Exhibit 10.1


 


EXECUTIVE EMPLOYMENT AGREEMENT


 


This Executive
Employment Agreement (“Agreement”) is made this 3rd day of January, 2008,
between Fidelity D&D Bancorp, Inc. (“Corporation”) and Fidelity
Deposit and Discount Bank (“Bank”), and Timothy P. O’Brien (“Executive”).


 


WITNESSETH:


 


WHEREAS, Corporation
is a bank holding company; and


 


WHEREAS, Bank is a
subsidiary of Corporation; and


 


WHEREAS, Corporation
and Bank desire to employ Executive under the terms and conditions set forth
herein; and


 


WHEREAS, Executive desires to serve
Corporation and Bank in an executive capacity under the terms and conditions
set forth in this Agreement;


 


NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties agree as follows:


 


1.     TERM OF EMPLOYMENT.   Corporation and Bank hereby shall employ
Executive, and Executive hereby accepts employment with Corporation and Bank,
commencing effective January 22, 2008 and continuing until such time as Executive’s
employment is terminated as provided in this Agreement.  For purposes of this Agreement, “Employment
Period” shall mean any period during which Executive is employed by Corporation
and/or Bank.


 


2.     POSITION
AND DUTIES.  Executive
shall serve as Executive Vice President 
of the Bank, and Executive shall serve in such capacities as Bank and/or
Corporation direct.


 


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3.     ENGAGEMENT
IN OTHER EMPLOYMENT.  
Executive will devote his full attention, time and energies to the
business of Corporation, Bank and any of their subsidiaries or affiliates.  Within ten (10) days of the execution of
this Agreement, Executive shall provide to the Board of Directors of
Corporation a list of the organizations (philanthropic or otherwise) and/or
business(es) which he is a director, officer or member of and identify the same
on Exhibit “A” attached hereto. 
Furthermore, Executive shall provide as of each anniversary date of this
Agreement an updated list reflecting Executive’s then current positions and
expected terms of service with any organizations and/or business(es) other than
Corporation or Bank.


 


4.     COMPENSATION.


 


(a)   Annual Direct Salary.  As compensation for services rendered
Corporation and Bank under this Agreement, Executive shall be entitled to
receive from Corporation or Bank an annual direct salary of One Hundred
Fifty-Five Thousand Dollars ($155,000) per year (“Annual Direct Salary”),
payable in substantially equal weekly installments (or such other intervals,
consistent with Bank’s payroll policy), prorated for any partial employment
period.  The Annual Direct Salary shall
be reviewed annually or earlier, but no later than December 31 of the then
calendar year and shall be subject to annual change in the discretion of
Corporation and Bank (but not reduced below One Hundred Fifty-Five Thousand
Dollars ($155,000), or the rate later established, without Executive’s written
consent, except in cases of national financial depression or emergency when
compensation reduction has been implemented by the Board of Directors for Bank’s
senior management), as 


 


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may be set by the Board of Directors of
Corporation and Bank taking into account the position, duties and performance
of Executive.


 


(b)   Bonus. 
Executive shall be paid a signing bonus of Ten Thousand Dollars
($10,000) upon the first payroll date following Executive’s commencement of
employment provided Executive remains employed by Corporation and Bank as of
such date.  Corporation or Bank, in their
sole discretion, may provide for payment of a periodic bonus to Executive in
such an amount or nature as they may deem appropriate as an incentive to
Executive and to reward Executive for his performance.  Any bonus amount shall be paid on or before March 15
of the year following the year with respect to which the bonus is earned.


 


In addition, Executive  shall be awarded One Thousand (1000) options
of the Fidelity D & D Bancorp, Inc. stock pursuant to and within
the guidelines of the Employee Stock Option Plan, as amended.


 


5.     FRINGE
BENEFITS, VACATION, EXPENSES AND PERQUISITES.


 


(a)   Employee
Benefit Plans.  Executive shall be
eligible to participate in or receive benefits under all Bank employee benefit
plans including, but not limited to, any pension plan, profit-sharing plan,
savings plan, life insurance plan, health insurance plan or disability
insurance plan as made available by Bank to its employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements, and subject to the right of Bank to modify, change or
eliminate such plans or arrangements.


 


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(b)   Vacation, Holidays, Sick Days and Personal Days.  Executive shall be entitled to the number of
fifteen (15) paid vacation days in each calendar year. Executive shall also be
entitled to all paid holidays, sick days and personal days given by Corporation
and/or Bank to its employees.  Unused
paid vacation, holiday, sick or personal days may not be accumulated for use in
any subsequent year; nor may compensation be paid in lieu thereof.


 


(c)   Business Expenses.  During the term of his employment hereunder,
Executive shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him in furtherance of his duties and responsibilities,
which are properly accounted for, in accordance with the policies and
procedures established by the Board of Directors of Corporation and/or Bank for
its senior executive officers.


 


(d)   Automobile. 
Executive shall be provided with a company-owned or leased vehicle
during the Employment Period.  The
vehicle is to be used for Corporation or Bank business and/or business development;
provided, however, that Executive may also employ such vehicle for personal use
in accordance with applicable tax rules and at Executive’s expense.


 


(e)          Club Memberships.  Corporation shall provide payment of annual
dues and monthly business development expenses for Executive in connection with
a club membership to the Glen Oak Country Club or a different Club agreed upon
by the parties.  Unless otherwise agreed,
initiation fees shall be paid by Corporation or Bank only if the membership is
the property of Corporation or Bank.


 


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6.     INDEMNIFICATION.  Corporation and Bank will indemnify Executive
and advance expenses to the same degree as provided by the Bylaws of
Corporation to Members of its Board of Directors and as required under Pennsylvania
and federal law, with respect to any threatened, pending or completed legal or
regulatory action, suit or proceeding brought against him by reason of the fact
that he is or was a director, officer, employee or agent of Corporation or
Bank.


 


7.     LIABILITY
INSURANCE.  Bank and/or
Corporation shall use its best efforts to obtain insurance coverage for
Executive under an insurance policy covering officers and directors of Bank and
Corporation against lawsuits, arbitrations or other legal or regulatory proceedings;
however, nothing herein shall be construed to require Bank and/or Corporation
to obtain such insurance if the Board of Directors of Bank and/or Corporation
determine that such coverage cannot be obtained at a reasonable price.


 


8.     UNAUTHORIZED
DISCLOSURE.  During the
term of his employment hereunder, or at any later time, Executive shall not,
without the written consent of the Board of Directors of Corporation or Bank or
a person authorized thereby, knowingly use for his own benefit or the benefit
of any other person or other entity, or disclose to any person, other than an
employee of Corporation or Bank or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by Executive of his
duties as an executive of Corporation or Bank, any confidential information,
trade secrets or know-how, obtained by him while in the employ of Corporation
or Bank.  Confidential information
includes any services, products, improvements, formulas, projects, proposals,
designs or styles, processes, customers, (including, but not limited to,
customers of Corporation, Bank or any of their affiliates or subsidiaries on
whom Executive called or 


 


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with whom he became acquainted during the term of his employment),
methods of business or any business practices, research, product or business
plans, customer lists, markets, software, developments, inventions, technology,
drawings, engineering, marketing, distribution and sales methods and systems,
finances, sales and profit figures, and other business information of
Corporation, Bank or any of their subsidiaries or affiliates, the disclosure of
which could be or will be materially damaging to Corporation, Bank or any of
their subsidiaries or affiliates, provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by Executive or any person
with the assistance, consent or direction of Executive) or any information of a
type not otherwise considered confidential by persons engaged in the same
business or a business similar to that conducted by Corporation or Bank or any
information that must be disclosed as required by law.


 


9.     WORK MADE
FOR HIRE.  Any work
performed by Executive under this Agreement should be considered a “Work Made
for Hire” as that phrase is defined by the U.S. patent laws and shall be owned
by and for the express benefit of Corporation, Bank and any of their
subsidiaries and affiliates.  In the
event it should be established that such work does not qualify as a Work Made
for Hire, Executive agrees to and does hereby assign to Corporation, Bank and
their affiliates and subsidiaries, all of his rights, title, and/or interest in
such work product, including, but not limited to, all copyrights, patents,
trademarks and proprietary rights.


 


10.   RETURN OF
COMPANY PROPERTY AND DOCUMENTS. 
Executive agrees that, at the time of termination of his employment,
regardless of the reason for termination, he will deliver to Corporation or
Bank, any and all company property, including, but not 


 


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limited to, keys, security codes or passes, mobile telephones, pagers,
computers, devices, confidential information (as defined in this Agreement),
records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, software programs, equipment,
other documents or property, or reproductions of any of the aforementioned
items developed or obtained by Executive during the course of his
employment.  Executive further agrees to
sign and return the “Termination Certificate” attached hereto as Exhibit “B,”
together with all company property within three (3) days of the date of
termination of Executive’s employment.


 


11.   RESTRICTIVE
COVENANT.


 


(a)           Non-Competition and Non-Solicitation.  Executive
hereby acknowledges and recognizes the highly competitive nature of the
business of Corporation and Bank and accordingly agrees that, for the
applicable period set forth in Section 11(c) hereof, Executive shall
not:


 


(i)    be engaged, directly or indirectly, either for his
own account or as agent, consultant, employee, partner, officer, director,
proprietor, investor (except as an investor owning less than 2% of the stock of
a publicly owned company) or otherwise of any person, firm, corporation or
enterprise engaged in (1) the banking or financial services industry
(including a bank holding company), or (2) any other activity in which
Corporation, Bank or any of their subsidiaries or affiliates are engaged during
the Employment Period, within a fifty (50) mile radius of Blakely &
Drinker Streets, Dunmore, Pennsylvania 18512 (the “Non-Competition Area”); or


 


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(ii)      provide financial or other
assistance to any person, firm, corporation or enterprise engaged in (1) the
banking or financial services industry (including a bank holding company), or (2) any
other activity in which Corporation, Bank or any of their subsidiaries or
affiliates are engaged during the Employment Period in the Non-Competition
Area; or


 


(iii)     directly or indirectly contact,
solicit or induce any person, firm, corporation or other entity who or which is
a customer or referral source of Corporation, Bank or any of their subsidiaries
or affiliates during the term of Executive’s employment or at the date of
termination of Executive’s employment, to become a client, customer or referral
service of any other person, firm, corporation or other entity; or


 


(iv)     directly or indirectly solicit,
induce or encourage any employee of Corporation, Bank or any of their
subsidiaries or affiliates, who is employed during the term of Executive’s
employment or at the date of termination of Executive’s employment, to leave
the employ of Corporation, Bank or any of their subsidiaries or affiliates or
to seek, obtain or accept employment with any person or entity other than
Corporation, Bank or any of their subsidiaries or affiliates.


 


(b)   Amendment
of Restrictive Covenant.  It is
expressly understood and agreed that, although Executive, Corporation and Bank 


 


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consider the restrictions contained in Section 11(a) reasonable
for the purpose of preserving for Corporation, Bank and any of their
subsidiaries or affiliates, their good will and other proprietary rights, if a
final judicial determination is made by a court having jurisdiction that the
time or territory or any other restriction contained in Section 11(a) is
an unreasonable or otherwise unenforceable restriction against Executive, the
provisions of Section 11(a) shall not be rendered void, but shall be
deemed amended to apply as to such maximum time and territory and to such other
extent as such court may judicially determine or indicate to be reasonable.


 


(c)   Period of Restrictive Covenant.  The provisions of this Section 11 shall
be applicable, commencing on the date this Agreement is entered and ending
twelve (12) months after the effective date of termination of Executive’s
employment.


 


(d)   Breach of Restrictive Covenant.  It is expressly understood and agreed that if
Executive violates or breaches any provision of this Section 11, then the
provisions of this Section 11 shall apply to Executive for an additional
one (1) year following the date of such violation or breach.


 


(e)           Enforcement
of Covenants.  Executive acknowledges
that his breach of any of the restrictions set forth in this Agreement in
Sections 8, 9, 10 or 11 will result in irreparable injury which is not
compensable in damages or other legal remedies, and Bank, Corporation or their
successors may seek to obtain injunctive relief against the breach, or
threatened breach of this Agreement, and/or specific performance and damages,
as well as other legal and 


 


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equitable remedies including attorneys’ fees
which may be available and to which Bank, Corporation or their successors may
be entitled.  The right to equitable
relief shall include, without limitation, the right to both preliminary and
permanent injunctions against any breach or threatened breach and specific
performance of the provisions of this Agreement, and in such case, Executive
shall raise no objection, and hereby waives any objection, to the form of
relief prayed for in any such proceeding. 
Bank, Corporation or their successor shall not be required to post a
bond or similar assurance should Bank, Corporation or their successor bring any
action for equitable relief in order to enforce this Agreement.


 


12.   TERMINATION.


 


(a)           Death.  Notwithstanding any other provision of this
Agreement, this Agreement shall terminate automatically upon Executive’s death,
and Executive’s rights under this Agreement shall cease as of the date of such
termination.


 


(b)           Disability.  If, while employed hereunder, Executive
suffers a Disability such that by reason of any physical or mental impairment
he is unable to perform all of the essential functions of his position on a
full time basis, with or without a reasonable accommodation and without posing
a direct threat to himself or others for a period exceeding sixty (60) days,
then all compensation and employment obligations of Bank and Corporation under
this Agreement shall immediately cease (with the exception of Executive’s
rights under Bank’s then existing short term and/or long term disability plans,



 


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if any), and this Agreement shall terminate; provided, however, that
nothing in this Section 12(b) shall prohibit Bank and Corporation, in
their sole discretion, from continuing to pay Executive the regular amount of
Executive’s Annual Direct Salary or such other amount as Bank and Corporation
may determine after the expiration of such sixty-day period.


 


(c)           Cause.  Notwithstanding any other provisions of this
Agreement, Bank and/or Corporation may terminate Executive’s employment
hereunder for “Cause.” As used in this Agreement, Bank and/or Corporation shall
have Cause to terminate Executive’s employment hereunder upon: (i) the
willful failure by Executive to substantially perform his duties hereunder
(other than a failure resulting from Executive’s incapacity because of physical
or mental illness, as provided in Section 12(b) hereof); (ii) the
willful engaging by Executive in misconduct injurious to Corporation or Bank; (iii) the
willful violation by Executive of the provisions of Sections 3, 8, 9 or 11
hereof; (iv) the dishonesty or gross negligence of Executive in the
performance of his duties; (v) the breach of Executive’s fiduciary duty
involving personal profit; (vi) the violation of any law, rule or
regulation governing banks or bank officers or any final cease and desist order
issued by a bank regulatory authority; (vii) conduct on the part of
Executive which brings public discredit to Corporation or Bank; (viii) unlawful
discrimination by Executive, including harassment against Corporation’s or Bank’s
employees, customers, business associates, contractors or visitors; (ix) theft
or abuse by Executive of Corporation’s or Bank’s property or the property of
Corporation’s or Bank’s 


 


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customers, employees, contractors, vendors or business associates; (x) failure
of Executive to follow the good faith lawful instructions of the Board of
Directors of Corporation or Bank with respect to its operations and a failure
to cure such violation within five (5) working days of notice from the
Board of Directors of such failure; (xi) the direction or recommendation of a
state or federal bank regulatory authority to remove Executive’s position with
Corporation and/or Bank as identified herein; 
(xii) any final removal or prohibition order to which Executive is
subject, by a federal banking agency pursuant to Section 8(e) or Section 8(g) of
the Federal Deposit Insurance Act, or a state banking agency pursuant to
Pennsylvania Law; (xiii) Executive’s conviction of or plea of guilty or nolo
contendere to a felony,  crime of
falsehood or a crime involving moral turpitude, or the actual incarceration of
Executive; (xiv) any act of fraud, misappropriation or personal dishonesty;
(xv) insubordination; (xvi) misrepresentation of a material fact, or omission
of information necessary to make the information supplied not materially
misleading, in an application or other information provided by Executive to
Bank or Corporation or any representative of Bank or Corporation in connection
with Executive’s employment with Bank or Corporation; (xvii) the existence of
any material conflict between the interests of Corporation and Executive that
is not disclosed in writing by Executive to Bank or Corporation and approved in
writing by the Board of Directors of Bank or Corporation; or (xviii) an action
by Executive that is clearly contrary to the best interests of Bank or
Corporation.


 


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(d)           Termination
by Executive.  Executive may
terminate his employment hereunder (i) for any or no reason or (ii) for
Good Reason.  The term “Good Reason”
shall mean (1) any material diminution, without Executive’s consent, in
Executive’s authority, duties or responsibilities described in Section 2
hereof; (2) any material breach of this Agreement by Corporation or Bank,
which breach is not cured within thirty (30) days or such longer time as may be
reasonably required to effect such cure; (3) any reduction in Executive’s
Annual Direct Salary in violation of Section 4(a); or (4) any
assignment of Executive to a principal office location outside a radius of
fifty (50) miles from the intersection of Blakely & Drinker Streets,
Dunmore, Pennsylvania; provided, however, that a Good Reason termination shall
not have occurred unless Executive has notified Corporation or Bank, as
applicable, in writing within thirty (30) days of the initial existence of the
condition constituting such Good Reason and such condition is not cured within
thirty (30) days of such notice, or if said condition cannot be cured within
thirty (30) days, within a reasonable time thereafter if a diligent effort is
being made by Corporation and/or Bank to cure such condition, and further
provided that Executive actually terminates employment within twelve (12)
months of the initial existence of such condition.


 


(e)           Termination
Without Cause.  Nothing herein shall
prohibit Corporation or Bank from terminating the employment of Executive
without Cause (and other than pursuant to Sections 12(a) (Death) or 12(b) (Disability)),
in which case Executive shall be limited to the remedies provided in Section 13(b).


 


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13.           PAYMENTS UPON TERMINATION ABSENT A CHANGE IN
CONTROL.


 


(a)           Termination
for Disability, Cause or Executive Terminates for Other Than Good Reason.  If Executive’s employment is terminated by
Executive pursuant to Section 12(d)(i) hereof, or if Executive’s
employment is terminated by Bank or Corporation pursuant to Section 12(b) (Disability)
or Section 12(c)(Cause), Corporation or Bank shall pay Executive the
prorated amount of his Annual Direct Salary through the date of termination of
Executive’s employment at the rate in effect at the time of termination and
Corporation and Bank shall have no further obligation to Executive under this
Agreement, subject, in the case of Executive’s Disability, to the terms of Section 12(b).


 


(b)           Termination
without Cause or for Good Reason.  If
Executive’s employment is terminated by Corporation or Bank other than for
Death, Disability or Cause, or Executive terminates his employment for Good
Reason, then Corporation or Bank shall pay Executive within thirty (30) days
after such termination an amount equal to his Annual Direct Salary.  The
obligations of Corporation and Bank pursuant to this Section 13(b) in
the event Executive terminates his employment for Good Reason shall be
contingent upon receipt of thirty (30) days notice from Executive of Executive’s
termination of employment for Good Reason, and Executive’s best efforts during
that thirty (30) day period to assist in the transition to Executive’s
successor, including training of such successor if chosen.  Notwithstanding anything in this Section 13(b) to
the contrary, Corporation or Bank shall not be liable for any 


 


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payment that would otherwise become due
hereunder on or after the date Executive commences other employment.  Except as specifically provided in this Section 13(b),
or as provided in Section 12(b) or Section 14 hereof, or as
otherwise required by law, all benefits provided Executive under this Agreement
shall terminate effective the date of Executive’s termination of employment.


 


14.           PAYMENTS UPON
TERMINATION FOLLOWING A CHANGE IN CONTROL.


 


(a)           If a Change in Control
shall occur, Executive may resign from employment with Corporation and Bank
effective as of the Date of Change of Control subject to Bank’s right to extend
his employment for up to six months under Section 14(c) (or, if
involuntarily terminated, give notice of intention to collect benefits under
this Agreement) by delivering a notice in writing (“Notice of Termination”) to
Corporation and Bank or other successor, and the provisions of Section 14(c) of
this Agreement shall apply.


 


(b)           During the period of
time between the execution of an agreement to effect a Change in Control and the
Date of the Change in Control, Executive’s employment may only be terminated by
Corporation or by Bank for Cause.  If,
during that period of time, Executive’s employment is terminated for Cause,
then all rights of Executive under this Agreement shall cease as of the
effective date of such termination.  If,
during that period of time, Executive’s employment is terminated other than for
Cause, then Executive may give notice of intention to collect benefits under
this Agreement by delivering a 


 


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notice in writing (“Notice of Termination”) to Corporation and Bank and
the provisions of Section 14(c) of this Agreement shall apply.


 


(c)           In
the event that Executive delivers a Notice of Termination to Corporation and
Bank or their successor, following the Change in Control, Executive shall be
entitled to receive the compensation and benefits set forth below:


 


Corporation, Bank or their successor shall pay Executive a lump sum
amount equal to and no greater than two (2) times Executive’s Annual
Direct Salary as defined in Section 4(a), minus applicable taxes and
withholdings.  Executive shall not be
entitled to receive payments pursuant to Section 13(b) in addition to
payments under this Section 14(c).   In addition, for a period of one (1) year
from the date of termination of Executive’s employment, or until Executive
secures substantially similar benefits through other employment, whichever
shall first occur, Executive shall receive a continuation of health care, life
and disability insurance in effect with respect to Executive at the time of his
termination of employment to the extent such benefits remain available under
the terms of any applicable contracts or policies.  To the extent such benefits are unavailable,
Executive shall receive comparable coverage on an individual policy basis,
limited to aggregate payments for such coverage not exceeding the applicable
dollar limitation under Section 402(g)(1)(B) of the Internal Revenue
Code (“Code”) for the year in which Executive terminates employment.  In the event the payments described herein,
when 


 


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added to all other amounts or benefits provided to or on behalf of
Executive in connection with his termination of employment, would result in the
imposition of an excise tax under Code Section 4999, such payments shall
be retroactively (if necessary) reduced to the extent necessary to avoid such
excise tax imposition.  Upon written
notice to Executive, together with calculations of Corporation, Bank or their
successor’s independent auditors, Executive shall remit to Corporation, Bank or
their successor the amount of the reduction, plus such interest, as may be
necessary to avoid the imposition of such excise tax.  Notwithstanding the foregoing or any other
provision of this contract to the contrary, if any portion of the amount herein
payable to Executive is determined to be non-deductible pursuant to the
regulations promulgated under Section 280G of the Code, then Bank,
Corporation or their successor shall be required only to pay to Executive the
amount determined to be deductible under Section 280G.


 


In addition, notwithstanding the payments to
Executive contemplated by this Section 14(c), if Executive is requested by
Corporation, Bank or a successor thereto to remain in the employ of
Corporation, Bank or such successor following the Date of Change of Control,
Executive expressly agrees to remain in the employ of Corporation, Bank or such
successor for not less than six months, or such shorter period as Corporation,
Bank or such successor may request, following the Date of Change of
Control.  Executive 


 


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agrees to remain an employee of Corporation,
Bank or a successor pursuant to such request conditioned upon Executive being
compensated in the same amount and on the same terms as he was compensated
immediately prior to the Date of Change of Control, including participation in
all employee benefit plans to which he would otherwise be entitled.  In such case the payment contemplated by this
Section 14(c) shall be paid after termination of the employment
relationship.


 


(d)           Payment
pursuant to Section 14(c) hereof shall be made on the first business
day of the month following the date that is six (6) months after Executive’s
termination of employment.


 


15.   DEFINITION OF CHANGE IN CONTROL.  For purposes of this Agreement, the term “Change
in Control” (other than one occurring by reason of an acquisition of Bank or Corporation
by Executive) shall be deemed to have occurred if the Board of Directors of
Corporation or Bank certifies on an objective basis that one of the following
has occurred:


 


(a)           a
sale or other transfer of ownership of forty percent (40%) or more of the total
gross fair market value of the assets of Corporation and Bank to any
individual, corporation, partnership, trust or other entity or organization (“Person”)
or group of Persons acting in concert as a partnership or other group, other
than a Person controlling, controlled by or under common control with
Corporation or Bank;


 


(b)           any
Person or group of Persons acting in concert as a partnership or other group,
other than a Person controlling, controlled by or under common control with
Corporation or Bank, acquires ownership of stock in 


 


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Corporation, that together with stock held by such Person or group,
constitutes more than 50 percent of the total fair market value or total voting
power of the stock of Corporation, provided such Person or group did not own
more than 50 percent of the total fair market value or total voting power of
the stock of Corporation prior to such acquisition; or


 


(c)           the
replacement of a majority of members of Corporation’s Board of Directors over
any period of one year or less by directors whose appointment or election is
not endorsed by a majority of the members of Corporation’s Board of Directors
prior to the date of the appointment or election.


 


16.   DEFINITION OF DATE OF CHANGE IN CONTROL.  For purposes of this Agreement, the Date of
Change in Control shall mean:


 


(a)   the date of closing of any agreement for the
transfer of ownership of forty percent (40%) or more of the total gross fair
market value of the assets of Corporation and Bank to any Person or group of
Persons acting in concert as a partnership or other group, other than a Person
controlling, controlled by or under common control with Corporation or Bank;


 


(b)   the first date on which any Person or group of
Persons acting in concert as a partnership or other group, other than a Person
controlling, controlled by or under common control with Corporation or Bank,
acquires ownership of stock in Corporation, that together with stock held by
such Person or group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of 


 


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Corporation, provided such Person or group did not own more than 50
percent of the total fair market value or total voting power of the stock of
Corporation prior to such acquisition; or


 


(c)   the date on which individuals who formerly
constituted a majority of the Board of Directors of Corporation under Section 15(c) hereof
ceased to be a majority.


 


17.   ARBITRATION.  Corporation, Bank and Executive recognize
that in the event a dispute should arise between them concerning the
interpretation or implementation of this Agreement, lengthy and expensive
litigation will not afford a practical resolution of the issues within a
reasonable period of time.  Consequently,
with the exception of the Engagement in Other Employment provisions in Section 3,
the Unauthorized Disclosure provisions of Section 8, the Return of Company
Property and Documents provisions of Section 10 and the Restrictive
Covenant provisions in Section 11, which Corporation or Bank may seek to
enforce in any court of competent jurisdiction, each party agrees that all
disputes, disagreements and questions of interpretation concerning this
Agreement are to be submitted for resolution, in Scranton, Pennsylvania, to the
American Arbitration Association (“Association”) in accordance with the
Association’s National Rules for the Resolution of Employment Disputes or
other applicable rules then in effect (“Rules”).  Corporation, Bank or Executive may initiate
an arbitration proceeding at any time by giving notice to the other in
accordance with the Rules.  Corporation,
Bank and Executive may, as a matter of right, mutually agree on the appointment
of a particular arbitrator from the Association’s pool.  The arbitrator shall not be bound by the rules of
evidence and procedure of the courts of the Commonwealth of Pennsylvania but
shall be bound by the substantive 


 


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law applicable to this Agreement. 
The arbitration proceeding and all filings, testimony, documents and
information, relating to or presented during the proceeding, shall be disclosed
exclusively for the purpose of facilitating the arbitration process and for no
other purpose and shall be deemed to be information subject to the
confidentiality provisions of this Agreement. 
The decision of the arbitrator, absent fraud, duress, incompetence or
gross and obvious error of fact or law, shall be final and binding upon the
parties and shall be enforceable in courts of proper jurisdiction.  Following written notice of a request for
arbitration, Corporation, Bank and Executive shall be entitled to an injunction
restraining all further proceedings in any pending or subsequently filed
litigation concerning this Agreement, except as otherwise provided herein.


 


18.   NOTICE.  Notices and all other communications provided
for in this Agreement shall be in writing and shall be deemed to have been duly
given when hand-delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:


 


 


	
  If to Executive:

  	
  Timothy P. O’Brien

  
	
   

  	
  1013 Summerfield Drive

  
	
   

  	
  Dalton, PA 18414

  
	
   

  	
   

  
	
   

  	
   

  
	
  If to Bank:

  	
  Steven C. Ackmann, President

  
	
   

  	
  The Fidelity Deposit and Discount Bank

  
	
   

  	
  Blakely and Drinker Streets

  
	
   

  	
  Dunmore, PA 18512

  
	
   

  	
   

  
	
   

  	
   

  
	
  If to Corporation:

  	
  Steven C. Ackmann, President

  
	
   

  	
  Fidelity D&D Bancorp, Inc.

  
	
   

  	
  Blakely and Drinker Streets

  
	
   

  	
  Dunmore, PA 18512

  



 


 


21

















 


or to such other address as any party may have furnished to the other
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.


 


19.   SUCCESSORS.  This Agreement shall inure to the benefit of
and be binding upon Executive, his personal representatives, heirs or assigns
and to Bank and/or Corporation and any of their successors or assigns.


 


20.   SEVERABILITY.  If any provision of this Agreement is
declared unenforceable for any reason, the remaining provisions of this
Agreement shall be unaffected thereby and shall remain in full force and
effect.


 


21.   AMENDMENT.  Except as otherwise provided herein, this
Agreement may be amended or terminated only by mutual agreement of the parties
in writing.


 


22.   PAYMENT OF MONEY DUE DECEASED EXECUTIVE.  In the event of Executive’s death, any monies
that may be due him from Corporation or Bank under this Agreement as of the
date of death, shall be paid to the person designated by him in writing for
this purpose, or in the absence of any such designation, to his estate.


 


23.   LAW GOVERNING.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.  Further, subject to Section 17, the
parties agree to the exclusive jurisdiction and venue of the Court of Common
Pleas in Lackawanna County, Pennsylvania and the United States District Court
for the Middle District of Pennsylvania for all disputes between the parties
not subject to arbitration, and for purposes of appeal from any arbitration
award.  The provisions of this Agreement
shall be construed consistent with Section 409A of the Code and all
applicable 


 


22

















 


guidance thereunder so as not to result in the inclusion in Executive’s
income of any benefit under this Agreement by reason of the application of such
section.


 


24.   ENTIRE AGREEMENT.  This Agreement represents the entire
understanding of the parties with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous agreements, oral or in writing,
between the parties with respect to the employment of Executive by Corporation
and Bank.


 


IN WITNESS WHEREOF,
the parties hereto, intending to be legally bound hereby, have caused this
Agreement to be duly executed in their respective names and, in the cases of
Corporation and Bank, by their authorized representatives the day and year
first above written.


 


	
  ATTEST:

  	
   

  	
  THE FIDELITY DEPOSIT AND DISCOUNT BANK

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Barbara Shimkus

  	
   

  	
  By:

  	
  /s/ Steven C. Ackmann

  	
   

  
	
   

  	
   

  	
   

  	
  Steven C. Ackmann, President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  FIDELITY D&D BANCORP, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Barbara Shimkus

  	
   

  	
  By:

  	
  /s/ Steven C. Ackmann

  	
   

  
	
   

  	
   

  	
   

  	
  Steven C. Ackmann, President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Brian J. Cali

  	
   

  	
   

  	
  /s/ Timothy P. O’Brien

  	
   

  
	
   

  	
   

  	
   

  	
  Timothy P. O’Brien

  



 


23

















 


EXHIBIT A


 


OUTSIDE POSITIONS HELD BY EXECUTIVE


AS OF                           ,
200  


 


	
  ORGANIZATION

  	
   

  	
  POSITION

  	
   

  	
  TERM OF SERVICE

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


 


24

















 


EXHIBIT B


 


TERMINATION CERTIFICATE


 


This document certifies that I do not have in
my possession, nor have I failed to return, any keys, security codes or passes,
mobile telephones, pagers, computers, devices, confidential information,
records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints or reproductions of any of the
aforementioned items belonging to Fidelity D&D Bancorp, Inc., Fidelity
Deposit and Discount Bank or any of their affiliates or subsidiaries, or any of
their respective successors or assigns (hereinafter collectively, “Companies”).


 


I further certify that I have complied and
will continue to comply with all the terms of the Executive Employment
Agreement (“Employment Agreement”) entered by me, Fidelity D&D Bancorp, Inc.
and Fidelity Deposit and Discount Bank, with respect to my employment, which
began thereunder effective
                              ,
2008.


 


Without limiting the generality of the
preceding paragraph, I will, in accordance with the Employment Agreement,
preserve as confidential, all proprietary and confidential information, trade
secrets and know-how of Companies, including, but not limited to, research,
product or business plans, products, services, projects, proposals, customer
lists or customers (including, but not limited to, customers of Companies on
whom I called or with whom I became acquainted during the term of my
employment), markets, software, developments, inventions, processes, formulas,
technology, designs or styles, drawings, engineering, marketing, distribution,
and sales methods and systems, sales and profit figures, finances and other
business information disclosed to me by Companies, either directly or
indirectly in writing, orally or by drawings or inspection of documents or
otherwise.


 


 


	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  Timothy P. O’Brien

  



 


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