SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
QNB Corp.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
[INSERT NAME OF FILER WHEN APPLICABLE]
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / 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):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
Proxy Statement
April 8, 1996
<PAGE>
April 8, 1996
Dear Shareholder:
The 1996 Annual Meeting of the Shareholders of QNB Corp. (the "Corporation")
will be held at the offices of The Quakertown National Bank, 320 West Broad
Street, Quakertown, Pennsylvania, on Tuesday, May 7, 1996, at 11:00 a.m. Notice
of the Annual Meeting, the Corporation's Proxy Statement, Proxy Card and 1995
Annual Report are enclosed.
At this year's Annual Meeting, you are being asked to elect three (3) Directors,
and to approve the adoption of the Employee Stock Purchase Plan. These proposals
are fully described in the accompanying Proxy Statement, which you are urged to
read carefully.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY ENDORSED THE CANDIDATES FOR ELECTION AND
APPROVED THE OTHER TWO PROPOSALS DESCRIBED IN THE PROXY STATEMENT. WE RECOMMEND
THAT YOU VOTE "FOR" ALL THREE CANDIDATES AND "FOR" THE ADOPTION OF THE EMPLOYEE
STOCK PURCHASE PLAN.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the meeting in person,
please complete, date and sign the enclosed Proxy Card and return it in the
envelope provided.
If you have any questions, please contact our Assistant Corporate Secretary,
Tara E. Zuck, at (215)538-5715.
Thank you for your cooperation and continuing support.
Very truly yours,
/s/ Thomas J. Bisko
THOMAS J. BISKO
President and
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------
TO BE HELD ON MAY 7, 1996
Notice is hereby given that the 1996 Annual Meeting of the Shareholders
of QNB Corp. (the "Corporation") will be held at the offices of The Quakertown
National Bank, 320 West Broad Street, Quakertown, Pennsylvania 18951, on
Tuesday, May 7, 1996 at 11:00 a.m., local time, for the following purposes:
(1) To elect three (3) Directors.
(2) A proposal to approve the Corporation's 1996 Employee Stock
Purchase Plan.
(3) To transact such other business as may properly come
before the Annual Meeting or any adjournment(s)
thereof.
The Board of Directors has fixed the close of business on March 29,
1996, as the record date for the purpose of determining those shareholders
entitled to notice of and to vote at the Annual Meeting and any adjournments
thereof.
All shareholders are cordially invited to attend the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to mark,
date, sign and mail the enclosed proxy in the envelope supplied, as soon as
possible. At any time prior to their being voted, proxies are revocable by
written notice to the Corporation in accordance with the instructions set forth
in the enclosed Proxy Statement or by voting at the meeting in person. If you
attend the Annual Meeting, you may withdraw your proxy before it is voted and
then vote your shares in person.
By Order of the Board of Directors,
/s/ Charles M. Meredith, III
Charles M. Meredith, III
Secretary
<PAGE>
QNB CORP.
10 North Third Street
Quakertown, Pennsylvania 18951
(215) 538-5715
----------------
PROXY STATEMENT
1996 ANNUAL MEETING OF SHAREHOLDERS - MAY 7, 1996
This Proxy Statement is being furnished to holders of the Common Stock,
par value $1.25 per share (the "Common Stock"), of QNB Corp. (the "Corporation")
in connection with the solicitation of proxies by the Board of Directors of the
Corporation (the "Board of Directors") for use at the 1996 Annual Meeting of
Shareholders (the "Annual Meeting"). The Annual Meeting will be held at the
offices of The Quakertown National Bank (the "Bank"), at 320 West Broad Street,
Quakertown, Pennsylvania 18951, on May 7, 1996. (The Annual Meeting and any
adjournment(s) or postponement(s) thereof, are referred to hereinafter as the
"Annual Meeting.")
As of the date of this Proxy Statement, the Board of Directors knows of
no business that will be presented for consideration at the Annual Meeting other
than that referred to in the Notice of Annual Meeting attached hereto. As to
other business, if any, that may properly come before the Annual Meeting,
properly executed proxies in the form enclosed will be voted in accordance with
the judgment of the person or persons voting the proxy.
The cost of solicitation of proxies will be borne by the Corporation.
The Corporation will reimburse brokerage firms and other custodians, nominees,
and fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of the Corporation's Common Stock. In
addition to solicitations by mail, directors, officers, and employees of the
Corporation and the Bank may solicit proxies personally or by telephone, without
additional compensation.
These proxy materials are first being mailed to holders of the Common
Stock on or about April 8, 1996.
Date, Time, and Place of Meeting
The Annual Meeting will be held on May 7, 1996 at 11:00 a.m., local
time, at the offices of the Bank at 320 West Broad Street, Quakertown,
Pennsylvania.
Outstanding Securities; Quorum; Voting Rights; and Record Date
The close of business on March 29, 1996, has been fixed as the record
date for the purpose of determining those shareholders entitled to notice of,
and to vote at, the Annual Meeting. As of the close of business on that date,
the Corporation had issued and outstanding 1,423,998 shares of Common Stock.
Holders of the Common Stock are entitled to one vote for each share of
Common Stock held of record on the record date with respect to each matter to be
voted on at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of the Common Stock is necessary to constitute a quorum
at the Annual Meeting.
<PAGE>
Solicitation of Proxies
Proxies in the form enclosed with this Proxy Statement are being
solicited by the Board of Directors.
Voting and Revocability of Proxies
Shares of Common Stock represented by properly executed proxies will,
unless such proxies have previously been revoked, be voted in accordance with
the instructions indicated on the proxies. If no instructions are indicated on
such proxies, such shares will be voted FOR the election of the nominees of the
Corporation's Board of Directors, and FOR approval of the proposed Employee
Stock Purchase Plan. It is not anticipated that any matters will be presented at
the Annual Meeting other than as set forth in the accompanying Notice of Annual
Meeting. In the event that any other matters are properly presented at the
Annual Meeting, proxies will be voted in the discretion of the proxy holders as
to such matters.
A holder of shares of Common Stock who executes and returns a proxy has
the power to revoke it at any time before it is exercised by delivering to Mr.
Charles M. Meredith, III, Secretary of the Corporation, at the offices of the
Corporation, at the address indicated above, either an instrument revoking the
proxy or a duly executed proxy bearing a later date, or by attending the Annual
Meeting and voting in person.
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock, par
value $1.25 per share, beneficially owned by each current Director and nominee,
by each executive officer, and by all Directors, nominees and executive officers
of the Corporation and the Bank, as a group, as of March 29, 1996. The address
for each such person is 320 West Broad Street, Quakertown, Pennsylvania 18951.
The following table does not include shares held within the Bank sponsored
401(k) Profit Sharing pension plans.
<TABLE>
<CAPTION>
Name of Number of Shares Percent of
Beneficial Owner Owned(1)(2) Class(3)
- - ------------------- ---------------- ----------
<S> <C> <C>
Norman L. Baringer, Director 5,000(4) *
Thomas J. Bisko, Director, President/ 12,486(5) *
Chief Executive Officer (8,080)
Kenneth F. Brown, Jr., Director 16,424(6) 1.15%
Dennis C. Helf, Director (Bank) 800 *
Donald T. Knauss, Director 60,968(7) 4.28%
Bret H. Krevolin, Senior Vice President/ 4,600(8) *
Chief Financial Officer (Bank) (4,550)
Bryan S. Lebo, Senior Vice President/ 1,700(9) *
Lending (Bank) (1,400)
Charles M. Meredith, III, Director 41,300(10) 2.90%
Philip D. Miller, Director 33,756(11) 2.37%
Gary S. Parzych, Director 1,550 *
Henry L. Rosenberger, Director 26,928(12) 1.89%
Mary Ann Smith, Senior Vice President/ 5,620(13) *
Operations (Bank) (4,600)
Edgar L. Stauffer, Director 40,384(14) 2.84%
Robert C. Werner, Executive Vice President/ 6,853(15) *
Chief Operating Officer (Bank) (6,040)
Existing Directors, Nominees
& Executive Officers
as a Group (14 persons) 258,369 18.14%
(24,670)
</TABLE>
- - ------------------------------------
* Less than 1.00%
<PAGE>
(1) Unless otherwise indicated, each person owns the indicated shares directly
and has sole voting and investment power with respect to the shares
indicated as beneficially owned by such person.
(2) The parenthetical reference, if any, reflects, in addition to the number
of issued and outstanding shares indicated above as beneficially owned,
directly or indirectly, the number of options or warrants which are held
and which are exercisable within sixty (60) days.
(3) Numbers are rounded-off to the nearest one-hundredth percent.
(4) Includes 2,588 shares owned jointly by Mr. Baringer with his wife, Nancy,
and 800 shares held in her individual capacity.
(5) Includes 3,218 shares owned jointly by Mr. Bisko with his wife, Barbara
and 8,080 immediately exercisable options awarded under the Stock
Incentive Plan.
(6) Includes 15,624 shares owned jointly by Mr. Brown with his wife, Pamela.
(7) Includes 8,964 shares held by Mr. Knauss's wife, Ruth and 6,800 shares
held in E.W. Knauss and Son Inc. Profit Sharing Trust with respect to
which Mr. Knauss claims beneficial ownership.
(8) Includes 50 shares owned jointly by Mr. Krevolin with his wife, Susan and
4,550 immediately exercisable options awarded under the Stock Incentive
Plan.
(9) Includes 300 shares owned jointly by Mr. Lebo with his wife, Elaine and
1,400 immediately exercisable options awarded under the Stock Incentive
Plan.
(10) Includes 5,184 shares owned jointly by Mr. Meredith with his wife,
Elizabeth; 2,396 shares held in her individual capacity; 108 shares held
of record by Ella K. Meredith, Mr. Meredith's mother; and 4,200 shares
held of record by Franklin & Meredith, Inc., with respect to which Mr.
Meredith claims beneficial ownership.
(11) Includes 396 shares owned by Mr. Miller's wife, Nancy W. Kelly. Mr. Miller
does not claim beneficial ownership of these shares.
(12) Includes 5,076 shares held by Mr. Rosenberger's wife, Charlotte; 888
shares held of record by Mr. Rosenberger's daughter, as to which Mr.
Rosenberger has sole voting and dispositive power; 6,300 shares h eld of
record by Rosenberger Cold Storage, Inc.; and 4,600 shares owned by
Rosenberger Cold Storage, Inc . Profit Sharing Trust, with respect to
which Mr. Rosenberger claims beneficial ownership.
(13) Includes 812 shares owned jointly by Ms. Smith with her husband, Randall;
208 shares held of record by Ms. Smith's children, as to which Ms. Smith
has the sole voting and dispositive power and 4,600 immediately
exercisable options awarded under the Stock Incentive Plan.
(14) Includes 21,696 shares owned jointly by Mr. Stauffer with his wife, Mary
Blake; 300 shares held in her individual capacity; and 6,156 shares owned
by Stauffer Profit Sharing Trust, with respect to which Mr. Stauffer
claims beneficial ownership.
(15) Includes 813 shares owned jointly by Mr. Werner with his wife, Judith and
6,040 immediately exercisable options awarded under the Stock Incentive
Plan.
<PAGE>
BENEFICIAL OWNERSHIP OF SECURITIES
On March 29, 1996, there were outstanding and entitled to vote
1,423,998 shares of Common Stock, par value $1.25 per share. The following table
sets forth the names of persons who, directly or indirectly, are known to the
management of the Corporation to be beneficial owners (as determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended), of at least five percent (5%) of the Common Stock outstanding as of
March 29, 1996:
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percent of
Beneficial Owner Owned(1) Class(2)
- - ------------------- ---------------- ----------
<S> <C> <C>
James C. Ebbert 117,628 8.26%
303 Edgemont Avenue
Quakertown, PA 18951
</TABLE>
- - ------------------------
(1) Includes 117,628 shares owned jointly by Mr. Ebbert with his wife, Martha.
(2) Numbers are rounded-off to the nearest one-hundredth percent.
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors
The Articles of Incorporation of the Corporation and the Corporation's
By-Laws provide, in summary, that the Board of Directors shall consist of nine
members and shall be divided into three classes, Class I, Class II, and Class
III, which shall be as nearly equal in number as possible. The Directors
currently constituting Class II have been nominated for re-election at the
Annual Meeting. Directors in Class III and Class I will hold office until the
1997 and 1998 annual meetings, respectively.
The Nominees
At the Annual Meeting, three directors are to be elected. Each director
so elected will hold office until the Annual Meeting of shareholders is held in
1999 and until his successor in office shall be duly qualified and elected.
To the extent given discretion, the persons named in the accompanying
proxy intend to vote to elect each of the nominees listed below. In the event
that any nominee should decline to serve or be unable to serve, the persons
named as proxies may vote for the election of such person or persons as may be
recommended by the Board of Directors. The Board of Directors does not have a
Nominating Committee.
Set forth below, with respect to each nominee for Director, is his
name, age, the time period served as a Director, if any, and his principal
occupation(s) or employment and business affiliation(s) at present and during
the last five years.
Voting Requirements
The three (3) directors are required to be elected by the affirmative
vote of a majority of the votes cast as to the particular seat. Votes may be
cast in favor or withheld for any or all of the appropriate nominees.
Abstentions and broker non-votes will be counted as neither for nor
against a nominee, but the shares represented by such abstention or broker
non-vote will be considered present at the Annual Meeting for quorum purposes.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT EACH OF THESE NOMINEES BE ELECTED
AS A DIRECTOR.
<PAGE>
NOMINEES FOR THREE YEAR TERM EXPIRING IN 1999 (Class II Directors)
Kenneth F. Brown, Jr.
Age 40; President, McAdoo & Allen, Inc. (manufacturing), Quakertown,
Pa., from September 1989 to present; Executive Vice President, McAdoo &
Allen, Inc., from April 1976 to August 1989. A Director since 1993.
Henry L. Rosenberger
Age 50; President, Rosenberger's Cold Storage, Inc.(refrigerated
storage), Hatfield, Pa., from June, 1981 to present; President,
Rosenberger's Cold Transport, Inc.(refrigerated trucks), from October,
1984 to present; President, Dock Woods Community, Inc. (retirement
community), January, 1988 to present; a Director since 1984.
Edgar L. Stauffer
Age 57; Co-Owner, Stauffer Manufacturing Corporation (manufacturer and
importer of industrial work gloves and safety equipment), Red Hill,
Pa., from August, 1959 to present; Co-Owner, H. Texier Glove
Corporation, Inc., from September, 1983 to present; a Director since
1983.
Continuing Directors Serving Until 1997 (Class III Directors)
Philip D. Miller
Age 73; Chairman of the Board of the Bank, from September, 1985 to
present; Chairman of the Board of the Corporation, from May, 1986 to
present; a Director since 1966.
Donald T. Knauss
Age 70; Secretary of the Corporation, from 1984 to April, 1994;
Secretary of the Bank, from 1968 to April, 1994; Chairman of the Board,
E. W. Knauss & Son, Inc. (meat processing), Quakertown, Pa., from 1986
to present; a Director since 1954.
Thomas J. Bisko
Age 48; Chief Executive Officer of the Bank and the Corporation, from
March, 1988 to present; President of the Bank, from September, 1985 to
present; Treasurer of the Corporation, from February, 1986 to present;
President of the Corporation, from May, 1986 to present; a Director
since 1985.
Continuing Directors Serving Until 1998 (Class I Directors)
Gary S. Parzych
Age 40; President, Eugene T. Parzych, Inc. (construction company),
Trumbauersville, PA., from 1980 to present; President, Finland Leasing
Company, Inc., from June, 1986 to present; Director, Quakertown
Community School Board, from January, 1987 to present.
Norman L. Baringer
Age 65; President, Baringer Assoc. Inc. (insurance, real estate
brokerage), Quakertown, Pa., 1985 to present; a Director since 1992.
Charles M. Meredith, III
Age 60; Secretary of the Corporation and the Bank from April, 1994 to
present; Owner, The Free Press (newspaper), Quakertown, Pa., from 1969
to present; a Director since 1968.
- - -------------------------------
Directors' tenures in office, in some instances, refer to service as a
Director of the Bank prior to the formation of QNB Corp. as the holding company
for the Bank.
<PAGE>
THE BOARDS OF DIRECTORS OF THE CORPORATION AND THE BANK
Each current director of the Corporation is also a current member of
the Bank's Board of Directors. Dennis C. Helf is a member of the Board of
Directors of the Bank only.
The Board of Directors of the Corporation met 8 times in 1995. The
Board of Directors of the Bank met a total of 27 times during such period. All
current Directors attended at least 75 percent of the aggregate number of all
meetings of the Board(s) of Directors of the Bank and the Corporation.
Set forth below is information concerning the standing committees of
the Board of Directors of the Corporation.
Executive Committee. The Executive Committee is authorized to exercise
all of the authority of the Board of Directors in the management of the
Corporation between Board meetings, unless otherwise provided by the By-Laws of
the Corporation. The Executive Committee did not meet in 1995. The present
members of the Executive Committee are Messrs. Bisko, Knauss, Meredith,
Stauffer, and Miller.
Building Committee. The Building Committee is responsible for
overseeing the Corporation's physical plant. The present members of the Building
Committee are Messrs. Baringer, Brown, Knauss, and Parzych. The Building
Committee met once in 1995.
Compensation Committee. The Compensation Committee's primary function
is to review and determine the compensation of present and proposed senior
members of management of the Corporation. The Compensation Committee met once in
1995. The present members of the Compensation Committee are Messrs. Knauss,
Meredith, Rosenberger, and Stauffer.
Directors' Compensation. Each Director of the Corporation is also a
member of the Board of Directors of the Bank. During 1995 each Director received
a fee of $350 for each Board meeting attended. Directors are not reimbursed for
Board meetings of the Corporation. Members of the Committees of the Board of
Directors also received $175 for each Committee meeting attended. Directors who
are salaried officers of the Corporation or the Bank do not receive fees for
their services as a director.
<PAGE>
PROPOSAL 2
ADOPTION OF THE PROPOSED QNB CORP.
EMPLOYEE STOCK PURCHASE PLAN
Summary Plan Description
The QNB Corp. Employee Stock Purchase Plan ("Plan") offers eligible
employees an opportunity to purchase from the Corporation shares of QNB Corp.
common stock, $1.25 par value ("Common Stock") at a 5% discount from the fair
market value as determined in accordance with the terms of the Plan. An employee
is considered eligible to participate in the Plan if they have had at least one
year continuous service to the Corporation preceding the Offer Date. Employees
who are regularly scheduled to work 20 hours or less a week are not eligible to
participate in the Plan. As of March 29, 1996 there were 120 employees eligible
to participate in the Plan. It is undetermined as to the anticipated level of
participation in the proposed Plan.
Purchases under the Plan will be made by payroll deductions over a six
month offering period. The purpose of the Plan is to provide an incentive for
eligible employees to remain in the employ of the Corporation and to devote
their best efforts to its success by affording such employees an opportunity to
acquire the Common Stock in a convenient and advantageous manner and to maintain
a proprietary interest in the Corporation.
The Plan is intended to be an "Employee Stock Purchase Plan" within the
meaning of Section 423 of the Internal Revenue Code of 1986, as amended
("Code"). The Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), nor is it qualified under Section 401(a)
of the Code. The Plan document is attached as Exhibit 1 to this proxy.
Duration of the Plan
The Plan will remain in effect until (i) terminated by action of the
Board of Directors of the Corporation, (ii) all Common Stock subject to the Plan
has been purchased by the employees, or (iii) June 1, 2001, whichever shall
occur first. A maximum of 25,000 shares of Common Stock may be issued under the
Plan.
One or more offerings to purchase Common Stock will be made during the
term of the Plan. It is anticipated that additional offerings of six months each
will be made under the Plan commencing on June 1 and December 1 of each year
during the term of the Plan. The initial offering, pending shareholder approval,
will commence June 1, 1996.
Quorum and Voting Requirements
A quorum for the purpose of acting on this proposal, requires the
presence, in person or by proxy, of the holders of at least a majority of the
outstanding shares of the Corporation. The affirmative vote of the holders of a
majority of the outstanding shares of the Corporation's shares present, in
person or by proxy, is required for the adoption of this Proposal.
Board of Directors' Recommendations
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT YOU VOTE FOR THE
ADOPTION OF THE PROPOSED EMPLOYEE STOCK PURCHASE PLAN. UNLESS OTHERWISE
DIRECTED, YOUR PROXY WILL BE VOTED IN FAVOR OF RATIFICATION.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
Since the formation of the Corporation, none of its executive officers
have received any separate compensation from the Corporation. Philip D. Miller,
Thomas J. Bisko, Robert C. Werner, and Bret H. Krevolin are the only executive
officers of the Corporation that are also executive officers of the Bank. The
following information is furnished concerning the executive officers of the
Corporation whose aggregate remuneration from the Bank exceeded $100,000 during
the fiscal year ended December 31, 1995:
<TABLE>
<CAPTION>
Long Term
Compensa- All Other
Salary tion/Options Compensa-
Name Year ($) (#) tion ($)
- - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Bisko 1995 $165,000 1600 Shares $15,865 (1)
President and 1994 $157,740 1600 Shares $15,858 (2)
Chief Executive Officer 1993 $151,673 1600 Shares $16,366 (3)
Robert C. Werner 1995 $104,000 1500 Shares $8,320 (1)
Executive Vice President/ 1994 $100,000 1500 Shares $8,000 (2)
Chief Operating Officer 1993 $80,286 1400 Shares $6,417 (3)
</TABLE>
- - -----------------------
(1) Represents contributions made by the Bank of $12,000 to Mr. Bisko's and
$8,320 to Mr. Werner's account in the Bank's 401(k) and Money Purchase
Pension Plans. Mr. Bisko's amount also includes $3,865, representing the
dollar value of insurance premiums paid by the Bank under the terms of a
salary continuation agreement.
(2) Represents contributions made by the Bank of $11,993 to Mr. Bisko's and
$8,000 to Mr. Werner's accounts in the Bank's 401(k) and Money Purchase
Pension Plans. Mr. Bisko's amount includes $3,865, representing the dollar
value of insurance premiums paid by the Bank under the terms of a salary
continuation agreement.
(3) Represents contributions made by the Bank of $12,501 to Mr. Bisko's and
$6,417 to Mr. Werner's accounts in the Bank's 401(k) and Money Purchase
Pension Plans. Mr. Bisko's amount includes $3,865, representing the dollar
value of insurance premiums paid by the Bank under the terms of a salary
continuation agreement.
<PAGE>
Stock Option Grants for 1995
The following table shows grants of stock options to Mr. Bisko and Mr.
Werner for fiscal 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Total
Options
Granted Exercise
Options to Employees or Base Expira-
Granted in Fiscal Price tion
Name (#) Year ($/Share) Date
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Bisko 1600 17.4% $29.50 1/30/2001
President & Chief Executive Officer
Robert C. Werner 1500 16.3% $29.50 1/30/2001
Executive Vice President/
Chief Operating Officer
</TABLE>
Aggregate Option Exercises and Option Values
The following table provides information as to stock options
exercised by Mr. Bisko and Mr. Werner in 1995 and the value of stock options
held by such officer at year-end 1995 measured in terms of the closing price
(average of bid and ask price) of the Corporation's Common Stock on December 31,
1995, which was $30.00. All stock options are immediately exercisable.
AGGREGATE STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END STOCK OPTION VALUES
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares Aggregate Unexercised In-the-Money
Acquired on Value Options at Options at
Name Exercise (#) Realized 12/31/95 (1) 12/31/95 (1)
- - --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas J. Bisko 756 (2) $22,680 6,480 $73,050
Robert C. Werner 377 (3) $11,310 4,540 $49,125
</TABLE>
- - -----------------------------
(1) All such options are immediately exercisable
(2) Represents the net number of shares acquired by Mr. Bisko following
payment of the option exercise price by the delivery of shares acquired
by Mr. Bisko upon exercise of 1,680 of such options.
(3) Represents the net number of shares acquired by Mr. Werner following
payment of the option exercise price by the delivery of shares acquired
by Mr. Werner upon exercise of 840 of such options.
<PAGE>
Employment Agreements
On September 2, 1986, the Corporation and Mr. Bisko entered into an
employment agreement for a term commencing on September 1, 1986 and terminating
on December 31, 2013; provided, that such employment agreement may be terminated
by either party upon five years' prior written notice. Under the terms of the
employment agreement, Mr. Bisko is to be employed as the President of the Bank
and to render such services consistent therewith as may be reasonably required
of him from time to time by the Board of Directors. Mr.Bisko's base salary is
$171,600 for 1996, subject to an annual review and adjustment, based upon
performance, as determined by the Board of Directors or a designated committee
thereof. Mr. Bisko shall also be reimbursed for all reasonable and necessary
expenses which are related to his duties. Mr. Bisko may be discharged at any
time for just and proper cause, except that, following a change of control of
the Corporation (which is defined as any one person or group obtaining voting
control of 25% or more of the outstanding Common Stock of the Corporation), Mr.
Bisko's employment may only be terminated if he materially breaches his
obligations under his employment agreement, fails or refuses to comply with the
proper and reasonable written policies of the Board of Directors, or is
convicted of a felony. If Mr. Bisko's employment is terminated for reasons other
than, among others, discharge for cause, a change in control of the Corporation,
or death or disability, Mr. Bisko shall be entitled to receive a lump sum
severance payment equal to five times his then current base salary. If Mr. Bisko
were terminated at the minimum base salary of $171,600 as of January 1, 1996, he
would be entitled to receive a maximum lump sum payment equal to $858,000. Such
a provision may be deemed to be "anti-takeover" in nature inasmuch as it may
discourage a potential acquiror who would desire to replace Mr. Bisko with a new
president. In the event of Mr. Bisko's death or disability, the Corporation
shall pay either to Mr. Bisko, his estate, or his designated beneficiary, an
amount equal to his then current base salary in equal monthly installments,
which amounts may be reduced based upon the receipt of any life or disability
insurance proceeds from policies maintained by and at the expense of the
Corporation.
The Bank provides Mr. Bisko, for the benefit of his named beneficiary,
with a Salary Continuation Agreement ("Agreement"). In the event of Mr. Bisko's
death, the Agreement provides his beneficiary with monthly income for 180
consecutive months. The Agreement is enforced only while Mr. Bisko remains
employed by the Bank. If Mr. Bisko's employment is terminated for any reason
other than death, all rights under the Agreement will be terminated. The
benefits are funded through an insurance policy with the cost limited to the
annual premium on the policy.
The Bank provides Mr. Bisko with a membership in a country club. Mr. Bisko
is reimbursed for the cost of all meals at the club which are related to
business. Mr. Bisko is not reimbursed for personal meals at the country club.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following lists the executive officers of the Corporation, and
other significant employees, their respective ages, positions held, recent
business experience with the Corporation and the Bank, and the period they have
served in their respective capacities.
Philip D. Miller
Age 73; Chairman of the Board of the Bank, from September, 1985 to present;
Chairman of the Board of the Corporation, from May, 1986 to present; Chief
Executive Officer of the Bank, from 1966 to March, 1988; President of the
Corporation, from September, 1984 to May, 1986.
Thomas J. Bisko
Age 48; Chief Executive Officer of the Bank and the Corporation, from March,
1988 to present; President of the Bank, from September, 1985 to present;
President of the Corporation, from May, 1986 to present; Treasurer of the
Corporation, from February, 1986 to present.
<PAGE>
Robert C. Werner
Age 38; Executive Vice President/Chief Operating Officer of the Bank, from
January 1994 to present; Senior Vice President/Chief Financial Officer of the
Bank, from January, 1989 to December 1993; Vice President of the Corporation,
from October, 1988 to present.
Bret H. Krevolin
Age 33; Senior Vice President/Chief Financial Officer of the Bank from January
1995 to present; Chief Accounting Officer of the Corporation, from January 1992
to present; Vice President/Controller of the Bank from August 1989 to December
1994; Supervisor, Coopers & Lybrand, Philadelphia, from July 1988 to August
1989.
Bryan S. Lebo
Age 39; Senior Vice President/Lending from January 1995 to present; Executive
Vice President of Lehigh Valley Bank from 1992 to 1994; Administrative Vice
President of Lehigh Valley Bank from 1990 to 1992; Vice President of Lehigh
Valley Bank from 1987 to 1990.
Mary Ann Smith
Age 42; Senior Vice President/Operations of the Bank from January 1995 to
present; Vice President/Operations of the Bank, from January 1988 to December
1994.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Certain of the directors and executive officers of the Corporation
and/or their affiliates have loans outstanding from the Bank. All such loans
were made in the ordinary course of the Bank's business; were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated persons; and,
in the opinion of management, do not involve more than the normal risk of
collectability or present other unfavorable features. As of December 31, 1995,
there were $4,626,000 in loans outstanding to directors, principal officers, and
their related interests.
NOMINATIONS AND SHAREHOLDER PROPOSALS
Nominations for election to the Board of Directors may be made by any
shareholder if made in writing and delivered or mailed to the President of the
Corporation, not less than fourteen (14) days or more than fifty (50) days prior
to any meeting of shareholders called for the election of Directors, provided
however, that if less than twenty-one (21) days notice of the meeting is given
to shareholders, such nomination shall be mailed or delivered to the President
of the Corporation not later than the close of business on the seventh (7) day
following the day on which the notice of the meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of Common Stock of the Corporation that will be voted for each proposed
nominee; (d) the name and residence address of the notifying shareholder; and
(e) the number of shares of Common Stock of the Corporation owned by the
notifying shareholder. Nominations not made in accordance with these provisions
may be disregarded by the Chairman of the Annual Meeting.
Any Shareholder Proposal for the 1997 Annual Meeting must be submitted,
in writing, to the Secretary of the Corporation in accordance with the proxy
rules of the Securities and Exchange Commission prior to December 10, 1996. Any
Shareholder Proposal not submitted in accordance with the foregoing may be
disregarded by the Chairman of the Annual Meeting.
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors and persons who own more than ten percent
of the Corporation's Common Stock to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent owners are required by Securities and Exchange
Commission regulations to furnish the Corporation with copies of all Section
16(a) forms they file.
Based solely on the Corporation's review of the copies of such forms
received by it, the Corporation believes that, during the fiscal year ended
December 31, 1995, all filing requirements applicable to its officers, directors
and greater than ten percent owners were complied with.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than those matters described above in the Proxy Statement.
However, if any other matters should properly come before the Annual Meeting, it
is intended that the proxies hereby solicited will be voted with respect to
those other matters in accordance with the judgment of the persons voting the
proxies.
If there are not sufficient votes for approval of any of the matters to
be acted upon at the Annual Meeting, the Annual Meeting may be adjourned to
permit the further solicitation of proxies.
By Order of the Board of Directors,
/s/ Charles M. Meredith, III
Charles M. Meredith, III
Secretary
Quakertown, Pennsylvania
April 8, 1996
<PAGE>
Exhibit 1
QNB CORP.
STOCK PURCHASE PLAN
1. Purpose. The purpose of the QNB Corp. Stock Purchase Plan (Plan) is to
provide an incentive for Eligible Employees to remain in the employ of the
Corporation and to devote their best efforts to its success by affording such
employees an opportunity to acquire the Corporation's Common Stock in a
convenient and advantageous manner and to maintain a proprietary interest in the
Corporation. The Plan is intended to be an "employee stock purchase plan" within
the meaning of Section 423 of the Code.
2. Definitions. Whenever used in the Plan:
(a) "Alternative Offering Price" means 95 percent of the Fair Market Value
of Common Stock on the last day of the Offering Period (November 30 or May 31)
next following the beginning of the Offering Period.
(b) "Beneficiary" means the person designated by an Eligible Employee, in
accordance with Section 11(e), to make the elections prescribed in Section 11(d)
in the event of such Eligible Employee's death.
(c) "Board" means the Board of Directors of QNB Corp.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Committee of officers appointed by the
Corporation's Board of Directors. The initial members of the Committee shall be
Thomas J. Bisko, President and Chief Executive Officer, Robert C. Werner, Vice
President, and Bret H. Krevolin, Chief Accounting Officer.
(f) "Common Stock" means the common stock, par value $1.25 per share, of
QNB Corp.
(g) "Compensation" means the Eligible Employee's wages, salaries, fees for
professional services and other amounts received for professional services
actually rendered in the course of employment with the Corporation to the extent
that the amounts are includible in gross income (including but not limited to,
commissions paid salesman, compensation for services on the basis of percentage
of the profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, and reimbursements or other expense allowances under a nonaccountable
plan (as described in Regulation 1.62-2(c) for a Plan Year).
(h) "Corporation" means QNB Corp. and such of its Subsidiaries existing as
of the effective date of the adoption of the Plan, or thereafter acquired, as
may be designated from time to time by the Board.
(i) "Disability" means total disability as defined in the long term
disability plan of the Corporation.
(j) "Effective Date" shall mean June 1, 1996, the date the initial offering
will commence.
(k) "Eligible Employee" means any employee of the Corporation and such
additional Subsidiary or Subsidiaries as shall be determined by the Board to
participate in the Plan who has been continuously employed by the Corporation or
Subsidiary for at least the one year preceding the Offering Date. Employees who
are scheduled to regularly work 20 hours or less a week are not considered
eligible to participate in the Plan.
(l) "Fair Market Value" means the average of the highest and lowest selling
prices of Common Stock as reported by a national securities exchange on which
the shares of the Common Stock are traded on such date, including the NASDAQ
National Market, or the bid price as reported by one of the QNB Corp. market
makers.
Notwithstanding any provision of the Plan to the contrary, no determination
made with respect to the Fair Market Value of Common Stock subject to an option
shall be inconsistent with Section 423 of the Code or regulations thereunder.
(m) "Offering Date" means June 1 or December 1, the days designated by the
Board for any offering made under the Plan.
(n) "Offer Period" means the period of 6 months for each offering made
under the Plan during which payroll deductions shall be made from the
Compensation of Eligible Employees granted an option under the offering.
(o) "Offering Price" means 95% of the Fair Market Value of Common Stock on
an Offering Date (June 1 or December 1) of each year during the term of the
Plan.
(p) "Plan" means the QNB Corp. Stock Purchase Plan, as amended from time to
time.
(q) "Plan Administrator" means the person appointed by the Board to
administer the Plan in accordance with Section 3.
(r) "Plan Custodian" means the Corporation or a successor Plan Custodian
selected by the Committee.
(s) "Purchase Date" means the date on which the Plan Custodian credits the
Eligible Employee's account (customarily the last day of each Offer Period) for
shares purchased under the Plan.
(t) "Retirement" means retirement under the Quakertown National Bank
Retirement Plan or any pension plan of a Subsidiary.
(u) "Subsidiary" means a subsidiary corporation of QNB Corp. as defined in
Section 424(f) of the Code.
<PAGE>
3. Administration.
(a) The Board shall appoint a Committee to serve as Plan Administrator.
Except where the Plan specifically reserves the determination of matters to the
Board, the Plan shall be administered by the Plan Administrator. In addition to
the Plan Administrator's duties with respect to the Plan stated elsewhere in the
Plan, the Plan Administrator shall have full authority, consistently with the
Plan, to interpret the Plan, to promulgate such rules and regulations with
respect to the Plan as is deemed desirable and to make all other determinations
necessary or desirable for the administration of the Plan. Except as provided in
paragraph (b), all decisions, determinations and interpretations of the Plan
Administrator shall be binding upon all persons participating in the Plan.
(b) If a claim for benefits under the Plan is wholly or partially denied by
the Plan Administrator, the claimant may request the Committee to review the
denial of his or her claim. The Committee shall make a decision and furnish such
decision to the claimant and the Plan Administrator within a reasonable period
of time after the request for review is made. All decisions of the Committee
shall be final and binding upon all persons participating in the Plan.
(c) It is intended that the Plan shall constitute an "employee stock
purchase plan" within the meaning of Section 423 of the Code. The Plan
Administrator shall administer the Plan in such a manner as to carry out this
intention.
4. Shares Subject to the Plan. The aggregate number of shares of Common Stock
which may be purchased pursuant to options granted under the Plan is 25,000
shares, subject to adjustment pursuant to Section 17. All options granted
pursuant to the Plan shall be subject to the same rights and privileges. The
shares of Common Stock delivered by the Corporation pursuant to the Plan may be
previously issued shares reacquired by the Corporation or authorized but
unissued shares. If any option expires or terminates for any reason without
having been exercised in full, the shares covered by the unexercised portion of
such option shall again be available for options within the limit specified
above.
5. Offerings. Subject to the provisions of the Plan, the Board shall from time
to time in its discretion make offerings to Eligible Employees to purchase
Common Stock under the Plan. The terms and conditions for each such offering
shall specify the Offering Date, the Offering Price, the Offer Period and the
number of shares of Common Stock that may be purchased under the offering. It is
anticipated, but not required, that additional offerings of six months each will
be made under the Plan commencing on December 1 and June 1 of each year during
the term of the Plan. The initial offering will commence on June 1, 1996.
6. Number of Shares Employee May Purchase.
(a) Pursuant to any offering made under the Plan, and subject to the
provisions of the Plan, no Eligible Employee may be granted an option to
purchase shares of Common Stock under the Plan which would permit him or her to
purchase shares of Common Stock which exceeds $15,000 of fair market value of
such stock (determined at the time such option was granted) for each calendar
year for which such option was outstanding. The Board may change from time to
time the total dollar limit of shares that may be purchased by an Eligible
Employee for each calendar year for which such option was outstanding.
(b) No Eligible Employee may be granted an option to purchase shares of
Common Stock under the Plan if such Eligible Employee, immediately after the
option is granted, would own stock possessing five (5) percent or more of the
total combined voting power or value of all classes of stock of the Corporation
or its Subsidiaries. For purposes of determining stock ownership under this
paragraph, the rules of Section 424(d) of the Code shall apply and stock which
the eligible Employee may purchase under outstanding stock options shall be
treated as stock owned by such Eligible Employee.
7. Method of Participation.
(a) The Plan Administrator shall give notice to Eligible Employees of each
offering of options to purchase shares of Common Stock pursuant to the Plan and
the terms and conditions for each offering.
(b) Each Eligible Employee who desires to accept all or any part of the
option to purchase shares of Common Stock under an offering shall signify his or
her election to do so by authorizing the Corporation, in the form and manner
prescribed by the Plan Administrator, to make payroll deductions in any whole
percentage of Compensation of at least 1% and not more than 5%. Such election
and authorization must be made at least 15 days prior to an Offering Period and
shall continue in effect unless and until such Eligible Employee changes his or
her payroll deductions or terminates his or her employment with the Corporation,
as provided in Section 8 and 11 respectively.
(c) The Board may change from time to time the minimum and maximum
percentage limits of payroll deductions set forth in Section 7(b) of the Plan.
<PAGE>
8. Payroll Deductions.
(a) The percentage of Compensation elected by each Eligible Employee for
the purchase of shares of Common Stock covered by the option granted to such
Eligible Employee in any offering shall be deducted during the Offer Period
specified in the offering through regular payroll deductions, and shall be
credited to an account maintained in his or her name. The percentage of
Compensation so deducted may not be increased or decreased by the Eligible
Employee at any time during the Offer Period except as provided in Sections 7(b)
and 8(b) of the Plan.
(b) At any time during the Offer Period for any offering, an Eligible
Employee granted an option to purchase shares of Common Stock under such
offering may direct the Corporation to suspend further payroll deductions with
respect to such option, in which case all payroll deductions with respect to
such option shall cease as soon as administratively practical. In that event,
any amounts already credited to his or her account during the Offer Period in
which such suspension occurs shall be retained by the Corporation until the end
of such Offer Period, at which time such amounts shall be used to purchase
shares under the option in accordance with Section 9. An Eligible Employee who
has suspended further payroll deductions may direct the Corporation to reinstate
deductions at the next Offer Period. An Eligible Employee's election to suspend
payroll deductions, or to reinstate deductions, shall be made by the filing of a
notice with the Plan Administrator in the form and manner and within the time
period prescribed by the Plan Administrator, and such changes shall be effective
as soon as administratively practical.
9. Exercise of Options and Purchase of Shares.
(a) Unless an Eligible Employee granted an option under any offering has
subsequently suspended payroll deductions pursuant to Section 8, such option
shall be deemed to have been exercised as of the last day of the Offer Period
for such offering and shall become on each date an irrevocable obligation to
purchase Common Stock in accordance with the provisions of the Plan. The number
of shares of Common Stock purchased each Offer Period by each such Eligible
Employee shall be determined by dividing (i) the amount (including all payroll
deductions and any dividends paid by the Corporation on shares credited to such
Eligible Employee's account) accumulated in his or her account during such Offer
Period by (ii) the lower or the Offering Price or the Alternative Offering
Price, but in no event shall the aggregate number of shares purchased in any
Offer Period exceed the maximum number of shares of such Eligible Employee was
entitled to purchase pursuant to the limitations provided in Section 6. The
shares of Common Stock purchased by each such Eligible Employee pursuant to this
Section 9 shall be credited to such Eligible Employee's account, and shall be
held in such account until withdrawn, distributed or sold pursuant to Section
10, 11 or 19, whichever is applicable.
(b) If, with respect to any offering made under the Plan, the Eligible
Employees participating in the offering becoming entitled at the end of any
Offer Period during the Offer Period for such offering to purchase more than the
aggregate number of shares of Common Stock specified by the number of shares,
and any amounts remaining in the accounts of Eligible Employees shall be
refunded in each as soon as practicable thereafter.
10. Withdrawal and Sale of Shares.
(a) An Eligible Employee may, at any time, elect to withdraw part or all of
the shares of Common Stock, except fractional shares, held in his or her account
pursuant to Section 9. As soon as practicable thereafter, a certificate for the
number of whole shares which such Eligible Employee has elected to withdraw
shall be issued to him or her. No certificate for fractional shares shall be
issued and the value of any such fractional shares, as determined by the Plan
Custodian, shall be paid in cash.
(b) An Eligible Employee's election to withdraw or sell shares of Common
Stock pursuant to paragraphs (a) and (b), respectively, shall be made by the
filing of a notice with the Plan Administrator in the form and manner prescribed
by the Plan Administrator.
11. Rights Upon Death or Other Termination of Employment.
(a) If the employment of an Eligible Employee granted an option to purchase
shares of Common Stock under any offering terminates during the Offer Period for
such offering because of death, Disability or Retirement, the Eligible Employee
or, if applicable, such Eligible Employee's estate, may elect to (i) cancel the
option, in which event the Corporation shall distribute the balance in such
Eligible Employee's account as soon as practicable thereafter, or (ii) exercise
the semi-annual installment of the option for the Offer Period during which such
termination of employment occurs, in which event any amounts already credited to
such Eligible Employee's account during such Offer Period shall be retained by
the Corporation until the end of such Offer Period, at which time such amounts
shall be used to purchase shares under the option in accordance with Section 9,
and as soon as practicable thereafter the Corporation shall distribute the
balance of such account.
<PAGE>
(b) If the employment of an Eligible Employee granted an option under any
offering terminates for any reason other than death, Disability or Retirement,
the Corporation shall distribute such Eligible Employee's account as soon as
practicable thereafter.
(c) If shares of Common Stock represent any portion of the balance in an
Eligible Employee's account which is required to be distributed pursuant to
paragraph (a) or (b) of this section, the Eligible Employee or if applicable,
such Eligible Employee's estate, may elect to receive a distribution of such
shares, in which event a certificate for such shares shall be issued, provided
that no certificate for fractional shares shall be issued and the value of any
remaining amounts, as determined by the Plan Custodian, shall be distributed in
cash.
(d) An election pursuant to paragraph (a) or (b) of this section shall be
made by the filing of a notice with the Plan Administrator in the form and
manner and within the time period prescribed by the Plan Administrator. If no
such notice is filed within the time period prescribed by the Plan
Administrator, (i) in the case of the election provided in paragraph (a), the
Corporation shall treat the option as canceled in accordance with subdivision
(ii) of that paragraph, and (ii) in the case of the election provided in
paragraph (c), the Plan Custodian shall distribute certificates for the shares
in accordance with subdivision (ii) of that paragraph.
(e) Each Eligible Employee may designate a Beneficiary, in the form and
manner prescribed by the Plan Administrator, to make the elections prescribed in
paragraph (d) of the section in the event of such Eligible Employee's death.
Such Beneficiary designation may be changed by the Eligible Employee at any
time. If there is no valid Beneficiary designation at the time of the Eligible
Employee's death (because the designated Beneficiary predeceased the Eligible
Employee for any other reason), the election shall be made by the executor or
administrator of the eligible Employee's estate.
12. Shareholder Rights. An Eligible Employee granted an option to purchase
shares of Common Stock under the Plan shall not be entitled to any rights as a
shareholder with respect to any shares covered by such option until such shares
shall have been registered on the transfer books of QNB Corp. in the name of
such person.
13. Rights Not Transferable. An Eligible Employee's rights under the Plan are
exercisable, during his or her lifetime, only by such employee and may not be
sold, pledged, assigned or transferred in any manner other than by will or the
laws of descent and distribution. Any attempt to sell, pledge, assign or
transfer such rights shall be void and shall automatically cause the option held
by the Eligible Employee to be terminated. In such event, any cash remaining in
the account of such Eligible Employee shall be refunded to him or her.
14. Notice Premature Disposition. If within two years after the date of grant of
an option to an Eligible Employee under the Plan or within one year after the
transfer of shares of Common Stock to such Eligible Employee on any exercise of
the option, the Eligible Employee makes a disposition (as defined in Section 424
(c) of the Code) of shares of such Common Stock, such Eligible Employee shall
notify the Plan Administrator within 10 days after such disposition.
15. Use of Proceeds. The proceeds received by the Corporation from the sale by
it of shares of Common Stock to persons exercising options pursuant to the Plan
will be used for the general purposes of the Corporation.
16. Laws, Regulations and Listings. All rights granted or to be granted to
Eligible Employees under the Plan are express subject to all applicable laws and
regulations and to the approval of all governmental authorities required in
connection with the authorization, issuance, sale or transfer of the shares of
Common Stock reserved for the Plan including without limitation, there being a
current registration statement covering the offer of shares of Common Stock
purchasable under options on the last day of the Offer Period applicable to such
options. If a registration statement shall not then be effective, the term of
such options and the Offer Period shall be extended until the first business day
after the effective date of such registration statement, or post-effective
amendment thereto, but in no event later than 27 months after the date such
options were granted. In addition, all rights are subject to the due listing of
such shares of Common Stock on any stock exchanges where the Common Stock is
listed.
17. Adjustment Upon Changes in Capitalization. If there is a change in the
number or kind of outstanding shares of Common Stock of QNB Corp., by reason of
a stock dividend, stock split, recapitalization, merger, consolidation,
combination or other similar event, appropriate adjustments shall be made by the
Board to the number and kind of shares subject to the Plan, the number and kind
of shares under options then outstanding, the maximum number of shares available
for options, the Offering Price and Alternative Offering Price, and other
relevant provisions, to the extent that the Board, in its sole discretion,
determines that such change makes such adjustments necessary or equitable.
<PAGE>
18. No Employment Rights. Nothing in the Plan shall confer upon any employee of
the Corporation any right to continued employment, or interfere with the right
of the Corporation to terminate his or her employment at any time.
19. Termination: Amendments.
(a) The Board may, at any time, terminate the Plan. Unless the Plan shall
previously have been terminated by the Board, it shall terminate on June 1,
2001. No option may be granted after such termination. Upon termination of the
Plan, shares of Common Stock held in the accounts of Eligible Employee shall be
issued to them, and cash, if any, remaining in such accounts shall be refunded
to them, unless such shares and cash are transferred to a successor plan, if
any, at the election of the Eligible Employee.
(b) The Board may, at any time or times, amend the Plan or amend any
outstanding options or options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which at
the time may be permitted by law.
(c) Except as provided in Section 17, no such amendment of the Plan shall,
without the approval of the shareholders of QNB Corp. (which shall not occur
more frequently than once every six months): (i) increase the maximum number of
shares which may be purchased pursuant to options granted under the Plan; (ii)
reduce the price at which shares of Common Stock subject to options granted
under the Plan may be purchased; (iii) change the definition of Subsidiaries
eligible to participate in the Plan; or (v) materially increase the benefits
accruing to participants in the Plan.
(d) No termination or amendment of the Plan shall, without the consent of
an Eligible Employee, adversely affect the Eligible Employee's rights under any
option previously granted under the Plan.
20. Effective Date. The Plan shall become effective upon approval by the Board;
provided, however, that the Plan shall be submitted to the shareholders of QNB
Corp. for approval in accordance with corporate law of the Commonwealth of
Pennsylvania, and if not approved by the shareholders shall be of no force and
effect.
IN WITNESS WHEREOF, the Corporation has caused the Plan to be duly
executed by its officers as of the 12th day of March, 1996.
(SEAL)
Attest: QNB CORP.
/s/ Tara E. Zuck /s/ Thomas J. Bisko
- - -------------------------- ---------------------------
Tara E. Zuck Thomas J. Bisko
Assistant Secretary President/CEO
<PAGE>
REVOCABLE PROXY
QNB Corp.
ANNUAL MEETING OF SHAREHOLDERS
May 7, 1996
The undersigned hereby appoints J. Clair Hershey, James C. Ebbert, and Daniel W.
Schantz, and each of them, with full powers of substitution, to act as attorneys
and proxies for the undersigned to vote all shares of QNB Corp. common stock
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
(the "Meeting") to be held at the offices of The Quakertown National Bank, 320
West Broad Street, Quakertown, PA at 11:00 a.m. on Tuesday, May 7, 1996, and at
any and all adjournments thereof.
1. The election as directors of all nominees listed (except as marked to the
contrary), for three-year terms
Kenneth F. Brown Henry L. Rosenberger Edgar L. Stauffer
FOR WITHHOLD FOR ALL EXCEPT
/ / / / / /
INSTRUCTION: To withhold your vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided
below.
2. The adoption of the proposed QNB Corp. Employee Stock Purchase Plan
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment or postponement
thereof. THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN THEIR BEST JUDGEMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. The Board of
Directors recommends a vote "FOR" each of the listed proposals.
Detach above card, sign, date and mail in paid envelope provided.
<PAGE>
QNB Corp.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS Should the above
signed be present and choose to vote at the Meeting or at any adjournments or
postponements thereof, and after notification to the Secretary of the Company at
the Meeting of the shareholder's decision to terminate this proxy, then the
powers of such attorneys or proxies shall be deemed terminated and of no further
force and effect. This proxy may also be revoked by filing written notice of
revocation with the Secretary of the Company or by duly executing a proxy
bearing a later date. The above signed acknowledges receipt from the Company,
prior to the execution of this proxy, of the Notice of Annual Meeting of
Shareholders, Proxy Statement and Annual Report. Please sign exactly as your
name(s) appear(s) above. When signing as an attorney, executor, administrator,
trustee, or guardian, please give your full title. If signer is a corporation,
please sign full corporate name by authorized officer. If shares are held
jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
