VALLEY FINANCIAL CORPORATION
36 Church Avenue, SW
Roanoke, Virginia 24011
This Proxy is solicited by the Board of Directors of Valley
Financial Corporation (the "Company") for the 1997 Annual Meeting
of Shareholders to be held on April 17, 1997 (the "Annual Meeting").
The undersigned hereby appoints Douglas W. Densmore, Esq. and
Kevin P. Oddo, Esq., either of whom may act, with full power of
substitution, as proxy to vote all of the shares of common stock of
the Company held of record by the undersigned on February 28, 1997,
at the Annual Meeting of the Company to be held on April 17, 1997, and
at any adjournments thereof, as designated below:
1. ELECTION OF FOUR CLASS C DIRECTORS to serve until the 2000 Annual
Meeting of Shareholders.
[ ] FOR all nominees below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees below
CLASS C NOMINEES
Ellis L. Gutshall, A. Wayne Lewis, George W. Logan and Maury L. Strauss
Instruction: To withhold authority for any individual nominee, write
that nominee's name on the space provided below.
2. [ ] FOR [ ] AGAINST [ ] ABSTAIN FROM VOTING
Ratification of the Stock Option Agreement dated December 19, 1996 between
the Company and Ellis L. Gutshall
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
THE STOCK REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED. IF NO DIRECTION IS GIVEN, THE PROXY WILL BE VOTED
FOR PROPOSALS NOS. 1 AND 2 ABOVE.
The undersigned hereby acknowledges receipt of the Notice and Proxy
Statement dated March 11, 1997, with respect to the 1997 Annual Meeting.
Dated ___________________________, 1997
Number of Shareholders Attending The Annual Meeting _____
__________________________________
(Signature of Shareholder)
________________________________
NOTE: When signing as attorney, trustee,
administrator, executor or guardian,
please give your full title as such.
If a corporation, please sign in
full corporate name by President
or other authorized officer. In the
case of joint tenants, each joint
owner must sign.
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VALLEY FINANCIAL CORPORATION
36 Church Avenue, SW
Roanoke, Virginia 24011
NOTICE OF 1997 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN, that the 1997 Annual Meeting of Shareholders
of Valley Financial Corporation (the "Annual Meeting") will be held at
the Holiday Inn - Tanglewood, 4468 Starkey Road, SW, Roanoke, Virginia
24014, on Thursday, April 17, 1997, at 6:00 p.m. local time, for the
following purposes:
1. To elect four Class C directors to serve until the 2000 Annual
Meeting of Shareholders, or in the case of each director, until his
successor is duly elected and qualifies.
2. To ratify and approve the Stock Option Agreement dated December 19,
1996 between the Company and Ellis L. Gutshall.
3. To transact such other business as may properly come before the
Annual Meeting.
Only shareholders of record at the close of business on February 28,
1997, are entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof.
Your attention is directed to the Proxy Statement accompanying this
Notice for a more complete statement regarding matters proposed to be acted
upon at the Annual Meeting.
To assure that your shares are represented at the Annual Meeting,
please complete, sign, date and mail promptly the enclosed proxy, for
which a return envelope is provided. Your proxy is revocable by you at
any time prior to its exercise.
By Order of the Board of Directors
/S/A. Wayne Lewis
Executive Vice President, Chief Operating
Officer and Corporate Secretary
March 11, 1997
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VALLEY FINANCIAL CORPORATION
36 Church Avenue, SW
Roanoke, Virginia 24011
PROXY STATEMENT
FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
The solicitation of the enclosed proxy is made by and on behalf of the
Board of Directors of Valley Financial Corporation (the "Company") to be
used at the 1997 Annual Meeting of Shareholders (the "Annual Meeting") to
be held at 6:00 p.m., local time, at the Holiday Inn - Tanglewood, 4468
Starkey Road, SW, Roanoke, Virginia 24014, on Thursday, April 17, 1997,
and at any adjournments thereof. The approximate mailing date of this
Proxy Statement is March 11, 1997.
The cost of solicitation of proxies will be borne by the Company.
Such costs include charges by brokers, fiduciaries and custodians for
forwarding proxy materials to beneficial owners of Company stock held
in their names. Solicitations will be made only by use of the mails,
except that if necessary, officers, directors and employees of the Company
may without additional compensation solicit proxies by telephone or personal
contact.
All properly executed proxies delivered pursuant to this solicitation
will be voted at the Annual Meeting in accordance with the instructions
thereon. Any person signing and mailing the enclosed proxy may,
nevertheless, revoke the proxy at any time prior to the actual voting
thereof by providing written notice of revocation of the proxy, or by
submitting a signed proxy bearing a later date. Any such written notice
of revocation should be sent to the Corporate Secretary of the Company,
P.O. Box 2740, Roanoke, Virginia 24001.
An Annual Report to Shareholders, including the summary consolidated
financial statements for the year ended December 31, 1996, is being
mailed to you concurrently with this Proxy Statement, but is not and should
not be considered proxy solicitation material.
VOTING PROCEDURES
As of February 28, 1997, the Company had outstanding 964,040 shares of
its common stock, no par value (the "Common Stock"), each of which is
entitled to one vote at the Annual Meeting or any adjournment thereof. A
majority of votes entitled to be cast on matters to be considered at the
Annual Meeting constitutes a quorum. Broker nonvotes (in which brokers
fail to vote shares on behalf of the beneficial owners thereof) will not
be treated as present or represented at the meeting, and will not be
included in determining whether a quorum is present.
Election of Directors. Directors are elected by a plurality of the
of the votes of the shares represented in person or by proxy at the Annual
Meeting. Only shares that are voted in favor of a nominee will be counted
toward that nominee's achievement of a plurality. Shares represented by
proxy as to which the shareholder properly withheld authority to vote for
a nominee will not be counted toward that nominee's achievement of a
plurality.
Other Matters. The affirmative vote of a majority of the shares
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represented at the Annual Meeting is required for a matter to be deemed
approved by the shareholders. Shares represented by proxy as to which
the shareholder abstained from voting are considered present at the
meeting for the proposal but, because they are not affirmative votes
for the proposal, they have the same effect as votes cast against the
proposal. Broker nonvotes are not considered present at the Annual Meeting
and are not counted with regard to the proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to persons
believed by management of the Company to be beneficial owners of more
than 5% of the outstanding Common Stock. Other than as disclosed below,
the Company is not aware of any person or group, as those terms are
defined in the Securities Exchange Act of 1934, who beneficially owned
more than 5% of the outstanding Common Stock as of February 28, 1997.
Name and Address Number of Percent
Title of Class of Beneficial Owner Shares Owned of Class
Common Stock George W. Logan 86,000 8.92%
P.O. Box 1190
Salem, VA 24153
ELECTION OF DIRECTORS
The Company's Articles of Incorporation divide the Board of Directors
into three classes (A, B and C) as nearly equal in number as possible, with
the terms of office of each class ending in successive years. The current
term of office of the Class C directors expires at this 1997 Annual Meeting.
The terms of office of the Class A and Class B directors will expire in 1998
and 1999, respectively.
It is the intent of the named proxies, unless otherwise directed, to
vote in favor of the election of each of the four nominees for Class C
director whose names appear below. Each nominee has agreed to serve if
elected. In the event any named nominee shall unexpectedly be unable to
serve, proxies will be voted for the remaining named nominees and such
other person or persons as may be designated by the Board of Directors.
INFORMATION CONCERNING DIRECTORS AND NOMINEES
The following information, including the principal occupation during
the past five years, is given with respect to the nominees for election to
the Board at the Annual Meeting, and for the directors who will continue
in office after the Annual Meeting. All of the nominees for re-election
as Class C directors currently serve as directors of the Company and of
Valley Bank, N.A. (the "Bank"), the Company's wholly-owned subsidiary.
Lawrence H. Hamlar, a Class C director of the Company since its
formation in 1994, attained the age of 75 years prior to the Annual Meeting
and, pursuant to the director mandatory retirement provisions of the
Company's Bylaws, is not standing for re-election to another term.
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Shares of Common Stock
Beneficially Owned
as of February 28, 1997
Name, Age and Year Shares Percent
First Became Director Principal Occupation Owned of Class
NOMINEES FOR DIRECTOR
CLASS C
(To serve until 2000 Annual Meeting)
1
Ellis L. Gutshall* President and Chief
Age 46 Executive Officer of the 8,400 0.87%
Director since Company since June, 1996;
6/96 prior thereto, Senior
Vice President and Chief
Lending Officer since
1/95; prior thereto,
Executive Vice President,
First Virginia Bank -
Southwest, Roanoke, VA
A. Wayne Lewis* Executive Vice President,
Age 53 Chief Operating 11,000 1.14%
Director since Officer, Chief Financial
3/94 Officer and Corporate
Secretary of the Company
since 6/96; prior thereto,
Senior Vice President since
1/94; prior thereto,
Executive Vice President and
Corporate Secretary, Dominion
Bankshares Corporation,
Roanoke, VA
George W. Logan* Chairman of the Board of
Age 52 Directors of the Company 86,000 8.92%
Director since 1994; Chairman,
since 3/94 Director Warsaw Industrial
Centers (developer
of commercial distribution
warehouses) since 1992;
prior thereto, President,
Valley Motorsport (import
car dealer), Roanoke, VA
2
Maury L. Strauss Chairman, Strauss Development
Age 72 Corporation 20,100 2.08%
Director (real estate development
since 3/94 firm) since 1995; prior
thereto, Chairman, Strauss
Construction Co.
(real estate development
and residential
construction firm),
Roanoke, VA
DIRECTORS CONTINUING IN OFFICE
CLASS A
(serving until 1998 Annual Meeting)
3
Eddie F. Hearp President, National Financial
Age 53 Services, Inc. 24,981 2.59%
Director (personal and business
since 3/94 insurance, retirement
benefit planning), Roanoke, VA
4
Anna L. Lawson Anthropologist, Daleville,
Age 53 VA 33,000 3.42%
Director
since 3/94
4
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Shares of Common Stock
Beneficially Owned
as of February 28, 1996
Name, Age and Year Shares Percent
First Became Director Principal Occupation Owned of Class
5
John W. Starr, M.D. Cardiologist, Consultants
Age 50 in Cardiology, 22,900 2.37%
Director since P.C., Roanoke, VA
3/94
6
Michael E. Warner Private investor,
Age 61 Roanoke, VA 22,100 2.29%
Director
since 3/94
CLASS B
(serving until 1999 Annual Meeting)
7 8
Abney S. Boxley, III President, W.W. Boxley Co. 30,000 3.11%
Age 39 (crushed stone supplier),
Director Roanoke, VA
since 3/94
9
W. Jackson Burrows* Executive Vice President, 47,500 4.93%
Age 49 Virginia Construction
Director Supply, Inc. (distributor
since 3/94 to commercial and
highway contractors),
Salem, VA
10
William D. Elliot* President, AEW, Inc.
Age 51 (specialists in 45,000 4.66%
Director and maintenance of
since 3/94 overhead electric power
lines, industrial
electrical wiring and
industrial process
controls) since 2/97;
prior thereto, President,
Davis H. Elliot Co.,
Roanoke, VA
Barbara B. Lemon Civic leader, Roanoke, VA 20,000 2.07%
Age 60
Director
since 3/94
11
Ward W. Stevens, M.D.* Neurosurgeon, Neurosurgical
Age 61 Associates 27,500 2.85%
Director of Roanoke, Inc.,
since 3/94 Roanoke, VA
13 Directors and 398,481 41. 33%
Executive Officers as a
group, including those
named above
____________________
* Member of the Executive Committee
1 Includes 200 shares held by Mr. Gutshall as custodian for his children
and 2,000 shares Mr. Gutshall has the right to acquire within 60 days
through the exercise of stock options.
2 Includes 20,000 shares held by Strauss Development Corporation,
of which Mr. Strauss is Chairman.
3 Includes 250 shares held by Mr. Hearp's spouse.
4 Includes 2,000 shares held by Mrs. Lawson's son, 1,000 shares
held by her spouse and 1,500 shares held by Mrs. Lawson as custodian
for her nephew.
5 Includes 1,000 shares held by Dr. Starr's spouse, 20,000 shares owned
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beneficially by Dr. Starr through the Consultants in Cardiology, P.C.
Profit Sharing Plan and 400 shares held by Dr. Starr as custodian for
his children.
6 Includes 20,000 shares held jointly by Mr. Warner with his spouse.
7 Mr. Boxley is also a director of Roanoke Gas Company.
8 Includes 10,000 shares held by Blue Ridge Stone Corporation, of
which Mr. Boxley is President.
9 Includes 13,000 shares held by Mr. Burrows' spouse, 2,000 shares
held by Mr. Burrows as trustee for his son and 1,000 shares held by
Mr. Burrows' son.
10 Includes 15,000 shares held by AEW, Inc., of which Mr. Elliot is
President.
11 Includes 27,500 shares held beneficially by Dr. Stevens through
the Neurological Associates of Roanoke, Inc. Profit Sharing Plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
FOR CLASS C DIRECTOR LISTED ABOVE.
Certain Relationships and Related Transactions
Anna L. Lawson, a Class A Director, is the sister of George W. Logan,
a Class C Director and Chairman of the Board of Directors. Other than the
foregoing, there are no family relationships among the Directors and
Executive Officers of the Company.
The Company leases the premises for its South Roanoke office from
Betty J. Burrows, the mother of W. Jackson Burrows, a director of the
Company. The lease is for a term of twelve years from January 1, 1997,
with one five-year renewal option. Total lease payments by the Company
to Mrs. Burrows during the initial term of the lease will aggregate
$151,080. Management is of the opinion that the terms of the lease are
no less favorable to the Company than if with an unaffiliated party.
The Bank has had and expects to have loan transactions with certain of
the directors and officers and their affiliates. Management of the Bank
is of the opinion that such loans were made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions
with other persons, and do not involve more than normal risk of
collectibility or present other unfavorable features.
BOARD OF DIRECTORS AND COMMITTEES
The Boards of the Company and the Bank are identical in membership.
The Boards have standing audit, nominating and compensation committees
(or committees performing similar functions) as listed below.
Audit Committee
The Audit Committee consists of Mrs. Lemon (Chairman), Messrs.
Hamlar and Hearp, and Dr. Starr. The Committee meets periodically with
the independent auditors, internal auditors, bank regulators and certain
appropriate officers of the Company. The basic functions of this committee
include reviewing annual and interim reports of the internal and the
independent auditors, reviewing the Company's system of internal controls
and recommending the selection of independent auditors. The Audit Committee
met two times in 1996.
Human Resources Committee
The Human Resources Committee consists of Messrs. Elliot (Chairman)
and Boxley, and Mrs. Lawson. The Committee oversees the Company's
compensation and benefits practices, recommends to the full Board
the compensation arrangements for the Chief Executive Officer and
the Chief Operating Officer, administers any executive compensation
plans (including the present Incentive Stock Plan), reviews management
succession plans and recommends to the full Board candidates for election
as directors. The Committee met five times in 1996.
The Committee will consider suggestions from all sources,
including shareholders, regarding possible candidates for nomination
and election to the Board. Generally, candidates should be highly
qualified by business, professional or comparable experience,
affirmatively desirous of serving on the Board, financially capable
of making a meaningful investment in the Company's stock, and able to
represent the interests of all shareholders and not merely those of a
special interest group. Shareholders wishing to suggest a candidate
for consideration at the 1998 Annual Meeting of Shareholders should
forward, not later than December 17, 1997, the candidate's name and
a description of the candidate's background and qualifications to the
Corporate Secretary of the Company, who also serves as Secretary to
the Human Resources Committee.
Compensation of Directors
Directors of the Company did not receive any fees or other
compensation for their services as directors in 1996. It is the
present intent of the Board not to begin paying directors' fees at
least through calendar year 1997.
Board and Committee Meetings and Attendance
The Board of the Company met five times in 1996, and the Board
of the Bank met twelve times during the same period. All incumbent
directors attended at least 75% of the total meetings of the Boards
of the Company and the Bank, and all committees thereof on which he or
she sat.
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of beneficial ownership reporting Forms 3 and 4
furnished to the Company under Rule 16a-3(e) of the Securities and
Exchange Commission (the "Commission"), the Company believes that all
reports of initial and subsequent changes in beneficial ownership of
the Company's securities as required pursuant to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), were
filed with the Commission on a timely basis during the most recent
fiscal year or prior fiscal years by all persons who were directors
or officers of the Company at any time during such fiscal years.
EXECUTIVE COMPENSATION
The following table shows the cash compensation paid by the Company
to its executive officers for the three years ended December 31, 1996.
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Summary Compensation Table
Other
Name and Principal Position Year Salary$ Bonus$ Annual Other
Ellis L. Gutshall
President/Chief Executive
Officer 1996 108,884 0 0 0
1995 96,184 0 0 0
1994 0 0 0 0
Guy W. Byrd, Jr.
President/Chief Executive
Officer (January, 1994 -
June, 1996) 1996 65,750 0 0 70,750(1)
1995 128,042 26,500 0 0
1994 90,000 0 13,352(2) 5,385(3)
(1) Consists of severance payments made in connection with the
termination of Mr. Byrd's employment with the Company on June 20, 1996.
(2) Includes $12,911 of relocation expenses, $428 executive medical
reimbursement and $13 of other life insurance premiums.
(3) Consists of reimbursement of interest expense on a loan to purchase
a life insurance policy of which Mr. Byrd and his family are
beneficiaries.
Incentive Stock Plan
The Incentive Stock Plan (the "Plan") was effective January 19, 1995
and is applicable to not more than 99,000 shares of the Company's Common
Stock. The Plan is administered by the Human Resources Committee
(the "Committee") of the Board (directors Boxley, Elliot and Lawson),
which has the authority to grant to officers and employees of the Company
and the Bank stock options, stock appreciation rights and outright grants
of stock. Option prices are determined by the Committee, but cannot be
less than fair market value of the Company's Common Stock at the time
the option is granted. The exercise period of each option is determined
by the Committee at the date of grant but cannot be more than ten years.
Non-employee directors of the Company are not eligible for awards under
the Plan.
There were no options granted under the Plan in 1996 to any executive
officer named in the summary compensation table. The following table
shows stock options exercised during the last fiscal year (if any) and
granted but unexercised stock options for the named executive officers
at December 31, 1996.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value of
Number of Securities Unexercised
Underlying In-the-Money
Unexercised Options Options at
at 12/31/96 (#) 12/31/96 ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized($) Unexercisable Unexercisable
Ellis L. Gutshall 0 0 1,000 0
4,000 0
Guy W. Byrd, Jr. 0 0 0 0
0 0
Individual Stock Option Agreements
In addition to the Incentive Stock Plan described above, the Company
has entered into agreements with Messrs. Gutshall and Lewis whereby those
executive officers have received nontransferable options to purchase at
$10 per share for each of three years shares of Company Common Stock in
an amount up to one percent of the total shares sold in the Company=s
initial public offering, subject to the Bank meeting certain performance
criteria as to profitability, size and loan quality for that year. With
respect to Mr. Lewis, the performance criteria relate to the Bank's first
through third years of operation since its opening on May 15, 1995 and,
with respect to Mr. Gutshall, the Bank's second through fourth years of
operation. The Company's individual stock option agreement with Mr. Lewis
is contained in his employment agreement dated April 8, 1994, which was
intended to induce him to become an organizer of the Bank (see "Employment
Contracts and Termination of Employment and Change-in-Control Agreements").
The Company has entered into a Stock Option Agreement dated December 19,
1996 with Mr. Gutshall (the "Option Agreement"), which is intended to
compensate him in part for his assumption on June 20, 1996 of the position
of President and Chief Executive Officer of the Company and the Bank.
The Company sold 964,040 shares of Common Stock in its initial public
offering, so if the Bank meets the applicable specified performance
criteria for all of its first four years of operation, each officer would
have three exercisable stock purchase options of 9,640 shares each or an
aggregate of 28,920 shares per officer. The options are cumulative and
exercisable in whole or in part only if the performance criteria are met,
or if the Board determines that the performance criteria have been
substantially met. Each option has a term of ten years from the date of
vesting unless the officer's employment is terminated prior to the
expiration of the ten year period. The Board currently contemplates that
the shares of Common Stock needed to satisfy these stock option agreements
will be taken from the 99,000 shares reserved for issuance pursuant to the
Incentive Stock Plan, although there can be no assurance that such will
ultimately be the case. As of December 31, 1996, none of the stock options
had vested.
The Option Agreement between the Company and Mr. Gutshall has been
executed and is binding. However, in order for the Option Agreement and
the shares, if any, acquired pursuant thereto to receive treatment that is
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considered desirable under Rule 16b-3 of the Commission, the Option
Agreement must be ratified by the affirmative vote of the holders of a
majority of the shares of Common Stock represented at the Annual Meeting.
The proxy card accompanying this Proxy Statement contains a section for this
purpose.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
STOCK OPTION AGREEMENT DATED DECEMBER 19, 1996 BETWEEN THE COMPANY AND
MR. GUTSHALL.
Employment Contracts and Termination of Employment and Change-in-Control
Agreements
On April 8, 1994, the Company entered into an employment agreement
(the "Employment Agreement") with Mr. Lewis. The Employment Agreement
has an initial term of three years from the first day of the month following
the Company's breaking escrow on its initial public offering (February 1,
1995), with an automatic extension each year of one additional year unless
either party gives notice at least 120 days prior to the date of extension
that the Employment Agreement shall not be extended. The Agreement provides
for a certain minimum salary level that may be increased (but not decreased)
by the Board pursuant to an annual evaluation, as well as group benefits to
the extent provided to other executives, the establishment of a life
insurance policy financing facility and the stock option arrangement
described above.
The Employment Agreement also contains change-in-control provisions
entitling Mr. Lewis to certain benefits in the event his employment is
terminated within three years of a change in control of the Company for
reason other than death, retirement, disability, cause, voluntary
resignation other than for good reason, or pursuant to notice of termination
given prior to the change in control (except notice of termination given
after any regulatory filing has been made in contemplation of a change in
control). If a change in control followed by such termination occurs, the
executive will receive a lump-sum payment equal to 2.99 times average
compensation (determined as set forth in the Agreement), provided that if
the payment is or will be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code or any similar tax (the "Excise Tax"), the
amount of such payment will be reduced by the amount necessary to avoid
the Excise Tax.
As an inducement in part to become the Chief Lending Officer of the
Bank in January, 1995, the Company agreed to enter into a change-in-control
severance agreement with Mr. Gutshall (the "Severance Agreement") which
would entitle Mr. Gutshall to the same change-in-control protections and
compensation provided to Mr. Byrd and Mr. Lewis. The effective date of the
Severance Agreement is December 19, 1996 and the initial term is five years.
The Severance Agreement provides that if there is a change in control of
the Company during the term of the Severance Agreement, then Mr. Gutshall
shall be entitled to the same change-in-control protections and compensation
as outlined in the discussion of Mr. Lewis' Employment Agreement in the
immediately preceding paragraph.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP acted as the Company's independent certified
public accountants for the fiscal year ended December 31, 1996, and will
do so again in 1997. Representatives of KPMG Peat Marwick LLP are expected
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to attend the Annual Meeting and will have the opportunity to make a
statement if they so desire and to be available to respond to appropriate
questions from shareholders.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 1998
Annual Meeting of Shareholders must be received not later than December 17,
1997 by the Corporate Secretary at P.O. Box 2740, Roanoke, VA 24001, for
inclusion in the Company's Proxy Statement relating to that meeting.
OTHER MATTERS WHICH MAY COME BEFORE THE MEETING
The Board of Directors knows of no other matter which may properly come
before the Annual Meeting for action. However, if any other matter does
properly come before the Annual Meeting, the persons named in the enclosed
form of proxy will vote the proxy in accordance with their judgment as to
what is in the best interests of the Company.
Annual Report on Form 10-KSB
A copy of the Company's Annual Report on Form 10-KSB as filed with
the Commission for the year ended December 31, 1996 is available without
charge to shareholders after March 31, 1997 upon request to the Corporate
Secretary at P.O. Box 2740, Roanoke, VA 24001.
By Order of the Board of Directors
\S\A. Wayne Lewis
Roanoke, Virginia Executive Vice President, Chief
March 11, 1997 Operating Officer
and Corporate Secretary
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