PKKW Parkway Acquisition Corporation (QX)

Item 4.          Description of Securities.

The following description of the material terms of the Registrant’s capital stock does not purport to be complete and is subject to, and qualified in its entirety by reference to, its articles of incorporation and its bylaws. The articles of incorporation and bylaws are included as exhibits to the Company’s Annual Report on Form 10-K, which is incorporated by reference herein.

General

The Registrant’s authorized capital stock consists of 25,000,000 shares of common stock, no par value, and 5,000,000 shares of preferred stock, no par value. As of December 15, 2020, there were 6,045,775 shares of the Registrant’s common stock outstanding and no shares of preferred stock outstanding.

Common Stock

Shares of the Registrant’s common stock have the following rights, preferences, and privileges:

Voting Rights

Holders of the Registrant’s common stock are entitled to one vote per share on all matters voted on generally by shareholders, including the election of directors. Its articles of incorporation do not provide for cumulative voting for the election of directors, which means that the holders of a majority of the outstanding shares of the Registrant’s common stock have the capacity to elect all of the members of the Board of Directors. Except as otherwise required by law or with respect to any outstanding class or series of the Registrant’s preferred stock, the holders of its common stock possess all voting power.

Dividend Rights; Rights Upon Liquidation

Subject to any preferential rights of holders of any outstanding shares of the Registrant’s preferred stock, holders of shares of the Registrant’s common stock are entitled to receive dividends on their shares of common stock out of assets legally available for distribution when, as, and if authorized and declared by the Board of Directors and to share ratably in its assets legally available for distribution to the Registrant’s shareholders in the event of its liquidation, dissolution, or winding-up.

Preemptive Rights

Holders of the Registrant’s common stock have no preemptive rights to purchase, subscribe for, or otherwise acquire any of the Registrant’s unissued securities.

Miscellaneous

Holders of the Registrant’s common stock have no preferences or conversion or exchange rights. Shares of the Registrant’s common stock will not be liable for further calls or assessments by the Registrant, and the holders of its common stock will not be liable for any of the Registrant’s liabilities.

Exclusive Forum

Section 5.6 of the Registrant’s bylaws provides that a circuit court or a federal district court with jurisdiction over the County of Grayson, Virginia shall be the sole and exclusive forum for certain shareholder litigation matters. Although the Registrant believes this provision is beneficial to the combined company by providing increased consistency in the application of Virginia law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against the Registrant’s directors and officers and would prevent a shareholder from selecting a different judicial forum for disputes with the Registrant and the Registrant’s directors, officers and employees. However, it is possible that a court could rule that this provision is unenforceable or inapplicable to a particular dispute.

Preferred Stock

The Registrant’s articles of incorporation authorize the issuance of 5,000,000 shares of preferred stock, no par value. As of December 15, 2020, no shares of the Registrant’s preferred stock were issued and outstanding.

The Registrant’s articles of incorporation authorize the Board of Directors to designate and issue from time to time one or more series of preferred stock without shareholder approval. The Board of Directors may fix and determine the preferences, limitations, and relative rights of each series of preferred stock issued. Because the Board of Directors has the power to establish the preferences and rights of each series of preferred stock, it may afford the holders of any series of preferred stock preferences and rights, voting or otherwise, senior to the rights of holders of the Registrant’s common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of common stock unless and until the Board of Directors determines the specific rights of the holders of preferred stock proposed to be issued. However, the effects might include:

Antitakeover Provisions of the Registrant’s Articles of Incorporation and Bylaws

General

The Registrant’s articles of incorporation and bylaws contain provisions that could make more difficult an acquisition of the Registrant by means of a tender offer, a proxy contest or otherwise. In addition, Virginia has two antitakeover statutes, the Affiliated Transactions Statute and the Control Share Acquisitions Statute, that could make it more difficult for another party to acquire the Registrant without the approval of the Board of Directors. These provisions are expected to discourage specific types of coercive takeover practices and inadequate takeover bids as well as to encourage persons seeking to acquire control to first negotiate with the Registrant. Although these provisions may have the effect of delaying, deferring or preventing a change in control, the Registrant believes that the benefits of increased protection through the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure the Registrant outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.

Blank Check Preferred Stock

The Registrant’s articles of incorporation authorize the Board of Directors to establish one or more series of preferred stock and to determine, with respect to any series of preferred stock, the preferences, rights, and other terms of such series. Under this authority, the Board of Directors could create and issue a series of preferred stock with rights, preferences, or restrictions that have the effect of discriminating against an existing or prospective holder of the Registrant’s capital stock as a result of such holder beneficially owning or commencing a tender offer for a substantial amount of the Registrant’s common stock. One of the effects of authorized but unissued and unreserved shares of preferred stock may be to render it more difficult for, or to discourage an attempt by, a potential acquirer to obtain control of the Registrant by means of a merger, tender offer, proxy contest, or otherwise, and thereby protect the continuity of the Registrant’s management.

Board Vacancies

Virginia law and the Registrant’s articles of incorporation and bylaws provide that any vacancy occurring on the Board of Directors may be filled by a majority of directors then in office, even if less than a quorum. These provisions may discourage, delay, or prevent a third party from voting to remove incumbent directors and simultaneously gaining control of the Board of Directors by filling the vacancies created by that removal with its own nominees.

Shareholder Meetings

Under its bylaws, only the Chairman of the Board of Directors, President, or a majority of the Board of Directors may call special meetings of shareholders. Under Virginia law, shareholders may only conduct business at special meetings of shareholders that is specified in the notice of the meeting.

Advance Notification of Shareholder Nominations and Proposals

The Registrant’s bylaws establish advance notice procedures with respect to the nomination of persons for election as directors, other than nominations made by or at the direction of the Board of Directors, and shareholder proposals for business.

Shareholder Nominations. The Registrant’s bylaws provide that a shareholder entitled to vote for the election of directors may nominate persons for election to the Board of Directors by delivering written notice to the Corporate Secretary. With respect to an election to be held at an annual meeting of shareholders, its bylaws require that such notice generally must be delivered not later than the close of business on the 60th day prior to the anniversary of the immediately preceding year’s annual meeting.

The shareholder’s notice is required to include, as to the nominee, the following:

The shareholder’s notice must also contain the name and address of the shareholder and of any other shareholder who, to the shareholder’s knowledge, supports the nomination, and the class and number of shares owned beneficially or of record by the nominating shareholder and the other shareholders supporting the nomination.

Shareholder Proposals. In order for a shareholder to bring other business before a shareholder meeting, timely notice must be received by the Corporate Secretary within the time limits described under “– Shareholder Nominations” above. The shareholder’s notice is required to contain, as to each matter of business, the following: