This excerpt taken from the UVV DEF 14A filed Jun 28, 2007.
The Amendments Related to Proposal Five
Article IV Amendments
Our Board of Directors determined that the authorization for the 8% Cumulative Preferred Stock contained in Article IV of the Articles of Incorporation was no longer needed by us as authorized capital. All of the shares of 8% Cumulative Preferred Stock have been retired and are no longer issued and outstanding. Our Board of Directors may issue new shares of preferred stock from the authorization of 5,000,000 shares of Additional Preferred Stock in the Articles of Incorporation. As a result, the authorization for the 8% Cumulative Preferred Stock and other references to it have been removed from the Articles of Incorporation, as amended.
To date, our Board of Directors has designated a total of 500,000 shares of Additional Preferred Stock as Series A Junior Participating Preferred Stock and a total of 220,000 shares of Additional Preferred Stock as Series B 6.75% Convertible Perpetual Preferred Stock. The Series A Junior Participating Preferred Stock is reserved for issuance in connection with our shareholder rights plan. As of June 19, 2007, there were 220,000 shares of Series B 6.75% Convertible Perpetual Preferred Stock issued and outstanding. We believe that the remaining authorization of Additional Preferred Stock is adequate for our purposes. Other than the elimination of references to the 8% Cumulative Preferred Stock, there are no changes in the designations for the Series A and Series B Preferred Stock in the Articles of Incorporation, as amended. The Articles of Incorporation, as amended, reflect the addition of the designation of the Series B 6.75% Convertible Perpetual Preferred Stock from the Articles of Amendment filed with the SCC in March 2006 and does not represent a change in the Articles of Incorporation. There are no deletions or additions to the designation as part of the proposed amendment to the Articles of Incorporation.
The Articles of Incorporation, as amended, delete from Article IV provisions relating to the types of consideration that may be received as payment for our capital stock, the limitation on liability in connection with subscription contracts, and the provisions relating to the disposal of stocks or bonds for such consideration as we may determine. Under the VSCA, our Board of Directors is authorized to issue shares of capital stock for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services to be performed, or other securities of the corporation and to determine in good faith that the consideration received or to be received for the shares is adequate. The adoption of the Articles of Incorporation, as amended, will conform our authority to issue shares to the provisions of the VSCA. In addition, subscription contracts are subject to the VSCA and, under the Articles of Incorporation, as amended, any limitation on liability may be addressed in the subscription contracts at the discretion of our Board of Directors.
The provisions of Article IV relating to our payment of dividends have been revised and moved to Article VI, paragraph 6 of the Articles of Incorporation, as amended.
Article VI Amendments
Article VI, paragraph 3 of the Articles of Incorporation currently provides that our Board of Directors may, before the issue of any new or additional stock, determine that all or any part of the issuance will be offered first to existing shareholders on a pro rata basis, but in the absence of such determination the new or additional shares may be dealt with by the Board of Directors in its best judgment. Article VI, paragraph 3 of the Articles of Incorporation, as amended, clarifies that no holder of outstanding shares of any class of capital stock shall have any preemptive right to subscribe for or purchase shares of our capital stock or other securities, whether now or hereafter authorized, or any warrants, rights, or options to purchase any such stock or security, or any obligations convertible into such stock or security. The amendment does not limit the ability of the Board of Directors in its discretion to grant to shareholders pro rata rights to purchase shares of capital stock in connection with a rights offering or other similar offering.
Article VI, paragraph 6 of the Articles of Incorporation currently provides that the Board of Directors may set apart, from the net earnings or surplus profits of the corporation, an amount of profits as working capital, or as a reserve or surplus fund to cover depreciation or losses, or to meet liabilities or contingencies or for any other corporate purpose. Article VI, paragraph 6 of the Articles of Incorporation, as amended, deletes this provision as unnecessary since the Board has such authority in the absence of the provision. In addition, Article VI, paragraph 6 of the Articles of Incorporation, as amended, now provides for the declaration of annual, semi-annual, quarterly, or monthly dividends by the Board of Directors in its discretion, subject to any limitations contained in our Bylaws, at such times as may be fixed in the Bylaws or, if no time is fixed, at such time as may be declared by the Board of Directors. The former provisions relating to declaration of dividends by the Board of Directors contained in Article IV of the Articles of Incorporation were moved to Article VI and revised to delete the requirement that dividends be paid out of our surplus or net earnings. The effect of the amendment is that dividends may be lawfully declared by the Board of Directors under Virginia law unless, as a result of the distribution, we would not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.
Article VI, paragraph 7 of the Articles of Incorporation currently provides that we may apply surplus earnings or cumulated profits to the purchase or acquisition of our stock, bonds or other securities and obligations. Article VI, paragraph 7 of the Articles of Incorporation, as amended, deletes the limitation that we may purchase our securities only from surplus earnings or cumulated profits. This limitation is not a requirement of Virginia law and is not required to be stated in our Articles of Incorporation. The provisions of Article VI, paragraph 7 relating to the determination of profits for purposes of declaring and paying dividends is unnecessary in light of the revisions to the dividend provisions in Article VI, paragraph 6, as described above, and therefore have been deleted.
The exact terms of the amendments described in this Proposal Five may be found in Article IV and VI of the attached Exhibit 2, with deletions indicated by strikeouts and additions indicated by underlining.