-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L4MT/z4wtYfN3xWQadKnrXQmV7pa9qjJ5pcWgd+oRmkz5AgdT+5iba0sMaB6fx8L Uuwfx+48Qk4w7+ie1Xz+/Q== 0000893220-99-001314.txt : 19991119 0000893220-99-001314.hdr.sgml : 19991119 ACCESSION NUMBER: 0000893220-99-001314 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19991118 EFFECTIVENESS DATE: 19991118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QNB CORP CENTRAL INDEX KEY: 0000750558 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 232318082 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-91201 FILM NUMBER: 99760302 BUSINESS ADDRESS: STREET 1: 10 NORTH THIRD STREET CITY: QUAKERTOWN STATE: PA ZIP: 18951-9005 BUSINESS PHONE: 2155385600 S-8 1 QNB FORM S-8 1 As filed with the Securities and Exchange Commission on November 18, 1999 Registration No. 333-_____ ================================================================================ 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 ------------------------ ---------- (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
- ------------------------------------------------------------------------------------------------------------------------ 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 - ------------------------------------------------------------------------------------------------------------------------ Common Stock, $1.25 Par Value 100,000 $29.00 $2,900,000.00 $806.20 - ------------------------------------------------------------------------------------------------------------------------
(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 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. II-1 3 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. II-2 4 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. II-3 5 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 II-4 6 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, II-5 7 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 II-6 8 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. II-7 9 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. II-8 10 ITEMS 8. EXHIBITS. EXHIBIT NO. ----------- 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. II-9 11 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. II-10 12 (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. II-11 13 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.
CAPACITY DATE -------- ---- /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
II-12 14 /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
II-13 15 EXHIBIT INDEX
PAGE NUMBER IN SEQUENTIAL NUMBERING EXHIBIT NO. SYSTEM - ----------- ------ 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
16 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
* Incorporated by reference. EX-4.3 2 QNB CORP. 1998 STOCK INCENTIVE PLAN 1 EXHIBIT 4.3 QNB CORP. 1998 STOCK INCENTIVE PLAN 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 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 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 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 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 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 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 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 EX-5 3 OPINION OF SHUMAKER WILLIAMS, P.C. 1 EXHIBIT 5 OPINION OF SHUMAKER WILLIAMS, P.C. 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 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. EX-23.1 4 CONSENT OF KPMG LLP 1 EXHIBIT 23.1 CONSENT OF KPMG LLP 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 EX-99.1 5 DESCRIPTION OF REGISTRANT'S SECURITIES 1 EXHIBIT 99.1 DESCRIPTION OF REGISTRANT'S SECURITIES 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. 3 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, 4 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 5 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), 6 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 7 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. -----END PRIVACY-ENHANCED MESSAGE-----