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:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VALLEY FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) 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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) 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 Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
VALLEY FINANCIAL CORPORATION
36 CHURCH AVENUE, SW
ROANOKE, VIRGINIA 24011
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders of
Valley Financial Corporation (the "Annual Meeting") will be held at the Mill
Mountain Theatre, One Market Square, Roanoke, Virginia 24011 on Thursday, April
27, 2000 at 5:30 p.m. local time, for the following purposes:
1. To elect four Class C directors to serve until the 2003 Annual
Meeting of Shareholders, or in the case of each director, until his
or her successor is duly elected and qualifies.
2. To transact such other business as may properly come before the
Annual Meeting.
THERE WILL BE A RECEPTION FOR SHAREHOLDERS IMMEDIATELY FOLLOWING THE
ANNUAL MEETING. AFTER THE RECEPTION, SHAREHOLDERS ARE INVITED TO ATTEND
A 7:30 P.M. COMPLIMENTARY PERFORMANCE OF MILL MOUNTAIN THREATRE'S
PRODUCTION OF THE MYSTERY OF IRMA VEP, A HILARIOUS SPOOF OF VICTORIAN
MELODRAMA AND GOTHIC HORROR MOVIES. VALLEY BANK RECENTLY BECAME A
PRIMARY CORPORATE SPONSOR OF MILL MOUNTAIN THEATRE, THE VALLEY'S
PREMIERE PRODUCTION COMPANY. PLEASE INDICATE IN THE BOX PROVIDED ON THE
PROXY CARD HOW MANY TICKETS YOU WILL NEED FOR THE PLAY.
Only shareholders of record at the close of business on February 25,
2000 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/ Ellis L. Gutshall
---------------------
Ellis L. Gutshall
President and Chief Executive Officer
March 22, 2000
<PAGE>
VALLEY FINANCIAL CORPORATION
36 CHURCH AVENUE, SW
ROANOKE, VIRGINIA 24011
PROXY STATEMENT
FOR THE 2000 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 2000 Annual Meeting of Shareholders (the "Annual Meeting") to be held at
5:30 p.m. local time, at the Mill Mountain Theatre, One Market Square, Roanoke,
Virginia 24011 on Thursday, April 27, 2000 and at any adjournments thereof. The
approximate mailing date of this Proxy Statement is March 22, 2000.
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, 1999 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 25, 2000 the Company had outstanding 1,013,207 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
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.
2
<PAGE>
OTHER MATTERS. The affirmative vote of a majority of the shares
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 25, 2000.
NAME AND ADDRESS NUMBER OF
TITLE OF CLASS OF BENEFICIAL OWNER SHARES OWNED PERCENT OF CLASS
-------------- ------------------- ------------ ----------------
Common Stock George W. Logan 94,500 9.33%
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 2000 Annual Meeting. The terms
of office of the Class A and Class B directors will expire in 2001 and 2002,
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 directors
currently serve as directors of the Company and of Valley Bank (the "Bank"), the
Company"s wholly-owned subsidiary. Maury L. Strauss, a Class C director since
1994, is not standing for re-election under the provisions of the Company's
bylaws dealing with age limitation for directors.
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS OF
FEBRUARY 25, 2000 (12)
NAME, AGE AND YEAR SHARES PERCENT
FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION OWNED OF CLASS
- ---------------------------------------- ----------------------------------------------- --------------- -------------
NOMINEES FOR DIRECTOR
CLASS C
(SERVING UNTIL 2003 ANNUAL MEETING)
Ellis L. Gutshall* President and Chief Executive Officer of the 41,286 (1) 3.94%
Age 49 Company since 1996; prior thereto, Senior
Director since 6/96 Vice President and Chief Lending Officer,
Roanoke, VA
Mason Haynesworth Retired; former Director of Specialized 525(2) 0.05%
Age 59 Audits, Norfolk Southern Corporation (rail
Director since 6/97 transportation company), Roanoke, VA
A. Wayne Lewis* Executive Vice President, Chief Operating 45,066 (3) 4.31%
Age 56 Officer, Chief Financial Officer and
Director since 3/94 Corporate Secretary of the Company since
1996; prior thereto, Senior Vice President,
Roanoke, VA
George W. Logan*(4) Chairman of the Board of Directors of 94,500 9.33%
Age 55 the Company; Chairman, Alliance Industrial
Director since 3/94 Center (developer of commercial distribution
warehouses), Roanoke, VA
DIRECTORS CONTINUING IN OFFICE
CLASS A
(SERVING UNTIL 2001 ANNUAL MEETING)
Eddie F. Hearp President, National Financial Services, Inc. 26,754 (5) 2.64%
Age 56 (personal and business insurance, retirement
Director since 3/94 benefit planning), Roanoke, VA
Anna L. Lawson Anthropologist, Daleville, VA 34,125 (6) 3.37%
Age 56
Director since 3/94
John W. Starr, M.D. Cardiologist, Consultants in Cardiology, 26,250 (7) 2.59%
Age 53 P.C., Roanoke, VA
Director since 3/94
Michael E. Warner Private Investor, Roanoke, VA 23,205 (8) 2.29%
Age 64
Director since 3/94
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED AS OF
FEBRUARY 25, 2000 (12)
NAME, AGE AND YEAR SHARES PERCENT
FIRST BECAME DIRECTOR PRINCIPAL OCCUPATION OWNED OF CLASS
- ---------------------------------------- ----------------------------------------------- --------------- -------------
CLASS B
(SERVING UNTIL 2002 ANNUAL MEETING)
Abney S. Boxley, III (9) President and Chief Executive Officer, W.W. 21,000 2.07%
Age 42 Boxley Co., Inc. (construction materials
Director since 3/94 supplier), Roanoke, VA
William D. Elliot* Chairman and President, AEW, Inc. 47,250 (10) 4.66%
Age 54 (specialists in construction and maintenance
Director since 3/94 of overhead electric power lines, industrial
electric wiring and industrial process
controls), Roanoke, VA
Barbara B. Lemon Civic Leader, Roanoke, VA 21,000 2.07%
Age 63
Director since 3/94
Ward W. Stevens, M.D.* Retired neurosurgeon since 1997; prior 28,875 2.85%
Age 64 thereto, neurosurgeon, Neurosurgical
Director since 3/94 Associates of Roanoke, Inc., Roanoke, VA
EXECUTIVE OFFICERS
J. Randy Woodson Senior Vice President and Chief Lending 4,432(11) 0.44%
Age 38 Officer of Valley Bank since 2000; prior
thereto, Senior Vice President since 1998;
prior thereto, Senior Vice President, Crestar
Bank, Roanoke, VA
13 Directors and Executive 414,268 38.22%
Officers as a group
</TABLE>
* Member of the Executive Committee
(1) Includes 210 shares held by Mr. Gutshall as custodian for his children and
34,566 shares Mr. Gutshall has the right to acquire within 60 days through
the exercise of stock options.
(2) Includes 525 shares held jointly by Mr. Haynesworth with his spouse.
(3) Includes 33,516 shares Mr. Lewis has the right to acquire within 60 days
through the exercise of stock options.
(4) Mr. Logan is also a director of Roanoke Electric Steel Corporation.
(5) Includes 262 shares held by Mr. Hearp"s spouse.
(6) Includes 1,050 shares held by Mrs. Lawson's spouse, 2,100 shares held by
her son and 2,100 shares held by Mrs. Lawson as custodian for her nephew.
Mrs. Lawson disclaims beneficial ownership of these shares.
(7) Includes 1,050 shares held by Dr. Starr's spouse, 21,000 shares owned
beneficially by Dr. Starr through the Consultants in Cardiology, P.C.
Profit Sharing Plan and 420 shares held by Dr. Starr as custodian for his
children.
(8) Includes 21,000 shares held jointly by Mr. Warner with his spouse.
(9) Mr. Boxley is also a director of Roanoke Gas Company.
(10) Includes 15,750 shares held by AEW, Inc., of which Mr. Elliot is Chairman
and President.
(11) Includes 2,730 shares Mr. Woodson has the right to acquire within 60 days
through the exercise of stock options.
(12) Computed in accordance with SEC Rule 13d-3 to reflect stock options
exercisable within 60 days.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR CLASS C
LISTED ABOVE.
5
<PAGE>
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 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 directors Haynesworth (Chairman),
Hearp, Lemon and 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 twice in 1999.
HUMAN RESOURCES COMMITTEE
The Human Resources Committee consists of directors Boxley (Chairman),
Elliot, Lawson, Lemon and Logan. 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 four times in 1999.
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 any special interest group. Shareholders wishing to suggest a candidate
for consideration at the 2001 Annual Meeting of Shareholders should forward not
later than December 15, 2000 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.
6
<PAGE>
COMPENSATION OF DIRECTORS
Directors of the Company did not receive any retainers for their
services as directors in 1999, but were paid a fee of $100 for each Board
meeting attended and $50 for meetings of Board committees attended. Committee
fees are reduced by 50% if a meeting is held immediately before or after a
meeting of the Board or another committee. Directors who are also active
Officers of the Company are not eligible to receive director fees.
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
The Board of the Company met four times in 1999 and the Board of the
Bank met fourteen times during the same period. All incumbent Board members
except for directors Logan and Warner 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, 4 and 5
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.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table shows the cash compensation paid by the Company to
its executive officers for the three years ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY $ BONUS $ OPTIONS OTHER $ (1)
- --------------------------- ---- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Ellis L. Gutshall 1999 145,400 54,000 11,697 4,899
President and Chief Executive Officer
1998 124,373 30,000 10,122 1,009
1997 117,879 19,500 10,122 0
A. Wayne Lewis 1999 120,150 36,000 1,575 5,443
Executive Vice President and
Chief Operating Officer 1998 108,150 20,000 10,122 1,638
1997 102,248 12,500 20,244 0
J. Randy Woodson 1999 94,125 17,000 3,938 4,252
Senior Vice President and
Chief Lending Officer - Valley Bank 1998 80,480 10,000 5,250 1,265
1997 0 0 0 0
</TABLE>
(1) Includes 401(k) employer matching contributions.
INCENTIVE STOCK PLAN
The Incentive Stock Plan (the "Plan") was effective January 19, 1995
and is applicable to not more than 103,950 shares of the Company"s Common Stock.
The Plan is administered by the Human Resources Committee (the "Committee") of
the Board, 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.
The following table shows stock options granted to the named executive
officers under the Plan.
<TABLE>
<CAPTION>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------------
PERCENT OF TOTAL
NUMBER OF OPTIONS GRANTED TO
SECURITIES UNDERLYING EMPLOYEES DURING EXERCISE OR BASE
NAME OPTIONS GRANTED FISCAL YEAR PRICE ($/SH) EXPIRATION DATE
---------------------- ----------------------- ---------------------- ------------------------- -------------------
<S> <C> <C> <C> <C> <C>
Ellis L. Gutshall 1,575 4.96 16.63 12/16/09
A. Wayne Lewis 1,575 4.96 16.63 12/16/09
J. Randy Woodson 3,150 9.92 15.20 01/21/09
788 2.48 16.63 12/16/09
</TABLE>
8
<PAGE>
The following table shows stock options exercised during the last
fiscal year (if any) and granted but unexercised stock options under the Plan
for the named executive officers at December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 12/31/99 (#) at 12/31/99 ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
---- --------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Ellis L. Gutshall 0 0 4,200 44,100
2,625 16,341
A. Wayne Lewis 0 0 3,150 36,816
3,675 29,859
J. Randy Woodson 0 0 2,730 18,341
6,458 37,731
</TABLE>
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 $9.50
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 entered into a Stock Option
Agreement dated December 19, 1996 with Mr. Gutshall (the "Option Agreement"),
which was 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 1,012,242 shares of Common Stock in its initial public
offering (total shares and option prices adjusted to reflect the recent
1.05-for-1 stock split), so if the Bank met the applicable specified performance
criteria for its first four years of operation, each officer would have three
exercisable stock purchase options of 10,122 shares each or an aggregate of
30,366 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. As of December 31,
1999 all performance criteria had been met and all options had vested.
9
<PAGE>
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"). 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. On February 9, 1998 the Company entered
into a severance agreement with Mr. Woodson having the same effect as the
Severance Agreement with Mr. Gutshall.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Larrowe & Company, P.L.C. acted as the Company's independent certified
public accountants for the fiscal year ended December 31, 1999. Representatives
of Larrowe & Company, P.L.C. are expected to attend the Annual Meeting and will
have the opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions from shareholders.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company"s
2001 Annual Meeting of Shareholders must be received not later than December 15,
2000 by the Corporate Secretary at P.O. Box 2740, Roanoke, VA 24001 for
inclusion in the Company"s Proxy Statement relating to that meeting.
10
<PAGE>
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
The Board of Directors knows of no other matter that 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
Securities and Exchange Commission for the year ended December 31, 1999 is
available without charge to shareholders after March 31, 2000 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 Operating
March 22, 2000 Officer and Corporate Secretary
11
<PAGE>
VALLEY FINANCIAL CORPORATION
36 CHURCH AVENUE, SW
ROANOKE, VIRGINIA 24011
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF VALLEY FINANCIAL
CORPORATION FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 27,
2000.
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 25, 2000 at the Annual Meeting of the Company to be held
on April 27, 2000 and at any adjournments thereof, as designated below:
1. ELECTION OF FOUR CLASS C DIRECTORS to serve until the 2003 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, Mason Haynesworth, A. Wayne Lewis and George W. Logan
INSTRUCTION: To withhold authority for any individual nominee, write that
nominee's name on the space provided below.
- --------------------------------------------------------------------------------
2. 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 PROPOSAL NO.
1 ABOVE.
The undersigned hereby acknowledges receipt of the Notice and Proxy
Statement dated March 22, 2000 with respect to the 2000 Annual Meeting.
DATED , 2000
-----------------------
========================================================
NUMBER OF SHAREHOLDERS ATTENDING THE ANNUAL MEETING ___
========================================================
----------------------------------
(SIGNATURE OF SHAREHOLDER)
========================================================
NUMBER OF SHAREHOLDERS ATTENDING THE PLAY AFTERWARD ___
========================================================
----------------------------------
(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.
