AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NATIONAL BANKSHARES, INC.
The Articles of Incorporation of National Bankshares, Inc. are hereby
amended and restated as follows:
1. The name of the Corporation is National Bankshares, Inc.
2. (a) The aggregate number of shares which the Corporation is authorized
to issue is as follows:
Class Number of Shares Par Value
----- ---------------- ---------
Common 10,000,000 $1.25
Preferred 5,000,000 No Par Value
(b) The Board of Directors of the Corporation (the Board of Directors) may,
by amending these Articles of Incorporation (the Articles) by filing Articles of
Amendment with the Virginia State Corporation Commission, fix in whole or in
(i) any class of shares, before the issuance of any shares of that class, or
(ii) one or more series within a class, before the issuance of any share within
that series.
(c) The preferred stock (including any shares of preferred stock restored
to the status of authorized but unissued preferred stock undesignated as to
series pursuant to this Article 2(c)) may be divided into one or more series and
issued from time to time with such preferences, privileges, limitations and
relative rights as shall be fixed and determined by the Board of Directors.
Without limiting the generality of the foregoing, the Board of Directors is
expressly authorized to the fullest extent permitted from time to time by law to
fix:
(i) the distinctive serial designations and the division of shares of
preferred stock into one or more series and the number of shares of a
particular series, which may be increased or decreased (but not below the
number of shares thereof then outstanding);
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(ii) the rate or amount (or the method of determining the rate or
amount) and times at which, the form in which, and the preferences and
conditions under which, dividends shall be payable on shares of a
particular series, the status of such dividends as cumulative, partially
cumulative, or noncumulative, the date or dates from which dividends, if
cumulative, shall accumulate, and the status of such series as
participating or nonparticipating with shares of other classes or series;
(iii) the price or prices at which, the consideration for which, the
period or periods within which and the terms and conditions, if any, upon
which the shares of a particular series may be redeemed, in whole or in
part, at the option of the Corporation or otherwise;
(iv) the amount or amounts and rights and preferences, if any, to
which the Holders (as defined in Article 3 below) of shares of a particular
series are entitled or shall have upon any involuntary or voluntary
liquidation, dissolution or winding up of the Corporation;
(v) the rights and preferences over or otherwise in relation to any
other class or series (including other series of preferred stock), as to
the right to receive dividends and/or the right to receive payments out of
the net assets of the Corporation upon any involuntary or voluntary
liquidation, dissolution or winding up of the Corporation;
(vi) the right, if any, of the Holders of a particular series, the
Corporation or another person to convent or cause conversion of shares of
such series into shares of other classes or series or into other
securities, cash, indebtedness or other property, or to exchange or cause
exchange of such shares for shares of other classes or series or other
securities, cash, indebtedness or other property, and the terms and
conditions, if any, including the price or prices or the rate or rates of
conversion and exchange, and the terms and conditions or adjustments, if
any, at which such conversion or exchange may be made or caused;
(vii) the obligation, if any, of the Corporation to redeem, purchase
or otherwise acquire, in whole or in part, shares of a particular series
for a sinking fund or otherwise, the terms and conditions thereof, if any,
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including the price or prices and the nature of the consideration payable
for such shares so redeemed, purchased or otherwise acquired;
(viii) the voting rights, if any, including special, conditional or
limited voting rights, of the shares of a particular series in addition to
those required by law, including the number of votes per share and any
requirement for the approval by the Holders of shares of all series of
preferred stock, or of the shares of one or more series thereof, or of
both, in an amount greater than a majority up to such amount as is in
accordance with applicable law or these Articles, as a condition to
specified corporate action or amendments to the Articles; and
(ix) any other preferences, limitations and relative rights which may
be so determined by resolution or resolutions of the Board of Directors.
Shares of preferred stock shall rank prior or superior to the common
stock in respect of the right to receive dividends and/or the right to receive
payments out of the net assets of the Corporation upon any involuntary or
voluntary liquidation, dissolution or winding up of the Corporation. All shares
of preferred stock redeemed, purchased or otherwise acquired by the Corporation
(including shares surrendered for conversion or exchange) shall be cancelled and
thereupon restored to the status of authorized but unissued shares of preferred
stock undesignated as to series.
(d) The Holders of common stock, to the exclusion of any other class of
stock of the Corporation, have sole power to vote for the election of directors
except as (i) otherwise expressly provided in the serial designation of any
series of preferred stock, (ii) otherwise expressly provided in these Articles
and (iii) otherwise expressly provided by the then existing laws of the
Commonwealth of Virginia. The Holders of common stock will have one vote for
each share of common stock held by them.
(e) No Holder of shares of stock of any class of the
Corporation will have any preemptive or preferential right of subscription to
any shares of any class of stock of the Corporation, whether now or hereafter
authorized, or to any obligations of the Corporation convertible into stock of
the Corporation, issued or sold, nor any right of subscription to any thereof.
3.(a) Subject to the rights of Holders of any series of preferred stock
to elect directors under specified circumstances:
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(i) The number of directors of the Corporation, not less than nine nor
more than twenty-six, shall be set by the Bylaws. The directors shall be
divided into three classes as nearly equal in number as possible, with the
term of office of directors of the first class to expire at the first
annual meeting of the shareholders after their election, that of the second
class to expire at the second annual meeting after their election, and that
of the third class to expire at the third annual meeting after their
election. At each annual meeting after such classification, the number of
directors equal to the number of the class whose term expires at the time
of such meeting shall be elected to hold office until the third succeeding
annual meeting of shareholders and until their respective successors are
elected and shall qualify. In the event of any increase or decrease in the
number of directors fixed by the Bylaws, all classes of directors shall be
increased or decreased as equally as may be possible.
(ii) Newly-created directorship resulting from an increase in the
authorized number of directors or any vacancies in the Board of Directors
resulting from death, resignation, retirement, disqualification, removal
from office, or other cause shall be filled by the affirmative vote of a
majority of the directors then in office, whether or not a quorum. No
decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director. A director may be removed
from office only for cause and only by the affirmative vote of the Holders
of not less than two-thirds of each class of the voting stock of the
Corporation then outstanding at a meeting called for that purpose.
(b) The power to adopt, alter, amend or repeal Bylaws is vested in the
Board of Directors, which may take such action by the vote of two-thirds of
the directors present and voting at a meeting at which a quorum is present,
provided that if, as of the date such action shall occur, there is an
Interested Shareholder (other than an Interested Shareholder qualifying as
such on the effective date and time of the certificate by the Virginia State
Corporation Commission relating to the Articles of Amendment pursuant to which
this amendment has been adopted), such two-thirds must include two-thirds of
the Continuing Directors. The Bylaws may contain any provision respecting the
affairs, business, governance or other matters relating to the Corporation not
inconsistent with the express provisions of these Articles. Shareholders, by
the affirmative vote '
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of the Holders of not less than 80 percent of each class of the voting stock of
the Corporation then outstanding, may (i) adopt new Bylaws, or (ii) alter, amend
or repeal Bylaws adopted by either the shareholders or the Board, and (iii)
prescribe that any Bylaw made by them shall not be altered, amended or repealed
by the Board.
(c) The affirmative vote of the Holders of not less than 80
percent of each class of voting stock of the Corporation then outstanding shall
be required to amend or repeal this Article 3 or adopt any provision of the
Articles or Bylaws inconsistent with this Article 3.
(d) For purposes of this Article 3:
(i) "Person" means any individual, firm, corporation or other entity.
(ii) "Interested Shareholder" means (A) any Person (other than the
Corporation, a Subsidiary, or any profit-sharing, employee stock ownership
or employee benefit plan of the Corporation or a Subsidiary, or any trustee
of or fiduciary with respect to any such plan acting in such capacity) that
is the direct or indirect beneficial owner (as defined in Rules 13d -3 and
13d-5 under the '34 Act as in effect on November 1, 1992) of five percent
or more of the outstanding capital stock of the Corporation entitled to
vote for the election of directors, and (B) any Affiliate or Associate of
any such Person.
(iii) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations under
the '34 Act as in effect on November 1, 1992.
(iv) "Subsidiary" means any business entity, 50 percent or more of
which is directly or indirectly owned by the Corporation.
(v) "Continuing Director" means any member of the Board of Directors
who is neither an Interested Shareholder nor affiliated with an Interested
Shareholder and who was a member of the Board of Directors immediately
prior to the time that the Interested Shareholder became an Interested
Shareholder.
(vi) "Holders" means the holders of all classes and series of the
capital stock of the Corporation.
4. To the full extent that the laws of the Commonwealth of Virginia, as they now
or may hereafter exist, permit the limitation or elimination of the liability of
directors or officers, no director or officer of the Corporation shall be liable
to the Corporation or its shareholders for any monetary damages.
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5. (a) The Corporation shall indemnify a director or officer of the Corporation
who is or was a party to any proceeding, including a proceeding by or in the
right of the Corporation, by reason of the fact that he is or was such a
director or officer or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other profit or non-profit enterprise
against all liabilities and expenses incurred in the proceeding except such
liabilities and expenses as are incurred because of his willful misconduct or
knowing violation of the criminal law. Unless a determination has been made that
indemnification is not permissible, the Corporation shall make advances and
reimbursement for expenses incurred by a director or officer in a proceeding
upon receipt of an undertaking from him to repay the same if it is ultimately
determined that he is not entitled to indemnification. Such undertaking shall be
an unlimited unsecured general obligation of the director or officer and shall
be accepted without reference to his ability to make repayment. The Board of
Directors is hereby empowered to contract in advance to indemnify and advance
the expenses of any director or officer. The termination of any proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent shall not, by itself, create a presumption that the director or
officer did not meet the standard of conduct entitling him to indemnity
hereunder.
(b) The Board of Directors is hereby empowered to cause the Corporation
to indemnify and make advances and reimbursement for expenses (or contract in
advance for the same) incurred by any person not specified in paragraph (a) of
this Article 5 who was or is a party to any proceeding, by reason of the fact
that he is or was an employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other profit or non-profit enterprise, to the same extent as if such person were
specified as one to whom indemnification is granted in paragraph (a) of this
Article.
(c) The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
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corporation, partnership, joint venture, trust employee benefit plan or other
enterprise, against any liability asserted against or incurred by such person in
any such capacity arising from his status as such, whether or not the
Corporation would have power to indemnify him against such liability under the
provisions of this Article.
(d) Except as hereinafter provided, all determinations as to the
permissibility of indemnification and advances and reimbursement for expenses
(including contracts with respect thereto) shall be made by a majority vote of a
quorum consisting of directors not at the time parties to the proceeding. In the
event such a quorum cannot be obtained to make any determination as to the
permissibility of indemnification and advancement and reimbursement for expenses
with respect to any claim for indemnification (including contracts with respect
thereto), or in the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act with
respect to which indemnification is claimed, such determination shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel. No authorization of any indemnification and/or of
advances and reimbursement for expenses required hereunder (or under any
contract entered into pursuant hereto) shall be necessary. Authorization of
indemnification and/or of advances and reimbursement for expenses which are not
required hereunder (or under any contract entered into pursuant hereto) shall be
made in the same manner as the determination of whether indemnification is
permissible, except that if the determination is made by special legal counsel,
authorization of indemnification and/or of advances and reimbursement for
expenses shall be made by those entitled under Section 13.1-701B.3. of the Code
of Virginia, as now in effect or hereafter amended or replaced, to select
counsel.
(e) The provisions of this Article shall be applicable to all actions, claims,
suits or proceedings commenced after the adoption hereof, whether arising from
any action taken or failure to act before or after such adoption. No amendment,
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modification or repeal of this Article shall diminish the rights provided hereby
or diminish the right to indemnification with respect to any claim, issue or
matter in any then pending or subsequent proceeding that is based in any
material respect on any alleged action or failure to act prior to such
amendment, modification or repeal.
(f) Except to the extent inconsistent with this Article, terms used herein
shall have the same meanings assigned them in the Indemnification Article of the
Virginia Stock Corporation Act, as now in effect or hereafter amended or
replaced. Without limitation, it is expressly understood that reference herein
to directors, officers, employees or agents shall include former directors,
officers, employees and agents shall include former directors, officers,
employees and agents and their respective heirs, executors and administrators.
6.(a) Any Business Combination shall require only such affirmative vote by the
Holders as is required by applicable law and any other provision of the
Articles, exclusive of Section (b) of this Article 6, if the conditions of
either of paragraphs (i) or (ii) are met:
(i) The Business Combination has been approved by a vote of a
majority of the directors, including a majority of all the Continuing
Directors; or
(ii) All of the following conditions have been satisfied:
(A) The Holders shall receive the aggregate amount of (x) cash
and (y) fair market value (as of the date of the consummation of the
Business Combination) of consideration other than cash, at least equal
to the highest per share price (including any brokerage commissions,
transfer taxes and soliciting dealers' assessing fees) paid by the
Interested Shareholder for any shares of such class or series of stock
acquired by the Interested Shareholder. However, if the highest
preferential amount per share of a series of preferred stock to which
the Holders thereof would be entitled in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of
the Corporation (regardless of whether the Business Combination
constitutes such an event) is greater than such aggregate amount,
Holders of such series of preferred stock shall receive at least the
highest preferential amount per share applicable to such series of
preferred stock; and
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(B) The consideration to be received by Holders of any class or
series of outstanding common or preferred stock shall be in cash or in
the same form as the Interested Shareholder has previously paid for
shares of such class or series of stock. If the Interested Stockholder
has paid for shares of any class or series of stock with varying forms
of consideration, the form of consideration given for such class or
series of stock in the Business Combination shall be either cash or
the form used to acquired the largest number of shares of such class
or series of stock previously acquired by the Interested Shareholder;
and
(C) A proxy statement satisfying the requirements of the
Securities Exchange Act of 1934 ("'34 Act") and the rules and
regulations thereunder (or any subsequent provisions replacing the '34
Act and such rules and regulations) shall be mailed to the
shareholders of the Corporation at least 45 days prior to the holding
of any meeting of shareholders of the Corporation to vote upon the
Business Combination (whether or not such proxy or information
statement is required pursuant to the '34 Act or any subsequent
provisions) and shall contain in the forepart thereof in a prominent
place any recommendations as to the advisability or inadvisability of
the Business Combination which the Continuing Directors may choose to
state and, if deemed advisable by a majority of the Continuing
Directors, an opinion of a reputable investment banking firm as to the
fairness (or lack of fairness) of the terms of such Business
Combination from the point of view of the Holders of any class or
series of voting stock of the Corporation other than the Interested
Shareholder (such investment banking firm to be selected by majority
of the Continuing Directors, to be furnished with all information it
reasonably requests and to be paid by the Corporation a reasonable fee
for its services upon receipt by the Corporation of such opinion).
(b) If the provisions of paragraph (a) of this Article 6 have not been
satisfied, any Business Combination shall require the affirmative vote of the
Holders of at least 80 percent of each class of the voting stock of the
Corporation then outstanding. Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that some lesser
percentage may be specified by law or in any agreement of the Corporation with
any national securities exchange or otherwise.
(c) For the purposes of this Article 6:
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(i) "Business Combination" means any of the following:
(A) Any merger or consolidation of the Corporation or any
Subsidiary with or into (x) any Interested Shareholder, or (y) any
other Corporation which, after such merger or consolidation, would be
an Interested Shareholder; or
(B) Any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Shareholder of any assets of
the Corporation or any Subsidiary when such assets have an aggregate
fair market value of $500,000 or more; or
(C) The issuance or transfer to any Interested Shareholder by
the Corporation or any Subsidiary (in one transaction or a series of
related transactions) of any equity securities of the Corporation or
any Subsidiary where any such equity securities have an aggregate fair
market value of $500,000 or more; or
(D) The adoption of any plan or proposal for the liquidation or
dissolution of the Corporation; or
(E) Any reclassification of securities (including any preferred
stock split) or recapitalization of the Corporation or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
similar transaction (whether or not with or into or otherwise
involving an Interested Shareholder) which has the effect of directly
or indirectly increasing the percentage of the outstanding shares of
any class of equity or convertible securities of the Corporation or
any Subsidiary which is directly or indirectly owned by any Interested
Shareholder; or
(F) Any agreement, contract, or other arrangement providing for
any of the transactions described in this definition of a "Business
Combination;" or
(G) The Corporation or any of its Subsidiaries entering into a
partnership agreement with any Interested Shareholder.
(ii) "Person" means any individual, firm, corporation or other
entity.
(iii) "Interested Shareholder" means (A) any Person (other than
the Corporation, a Subsidiary, or any profit-sharing, employee stock
ownership or employee benefit plan of the Corporation or a Subsidiary,
or any trustee of or fiduciary with respect to any such plan acting in
such capacity) that is the direct or indirect beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the '34 Act as in effect on
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November 1, 1992) of five percent or more of the outstanding capital
stock of the Corporation entitled to vote for the election of
directors, and (B) any Affiliate or Associate of any such Person.
(iv) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General Rules and
Regulations under the '34 Act as in effect on November 1, 1992.
(v) "Subsidiary" means any business entity, 50 percent or more of
which is directly or indirectly owned by the Corporation.
(vi) "Continuing Director" means any member of the Board of
Directors who is neither an Interested Shareholder nor affiliated with
an Interested Shareholder and who was a member of the Board of
Directors immediately prior to the time that the Interested
Shareholder became an Interested Shareholder.
(vii) "Holders" means the holders of all classes and series of
the capital stock of the Corporation.
(d) A majority of the Continuing Directors shall have the power to make all
determinations with respect to this Article 6, including, without limitation,
etermining which transactions are Business Combinations, the Persons who are
Interested Shareholders, the time at which an Interested Shareholders became an
Interested Shareholder, the fair market value of any assets, securities or other
property, and whether a Person is an Affiliate or Associate of another, and any
such determinations of such Continuing Directors shall be conclusive and
binding.
(e) Nothing contained in this Article 6 shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by law.
(f) Not withstanding any other provisions of the Articles or of
the Bylaws of the Corporation (and in addition to any other vote that may be
required by law or the Bylaws of the Corporation), the affirmative vote of the
Holders of not less than 80 percent of each class of the voting stock of the
Corporation then outstanding shall be required in order to amend or repeal this
Article 6 or adopt any provision inconsistent herewith.
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