Fill and Sign the Proposal No 3approval to Effect Reverse Stock Secgov Form

PROPOSAL NO. 3 AMENDMENT To ARTICLES OF INCORPORATION TO CHANGE THE TERMS OF THE AUTHORIZED PREFERRED STOCK The Board of Directors has unanimously approved and recommended to the shareholders an amendment (the "Preferred Amendment") to Article Four of its Articles of Incorporation, as amended, to change the terms of the Company's Preferred Stock. A copy of the Proposed Amendment and the Preferred Amendment to Article Four setting forth the amended Article Four in its entirety is attached as Exhibit A and incorporated herein by reference. The current terms of the authorized Preferred Stock of the Company were established in 1973 and were fashioned for a specific proposed issuance of a series of Preferred Stock. Management believes it is in the Company's best interest to provide for basic Preferred Stock, which would allow the Company by action of the Board to issue, at any time and from time to time, one or more series of Preferred Stock without further shareholder approval. In addition, the Board would be able to determine all designations, preferences, limitations, and relative rights of such stock including, but not limited to, the designation of series and numbers of shares, dividend rights, rights upon liquidation or distribution of the assets of the Company, conversion or exchange rights, redemption provisions, sinking fund provisions and voting rights. The current terms of the authorized Preferred Stock, among other matters, provide for the specific payment of cumulative quarterly dividends, specific voting power for the election of directors and for all other purposes, specific requirements for redemption and liquidation, and the right of holders of Preferred Stock to elect three directors of the Company when dividends payable on the Preferred Stock are in arrears for six full quarterly dividends. In making the decision to amend the terms of the current authorized Preferred Stock, the Board considered the fact that many publicly traded companies have basic preferred stock. This type of preferred stock provides greater flexibility for potential future financing needs, acquisitions, and other corporate purposes. The issuance of Preferred Stock could be used to create voting impediments and to make it more difficult for persons seeking to effect a merger or otherwise gain control of the Company. Neither the Board nor management is considering the use of Preferred Stock for such purposes and they are not aware of any present effort to accumulate the securities for the purpose of gaining control of the Company. As has always been the case with the Company's Preferred Stock, the authorization and issuance of a series of Preferred Stock could have certain effects on the rights of holders of Common Stock. Such effects might include (a) restrictions on dividends on Common Stock if dividends on the Preferred Stock are in arrears, (b) possible dilution of the voting power of the Common Stock to the extent that the Preferred Stock has voting rights, and (c) holders of the Common Stock not being entitled to share in the Company's assets upon liquidation until satisfaction of any liquidation preference granted to the Preferred Stock. The approval of the Preferred Amendment requires the affirmative vote of the holders of two-thirds of the outstanding shares of Common Stock. The Board of Directors recommends a vote FOR approval for the amendment to the Articles of Incorporation to change the terms of the authorized Preferred Stock. EXHIBIT A 4.1 General.The aggregate number of shares which the corporation has authority to issue is Thirty-Six Million (36,000,000) shares, divided into one class of Thirty-Five Million (35,000,000) shares of Common Stock with par value of $1.00 per share, and one class of One Million (1,000,000) shares of Preferred Stock with par value of $1.00 per share. No holder of Common Stock or Preferred Stock or other person shall have any preemptive right whatsoever. 4.2 Authorization of Directors to Determine Certain Rights. The Board of Directors is authorized, from time to time, to divide the Preferred Stock into Series, to fix and determine separately for each Series any or all of the relative rights and preferences, to issue shares of any Series then or previously designated, fixed and determined, and to increase or decrease the number of shares within any Series. The relative rights and preferences of shares of Preferred Stock may vary between Series in any and all respects. Without limiting the foregoing, each Series may vary from any other Series with respect to the following relative rights and preferences: (A) the ratio of dividend payable with respect to the shares of any Series and the dates, terms and other conditions on which such dividend shall be payable; (B) the nature of the dividend payable with respect to shares of any Series as cumulative, noncumulative or partially cumulative; (C) the price at and the terms and conditions on which shares may be redeemed; (D) the amount payable upon shares in event of involuntary liquidation; (E) the amount payable upon shares in event of voluntary liquidation; (F) sinking fund provisions (if any) for the redemption or purchase of shares; (G) the terms and conditions on which shares may be converted if the shares of any Series are issued with the privilege of conversion; (H) voting rights (including the number of votes per share, the matters on which the shares can vote, and the contingencies which make the voting rights effective); and (I) repurchase obligations of the corporation with respect to the shares of any Series. Victoria Bankshares, Inc. 3/22/94