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10-K/A - AMENDED ANNUAL REPORT - PEOPLES BANCORP OF NORTH CAROLINA INC | pebk_10k.htm |
EXHIBIT (4)(ii)
DESCRIPTION OF REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
General
As of
December 31, 2019, Peoples Bancorp of North Carolina, Inc. (the
“Company”) had one class of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended:
Common stock, no par value per share.
Securities
The authorized capital stock of the Company currently consists of
20,000,000 shares of common stock, no par value per share (the
“Common Stock”), and 5,000,000 shares of preferred
stock, no par value per share. The outstanding shares of the
Company Common Stock are duly authorized, validly issued, fully
paid, and non-assessable.
Common Stock
As of
February 29, 2020, 5,914,304 shares of common stock were issued and
outstanding. The Company’s Common Stock is listed on The
NASDAQ Global Market under the symbol
“PEBK.”
Voting Rights
Each
holder of Common Stock is entitled to one vote for each share held
of record on all matters submitted to a vote of the shareholders.
Shareholders are not entitled to cumulate their votes for the
election of directors. Directors are elected by a plurality of the
votes cast. Each director is elected to a term ending as of the
next succeeding annual meeting or until his or her earlier death,
resignation, retirement, removal or disqualification.
Liquidation Rights
In the
event of the Company’s liquidation, dissolution or winding
up, holders of Common Stock are entitled to share ratably in all
the Company’s assets remaining after payment of liabilities,
including but not limited to the Company’s outstanding
subordinate debentures, and the liquidation preference of any then
outstanding preferred shares. Because the Company is a bank holding
company, its rights and the rights of its creditors and
shareholders to receive the assets of any subsidiary upon
liquidation or recapitalization may be subject to prior claims of
the subsidiary’s creditors, except to the extent that the
Company may itself be a creditor with recognized claims against the
subsidiary.
Dividends
Holders
of the Company’s Common Stock are entitled to receive ratably
such dividends as may be declared by the Company’s Board of
Directors out of legally available funds. The ability of the Board
of Directors to declare and pay dividends on Common Stock is
subject to the terms of applicable North Carolina law and banking
regulations. The Company’s principal source of income is
dividends that are declared and paid by the Peoples Bank on its
capital stock. Therefore, the ability of the Company to pay
dividends is dependent upon the receipt of dividends from Peoples
Bank. North Carolina commercial banks, such as Peoples Bank, are
subject to legal limitations on the amounts of dividends they are
permitted to pay. Peoples Bank may pay dividends from undivided
profits, which are determined by deducting and charging certain
items against actual profits, including any contributions to
surplus required by North Carolina law. Also, an insured depository
institution, such as Peoples Bank, is prohibited from making
capital distributions, including the payment of dividends, if,
after making such distribution, the institution would become
“undercapitalized,” as such term is defined in the
applicable law and regulations. Also, the Company may not pay
dividends on its capital stock if it is in default or has elected
to defer payments of interest under its junior subordinated
debentures. The declaration and payment of future dividends to
holders of its Common Stock will also depend upon the
Company’s earnings and financial condition, the capital
requirements of its subsidiaries, regulatory conditions and other
factors as the Board of Directors may deem relevant.
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Anti-Takeover Provisions
Board of Directors. The Company’s
Articles of Incorporation and Bylaws provide that the number of
directors shall not be less than five or more than 15. The number
of directors currently is ten, but such number may be changed by
resolution of the Company’s Board of Directors. These
provisions have the effect of enabling the Company’s Board of
Directors to elect directors friendly to management in the event of
a non-negotiated take-over attempt and may make it more difficult
for a person seeking to acquire control of the Company to gain
majority representation on the Company’s Board of Directors
in a relatively short period of time. Pursuant to North Carolina
law and the Company’s Bylaws, directors are elected by a
plurality vote in contested and uncontested elections.
Cumulative Voting. The Company’s
Articles of Incorporation do not provide for cumulative voting for
any purpose. Cumulative voting in election of directors entitles a
shareholder to cast a total number of votes equal to the number of
directors to be elected multiplied by the number of his or her
shares and to distribute that number of votes among such number of
nominees as the shareholder chooses. The absence of cumulative
voting for directors limits the ability of a minority shareholder
to elect directors. Because the holder of less than a majority of
the shares of the Company’s Common Stock cannot be assured
representation the Board of Directors, the absence of cumulative
voting may discourage accumulations of shares of the
Company’s Common Stock or proxy contests that would result in
changes in the Company's management.
Special Meetings. The Company’s
Bylaws provide that special meetings of shareholders may be called
by the Chairman of the Board, the Chief Executive Officer, the
President, or by the Board of Directors. If a special meeting is
not called by such persons or entities, shareholder proposals
cannot be presented to the shareholders for action until the next
annual meeting.
Preemptive Rights. The Company’s
Articles of Incorporation do not provide for preemptive rights with
respect to any shares which may be issued by the
Company.
Capital Stock. The Company’s
Articles of Incorporation authorize the issuance of 20,000,000
shares of Common Stock and 5,000,000 shares of preferred stock.
This provides the Board of Directors with flexibility to issue
additional shares, without further shareholder approval except as
expressly required by applicable stock exchange listing standards,
for proper corporate purposes, including financings, acquisitions,
stock dividends, stock splits, employee stock options and other
appropriate purposes. However, issuance of additional authorized
shares may also have the effect of impeding or deterring future
attempts to gain control of the Company. Subject to certain
restrictions established to protect the holders of the preferred
shares, the Company’s Board of Directors also has sole
authority to determine the terms of any one or more series of
preferred stock, including voting rights, conversion rates,
dividend rights, and liquidation preferences, which could adversely
affect the voting power of the holders of the Common Stock and
discourage an attempt to acquire control of the Company. The
Company’s Board of Directors has the power, to the extent
consistent with its fiduciary duties, to issue preferred stock to
persons friendly to management or otherwise in order to impede
attempts by third parties to acquire voting control of the Company
and to impede other transactions not favored by
management.
Director Nominations. The
Company’s Bylaws require a shareholder who intends to
nominate a candidate for election to the Board of Directors at a
shareholders’ meeting to give written notice to
Company’s Secretary at least 50 days (but not more than 90
days) in advance of the date of the meeting at which such
nomination will be made; provided, however, that if less than 60
days’ notice of the meeting is given to shareholders, such
nominations must be delivered to the Company’s Secretary no
later than the close of business on the 10th day following the
day on which notice of the meeting was mailed.
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Supermajority Voting Provisions. The
Company’s Articles of Incorporation require the affirmative
vote of 75% of the outstanding shares entitled to vote to approve a
merger, combination, or other Business Combination (as defined in
the Company’s Articles of Incorporation), unless the
transaction is approved, prior to consummation, by the Board of
Directors, by the vote of at least 75% of the Whole Board of
Directors (as defined in the Company’s Articles of
Incorporation) and, if the Business Combination is proposed by a
Related Person (as defined in the Company’s Articles of
Incorporation), by at least 75% of the Continuing Directors (as
defined in the Company’s Articles of Incorporation) of the
Board of Directors. This provision could tend to make the
acquisition of the Company more difficult to accomplish without the
cooperation or favorable recommendation of the Company’s
Board of Directors. When evaluating such Business Combinations, the
Board of Directors will consider (i) the social and economic
effects of acceptance of such an offer on the Company’s
depositors, borrowers, other customers, employees, and creditors of
the Company and its subsidiaries, and on the communities in which
the Company and its subsidiaries operate or are located; (ii) the
Company’s ability, and the ability of its subsidiaries, to
fulfill the objectives of a bank holding company and of commercial
banking entities, as applicable, under applicable federal and state
statutes and regulations; (iii) the business and financial
condition and prospects and earnings prospects of the person or
group proposing the combination, including, but not limited to,
debt service and other existing financial obligations, financial
obligations to be incurred in connection with the combination, and
other likely financial obligations of such person or group, and the
possible effect of such conditions and prospects upon the Company
and its subsidiaries and the communities in which the Company and
its subsidiaries are located; (iv) the competence, experience, and
integrity of the person or group proposing the combination and its
or their management; and (v) the prospects for successful
conclusion of the proposed combination.
Change in Control Regulations. Federal
law requires the approval of the Federal Reserve prior to any
person or entity, or any persons or entities acting in concert,
acquiring 10% or more of the Company’s common stock, and
prior to certain other actions that are deemed pursuant to
regulations of the Federal Reserve to constitute control. In
addition, North Carolina law requires the approval of the
Commissioner prior to acquiring control of a North Carolina
bank.
Transfer Agent and Registrar
The
transfer agent and registrar of the Company’s Common Stock is
Broadridge Corporate Issuer Solutions, Inc.
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