<PAGE> 1
As filed with the Securities and Exchange Commission on November 18, 1999
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
QNB CORP.
(Exact Name of Registrant As Specified In Its Charter)
PENNSYLVANIA 23-2318082
------------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 North Third Street
QUAKERTOWN, PENNSYLVANIA 18951-9005
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(Address of principal executive offices) (Zip Code)
-------------------------------
QNB CORP. 1998 STOCK INCENTIVE PLAN
(Full title of the plan)
-------------------------------
THOMAS J. BISKO Copies To:
PRESIDENT AND CHIEF EXECUTIVE OFFICER NICHOLAS BYBEL, JR., ESQUIRE
QNB CORP. JEAN SVOBODA MCMASTER, ESQUIRE
10 NORTH THIRD STREET SHUMAKER WILLIAMS, P.C.
QUAKERTOWN, PENNSYLVANIA 18951-9005 POST OFFICE BOX 88
(215) 538-5600 HARRISBURG, PENNSYLVANIA 17108
(Name, address, including zip code, and telephone (717) 763-1121
number, including area code, of agent for service)
-------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Title Amount Proposed Maximum Proposed Maximum Amount of
of Securities to to be Offering Price Aggregate Registration
be Registered Registered(1) Per Share(2) Offering Price(2) Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$1.25 Par Value 100,000 $29.00 $2,900,000.00 $806.20
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on the maximum number of shares of QNB Corp. common stock
authorized for issuance under the plan set forth above. This
Registration Statement also registers an indeterminate number of shares
of common stock as may become issuable by reason of the anti-dilution
provisions of this plan.
(2) Pursuant to Rule 457(c) and (h)(1), the offering price is estimated
solely for the purpose of calculating the amount of the registration
fee and is based upon the average of the closing bid and asked prices
of the common stock of QNB on November 16, 1999.
PAGE 1 OF 37 SEQUENTIALLY NUMBERED PAGES
INDEX TO EXHIBITS FOUND ON PAGE 15
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
QNB Corp. files this registration statement to register 100,000 shares
of QNB Corp. common stock that it may issue pursuant to the terms and conditions
of the QNB Corp. 1998 Stock Incentive Plan.
QNB prepared a prospectus meeting the requirements of Part I of Form
S-8. The prospectus is not included in this registration statement. QNB will
deliver the prospectus to each plan participant pursuant to Rule 428(b)(1) of
the Securities Act of 1933.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
QNB incorporates the following documents by reference in this
registration statement, as filed with the Commission under File No. 0-17706:
(a) QNB Corp.'s Annual Report on Form 10-K for the year ended
December 31, 1998, filed with the Commission on March 30,
1999;
(b) QNB Corp.'s Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999, filed with the Commission on May 17,
1999; quarter ended June 30, 1999, filed with the Commission
on August 16, 1999; quarter ended September 30, 1999, filed
with the Commission on November 15, 1999; and
(c) description of QNB Corp.'s common stock, incorporated by
reference to Exhibit 99.1, as attached to this registration
statement.
In addition, QNB incorporates by reference into this registration
statement all documents subsequently filed by QNB Corp. pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the date of this
registration statement and they will become a part of this registration
statement from their date of filing.
Any statement contained in a document that is incorporated by reference
will be modified or superseded for all purposes to the extent that a statement
contained in this registration statement (or in any other document that is
subsequently filed with the Commission and incorporated by reference) modifies
or is contrary to that previous statement.
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QNB will provide, without charge, to each participant in the plan who
so requests, a copy of any or all of the documents mentioned above. QNB also
will provide all documentation relating to the plan that is required to be
delivered to participants pursuant to the rules adopted under the Securities Act
of 1933. Participants should address requests for copies orally or in writing
to:
QNB Corp.
Attention: Thomas J. Bisko
President and Chief Executive Officer
10 North Third Street
Quakertown, Pennsylvania 18951-9005
(215) 538-5600
ITEM 4. DESCRIPTION OF SECURITIES.
Incorporated by reference to Exhibit 99.1, as attached to this
registration statement.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subchapter D of Chapter 17 of the Pennsylvania Business Corporation Law
of 1988, as amended (the "BCL"), (15 Pa. C.S.A. Sections 1741-1750) provides
that a business corporation shall have the power under certain circumstances to
indemnify directors, officers, employees and agents against certain expenses
incurred by them in connection with any threatened, pending or completed action,
suit or proceeding.
Section 1721 of the BCL (relating to the Board of Directors) declares
that unless otherwise provided by statute or in a by-law adopted by the
shareholders, all powers enumerated in Section 1502 (relating to general powers)
and elsewhere in the BCL or otherwise vested by law in a business corporation
shall be exercised by or under the authority of, and the business and affairs of
every business corporation shall be managed under the direction of, a board of
directors. If any such provision is made in the by-laws, the powers and duties
conferred or imposed upon the board of directors under the BCL shall be
exercised or performed to such extent and by such person or persons as shall be
provided in the by-laws.
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Section 1712 of the BCL provides that a director shall stand in a
fiduciary relation to the corporation and shall perform his duties as a
director, including his duties as a member of any committee of the board upon
which he may serve, in good faith, in a manner he reasonably believes to be in
the best interests of the corporation and with such care, including reasonable
inquiry, skill and diligence, as a person of ordinary prudence would use under
similar circumstances. In performing his duties, a director shall be entitled to
rely in good faith on information, opinions, reports or statements, including
financial statements and other financial data, in each case prepared or
presented by any of the following:
(1) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in
the matters presented;
(2) counsel, public accountants or other persons as to matters
which the director reasonably believes to be within the
professional or expert competence of such person; or
(3) a committee of the board upon which he does not serve, duly
designated in accordance with law, as to matters within its
designated authority, which committee the director reasonably
believes to merit confidence.
A director shall not be considered to be acting in good faith, if he has
knowledge concerning the matter in question that would cause his reliance to be
unwarranted.
Section 1716 also states that in discharging the duties of their
respective positions, the board of directors, committees of the board and
individual directors may, in considering the best interests of the corporation,
consider the effects of any action upon employees, upon suppliers and customers
of the corporation and upon communities in which offices or other establishments
of the corporation are located, and all other pertinent factors. The
consideration of those factors shall not constitute a violation of Section 1712.
In addition, absent breach of fiduciary duty, lack of good faith or
self-dealing, actions taken as a director or any failure to take any action
shall be presumed to be in the best interests of the corporation.
Moreover, Section 1713 addresses the personal liability of directors
and states that if a by-law adopted by the shareholders so provides, a director
shall not be personally liable, as such, for monetary damages for any action
taken, or any failure to take any action, unless:
(1) the director has breached or failed to perform the duties of
his office under this section; and
(2) the breach or failure to perform constitutes self-dealing,
willful misconduct or recklessness.
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The provisions discussed above shall not apply to:
(1) the responsibility or liability of a director pursuant to any
criminal statute; or
(2) the liability of a director for the payment of taxes pursuant
to local, state or federal law.
Finally, Section 1714 states that a director of a corporation who is
present at a meeting of its board of directors, or of a committee of the board,
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent is entered in the minutes of the
meeting or unless he files his written dissent to the action with the secretary
of the meeting before the adjournment thereof or transmits the dissent in
writing to the secretary of the corporation immediately after the adjournment of
the meeting. The right to dissent shall not apply to a director who voted in
favor of the action. Nothing in this Section 1721 shall bar a director from
asserting that minutes of the meeting incorrectly omitted his dissent if,
promptly upon receipt of a copy of such minutes, he notified the secretary, in
writing, of the asserted omission or inaccuracy.
Section 1741 of the BCL (relating to third party actions) provides that
unless otherwise restricted in its by-laws, a business corporation shall have
the power to indemnify any person who was or is a party, or is threatened to be
made a party to any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation), by reason of the fact that such person
is or was a representative of the corporation, or is or was serving at the
request of the corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with the action or proceeding if such person acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any
action or proceeding by judgment, order, settlement or conviction or upon a plea
of nolo contendere or its equivalent shall not of itself create a presumption
that the person did not act in good faith and in a manner that he reasonably
believed to be in, or not opposed to, the best interests of the corporation, and
with respect to any criminal proceeding, had reasonable cause to believe that
his conduct was not unlawful.
Section 1742 of the BCL (relating to derivative actions) provides that
unless otherwise restricted in its by-laws, a business corporation shall have
the power to indemnify any person who was or is a party, or is threatened to be
made a party, to any threatened, pending or completed action by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
such person is or was a representative of the corporation, or is or was serving
at the request of the corporation as a representative of another domestic or
foreign corporation for profit or not-for-profit, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of the action if such person acted in good faith and in a manner he
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reasonably believed to be in, or not opposed to, the best interests of the
corporation. Indemnification shall not be made under this section in respect of
any claim, issue or matter as to which such person has been adjudged to be
liable to the corporation unless, and only to the extent that, the court of
common pleas of the judicial district embracing the county in which the
registered office of the corporation is located or the court in which such
action was brought determines upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court of
common pleas or such other court shall deem proper.
Section 1743 of the BCL (relating to mandatory indemnification)
provides for mandatory indemnification of directors and officers such that to
the extent that a representative of the business corporation has been successful
on the merits or otherwise in defense of any action or proceeding referred to in
Sections 1741 (relating to third party actions) or 1742 (relating to derivative
actions), or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
Section 1744 of the BCL (relating to procedure for effecting
indemnification) provides the procedure for effecting indemnification. Under
this section unless ordered by a court, any indemnification under Section 1741
(relating to third party actions) or 1742 (relating to derivative actions) shall
be made by the business corporation only as authorized in the specific case upon
a determination that indemnification of the representative is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in those sections. The determination shall be made:
(1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the action or
proceeding;
(2) if such quorum is not obtainable, or, if obtainable and a
majority vote of a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion; or
(3) by the shareholders.
Section 1745 of the BCL (relating to advancing expenses) provides that
expenses (including attorneys' fees) incurred in defending any action or
proceeding referred to above may be paid by the business corporation in advance
of the final disposition of the action or proceeding upon receipt of an
undertaking by or on behalf of the representative to repay such amount if it is
ultimately determined that such person is not entitled to be indemnified by the
corporation as authorized by the BCL or otherwise.
Section 1746 of the BCL (relating to supplementary coverage) provides
that the indemnification and advancement of expenses provided by or granted
pursuant to the other sections of the BCL shall not be deemed exclusive of any
other rights to which a person seeking indemnification or advancement of
expenses may be entitled under any other by-law, agreement,
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vote of shareholders or disinterested directors or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding such office.
Section 1746 of the BCL also provides that indemnification referred to
above shall not be made in any case where the act or failure to act giving rise
to the claim for indemnification is determined by a court to have constituted
willful misconduct or recklessness.
Section 1746 further declares that indemnification under any by-law,
agreement, vote of shareholders or directors or otherwise, may be granted for
any action taken or any failure to take any action and may be made whether or
not the corporation would have the power to indemnify the person under any other
provision of law except as provided in this section and whether or not the
indemnified liability arises or arose from any threatened, pending or completed
action by or in the right of the corporation. Such indemnification is declared
to be consistent with the public policy of the Commonwealth of Pennsylvania.
Section 1747 of the BCL (relating to the power to purchase insurance)
provides that unless otherwise restricted in its by-laws, a business corporation
shall have power to purchase and maintain insurance on behalf of any person who
is or was a representative of the corporation or is or was serving at the
request of the corporation as a representative of another domestic or foreign
corporation for profit or not-for-profit, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against that liability under
the provisions of the BCL. Such insurance is declared to be consistent with the
public policy of the Commonwealth of Pennsylvania.
Section 1750 of the BCL (relating to duration and extent of coverage)
declares that the indemnification and advancement of expenses provided by, or
granted pursuant to, the BCL shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a representative of the
corporation and shall inure to the benefit of the heirs and personal
representative of that person.
Section A of Article XIII of QNB's Articles of Incorporation and
Section 7-1 of Article VII of QNB's By-laws provide that QNB shall indemnify, to
the fullest extent now or hereafter permitted by law, each director or officer
(including each former director or officer) of QNB who was or is made a party to
or a witness in or is threatened to be made a party to or a witness in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was an authorized representative of QNB, against all expenses (including
attorney's fees and disbursements), judgments, fines (including excise taxes and
penalties) and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding.
Section B of Article XIII of QNB's Articles of Incorporation and
Section 7-2 of Article VII of QNB's By-laws provide that QNB shall pay expenses
(including attorneys' fees and disbursements) incurred by a director or officer
of QNB referred to in Section A and Section 7-1, respectively, thereof, in
defending or appearing as a witness in any civil or criminal action, suit
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or proceeding described in Section A and Section 7-1, respectively, thereof in
advance of the final disposition of such action, suit or proceeding. The
expenses incurred by such director officer shall be paid by QNB in advance of
the final disposition of such action, suit or proceeding referred to in such
Section C or Section 7-3 in advance of the final disposition of such action,
suit or proceeding only upon receipt of an undertaking by or on behalf of such
director pr officer to repay all amounts advanced if it shall be determined that
he is not entitled to be indemnified by QNB.
Section C of Article XIII of QNB's Articles of Incorporation and
Section 7-3 of Article VII of QNB's By-laws provide that QNB may, as determined
by the Board of Directors from time to time, indemnify to the fullest extent now
or hereafter permitted by law, any person who was or is a party to or a witness
in or is threatened to be made a party to or a witness in, or is otherwise
involved in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was an authorized representative of QNB, both as to action is his
official capacity and as to action in another capacity while holding such office
or position, against all expenses (including attorney's fees and disbursements),
judgments, fines (including excise taxes and penalties), and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding. QNB may, as determined by the Board of Directors
from time to time, pay expenses incurred by any such person by reason of his
participation in an action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by QNB.
Section D of Article XIII of QNB Articles of Incorporation and Section
7-4 of Article VII of QNB's By-laws provide that indemnification under such
Articles is provided pursuant to Section 8365 of the Pennsylvania Director's
Liability Act (or successor provision or statute) and such Articles are intended
to provide indemnification in accordance with their terms whether QNB would have
the power to so indemnify under any other provision of law except such Act and
whether or not the indemnified liability arises or arose from any threatened,
pending or completed action by or in the right of QNB; indemnification under
such provisions shall not be made by QNB in any case where the alleged act or
failure to act giving rise to the claim for indemnification is expressly
prohibited by the Pennsylvania Director's Liability Act or any successor statue
as in effect at the time of such alleged action or failure to take action.
Section E of Article XIII of QNB's Articles of Incorporation and
Section 7-5 of Article VII of QNB's By-laws provide that QNB shall have the
power to purchase and maintain insurance on behalf of any authorized
representative of QNB against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or not
QNB would have the power to indemnify him against such liability. The Board of
Directors, without further approval of the shareholders, shall have the power to
borrow money on behalf of QNB, including the power to pledge the assets of QNB,
from time to time, to discharge QNB's obligations with respect to
indemnification and the advancement and reimbursement of expenses, and the
purchase and maintenance of insurance on behalf of each director and officer
against any liability asserted against or incurred by such director or officer
in any capacity.
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Finally, Section F of Article XIII of QNB's Articles of Incorporation
and Section 7-6 of Article VII of QNB's By-laws provide that each director and
officer of QNB shall be deemed to act in such capacity in reliance upon such
rights of indemnification and advancement of expenses. The rights of
indemnification and advancement of expenses provided shall not be deemed
exclusive of any other rights to which any person seeking indemnification or
advancement or expenses may be entitled under any agreement, vote of
shareholders or disinterested directors, statute or otherwise, both as to action
in such person's official capacity and as to action in another capacity while
holding such office or position, and shall continue as to a person who has
ceased to be an authorized representative of QNB and shall inure to the benefit
of the heirs, executors and administrators of such person. Any repeal or
modification such Articles or By-laws by the shareholders or the Board of
Directors of QNB shall not adversely affect any right or protection existing at
the time of such repeal or modification to which any person may be entitled
under such Articles or By-laws.
QNB maintains insurance insuring its directors, officer, employees or
agents against certain liabilities which they might incur as directors, officer,
employees or agents including, if possible, certain liabilities under the
Securities Act of 1933, as amended (the "1933 Act").
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by a director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the manner has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the 1933 Act and will be governed by the final adjudication of such
issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
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ITEMS 8. EXHIBITS.
EXHIBIT NO.
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4.1 Articles of Incorporation of the Registrant, as amended.
(Incorporated by reference to Exhibit 3.1 of the Registrant's
Form 10-Q, filed with the Commission on August 13, 1998).
4.2 By-laws of the Registrant, as amended. (Incorporated by
reference to Exhibit 3.2 of the Registrant's Form 10-Q, filed
with the Commission on August 13, 1998).
4.3 QNB Corp. 1998 Stock Incentive Plan.
5 Opinion of Shumaker Williams, P.C. re: Legality.
10.1 Employment Agreement between the Registrant and Thomas J.
Bisko. (Incorporated by reference to Exhibit 10.1 of the
Registrant's Form 10-K, filed with the Commission on March 30,
1999.)
10.2 Salary Continuation Agreement between Quakertown National Bank
and Thomas J. Bisko. (Incorporated by reference to Exhibit
10.2 of the Registrant's Form 10- K, filed with the Commission
on March 30, 1999.)
10.3 QNB Corp. Stock Incentive Plan. (Incorporated by reference to
Exhibit 4A to Registration Statement No. 333-16627 on Form
S-8, filed with the Commission on November 22, 1996).
10.4 QNB Corp. Employee Stock Purchase Plan. (Incorporated by
reference to Exhibit 4B to Registration Statement No.
333-16627 on Form S-8, filed with the Commission on November
22, 1996).
10.5 The Quakertown National Bank Profit Sharing and Section 401(k)
Salary Deferral Plan. (Incorporated by reference to Exhibit 4C
to Registration Statement No. 333- 16627 on Form S-8, filed
with the Commission on November 22, 1996).
23.1 Consent of KPMG LLP.
23.2 Consent of Shumaker Williams, P.C. (Contained at Exhibit 5 of
this Registration Statement).
24 Power of Attorney of Directors and Officers. (Included on
Signature Pages).
99.1 Description of Registrant's Securities.
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ITEM 9. UNDERTAKINGS.
(a) Rule 415 offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i)
and (a)(1)(ii) shall not apply if the
information required to be included in a
post-effective amendment by those paragraphs
is contained in periodic reports filed with
or furnished to the Commission by the
Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered therein,
and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
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(b) Filings incorporating subsequent Exchange Act documents by
reference.
The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Request for acceleration of effective date or filing of
registration statement on Form S-8.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities, other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act of
1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Quakertown, Commonwealth of Pennsylvania, on November
16, 1999.
QNB Corp.
By: /s/ Thomas J. Bisko
-------------------------------------
Thomas J. Bisko
President and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas J. Bisko and Robert C. Werner, and
each of them, his true and lawful attorney-in-fact, as agent with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacity, to sign any or all amendments to this registration statement
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as they might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following person in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
CAPACITY DATE
-------- ----
<S> <C> <C>
/s/ Thomas J. Bisko President and Chief Executive November 16, 1999
- -------------------------------- Officer; Director
Thomas J. Bisko
/s/Robert C. Werner Vice President November 16, 1999
- --------------------------------
Robert C. Werner
</TABLE>
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<TABLE>
<S> <C> <C>
/s/ Bret H. Krevolin Chief Accounting Officer November 16, 1999
- ----------------------------------
Bret H. Krevolin
/s/ Norman L. Baringer Director November 16, 1999
- -------------------------------
Norman L. Baringer
/s/ Kenneth F. Brown, Jr. Director November 16, 1999
- -------------------------------
Kenneth F. Brown, Jr.
/s/ Dennis Helf Director November 16, 1999
- -------------------------------
Dennis Helf
/s/ Donald T. Knauss Director November 16, 1999
- ---------------------------------
Donald T. Knauss
/s/ Charles M. Meredith, III Director November 16, 1999
- ------------------------------
Charles M. Meredith, III
/s/ Gary S. Parzych Director November 16, 1999
- -----------------------------------
Gary S. Parzych
- ----------------------------------- Director November __, 1999
Henry L. Rosenberger
- ----------------------------------- Director November __, 1999
Edgar L. Stauffer
</TABLE>
II-13
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
IN SEQUENTIAL
NUMBERING
EXHIBIT NO. SYSTEM
- ----------- ------
<S> <C> <C>
4.1 Articles of Incorporation of the Registrant, as amended. *
(Incorporated by reference to Exhibit 3.1 of the
Registrant's Form 10-Q, filed with the Commission on August
13, 1998).
4.2 By-laws of the Registrant, as amended. (Incorporated by *
reference to Exhibit 3.2 of the Registrant's Form 10-Q,
filed with the Commission on August 13, 1998).
4.3 QNB Corp. 1998 Stock Incentive Plan. 12
5 Opinion of Shumaker Williams, P.C. re: Legality. 26
10.1 Employment Agreement between the Registrant and *
Thomas J. Bisko. (Incorporated by reference to Exhibit 10.1
of the Registrant's Form 10-K, filed with the Commission
on March 30, 1999.)
10.2 Salary Continuation Agreement between Quakertown *
National Bank and Thomas J. Bisko. (Incorporated by
reference to Exhibit 10.2 of the Registrant's Form 10-K, filed
with the Commission on March 30, 1999.)
10.3 QNB Corp. Stock Incentive Plan. (Incorporated by reference *
to Exhibit 4A to Registration Statement No. 333-16627 on
Form S-8, filed with the Commission on November 22, 1996).
10.4 QNB Corp. Employee Stock Purchase Plan. (Incorporated by *
reference to Exhibit 4B to Registration Statement No. 333-16627
on Form S-8, filed with the Commission on November 22, 1996).
10.5 The Quakertown National Bank Profit Sharing and Section 401(k) *
Salary Deferral Plan. (Incorporated by reference to Exhibit 4C to
Registration Statement No. 333-16627 on Form S-8, filed with
the Commission on November 22, 1996).
23.1 Consent of KPMG LLP. 29
</TABLE>
<PAGE> 16
<TABLE>
<S> <C> <C>
23.2 Consent of Shumaker Williams, P.C. (Contained at Exhibit 5 of
this Registration Statement).
24 Power of Attorney of Directors and Officers
(Included on Signature Pages).
99.1 Description of Registrant's Securities. 31
</TABLE>
* Incorporated by reference.
<PAGE> 1
EXHIBIT 4.3
QNB CORP.
1998 STOCK INCENTIVE PLAN
<PAGE> 2
QNB CORP.
1998 STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to
advance the development, growth and financial condition of QNB Corp.
(the "Corporation") and each subsidiary thereof, as defined in Section
424 of the Internal Revenue Code of 1986, as amended (the "Code"), by
providing incentives through participation in the appreciation of the
common stock of the Corporation to secure, retain and motivate
personnel who may be responsible for the operation and for management
of the affairs of the Corporation and any subsidiary now or hereafter
existing ("Subsidiary").
2. Term. The Plan shall become effective as of the date it is adopted by
the Corporation's Board of Directors (the "Board"), and shall be
presented for approval at the next meeting of the Corporation's
shareholders. Any and all options and rights awarded under the Plan
(the "Awards") before it is approved by the Corporation's shareholders
shall be conditioned upon, and may not be exercised before, receipt of
shareholder approval, and shall lapse upon failure to receive such
approval. Unless previously terminated by the Board, the Plan shall
terminate on, and no options shall be granted after the tenth
anniversary of the effective date of the Plan.
3. Stock. Shares of the Corporation's common stock, par value $1.25 per
share (the "Stock"), that may be issued under the Plan shall not
exceed, in the aggregate, 100,000 shares, as may be adjusted pursuant
to Section 16 hereof. Shares may be either authorized and unissued
shares, or authorized shares, issued by and subsequently reacquired by
the Corporation as treasury stock. Under no circumstances shall any
fractional shares be awarded under the Plan. Except as may be otherwise
provided in the Plan, any Stock subject to an Award that, for any
reason, lapses or terminates prior to exercise, shall again become
available for grant under the Plan. While the Plan is in effect, the
Corporation shall reserve and keep available the number of shares of
Stock needed to satisfy the requirements of the Plan. The Corporation
shall apply for any requisite governmental authority to issue shares
under the Plan. The Corporation's failure to obtain any such
governmental authority, deemed necessary by the Corporation's legal
counsel for the lawful issuance and sale of Stock under the Plan, shall
relieve the Corporation of any duty, or liability for the failure to
issue or sell the Stock.
4. Administration. The ability to control and manage the operation and
administration of the Plan shall be vested in the Board or in a
committee of two or more members of the Board, selected by the Board
(the "Committee"). The Committee shall have the authority and
discretion to interpret the Plan, to establish, amend and rescind any
rules and regulations relating to the Plan, to determine the terms and
provisions of any agreements made pursuant to the Plan, and to make any
and all determinations that may be necessary or advisable for the
administration of the Plan. Any interpretation of the Plan by the
Committee and any decision made by the Committee under the Plan is
final and binding.
1
<PAGE> 3
The Committee shall be responsible and shall have full, absolute and
final power of authority to determine what, to whom, when and under what facts
and circumstances Awards shall be made, and the form, number, terms, conditions
and duration thereof, including but not limited to when exercisable, the number
of shares of Stock subject thereto, and the stock option exercise prices. The
Committee shall make all other determinations and decisions, take all actions
and do all things necessary or appropriate in and for the administration of the
Plan. No member of the Committee or of the Board shall be liable for any
decision, determination or action made or taken in good faith by such person
under or with respect to the Plan or its administration.
5. Awards. Awards may be made under the Plan in the form of: (a)
"Qualified Options" to purchase Stock, which are intended to qualify
for certain tax treatment as incentive stock options under Sections 421
and 422 of the Code, or (b) "Non-Qualified Options" to purchase Stock,
which are not intended to qualify under Sections 421 through 424 of the
Code. More than one Award may be granted to an eligible person, and the
grant of any Award shall not prohibit the grant another Award, either
to the same person or otherwise, or impose any obligation to exercise
on the participant. All Awards and the terms and conditions thereof
shall be set forth in written agreements, in such form and content as
approved by the Committee from time to time, and shall be subject to
the provisions of the Plan whether or not contained in such agreements.
Multiple Awards for a particular person may be set forth in a single
written agreement or in multiple agreements, as determined by the
Committee, but in all cases each agreement for one or more Awards shall
identify each of the Awards thereby represented as a Qualified Option
or Non-Qualified Option, as the case may be.
6. Eligibility. Persons eligible to receive Awards shall be those key
officers and other employees of the Corporation and each Subsidiary, as
determined by the Committee. A person's eligibility to receive an Award
shall not confer upon him or her any right to receive an Award. Except
as otherwise provided, a person's eligibility to receive, or actual
receipt of an Award under the Plan shall not limit or affect his or her
benefits under or eligibility to participate in any other incentive or
benefit plan or program of the Corporation or of its affiliates.
7. Qualified Options. In addition to other applicable provisions of the
Plan, all Qualified Options and Awards thereof shall be under and
subject to the following terms and conditions:
(a) No Qualified Option shall be awarded more than ten (10) years
after the date the Plan is adopted by the Board or the date
the Plan is approved by the Corporation's shareholders,
whichever is earlier;
(b) The time period during which any Qualified Option is
exercisable, as determined by the Committee, shall not
commence before the expiration of six (6) months or continue
beyond the expiration of ten (10) years after the date the
Qualified Option is awarded;
2
<PAGE> 4
(c) If a participant, who was awarded a Qualified Option, ceases
to be employed by the Corporation or any Subsidiary for any
reason other than his or her death, the Committee may permit
the participant thereafter to exercise the option during its
remaining term for a period of not more than three (3) months
after cessation of employment to the extent that the Qualified
Option was then and remains exercisable, unless such
employment cessation was due to the participant's disability,
as defined in Section 22(e)(3) of the Code, in which case the
three (3) month period shall be twelve (12) months; if the
participant dies while employed by the Corporation or a
Subsidiary, the Committee may permit the participant's
qualified personal representatives, or any persons who acquire
the Qualified Option pursuant to his or her Will or laws of
descent and distribution, to exercise the Qualified Option
during its remaining term for a period of not more than twelve
(12) months after the participant's death to the extent that
the Qualified Option was then and remains exercisable; the
Committee may impose terms and conditions upon and for the
exercise of a Qualified Option after the cessation of the
participant's employment or his or her death;
(d) The purchase price of Stock subject to any Qualified Option
shall not be less than the Stock's fair market value at the
time the Qualified Option is awarded or less than the Stock's
par value; and
(e) Qualified Options may not be sold, transferred or assigned by
the participant except by will or the laws of descent and
distribution.
8. Non-Qualified Options. In addition to other applicable provisions of
the Plan, all NonQualified Options and Awards thereof shall be under
and subject to the following terms and conditions:
(a) The time period during which any Non-Qualified Option is
exercisable shall not commence before the expiration of six
(6) months or continue beyond the expiration of ten (10) years
after the date the Non-Qualified Option is awarded;
(b) If a participant, who was awarded a Non-Qualified Option,
ceases to be eligible under the Plan, before lapse or full
exercise of the option, the Committee may permit the
participant to exercise the option during its remaining term,
to the extent that the option was then and remains
exercisable, or for such time period and under such terms and
conditions as may be prescribed by the Committee;
(c) The purchase price of a share of Stock subject to any
Non-Qualified Option shall not be less than the Stock's par
value; and
(d) Except as otherwise provided by the Committee, Non-Qualified
Stock Options granted under the Plan are not transferable
except as designated by the participant by Will and the laws
of descent and distribution.
3
<PAGE> 5
9. Exercise. Except as otherwise provided in the Plan, Awards may be
exercised in whole or in part by giving written notice thereof to the
Secretary of the Corporation, or his or her designee, identifying the
Award to be exercised, the number of shares of Stock with respect
thereto, and other information pertinent to exercise of the Award. The
purchase price of the shares of Stock with respect to which an Award is
exercised shall be paid with the written notice of exercise, either in
cash or in securities of the corporation, including securities issuable
hereunder, at its then current fair market value, or it any combination
thereof, as the Committee shall determine. Funds received by the
Corporation from the exercise of any Award shall be used for its
general corporate purposes.
The Committee may permit an acceleration of previously
established exercise terms of any Awards as, when, under such facts and
circumstances, and subject to such other or further requirements and
conditions as the Committee may deem necessary or appropriate. In
addition:
(a) if the Corporation or its shareholders execute an agreement to
dispose of all or substantially all of the Corporation's
assets or stock by means of sale, merger, consolidation,
reorganization, liquidation or otherwise, as a result of which
the Corporation's shareholders, immediately before the
transaction, will not own at least fifty percent (50%) of the
total combined voting power of all classes of voting stock of
the surviving entity (be it the Corporation or otherwise)
immediately after the consummation of the transaction, then
any and all outstanding Awards shall immediately become and
remain exercisable or, if the transaction is not consummated,
until the agreement relating to the transaction expires or is
terminated, in which case, all Awards shall be treated as if
the agreement was never executed;
(b) if there is an actual, attempted or threatened change in the
ownership of at least twenty-five percent (25%) of all classes
of voting stock of the Corporation through the acquisition of,
or an offer to acquire such percentage of the Corporation's
voting stock by any person or entity, or persons or entities
acting in concert or as a group, and the acquisition or offer
has not been duly approved by the Board; or
(c) if during any period of two (2) consecutive years, the
individuals who at the beginning of such period constituted
the Board cease, for any reason, to constitute at least a
majority of the Board, (unless the election of each director
of the Board, who was not a director of the Board at the
beginning of such period, was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of such period) thereupon any and
all Awards immediately shall become and remain exercisable.
10. Withholding. When a participant exercises a stock option awarded under
the Plan, the Corporation, in its discretion and as required by law,
may require the participant to remit
4
<PAGE> 6
to the Corporation an amount sufficient to satisfy fully any federal,
state and other jurisdictions' income and other tax withholding
requirements prior to the delivery of any certificates for shares of
Stock, at the Committee's discretion remittance may be made in cash,
shares already held by the participant or by the withholding by the
Corporation of sufficient shares issuable pursuant to the option to
satisfy the participant's withholding obligation.
11. Value. Where used in the Plan, the "fair market value" of Stock or any
options or rights with respect thereto, including Awards, shall mean
and be determined by (a) the average of the highest and lowest reported
sales prices thereof on the principal established domestic securities
exchange on which listed, and if not listed, then (b) the average of
the dealer "bid" and "ask" prices thereof on the New York
over-the-counter market, as reported by the National Association of
Securities Dealers, Inc., in either case as of the specified or
otherwise required or relevant time, or if not traded as of such
specified, required or relevant time, then based upon such reported
sales or "bid" and "ask" prices before and/or after such time in
accordance with pertinent provisions of and principles under the Code
and the regulations promulgated thereunder.
12. Amendment. To the extent permitted by applicable law, the Board may
amend, suspend, or terminate the Plan at any time. The amendment or
termination of this Plan shall not, without the consent of the
participants, alter or impair any rights or obligations under any Award
previously granted hereunder.
From time to time, the Committee may rescind, revise and add
to any of the terms, conditions and provisions of the Plan or of an
Award as necessary or appropriate to have the Plan and any Awards
thereunder be or remain qualified and in compliance with all applicable
laws, rules and regulations, and the Committee may delete, omit or
waive any of the terms conditions or provisions that are no longer
required by reason of changes of applicable laws, rules or regulations,
but not limited to, the provisions of Sections 421 and 422 of the Code,
Section 16 of the Securities Exchange Act of 1934, as amended, (the
"1934 Act") and the rules and regulations promulgated by the Securities
and Exchange Commission. Without limiting the generality of the
preceding sentence, each Qualified Option shall be subject to such
other and additional terms, conditions and provisions as the Committee
may deem necessary or appropriate in order to qualify as a Qualified
Option under Section 422 of the Code, including, but not limited to,
the following provisions:
(a) At the time a Qualified Option is awarded, the aggregate fair
market value of the Stock subject thereto and of any Stock or
other capital stock with respect to which incentive stock
options qualifying under Sections 421 and 422 of the Code are
exercisable for the first time by the participant during any
calendar year under the Plan and any other plans of the
Corporation or its affiliates, shall not exceed $100,000.00;
and
5
<PAGE> 7
(b) No Qualified Option, shall be awarded to any person if, at the
time of the Award, the person owns shares of the stock of the
Corporation possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the
Corporation or its affiliates, unless, at the time the
Qualified Option is awarded, the exercise price of the
Qualified Option is at least one hundred and ten percent
(110%) of the fair market value of the Stock on the date of
grant and the option, by its terms, is not exercisable after
the expiration of five (5) years from the date it is awarded.
13. Continued Employment. Nothing in the Plan or any Award shall confer
upon any participant or other persons any right to continue in the
employ of, or maintain any particular relationship with, the
Corporation or its affiliates, or limit or affect any rights, powers or
privileges that the Corporation or its affiliates may have to
supervise, discipline and terminate the participant. However, the
Committee may require, as a condition of making and/or exercising any
Award, that a participant agree to, and in fact provide services,
either as an employee or in another capacity, to or for the Corporation
or any Subsidiary for such time period as the Committee may prescribe.
The immediately preceding sentence shall not apply to any Qualified
Option, to the extent such application would result in disqualification
of the option under Sections 421 and 422 of the Code.
14. General Restrictions. If the Committee or Board determines that it is
necessary or desirable to: (a) list, register or qualify the Stock
subject to the Award, or the Award itself, upon any securities exchange
or under any federal or state securities or other laws, (b) obtain the
approval of any governmental authority, or (c) enter into an agreement
with the participant with respect to disposition of any Stock
(including, without limitation, an agreement that, at the time of the
participant's exercise of the Award, any Stock thereby acquired is and
will be acquired solely for investment purposes and without any
intention to sell or distribute the Stock), then such Award shall not
be consummated in whole or in part unless the listing, registration,
qualification, approval or agreement, as the case may be, shall have
been appropriately effected or obtained to the satisfaction of the
Committee and legal counsel for the Corporation.
15. Rights. Except as otherwise provided in the Plan, participants shall
have no rights as a holder of the Stock unless and until one or more
certificates for the shares of Stock are issued and delivered to the
participant.
16. Adjustments. In the event that the shares of common stock of the
Corporation, as presently constituted, shall be changed into or
exchanged for a different number or kind of shares of common stock or
other securities of the Corporation or of other securities of the
Corporation or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up,
combination of shares or otherwise) or if the number of such shares of
common stock shall be increased through the payment of a stock
dividend, stock split or similar transaction, then, there shall be
substituted for or added to each share of common stock of the
Corporation that was theretofore appropriated, or which thereafter may
become subject to an option under the Plan, the
6
<PAGE> 8
number and kind of shares of common stock or other securities into
which each outstanding share of the common stock of the Corporation
shall be so changed or for which each such share shall be exchanged or
to which each such shares shall be entitled, as the case may be. Each
outstanding Award shall be appropriately amended as to price and other
terms, as may be necessary to reflect the foregoing events.
If there shall be any other change in the number or kind of
the outstanding shares of the common stock of the Corporation, or of
any common stock or other securities in which such common stock shall
have been changed, or for which it shall have been exchanged, and if a
majority of the disinterested members of the Committee shall, in its
sole discretion, determine that such change equitably requires an
adjustment in any Award that was theretofore granted or that may
thereafter be granted under the Plan, then such adjustment shall be
made in accordance with such determination.
The grant of an Award under the Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure, to merge, to consolidate, to dissolve, to liquidate
or to sell or transfer all or any part of its business or assets.
Fractional shares resulting from any adjustment in Awards
pursuant to this Section 16 may be settled as a majority of the
disinterested members of the Board of Directors or of the Committee, as
the case may be, shall determine.
To the extent that the foregoing adjustments relate to common
stock or securities of the Corporation, such adjustments shall be made
by a majority of the members of the Board, whose determination in that
respect shall be final, binding and conclusive. Notice of any
adjustment shall be given by the Corporation to each holder of an Award
that is so adjusted.
17. Forfeiture. Notwithstanding anything to the contrary in this Plan, if
the Committee finds, after full consideration of the facts presented on
behalf of the Corporation and the involved participant, that he or she
has been engaged in fraud, embezzlement, theft, commission of a felony,
or dishonesty in the course of his or her employment by the Corporation
or by any Subsidiary and such action has damaged the Corporation or the
Subsidiary, as the case may be, or that the participant has disclosed
trade secrets of the Corporation or its affiliates, the participant
shall forfeit all rights under and to all unexercised Awards, and under
and to all exercised Awards under which the Corporation has not yet
delivered payment or certificates for shares of Stock (as the case may
be), all of which Awards and rights shall be automatically canceled.
The decision of the Committee as to the cause of the participant's
discharge from employment with the Corporation or any Subsidiary and
the damage thereby suffered shall be final for purposes of the Plan,
but shall not affect the finality of the participant's discharge by the
Corporation or Subsidiary for any other purposes. The preceding
provisions of this paragraph shall not apply to any Qualified Option to
the extent such application would result in disqualification of the
option as an incentive stock option under Sections 421 and 422 of the
Code.
7
<PAGE> 9
18. Indemnification. In and with respect to the administration of the Plan,
the Corporation shall indemnify each member of the Committee and/or of
the Board, each of whom shall be entitled, without further action on
his or her part, to indemnification from the Corporation for all
damages, losses, judgments, settlement amounts, punitive damages,
excise taxes, fines, penalties, costs and expenses (including without
limitation attorneys' fees and disbursements) incurred by the member in
connection with any threatened, pending or completed action, suit or
other proceedings of any nature, whether civil, administrative,
investigative or criminal, whether formal or informal, and whether by
or in the right or name of the Corporation, any class of its security
holders, or otherwise, in which the member may be or may have been
involved, as a party or otherwise, by reason of his or her being or
having been a member of the Committee and/or of the Board, whether or
not he or she continues to be a member of the Committee or of the
Board. The provisions, protection and benefits of this Section shall
apply and exist to the fullest extent permitted by applicable law to
and for the benefit of all present and future members of the Committee
and/or of the Board and their respective heirs, personal and legal
representatives, successors and assigns, in addition to all other
rights that they may have as a matter of law, by contract, or
otherwise, except (a) to the extent there is entitlement to insurance
proceeds under insurance coverages provided by the Corporation on
account of the same matter or proceeding for which indemnification
hereunder is claimed, or (b) to the extent there is entitlement to
indemnification from the Corporation, other than under this Section, on
account of the same matter or proceeding for which indemnification
hereunder is claimed.
19. Miscellaneous. (a) Any reference contained in this Plan to particular
section or provision of law, rule or regulation, including but not
limited to the Code and the 1934 Act, shall include any subsequently
enacted or promulgated section or provision of law, rule or regulation,
as the case may be. With respect to persons subject to Section 16 of
the 1934 Act, transactions under this Plan are intended to comply with
all applicable conditions of Section 16 and the rules and regulations
promulgated thereunder, or any successor rules and regulations that may
be promulgated by the Securities and Exchange Commission, and to the
extent any provision of this Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by
applicable law and deemed advisable by the Committee.
(b) Where used in this Plan: the plural shall include the
singular, and unless the context otherwise clearly requires,
the singular shall include the plural; and the term
"affiliates" shall mean each and every Subsidiary and any
parent of the Corporation.
(c) The captions of the numbered Sections contained in this Plan
are for convenience only, and shall not limit or affect the
meaning, interpretation or construction of any of the
provisions of the Plan.
- - - - - - - - - - - -
END
- - - - - - - - - - - -
8
<PAGE> 1
EXHIBIT 5
OPINION OF SHUMAKER WILLIAMS, P.C.
<PAGE> 2
EXHIBIT 5
November 16, 1999
Thomas J. Bisko
President and Chief Executive Officer
QNB Corp.
10 North Third Street
Quakertown, Pennsylvania 18951-9005
RE: QNB Corp. (the "Corporation")
Registration Statement Form S-8
Our File No.: 119-98
Dear Mr. Bisko:
We have acted as special corporate counsel to the Corporation in
connection with preparation of the Corporation's Registration Statement on Form
S-8 relating to the registration of 100,000 shares of the Corporation's common
stock under the Securities Act of 1933 that are issuable under the Corporation's
1998 Stock Incentive Plan (the "Plan").
In connection with this matter, we have reviewed the following:
1. the Corporation's Articles of Incorporation;
2. the Corporation's By-Laws;
3. Resolutions adopted by the Corporation's Board of Directors on
March 10, 1998 authorizing the Plan;
4. the Corporation's 1998 Proxy Statement regarding shareholder
approval of the Plan;
5. the Corporation's Certificate of Judges of Election indicating
shareholder approval of the Plan; and
6. the Plan.
Based upon our review of the foregoing, it is our opinion that:
a. QNB Corp. is duly incorporated under the laws of the
Commonwealth of Pennsylvania and is validly existing and in
good standing under the laws of the Commonwealth; and
<PAGE> 3
b. The Corporation's common stock, $1.25 par value, issuable
under the Plan, when and as issued in accordance with the
provisions of the Plan, will be duly and validly issued, fully
paid and nonassessable.
In giving the foregoing opinion, we have assumed that the Corporation
will have, at the time of the issuance of common stock under the Plan, a
sufficient number of authorized shares available for issue.
We consent to the use of this opinion as an exhibit to the Registration
Statement on Form S-8, filed by the Corporation, relating to the Plan. In giving
this consent, we do not thereby admit that we come within the category of
persons whose consent is required under Sections 7 or 11 of the Securities Act
of 1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
SHUMAKER WILLIAMS, P.C.
/s/ Nicholas Bybel, Jr.
-----------------------------
By Nicholas Bybel, Jr.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF KPMG LLP
<PAGE> 2
EXHIBIT 23.1
The Board of Directors
QNB Corp.
10 North Third Street
Quakertown, PA 18951-9005
We consent to the use of our reported incorporated herein by reference.
/s/ KPMG LLP
Philadelphia, Pennsylvania
November 15, 1999
<PAGE> 1
EXHIBIT 99.1
DESCRIPTION OF REGISTRANT'S SECURITIES
<PAGE> 2
EXHIBIT 99.1
DESCRIPTION OF REGISTRANT'S SECURITIES
QNB Corp. is authorized by its Amended and Restated Articles of
Incorporation to issue 5,000,000 shares of common stock, $1.25 par value per
share.
The following is a summary of certain rights and provisions of the
common stock. The summary does not purport to be complete and is qualified in
its entirety by reference to the Articles of Incorporation and By-laws of QNB
Corp. and the Pennsylvania Business Corporation Law.
DIVIDEND RIGHTS AND LIMITATIONS ON PAYMENT OF DIVIDENDS. The holders of common
stock are entitled to dividends and other distributions as and when declared by
the Board of Directors of QNB Corp. from assets legally available therefor.
Specifically, dividends may be paid in cash, property or shares of common stock,
unless QNB Corp. is insolvent or the dividend payment would render it insolvent;
and payment may be made in cash or property only from QNB Corp.'s unreserved and
unrestricted earned surplus, or out of its capital surplus available for
dividends.
VOTING RIGHTS. The holders of common stock have one vote for each share on all
matters presented for a shareholder vote. Cumulative voting of shares does not
exist.
LIQUIDATION RIGHTS. Upon the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of QNB Corp., after the payment in full of its
debts and other liabilities, the remainder of its assets, if any, are to be
distributed ratably among the shareholders of the common stock.
CONVERSION AND PREEMPTIVE RIGHTS. The holders of common stock have no conversion
or preemptive rights with respect to the issuance of QNB Corp. securities.
REDEMPTION AND SINKING FUND PROVISIONS. The common stock is not subject to any
redemption or sinking fund provisions.
LIABILITY TO FURTHER CALLS OR TO ASSESSMENTS BY THE CORPORATION. The common
stock is not subject to liability for further calls or to assessments by QNB
Corp.
QNB Corp.'s Articles of Incorporation contain certain provisions that
holders may deem to be "anti-takeover" in nature.
Article VIII of QNB's Articles of Incorporation sets forth the
principal provisions intended to discourage attempts to acquire control of QNB
Corp. without the support of at least a majority of QNB's Board of Directors. In
addition, certain other provisions of the Articles of Incorporation, although
not intended primarily to deter attempts to acquire control of QNB Corp.
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may, as described below, deter attempts and/or give QNB Corp. certain additional
means of responding to takeover attempts by persons who do not have the support
of at least a majority of QNB Corp.'s Board of Directors.
The Articles of Incorporation generally provide that any merger,
consolidation, sale of substantially all of QNB Corp.'s shareholders equity (or
their affiliates or associates), more fully described below, or other similar
transactions must be approved by the affirmative vote of not less than 75% of
QNB's then outstanding voting stock. Under the Articles of Incorporation, the
75% affirmative stockholder vote would not be required if:
o a majority of the Board of Directors has given prior approval
to the acquisition by the Related Person (as defined below)
involved in the Business Combination, (as defined below) of
20% or more of the outstanding shares of common stock which
resulted in that person becoming a Related Person, or
o approved the Business Combination prior to the time that the
person became a Related Person.
The term "Business Combination" means:
o any merger or consolidation of QNB Corp. or a Subsidiary with
or into a Related Person,
o any sale, lease, exchange, transfer or other disposition,
including without limitation, a mortgage or any other security
device of all or any substantial part of the assets of QNB
Corp. (including without limitation any securities of a
Subsidiary) or of a Subsidiary, to a Related Person,
o any merger or consolidation of a Related Person with or into
QNB Corp. or a Subsidiary,
o any sale, lease, exchange, transfer or other disposition of
all or any substantial part of the assets of a Related Person
to QNB Corp. or a Subsidiary,
o the issuance of any securities of QNB Corp. or a Subsidiary to
a Related Person,
o the acquisition by QNB Corp. or a Subsidiary of any securities
of a Related Person,
o any reclassification of voting stock of QNB Corp., or any
recapitalization involving voting stock of QNB Corp.,
consummated within five years after a Related Person became a
Related Person,
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o any loan or other extension of credit by QNB Corp. or a
Subsidiary to the Related Person or any guarantees by QNB
Corp. or a Subsidiary of any loan or other extension of credit
by any person to a Related Person, and
o any agreement, contract or other arrangement provided for any
of the transactions described in this definition of Business
Combination.
A "Related Person" is any individual, corporation, partnership or other
person or entity which, together with its "affiliates" and "associates" (as
those terms are defined in QNB Corp.'s Articles of Incorporation) is the
beneficial owner, directly or indirectly, of 20% or more of QNB Corp.'s
outstanding voting stock.
The Articles of Incorporation also provide that, when evaluating any
offer by another party or a tender or exchange offer for any equity security of
QNB Corp. or to enter into a merger or other Business Combination with QNB
Corp., the Board may consider, among other factors:
o the social and economic effects on the employees, customers
and other institutions of QNB Corp. and its subsidiaries and
on the communities in which QNB Corp. and its subsidiaries
operate or are located, and
o the desirability of QNB Corp. continuing as an independent
entity.
Article VIII of QNB Corp.'s Articles of Incorporation may be amended or
repealed only by the affirmative vote of holders of 75% of QNB's outstanding
shares of stock then entitled to vote.
In the absence of the provision in Article VIII requiring a 75% vote of
shareholders (unless a majority of the Board of Directors approves the
transaction) to approve Business Combinations, a person acquiring control of
more than 50% of the voting shares of QNB Corp. could subsequently use its
control to force majority shareholders to dispose of their shares at a price
that would not reflect any premium the person may have paid to acquire its
controlling interest. Instead, the controlling person would essentially set the
price. The price may be lower than the price paid to acquire control, or be paid
in a less desirable form (e.g., in equity or debt securities instead of cash).
The provisions in QNB Corp.'s Articles of Incorporation tend to discourage a
Related Person who seeks to obtain control of QNB Corp. at a relatively low
price through a subsequent Business Combination, because acquisition of the
remaining equity interests could not be assured unless a majority of the
directors or 75% of the shareholders approve the transaction prior to the
Related Person becoming a Related Person.
This supermajority voting provision may, in some cases, be
disadvantageous to some shareholders, because tender offers or other non-open
market acquisitions of stock are usually made at prices above the prevailing
market price of a company's stock. In addition, acquisitions of stock by persons
attempting to acquire control through market purchases may cause the market
price of the stock to reach levels that are higher than would otherwise be the
case. However, because this supermajority provision in QNB Corp.'s Articles of
Incorporation may
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discourage these purchases, particularly purchases of less than all of QNB
Corp.'s shares, it may deprive shareholders of an opportunity to sell their
stock at a higher price. Moreover, the provision may decrease the likelihood
that a tender offer will be made and as a result may adversely affect those
shareholders who would desire to participate in a tender offer. A potential
purchaser of stock seeking to obtain control may also be discouraged from
purchasing stock because a 75% shareholder vote would be required in order to
change or eliminate these provisions.
These provisions also give veto power to the holders of a minority of
the voting shares with respect to a Business Combination, even when a majority
of the shareholders may believe it is in their best interests. Thus, the
supermajority provision in Article VIII may tend to insulate current management
against the possibility of removal in the event of a takeover bid.
In addition, the Articles of Incorporation contain provisions which,
although not directly concerned with Business Combinations or acquisitions of
QNB Corp. voting stock, shareholders may deem to have an anti-takeover effect.
These provisions are described below.
The Articles of Incorporation provide for a classified Board of
Directors. A classified Board may help to moderate the pace of any change in
control of the Board of Directors by extending the time required to elect a
majority of the directors to at least two successive annual meetings. This
extension of time also tends to discourage a tender offer or takeover bid, and
makes it more difficult for a majority of shareholders to change the composition
of the Board of Directors, even though shareholders may desire to do so.
Shareholders may consider this provision to be anti-takeover in nature.
QNB Corp.'s Articles of Incorporation provide that the Board consist of
nine directors. The number of directors may be changed only by the affirmative
supermajority vote of:
o the holders of at least 75% of the outstanding shares entitled
to vote, or
o 75% of the directors then in office. Any directorship may be
filled by affirmative vote of at least 66-2/3% of the entire
Board of Directors then in office.
The president or a majority of the Board of Directors may call a
special shareholders meeting. In addition, shareholders who hold at least 20% of
the votes entitled to be cast at a shareholders meeting may call a special
shareholders meeting.
The holders of a majority of the outstanding shares of stock entitled
to vote may, by affirmative vote, amend QNB Corp.'s Articles of Incorporation,
provided, however, that the following articles may be amended only by the
affirmative vote of 75% of the outstanding shares of stock then entitled to
vote:
o Article V (setting the number of authorized shares of capital
stock),
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o Article VII (setting the number of directors and providing for
classification of the Board of Directors, among other things),
o Article VIII (concerning Business Combinations with Related
Persons, as described above),
o Article IX (incorporating recent anti-takeover amendments to
the Pennsylvania Business Corporation Law), and
o Article X (relating to amendments).
The primary purpose of the Articles of Incorporation and By-law
provisions, described above, relating to directors, shareholders meetings and
amendment of the Articles of Incorporation and By-laws, is to discourage a rapid
change in the composition of the Board, particularly by parties hostile to
management. In order to obtain effective control of QNB Corp., a takeover
bidder, for example, must control at least a majority of the directors' votes
and must obtain a greater percentage of the directors' votes to effect certain
transactions. One common method for a takeover bidder to obtain control is to
acquire a majority of the outstanding shares of a corporation through a tender
offer or open-market purchase or purchases, and then to use the acquired voting
power to remove existing directors or to create new directorships and fill the
positions with persons chosen by the takeover bidder. Restricting the creation
of new directorships and the filling of vacancies makes this strategy more
difficult to implement, and encourages potential takeover bidders to obtain the
consent of the existing Board before attempting a takeover.
In addition, the other provisions, relating to the number of directors
and filling of vacancies, also make changing the composition of the Board of
Directors more difficult, even if the shareholders believe the change is
warranted. These provisions increase the security of incumbent directors in
their positions and tend to perpetuate incumbent management.
"ANTI-TAKEOVER" PROVISIONS OF PENNSYLVANIA LAW.
Pennsylvania law, subject to certain exceptions, imposes a five-year
moratorium on certain Business Combinations between certain corporations and any
shareholder who acquires 20% or more of the corporation's voting stock (the
"Interested Shareholder"), unless the Interested Shareholder obtains prior
approval of the corporation's board of directors or, if the Interested
Shareholder owns 80% or more of the corporation's voting stock and has held the
stock for at least three consecutive months, the Interested Shareholder obtains
approval of a majority of disinterested shareholders and complies with certain
detailed "fair price" provisions. This moratorium period runs from the date on
which the Interested Shareholder first acquires, directly or beneficially, a
"control percentage" equal to voting power over 20% or more of the corporation's
voting shares. The section excludes from the determination of the 20% stock
ownership threshold, stock held by, or received (through gift or bequest) from
any natural person who has held such stock continuously since January 1, 1983.
Once the five-year moratorium period expires, a Business Combination may be
approved by a majority of disinterested
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shareholders or a majority of all shareholders, subject to compliance with the
"fair price" provisions. The section specifically provides that a corporation's
Board of Directors may waive the applicability of the moratorium as to a
shareholder who would otherwise be restricted by the section. In theory, the
section serves to inhibit certain Business Combinations that are attempted
without prior approval of a corporation's Board of Directors.
A separate section of Pennsylvania law requires certain entities that
acquire a greater than 20% equity interest in some Pennsylvania corporations to
offer to purchase all other outstanding capital stock of the corporation at a
minimum "fair price." As specifically permitted by the section, QNB Corp.'s
Board of Directors amended QNB Corp.'s Articles of Incorporation to exempt QNB
Corp. and its shareholders from the applicability of this section.
Pennsylvania law also permits the adoption of plans to provide for a
Pennsylvania corporation's issuance of rights to buy shares to existing
shareholders. These plans are commonly implemented by distributing dividends of
one right for each share held to the holders of common stock of a target
company. Each right permits the holder to purchase one share of common stock or
other form of equity security at any time during an exercise period determined
by the Board of Directors. Once a third party has acquired a sufficient amount
of the target company stock, e.g., 20%, each right becomes exercisable and
permits the holders to purchase either the acquiring company's stock or the
target's common stock at a predetermined price.
Although QNB Corp.'s Board of Directors believes these provisions are
beneficial to shareholders by encouraging arms-length negotiations with
potential takeover bidders, these provisions also tend to discourage some
takeover bids. As a result, QNB Corp. shareholders may be deprived of
opportunities to sell some or all of their shares in a tender offer. Tender
offers for control usually involve a purchase price higher than the current
market price and may involve a bidding contest between competing takeover
bidders. These provisions also discourage open-market purchases by a potential
takeover bidder, as the purchases may temporarily increase the market price of
QNB Corp.'s shares, enabling shareholders to sell their shares at a price higher
than the otherwise prevailing price. The provisions also decrease the market
price of QNB Corp.'s shares by making the stock less attractive to persons who
invest in securities in anticipation of an increase in price if a takeover
attempt develops.
Further, these provisions make certain mergers or other Business
Combinations with major shareholders more difficult to accomplish.
Under the Change in Bank Control Act of 1978, subject to certain
exceptions, no person may acquire "control" of a registered bank holding company
by giving less than 60 days' prior written notice to the Federal Reserve Board.
Under the Change in Bank Control Act of 1978 and the regulations promulgated
thereunder, control is generally presumed to be the power to vote 25% or more of
the common stock of a registered bank holding company. The Board of Governors of
the Federal Reserve System is empowered to disapprove any such acquisition of
control.
