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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
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March 29, 1999
NewSouth Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Virginia 0-22219 56-1999749
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation or
Organization)
1311 Carolina Avenue, Washington, North Carolina 27889
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
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(252) 946-4178
Not applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On March 29, 1999, NewSouth Bancorp, Inc., a Delaware
corporation ("NewSouth Delaware"), reincorporated in the
Commonwealth of Virginia by merging (the "Merger") with its
wholly owned subsidiary, NewSouth Bancorp, Inc., a Virginia
corporation (the "Company" or "NewSouth Virginia") (the
"Reincorporation"), with NewSouth Virginia as the surviving
corporation. Under the terms of the Plan of Reorganization and
Agreement and Plan of Merger (the "Agreement"), dated January
11, 1999 between NewSouth Delaware and NewSouth Virginia, each
share of NewSouth Delaware common stock, par value $.01 per
share, ("NewSouth Delaware Common Stock") issued and outstanding
immediately prior to the effective date (the "Effective Date")
were, by virtue of the Merger, converted into one share of
common stock, par value $.01 per share, of NewSouth Virginia
("NewSouth Virginia Common Stock").
At the Effective Date, the certificates which immediately
prior to the Effective Date represented shares of NewSouth
Delaware Common Stock were deemed for all purposes to represent
the same number of shares of NewSouth Virginia Common Stock.
NewSouth Virginia, as a result of the Reincorporation, is the
successor issuer of NewSouth Delaware.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
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Listed below are the financial statements and exhibits
filed as a part of this report.
(a) Financial Statements of Business Acquired.
Independent Auditors' Report *
Consolidated Statements of Financial Condition
as of December 31, 1998 (unaudited) and September
30, 1998 and 1997 *
Consolidated Statements of Operations for the
Three Months Ended December 31, 1998 and 1997
(unaudited) and for the Years Ended September 30,
1998, 1997 and 1996 *
Consolidated Statements of Stockholders' Equity
for the Three Months December 31, 1998 (unaudited)
and the for the Years Ended September 30, 1998,
1997 and 1996 *
Consolidated Statements of Cash Flows for the
Three Months Ended December 31, 1998 and 1997
(unaudited) and for the Years Ended September 30,
1998, 1997 and 1996 *
Notes to Consolidated Financial Statements *
________________
* The financial information of the business acquired,
NewSouth Delaware, has been previously filed by
NewSouth Delaware in its Annual Report on Form 10-K
for the year ended September 30, 1998 and in its
Quarterly Report on Form 10-Q for the quarter ended
December 31, 1998 and are hereby incorporated by
reference to such reports.
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Prior to the consummation of the Reincorporation, the
Company did not have any significant assets or liabilities.
Accordingly no financial statements of the Company are
presented.
(b) Pro forma consolidated financial statements of NewSouth
Virginia would reflect no material differences from the
consolidated financial statements of NewSouth Delaware for
the periods presented in Item 7(a) above and thus are not
included.
(c) The following exhibits are filed with this Report:
Number Description
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2 Plan of Reorganization and Agreement and Plan of
Merger
3.1 Articles of Incorporation of NewSouth Virginia
3.2 Bylaws of NewSouth Virginia
4 Form of Common Stock Certificate of NewSouth
Virginia
99 Description of New South Virginia Capital Stock
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
NewSouth Bancorp, Inc.
(Registrant)
Date: March 29, 1999 By: /s/ Thomas A. Vann
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Thomas A. Vann
President
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PLAN OF REORGANIZATION AND AGREEMENT AND PLAN OF MERGER
This Plan of Reorganization and Agreement of Merger
(hereinafter called the "Merger Agreement") is made as of
January 11, 1999, by and between NewSouth Bancorp, Inc., a
Delaware corporation ("NewSouth Delaware") and NewSouth Bancorp,
Inc., a Virginia corporation ("NewSouth Virginia"). NewSouth
Delaware and/or NewSouth Virginia, when reference is made to the
entity irrespective of the state of incorporation, is sometimes
herein referred to as the "Company."
WITNESSETH:
WHEREAS, NewSouth Delaware is a corporation duly organized
and existing under the laws of the State of Delaware;
WHEREAS, NewSouth Virginia is a corporation duly organized
and existing under the laws of the Commonwealth of Virginia;
WHEREAS, as of the date of this Merger Agreement, NewSouth
Delaware has authority to issue 8,000,000 shares of common
stock, par value $.01 per share, of which 4,040,844 shares are
issued and outstanding; and 1,000,000 shares of preferred stock,
par value $.01 per share, none of which are issued or outstand-
ing;
WHEREAS, as of the date of this Merger Agreement, NewSouth
Virginia has authority to issue 8,000,000 shares of common
stock, par value $.01 per share, of which 100 shares are issued
and outstanding and owned by NewSouth Delaware; and 1,000,000
shares of preferred stock, par value $.01 per share, none of
which are issued or outstanding;
WHEREAS, the respective Boards of Directors of NewSouth
Delaware and NewSouth Virginia have determined that, for the
purpose of effecting the reincorporation of NewSouth Delaware in
the Commonwealth of Virginia, it is advisable and to their
advantage and the advantage of their respective stockholders
that NewSouth Delaware merge with and into NewSouth Virginia
upon the terms and conditions herein provided; and
WHEREAS, the respective Boards of Directors of NewSouth
Delaware and NewSouth Virginia have approved this Merger
Agreement and have directed that this Merger Agreement be
submitted to the vote of their respective stockholders.<PAGE>
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AGREEMENT
NOW, THEREFORE, the parties do hereby adopt the plan of
reorganization encompassed by this Merger Agreement and do
hereby agree that NewSouth Delaware shall merge with and into
NewSouth Virginia on the following terms, conditions and other
provisions:
I. TERMS AND CONDITIONS
1.1 Merger. Subject to approval of the respective
stockholders of NewSouth Delaware and NewSouth Vifginia and the
receipt of all required regulatory approvals, NewSouth Delaware
shall be merged with and into NewSouth Virginia (the "Merger"),
and NewSouth Virginia shall be the surviving corporation,
effective upon the date when this Merger Agreement is made
effective in accordance with applicable law (the "Effective
Date").
1.2 Succession. Upon the Effective Date, NewSouth Virginia
shall succeed to all of the rights, privileges, powers and
property of NewSouth Delaware in the manner of and as more fully
set forth in Section 13.1-721 of the Virginia Stock Corporation
Act.
1.3 Common Stock of NewSouth Delaware. Upon the Effective
Date, by virtue of the Merger and without any action on the part
of the holder thereof, each share of common stock, par value
$.01 per share, of NewSouth Delaware outstanding immediately
prior thereto shall be changed and converted into one fully paid
and non-assessable share of the common stock of NewSouth
Virginia, par value $.01 per share.
1.4 Common Stock of NewSouth Virginia. Upon the Effective
Date, by virtue of the Merger and without any action on the part
of the holder thereof, the 100 shares of common stock, par value
$.01 per share, of NewSouth Virginia outstanding immediately
prior thereto shall be canceled and returned to the status of
authorized but unissued shares.
1.5 Stock Certificates. Upon and after the Effective Date,
all of the outstanding certificates which prior to that time
represented shares of common stock, par value $.01 per share, of
NewSouth Delaware shall be deemed for all purposes to evidence
ownership of and to represent the shares of common stock, par
value $.01 per share, of NewSouth Virginia into which the shares
of NewSouth Delaware represented by such certificates have been
converted as herein provided. The registered owner on the books
and records of NewSouth Virginia or its transfer agent of any
such outstanding stock certificate shall, until such certificate
shall have been surrendered for transfer or conversion or
otherwise accounted for to NewSouth Virginia or its transfer
agent, have and be entitled to exercise any voting and other
rights with respect to, and to receive any dividend and other
distributions upon, the shares of NewSouth Virginia evidenced by
such outstanding certificate as above provided.
1.6 Options. Upon the Effective Date, NewSouth Virginia
will assume and continue NewSouth Delaware's 1997 Stock Option
Plan, and the outstanding and unexercised portions of all
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options and rights to buy common stock, par value $.01 per
share, of NewSouth Delaware shall become options or rights for
the same number of shares of common stock, par value $.01 per
share, of NewSouth Virginia, with no other changes in the terms
and conditions of such options or rights, including exercise
prices, and effective upon the Effective Date, NewSouth Virginia
hereby assumes the outstanding and unexercised portions of such
options and rights and the obligations of NewSouth Delaware with
respect thereto.
1.7 Restricted Stock Awards. Upon the Effective Date,
NewSouth Virginia will assume and continue NewSouth Delaware's
Management Recognition Plan, and awarded but unvested shares of
restricted common stock, par value $.01 per share, of NewSouth
Delaware shall become the same number of shares of awarded but
unvested restricted common stock, par value $.01 per share, of
NewSouth Virginia, with no other changes in the terms and
conditions of such restricted stock awards, including vesting
schedules and rights to receive dividend payments, and effective
upon the Effective Date, NewSouth Virginia hereby assumes the
obligations of NewSouth Delaware with respect to the Management
Recognition Plan and awards made by NewSouth Delaware there-
under.
1.8 Other Employee Benefit Plans. Upon the Effective Date,
NewSouth Virginia will assume all obligations of NewSouth
Delaware under any and all employee benefit plans in effect as
of the Effective Date or with respect to which employee rights
or accrued benefits are outstanding as of the Effective Date.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
2.1 Articles of Incorporation and Bylaws. The Articles of
Incorporation of NewSouth Virginia in effect on the Effective
Date (a copy of which is attached hereto and incorporated herein
by this reference), shall continue to be the Articles of
Incorporation of NewSouth Virginia. The Bylaws of NewSouth
Virginia in effect on the Effective Date shall continue to be
the Bylaws of NewSouth Virginia.
2.2 Directors. The directors of NewSouth Virginia
immediately preceding the Effective Date shall remain the
directors of NewSouth Virginia on and after the Effective Date.
Such directors of NewSouth Virginia shall hold office in the
classes and for the terms as in effect immediately prior to the
Effective Date, and until their successors are elected and
qualified or their prior resignation, removal or death.
2.3 Officers. The officers of NewSouth Virginia shall
remain the officers of NewSouth Virginia upon the Effective Date
and shall serve until their successors are elected and qualified
or their prior resignation, removal or death.
III. MISCELLANEOUS
3.1 Further Assurances. From time to time, as and when
required by NewSouth Virginia or by its successors and assigns,
there shall be executed and delivered on behalf of NewSouth
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Delaware such deeds and other instruments, and there shall be
taken or caused to be taken by it such further and other action
as shall be appropriate or necessary in order to vest or
perfect, or to conform of record or otherwise, in NewSouth
Virginia the title to and possession of all the property,
interests, assets, rights, privileges, immunities, powers,
franchises, and authority of NewSouth Delaware, and otherwise to
carry out the purposes of this Merger Agreement, and the
officers and directors of NewSouth Virginia are fully authorized
in the name of and on behalf of NewSouth Delaware or otherwise
to take any and all such action and to execute and deliver any
and all such deeds and other instruments.
3.2 Amendment. At any time before or after approval by the
stockholders of NewSouth Delaware, this Merger Agreement may be
amended in any manner (except that Section 1.3, 1.4 and 2.1 and
any of the other principal terms hereof as set forth in Section
251(d) of the Delaware General Corporation Law may not be
amended without the approval of the stockholders of NewSouth
Delaware) as may be determined in the judgment of the respective
Boards of Directors of NewSouth Delaware and NewSouth Virginia
to be necessary, desirable or expedient in order to clarify the
intention of the parties hereto or to effect or facilitate the
purposes and intent of this Merger Agreement; provided, however,
that the Merger Agreement may not be amended after stockholder
approval if such amendment would (i) alter or change the amount
or kind of shares or other consideration to be received by
stockholders in the Merger; (ii) alter or change any term of the
Articles of Incorporation of NewSouth Virginia; (iii) alter or
change any of the terms and conditions of the Merger Agreement
if such alteration or change would adversely affect the
stockholders; or (iv) otherwise violate applicable law.
3.3 Abandonment. At any time before the Effective Date,
this Merger Agreement may be terminated and the Merger may be
abandoned by the Board of Directors of either NewSouth Delaware
or NewSouth Virginia or both, notwithstanding the approval of
this Merger Agreement by the stockholders of NewSouth Delaware.
3.4 Counterparts. In order to facilitate the filing and
recording of this Merger Agreement, the same may be executed in
any number of counterparts, each of which shall be deemed to be
an original.
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IN WITNESS WHEREOF, this Merger Agreement, having first
been duly approved by the Boards of Directors of NewSouth
Delaware and NewSouth Virginia, is hereby executed on behalf of
each said corporation and attested by their respective officers
thereunto duly authorized.
NEWSOUTH BANCORP, INC.,
a Delaware corporation
Corporate Seal By:/s/ Thomas A. Vann
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Thomas A. Vann
Attest:
/s/ William L. Wall
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William L. Wall
Secretary
NEWSOUTH BANCORP, INC.,
a Virginia corporation
Corporate Seal By:/s/ Thomas A. Vann
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Thomas A. Vann
Attest:
/s/ William L. Wall
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William L. Wall
Secretary
5
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ARTICLES OF INCORPORATION
OF
NEWSOUTH BANCORP, INC.
The undersigned, pursuant to Chapter 9 of Title 13.1 of the
Code of Virginia, states as follows:
ARTICLE I
NAME
The name of the corporation is NewSouth Bancorp, Inc.
(herein the "Corporation").
ARTICLE II
POWERS
The purpose for which the Corporation is organized is to
act as a financial institution holding company and to transact
all other lawful business for which corporations may be
incorporated pursuant to the Virginia Stock Corporation Act.
The Corporation shall have all the powers of a corporation
organized under the Virginia Stock Corporation Act.
ARTICLE III
RESIDENT AGENT
The mailing address of the Corporation's initial registered
office in the Commonwealth of Virginia is 5511 Staples Mill
Road, Richmond, Virginia 23228, County of Henrico, and the name
of the Corporation's initial registered agent at that office is
Edward R. Parker, Esquire. The initial registered agent is a
resident of the Commonwealth of Virginia and a member of the
Virginia State Bar and has a business office identical with the
registered office.
ARTICLE IV
INITIAL DIRECTORS
The number of directors constituting the initial board of
directors of the Corporation is seven, which number may be
increased or decreased pursuant to the bylaws of the Corporation
and Article X of these Articles, but shall never be less than
the minimum number permitted by the Virginia Stock Corporation
Act now or hereafter in force. The names and addresses of the
persons who are to serve as directors until the first annual
meeting and until their successors are elected and qualified,
are:
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Name Address
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Edmund T. Buckman, Jr. 1026 Summit Avenue
Washington, NC 27889
Frederick N. Holscher 46 Harbor Road
Washington, NC 27889
Frederick H. Howdy 67 Katherine Drive
Washington, NC 27889
Linley H. Gibbs, Jr. 222 Magnolia Drive
Washington, NC 27889
Thomas A. Vann 113 Palmer Place
Washington, NC 27889
Charles E. Parker, Jr. 1061 Lucerne Way
New Bern, NC 28560
Marshall T. Singleton 776 Mimosa Shores Road
Washington, NC 27889
ARTICLE V
CAPITAL STOCK
The aggregate number of shares of all classes of capital
stock which the Corporation has authority to issue is 9,000,000,
of which 8,000,000 are to be shares of common stock, $.01 par
value per share, and of which 1,000,000 are to be shares of
serial preferred stock, $.01 par value per share. The shares
may be issued by the Corporation from time to time as approved
by the board of directors of the Corporation without the
approval of the stockholders except as otherwise provided in
this Article V or to the extent that such approval is required
by governing law, rule or regulation. The consideration for the
issuance of the shares shall be paid to or received by the
Corporation in full before their issuance and shall not be less
than the par value per share. Shares may be issued for consi-
deration consisting of any tangible property or benefit to the
Corporation, including cash, promissory notes, services per-
formed, contracts for services to be performed, or other
securities of the Corporation. A good faith determination by
the board of directors that the consideration received or to be
received for the shares to be issued is adequate is conclusive
insofar as the adequacy of consideration relates to whether the
shares are validly issued, fully paid and nonassessable. When
the board of directors has made such a determination and the
Corporation has received the consideration, the shares issued
therefor are fully paid and nonassessable.
A description of the different classes and series (if any)
of the Corporation's capital stock, and a statement of the
relative, designations, preferences, limitations and relative
rights of the shares of each class and series (if any) of
capital stock, and the qualifications, limitations or
restrictions thereof, are as follows:
A. Common Stock. Except as provided in these Articles,
the holders of the common stock shall exclusively possess all
voting power. Each holder of shares of common stock shall be
entitled to one vote for each share held by such holder, except
as otherwise expressly set forth in these Articles.
2
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Whenever there shall have been paid, or declared and set
aside for payment, to the holders of the outstanding shares of
any class of stock having preference over the common stock as to
the payment of dividends, the full amount of dividends and
sinking fund or retirement fund or other retirement payments, if
any, to which such holders are respectively entitled in
preference to the common stock, then dividends may be paid on
the common stock, and on any class or series of stock entitled
to participate therewith as to dividends, out of any assets
legally available for the payment of dividends, but only when
and as declared by the board of directors of the Corporation.
In the event of any liquidation, dissolution or winding up
of the Corporation, after there shall have been paid, or
declared and set aside for payment, to the holders of the
outstanding shares of any class having preference over the
common stock in any such event, the full preferential amounts to
which they are respectively entitled, the holders of the common
stock and of any class or series of stock entitled to partici-
pate therewith, in whole or in part, as to distribution of
assets shall be entitled, after payment or provision for payment
of all debts and liabilities of the Corporation, to receive the
remaining assets of the Corporation available for distribution,
in cash or in kind.
Each share of common stock shall have the same relative
powers, preferences and rights as, and shall be identical in all
respects with, all the other shares of common stock of the
Corporation, except as otherwise expressly set forth in these
Articles.
B. Serial Preferred Stock. Except as provided in these
Articles, the board of directors of the Corporation is
authorized, from time to time by adoption of an amendment to
these Articles, to provide for the issuance of one or more
classes of serial preferred stock in series and to fix and state
the powers, designations, preferences and relative, participat-
ing, optional or other special rights of the shares of each such
class or series, and the qualifications, limitations or restric-
tions thereof, including, but not limited to determination of
any of the following:
1. the distinctive designation and the number of shares
constituting such class or series;
2. the dividend rates or the amount of dividends to be
paid on the shares of such class or series, whether
dividends shall be cumulative and, if so, from which
date or dates, the payment date or dates for divi-
dends, and the participating or other special rights,
if any, with respect to dividends;
3. the voting powers, full or limited, if any, of the
shares of such class or series;
4. whether the shares of such class or series shall be
redeemable and, if so, the price or prices at which,
and the terms and conditions upon which such shares
may be redeemed;
5. the amount or amounts payable upon the shares of such
class or series in the event of voluntary or involun-
tary liquidation, dissolution or winding up of the
Corporation;
6. whether the shares of such class or series shall be
entitled to the benefits of a sinking or retirement
fund to be applied to the purchase or redemption of
such shares, and, if so entitled, the amount of such
fund and the manner of its application, including the
price or prices at which such shares may be redeemed
or purchased through the application of such funds;
7. whether the shares of such class or series shall be
convertible into, or exchangeable for, shares of any
other class or classes or any other series of the same
or any other class or classes of stock of the Corpora-
tion and, if so convertible or exchangeable, the con-
version price or prices, or the rate or rates of
exchange, and the adjustments thereof, if any, at
which such conversion or exchange may be made, and any
other terms and conditions of such conversion or
exchange;
8. the subscription or purchase price and form of con-
sideration for which the shares of such class or
series shall be issued;
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9. whether the shares of such class or series which are
redeemed or converted shall have the status of
authorized but unissued shares of serial preferred
stock and whether such shares may be reissued as
shares of the same or any other class or series; and
10. any other preferences, limitations, relative rights,
restrictions, including restrictions on transferabili-
ty, and qualifications of shares of such class or
series, not inconsistent with law and these Articles.
Each share of each series of serial preferred stock shall
have the same relative powers, preferences, limitations and
rights as, and shall be identical in all respects with, all the
other shares of preferred stock of the same series, except as
otherwise expressly set forth in these Articles.
ARTICLE VI
PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of
stock or of options, warrants or other rights to purchase shares
of any class or series of stock or of other securities of the
Corporation shall have any preemptive right to purchase or
subscribe for any unissued stock of any class or series, or any
unissued bonds, certificates of indebtedness, debentures or
other securities convertible into or exchangeable for stock of
any class or series or carrying any right to purchase stock of
any class or series; but any such unissued stock, bonds,
certificates or indebtedness, debentures or other securities
convertible into or exchangeable for stock or carrying any right
to purchase stock may be issued pursuant to resolution of the
board of directors of the Corporation to such persons, firms,
corporations or associations, whether or not holders thereof,
and upon such terms as may be deemed advisable by the board of
directors in the exercise of its sole discretion.
ARTICLE VII
REPURCHASE OF SHARES
The Corporation may from time to time, pursuant to authori-
zation by the board of directors of the Corporation and without
action by the stockholders, purchase or otherwise acquire shares
of any class, bonds, debentures, notes, scrip, warrants, obliga-
tions, evidences of indebtedness, or other securities of the
Corporation in such manner, upon such terms, and in such amounts
as the board of directors shall determine; subject, however, to
such limitations or restrictions, if any, as are contained in
the express terms of any class of shares of the Corporation
outstanding at the time of the purchase or acquisition in
question or as are imposed by law.
ARTICLE VIII
MEETINGS OF STOCKHOLDERS; CUMULATIVE VOTING
A. Any action required to be taken or which may be taken
at any meeting of stockholders of the Corporation may be taken
without a meeting if a consent in writing setting forth the
action so taken shall be signed by all of the stockholders
entitled to vote with respect to the subject matter thereof.
B. Special meetings of the stockholders of the
Corporation for any purpose or purposes may be called at any
time by the board of directors of the Corporation or by a
committee of the board of directors which has been duly
designated by the board of directors and whose powers and
authorities, as provided in a resolution of the board of
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directors or in the bylaws of the Corporation, include the power
and authority to call such meetings, but special meetings
may not be called by any other person or persons.
C. There shall be no cumulative voting by stockholders of
any class or series in the election of directors of the
Corporation.
D. Meetings of stockholders may be held at any place
within the United States as the bylaws may provide.
E. One-third of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than
one-third of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the
meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have
been transacted at the meeting as originally notified. The
stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
ARTICLE IX
NOTICE FOR NOMINATIONS AND PROPOSALS
A. Nominations for the election of directors and
proposals for any new business to be taken up at any annual or
special meeting of stockholders may be made by the board of
directors of the Corporation or by any stockholder of the
Corporation entitled to vote generally in the election of
directors. In order for a stockholder of the Corporation to
make any such nominations and/or proposals, he or she shall give
notice thereof in writing, delivered or mailed by first class
United States mail, postage prepaid, to the secretary of the
Corporation not less than 30 days nor more than 60 days prior to
any such meeting; provided, however, that if less than 40 days'
notice of the meeting is given to stockholders, such written
notice shall be delivered or mailed, as prescribed, to the
secretary of the Corporation not later than the close of
business on the tenth day following the day on which notice of
the meeting was mailed to stockholders. Each such notice given
by a stockholder with respect to nominations for the election
of directors shall set forth (i) the name, age, business address
and, if known, residence address of each nominee proposed in
such notice, (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of stock of the
Corporation which are beneficially owned by each such nominee.
In addition, the stockholder making such nomination shall
promptly provide any other information reasonably requested by
the Corporation.
B. Each such notice given by a stockholder to the
secretary with respect to business proposals to bring before a
meeting shall set forth in writing as to each matter: (i) a
brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the
meeting; (ii) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business;
(iii) the class and number of shares of the Corporation which
are beneficially owned by the stockholder; and (iv) any
material interest of the stockholder in such business.
Notwithstanding anything in these Articles to the contrary, no
business shall be conducted at the meeting except in accordance
with the procedures set forth in this Article IX.
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C. The chairman of the annual or special meeting of
stockholders may, if the facts warrant, determine and declare to
such meeting that a nomination or proposal was not made in
accordance with the foregoing procedure, and, if he should so
determine, he shall so declare to the meeting and the defective
nomination or proposal shall be disregarded and laid over for
action at the next succeeding adjourned, special or annual
meeting of the stockholders taking place thirty days or more
thereafter. This provision shall not require the holding of any
adjourned or special meeting of stockholders for the purpose of
considering such defective nomination or proposal.
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ARTICLE X
DIRECTORS
A. Number; Vacancies. The number of directors of the
Corporation shall be such number, not less than five nor more
than fifteen (exclusive of directors, if any, to be elected by
holders of preferred stock of the Corporation, voting separately
as a class), as shall be set forth from time to time in the
bylaws, provided that no action shall be taken to decrease or
increase the number of directors unless at least two-thirds of
the directors then in office shall concur in said action, and
further provided that no increase or decrease in the number of
directors shall affect the tenure of office of any director.
Subject to the rights of the holders of any class of preferred
stock then outstanding, newly created directorships resulting
from any increase in the authorized number of directors or any
vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office
or other cause shall be filled by a majority vote of the
stockholders or by a two-thirds vote of the directors then in
office, whether or not a quorum. A director so chosen by the
stockholders shall hold office for the balance of the term then
remaining. A director so chosen by the remaining directors
shall hold office until the next annual meeting of stockholders
at which directors are elected and until his successor is
elected and qualifies, at which time the stockholders shall
elect a director to hold office for the balance of the term then
remaining.
B. Classified Board. At the first meeting of
stockholders of the Corporation at which directors are elected,
the board of directors of the Corporation shall be divided into
three classes as nearly equal in number as the then total number
of directors constituting the entire board of directors shall
permit, which classes shall be designated Class I, Class II and
Class III. At such annual meeting of stockholders, directors
assigned to Class I shall be elected to hold office for a term
expiring at the first succeeding annual meeting of stockholders
thereafter, directors assigned to Class II shall be elected to
hold office for a term expiring at the second succeeding annual
meeting thereafter, and directors assigned to Class III shall be
elected to hold office for a term expiring at the third
succeeding annual meeting thereafter. Thereafter, at each
succeeding annual meeting, directors of each class shall be
elected for three year terms. Notwithstanding the foregoing, a
director whose term shall expire at any annual meeting shall
continue to serve until such time as his successor shall have
been duly elected and shall have qualified unless his position
on the board of directors shall have been abolished by action
taken to reduce the size of the board of directors prior to said
meeting.
Should the number of directors of the Corporation be
reduced, the directorship(s) eliminated shall be allocated among
classes as appropriate so that the number of directors in each
class is as specified in the immediately preceding paragraph.
The board of directors shall designate, by the name of the
incumbent(s), the position(s) to be abolished. Notwithstanding
the foregoing, no decrease in the number of directors shall have
the effect of shortening the term of any incumbent director.
Should the number of directors of the Corporation be increased,
the additional directorships shall be allocated among classes as
appropriate so that the number of directors in each class is as
specified in the immediately preceding paragraph.
Whenever the holders of any one or more series of preferred
stock of the Corporation shall have the right, voting separately
as a class, to elect one or more directors of the Corporation,
the board of directors shall consist of said directors so
elected in addition to the number of directors fixed as provided
above in this Article X. Notwithstanding the foregoing, and
except as otherwise may be required by law or by the terms and
provisions of the preferred stock of the Corporation, whenever
the holders of any one or more series of preferred stock of the
Corporation shall have the right, voting separately as a class,
to elect one or more directors of the Corporation, the terms of
the director or directors elected by such holders shall expire
at the next succeeding annual meeting of stockholders.
6
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ARTICLE XI
REMOVAL OF DIRECTORS
Notwithstanding any other provision of these Articles or
the bylaws of the Corporation, any director or the entire board
of directors of the Corporation may be removed at any time, but
only for cause and only by the affirmative vote of the holders
of at least 80% of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a
meeting of the stockholders called for that purpose.
Notwithstanding the foregoing, whenever the holders of any one
or more series of preferred stock of the Corporation shall have
the right, voting separately as a class, to elect one or more
directors of the Corporation, the preceding provisions of this
Article XI shall not apply with respect to the director or
directors elected by such holders of preferred stock.
ARTICLE XII
ACQUISITION OF CAPITAL STOCK
A. Three-Year Prohibition. For a period of three years
from the effective date of the completion of the conversion of
Home Savings Bank, SSB, Washington, North Carolina, from mutual
to stock form (which entity or its successor shall become a
wholly owned subsidiary of the Corporation upon such
conversion), no person shall directly or indirectly offer to
acquire or acquire the beneficial ownership of more than 10% of
any class of equity security of the Corporation, unless such
offer or acquisition shall have been approved in advance by a
two-thirds vote of the Continuing Directors, as defined in
Article XIII. In addition, for period of three years from the
completion of the conversion of Home Savings Bank, SSB from
mutual to stock form (which entity or its successor shall become
a wholly owned subsidiary of the Corporation upon such conver-
sion), and notwithstanding any provision to the contrary in
these Articles or in the bylaws of the Corporation, where any
person directly or indirectly acquires beneficial ownership of
more than 10% of any class of equity security of the Corporation
in violation of this Article XII, the securities beneficially
owned in excess of 10% shall not be counted as shares entitled
to vote, shall not be voted by any person or counted as voting
shares in connection with any matter submitted to the
stockholders for a vote, and shall not be counted as outstanding
for purposes of determining a quorum or the affirmative vote
necessary to approve any matter submitted to the stockholders
for a vote.
B. Prohibition After Three Years. If at any time after
three years from the effective date of the completion of the
conversion of Home Savings Bank, SSB from mutual to stock form
(which entity or its successor shall become a wholly owned
subsidiary of the Corporation upon such conversion), any person
shall acquire the beneficial ownership of more than 10% of any
class of equity security of the Corporation without the prior
approval by a two-thirds vote of the Continuing Directors, as
defined in Article XIII hereof, then the record holders of
voting stock of the Corporation beneficially owned by such
acquiring person shall have only the voting rights set forth in
this paragraph B on any matter requiring their vote or consent.
With respect to each vote in excess of 10% of the voting power
of the outstanding shares of voting stock of the Corporation
which such record holders would otherwise be entitled to cast
without giving effect to this paragraph B, such record holders
in the aggregate shall be entitled to cast only one-hundredth
(1/100) of a vote, and the aggregate voting power of such record
holders, so limited for all shares of voting stock of the
Corporation beneficially owned by such acquiring person, shall
be allocated proportionately among such record holders. For
each such record holder, this allocation shall be accomplished
by multiplying the aggregate voting power, prior to imposing the
limitations of this paragraph B, of the outstanding shares of
voting stock of the Corporation beneficially owned by such
record holder by a fraction whose numerator is the number of
votes equal to 10% of the shares of voting stock of the
Corporation and whose denominator is the total number of votes
represented by the shares of voting stock of the Corporation
that are beneficially owned by such acquiring person; any share
held by such record holder in excess of the allocated amount as
determined in accordance with the previous clause shall be
entitled to cast one-hundredth of a vote. A person who is a
record owner of shares of voting stock of the Corporation that
are
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beneficially owned simultaneously by more than one person shall
have, with respect to such shares, the right to cast the least
number of votes that such person would be entitled to cast under
this paragraph B by virtue of such shares being so beneficially
owned by any of such acquiring persons.
C. Definitions. The term "person" means an individual,
a group acting in concert, a corporation, a partnership, an
association, a joint stock company, a trust, an unincorporated
organization or similar company, a syndicate or any other group
acting in concert formed for the purpose of acquiring, holding,
voting or disposing of securities of the Corporation. The term
"acquire" includes every type of acquisition, whether effected
by purchase, exchange, operation of law or otherwise. The term
group "acting in concert" includes (a) knowing participation in
a joint activity or conscious parallel action towards a common
goal whether or not pursuant to an express agreement, and (b) a
combination or pooling of voting or other interest in the
Corporation's outstanding shares for a common purpose, pursuant
to any contract, understanding, relationship, agreement or other
arrangement, whether written or otherwise. The term "beneficial
ownership" shall have the meaning defined in Rule 13d-3 of the
General Rules and Regulations under the Securities and Exchange
Act of 1934, as in effect on the date of filing of these
Articles.
D. Exclusion for Employee Benefit Plans, Directors,
Officers, Employees and Certain Proxies. The restrictions
contained in this Article XII shall not apply to (i) any
underwriter or member of an underwriting or selling group
involving a public sale or resale of securities of the
Corporation or a subsidiary thereof; provided, however, that
upon completion of the sale or resale of such securities, no
such underwriter or member of such selling group is a beneficial
owner of more than 10% of any class of equity security of the
Corporation, (ii) any proxy granted to one or more Continuing
Directors, as defined in Article XIII, by a stockholder of the
Corporation or (iii) any employee benefit plans of the
Corporation. In addition, the Continuing Directors, as defined
in Article XIII, the officers and employees of the Corporation
and its subsidiaries, the directors of subsidiaries of the
Corporation, the employee benefit plans of the Corporation and
its subsidiaries, entities organized or established by the
Corporation or any subsidiary thereof pursuant to the terms of
such plans and trustees and fiduciaries with respect to such
plans acting in such capacity shall not be deemed to be a group
with respect to their beneficial ownership of voting stock of
the Corporation solely by virtue of their being directors,
officers or employees of the Corporation or a subsidiary thereof
or by virtue of the Continuing Directors, as defined in Article
XIII, the officers and employees of the Corporation and its
subsidiaries and the directors of subsidiaries of the
Corporation being fiduciaries or beneficiaries of an employee
benefit plan of the Corporation or a subsidiary of the
Corporation. Notwithstanding the foregoing, no director,
officer or employee of the Corporation or any of its
subsidiaries or group of any of them shall be exempt from the
provisions of this Article XII should any such person or group
become a beneficial owner of more than 10% of any class of
equity security of the Corporation.
E. Determinations. A majority of the Continuing
Directors, as defined in Article XIII, shall have the power to
construe and apply the provisions of this Article XII and to
make all determinations necessary or desirable to implement such
provisions, including but not limited to matters with respect to
(a) the number of shares beneficially owned by any person, (b)
whether a person has an agreement, arrangement or understanding
with another as to the matters referred to in the definition of
beneficial ownership, (c) the application of any other
definition or operative provision of this Article XII to the
given facts or (d) any other matter relating to the applica-
bility or effect of this Article XII. Any constructions,
applications, or determinations made by the Continuing Directors
pursuant to this Article XII in good faith and on the basis of
such information and assistance as was then reasonably available
for such purpose shall be conclusive and binding upon the
Corporation and its stockholders.
ARTICLE XIII
APPROVAL OF CERTAIN BUSINESS COMBINATIONS
In addition to any voting requirements under the Virginia
Stock Corporation Act, the stockholder vote required to approve
Business Combinations (as hereinafter defined) shall be as set
forth in this section.
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A. (1) Except as otherwise expressly provided in this
Article XIII, the affirmative vote of the holders of (i) at
least 80% of the outstanding shares entitled to vote thereon
(and, if any class or series of shares is entitled to vote
thereon separately, the affirmative vote of the holders of at
least 80% of the outstanding shares of each such class or
series), and (ii) at least a majority of the outstanding shares
entitled to vote thereon, not including shares deemed
beneficially owned by a Related Person (as hereinafter defined),
shall be required in order to authorize any of the following:
(a) any merger or consolidation of the
Corporation with or into a Related Person (as
hereinafter defined);
(b) any sale, lease, exchange, transfer or
other disposition, including without limitation, a
mortgage, or any other capital device, of all or any
Substantial Part (as hereinafter defined) of the
assets of the Corporation (including without
limitation any voting securities of a subsidiary) or
of a subsidiary, to a Related Person;
(c) any merger or consolidation of a Related
Person with or into the Corporation or a subsidiary of
the Corporation;
(d) any sale, lease, exchange, transfer or
other disposition of all or any Substantial Part of
the assets of a Related Person to the Corporation or
a subsidiary of the Corporation;
(e) the issuance of any securities of the
Corporation or a subsidiary of the Corporation to a
Related Person;
(f) the acquisition by the Corporation or a
subsidiary of the Corporation of any securities of a
Related Person;
(g) any reclassification of the common stock
of the Corporation, or any recapitalization involving
the common stock of the Corporation; and
(h) any agreement, contract or other
arrangement providing for any of the transactions
described in this Article.
(2) Such affirmative vote shall be required notwith-
standing any other provision of these Articles, any pro-
vision of law, or any agreement with any regulatory agency
or national securities exchange which might otherwise
permit a lesser vote or no vote.
(3) The term "Business Combination" as used in this
Article XIII shall mean any transaction which is referred
to in any one or more of subparagraphs A(1)(a) through (h)
above.
B. The provisions of paragraph A shall not be applicable
to any particular Business Combination, and such Business
Combination shall require only such affirmative vote as is
required by any other provision of these Articles, any provision
of law, or any agreement with any regulatory agency or national
securities exchange, if the Business Combination shall have been
approved by a two-thirds vote of the Continuing Directors (as
hereinafter defined); provided, however, that such approval
shall only be effective if obtained at a meeting at which a
Continuing Director Quorum (as hereinafter defined) is present.
C. For the purposes of this Article XIII the following
definitions apply:
(1) The term "Related Person" shall mean and include
(a) any individual, corporation, partnership or other
person or entity which together with its "affiliates" (as
that term is defined in Rule 12b-2
9<PAGE>
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of the General Rules and Regulations under the Securities
Exchange Act of 1934), "beneficially owns" (as that term is
defined in Rule 13d-3 of the General Rules and Regulations under
the Securities Exchange Act of 1934) in the aggregate 10% or
more of the outstanding shares of the common stock of the
Corporation; and (b) any "affiliate" (as that term is defined in
Rule 12b-2 under the Securities Exchange Act of 1934) of any
such individual, corporation, partnership or other person or
entity. Without limitation, any shares of the common stock
of the Corporation which any Related Person has the right to
acquire pursuant to any agreement, or upon exercise or
conversion rights, warrants or options, or otherwise, shall be
deemed "beneficially owned" by such Related Person.
(2) The term "Substantial Part" shall mean more than
25 percent of the total assets of the Corporation, as of
the end of its most recent fiscal year ending prior to the
time the determination is made.
(3) The term "Continuing Director" shall mean any
member of the board of directors of the Corporation who is
unaffiliated with the Related Person and was a member of the
the board prior to the time that the Related Person became a
a Related Person, and any successor of a Continuing Directors
who is unaffiliated with the Related Person and is recommended
recommended to succeed a Continuing Director by a majority of
Continuing Directors then on the board.
(4) The term "Continuing Director Quorum" shall mean
two-thirds of the Continuing Directors capable of exercising the
powers conferred on them.
ARTICLE XIV
EVALUATION OF BUSINESS COMBINATIONS
In connection with the exercise of its judgment in deter-
mining what is in the best interests of the Corporation and
of the stockholders, when evaluating a Business Combination (as
defined in Article XIII hereof) or a tender or exchange offer,
the board of directors of the Corporation may, in addition to
considering the adequacy of the amount to be paid in connection
with any such transaction, consider all of the following factors
and any other factors which it deems relevant; (i) the social
and economic effects of the transaction on the Corporation and
its subsidiaries, employees, depositors, loan and other
customers, creditors and other elements of the communities in
which the Corporation and its subsidiaries operate or are
located; (ii) the business and financial condition and earnings
prospects of the acquiring person or entity, including, but not
limited to, debt service and other existing financial
obligations, financial obligations to be incurred in connection
with the acquisition, and other likely financial obligations of
the acquiring person or entity, and the possible effect of such
conditions upon the Corporation and its subsidiaries and the
other elements of the communities in which the Corporation and
its subsidiaries operate or are located; and (iii) the
competence, experience, and integrity of the acquiring person or
entity and its or their management.
ARTICLE XV
LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY
An officer or director of the Corporation, as such, shall
not be liable to the Corporation or its stockholders for money
damages in any proceeding brought by or in the right of the
Corporation or brought by or on behalf of stockholders of the
Corporation, except to the extent otherwise required by Virginia
law. If Virginia law is amended or enacted after the date of
filing of these articles to further eliminate or limit the
personal liability of officers and directors, then the liability
of officers and directors of the Corporation shall be eliminated
or limited to the fullest extent permitted by Virginia law, as
so amended. Any repeal or modification of the foregoing
paragraph by the stockholders
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of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time
of such repeal or modification.
ARTICLE XVI
INDEMNIFICATION
A. The Corporation shall indemnify, to the fullest extent
permissible under the Virginia Stock Corporation Act, any
individual who is or was a director, officer, employee or agent
of the Corporation, and any individual who serves or served at
the Corporation's request as a director, officer, partner,
trustee, employee or agent of another corporation, partnership,
joint venture, trust, other enterprise or employee benefit plan,
in any proceeding in which the individual is made a party as a
result of his service in such capacity.
B. (1) Reasonable expenses incurred by any person
identified in paragraph A of this Article XVI who is a party to
a proceeding will be paid or reimbursed by the Corporation in
advance of the final disposition of the proceeding upon receipt
by the Corporation of: (i) a written statement by such person
of his good faith belief that the standard of conduct necessary
for indemnification by the Corporation as authorized in this
Article XVI has been met; and (ii) a written undertaking by or
on behalf of such person to repay the amount if it shall
ultimately be determined that the standard of conduct has not
been met.
(2) The undertaking required by subparagraph (ii) of
paragraph (1) of this paragraph B shall be an unlimited general
obligation of such person but need not be secured and may be
accepted without reference to financial ability to make the
repayment.
C. Nonexclusive. The indemnification and advance payment
of expenses provided by paragraphs A and B shall not be
exclusive of any other rights to which a person may be entitled
by law, bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
D. Continuation. The indemnification and advancement of
expenses provided by this Article XVI shall be deemed to be a
contract between the Corporation and the persons entitled to
indemnification thereunder, and any repeal or modification of
this Article XVI shall not affect any rights or obligations then
existing with respect to any state of facts then or theretofore
existing or any action, suit or proceeding theretofore or
thereafter brought based in whole or in part upon any such state
of facts. The indemnification and advance payment provided by
paragraphs A and B shall continue as to a person who has ceased
to hold a position named in paragraph A and shall inure to his
or her heirs, executors and administrators.
E. Insurance. The Corporation shall purchase and
maintain insurance on behalf of any person who holds or who has
held any position as a director or officer of the Corporation
against any liability incurred by him or her in any such
position, or arising out of his status as such, whether or not
the Corporation would have power to indemnify him or her against
such liability under paragraphs A and B.
F. Intention and Savings Clause. It is the intention of
this Article XVI to provide for indemnification to the fullest
extent permitted by the Virginia Stock Corporation Act, and this
Article XVI shall be interpreted accordingly. If this Article
XVI or any portion hereof shall be invalidated on any ground by
any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director, officer, employee, and
agent of the Corporation as to costs, charges, and expenses
(including attorneys' fees), judgments, fines, and amounts paid
in settlement with respect to any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative,
including an action by or in the right of the Corporation, to
the full extent permitted by any applicable portion of this
Article XVI that shall not have been invalidated and to the full
extent permitted by applicable law. If the Virginia Stock
Corporation Act is amended, or other Virginia law is enacted, to
permit further or additional indemnification of the
11<PAGE>
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persons defined in this Article XVI.A, then the indemnification
of such persons shall be to the fullest extent permitted by the
Virginia Stock Corporation Act, as so amended, or such other
Virginia law.
Any repeal or modification of the foregoing paragraph by
the stockholders of the Corporation shall not adversely affect
any right or protection of a director of the Corporation
existing at the time of such repeal or modification.
ARTICLE XVII
AMENDMENT OF BYLAWS
In furtherance and not in limitation of the powers
conferred by statute, the board of directors of the Corporation
is expressly authorized to adopt, repeal, alter, amend and
rescind the bylaws of the Corporation by a vote of two-thirds of
the board of directors. Notwithstanding any other provision of
these Articles or the bylaws of the Corporation (and notwith-
standing the fact that some lesser percentage may be specified
by law), the bylaws shall not be adopted, repealed, altered,
amended or rescinded by the stockholders of the Corporation
except by the vote of the holders of not less than 80% of the
outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors (considered for
this purpose as one class) cast at a meeting of the stockholders
called for that purpose (provided that notice of such proposed
adoption, repeal, alteration, amendment or rescission is
included in the notice of such meeting), or, as set forth above,
by the board of directors.
ARTICLE XVIII
AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to repeal, alter, amend
or rescind any provision contained in these Articles in the
manner now or hereafter prescribed by law, and all rights
conferred on stockholders herein are granted subject to this
reservation. Notwithstanding the foregoing, the provisions set
forth in Articles VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII
and this Article XVIII of these Articles may not be repealed,
altered, amended or rescinded in any respect unless the same is
approved by the affirmative vote of the holders of not less than
80% of the outstanding shares of capital stock of the Corpora-
tion entitled to vote generally in the election of directors
(considered for this purpose as a single class) cast at a
meeting of the stockholders called for that purpose (provided
that notice of such proposed repeal, alteration, amendment or
rescission is included in the notice of such meeting); except
that such repeal, alteration, amendment or rescission may be
made by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors (considered for
this purpose as a single class) if the same is first approved by
a majority of the Continuing Directors, as defined in Article
XIII of these Articles.
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IN WITNESS WHEREOF, I have signed these Articles and
acknowledge the same to be my act this 4th day of January, 1999.
/s/ Thomas A. Vann
-----------------------------
Thomas A. Vann, Incorporator
13
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BYLAWS
OF
NEWSOUTH BANCORP, INC.
ARTICLE I
PRINCIPAL EXECUTIVE OFFICE
The principal executive office of NewSouth Bancorp, Inc.
(herein the "Corporation") shall be at 1311 Carolina Avenue,
Washington, North Carolina 27889. The Corporation may also have
offices at such other places within or without the State of
North Carolina as the board of directors shall from time
to time determine.
ARTICLE II
STOCKHOLDERS
SECTION 1. Place of Meetings. All annual and special
meetings of stockholders shall be held at the principal
executive office of the Corporation or at such other place
within the United States as the board of directors may determine
and as designated in the notice of such meeting.
SECTION 2. Annual Meeting. A meeting of the stockholders
of the Corporation for the election of directors and for the
transaction of any other business of the Corporation shall be
held annually at such date and time as the board of directors
may determine.
SECTION 3. Special Meetings. Special meetings of the
stockholders for any purpose or purposes may be called at any
time by the chairman, by the president, by a majority of
the board of directors or by a committee of the board of
directors in accordance with the provisions of the Corporation's
Articles of Incorporation.
SECTION 4. Conduct of Meetings. Annual and special
meetings shall be conducted in accordance with these bylaws or
as otherwise prescribed by the board of directors. The chairman
or chief executive officer of the Corporation shall preside at
such meetings.
SECTION 5. Notice of Meeting. Written notice stating the
place, day and hour of the meeting and the purpose or purposes
for which the meeting is called shall be mailed by the secretary
or the officer performing his duties, not less than ten days nor
more than sixty days before the meeting to each stockholder of
record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered when deposited in the United
States mail, addressed to the stockholder at his address as it
appears on the stock transfer books or records of the
Corporation as of the record date prescribed in Section 6 of
this Article II, with postage thereon prepaid. If a stockholder
is present in person or by proxy at a meeting, unless the
stockholder at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting, or in
writing waives notice thereof before or after the meeting,
notice of the meeting to such stockholder shall be unnecessary.
When any stockholders' meeting, either annual or special, is
adjourned to a different date, time or place, it shall not be
necessary to give any notice of the date, time or place of any
meeting or of the business to be transacted at such adjourned
meeting, other than an announcement at the meeting at which such
adjournment is taken. If a new record date for the adjourned
meeting is or shall be fixed under Section 6 of Article II of
these Bylaws, however, notice of the adjourned meeting shall be
given under this Section 5 to persons who are stockholders as of
the new record date.<PAGE>
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SECTION 6. Fixing of Record Date. For the purpose of
determining stockholders entitled to notice of or to vote at any
meeting of stockholders, or any adjournment thereof, or stock-
holders entitled to receive payment of any dividend, or in order
to make a determination of stockholders for any other proper
purpose, the board of directors shall fix in advance a date as
the record date for any such determination of stockholders.
Such date in any case shall be not more than seventy days prior
to the date on which the particular action, requiring such
determination of stockholders, is to be taken. A determination
of stockholders entitled to notice of or to vote at a stock-
holders' meeting is effective for any adjournment of the meeting
unless the board of directors fixes a new record date, which it
shall do if the meeting is adjourned to a date more than 120
days after the date fixed for the original meeting.
SECTION 7. Voting Lists. The officer or agent having
charge of the stock transfer books for shares of the Corporation
shall make, at lest ten days before each meeting of stockholders,
a complete record of the stockholders entitled to vote at such
meeting or any adjournment thereof, with the address of and the
number of shares held by each. The record, for a period of ten
days before such meeting, shall be kept on file at the registered
office or the principal office of the Corporation or at the
office of the Corporation's transfer agent, whether within or
outside the State of North Carolina, and shall be subject to
inspection by any stockholder for any purpose germane to the
meeting at any time during usual business hours. Such record
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder
for any purpose germane to the meeting during the whole time of
the meeting. The original stock transfer books shall be prima
facie evidence as to who are the stockholders entitled to examine
such record or transfer books or to vote at any meeting of
stockholders.
SECTION 8. Proxies. At all meetings of stockholders, a
stockholder may vote by proxy executed in writing by the stock-
holder or by his duly authorized attorney in fact. Proxies
solicited on behalf of the management shall be voted as directed
by the stockholder or, in the absence of such direction, as
determined by a majority of the board of directors. No proxy
shall be valid after eleven months from the date of its
execution unless otherwise provided in the proxy.
SECTION 9. Voting. Except as otherwise specified in the
Articles of Incorporation, at each election for directors every
stockholder entitled to vote at such election shall be entitled
to one vote for each share of stock held by him. Unless
otherwise provided in the Articles of Incorporation, by statute,
or by these Bylaws, a majority of those votes cast by stock-
holders at a lawful meeting shall be sufficient to pass on a
transaction or matter which properly comes before the meeting,
except that a plurality of all the votes cast at a meeting at
which a quorum is present is sufficient to elect a director
SECTION 10. Voting of Shares in the Name of Two or More
Persons. When ownership of stock stands in the name of two or
more persons, in the absence of written directions to the
Corporation to the contrary, at any meeting of the stockholders
of the Corporation any one or more of such stockholders may
cast, in person or by proxy, all votes to which such ownership
is entitled. In the event an attempt is made to cast
conflicting votes, in person or by proxy, by the several persons
in whose name shares of stock stand, the vote or votes to which
these persons are entitled shall be cast proportionally in
proportion to the number of persons voting.
SECTION 11. Voting of Shares by Certain Holders. Shares
standing in the name of another corporation may be voted by any
officer, agent or proxy as the bylaws of such corporation may
prescribe, or, in the absence of such provision, as the board of
directors of such corporation may determine. Shares held by an
administrator, executor, guardian, conservator, committee or
curator representing the stockholder may be voted by him, either
in person or by proxy, without a transfer of such shares into
his name. Shares standing in the name of a trustee may be voted
by him, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him without a transfer of such
shares into his name. Shares standing in the name of a receiver
may be voted by such receiver, and shares held by or under the
control of a receiver may be voted by such receiver without the
transfer thereof into his name if authority to do so is
contained in an appropriate order of the court or other public
authority by which such receiver was appointed.
2
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A stockholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee and thereafter the pledgee shall be entitled
to vote the shares so transferred.
Shares held by another corporation, if a majority of the
shares entitled to vote for the election of directors of such
other corporation are held by the Corporation, shall not be
voted at any meeting or counted in determining the total number
of outstanding shares at any given time for purposes of any
meeting.
SECTION 12. Inspectors of Election. In advance of any
meeting of stockholders, the board of directors may appoint one
or more persons, other than nominees for office, as inspectors
of election to act at such meeting or any adjournment thereof.
If inspectors of election are not so appointed, the person
presiding at the meeting shall make such appointment at the
meeting. In case any person appointed as inspector fails to
appear or fails or refuses to act, the vacancy may be filled by
appointment by the board of directors in advance of the meeting
or at the meeting by the person presiding at the meeting.
Unless otherwise prescribed by applicable law, the duties
of such inspectors shall include: determining the number of
shares of stock and the voting power of each share, the shares
of stock represented at the meeting, the existence of a quorum,
the authenticity, validity and effect of proxies; receiving
votes, ballots or consents; hearing and determining all
challenges and questions in any way arising in connection with
the right to vote; counting and tabulating all votes or
consents; determining the result; and such acts as may be proper
to conduct the election or vote with fairness to all
stockholders.
SECTION 13. Nominating Committee. The board of directors
or a committee appointed by the board of directors shall act as
a nominating committee for selecting the nominees for election
as directors. Except in the case of a nominee substituted as a
result of the death or other incapacity of a management nominee,
the nominating committee shall deliver written nominations to
the secretary at least twenty days prior to the date of the
annual meeting. Provided such committee makes such nominations,
no nominations for directors except those made by the nominating
committee shall be voted upon at the annual meeting unless other
nominations by stockholders are made in writing and delivered to
the secretary of the Corporation in accordance with the provi-
sions of the Corporation's Articles of Incorporation.
SECTION 14. New Business. Any new business to be taken up
at the annual meeting shall be stated in writing and filed with
the secretary of the Corporation in accordance with the provi-
sions of the Corporation's Articles of Incorporation. This
provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, direc-
tors and committees, but in connection with such reports no new
business shall be acted upon at such annual meeting unless
stated and filed as provided in the Corporation's Articles of
Incorporation.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of
the Corporation shall be under the direction of its board of
directors. The chairman shall preside at all meetings of the
board of directors.
SECTION 2. Number, Term and Election. The board of direc-
tors shall initially consist of seven members and thereafter
shall consist of such number of members as determined by the
board of directors from time to time in accordance with the
provisions of the Corporation's Articles of Incorporation. The
board of directors shall be divided into three classes as nearly
equal in number as possible. The members of each class shall be
elected for a term of three years and until their successors are
elected or qualified. The board of directors shall be
classified in accordance with the provisions of the
Corporation's Articles of Incorporation.
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SECTION 3. Regular Meetings. A regular meeting of the
board of directors shall be held at such time and place as shall
be determined by resolution of the board of directors without
other notice than such resolution.
SECTION 4. Special Meetings. Special meetings of the board
of directors may be called by or at the request of the chairman,
the chief executive officer, or one-third of the directors. The
person calling the special meeting of the board of directors may
fix any place as the place for holding any special meeting of the
board of directors called by such person.
Members of the board of directors may participate in regular
or special meetings by means of conference telephone or similar
communications equipment by which all persons participating in
the meeting can hear each other. Such participation shall
constitute presence in person.
SECTION 5. Notice. Written notice of any special meeting
shall be given to each director at least two days previous
thereto delivered personally or by telegram or at least seven
days previous thereto delivered by mail at the address at which
the director is most likely to be reached. Such notice shall be
deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid if mailed or when
delivered to the telegraph company if sent by telegram. Any
director may waive notice of any meeting by a writing filed with
the secretary. The attendance or participation of a director at
a meeting shall constitute a waiver of notice of such meeting,
except where a director at the beginning of a meeting or promptly
upon his or her arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote
for or assent to action taken at the meeting. Neither the
business to be transacted at, nor the purpose of, any meeting of
the board of directors need be specified in the notice or waiver
of notice of such meeting.
SECTION 6. Quorum. A majority of the number of directors
fixed by Section 2 of this Article III shall constitute a quorum
for the transaction of business at any meeting of the board of
directors, but if less than such majority is present at a
meeting, a majority of the directors present may adjourn the
meeting from time to time. Notice of any adjourned meeting shall
be given in the same manner as prescribed by Section 5 of this
Article III.
SECTION 7. Manner of Acting. The act of the majority of
the directors present at a meeting at which a quorum is present
shall be the act of the board of directors, unless a greater
number is prescribed by these Bylaws, the Corporation's Articles
of Incorporation, or the Virginia Stock Corporation Act.
SECTION 8. Action Without a Meeting. Any action required
or permitted to be taken by the board of directors at a meeting
may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the
directors and filed with the minutes or proceedings of the board
of directors.
SECTION 9. Resignation. Any director may resign at any
time by sending a written notice of such resignation to the
principal executive office of the Corporation addressed to the
board of directors, the chairman, the president or the secretary.
Unless otherwise specified in such written notice, such
resignation shall take effect upon delivery of the notice in
accordance with the terms of the preceding sentence.
SECTION 10. Vacancies. Any vacancy occurring in the board
of directors shall be filled in accordance with the provisions of
the Corporation's Articles of Incorporation. The term of any
director elected or appointed to fill a vacancy shall be in
accordance with the provisions of the Corporation's Articles of
Incorporation.
SECTION 11. Removal of Directors. Any director or the
entire board of directors may be removed only in accordance with
the provisions of the Corporation's Articles of Incorporation.
SECTION 12. Compensation. Directors, as such and advisory
or emeritus directors, may receive compensation for service on
the board of directors. Members of either standing or special
committees may be allowed such compensation as the board of
directors may determine.
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SECTION 13. Presumption of Assent. A director of the
Corporation who is present at a meeting of the board of directors
at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless (i) he
objects at the beginning of the meeting, or promptly upon his
arrival, to holding it or transacting specified business at the
meeting, or (ii) he votes against, or abstains from, the action
taken.
SECTION 14. Advisory and Emeritus Directors. The board of
directors may by resolution appoint as advisory directors indivi-
duals whom the board believes possess knowledge, experience and
other qualifications which may prove valuable to the Corporation,
and may appoint as emeritus directors individuals who have
retired from the board after extended and faithful service.
Advisory and emeritus directors may sit with the board of
directors at regular and special meetings and discuss any
question under consideration; provided, however, that advisory
and emeritus directors shall cast no vote. The board of
directors shall have the power to remove any advisory or emeritus
director with or without cause at any time.
SECTION 15. Age Limitation. No person shall be eligible for
election, reelection, appointment, or reappointment to the board
of directors if such person is then more than 80 years of age.
No director shall serve beyond the annual meeting of the
Corporation immediately following his attainment of 80 years of
age. Persons may serve as advisory directors or emeritus
directors without regard to age.
ARTICLE IV
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, as
they may determine to be necessary or appropriate for the conduct
of the business of the Corporation, and may prescribe the duties,
constitution and procedures thereof. Each committee shall
consist of one or more directors of the Corporation appointed by
a majority of the whole board. The board of directors may
designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at
any meeting of the committee.
The board of directors shall have power at any time to
change the members of, to fill vacancies in, and to discharge any
committee of the board. Any member of any such committee may
resign at any time by giving notice to the Corporation; provided,
however, that notice to the board of directors, the chairman, the
chief executive officer, the chairman of such committee, or the
secretary shall be deemed to constitute notice to the
Corporation. Such resignation shall take effect upon receipt of
such notice or at any later time specified therein; and, unless
otherwise specified therein, acceptance of such resignation shall
not be necessary to make it effective. Any member of any such
committee may be removed at any time, either with or without
cause, by the affirmative vote of a majority of the authorized
number of directors at any meeting of the board of directors
called for that purpose.
ARTICLE V
OFFICERS
SECTION 1. Positions. The officers of the Corporation
shall be a chairman, a vice chairman, a president, one or more
vice presidents, a secretary and a treasurer, each of whom shall
be elected by the board of directors. The board of directors may
designate one or more vice presidents as executive vice president
or senior vice president. The board of directors may also elect
or authorize the appointment of such other officers as the
business of the Corporation may require. The officers shall have
such authority and perform such duties as the board of directors
may from time to time authorize or determine. In the absence of
action by the board of directors, the officers shall have such
powers and duties as generally pertain to their respective
offices.
5
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SECTION 2. Election and Term of Office. The officers of
the Corporation shall be elected annually by the board of
directors at the first meeting of the board of directors held
after each annual meeting of the stockholders. If the election
of officers is not held at such meeting, such election shall be
held as soon thereafter as possible. Each officer shall hold
office until his successor shall have been duly elected and
qualified or until his death or until he shall resign or shall
have been removed in the manner hereinafter provided. Election
or appointment of an officer, employee or agent shall not of
itself create contract rights. The board of directors may
authorize the Corporation to enter into an employment contract
with any officer in accordance with state law; but no such
contract shall impair the right of the board of directors to
remove any officer at any time in accordance with Section 3 of
this Article V.
SECTION 3. Removal. Any officer may be removed by vote of
two-thirds of the board of directors whenever, in its judgment,
the best interests of the Corporation will be served thereby, but
such removal, other than for cause, shall be without prejudice to
the contract rights, if any, of the person so removed.
SECTION 4. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise, may
be filled by the board of directors for the unexpired portion of
the term.
SECTION 5. Remuneration. The remuneration of the officers
shall be fixed from time to time by the board of directors, and
no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the Corporation.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. To the extent permitted by
applicable law, and except as otherwise prescribed by the
Corporation's Articles of Incorporation or these Bylaws with
respect to certificates for shares, the board of directors or the
executive committee may authorize any officer, employee, or agent
of the Corporation to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the
Corporation. Such authority may be general or confined to
specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf
of the Corporation and no evidence of indebtedness shall be
issued in its name unless authorized by the board of directors.
Such authority may be general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or
other orders for the payment of money, notes or other evidences
of indebtedness issued in the name of the Corporation shall be
signed by one or more officers, employees or agents of the
Corporation in such manner, including in facsimile form, as shall
from time to time be determined by resolution of the board of
directors.
SECTION 4. Deposits. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation in any of its duly authorized
depositories as the board of directors may select.
ARTICLE VII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. The shares of the Cor-
poration shall be represented by certificates signed by the
chairman of directors or by the president or a vice president and
by the treasurer or an assistant treasurer or by the secretary or
an assistant secretary of the Corporation, and may be sealed with
the seal of the Corporation or a
6<PAGE>
<PAGE>
facsimile thereof. Any or all of the signatures upon a certifi-
cate may be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. If any
officer who has signed or whose facsimile signature has been
placed upon such certificate shall have ceased to be such officer
before the certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer at
the date of its issue.
SECTION 2. Form of Share Certificates. All certificates
representing shares issued by the Corporation shall set forth
upon the face or back that the Corporation will furnish to any
stockholder upon written request and without charge a full
statement of the designations, relative rights, preferences, and
limitations applicable to each class and the variations in
rights, preferences, and limitations determined for each series
(and the authority of the board of directors to determine
variations for future series).
Each certificate representing shares shall state upon the
face thereof: the name of the Corporation; that the Corporation
is organized under the laws of the Commonwealth of Virginia; the
name of the person to whom issued; the number and class of
shares; the date of issue; the designation of the series, if any,
which such certificate represents; the par value of each share
represented by such certificate, or a statement that the shares
are without par value. Other matters in regard to the form of
the certificates shall be determined by the board of directors.
SECTION 3. Payment for Shares. The consideration for the
issuance of shares shall be paid in accordance with the
provisions of the Corporation's Articles of Incorporation.
SECTION 4. Transfer of Shares. Transfer of shares of capi-
tal stock of the Corporation shall be made only on its stock
transfer books. Authority for such transfer shall be given only
by the holder of record thereof or by his legal representative,
who shall furnish proper evidence of such authority, or by his
attorney thereunto authorized by power of attorney duly executed
and filed with the Corporation. Such transfer shall be made only
on surrender for cancellation of the certificate for such shares.
The person in whose name shares of capital stock stand on the
books of the Corporation shall be deemed by the Corporation to be
the owner thereof for all purposes.
SECTION 5. Lost Certificates. The board of directors may
direct a new certificate to be issued in place of any certificate
theretofore issued by the Corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost,
stolen, or destroyed. When authorizing such issue of a new
certificate, the board of directors may, in its discretion and as
a condition precedent to the issuance thereof, require the owner
of such lost, stolen, or destroyed certificate, or his legal
representative, to give the Corporation a bond in such sum as it
may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged
to have been lost, stolen, or destroyed.
ARTICLE VIII
FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the last day
of September of each year. The Corporation shall be subject to
an annual audit as of the end of its fiscal year by independent
public accountants appointed by and responsible to the board of
directors.
7
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ARTICLE IX
DIVIDENDS
Subject to the provisions of the Corporation's Articles of
Incorporation and applicable law, the board of directors may, at
any regular or special meeting, declare dividends on the
Corporation's outstanding capital stock. Dividends may be paid
in cash, in property or in the Corporation's own stock.
ARTICLE X
CORPORATE SEAL
The corporate seal of the Corporation shall be in such form
as the board of directors shall prescribe.
ARTICLE XI
AMENDMENTS
In accordance with the Corporation's Articles of Incorpora-
tion, these Bylaws may be repealed, altered, amended or rescinded
by the stockholders of the Corporation only by vote of not less
than 80% of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a
meeting of the stockholders called for that purpose (provided
that notice of such proposed repeal, alteration, amendment or
rescission is included in the notice of such meeting). In
addition, the board of directors may repeal, alter, amend or
rescind these Bylaws by vote of two-thirds of the board of
directors at a legal meeting held in accordance with the
provisions of these Bylaws.
8
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COMMON STOCK
NUMBER ___ ___ SHARES
NEWSOUTH BANCORP, INC.
ORGANIZED UNDER THE LAWS OF THE COMMONWEALTH OF VIRGINIA
This certifies that
is the owner of CUSIP 652495 10 2
fully paid and nonassessable shares of common stock, par value
$0.01 per share, of
NewSouth Bancorp, Inc. (the "Corporation"), a Virginia
corporation. The shares represented by this certificate are
transferable only on the stock transfer books of the Corporation
by the holder of record hereof, or by his duly authorized
attorney or legal representative, upon the surrender of this
certificate properly endorsed. This certificate is not valid
until countersigned and registered by the Corporation's transfer
agent and registrar.
THIS SECURITY IS NOT A DEPOSIT OR ACCOUNT AND IS NOT FEDERALLY
INSURED OR GUARANTEED.
IN WITNESS WHEREOF, the Corporation has caused this certificate
to be executed by the facsimile signatures of its duly
authorized officers and has caused a facsimile of its corporate
seal to be hereunto affixed.
Dated:
_________________________ ___________________________
William L. Wall Thomas A. Vann
Secretary President
Countersigned and Registered:
By: __________________________________
Transfer Agent and Registrar
__________________________________
Authorized Signature
[CORPORATE SEAL]
RESTRICTIONS ON TRANSFER
The Articles of Incorporation include a provision which
prohibits any person from directly or indirectly acquiring or
offering to acquire the beneficial ownership of more than 10% of
any class of equity security of the Corporation. Such provision
eliminates the voting rights of securities acquired in violation
of the provision. Such provision will expire three years from
the effective date of completion of the conversion of Home
Savings Bank, SSB, Washington, North Carolina (the "Bank") from
mutual to stock form. The Articles of Incorporation also impose
certain restrictions on the voting rights of beneficial owners
of more than 10% of any class of equity security of the
Corporation after three years from the effective date of
completion of the conversion of the Bank from mutual to stock
form. The Corporation will furnish without charge to each
stockholder who so requests additional information with respect
to such restrictions. Such request may be made in writing to
the Secretary of the Corporation.
<PAGE>
The shares represented by this certificate are issued
subject to all the provisions of the Articles of Incorporation
and Bylaws of the Corporation as from time to time amended
(copies of which are on file at the principal executive office
of the Corporation), to all of which the holder by acceptance
hereof assents.
The Corporation will furnish without charge to each
stockholder who so requests a full statement of the
designations, relative rights, preferences and limitations of
each class of stock and the variations in rights, preferences
and limitations determined for each series, including the
authority of the board of directors to determine variations for
future series. Such requests shall be made in writing to the
Secretary of the Corporation.
The following abbreviations, when used in the inscription on
the face of this Certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and
not as tenants in common
UNIF TRANSFER MIN ACT - ..........Custodian.......... under
(Cust) (Minor)
Uniform Transfers to Minors Act.......................
(State)
Additional abbreviations may also be used though not in the
above list.
FOR VALUE RECEIVED, _________________ HEREBY SELL(S),
ASSIGN(S) AND TRANSFER(S) UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
___________________________________
/ /
- -----------------------------------
________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE,
OF ASSIGNEE)
________________________________________________________________
________________________________________________________________
_________________________________________________________ Shares
of the common stock evidenced by this certificate, and do hereby
irrevocably constitute and appoint , Attorney, to transfer the
said shares on the books of the Corporation, with full power of
substitution.
Dated ________________ _____________________________
Signature
_____________________________
Signature
In presence of: _________________
SEE REVERSE SIDE FOR RESTRICTIONS ON TRANSFER
NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME OF THE STOCKHOLDER(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
<PAGE>
DESCRIPTION OF NEWSOUTH VIRGINIA CAPITAL STOCK
General. The Articles of Incorporation of the Company
authorizes the issuance of up to 8,000,000 shares of NewSouth
Virginia Common Stock and 1,000,000 shares of serial preferred
stock, par value $.01 per share ("Preferred Stock"). As of
March 29, 1999, there were 4,050,144 shares of NewSouth Virginia
Common Stock issued and outstanding. No shares of Preferred
Stock have been issued. Each share of NewSouth Virginia Common
Stock has the same relative rights and is identical in all
respects with every other share of Common Stock.
COMMON STOCK
------------
Voting Rights. The holders of the Common Stock possess
exclusive voting rights in the Company, except to the extent
that shares of serial preferred stock issued in the future may
have voting rights, if any. Each holder of shares of the Common
Stock is entitled to one vote for each share held of record on
all matters submitted to a vote of holders of shares of the
Common Stock, without any right to cumulate voting in the
election of directors.
Dividends. The Company may, from time to time, declare
dividends to the holders of the NewSouth Virginia Common Stock
who will be entitled to share equally in any such dividends.
Liquidation. In the event of a liquidation, dissolution or
winding up of NewSouth Virginia, each holder of shares of
NewSouth Virginia Common Stock would be entitled to receive,
after payment of all debts and liabilities of NewSouth Virginia,
a pro rata portion of all assets of NewSouth Virginia available
for distribution to holders of NewSouth Virginia Common Stock.
If any serial preferred stock is issued, the holders thereof may
have a priority in liquidation or dissolution over the holders
of the NewSouth Virginia Common Stock.
No Preemptive Rights. The Articles of Incorporation and
Bylaws do not grant preemptive rights for any shares of the
NewSouth Virginia Common Stock or other securities of NewSouth
Virginia.
SERIAL PREFERRED STOCK
----------------------
The Articles of Incorporation authorize the Board of
Directors to issue up to 1,000,000 shares of Preferred Stock by
resolution from time to time in one or more series and to fix
and state the designations, powers and preferences and relative,
participating, optional and other special rights of such
shares, including voting rights (which could be full or limited)
and conversion rights. The Preferred Stock may rank prior to
the Common Stock as to dividend rights, liquidation preferences,
or both, and may have full or limited voting rights, and may be
convertible into shares of the Common Stock. The Board of
Directors has no present intention to issue any of the Preferred
Stock. Should the Board of Directors of NewSouth Virginia
subsequently issue Preferred Stock, no holder of any such stock
shall have any preemptive right to subscribe for or purchase any
stock or any other securities of NewSouth Virginia other than
such, if any, as the Board of Directors, in its sole discretion,
may determine and at such price or prices and upon such other
terms as the Board of Directors, in its sole discretion, may
fix.
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ANTI-TAKEOVER PROVISIONS IN THE ARTICLES OF INCORPORATION
AND BYLAWS
- ---------------------------------------------------------------
Certain provisions of the Company's Articles of Incorpora-
tion and Bylaws may have the effect of deterring or preventing
hostile takeovers, including those that might result in a
premium over the then-current trading price, or delaying or
preventing changes in control of management of the Company.
Classified Board of Directors and Related Provisions. The
Company's Articles of Incorporation provide that the Board of
Directors is divided into three classes which shall be as nearly
equal in number as possible. The directors in each class will
hold office following their initial appointment to office for
terms of one year, two years and three years, respectively, and,
upon reelection, will serve for terms of three years thereafter.
Each director serves until his or her successor is elected and
qualified. The Articles of Incorporation provide that a
director may be removed only for cause and only by the
affirmative vote of the holders of at least 80% of the
outstanding shares entitled to vote.
Stockholder Vote Required to Approve Business Combinations
with Principal Stockholders. The Company's Articles of Incor-
poration require the approval of the holders of (i) at least 80%
of the Company's outstanding shares of voting stock, and (ii) at
least a majority of the Company's outstanding shares of voting
stock, not including shares deemed beneficially owned by a
"Related Person," to approve certain "Business Combinations" as
defined therein, and related transactions. The increased voting
requirements in the Company's Articles of Incorporation apply in
connection with business combinations involving a "Related
Person," except in cases where the proposed transaction has been
approved in advance by two-thirds of those members of the
Company's Board of Directors who are unaffiliated with the
Related Person and who were directors prior to the time when the
Related Person became a Related Person (the "Continuing
Directors"). The term "Related Person" is defined to include
any individual, corporation, partnership or other entity or
affiliate thereof which owns beneficially or controls, directly
or indirectly, 10% or more of the outstanding shares of Common
Stock of the Company. A "Business Combination" is defined to
include (i) any merger or consolidation of the Company with or
into a Related Person; (ii) any sale, lease exchange, transfer,
or other disposition of all or a substantial part of the assets
of the Company or of a subsidiary to a Related Person (the term
"substantial part" is defined to include more than 25% of the
Company's total assets); (iii) any merger or consolidation of a
Related Person with or into the Company or a subsidiary of the
Company; (iv) any sale, lease, exchange, transfer or other
disposition of all or any substantial part of the assets of a
Related Person to the Company or a subsidiary of the Company;
(v) the issuance of any securities of the Company or a
subsidiary of the Company to a Related Person; (vi) the
acquisition by the Company or a subsidiary of the Company of any
securities of the Related Person; (vii) any reclassification of
the Common Stock, or any recapitalization involving the Common
Stock; and (viii) any agreement, contract or other arrangement
providing for any of the above transactions.
Limitations on Call of Meetings of Stockholders. The
Company's Articles of Incorporation provide that special
meetings of stockholders may only be called by the Company's
Board of Directors or an appropriate committee appointed by the
Board of Directors. Stockholders are not authorized to call a
special meeting, and stockholder action may be taken only at a
special or annual meeting of stockholders or by the written
consent of all of the stockholders entitled to vote with respect
to the matter.
Absence of Cumulative Voting. The Company's Articles of
Incorporation provide that there shall not be cumulative voting
by stockholders for the election of the Company's directors.
The absence of cumulative voting rights effectively means that
the holders of a majority of the shares voted at a meeting of
stockholders may, if they so choose, elect all directors of the
Company to be elected at that meeting, thus precluding minority
stockholder representation on the Company's Board of Directors.
2
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Restrictions on Acquisitions of Securities. The Articles
of Incorporation provides that for a period of three years from
the effective date of the conversion of NewSouth Bank (the
"Bank") from mutual to stock form (i.e., until April 7, 2000),
no person may directly or indirectly offer to acquire or acquire
the beneficial ownership of more than 10% of any class of the
equity security of the Company, unless such offer or acquisition
shall have been approved in advance by a two-thirds vote of the
Company's Continuing Directors.
This provision does not apply to any employee stock benefit plan
of the Company or to an underwriter or member of an underwriting
or selling group involving the public sale or resale of
securities of the Company or a subsidiary thereof; provided,
that upon completion of the sale or resale, no such underwriter
or member of the selling group is a beneficial owner of more
than 10% of any class of equity securities of the Company. In
addition, during such three-year period, no shares beneficially
owned in violation of the foregoing percentage limitation, as
determined by the Company's Board of Directors, shall be
entitled to vote in connection with any matter submitted to
stockholders for a vote. Additionally, the Articles of
Incorporation provide for further restrictions on voting rights
of shares owned in excess of 10% of any class of equity security
of the Company beyond the expiration of the three-year period.
Specifically, the Articles of Incorporation provide that if, at
any time after three years from the Bank's conversion to stock
form, any person acquires the beneficial ownership of more than
10% of any class of equity security of the Company, then, with
respect to each vote in excess of 10%, the record holders of
voting stock of the Company beneficially owned by such person
shall be entitled to cast only one-hundredth of one vote with
respect to each vote in excess of 10% of the voting power of
the outstanding shares of voting stock of the Company which such
record holders would otherwise be entitled to cast without
giving effect to the provision, and the aggregate voting power
of such record holders shall be allocated proportionately among
such record holders. An exception from the restriction is
provided if the acquisition of more than 10% of the securities
received the prior approval by a two-thirds vote of the
Company's Continuing Directors. Under the Company's Articles of
Incorporation, the restriction on voting shares beneficially
owned in violation of the foregoing limitations is imposed
automatically. In order to prevent the imposition of such
restrictions, the Board of Directors must take affirmative
action approving in advance a particular offer to acquire
or acquisition. Unless the Board took such affirmative action,
the provision would operate to restrict the voting by beneficial
owners of more than 10% of the NewSouth Virginia Common Stock in
a proxy contest.
Board Consideration of Certain Nonmonetary Factors in the
Event of an Offer by Another Party. The Articles of Incorpora-
tion of the Company direct the Board of Directors, in evaluating
a Business Combination or a tender or exchange offer, to consi-
der, in addition to the adequacy of the amount to be paid in
connection with any such transaction, certain specified factors
and any other factors the Board deems relevant, including (i)
the social and economic effects of the transaction on the
Company and its subsidiaries, employees, depositors, loan and
other customers, creditors and other elements of the communities
in which the Company and its subsidiaries operate or are
located; (ii) the business and financial condition and earnings
prospects of the acquiring person or entity; and (iii) the
competence, experience and integrity of the acquiring person
or entity and its or their management.
Authorization of Preferred Stock. The Company's Articles
of Incorporation authorize the issuance of up to 1,000,000
shares of Preferred Stock, which conceivably could represent an
additional class of stock required to approve any proposed
acquisition. The Company is authorized to issue Preferred Stock
from time to time in one or more series subject to applicable
provisions of law, and the Board of Directors is authorized to
fix the powers, designations, preferences and relative, partici-
pating, optional and other special rights of such shares,
including voting rights and conversion rights. Issuance of the
Preferred Stock could adversely affect the relative voting
rights of holders of NewSouth Virginia Common Stock. In the
event
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of a proposed merger, tender offer or other attempt to gain
control of the Company that the Board of Directors did not
approve, it might be possible for the Board of Directors to
authorized the issuance of a series of Preferred Stock with
rights and preferences that would impede the completion of such
a transaction. An effect of the possible issuance of Preferred
Stock, therefore, may be to deter a future takeover attempt.
The Board of Directors has no present plans or understandings
for the issuance of any Preferred Stock and does not intend to
issue any Preferred Stock except on terms which the Board of
Directors deems to be in the best interests of the Company and
its stockholders. This Preferred Stock, none of which has been
issued by the Company, together with authorized but unissued
shares of NewSouth Virginia Common Stock (the Articles of
Incorporation authorize the issuance of up to 8,000,000 shares
of NewSouth Virginia Common Stock), also could represent
additional capital required to be purchased by the acquiror.
Procedures for Stockholder Nominations and Proposals for
New Business. The Company's Articles of Incorporation provide
that any stockholder desiring to make a nomination for the
election of directors or a proposal for new business at a
meeting of stockholders must submit written notice to the
Secretary of the Company not less than 30 or more than 60 days
in advance of the meeting. The Articles of Incorporation
further provide that if a stockholder seeking to make a
nomination or a proposal for new business fails to follow the
prescribed procedures, the chairman of the meeting may disregard
the defective nomination or proposal. Management believes that
it is in the best interests of the Company and its stockholders
to provide sufficient time to enable management to disclose to
stockholders information about a dissident slate of nominations
for directors. This advance notice requirement may also give
management time to solicit its own proxies in an attempt to
defeat any dissident slate of nominations should management
determine that doing so is in the best interest of stockholders
generally. Similarly, adequate advance notice of stockholder
proposals will give management time to study such proposals and
to determine whether to recommend to the stockholders that such
proposals be adopted.
Amendment of Bylaws. The Company's Articles of Incorpora-
tion provide that the Company's Bylaws may be amended either by
a two-thirds vote of the Company's Board of Directors or by the
affirmative vote of the holders of not less than 80% of the
outstanding shares of the Company's stock entitled to vote
generally in the election of directors, after giving effect to
any limits on voting rights. Absent this provision, Virginia
law provides that a corporation's bylaws may be amended by the
holders of a majority of the votes cast at a meeting where a
quorum is present. The Company's Bylaws contain numerous
provisions concerning the Company's governance, such as fixing
the number of directors and determining the number of directors
constituting a quorum. By reducing the ability of a potential
corporate raider to make changes in the Company's Bylaws and
to reduce the authority of the Board of Directors or impede its
ability to manage the Company, this provision could have the
effect of discouraging a tender offer or other takeover attempt
where the ability to make fundamental changes through bylaw
amendments is an important element of the takeover strategy of
the acquiror.
Amendment of Articles of Incorporation. The Company's
Articles of Incorporation provide that specified provisions
contained in the Articles of Incorporation may not be repealed
or amended except upon the affirmative vote of not less than 80%
of the outstanding shares of the Company's stock entitled to
vote generally in the election of directors, after giving effect
to any limits on voting rights. This requirement exceeds the
two-thirds vote of the outstanding stock that would otherwise be
required by Virginia law for the repeal or amendment of a
provision of the Articles of Incorporation. The specific
provisions are those (i) governing the calling of special
meetings, the absence of cumulative voting rights and the
requirement that stockholder action be taken only at annual or
special meetings, (ii) requiring written notice to the Company
of nominations for the election of directors and new business
proposals, (iii) governing the number
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of the Company's Directors, the filling of vacancies on the
Board of Directors and classification of the Board of Directors,
(iv) providing the mechanism for removing directors, (v)
limiting the acquisition of 10% or more of the capital stock of
the Company (except, with the prior approval of the Continuing
Directors of the Company), (vi) governing the requirement for
the approval of certain Business Combinations involving a
"Related Person," (vii) regarding the consideration of certain
nonmonetary factors in the event of an offer by another party,
(viii) providing for the indemnification of directors, officers,
employees and agents of the Company, (ix) pertaining to the
elimination of the liability of the directors to the Company and
its stockholders for monetary damages, with certain exceptions,
for breach of fiduciary duty, and (x) governing the required
stockholder vote for amending the Articles of Incorporation or
Bylaws of the Company. This provision is intended to prevent
the holders of less than 80% of the outstanding stock of the
Company from circumventing any of the foregoing provisions by
amending the Articles of Incorporation to delete or modify one
of such provisions. This provision would enable the holders of
more than 20% of the Company's voting stock to prevent amend-
ments to the Company's Articles of Incorporation or Bylaws, even
if such amendments were favored by the holders of a majority of
the voting stock.
