STEEL OF WEST VIRGINIA INC, PRE 14A, 1997-03-26

STEEL OF WEST VIRGINIA INC
PRE 14A, 1997-03-26
STEEL WORKS, BLAST FURNACES & ROLLING MILLS (COKE OVENS)

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/

Check the appropriate box:

/X/ Preliminary Proxy Statement
/_/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Steel of West Virginia
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

/_/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

_____________________________________________________________________________

2) Aggregate number of securities to which transaction applies:

_____________________________________________________________________________

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*

_____________________________________________________________________________

4) Proposed maximum aggregate value of transaction:

_____________________________________________________________________________

/_/ Fee paid previously with preliminary materials.
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.

1) Amount previously paid: _________________________________________________

2) Form, Schedule or Registration No. ______________________________________

3) Filing party: ___________________________________________________________

4) Date filed: _____________________________________________________________

___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>

Preliminary Proxy Materials

April 4, 1997

Dear Stockholder:

It is our pleasure to invite you to the Annual Meeting of Stockholders of
Steel of West Virginia, Inc. to be held on Thursday, May 15, 1997 at 10:30 a.m.
at the Radisson Hotel Huntington, 1001 3rd Avenue, Huntington, West Virginia.

Whether or not you plan to attend, and regardless of the number of shares
you own, it is important that your shares be represented at the meeting. You are
accordingly urged to sign, date and return your proxy promptly in the enclosed
envelope, which requires no postage if mailed in the United States.

We sincerely hope you will be able to join us at the meeting. The officers
and directors of the Company look forward to seeing you at that time.

Sincerely,

Robert L. Bunting, Jr.
Chairman

Timothy R. Duke
President
<PAGE>

Preliminary Proxy Materials

STEEL OF WEST VIRGINIA, INC.
17th Street and 2nd Avenue
Huntington, West Virginia 25703

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

May 15, 1997

The Annual Meeting of Stockholders of Steel of West Virginia, Inc. (the
"Company") will be held at the Radisson Hotel Huntington, 1001 3rd Avenue,
Huntington, West Virginia on Thursday, May 15, 1997 at 10:30 a.m. for the
following purposes:

1. To elect Directors of the Company for the ensuing year.

2. To approve an amendment to the Company's Certificate of Incorporation
to authorize 13,000,000 additional shares of Common Stock.

3. To approve an amendment to the Company's Certificate of Incorporation
to authorize the issuance of up to 2,000,000 shares of Preferred
Stock, par value $.01 per share, in one or more series, on terms and
conditions to be established by the Board of Directors from time to
time.

4. To approve an amendment to the Company's Certificate of Incorporation
to provide that stockholder action may be taken only at a meeting of
the stockholders and not by written consent.

5. To ratify the reappointment of Ernst & Young LLP as independent
accountants for the Company.

6. To transact such other business as may properly come before the
meeting and any adjournments thereof.

The Board of Directors has fixed the close of business on March 31, 1997 as
the record date for the determination of stockholders entitled to notice and to
vote at the meeting and any adjournments thereof.

IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE
ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN IT
PROMPTLY IN THE ENCLOSED ENVELOPE.

By Order of the Board of Directors

STEPHEN A. ALBERT
Secretary

April 4, 1997
<PAGE>

Preliminary Proxy Materials

STEEL OF WEST VIRGINIA, INC.
17th Street and 2nd Avenue
Huntington, West Virginia 25703

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 15, 1997

GENERAL INFORMATION

The accompanying proxy is solicited by and on behalf of the Board of
Directors of Steel of West Virginia, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders to be held at the Radisson Hotel Huntington, 1001
3rd Avenue, Huntington, West Virginia on Thursday, May 15, 1997, at 10:30 a.m.
and any adjournments thereof.

When the enclosed proxy is properly executed and returned, the shares of
Common Stock of the Company, par value $.01 per share (the "Common Stock"), it
represents will be voted at the meeting in accordance with any directions noted
thereon and, if no direction is indicated, the shares it represents will be
voted: (i) FOR the election of the nominees for Directors set forth below; (ii)
FOR the proposed amendment to the Company's Certificate of Incorporation to
authorize 13,000,000 additional shares of Common Stock; (iii) FOR the proposed
amendment to the Company's Certificate of Incorporation to authorize the
issuance of up to 2,000,000 shares of Preferred Stock, par value $.01 per share,
in one or more series, on terms and conditions to be established by the Board of
Directors from time to time; (iv) FOR the proposed amendment to the Company's
Certificate of Incorporation to provide that stockholder action may be taken
only at a meeting of stockholders and not by written consent; (v) FOR the
ratification of the reappointment of Ernst & Young LLP as independent
accountants for the Company; and (vi) in the discretion of the holders of the
proxy with respect to any other business that may properly come before the
meeting. Any stockholder signing and delivering a proxy may revoke it at any
time before it is voted by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a date later than the date of the
proxy being revoked. Any stockholder attending the meeting in person may
withdraw his or her proxy and vote his or her shares.

The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made only by mail; provided, however, that officers and
regular employees of the Company may solicit proxies personally or by telephone
or telegram. Such persons will not be specially compensated for such services.
The Company may reimburse brokers, banks, custodians, nominees and fiduciaries
holding stock in their names or in the names of their nominees for their
reasonable charges and expenses in forwarding proxies and proxy material to the
beneficial owners of such stock.

The approximate mailing date of this Proxy Statement and the accompanying
proxy is April 4, 1997.

VOTING RIGHTS

Only stockholders of record at the close of business on March 31, 1997,
will be entitled to vote at the Annual Meeting of Stockholders. On that date,
there were 5,991,276 shares of Common Stock outstanding, the holders of which
are entitled to one vote per share on each matter to come before the meeting.
Voting rights are non-cumulative. A majority of the outstanding shares will
constitute a quorum at the meeting and abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business.

Directors are elected by plurality vote. The approval of the amendments to
the Company's Certificate of Incorporation and the ratification of the
reappointment of Ernst & Young LLP will require the affirmative vote of a
majority of the Common Stock voting on the proposal. Abstentions and broker
non-votes will not be counted in the election of directors or in determining
whether such ratification has been given.
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth as of March 25, 1997, the beneficial
ownership of Common Stock of each person known to the Company who owns more than
5% of the issued and outstanding Common Stock.

Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class(7)
- ----------------------------------- -------------------- ----------
FMR Corp. 909,800(1) 15.19
82 Devonshire Street
Boston, Massachusetts 02109

Heartland Advisors, Inc. 590,000(2) 9.85
790 North Milwaukee Street
Milwaukee, WI 53202

Putnam Investments, Inc. 546,700(3) 9.12
One Post Office Square
Boston, Massachusetts 02109

Robert L. Bunting, Jr. 534,380(4) 8.92
c/o Steel of West Virginia, Inc.
17th Street and 2nd Avenue
Huntington, West Virginia 25703

Dimensional Fund Advisors, Inc. 406,600(5) 6.79
1299 Ocean Avenue
Santa Monica, California 90401

Wachovia Corporation 320,000(6) 5.34
301 North Main Street
Winston-Salem, NC 27150-3099

- ---------------
(1) Fidelity Management & Research Company ("Fidelity"), 82 Devonshire Street,
Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR Corp. and an
investment adviser registered under Section 203 of the Investment Advisors
Act of 1940, is the beneficial owner of 733,000 shares (12.23%) of Common
Stock as a result of acting as investment advisor to various investment
companies registered under Section 8 of the Investment Company Act of 1940.
The ownership of one investment company, Fidelity Low-Priced Stock Fund,
amounted to 733,000 shares (12.23%) of Common Stock outstanding. Fidelity
Low-Priced Stock Fund has its principal business office at 82 Devonshire
Street, Boston, Massachusetts 02109. Edward C. Johnson 3d, FMR Corp.,
through its control of Fidelity, and the Funds each has sole power to
dispose of the 733,000 shares owned by the Funds. Neither FMR Corp. nor
Edward C. Johnson 3d, Chairman of FMR Corp., has the sole power to vote or
direct the voting of the shares owned directly by the Fidelity Funds, which
power resides with the Funds' Board of Trustees. Fidelity carries out the
voting of the shares under written guidelines established by the Funds'
Board of Trustees. Fidelity Management Trust Company, 82 Devonshire Street,
Boston, Massachusetts 02109, a wholly-owned subsidiary of FMR Corp. and a
bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934,
is the beneficial owner of 176,800 shares (2.95%) of Common Stock as a
result of its serving as investment manager of the institutional
account(s). Edward C. Johnson 3d and FMR Corp. through its control of
Fidelity Management Trust Company, has sole voting and dispositive power
over 176,800 shares of Common Stock owned by the institutional account(s)
as reported above. Members of the Edward C. Johnson 3d family and trusts
for their benefit are the predominant owners of Class B shares of Common
Stock of FMR Corp., representing approximately 49% of the voting power of
FMR Corp. Mr. Johnson

2
<PAGE>

3d owns 12.0% and Abigail P. Johnson owns 24.5% of the aggregate
outstanding voting stock of FMR Corp. Mr. Johnson 3d is chairman of FMR
Corp. and Abigail P. Johnson is a director of FMR Corp. The Johnson family
group and all other Class B shareholders have entered into a shareholder's
voting agreement under which all Class B shares will be voted in accordance
with the majority vote of Class B shares. Accordingly, through their
ownership of voting Common Stock and the execution of the shareholder's
voting agreement, members of the Johnson family may be deemed, under the
Investment Company Act of 1940 to form a controlling group with respect to
FMR Corp. The information set forth herein is based on a Schedule 13G dated
February 14, 1997 filed by FMR Corp. with the Securities and Exchange
Commission.

(2) Heartland Advisors, Inc. ("Heartland"), an investment advisor registered
under Section 203 of the Investment Advisors Act of 1940, is the beneficial
owner of 590,000 shares of Common Stock held in investment advisory
accounts. Heartland has sole voting and dispositive power over the shares
it owns, but various persons have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
securities. The information set forth herein is based on a Schedule 13G
filed with the Securities and Exchange Commission

(3) Putnam Investments, Inc. ("Putnam") is a wholly-owned subsidiary of Marsh &
McLennan Companies, Inc. ("M&MC") and wholly owns two registered investment
advisers: Putnam Investment Management, Inc. and the Putnam Advisory
Company, Inc., which are deemed to be beneficial owners of the shares set
forth in the table above. Neither Putnam nor M&MC has any power to vote or
dispose of, or direct the voting or disposition of, any of the shares set
forth in the table above, which were acquired by the afore-named investment
advisors for investment purposes for advisory clients. The information set
forth herein is based on a Schedule 13G dated January 27, 1997 filed by
Putnam with the Securities and Exchange Commission, which filing Putnam
states should not be deemed an admission of beneficial ownership.

(4) Of this amount, 233,710 shares are held in a trust for the benefit of Mr.
Bunting's wife, Nancy L. Bunting, and 237,557 shares are held in a trust
for the benefit of Mr. Bunting. Mr.and Mrs. Bunting are co-trustees of each
of said trusts. This amount includes 8,000 shares that Mr. Bunting has the
right to acquire through the exercise of options.

(5) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 406,600 shares set forth
in the table above, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, for all of which Dimensional
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares. The information set forth herein
is based on a Schedule 13G dated February 5, 1997 filed by Dimensional with
the Securities and Exchange Commission.

(6) Wachovia Corporation ("Wachovia"), a holding company, is the beneficial
owner of 320,000 shares of Common Stock held by Wachovia Bank of North
Carolina, N.A., Wachovia Bank of Georgia, N.A., and Wachovia Bank of South
Carolina, N.A., as trustees. Wachovia has sole voting and dispositive
power over such shares. The information set forth herein is based on
a Schedule 13G dated February 14, 1997 filed by Wachovia with the
Securities and Exchange Commission, which filing Wachovia states should not
be deemed an admission of beneficial ownership.

(7) Includes 85,500 shares deemed outstanding that may be acquired through the
exercise of options.

3
<PAGE>

DIRECTORS

PROPOSAL 1. ELECTION OF DIRECTORS

At the Annual Meeting of Stockholders, the entire Board of Directors,
consisting of six members, is to be elected. In the absence of instructions to
the contrary, the shares of Common Stock represented by a proxy delivered to the
Board of Directors will be voted FOR the six nominees named below. Each nominee
named below is presently serving as a Director of the Company and is anticipated
to be available for election and able to serve. However, if any such nominee
should decline or become unable to serve as a Director for any reason, votes
will be cast instead for a substitute nominee designated by the Board of
Directors or, if none is so designated, will be cast according to the judgment
in such matters of the person or persons voting the proxy.

The tables below and the paragraphs that follow present certain information
concerning the nominees for Director and the executive officers of the Company.
Each elected Director will serve until the next Annual Meeting of Stockholders
and until his or her successor has been elected and qualified. Officers are
elected by and serve at the discretion of the Board of Directors. None of the
Company's Directors or executive officers has any family relationship with any
other Director or executive officer.

Nominees for Directors
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Owned as of
Positions Years with March 25, Percent of
Name Age with Company Company 1997 Class (5)
- ---------------------------- ------ ------------------- ------------ ---------------- -------------
<S> <C> <C> <C> <C> <C>
Robert L. Bunting, Jr. 63 Chairman, Chief 14 534,380(2) 8.92
Executive Officer
and Director
Timothy R. Duke 45 President, Chief 10 23,140(3) *
Operating Officer
and Director

Stephen A. Albert 44 Director 10 4,000(4) *

Albert W. Eastburn(1) 68 Director 4 8,934(4) *
Daniel N. Pickens(1) 47 Director 4 6,391(4) *
Paul E. Thompson(1) 66 Director 3 5,391(4) *

All Directors and executive officers as a group ........................... 582,236(2)(3)(4) 9.72
</TABLE>

- ------------------------
* Less than one percent

(1) Member of the Compensation and Benefits Committee and the Audit Committee.

(2) Of this amount, 233,710 shares are held in a trust for the benefit of Mr.
Bunting's wife, Nancy L. Bunting, and 237,577 shares are held in a trust
for the benefit of Mr. Bunting. Mr. and Mrs. Bunting are co-trustees

4
<PAGE>

of each of said trusts. This amount includes 8,000 shares that Mr. Bunting
has the right to acquire through the exercise of options.

(3) This amount includes 6,000 shares that may be acquired through the exercise
of options.

(4) This amount includes 4,000 shares that may be acquired by each of Messrs.
Albert, Eastburn, Pickens and Thompson through the exercise of options.

(5) Includes 85,500 shares deemed outstanding that may be acquired through the
exercise of options.

Executive Officers who are not Directors

<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially Percent
Positions and Offices with Executive Owned as of of
Name the Company Age Officer Since March 25, 1997 Class (2)
- ------------------- ------------------------------ -------- ---------------- ------------------ ---------------

<S> <C> <C> <C> <C> <C>
Larry E. Gue Vice President of Human 54 1988 10,140(1) *
Relations

Mark G. Meikle Vice President, Treasurer 32 1996 3,000(1) *
and Chief Financial Officer

T. Elton North President, Marshall Steel, 49 1993 3,000(1) *
Inc.
</TABLE>

- ------------------------
* Less than one percent.

(1) This amount includes 3,000 shares that may be acquired through the exercise
of options.
(2) Includes 85,500 shares deemed outstanding that may be acquired through the
exercise of options.

Business Experience of Nominees and Executive Officers

Robert L. Bunting, Jr. has been Chairman of the Company, SWVA, Inc.
("SWVA") and Marshall Steel, Inc. ("Marshall"), the Company's wholly-owned
subsidiaries, since April 1993, Chief Executive Officer and a Director of the
Company since December 1986, Chief Executive Officer and a Director of SWVA
since its organization in 1982, President of the Company from 1986 to October
1996, and President of SWVA from 1982 to October, 1996. Mr. Bunting was Works
Manager of the Company's mini-mill before it was owned by SWVA. Before becoming
President of the mini-mill, Mr. Bunting held various positions in the steel
industry over a period of 27 years. Mr. Bunting received a bachelor of
metallurgical engineering from Cornell University in 1955.

Stephen A. Albert has been a Director of the Company since December 1986.
Since January 1996, Mr. Albert has been a member of the law firm of Sierchio &
Albert, P.C., counsel to the Company. Prior thereto, Mr. Albert was, since
February 1989, special counsel to the law firm of Proskauer Rose Goetz &
Mendelsohn LLP, counsel to the Company until January 1996, and prior thereto,
Mr. Albert was a member of the law firms of Feit & Ahrens and Feit & Shor, which
were counsel to the Company until January 1989. Mr. Albert has been engaged in
the practice of law in New York City since 1977.

5
<PAGE>

Albert W. Eastburn has been a Director of the Company since April 1993. Mr.
Eastburn was President and Chief Operating Officer of the Steel Group of Lukens,
Inc., a leading specialized manufacturer of steel plate and stainless steel
products ("Lukens"), from November 1988 until his retirement in 1991. Prior
thereto, Mr. Eastburn held various positions at Lukens which he joined in 1955.

Daniel N. Pickens has been a Director of the Company since April 1993. Mr.
Pickens has been a Vice President in the investment banking firm of Janney
Montgomery Scott Inc. since July 1996. Prior thereto, Mr. Pickens was a Senior
Vice President in the Corporate Finance Department of Wheat First Securities,
Inc. ("Wheat First") and held various positions at Wheat First since 1981.
Before joining Wheat First, Mr. Pickens practiced as an attorney in
Philadelphia, Pennsylvania.

Paul E. Thompson has been a Director since January 1994. From 1986 until
his retirement in 1992, Mr. Thompson was a Sub-District Director, District 23,
of the United Steel Workers of America ("USWA"). Prior thereto, Mr. Thompson was
a Staff Representative, District 23, of the USWA.

Timothy R. Duke has been President, Chief Operating Officer and a Director
since October 1996, Vice President, Treasurer and Chief Financial Officer from
March 1988 to October 1996 and Controller from June 1987 to March 1988. Mr. Duke
was formerly the Manager-Operations Accounting at Joy Manufacturing, and served
in various positions at Joy Manufacturing Company from 1979 until he joined the
Company. Mr. Duke is a certified public accountant and a certified management
accountant and has more than 20 years of experience in industry. He received a
bachelor of science degree in business from Pennsylvania State University and a
masters of business administration from Duquesne University.

Larry E. Gue has been Vice President of Human Relations of SWVA, Inc. since
March 1988 and has been Manager of Personnel and Public Relations of SWVA since
its organization in 1982. Mr. Gue began working at the Company's mini-mill in
1971 as part of the maintenance team. At that time, Mr. Gue was actively
involved in, and later became a leader of, the United Steel Workers of America
(Local 37), the union which represents the Company's work force.

Mark G. Meikle has been Vice President, Treasurer and Chief Financial
Officer of the Company since October 1996, Corporate Controller from February
1991 until October 1996 and Assistant Controller from April 1989 to February
1991. Mr. Meikle previously was employed by Ernst & Young working in both the
audit and tax departments. Mr. Meikle is a certified public accountant and a
certified management accountant. He received a bachelor of science degree in
business from West Virginia State College and a masters of business
administration from Marshall University.

T. Elton North has been President of Marshall since its organization in
April 1993. From June 1992 until April 1993, Mr. North was Division Manager for
the Memphis, Tennessee division of Marshall Steel Inc., a wholly-owned
subsidiary of Marshall Steel Ltd, a Canadian steel company. This division was
sold to the Company. Mr. North served as branch manager of Marshall Steel Ltd.
from June 1991 to June 1992. Prior thereto, Mr. North served as marketing
manager of Marshall Steel Ltd. for approximately six years.

Meetings of the Board of Directors and Committees

During the year ended December 31, 1996, the Board of Directors held ten
meetings. During that period no Director attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board of Directors held
during the period for which he was a Director and (ii) the total number of
meetings held by all Committees of the Board of Directors on which he served
during the period that he served on such Committees.

The Company's Board of Directors has a Compensation and Benefits Committee
and an Audit Committee, both of which are comprised of Directors who are not
officers or employees of the Company. The Board of Directors does not have a
standing nominating committee. The Compensation and Benefits Committee (the

6
<PAGE>

"Compensation Committee") reviews employee compensation and benefits, and the
Audit Committee reviews the scope of the independent audit, the appropriateness
of the accounting policies, the adequacy of internal controls, the Company's
year-end financial statements and such other matters relating to the Company's
financial affairs as its members deem appropriate. During 1996, the Compensation
and Benefits Committee held one meeting and the Audit Committee held one
meeting.

Executive Compensation

The following summary compensation table sets forth individual compensation
information for the Chief Executive Officer and each of the Company's executive
officers whose aggregate compensation exceeded $100,000 during the years ended
December 31, 1994, 1995 and 1996.

Summary Compensation Table

<TABLE>
<CAPTION>
All Other
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ------ ----- ------------

<S> <C> <C> <C> <C>
Robert L. Bunting, Jr. 1994 $225,000 $121,537 $ 9,957(1)
Chairman, Chief Executive 1995 225,000 150,750 9,957(1)
Officer and Director 1996 225,000 112,500 8,538(1)

Timothy R. Duke, President, 1994 $120,000 $ 69,375 $18,371(2)
Chief Operating Officer 1995 139,167 77,679 9,570(2)
and Director 1996 153,327 78,400 6,058(2)

Larry E. Gue, Vice President of Human 1994 $120,000 $ 67,126 $ 6,403(3)
Relations 1995 120,000 35,470 6,403(3)
1996 120,000 1,869 5,268(3)

T. Elton North, President 1994 $ 75,000 $ 47,099 $ 9,690(4)
Marshall Steel, Inc. 1995 75,000 50,876 6,915(4)
1996 79,039 45,000 5,421(4)
</TABLE>

- ------------------------
(1) Consists of a $7,500, $7,500 and $6,081 contribution to a defined
contribution plan and $2,457 of costs of group-term life insurance coverage
provided by the Company for 1994, 1995, and 1996 respectively.

(2) Consists of a $6,000, $6,708 and $5,676 contribution to a defined
contribution plan, $143, $186, and $382 costs of group-term life insurance
coverage provided by the Company, and $12,228, $2,676 and $0 paid in
connection with the Company's scholarship program, which is available to
all employees to which the Company pays a portion of the cost of post-high
school education for employees' dependents for 1994, 1995 and 1996
respectively.

(3) Consists of $6,000, $6,000 and $4,865 contribution to a defined
contribution plan and $403 of costs of group-term life insurance coverage
provided by the Company for 1994, 1995, and 1996 respectively.

(4) Consists of $3,750, $3,750 and $3,041 contribution to a defined
contribution plan, $5,850, $3,075 and $2,272 for personal use of a company
vehicle, and $90, $90 and $108 of costs of group-term life insurance
coverage provided by the Company for 1994, 1995 and 1996 respectively.

7
<PAGE>

The following tables present certain additional information concerning
stock options granted to or exercised by executive officers during 1995. These
were no stock options granted to executive officers in 1996.

AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value of Unexercised In-the-
Number of Securities Money
Underlying Unexercised Options Options at December 31,
at December 31, 1996 1996($)(1)
---------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert L. Bunting, Jr. 8,000 0 --- ---
Timothy R. Duke 6,000 0 --- ---
Mark G. Meikle 3,000 0 --- ---
Larry E. Gue 3,000 0 --- ---
T. Elton North 3,000 0 --- ---
</TABLE>

- ---------------------
(1) None of the options are "in-the-money".

Agreements Regarding Termination of Employment

The Company and Mr. Duke entered into a Change of Control Severance
Agreement, dated as of July 31, 1996, which provides that upon a "change of
control," Mr. Duke will be entitled to receive an amount equal to the greater of
(i) 125% of his annual base salary for the year in which such severance of
employment occurs, and (ii) 125% of his annual base salary for the year
preceding the year in which such severance of employment occurs, payable at Mr.
Duke's option in a lump sum or bi-monthly during the 12 months following such
severance. A "change of control" is defined in the agreement to have occurred if
(i) the Company or SWVA is a party to a merger or combination under the terms of
which any person or group (as that term is defined in Rule 13d-5 under the
Securities and Exchange Act of 1934) owns 20% or more of the shares in the
resulting company, or (ii) at least 50% in fair market value of the Company's or
SWVA's assets are sold, or (iii) at least 20% in voting power in election of
directors of the Company's or SWVA's capital stock is acquired by any one person
or group as that term is used in Rule 13d-5, or (iv) the individuals comprising
the Board of Directors of the Company on the date of the agreement cease to
comprise a majority of the Board of Directors of the Company or SWVA.

Directors' Compensation

Pursuant to the 1995 Non-Employee Directors Stock Option Plan (the
"Directors' Plan"), which is administered by the Compensation and Benefits
Committee, on April 1 of each year each Director (currently Messrs. Albert,
Eastburn, Pickens and Thompson) who is not an active employee of the Company
receives a grant of options to purchase 2,000 shares of Common Stock. All such
options are exercisable at the fair market value (determined in accordance with
the provisions of the Directors' Plan) at the date of grant, commencing on the
first anniversary of that date, and expire ten years after that date. The
Directors' Plan authorizes the issuance of up to 70,000 shares of Common Stock
upon the exercise of non-qualified stock options granted to non-employee
Directors of the Company.

The non-employee Directors (other than Mr. Albert) also receive cash
compensation for services as a Director, consisting of an annual retainer in the
amount of $6,000, a fee of $1,000 for each committee on which he serves, and a
fee of $1,000 for each meeting of the Board of Directors, the Compensation
Committee and the Audit Committee that he attends, of which $11,000 of the
compensation payable for a given year is paid in cash,

8
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and the balance of such compensation is paid by an award of shares of the
Company's Common Stock. The award is paid on December 15 of each year, with the
number of shares to be awarded to be determined by dividing the Director's
compensation for the year, less $11,000, by the fair market value of the Common
Stock on that date, with the Director receiving cash in lieu of fractional
shares. In 1996, the non-employee Directors as a group received for their
services as Directors cash compensation of $33,000 and 5,216 shares of Common
Stock.

As of March 25, 1997, all Directors who are not executive officers of the
Company have been granted options for an aggregate of 16,000 shares (4,000
shares each), 50% which vested on April 1, 1996 at an exercise price of $11 3/8
per share, and 50% which vested on April 1, 1997 at an exercise price of $9 per
share. All of the options are for a period of ten years from the date of grant.

On March 24, 1997, the closing sale price for the Common Stock on the
NASDAQ Stock Market, Inc. was $6 3/4.

Compensation Committee Report
Compensation Policies

The Compensation Committee of the Board of Directors is comprised of
Directors who are not officers or employees of the Company. The Compensation
Committee is responsible for reviewing and making recommendations to the Board
of Directors regarding the compensation and benefits of the Company's
management. The Committee's philosophy is that the Company's goals are more
likely to be achieved if management is encouraged to work together as a team and
if final compensation is tied to the Company's and the individual's performance
during the year, based on such Company factors as the change in operating income
from the prior year, the Company's achievement of budgeted earnings objectives,
and the Company's results of operations in light of economic conditions in the
industry and the general economy, and such personal factors as the individual's
supervision of or performance in his or her particular business unit, and his or
her supervision of significant corporate projects. Prior to 1995, this
philosophy had been implemented through the use of discretionary bonuses in
which each person included in the bonus award, including the Company's Chief
Executive Officer, received the same fixed percentage of salary as a bonus.
Incentive compensation is now awarded to management personnel to the extent that
the Company achieves certain corporate goals, and the particular individual
achieves certain personal goals.

Fiscal 1996 Compensation

In 1996, the base compensation of the Company's Chief Executive Officer,
Robert L. Bunting, Jr., was $225,000, as established pursuant to the employment
agreement then in effect between the Company and Mr. Bunting. No discretionary
bonuses were awarded to management personnel in 1996 although management awards
for 1995 were paid in 1996.

Compensation Committee
----------------------
Albert W. Eastburn
Daniel N. Pickens
Paul E. Thompson

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Performance Graph

Below is a graph comparing the cumulative total stockholder return on
the Company's Common Stock for the last five years with the cumulative total
return of companies included in the S&P 500 Stock Index and an index of peer
companies selected by the Company. The graph assumes (i) investment of $100 on
December 31, 1991 in the Company's Common Stock, the S&P 500 Index and Common
Stock of the peer group and (ii) the reinvestment of all dividends. The peer
group consists of Commercial Metals Co., Lukens, Inc., New Jersey Steel Corp.,
Nucor Corp. and Roanoke Electric Steel Corp.

1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
PEER GROUP 100.0% 157.0% 179.0% 176.4% 178.7% 163.7%
SWVA 100.0% 366.7% 566.7% 488.9% 411.1% 333.3%
S&P 500 100.0% 104.5% 111.8% 110.1% 147.7% 177.6%

Certain Transactions

The law firm of Sierchio & Albert, P.C., of which Stephen Albert, a
Director of the Company, is a member, has served as general counsel to the
Company since January 1996. In 1996, the Company paid legal fees totalling
$69,000 to Sierchio & Albert, P.C. for general representation of the Company.

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AMENDMENTS TO CERTIFICATE OF INCORPORATION

As set forth below, the Board of Directors is recommending that the
stockholders approve certain amendments to the Company's Certificate of
Incorporation. The first two of these proposals, which provide for increasing
the number of authorized shares of Common Stock and for the authorization of
preferred stock, will afford the Company flexibility in such matters as raising
additional capital, and the third of these proposals, which provides that
stockholder action may be taken only at a meeting of the stockholders, will
assure that all stockholders will have the ability to participate in any action
for which stockholder approval is required. These proposals could also have the
effect of making it more difficult for a third party to acquire, or could
discourage a third party from attempting to acquire, a controlling interest in
the Company. To that extent, the amendments are intended to encourage persons
seeking to acquire control of the Company to initiate such an acquisition
through arm's length negotiations with the Company's Board of Directors, which
will be able to evaluate the proposal and study alternative proposals in the
absence of the coercive atmosphere that might otherwise prevail and without the
imminent threat of removal. The amendments cannot, and are not intended to,
prevent a purchase of all or a majority of the equity securities of the Company
nor are they intended to deter bids or other efforts to acquire such securities.
Rather, the amendments are intended, in part, to discourage disruptive tactics
and takeovers at unfair prices or on terms that do not provide all stockholders
with the opportunity to sell their stock at a fair price, and to encourage
third parties which may seek to acquire control of the Company to initiate such
an acquisition through negotiations directly with the Board of Directors.
Therefore, the Board of Directors believes that it will be in a better position
to protect the interests of all of the stockholders if the amendments are
approved. From time to time the Board of Directors has received various
expressions of interest from third parties regarding their desire to discuss a
possible business combination, and the Company recently received such a request,
which the Board of Directors determined would not be in the best interests of
the Company or its stockholders to pursue. The approval of Proposals 2, 3 and 4
will, in conjunction with the recently adopted Shareholders' Rights Plan, assist
the Board of Directors and the stockholders in evaluating and responding to any
such requests that may be received in the future.

PROPOSAL 2. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
AUTHORIZE 13,000,000 ADDITIONAL SHARES OF COMMON STOCK

The Board of Directors of the Company has approved, subject to stockholder
approval, an amendment to Article FOURTH of the Company's Certificate of
Incorporation to increase the authorized shares of Common Stock from 12,000,000
to 25,000,000. The full text of the proposed amendment is as follows:

"FOURTH: The total number of shares of capital stock that the Corporation
shall have authority to issue is twenty-five million (25,000,000) shares of
Common Stock, par value $.01 per share."

As of March 25, 1997, there were 5,991,276 shares of Common Stock
outstanding, and options to purchase an aggregate of 85,500 shares of Common
Stock were outstanding under the 1995 Employee Stock Option Plan and the
Directors' Plan (the "Option Plans") (a total of 500,000 shares are reserved for
issuance under the Option Plans). The additional shares of Common Stock that
would be available for issuance if the proposed amendment to the Certificate of
Incorporation is approved may be issued for any proper corporate purpose at any
time without further stockholder approval (subject, however, to applicable
statutes or the rules of the NASDAQ National Market which require stockholder
approval for the issuance of shares in certain circumstances). The Board of
Directors believes it is desirable to give the Company this flexibility in
considering such matters as raising additional capital, acquisitions, or other
corporate purposes, including in connection with any future issuance of shares
in connection with the Company's Shareholders' Rights Plan. The authorization of
such shares will enable the Company to act promptly and without additional
expense if appropriate circumstances arise which require the issuance of such
shares. The Company has no current agreements, commitments, plans or intentions
to issue any additional shares, other than in connection with the Option Plans.
Holders of Common Stock are not entitled to preemptive rights, and to the extent
that any additional shares of Common Stock or securities convertible into Common
Stock may be issued other than on a pro rata basis to current stockholders, the
current ownership portion of current stockholders

11
<PAGE>

may be diluted. Depending upon the circumstances in which such additional shares
of Common Stock are issued, the overall effects of such issuance may be to
render more difficult or to discourage a merger, tender offer, proxy contest, or
the assumption of control by a holder of a large block of Common Stock and the
removal of incumbent management. For example, such shares could be used to
create voting or other impediments or to discourage persons seeking to gain
control of the Company, and such shares could be privately placed with
purchasers favorable to the Board of Directors in opposing such action. The
issuance of new shares also could be used to dilute the stock ownership of a
person or entity seeking to obtain control of the Company should the Board of
Directors consider an action of such entity or person not to be in the best
interests of the stockholders and the Company.

In the absence of instructions to the contrary, the shares of Common Stock
requested by a proxy delivered to the Board of Directors will be voted FOR the
approval of the amendment to the Company's Certificate of Incorporation to
authorize 13,000,000 additional shares of Common Stock.

PROPOSAL 3. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
AUTHORIZE 2,000,000 SHARES OF PREFERRED STOCK

The Board of Directors of the Company has approved, subject to stockholder
approval, an amendment to Article FOURTH of the Company's Certificate of
Incorporation to authorize the issuance of up to 2,000,000 shares of preferred
stock, $.01 par value per share ("Preferred Stock"), in one or more series on
terms and conditions to be established by the Board of Directors from time to
time, and commonly known as "blank check" Preferred Stock. The full text of the
proposed amendment is as follows (note that the actual number of authorized
shares of Common Stock will either be twelve million or twenty-five million
depending on whether the stockholders approve Propoposal No. 2):

"FOURTH: The total number of shares of capital stock that the Corporation
shall have authority to issue is (A) ______________ million (__,000,000)
shares of Common Stock, par value $.01 per share, and (B) two million
(2,000,000) shares of Preferred Stock, par value $.01 per share; as to
which Preferred Stock the Board of Directors of the Corporation shall have
full and complete authority by resolution from time to time, to establish
one or more series and to fix, determine and vary the voting rights,
designations, preferences, qualifications, privileges, limitations,
options, conversion rights and other special rights of each series,
including but not limited to, dividend rates and manner of payment,
preferential amounts payable upon voluntary or involuntary liquidation,
voting rights, conversion rights, redemption prices, terms and conditions
and sinking fund and stock purchase prices, terms and conditions."

The term "blank check" Preferred Stock refers to stock for which the
designations, preferences, conversion rights, cumulative rights, relative,
participating, optional and other rights, including voting rights,
qualifications, limitations, or restrictions thereof, are determined by the
Company's Board of Directors. The additional authorized shares that would be
available for issuance, if the proposed amendment to the Certificate of
Incorporation is approved, may be issued for any proper corporate purpose at any
time without further stockholder approval (subject, however, to applicable
statutes or the rules of the NASDAQ National Market which require stockholder
approval for the issuance of shares in certain circumstances). Each series of
Preferred Stock may rank senior to the Company's Common Stock with respect to
dividends and liquidation rights. No Preferred Stock is presently issued.

If approved by the stockholders, this provision of the Certificate of
Incorporation will authorize the Board of Directors to determine among other
things, with respect to each series of Preferred Stock which may be issued: (i)
the distinctive designation of such series and the number of shares constituting
such series, (ii) whether or not shares have voting rights and the extent of
such voting rights, if any (iii) the election, term of office, filling of
vacancies, and other terms of the directorship of directors, if any, to be
elected by the holders of any one or more series of such Preferred Stock, (iv)
the dividend rights, if any, including the dividend rates, preferences with
respect to other series of classes of stock, the times of payment and whether
dividends shall be cumulative, (v) the redemption price, terms of redemption,
the amount of and provisions regarding any sinking fund for the purchase or
redemption thereof, (vi) the liquidation preferences and the amounts payable on
dissolution or liquidation, and (vii) the terms and conditions, if any, under
which shares of the series may be converted into any other series of

12
<PAGE>

class of stock or debt of the Company. Holders of Common Stock have no
preemptive rights to purchase or otherwise acquire any Preferred Stock that may
be issued in the future.

The Board of Directors believes it is desirable to give the Company this
flexibility in considering such matters as raising additional capital,
acquisitions, or other corporate purposes. The authorization of such shares will
enable the Company to act promptly and without additional expense if appropriate
circumstances arise which require the issuance of such shares. The Company has
no current agreements, commitments, plans or intentions to issue any additional
shares, other than in connection with a possible amendment to the Shareholders'
Rights Plan to provide for the issuance of Preferred Stock rather than Common
Stock upon exercise of the rights. Depending upon the circumstances in which
such additional shares of Preferred Stock are issued, the overall effects of
such issuance may be to render more difficult or to discourage a merger, tender
offer, proxy contest, or the assumption of control by a holder of a large block
of Common Stock and the removal of incumbent management. For example, such
shares could be used to create voting or other impediments or to discourage
persons seeking to gain control of the Company. Such shares could be privately
placed with purchasers favorable to the Board of Directors in opposing such
action. In addition, the Board of Directors could authorize holders of a series
of Preferred Stock to vote either separately as a class or with the holders of
the Company's Common Stock, on any merger, sale, or exchange of assets by the
Company or any other extraordinary corporate transaction. The issuance of new
shares also could be used to dilute the stock ownership of a person or entity
seeking to obtain control of the Company should the Board of Directors consider
an action of such entity or person not to be in the best interests of the
stockholders and the Company.

Until the Board determines the respective rights of the holders of one or
more series of Preferred Stock, it is not possible to state the actual effect of
the authorization of the Preferred Stock upon the rights of holders of Common
Stock. Typical effects of such issuance could include, however; (i) reduction of
the amount otherwise available for payment of dividends on Common Stock if
dividends are payable on Preferred Stock, (ii) restrictions on dividends on
Common Stock if dividends on the Preferred Stock are in arrears, (iii)
dissolution of the voting power of Common Stock if the Preferred Stock has
voting rights, and (iv) restriction of the rights of holders of Common Stock to
share in the Company's assets upon liquidation until satisfaction of any
liquidation preference granted to the holders of Preferred Stock.

PROPOSAL 4. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
PROVIDE THAT STOCKHOLDER ACTION MAY BE TAKEN ONLY AT A
MEETING OF THE STOCKHOLDERS

The Board of Directors has approved, subject to stockholder approval, (i)
an amendment to the Company's Certificate of Incorporation to add a new
provision to require that stockholder action may be taken only at an annual or
special meeting and to prohibit stockholder action by written consent, and (ii)
an amendment to the Company's By-laws to delete Section 9 of Article II of the
By-laws which permits stockholder action by written consent (both amendments
being the "Written Consent Proposal"). The full text of new Article TENTH of the
Certificate of Incorporation is as follows:

"TENTH: Any action which is required to be taken by the stockholders of the
Corporation or permitted to be taken by the stockholders of the Corporation may
be taken only at any annual or special meeting of the stockholders, and may not
be taken otherwise than at such a meeting."

13
<PAGE>

Unless otherwise provided in the Certificate of Incorporation, Delaware law
permits any action required or permitted to be taken by stockholders to be taken
without a meeting, without prior notice and without stockholder vote if a
written consent setting forth the action to be taken is signed by the holders of
shares of outstanding stock having the number of votes necessary to authorize
such action at a meeting of stockholders. Currently, the Certificate of
Incorporation does not contain any provisions regarding stockholder consent
actions and the By-laws provide that action may be taken by written consent.
Consequently, unless the Written Consent Proposal is approved, persons holding a
majority interest in the Company could take significant corporate action without
giving other stockholders notice or the opportunity to vote.

The Written Consent Proposal, by prohibiting stockholder action by written
consent, would require that notice of and the opportunity to participate in any
proposed stockholder action be given to all stockholders of the Company who are
entitled to vote on that particular matter. Such notice would enable the
stockholders to take action, including judicial action, in order to protect
their interests.

In addition, the elimination of stockholder action by written consent may
prevent untimely action in a context where stockholders might not have the full
benefit of the knowledge, advice or participation of the Company's management
and the Board of Directors. In the event of a proposed acquisition of the
Company, for example, the interests of stockholders may best be served by a
transaction that results from negotiations based on careful consideration of the
proposed terms. Although there can be no certainty as to the result of any
particular negotiations, adoption of the Written Consent Proposal may tend to
promote negotiations concerning any proposed acquisition of the Company by
giving the Board of Directors greater bargaining power. Any provision in the
Company's Certificate of Incorporation that in effect requires a potential
acquirer to negotiate with the Company's management and Board of Directors,
however, could be characterized as increasing management's and the Board of
Director's ability to retain their positions with the Company and to resist a
transaction that may be deemed advantageous by certain stockholders. The
elimination of action by written consent also may render more difficult or
discourage a merger, tender offer, or proxy contest or deter, delay, or impede
stockholder action not approved by the Board of Directors, such as stockholder
attempts to obtain control of the Board of Directors. The Written Consent
Proposal also may impede or delay, at least until the next regularly scheduled
annual meeting, the initiation or consummation of significant business
transactions, such as reorganizations or recapitalizations, that are opposed by
the Board of Directors.

The Company's Board of Directors is of the view that the adverse effect, if
any, of the Written Consent Proposal is significantly outweighed by the greater
publicity, participation, discussion and negotiation which is likely to result
from the adoption of the Written Consent Proposal.

In the absence of instructions to the contrary, the shares of Common Stock
requested by a proxy delivered to the Board of Directors will be voted FOR the
approval of the Written Consent Proposal.

ACCOUNTANTS

PROPOSAL 5. SELECTION OF INDEPENDENT ACCOUNTANTS

The Board of Directors recommends the ratification by the stockholders of
the reappointment by the Board of Directors of Ernst & Young LLP as the
Company's independent accountants for the fiscal year ending December 31, 1997.
In the absence of instructions to the contrary, the shares of Common Stock
represented by a proxy delivered to the Board of Directors will be voted FOR the
ratification of the reappointment of Ernst & Young LLP. A representative of
Ernst & Young LLP is expected to be present at the Annual Meeting and will be
available to respond to appropriate questions and make such statements as he or
she may desire.

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STOCKHOLDER PROPOSALS AND DIRECTOR NOMINEES
FOR 1998 ANNUAL MEETING

It is contemplated that the Company's 1998 Annual Meeting of Stockholders
will be held on or about May 15, 1998. Stockholders of the Company who intend to
submit proposals or submit nominees for the election of Directors at the next
Annual Meeting of Stockholders must submit such proposals to the Company not
earlier than February 14, 1998 nor later than March 16, 1998. Stockholder
proposals should be submitted to Steel of West Virginia, Inc., P.O. Box 2547,
Huntington, West Virginia 25726, Attention: Mark G. Meikle, Vice President,
Treasurer and Chief Financial Officer.

ANNUAL REPORT

The Company's Annual Report for the year ended December 31, 1996, including
financial statements, is being mailed together with this Proxy Statement to the
Company's stockholders of record at the close of business on March 31, 1997. THE
COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS SOLICITED BY
THIS PROXY STATEMENT A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1996, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
A WRITTEN REQUEST FOR A COPY OF SUCH ANNUAL REPORT ON FORM 10-K SHOULD BE
DIRECTED TO STEEL OF WEST VIRGINIA, INC., P.O. BOX 2547, HUNTINGTON, WEST
VIRGINIA 25726, ATTENTION: MARK G. MEIKLE, VICE PRESIDENT, TREASURER AND CHIEF
FINANCIAL OFFICER.

OTHER BUSINESS

The Board of Directors does not know of any other business to be presented
to the meeting and does not intend to bring any other matters before the
meeting. However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote thereon according to their best judgment in the interests of the
Company.

By Order of the Board of Directors

Stephen A. Albert
Secretary
April 4, 1997

STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION
WILL BE APPRECIATED.

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Preliminary Proxy Materials

STEEL OF WEST VIRGINIA, INC.
17th STREET AND 2ND AVENUE
HUNTINGTON, WEST VIRGINIA 25703

PROXY

Solicited by the Board of Directors
for the Annual Meeting of Stockholders on
May 15, 1997

The undersigned hereby appoints Robert L. Bunting, Jr., Timothy R. Duke and
Stephen A. Albert or either of them, with full power of substitution, as proxies
and hereby authorizes them to represent and to vote, as designated below, all
shares of Common Stock of Steel of West Virginia, Inc. held of record by the
undersigned at the close of business on March 31, 1997 at the Annual Meeting of
Stockholders to be held on May 15, 1997 and any adjournments thereof.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3, 4, 5 and 6.

The Board of Directors recommends a vote FOR each of the proposals below.

1. ELECTION OF DIRECTORS

/ / FOR all nominees listed (except / / WITHHOLD AUTHORITY to
as marked to the contrary below) vote for all nominees listed below

Stephen A. Albert, Robert L. Bunting, Jr., Timothy R. Duke, Albert W. Eastburn,
Daniel N. Pickens, Paul E. Thompson

(INSTRUCTION: To withhold authority to vote for my individual nominee, strike a
line through the nominee's name in the list above.)

2. PROPOSAL TO APPROVE THE AMENDMENT OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO AUTHORIZE 13,000,000 ADDITIONAL SHARES OF COMMON STOCK.