Sr. 7,091 (11) *
Director and Nominee
Robert P. Farrell 916 (12) *
Treasurer
Kevin R. Messett 1,091 (13) *
Senior Vice President
All Officers and Directors as a Group (10 389,314 21.35 %
Directors, 3 Officers, 12 persons in total)
* Represents beneficial ownership of less than 1% of the company's common stock.
(1) Information furnished by the directors and the bank.
(2) Figure includes 976 shares held solely by Mr. Barrett, 9,270 shares
held solely by Mr. Barrett in an IRA, 2,005 shares held jointly by Mr.
Barrett and his spouse, 2,146 shares held by Mr. Barrett's spouse,
21,696 shares held as Trustee and co-owner of the Estate of Mildred
Barrett, and 1,000 exercisable options.
(3) Figure includes 48,522 shares held in the S.C. Cali Revocable Trust,
4,090 shares held in Jane Cali's Revocable Trust, and 1,000 exercisable
stock options.
(4) Figure includes 26,539 shares held solely by Mr. Cali, 2,456 shares
held by Mr. Cali in a self-employed retirement trust, 1,087 shares held
by Mr. Cali in trust for his children, 2,233 shares held jointly by Mr.
Cali and his children, and 3,174 shares held by Mr. Cali's children.
(5) Figure includes 200 shares held solely by Mr. Cognetti in an IRA, 2,900
shares held jointly by Mr. Cognetti and his spouse, 1,139 shares held
by Mr. Cognetti's spouse, 1,559 shares held by Mr. Cognetti's spouse
and child, and 1,000 exercisable stock options.
(6) Figure includes 4,000 shares held solely by Mr. Dempsey, 21,096 shares
held by Mr. Dempsey's spouse, 6,826 shares held by Mr. Dempsey's
children, and 1,000 exercisable stock options.
(7) Figure includes 12,408 shares held solely by Mr. Glinsky, 19,997 shares
held jointly by Mr. Glinsky and his spouse, 1,300 shares held jointly
by Mr. Glinsky and his children, 200 shares held by Mr. Glinsky's
spouse and children, 50 shares held by Mr. Glinsky's spouse and
grandchild, and 1,000 exercisable stock options.
(8) Figure includes 16,274 shares held solely by Mr. Marranca, 1,656 shares
held solely by Mr. Marranca in an IRA, 28,902 shares held by Mr.
Marranca's spouse, 3,000 shares held by Mr. Marranca's spouse and
grandchildren, and 1,400 exercisable stock options.
20
(9) Figure includes 84,754 shares held solely by Mrs. McDonald and 1,000
exercisable stock options held by Mrs. McDonald as the beneficiary of
the Estate of Herbert M. McDonald.
(10) Figure includes 34,381 shares held solely by Mr. McDonald, 6,151 shares
held by Mr. McDonald's spouse, 808 shares held by Mr. McDonald's spouse
and children, 21 shares held by Mr. McDonald's children, and 1,000
exercisable stock options.
(11) Figure includes 901 shares held solely by Mr. Tressler, 477 shares held
jointly by Mr. Tressler and his spouse, 915 shares held in trust by Mr.
Tressler's spouse and child, 3,478 shares held jointly by Mr. Tressler
in trust with his son, 269 shares held jointly by Mr. Tressler and his
daughter, 51 shares held jointly by Mr. Tressler and his grandchildren,
and 1,000 exercisable stock options.
(12) Figure includes 116 shares held jointly by Mr. Farrell with his spouse
and 800 exercisable stock options.
(13) Figure includes 91 shares held by Mr. Messett's children and 1,000
exercisable stock options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires each of
the company's officers and directors, and persons who beneficially own more than
10% of the registered class of the company's equity securities to file initial
reports of ownership and reports of changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the company with copies of all filed
Section 16(a) forms. The Board of Directors knows of no persons who own greater
than 10% of the company's outstanding common stock. Prior to the formation of
Fidelity D & D Bancorp, Inc., as the holding company of the bank, these reports
were filed for the bank's common stock with the FDIC.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required to be filed by those persons, the company believes that during the
period from January 1, 2000, through December 31, 2000, its officers and
directors were in compliance with all filing requirements applicable to them,
and that all required reports were filed on a timely basis, except that Director
Michael J. McDonald filed one late report that related to one transaction.
21
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors of Fidelity D & D Bancorp, Inc. governs the
company. In fulfilling its fiduciary duties, the Board of Directors acts in the
best interests of the company's shareholders, customers, and the communities
served by the company. To accomplish the strategic goals and objectives of the
company, the Board of Directors engages competent persons who undertake to
accomplish these objectives with integrity and in a cost-effective manner. The
compensation of these individuals is part of the Board of Directors' fulfillment
of its duties to accomplish the company's strategic mission.
The fundamental philosophy of the company's compensation program is to
offer competitive compensation opportunities for all employees, based on the
individual's contribution and personal performance. The bank's Human Resource
Committee, comprised of all the directors, administers the bank's compensation
program. The executive officers of the company are employed and compensated by
the bank. The committee seeks to establish a fair compensation policy governing
executive officers' base salaries and bonuses and to attract and motivate
competent, dedicated, and ambitious managers, whose efforts will enhance the
products and services of the company and the bank, thereby improving
profitability, increasing dividends to our shareholders and, subsequently,
raising the market value of our shares.
The committee reviews and approves annually the top executives
compensation, including the compensation for the chief executive officer and all
vice presidents. As a guideline for determining base salaries, the committee
uses information composed of a Pennsylvania bank peer group in the R.L. Webber
Salary Survey, as well as data collected by the company from proxies and Annual
Reports of Pennsylvania-based banks. The committee used a separate peer group of
banks for compensation review purposes from the peer group it used for the
performance chart because the R.L. Webber Salary Survey permits the committee to
base its review on data collected from a much broader data base than simply the
nine institutions in the peer group reflected in the performance graph.
CHIEF EXECUTIVE OFFICER COMPENSATION
The committee has determined that the Chief Executive Officer's 2000
base salary of $187,000, bonus of $8,000 and benefits are appropriate in light
of the company's performance. This determination included a review of the
company's return on assets, return on equity, net income, and asset growth.
However, no direct correlation exists between the Chief Executive Officer's
compensation, the Chief Executive Officer's increase in compensation, and any
specific performance criteria, nor does the committee give any weight to
specific individual performance criteria. After reviewing all information,
including the above, the committee subjectively determines the Chief Executive
Officer's compensation.
EXECUTIVE OFFICERS
The committee establishes the compensation of the company's executive
officers including increases in compensation based on its subjective analysis of
the individual's contribution to the company's strategic goals and objectives.
In determining whether strategic goals have been achieved, the committee
considers, among numerous factors, the following: the company's performance as
measured by earnings, revenues, return on assets, return on equity, market
share, total assets, and non-performing loans. Although the performance and
increases in compensation were measured in light of these factors, no direct
correlation exists between any specific criterion and an employee's
compensation, nor does the committee attribute any specific weight to any
criteria in the analysis. After review of all information, including the above,
the committee makes a subjective determination.
22
In addition to base salary, executive officers of the bank may
participate in the bank's 401(k) plan, which is generally available to all
employees. The committee also awards annual bonuses at the end of the year at
its discretion. In addition to base salary, during 2000, executive officers of
the bank were eligible to receive stock option awards under the bank's 1998
Stock Incentive Plan. On January 3, 2000, the bank awarded its officers and key
employees options to purchase 3,400 shares of common stock under the plan at an
exercise price of $35.13, as adjusted for the two-for-one exchange of company
common stock for bank common stock upon the bank's reorganization into a holding
company structure. The Board of Directors adopted the company's 2000 Stock
Incentive Plan in December of 2000, the approval of which is one proposal
presented in this proxy statement. See "Proposal No. 5: Approval and Adoption of
the Fidelity D & D Bancorp, Inc. 2000 Stock Incentive Plan" below for more
information about this plan.
General labor market conditions, the specific responsibilities of the
individual, and the individual's contributions to the company's success
influence total compensation opportunities available to the employees of the
company. Individuals are reviewed annually on a calendar year basis. The company
strives to offer compensation that is competitive with that offered by employers
of comparable size in our industry. Through these compensation policies, the
company believes it can meet its strategic goals and objectives for its
constituencies and provide compensation that is fair and meaningful to its
employees.
THE HUMAN RESOURCES COMMITTEE
PAUL A. BARRETT JOHN T. COGNETTI MARY E. MCDONALD
SAMUEL C. CALI PATRICK J. DEMPSEY MICHAEL J. MCDONALD
JOHN F. GLINSKY, JR. MICHAEL F. MARRANCA
DAVID L. TRESSLER, SR.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Mr. Michael F. Marranca, President and Chief Executive Officer of the
company, is a member of the Board of Directors of the company and of the Human
Resources Committee that performs the functions of a compensation committee. Mr.
Marranca neither participates in conducting his own review nor takes part in
determining his own compensation.
23
SHAREHOLDER PERFORMANCE GRAPH
We present below a graph comparing the yearly dollar change in the
cumulative total shareholder return on the company's common stock against the
cumulative total return of the S&P Stock Index and the Peer Group Index for the
period of five fiscal years commencing January 1, 1996 and ending December 31,
2000. The graph shows that the cumulative investment return to shareholders,
based on the assumption that a $100 investment was made on December 31, 1995, in
each of the company's capital stock, the S& P 500 Stock Index and the Peer Group
Index, the cumulative total investment at December 31, 2000, would be $198.93,
$231.62 and $153.16, respectively. All of these cumulative total returns are
computed assuming the reinvestment of all dividends. The shareholder return
shown on the graph below is not necessarily indicative of future performance.(1)
[GRAPHIC]
[The following is a description of the performance graph in tabular format.]
1995 1996 1997 1998 1999 2000
Peer Group
Total 800.00 992.02 1,402.79 1,577.27 1,424.95 1,225.31
Peer Group
Index 100.00 124.00 175.35 197.16 178.12 153.16
Fidelity D & D
Bancorp, Inc. 100.00 103.74 124.46 160.88 187.24 198.93
S & P 500
Total Return 100.00 122.90 163.85 210.58 254.83 231.62
S & P 500
Total Return Index 100.00 122.90 163.85 210.58 254.83 231.62
(1) The peer group for which the above information appears includes the
following companies: ACNB Corporation, CNB Financial Corporation,
Community Bancorp, Inc., Drovers Bancshares Corporation, First West
Chester Corporation, Franklin Financial Services Corp., Juniata Valley
Financial Corp., Penseco Financial Services Corp., and Pioneer American
Holding Co. These companies were selected based on four criteria: total
assets between $80 million and $650 million; market capitalization
greater than $20 million; headquarters in Pennsylvania; and, not quoted
on NASDAQ.
24
PROPOSAL NO. 4:
APPROVAL AND ADOPTION OF
THE FIDELITY D & D BANCORP, INC.
2000 INDEPENDENT DIRECTORS STOCK OPTION PLAN
On December 12, 2000, the Board of Directors adopted the Fidelity D & D
Bancorp, Inc. 2000 Independent Directors Stock Option Plan and reserved 50,000
shares of common stock for issuance under the plan. The plan is subject to
approval of the company's shareholders at the Annual Meeting. The terms and
effect of the plan are summarized below. This summary highlights selected
information from the 2000 Independent Directors Stock Option Plan and may not
contain all of the information that is important to an individual shareholder.
To understand the plan fully, and for more complete descriptions of the terms of
the plan, you are encouraged to read carefully the 2000 Independent Directors
Stock Option Plan, attached as Appendix "A."
The purposes of the 2000 Independent Directors Stock Option Plan are as
follows:
o To advance the development, growth and financial condition of the
company and the bank by providing additional incentives to
non-employee members of the Board of Directors of the company by
encouraging them to acquire stock ownership in the company;
o To secure, retain and motivate non-employee directors of the
company;
o To provide long-term incentive compensation through financial
rewards dependent on future increases in the market value of the
company's stock; and
o To align the interests of non-employee directors with those of
shareholders.
TERM
The plan is effective as of December 12, 2000, the date it was adopted
by the Board of Directors, subject to approval by the shareholders, and will
continue in effect for 10 years, unless previously terminated by the Board. The
maximum number of shares of common stock that may be issued under the plan is
50,000. However, the company may adjust the number due to stock splits, payments
of stock dividends or other changes in the structure of the company's capital.
ELIGIBILITY AND GRANTS
Persons eligible to receive awards under the plan will be those
directors who are not employees of either the company or its banking subsidiary.
Currently, there are 9 non-employee directors (also nominees for director) who
will be eligible under the plan.
25
Each non-employee director will be granted options to purchase 500
shares of common stock on the first business day of January. The purchase price
of common stock subject to a stock option shall be the fair market value, as
defined in the plan, at the time of grant. As of March 23, 2001, the fair market
value of the company's common stock was $36.375 per share, based on an average
of the dealer "bid" and "ask" prices on the Over-the-Counter Bulletin Board, as
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"). The recipient may exercise their stock options at any time
for 10 years after the date of grant, subject to any vesting period contained in
their specific agreement granting the options. No option may be exercised after
10 years from the date of grant. Furthermore, as described in the plan, upon the
execution of an agreement that would result in a change in control of the
company, any and all outstanding stock options under the plan will immediately
become exercisable until the consummation of the events proposed in the
agreement.
If a director ceases to be a director of the Company for any reason,
the remaining portion of a director's unexercised stock options terminate one
year after the director's termination, subject to the 10 year limitation on
exercisability. If a director dies prior to the expiration of the director's
stock options, and without having fully exercised the stock options, and to the
extent that the stock options are exercisable at the time of death, the
director's legal representative or beneficiary shall have the right to exercise
the stock options within one year after the director's death.
TRANSFERABILITY
Except as otherwise provided by the Board of Directors or by estate
laws, the recipient may not transfer any stock options under this plan other
than by will or the laws of descent and distribution.
ADMINISTRATION
The Board of Directors or a committee composed of at least two members
of the Board will have the ability to control and manage the operation and
administration of the plan.
AMENDMENT
The Board of Directors may amend, suspend or terminate the plan at any
time without shareholder approval, subject to the requirements under applicable
securities and tax laws or regulations. However, any amendment of the plan may
not materially or adversely affect any right of a director with respect to
unexercised stock options previously issued, without the director's consent.
26
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
Options issued pursuant to the plan will not qualify as incentive stock
options issued pursuant to a qualified plan within the meaning of Sections 421
and 422 of the Internal Revenue Code of 1986, as amended. Under the provisions
of the Code as in effect on the date of this proxy statement, a director who
receives a non-qualified option will not recognize taxable income on the grant
of the option. However, upon exercise, he or she will recognize ordinary income
in an amount equal to the excess of the fair market value of the stock on the
date that the option is exercised over the purchase price paid for the stock.
The company will be entitled to an income tax deduction in the year of exercise
in an amount equal to the amount of income recognized by the director.
CANCELLATION OF PRIOR OPTIONS
The Fidelity D & D Bancorp, Inc. 2000 Independent Directors Stock
Option Plan will replace The Fidelity Deposit and Discount Bank 1998 Independent
Directors Stock Option Plan. The bank will not make any further awards under the
prior plan if shareholders approve the new company plan. Also, upon
shareholders' approval of the new plan, each holder of an outstanding option
under the 1998 plan will be entitled to receive, in substitution for the prior
option, a new option under the 2000 plan. The prior options will be cancelled at
that time. The number of shares and the exercise price of the new options will
be adjusted for the exchange ratio of company common stock for bank common stock
upon the reorganization of the bank as the subsidiary of the company.
REGISTRATION UNDER THE SECURITIES ACT OF 1933
The company intends to register the options issued under the 2000
Independent Directors Stock Option Plan and the underlying securities by filing
the appropriate registration statement with the Securities and Exchange
Commission, pursuant to the Securities Act of 1933, as soon as practicable
following shareholders' approval of the plan.
NEW PLAN BENEFITS
The company made the first award on January 2, 2001, subject to
subsequent shareholder approval. On that date, the company granted the 9
non-employee directors options to purchase a total of 4,500 shares of the
company's common stock under the plan at an exercise price of $36.50 per share.
The options will become exercisable six months from the date of grant, on July
2, 2001, and expire on January 2, 2011. If shareholders do not approve the plan,
these options will lapse and cease to convey any rights.
27
The following table shows the benefits that will accrue to eligible
persons under the plan during 2001, including the dollar value of options as of
March 23, 2001:
NEW PLAN BENEFITS (1)
Name and Position Dollar Value ($) Number of Units
----------------- ---------------- ---------------
Chief Executive Officer and other Executives $0 0
named in the Summary Compensation Table
Executive Group $0 -0-
Non-Executive Director Group $0 4,500
(9 persons) (not in-the-money as of 3/23/01)
Non-Executive Officer Employee Group $0 -0-
-----------------
(1) The dollar value of the options is the difference between the fair
market value of the underlying securities and the exercise price of the
options. For purposes of this table, we have used the fair market value
on March 23, 2001, of $36.375 per share, based on an average of the
dealer "bid" and "ask" prices for the Company's common stock on the
over-the-counter market, as reported by NASDAQ. The exercise price is
$36.50 per share.
PROPOSED SHAREHOLDERS' RESOLUTION
The Board of Directors recommends a vote FOR the following resolution
which will be presented at the Annual Meeting:
"RESOLVED, that the Fidelity D & D Bancorp, Inc. 2000
Independent Directors Stock Option Plan, the text of which is provided
in its entirety in the Proxy Statement for the 2001 Annual Meeting of
Shareholders as Appendix `A,' is hereby approved, adopted, ratified and
confirmed by the shareholders of the Company."
The approval and adoption of the plan requires the affirmative vote of
at least a majority of all votes cast by shareholders. Proxies solicited by the
Board of Directors will be voted for the resolution unless shareholders specify
to the contrary on their proxies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RESOLUTION APPROVING
AND ADOPTING THE FIDELITY D & D BANCORP, INC. 2000 INDEPENDENT DIRECTORS STOCK
OPTION PLAN.
28
PROPOSAL NO. 5:
APPROVAL AND ADOPTION OF
THE FIDELITY D & D BANCORP, INC. 2000 STOCK INCENTIVE PLAN
On December 12, 2000, the Board of Directors adopted the Fidelity D & D
Bancorp, Inc. 2000 Stock Incentive Plan, subject to approval by the shareholders
at the annual meeting. The Board of Directors reserved 50,000 shares of common
stock for issuance under the Stock Incentive Plan subject to future adjustment
for stock splits or stock dividends. Also, in the event of an exchange of shares
of the company's common stock for another entity's capital, such as by reason of
merger or reorganization, the shares under the plan shall be substituted for the
new shares accordingly. The terms and effect of the 2000 Stock Incentive Plan
are summarized below. This summary highlights selected information from the 2000
Stock Incentive Plan and may not contain all of the information that is
important to an individual shareholder. To understand the plan fully, you should
carefully read the 2000 Stock Incentive Plan that is attached to this proxy
statement as Appendix "B". Appendix "B" is deemed to be an integral part of this
proxy statement.
The purposes of the Stock Incentive Plan are as follows:
o To advance the company's development, growth and financial
condition by providing additional incentives to key officers and
other employees by encouraging them to acquire stock ownership in
the company; and
o To secure, retain and motivate personnel who may be responsible
for the company's operation and management.
TERM
The Stock Incentive Plan became effective on December 12, 2000, the
date the Board of Directors adopted it, subject to shareholder approval within
one year. The Board may suspend or terminate the plan at any time and under no
circumstances may awards be granted after the 10th anniversary of the plan's
effective date, or December 12, 2010.
AMENDMENT
The Board of Directors of the company may amend, suspend or terminate
the plan at any time without shareholder approval, subject to the requirements
under applicable securities and tax laws or regulations. However, any amendment
of the plan may not materially or adversely affect any right of a participant
with respect to unexercised options previously issued, without the participant's
consent. The committee administering the plan may rescind, revise and add to any
of the terms, conditions and provisions in the plan or of an award under the
plan, as necessary or appropriate to have the plan or awards be or remain
qualified and in compliance with applicable securities and tax laws or
regulations.
29
ADMINISTRATION
A committee of at least three members of the Board, who are not
employees of the company or any subsidiary, administers and interprets the plan.
The committee also determines which executive officers and key employees qualify
for awards under the 2000 Stock Incentive Plan and their associated terms and
conditions.
ELIGIBILITY
Persons eligible to receive awards are those executive officers
employed by the company or its subsidiary and other key employees of the company
or a subsidiary of the company, as determined by the committee. A person's
eligibility to receive an award will not exclude him or her from participation
in any other company incentive or benefit plan or program.
AWARDS
The committee may issue awards under the Stock Incentive Plan in the
form of:
o QUALIFIED OPTIONS -- options to purchase stock intended to qualify
for tax treatment as incentive stock options under Internal
Revenue Code Sections 421 and 422, which confer specific tax
benefits to recipients; or
o NON-QUALIFIED OPTIONS -- options to purchase stock not intended to
qualify for tax treatment under Internal Revenue Code Sections 421
through 424.
The committee, in its sole discretion, determines the awards and their
terms and conditions. Generally, awards may be exercised in whole or in part.
The company will use funds received from the exercise of awards for its general
corporate purposes. The committee may rescind, revise and add to any of the
terms of the plan or of an award under the plan as necessary or appropriate to
qualify or comply with applicable laws. The committee may also permit an
acceleration of exercise terms of any awards. In addition, the 2000 Stock
Incentive Plan provides for acceleration of the exercise terms of all
outstanding awards if a change of control of the company occurs.
FEDERAL INCOME TAX CONSEQUENCES
An employee who receives qualified options will not recognize taxable
income on the grant or the exercise of the option. The exercise price of
qualified options must be no less than the stock's fair market value on the date
of the grant. As of March 23, 2001, the fair market value of the company's
common stock was $36.375 per share. Qualified options may not be exercised less
than six months after the date of grant nor more than 10 years after such date.
Other restrictions include:
30
o Qualified options may not be sold, transferred or assigned by the
participant except by will or the laws of descent and distribution.
o If the recipient of a qualified option ceases to be employed by the
company or its subsidiary for any reason other than death, the
committee administrating the plan may permit the recipient to exercise
the option during its remaining term, to the extent it remains
exercisable, for a period of not more than three months after the
cessation of employment, or if the employment was due to the disability
of the recipient, one year after the cessation of employment.
o If the participant dies while employed by the company or subsidiary,
the committee may permit the participant's qualified personal
representatives or beneficiaries under his or her will or applicable
laws to exercise the qualified option no more than one year after the
participant's death, to the extent that it remains exercisable.
If the stock acquired by the exercise of a qualified option is held
until the later of
o 24 months from the award's grant date, and
o one year from the award's exercise date,
any gain (or loss) recognized on the stock's sale or exchange will be treated as
long-term capital gain (or loss), and the company will not receive any income
tax deduction.
If stock acquired by the exercise of a qualified option is sold or
exchanged before the expiration of the required holding period, the employee
recognizes ordinary income in the year the disposition occurred in an amount
equal to the difference between the option price and the lesser of the stock's
fair market value on the exercise date, or the selling price. In the event of a
disqualifying disposition, the company is entitled to an income tax deduction in
the year the disposition occurred in an amount equal to the amount of ordinary
income the employee recognized.
Under the plan, non-qualified options may not be exercised less than
six months after the date of grant nor more than 10 years after such date. The
purchase price of common stock subject to non-qualified options shall be no less
than the company's par value. Because the company's stock does not have a par
value, the purchase price does not have a minimum amount. Non-qualified options
are not transferable except as designated by the participant by will and the
laws of descent and distribution. If the recipient of a non-qualified option
under the plan ceases to be employed by the company or its subsidiary, the
committee administering the plan may permit him or her to exercise the option
during its remaining term, to the extent the option remains exercisable, or for
such period of time and under such terms and conditions as the committee may
prescribe.
31
An employee who receives a non-qualified option will not recognize
taxable income on the grant of the award. However, upon exercise, he or she will
recognize ordinary income in an amount equal to the excess of the fair market
value of the stock on the date that the option is exercised over the purchase
price paid for the stock. The company is entitled to an income tax deduction in
the year of exercise in an amount equal to the amount of income the employee
recognized.
This tax discussion is a summary and provided for the shareholders'
convenience. The federal income tax consequences to any plan recipient and to
the company may vary from those described above, depending upon individual
actions and circumstances.
CANCELLATION OF PRIOR OPTIONS
The Fidelity D & D Bancorp, Inc. 2000 Stock Incentive Plan will replace
The Fidelity Deposit and Discount Bank 1998 Stock Incentive Plan. The bank will
not make any further awards under the prior plan if shareholders approve the new
company plan. Also, upon shareholders' approval of the new plan, each holder of
an outstanding option under the 1998 plan will be entitled to receive, in
substitution for the prior option, a new option under the 2000 plan. The prior
options will be cancelled at that time. The number of shares and the exercise
price of the new options will be adjusted for the exchange ratio of company
common stock for bank common stock upon the reorganization of the bank as the
subsidiary of the company.
REGISTRATION UNDER THE SECURITIES ACT OF 1933
The company intends to register the options issued under the 2000 Stock
Incentive Plan and the underlying securities by filing the appropriate
registration statement with the Securities and Exchange Commission, pursuant to
the Securities Act of 1933, as soon as practicable following shareholders'
approval of the plan.
NEW PLAN BENEFITS
The company made the first award on January 2, 2001, subject to
subsequent shareholder approval. On that date, the company granted certain
officers and key employees options to purchase a total of 2,900 shares of the
company's common stock under the plan at an exercise price of $36.50 per share.
The options will become exercisable six months from the date of grant, on July
2, 2001. The options expire on January 2, 2011. If shareholders do not approve
the plan, these options will lapse and cease to convey any rights.
32
The following table shows the benefits that will accrue to eligible
persons under the plan during 2001, including the dollar value of options as of
March 23, 2001:
NEW PLAN BENEFITS (1)
Name and Position Dollar Value ($) Number of Units
----------------- ---------------- ---------------
Michael F. Marranca, 0 (1) 700
Chief Executive Officer
Kevin R. Messett, 0 (1) 500
Executive Vice President
Executive Group 0 (1) 2,400
(5 persons)
Non-Executive Director Group 0 0
Non-Executive Officer Employee Group 0 (1) 500
(number subject to determination by the
Employee Stock Incentive Committee; one
person from this group received options on
January 2, 2001)
-----------------
(1) The dollar value of the options is the difference between the fair
market value of the underlying securities and the exercise price of the
options. For purposes of this table, we have used the fair market value
on March 23, 2001, of $36.375 per share, based on an average of the
dealer "bid" and "ask" prices for the Company's common stock on the
over-the-counter market, as reported by NASDAQ. The exercise price is
$36.50 per share. No options were in-the-money as of March 23, 2001.
Future grants by the committee are not presently determinable.
Currently, the Board of Directors has no definite plans to issue any benefits
under the Stock Incentive Plan.
PROPOSED SHAREHOLDERS' RESOLUTION
The Board of Directors recommends a vote FOR the following resolution
that will be presented at the Annual Meeting:
"RESOLVED, that the Fidelity D & D Bancorp, Inc. 2000 Stock Incentive
Plan, the text of which is set forth in its entirety in Appendix `B' to
the proxy statement for the 2001 Annual Meeting of Shareholders, is
hereby approved, adopted, ratified and confirmed by the shareholders of
the Company."
A majority of votes cast on this matter must vote in the affirmative to
approve and adopt the Stock Incentive Plan. The proxy holders will vote FOR the
above resolution unless shareholders specify otherwise on their proxy cards.
33
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE
AND ADOPT THE FIDELITY D & D BANCORP, INC. 2000 STOCK INCENTIVE PLAN.
PROPOSAL NO. 6:
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the company believes that Parente Randolph,
P.C.'s knowledge of the company is highly valuable and has appointed Parente
Randolph, P.C., Certified Public Accountants, to audit the financial statements
of the company and the bank for he fiscal year ending December 31, 2001. The
Board proposes that the shareholders ratify this appointment. Parente Randolph
advised the company that none of its members has any financial interest in the
company or the bank. Parente Randolph served as the company's independent
auditors for the 2000 fiscal year. They also assisted the company with the
preparation of their federal and state tax returns and provided assistance in
connection with regulatory matters, charging the company for these services at
its customary hourly billing rates. The company's Board of Directors approved
these non-audit services after due consideration of the auditors' objectivity
and after finding them to be wholly independent.
In the event that the shareholders do not ratify the selection of
Parente Randolph as the company's independent auditors for the 2001 fiscal year,
the Board of Directors may choose another accounting firm to provide independent
audit services for the 2001 fiscal year. Representatives of Parente Randolph
will attend the annual meeting to make a statement and answer questions.
The affirmative vote of the majority of votes cast on this proposal is
needed to ratify Parente Randolph as independent auditors for 2001.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF
PARENTE RANDOLPH, P.C., CERTIFIED PUBLIC ACCOUNTANTS, AS THE COMPANY'S
INDEPENDENT AUDITORS FOR ITS 2001 FISCAL YEAR.
LEGAL PROCEEDINGS
The nature of the company's business generates some litigation
involving matters arising in the ordinary course of business. However, in the
opinion of management of the company, no legal proceedings are pending, which,
if determined adversely to the company or the bank, would materially affect the
company's undivided profits or financial condition. No legal proceedings are
pending other than ordinary routine litigation incident to the business of the
company. In addition, to management's knowledge, no government authorities have
initiated or contemplated any material legal actions against the company or the
bank.
34
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Any shareholder who, in accordance with the proxy rules of the SEC,
wishes to submit a proposal for inclusion in the company's proxy statement for
its 2002 Annual Meeting of Shareholders must deliver such proposal in writing to
the Secretary of Fidelity D & D Bancorp, Inc. at its principal executive office,
Blakely and Drinker Streets, Dunmore, Pennsylvania 18512, not later than
December 1, 2001.
In addition, even if a proposal is not submitted by the above deadline
for inclusion in the proxy statement, shareholders should submit any proposal by
no later than February 14, 2002. In the event a shareholder submits a proposal
after that date, the proxy holders may vote against the proposal at their
discretion. However, the deadline for submitting nominations for directors is 60
days prior to the date of the 2002 Annual Meeting. See "Board of Directors and
Executive Officers - Nominating Directors" above.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no matters other than those referred to
in the Notice of Annual Meeting of Shareholders that properly may come before
the annual meeting. However, if any other matter should be properly presented
for consideration and voting at the annual meeting or any adjournments of the
meeting, the persons named as proxy holders will vote the proxies in what they
determine to be the best interest of the company.
ADDITIONAL INFORMATION
THE COMPANY ENCLOSES A COPY OF ITS ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2000, WITH THIS PROXY STATEMENT. IN ADDITION, UPON REQUEST,
ANY SHAREHOLDER MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 2000, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, FROM ROBERT P. FARRELL, TREASURER, FIDELITY
D & D BANCORP, INC., BLAKELY AND DRINKER STREETS, DUNMORE, PENNSYLVANIA 18512 OR
BY CALLING (570) 342-8281.
35
APPENDIX "A"
FIDELITY D & D BANCORP, INC.
2000 INDEPENDENT DIRECTORS STOCK OPTION PLAN
1. Company Purpose. The 2000 Independent Directors Stock Option Plan
(the "Plan") is established to advance the development, growth and financial
condition of Fidelity D & D Bancorp, Inc. (the "Company") and its subsidiaries,
by providing an incentive, through participation in the appreciation of the
capital stock of the Company, and thereby securing, retaining and motivating
members of the Company's Board of Directors who are not officers or employees of
the Company or any subsidiary thereof ( the "Outside Directors").
2. Term. The Plan shall become effective as of the date it is adopted
by the Company's Board of Directors (the "Board"), and shall be presented for
approval at the next meeting of the Company's shareholders. Any and all options
and rights awarded under the Plan (the "Awards") before it is approved by the
Company's shareholders shall be conditioned upon, and may not be exercised
before, receipt of shareholder approval, and shall lapse upon failure to receive
such approval. Unless previously terminated by the Board, the Plan shall
terminate on, and no options shall be granted after the tenth anniversary of the
effective date of the Plan; however, the Plan and all Awards made under the Plan
prior to such date shall remain in effect until such Awards have been satisfied
or terminated in accordance with the Plan and the terms of such Awards.
3. Stock. The shares of the Company's common stock, without par value
(the "Common Stock"), issuable under the Plan shall not exceed 50,000 shares.
The amount of Common Stock issuable under the Plan may be adjusted pursuant to
Section 10 hereof. The Common Stock issuable hereunder may be either authorized
and unissued shares of Common Stock, or authorized shares of Common Stock issued
by the Company and subsequently reacquired by it as treasury stock, or shares
purchased in open market transactions. Under no circumstances shall fractional
shares be issued under the Plan. The Company's failure to obtain any
governmental authority deemed necessary by the Company's legal counsel for the
proper grant of the stock options under this Plan and/or the issuance of Common
Stock under the Plan shall relieve the Company of any duty or liability for the
failure to grant stock options under the Plan and/or issue Common Stock under
the Plan as to which such authority has not been obtained.
4. Stock Options. Stock options shall be granted under the Plan to each
Outside Director of the Company, annually, on the first business day of January
(the "Grant Date"), with the first award of options to be made hereunder on
January 2, 2001. Each Outside Director who is a member of the Company's Board of
Directors on the Grant Date shall be awarded stock options to purchase 500
shares of Common Stock (the "Stock Options") under the following terms and
conditions:
(a) The time period during which any Stock Option is exercisable shall
be ten (10) years after the date of grant.
A-1
APPENDIX "A"
(b) If a director, who has received an award pursuant to the Plan,
ceases to be a member of the Board of Directors for any reason, the
director may exercise the Stock Option not more than twelve (12) months
after such cessation. If a director, who has received an award pursuant
to the Plan dies, the director's qualified personal representative, or
any person who acquires a Stock Option pursuant to the director's Will
or the laws of descent and distribution, may exercise such Stock Option
during its remaining term for a period of not more than twelve (12)
months after the director's death to the extent that the Stock Option
would then be and remains exercisable.
(c) The purchase price of a share of Common Stock subject to a Stock
Option shall be the fair market value of the Common Stock on the date
of grant, as determined under Section 6 hereof.
(d) The Stock Option shall be made by a written agreement in the form,
attached hereto as Exhibit "A," with such changes therein as may be
determined by the Committee ( as such term is defined in Section 12
hereof) (the "Stock Option Agreement").
5. Exercise. Except as otherwise provided in the Plan, a Stock Option
may be exercised in whole or in part by giving written notice thereof to the
Secretary of the Company, or his designee, identifying the Stock Option being
exercised, the number of shares of Common Stock with respect thereto, and other
information pertinent to the exercise of the Stock Option. The purchase price of
the shares of Common Stock with respect to which a Stock Option is exercised
shall be paid with the written notice of exercise, either in cash or in Common
Stock, which has been held by the director for at least six (6) months, at its
then current fair market value, or any combination of cash or Common Stock.
Funds received by the Company from the exercise of any Stock Option shall be
used for its general corporate purposes. The number of shares of Common Stock
subject to a Stock Option shall be reduced by the number of shares of Common
Stock with respect to which the director has exercised rights under the related
Stock Option Agreement.
If the Company or its shareholders execute an agreement to dispose of
all or substantially all of the Company's assets or capital stock by means of
sale, merger, consolidation, reorganization, liquidation or otherwise, as a
result of which the Company's shareholders as of immediately before such
transaction will not own at least fifty percent (50%) of the total combined
voting power of all classes of voting capital stock of the surviving entity (be
it the Company or otherwise) immediately after the execution of such
transaction, thereupon any and all outstanding Stock Options shall immediately
become exercisable until the consummation of such transaction, or if not
consummated, until the agreement therefor expires or is terminated, in which
case thereafter all Stock Options shall be treated as if the agreement never had
been executed. If during any period of two (2) consecutive years, the
individuals, who at the beginning of such period, constituted the Board of
Directors, cease for any reason to constitute at least a majority of the Board
of Directors (unless the election of each director of the Board of Directors,
who was not a director of the Board of Directors at the beginning of such
period, was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period) thereupon
any and all outstanding Stock Options shall immediately become exercisable. If
there is an actual, attempted or threatened change in the ownership of at least
A-2
APPENDIX "A"
twenty-five percent (25%) of any class of voting stock of the Company through
the acquisition of, or an offer to acquire, such percentage of the Company's
voting stock by any person or entity, or persons or entities acting in concert
or as a group, and such acquisition or offer has not been duly approved by the
Board of Directors, thereupon any and all outstanding Stock Options shall
immediately become exercisable.
6. Value. Where used in the Plan, the "Fair Market Value" of Common
Stock shall mean and be determined as follows: (i) in the event that the Common
Stock is listed on an established exchange, the closing price of the Common
Stock on the Stock Option's Grant Date or, if no trade occurred on that day, on
the next preceding day on which a trade occurred; or (ii) in the event that the
Common Stock is not listed on an established exchange, but is then quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the average of the average of the closing bid and asked quotations
of the Common Stock for the five (5) trading days immediately preceding the
Grant Date. In either case, in the event that no closing bid or asked quotation
is available on one (1) or more of such trading days, the fair market value
shall be determined by reference to the five (5) trading days immediately
preceding the Grant Date on which closing bid and asked quotations are
available.
7. Continued Relationship. Nothing in the Plan or in any Stock Option
shall confer upon any director any right to continue his/her relationship with
the Company as a director, or limit or affect any rights, powers or privileges
that the Company or its affiliates may have to supervise, discipline and
terminate such director, and the relationships thereof.
8. General Restrictions. The Board of Directors may require, in its
discretion, (a) the listing, registration or qualification of the Common Stock
issuable pursuant to the Plan on any securities exchange or under any federal or
state securities or other laws, (b) the approval of any governmental authority,
or (c) an execution of an agreement by any director with respect to disposition
of any Common Stock (including, without limitation, that at the time of the
director's exercise of the Stock Option, any Common Stock thereby acquired is
being and will be acquired solely for investment purposes and without any
intention to sell or distribute the Common Stock). If the Board of Directors so
requires, then Stock Options shall not be exercised, in whole or in part, unless
such listing, registration, qualification, approval or agreement has been
appropriately effected or obtained to the satisfaction of the Board of Directors
and legal counsel for the Company. Notwithstanding anything to the contrary
herein, a director shall not sell, transfer or otherwise dispose of any shares
of Common Stock acquired pursuant to a Stock Option unless at least six (6)
months have elapsed from the date the Stock Option was granted and, in any
event, the transfer or disposition is made in accordance with Section 16 of the
Securities Exchange Act of 1934, as amended, and as the same may be amended from
time to time.
9. Rights. Except as otherwise provided in the Plan, a director shall
have no rights as a holder of the Common Stock subject to a Stock Option unless
and until one or more certificates for the shares of Common Stock are issued and
delivered to the director. No Stock Option, or the grant thereof, shall limit or
affect the right or power of the Company or its affiliates to adjust,
A-3
APPENDIX "A"
reclassify, recapitalize, reorganize or otherwise change its or their capital or
business structure, or to merge, consolidate, dissolve, liquidate or sell any or
all of its or their business, property or assets.
10. Adjustments. In the event that the shares of Common Stock of the
Company, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of Common Stock or other securities of the
Company or of other securities of the Company or of another corporation or
entity (whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise) or if the number
of such shares of Common Stock shall be increased through the payment of a stock
dividend, stock split or similar transaction, then, there shall be substituted
for or added to each share of Common Stock of the Company that was theretofore
appropriated, or that thereafter may become subject to a Stock Option under the
Plan, the number and kind of shares of Common Stock or other securities into
which each outstanding share of the Common Stock of the Company shall be so
changed or for which each such share shall be exchanged or to which each share
shall be entitled, as the case may be. Each outstanding Stock Option shall be
appropriately amended as to price and other terms, as may be necessary to
reflect the foregoing events.
If there shall be any other change in the number or kind of the
outstanding shares of Common Stock of the Company, or of any Common Stock or
other securities into which such Common Stock shall have been changed, or for
which it shall have been exchanged, and if a majority of the members of the
Board of Directors shall, in their sole discretion, determine that the change
equitably requires an adjustment in any Stock Option that was theretofore
granted or that may thereafter be granted under the Plan, then such adjustment
shall be made in accordance with the determination.
The grant of a Stock Option pursuant to the Plan shall not affect, in
any way, the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge, to consolidate, to dissolve, to liquidate or to sell or
transfer all or any part of its business or assets.
Fractional shares resulting from any adjustment in a Stock Option
pursuant to this Section 10 may be settled as a majority of the members of the
Board of Directors shall determine.
To the extent that the foregoing adjustments relate to Common Stock or
securities of the Company, such adjustments shall be made by a majority of the
members of the Board of Directors, whose determination in that respect shall be
final, binding and conclusive. Notice of any adjustment shall be given by the
Company to each holder of a Stock Option that is so adjusted.
A-4
APPENDIX "A"
11. Assumption of Obligations under The Fidelity Deposit and Discount
Bank 1998 Independent Directors Stock Option Plan. The Plan shall replace The
Fidelity Deposit and Discount Bank 1998 Independent Directors Stock Option Plan,
as assumed by the Company pursuant to the Plan of Reorganization dated December
21, 1999, by and among the Company, The Fidelity Deposit and Discount Bank and
The Fidelity Deposit and Discount Interim Bank, and the related Plan of Merger,
dated December 21, 1999, by and between The Fidelity Deposit and Discount Bank
and The Fidelity Deposit and Discount Interim Bank. No further awards shall be
made under or pursuant to the 1998 Independent Directors Plan upon the effective
date of the Plan. To the extent any stock options under the 1998 Independent
Directors Stock Option Plan remain unexercised, the Company has assumed all
obligations of The Fidelity Deposit and Discount Bank under such outstanding
options, pursuant to the aforesaid Plan of Reorganization and Plan of Merger and
subject to adjustment for the exchange ratio of the Company's common stock for
the Bank's common stock stated therein. Upon the receipt of shareholder approval
for the Plan, each holder of an outstanding option under the 1998 Independent
Directors Stock Option Plan shall be entitled to receive, in cancellation of,
and in substitution for, such option, a new option under the Plan to acquire
shares of common stock of the Company, with the number of shares and the
exercise price adjusted by the exchange ratio of the Company's common stock for
the Bank's common stock stated in the Plan of Reorganization and Plan of Merger.
Otherwise, such outstanding stock options under the prior 1998 Independent
Directors Stock Option Plan shall remain in effect until they have been
exercised, satisfied, cancelled or terminated in accordance with their terms and
the aforesaid Plan of Reorganization and Plan of Merger.
12. Forfeiture. Notwithstanding anything to the contrary in this Plan,
if an option holder is engaged in fraud, embezzlement, theft, commission of a
felony, or dishonesty in the course of his relationship with the Company or its
affiliates, or has disclosed trade secrets of the Company or its affiliates, the
option holder shall forfeit all rights under and to all unexercised Stock
Options, and all exercised Stock Options for which the Company has not yet
delivered certificates for shares of Common Stock, and all rights to receive
Stock Options shall be automatically canceled.
13. Administration. The ability to control and manage the operation and
administration of the Plan shall be vested in the Board of Directors or in a
committee of two or more members of the Board of Directors, selected by the
Board of Directors (the "Committee"). The Committee shall have the authority and
discretion to interpret the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, to determine the terms and provisions of any
agreements made pursuant to the Plan, and to make any and all determinations
that may be necessary or advisable for the administration of the Plan. Any
interpretation of the Plan by the Committee and any decision made by it under
the Plan is final and binding.
14. Miscellaneous. Any reference contained in this Plan to a particular
section or provision of law, rule or regulation shall include any subsequently
enacted or promulgated section or provision of law, rule or regulation, as the
case may be. With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended, transactions under this Plan are intended to
comply with all applicable conditions of the rules and the regulations
promulgated thereunder or any successor rules that may be promulgated by the
Securities and Exchange Commission. To the extent any provision of this Plan
fails to so comply, it shall be deemed null and void, to the extent permitted by
A-5
APPENDIX "A"
applicable law, subject to the provisions of Section 15, below. Where used in
this Plan, the plural shall include the singular, and, unless the context
otherwise clearly requires, the singular shall include the plural and the
masculine shall include the feminine. The captions of the numbered Sections
contained in this Plan are for convenience only, and shall not limit or affect
the meaning, interpretation or construction of any of the provisions of the
Plan.
15. Transferability. Except as otherwise provided by the Board of
Directors, Stock Options granted under the Plan are not transferable except as
designated by the participant by will and the laws of descent and distribution.
16. Amendment. The Plan may be amended, suspended or terminated,
without notice, by a majority vote of the Board of Directors of the Company.
Notwithstanding the foregoing, no amendment of the Plan shall, without the
consent of the effected participant, alter or impair any rights or obligations
enjoyed by such participant under any unexercised Stock Option.
17. Taxes. The issuance of shares of Common Stock under the Plan shall
be subject to any applicable taxes or other laws or regulations of the United
States of America and any state or local authority having jurisdiction there
over.
- - - - - - -
END
- - - - - - -
A-6
APPENDIX "A"
EXHIBIT A
---------
FIDELITY D & D BANCORP, INC.
2000 INDEPENDENT DIRECTORS STOCK OPTION PLAN
STOCK OPTION AGREEMENT
A STOCK OPTION ( the " Stock Option") for________ (______) shares of
common stock, without par value (the "Common Stock"), of Fidelity D & D Bancorp,
Inc., a Pennsylvania business corporation, is hereby granted to ________________
(the "Director"), subject in all respects to the terms and provisions of the
Fidelity D & D Bancorp, Inc. 2000 Independent Directors Stock Option Plan (the
"Plan"). The option price as determined under Section 6 of the Plan is
$____________ per share.
This Stock Option shall vest and become exercisable six (6) months from
the date of this Agreement. This Option may not be exercised more than ten (10)
years from the date of grant, and may be exercised during such term only in
accordance with the terms of the Plan and this Agreement.
ATTEST: FIDELITY D & D BANCORP, INC.
By
- ----------------------------------- -------------------------------
Secretary , President
Dated:
---------------------------
The Director acknowledges receipt of a copy of the Plan, and represents
that he or she is familiar with the terms and provisions thereof. The Director
hereby accepts this Stock Option subject to all the terms and provisions of the
Plan.
Dated:
-------------------------------------
Director
[ OPTIONAL PARAGRAPH RE: TRANSFERABLE OPTIONS]
A-7
APPENDIX "A"
( With the Approval of the Committee, on an individual basis)
With the prior approval of the Committee or the Board of Directors, as
the case may be, this Stock Option may be transferred, for no consideration, to
or for the benefit of the Director's Immediate Family (including, without
limitation, to a trust for the benefit of the Director's Immediate Family or to
a partnership or a limited liability company for one or more members of the
Director's Immediate Family), subject to such limits as the Committee may
establish, and the transferee shall remain subject to all the terms and
conditions applicable to the Stock Option prior to such transfer. The foregoing
right to transfer the Stock Option shall apply to the right to consent to
amendments to this Agreement and, in the discretion of the Committee, shall also
apply to the right to transfer ancillary rights associated with the Stock
Option. The term "Immediate Family" shall mean the Director's spouse, parents,
children, stepchildren, adoptive relationships, sisters, brothers and
grandchildren (and, for this purpose, shall also include the Director).
A-8
APPENDIX "B"
FIDELITY D & D BANCORP, INC.
2000 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to
advance the development, growth and financial condition of Fidelity D &
D Bancorp, Inc. (the "Company") and each subsidiary thereof, as defined
in Section 424 of the Internal Revenue Code of 1986, as amended (the
"Code"), by providing incentives through participation in the
appreciation of the common stock of the Company to secure, retain and
motivate personnel who may be responsible for the operation and for
management of the affairs of the Company and any subsidiary now or
hereafter existing ("Subsidiary").
2. Term. The Plan shall become effective as of the date it is adopted by
the Company's Board of Directors (the "Board"), and shall be presented
for approval at the next meeting of the Company's shareholders. Any and
all options and rights awarded under the Plan (the "Awards") before it
is approved by the Company's shareholders shall be conditioned upon,
and may not be exercised before, receipt of shareholder approval, and
shall lapse upon failure to receive such approval. Unless previously
terminated by the Board, the Plan shall terminate on, and no options
shall be granted after the tenth anniversary of the effective date of
the Plan; however, the Plan and all Awards made under the Plan prior to
such date shall remain in effect until such Awards have been satisfied
or terminated in accordance with the Plan and the terms of such Awards.
3. Stock. Shares of the Company's common stock, without par value (the
"Stock"), that may be issued under the Plan shall not exceed, in the
aggregate, 50,000 shares, as may be adjusted pursuant to Section 16
hereof. Shares may be either authorized and unissued shares, or
authorized shares, issued by and subsequently reacquired by the Company
as treasury stock. Under no circumstances shall any fractional shares
be awarded under the Plan. Except as may be otherwise provided in the
Plan, any Stock subject to an Award that, for any reason, lapses or
terminates prior to exercise, shall again become available for grant
under the Plan. While the Plan is in effect, the Company shall reserve
and keep available the number of shares of Stock needed to satisfy the
requirements of the Plan. The Company shall apply for any requisite
governmental authority to issue shares under the Plan. The Company's
failure to obtain any such governmental authority, deemed necessary by
the Company's legal counsel for the lawful issuance and sale of Stock
under the Plan, shall relieve the Company of any duty, or liability for
the failure to issue or sell the Stock.
4. Administration. The ability to control and manage the operation and
administration of the Plan shall be vested in the Board or in a
committee of three or more non-employee members of the Board, selected
by the Board (the "Committee"). The Committee shall have the authority
and discretion to interpret the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, to determine the terms
and provisions of any agreements made pursuant to the Plan, and to make
any and all determinations that may be necessary or advisable for the
administration of the Plan. Any interpretation of the Plan by the
Committee and any decision made by the Committee under the Plan is
final and binding.
B-1
APPENDIX "B"
The Committee shall be responsible and shall have full,
absolute and final power of authority to determine what, to whom, when
and under what facts and circumstances Awards shall be made, and the
form, number, terms, conditions and duration thereof, including but not
limited to when exercisable, the number of shares of Stock subject
thereto, and the stock option exercise prices. The Committee shall make
all other determinations and decisions, take all actions and do all
things necessary or appropriate in and for the administration of the
Plan. No member of the Committee or of the Board shall be liable for
any decision, determination or action made or taken in good faith by
such person under or with respect to the Plan or its administration.
5. Awards. Awards may be made under the Plan in the form of: (a)
"Qualified Options" to purchase Stock, which are intended to qualify
for certain tax treatment as incentive stock options under Sections 421
and 422 of the Code, or (b) "Non-Qualified Options" to purchase Stock,
which are not intended to qualify under Sections 421 through 424 of the
Code. More than one Award may be granted to an eligible person, and the
grant of any Award shall not prohibit the grant of any other Award,
either to the same person or otherwise, or impose any obligation to
exercise on the participant. All Awards and the terms and conditions
thereof shall be set forth in written agreements, in such form and
content as approved by the Committee from time to time, and shall be
subject to the provisions of the Plan whether or not contained in such
agreements. Multiple Awards for a particular person may be set forth in
a single written agreement or in multiple agreements, as determined by
the Committee, but in all cases each agreement for one or more Awards
shall identify each of the Awards thereby represented as a Qualified
Option or Non-Qualified Option, as the case may be.
Unless otherwise stated, in the event that an award of
Qualified Option, or any part thereof, for any reason fails to qualify
under Sections 421 and 422 of the Code, then that award or part thereof
shall be deemed a grant of a Non-Qualified Option.
6. Eligibility. Persons eligible to receive Awards shall be those key
officers and other employees of the Company and each Subsidiary, as
determined by the Committee. A person's eligibility to receive an Award
shall not confer upon him or her any right to receive an Award. Except
as otherwise provided, a person's eligibility to receive, or actual
receipt of an Award under the Plan shall not limit or affect his or her
benefits under or eligibility to participate in any other incentive or
benefit plan or program of the Company or of its affiliates.
7. Qualified Options. In addition to other applicable provisions of the
Plan, all Qualified Options and Awards thereof shall be under and
subject to the following terms and conditions:
(a) No Qualified Option shall be awarded more than ten (10) years
after the date the Plan is adopted by the Board or the date
the Plan is approved by the Company's shareholders, whichever
is earlier;
B-2
APPENDIX "B"
(b) The time period during which any Qualified Option is
exercisable, as determined by the Committee, shall not
commence before the expiration of six (6) months or continue
beyond the expiration of ten (10) years after the date the
Qualified Option is awarded;
(c) If a participant, who was awarded a Qualified Option, ceases
to be employed by the Company or any Subsidiary for any reason
other than his or her death, the Committee may permit the
participant thereafter to exercise the option during its
remaining term for a period of not more than three (3) months
after cessation of employment to the extent that the Qualified
Option was then and remains exercisable, unless such
employment cessation was due to the participant's disability,
as defined in Section 22(e)(3) of the Code, in which case the
three (3) month period shall be twelve (12) months; if the
participant dies while employed by the Company or a
Subsidiary, the Committee may permit the participant's
qualified personal representatives, or any persons who acquire
the Qualified Option pursuant to his or her Will or laws of
descent and distribution, to exercise the Qualified Option
during its remaining term for a period of not more than twelve
(12) months after the participant's death to the extent that
the Qualified Option was then and remains exercisable; the
Committee may impose terms and conditions upon and for the
exercise of a Qualified Option after the cessation of the
participant's employment or his or her death;
(d) The purchase price of Stock subject to any Qualified Option
shall not be less than the Stock's Fair Market Value (pursuant
to Section 11 hereof) at the time the Qualified Option is
awarded or less than the Stock's par value; and
(e) Qualified Options may not be sold, transferred or assigned by
the participant except by will or the laws of descent and
distribution.
8. Non-Qualified Options. In addition to other applicable provisions of
the Plan, all Non-Qualified Options and Awards thereof shall be under
and subject to the following terms and conditions:
(a) The time period during which any Non-Qualified Option is
exercisable shall not commence before the expiration of six
(6) months or continue beyond the expiration of ten (10) years
after the date the Non-Qualified Option is awarded;
(b) If a participant, who was awarded a Non-Qualified Option,
ceases to be eligible under the Plan, before lapse or full
exercise of the option, the Committee may permit the
participant to exercise the option during its remaining term,
to the extent that the option was then and remains
exercisable, or for such time period and under such terms and
conditions as may be prescribed by the Committee;
(c) The purchase price of a share of Stock subject to any
Non-Qualified Option shall not be less than the Stock's par
value; and
B-3
APPENDIX "B"
(d) Except as otherwise provided by the Committee, Non-Qualified
Stock Options granted under the Plan are not transferable
except as designated by the participant by Will and the laws
of descent and distribution.
9. Exercise. Except as otherwise provided in the Plan, Awards may be
exercised in whole or in part by giving written notice thereof to the
Secretary of the Company, or his or her designee, identifying the Award
to be exercised, the number of shares of Stock with respect thereto,
and other information pertinent to exercise of the Award. The purchase
price of the shares of Stock with respect to which an Award is
exercised shall be paid with the written notice of exercise, either in
cash or in securities of the Company, including securities issuable
hereunder, at its then current Fair Market Value (pursuant to Section
11 hereof), or it any combination thereof, as the Committee shall
determine. Funds received by the Company from the exercise of any Award
shall be used for its general corporate purposes.
The Committee may permit an acceleration of previously
established exercise terms of any Awards as, when, under such facts and
circumstances, and subject to such other or further requirements and
conditions as the Committee may deem necessary or appropriate. In
addition:
(a) if the Company or its shareholders execute an agreement to
dispose of all or substantially all of the Company's assets or
stock by means of sale, merger, consolidation, reorganization,
liquidation or otherwise, as a result of which the Company's
shareholders, immediately before the transaction, will not own
at least fifty percent (50%) of the total combined voting
power of all classes of voting stock of the surviving entity
(be it the Company or otherwise) immediately after the
consummation of the transaction, then any and all outstanding
Awards shall immediately become and remain exercisable or, if
the transaction is not consummated, until the agreement
relating to the transaction expires or is terminated, in which
case, all Awards shall be treated as if the agreement was
never executed;
(b) if there is an actual, attempted or threatened change in the
ownership of at least twenty-five percent (25%) of all classes
of voting stock of the Company through the acquisition of, or
an offer to acquire such percentage of the Company's voting
stock by any person or entity, or persons or entities acting
in concert or as a group, and the acquisition or offer has not
been duly approved by the Board; or
(c) if during any period of two (2) consecutive years, the
individuals who at the beginning of such period constituted
the Board cease, for any reason, to constitute at least a
majority of the Board, (unless the election of each director
of the Board, who was not a director of the Board at the
beginning of such period, was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of such period) thereupon any and
all Awards immediately shall become and remain exercisable.
B-4
APPENDIX "B"
10. Withholding. When a participant exercises a stock option awarded under
the Plan, the Company, in its discretion and as required by law, may
require the participant to remit to the Company an amount sufficient to
satisfy fully any federal, state and other jurisdictions' income and
other tax withholding requirements prior to the delivery of any
certificates for shares of Stock, at the Committee's discretion
remittance may be made in cash, shares already held by the participant
or by the withholding by the Company of sufficient shares issuable
pursuant to the option to satisfy the participant's withholding
obligation.
11. Value. Where used in the Plan, the "Fair Market Value" of Stock or any
options or rights with respect thereto, including Awards, shall mean
and be determined by (a) the average of the highest and lowest reported
sales prices thereof on the principal established domestic securities
exchange on which listed, and if not listed, then (b) the average of
the dealer "bid" and "ask" prices thereof on the New York
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc., in either case as of the specified or
otherwise required or relevant time, or if not traded as of such
specified, required or relevant time, then based upon such reported
sales or "bid" and "ask" prices before and/or after such time in
accordance with pertinent provisions of and principles under the Code
and the regulations promulgated thereunder.
12. Assumption of Obligations under The Fidelity Deposit and Discount Bank
1998 Stock Incentive Plan. The Plan shall replace The Fidelity Deposit
and Discount Bank 1998 Stock Incentive Plan, as assumed by the Company
pursuant to the Plan of Reorganization dated December 21, 1999, by and
among the Company, the Fidelity Deposit and Discount Bank and The
Fidelity Deposit and Discount Interim Bank, and the related Plan of
Merger, dated December 21, 1999, by and between The Fidelity Deposit
and Discount Bank and The Fidelity Deposit and Discount Interim Bank.
No further awards shall be made under or pursuant to the 1998 Stock
Incentive Plan upon the effective date of the Plan. To the extent any
stock options under the 1998 Stock Incentive Plan remain unexercised,
the Company has assumed all obligations of The Fidelity Deposit and
Discount Bank under such outstanding options, pursuant to the aforesaid
Plan of Reorganization and Plan of Merger and subject to adjustment for
the exchange ratio of the Company's common stock for the Bank's common
stock stated therein. Upon the receipt of shareholder approval for the
Plan, each holder of an outstanding option under the 1998 Stock
Incentive Plan shall be entitled to receive, in cancellation of, and in
substitution for, such option, a new option under the Plan to acquire
shares of common stock of the Company, with the number of shares and
the exercise price adjusted by the exchange ratio of the Company's
common stock for the Bank's common stock stated in the Plan of
Reorganization and Plan of Merger. Otherwise, such outstanding stock
options under the prior 1998 Stock Incentive Plan shall remain in
effect until they have been exercised, satisfied, cancelled or
terminated in accordance with their terms and the aforesaid Plan of
Reorganization and Plan of Merger.
B-5
APPENDIX "B"
13. Amendment. To the extent permitted by applicable law, the Board may
amend, suspend, or terminate the Plan at any time. The amendment or
termination of this Plan shall not, without the consent of the
participants, alter or impair any rights or obligations under any Award
previously granted hereunder.
From time to time, the Committee may rescind, revise and add
to any of the terms, conditions and provisions of the Plan or of an
Award as necessary or appropriate to have the Plan and any Awards
thereunder be or remain qualified and in compliance with all applicable
laws, rules and regulations, and the Committee may delete, omit or
waive any of the terms conditions or provisions that are no longer
required by reason of changes of applicable laws, rules or regulations,
but not limited to, the provisions of Sections 421 and 422 of the Code,
Section 16 of the Securities Exchange Act of 1934, as amended, (the
"1934 Act") and the rules and regulations promulgated by the Securities
and Exchange Commission. Without limiting the generality of the
preceding sentence, each Qualified Option shall be subject to such
other and additional terms, conditions and provisions as the Committee
may deem necessary or appropriate in order to qualify as a Qualified
Option under Section 422 of the Code, including, but not limited to,
the following provisions:
(a) At the time a Qualified Option is awarded, the aggregate Fair
Market Value of the Stock subject thereto and of any Stock or
other capital stock with respect to which incentive stock
options qualifying under Sections 421 and 422 of the Code are
exercisable for the first time by the participant during any
calendar year under the Plan and any other plans of the
Company or its affiliates, shall not exceed $100,000.00; and
(b) No Qualified Option, shall be awarded to any person if, at the
time of the Award, the person owns shares of the stock of the
Company possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company
or its affiliates, unless, at the time the Qualified Option is
awarded, the exercise price of the Qualified Option is at
least one hundred and ten percent (110%) of the Fair Market
Value of the Stock on the date of grant and the option, by its
terms, is not exercisable after the expiration of five (5)
years from the date it is awarded.
14. Continued Employment. Nothing in the Plan or any Award shall confer
upon any participant or other persons any right to continue in the
employ of, or maintain any particular relationship with, the Company or
its affiliates, or limit or affect any rights, powers or privileges
that the Company or its affiliates may have to supervise, discipline
and terminate the participant. However, the Committee may require, as a
condition of making and/or exercising any Award, that a participant
agree to, and in fact provide services, either as an employee or in
another capacity, to or for the Company or any Subsidiary for such time
period as the Committee may prescribe. The immediately preceding
sentence shall not apply to any Qualified Option, to the extent such
application would result in disqualification of the option under
Sections 421 and 422 of the Code.
B-6
APPENDIX "B"
15. General Restrictions. If the Committee or Board determines that it is
necessary or desirable to: (a) list, register or qualify the Stock
subject to the Award, or the Award itself, upon any securities exchange
or under any federal or state securities or other laws, (b) obtain the
approval of any governmental authority, or (c) enter into an agreement
with the participant with respect to disposition of any Stock
(including, without limitation, an agreement that, at the time of the
participant's exercise of the Award, any Stock thereby acquired is and
will be acquired solely for investment purposes and without any
intention to sell or distribute the Stock), then such Award shall not
be consummated in whole or in part unless the listing, registration,
qualification, approval or agreement, as the case may be, shall have
been appropriately effected or obtained to the satisfaction of the
Committee and legal counsel for the Company.
16. Rights. Except as otherwise provided in the Plan, participants shall
have no rights as a holder of the Stock unless and until one or more
certificates for the shares of Stock are issued and delivered to the
participant.
17. Adjustments. In the event that the shares of common stock of the
Company, as presently constituted, shall be changed into or exchanged
for a different number or kind of shares of common stock or other
securities of the Company or of other securities of the Company or of
another corporation or entity (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up,
combination of shares or otherwise) or if the number of such shares of
common stock shall be increased through the payment of a stock
dividend, stock split or similar transaction, then, there shall be
substituted for or added to each share of common stock of the Company
that was theretofore appropriated, or which thereafter may become
subject to an option under the Plan, the number and kind of shares of
common stock or other securities into which each outstanding share of
the common stock of the Company shall be so changed or for which each
such share shall be exchanged or to which each such shares shall be
entitled, as the case may be. Each outstanding Award shall be
appropriately amended as to price and other terms, as may be necessary
to reflect the foregoing events.
If there shall be any other change in the number or kind of
the outstanding shares of the common stock of the Company, or of any
common stock or other securities in which such common stock shall have
been changed, or for which it shall have been exchanged, and if a
majority of the disinterested members of the Committee shall, in its
sole discretion, determine that such change equitably requires an
adjustment in any Award that was theretofore granted or that may
thereafter be granted under the Plan, then such adjustment shall be
made in accordance with such determination.
The grant of an Award under the Plan shall not affect in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure, to merge, to consolidate, to dissolve, to liquidate
or to sell or transfer all or any part of its business or assets.
Fractional shares resulting from any adjustment in Awards
pursuant to this Section 16 may be settled as a majority of the
disinterested members of the Board of Directors or of the Committee, as
the case may be, shall determine.
B-7
APPENDIX "B"
To the extent that the foregoing adjustments relate to common
stock or securities of the Company, such adjustments shall be made by a
majority of the members of the Board, whose determination in that
respect shall be final, binding and conclusive. Notice of any
adjustment shall be given by the Company to each holder of an Award
that is so adjusted.
18. Forfeiture. Notwithstanding anything to the contrary in this Plan, if
the Committee finds, after full consideration of the facts presented on
behalf of the Company and the involved participant, that he or she has
been engaged in fraud, embezzlement, theft, commission of a felony, or
dishonesty in the course of his or her employment by the Company or by
any Subsidiary and such action has damaged the Company or the
Subsidiary, as the case may be, or that the participant has disclosed
trade secrets of the Company or its affiliates, the participant shall
forfeit all rights under and to all unexercised Awards, and under and
to all exercised Awards under which the Company has not yet delivered
payment or certificates for shares of Stock (as the case may be), all
of which Awards and rights shall be automatically canceled. The
decision of the Committee as to the cause of the participant's
discharge from employment with the Company or any Subsidiary and the
damage thereby suffered shall be final for purposes of the Plan, but
shall not affect the finality of the participant's discharge by the
Company or Subsidiary for any other purposes. The preceding provisions
of this paragraph shall not apply to any Qualified Option to the extent
such application would result in disqualification of the option as an
incentive stock option under Sections 421 and 422 of the Code.
19. Indemnification. In and with respect to the administration of the Plan,
the Company shall indemnify each member of the Committee and/or of the
Board, each of whom shall be entitled, without further action on his or
her part, to indemnification from the Company for all damages, losses,
judgments, settlement amounts, punitive damages, excise taxes, fines,
penalties, costs and expenses (including without limitation attorneys'
fees and disbursements) incurred by the member in connection with any
threatened, pending or completed action, suit or other proceedings of
any nature, whether civil, administrative, investigative or criminal,
whether formal or informal, and whether by or in the right or name of
the Company, any class of its security holders, or otherwise, in which
the member may be or may have been involved, as a party or otherwise,
by reason of his or her being or having been a member of the Committee
and/or of the Board, whether or not he or she continues to be a member
of the Committee or of the Board. The provisions, protection and
benefits of this Section 18 shall apply and exist to the fullest extent
permitted by applicable law to and for the benefit of all present and
future members of the Committee and/or of the Board and their
respective heirs, personal and legal representatives, successors and
assigns, in addition to all other rights that they may have as a matter
of law, by contract, or otherwise, except (a) to the extent there is
entitlement to insurance proceeds under insurance coverages provided by
the Company on account of the same matter or proceeding for which
indemnification hereunder is claimed, or (b) to the extent there is
entitlement to indemnification from the Company, other than under this
Section 18, on account of the same matter or proceeding for which
indemnification hereunder is claimed.
B-8
APPENDIX "B"
20. Miscellaneous. (a) Any reference contained in this Plan to particular
section or provision of law, rule or regulation, including but not
limited to the Code and the 1934 Act, shall include any subsequently
enacted or promulgated section or provision of law, rule or regulation,
as the case may be. With respect to persons subject to Section 16 of
the 1934 Act, transactions under this Plan are intended to comply with
all applicable conditions of Section 16 and the rules and regulations
promulgated thereunder, or any successor rules and regulations that may
be promulgated by the Securities and Exchange Commission, and to the
extent any provision of this Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by
applicable law and deemed advisable by the Committee.
(b) Where used in this Plan: the plural shall include the
singular, and unless the context otherwise clearly requires,
the singular shall include the plural; and the term
"affiliates" shall mean each and every Subsidiary and any
parent of the Company.
(c) The captions of the numbered Sections contained in this Plan
are for convenience only, and shall not limit or affect the
meaning, interpretation or construction of any of the
provisions of the Plan.
- - - - - - - - - - - -
END
- - - - - - - - - - - -
B-9
APPENDIX "C"
AUDIT COMMITTEE CHARTER
Composition
- -----------
The audit committee shall be composed of at least three directors who are
independent of the management of the bank and are free of any relationship that,
in the opinion of the board of directors, would interfere with their exercise of
independent judgement as a committee member and are, or will shortly become,
financially literate. In addition, the members of the audit committee shall
understand financial statements.
Objective of the Audit Committee
- --------------------------------
The audit committee shall assist the board of directors in fulfilling its
responsibility to the shareholders, potential shareholders, and the investment
community relating to corporate accounting, reporting practices of the company,
and the quality and integrity of the financial reports of the company.
Specific Responsibilities of the Audit Committee
- ------------------------------------------------
In fulfilling its objective, the audit committee shall have the responsibility
with respect to:
The Bank's Risks and Control Environment
- ----------------------------------------
O To review management's overview of the risks, policies, procedures
and controls surrounding the integrity of financial reporting and,
particularly, the adequacy of the bank's controls in areas
representing significant financial and business risks;
O To establish, review, and update periodically a code of ethical
conduct, ensure that management has established a system to
enforce the code, and receive updates and briefings from
management and others on how compliance with ethical policies and
other relevant company procedures is being achieved;
O To review, with the Bank's counsel, legal matters, including
litigation and compliance with securities trading policies, the
foreign corrupt practices act and other laws having a significant
impact on the Bank's business or its financial statements; and
O To investigate any matter brought to its attention within the
scope of its duties, and retain outside counsel for this purpose
if, in its judgement, that is appropriate;
The Hiring and Firing of and Relationship with the Independent Accountants:
- --------------------------------------------------------------------------
O To participate, on behalf of the board of directors, in the
process by which the company selects the independent accountants
to audit the company's financial statements, evaluate annually the
effectiveness and objectivity of such accountants, and recommend
the engagement or replacement of independent accountants to the
board of directors;
C-1
APPENDIX "C"
O To have an open line of communication with the independent
accountants, who shall have ultimate accountability to the board
of directors and the audit committee, as representatives of the
shareholders;
O To approve the fees and other compensation paid to the independent
accountants; and
O To review the independence of the independent accountants prior to
engagement, annually discuss with the independent accountants
their independence annually based upon the written disclosures and
the letter from the independent accountants required by
Independent standards Board statement No. 1, as modified or
supplemented, and discuss with the board of directors any
relationships that may adversely affect the independence of the
independent accountants.
The Financial Reporting Process:
- -------------------------------
O To meet with the independent accountants and the financial
management of the Bank with respect to major changes to the Bank's
auditing and accounting principles;
O To meet with the independent accountants and the financial
management of the Bank together and separately with the
independent accountants (a) prior to the performance by the
independent accountants of the audit to discuss the scope of the
proposed audit for the current year and the audit procedures to be
utilized; and (b) at the conclusion of the audit to discuss (i)
the independent accountants' judgments about the quality, not just
the acceptability of the Bank's accounting principles as applied
in its financial reporting, the consistency of application of the
bank's accounting policies and the clarity, consistency, and
completeness of the entity's accounting information contained in
the financial statements and related disclosures, (ii) the
adequacy and effectiveness of the accounting and financial
controls of the Bank, including the internal controls to expose
any payments, transactions, or procedures that might be deemed
illegal or otherwise improper, and any recommendations for
improvement of such internal control procedures or for new or more
detailed controls or procedures of the bank, (iii) any other
results of the audit, including any comments or recommendations,
and (iv) the views of the independent accountants with respect to
the financial, accounting, and auditing personnel and the
cooperation that the independent accountants received during the
course of the audit; o To review and discuss with the independent
accountants and the financial management of the Bank the bank's
financial results before they are made public. In general, the
chairman of the audit committee may represent the entire committee
with respect to the review and discussions about interim financial
results; and
C-2
APPENDIX "C"
o To review other reports submitted by the bank to any governmental
body or public, including and certification, report, opinion or
review rendered by the independent accountants;
The Internal Audit Process:
- --------------------------
o To review, assess and approve the charter for the internal audit
department charter;
o To meet with the internal auditor regularly to approve the
internal audit plan for the year, discuss any changes to, and the
implementation of, that plan, the coordination of the internal
audits with the audit by the independent accountants, and the
results of the internal audits;
o To review the regular internal reports to management prepared by
the internal audit department and management's responses thereto;
o To meet with the internal auditor, the financial management and
the independent accountants together with the internal auditor
separately to discuss (a) the integrity of the Bank's internal and
external financial reporting processes and any proposed changes or
improvements in financial or accounting practices and the
implementation of such changes or improvements that have been
approved by the audit committee; (b) any disagreements among
management and the independent accountants or the internal
auditing department in connection with the preparation of the
financial statements; and (c) any concerns of the internal audit
department; and
o To review the independence, authority, qualifications, activities
and organizational structure of the internal audit department; and
Other Responsibilities of the Audit Committee:
- ---------------------------------------------
o To review and update periodically the charter for the audit
committee;
o To review, assess, and approve or disapprove conflicts of interest
and related-party transactions;
o To review accounting and financial human resources and succession
planning within the Bank;
o To meet at least four times annually, or more frequently as
circumstances dictate;
o To report to the board of directors the matters discussed at each
committee meeting;
o To assess the performance of the audit committee members through
self-assessment process, led by the chairman of the committee; and
o To keep an open line of communication with the financial and
senior management, the internal audit department, the independent
accountants, and the board of directors.
C-3
FIDELITY D & D BANCORP, INC.
PROXY
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 1, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints Michael F. Marranca,
Samuel C. Cali and Michael J. McDonald, and each or any of them, proxies of the
undersigned, with full power of substitution to vote all of the shares of
Fidelity D & D Bancorp, Inc. that the undersigned shareholder may be entitled to
vote at the Annual Meeting of Shareholders to be held at the main office of
Fidelity D & D Bancorp, Inc., Blakely and Drinker Streets, Dunmore, Pennsylvania
18512, on Tuesday, May 1, 2001, at 3:00 p.m. Eastern Daylight Time, and at any
adjournment or postponement of the meeting as follows:
1. ELECTION OF FOUR CLASS A DIRECTORS TO SERVE FOR A TWO-YEAR TERM:
PAUL A. BARRETT JOHN F. GLINSKY, JR.
JOHN T. COGNETTI MICHAEL J. MCDONALD
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the contrary below)* listed above
The Board of Directors recommends a vote FOR these nominees.
*Instruction: To withhold authority to vote for any individual
nominee(s), write that nominee's name(s) on the space provided below:
================================================================================
2. ELECTION OF THREE CLASS B DIRECTORS TO SERVE FOR A ONE-YEAR TERM:
SAMUEL C. CALI DAVID L. TRESSLER, SR.
MARY E. MCDONALD
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the contrary below)* listed above
The Board of Directors recommends a vote FOR these nominees.
*Instruction: To withhold authority to vote for any individual
nominee(s), write that nominee's name(s) on the space provided below:
================================================================================
3. ELECTION OF THREE CLASS C DIRECTORS TO SERVE FOR A THREE-YEAR TERM:
BRIAN J. CALI MICHAEL F. MARRANCA
PATRICK J. DEMPSEY
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all nominees
as marked to the contrary below)* listed above
The Board of Directors recommends a vote FOR these nominees.
*Instruction: To withhold authority to vote for any individual
nominee(s), write that nominee's name(s) on the space provided below:
================================================================================
4. PROPOSAL TO APPROVE AND ADOPT THE FIDELITY D & D BANCORP, INC. 2000
INDEPENDENT DIRECTORS STOCK OPTION PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
================================================================================
5. PROPOSAL TO APPROVE AND ADOPT THE FIDELITY D & D BANCORP, INC. 2000
STOCK INCENTIVE PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
================================================================================
6. RATIFICATION OF THE SELECTION OF PARENTE RANDOLPH, P.C., CERTIFIED
PUBLIC ACCOUNTANTS, AS THE INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote FOR this proposal.
================================================================================
7. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment or postponement of the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER
SPECIFIED BY THE UNDERSIGNED SHAREHOLDERS. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSALS 4, 5 AND 6.
Dated: __________________, 2001
- ----------------------------
Signature
Print name:
------------------------
-----------------------------------
Signature
Print name:
Name:
---------------------
Number of Shares Held of Record
on March 23, 2001:
- ----------------
o THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY IN THE ENCLOSED ENVELOPE.
o WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE. IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN.
o IF STOCK IS HELD JOINTLY, EACH OWNER SHOULD SIGN.