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