SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential of Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BAY BANKS OF VIRGINIA, INC.
(Name of Registrant as Specified in Its Charter)
BAY BANKS OF VIRGINIA, INC.
(Name of Person(s) Filing Proxy Statement)
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:*
-------------------------------------------------------------
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>
(804) 343-4089
2947.001
April 16, 1998
By Electronic Submission
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
ATTN: Filing Desk
Bay Bank of Virginia, Inc. (0-000-22955)/
Definitive Proxy Materials
Ladies and Gentlemen:
On behalf of Bay Banks of Virginia, Inc., Kilmarnock, Virginia ("Bay
Banks"), and pursuant to Regulation S-T under the Securities Act of 1933, as
amended, we are transmitting one copy of Chesapeake's definitive proxy statement
and form of proxy for its annual meeting of shareholders to be held on May 18,
1998.
Seven paper copies of Bay Bank's 1997 Annual Report to Shareholders
are being filed under separate cover.
Any questions or comments concerning this filing should be directed to
the undersigned at (804) 783-2003.
Sincerely,
George P. Whitley
Enclosures
cc: Mr. Austin L. Roberts, III
<PAGE>
April 17, 1998
Dear Fellow Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Bay Banks of Virginia, Inc. on May 18, 1998, at 1:00 p.m., at Indian Creek
Yacht & Country Club, Kilmarnock, Virginia. We would be pleased to have you as
our guest for a buffet luncheon starting at 12:15 p.m. If you wish to attend,
please indicate this on the luncheon reservation card that is enclosed. This
will allow us to have an accurate count of those joining us for the luncheon.
The primary business of the meeting will be the re-election of two
directors of the Company, approval of a Stock Option Plan for Non-Employee
Directors and the ratification of the appointment of independent auditors, as
more fully explained in the accompanying proxy statement.
During the meeting, we also will report to you on the condition and
performance of the Company and its subsidiary, the Bank of Lancaster. You will
have an opportunity to question management on matters that affect the interests
of all stockholders.
We hope you can join us for the luncheon and attend the Annual Meeting
on May 18th. Whether or not you plan to attend, please complete, sign and date
the enclosed proxy and return it promptly in the enclosed envelope. Your vote is
important.
Thank you for your interest in the Company's affairs. As always, we are
most grateful for your continuing support of the Company and the Bank of
Lancaster.
Sincerely,
Ammon G. Dunton, Jr. Austin L. Roberts, III
Chairman of the Board President and Chief Executive Officer
<PAGE>
BAY BANKS OF VIRGINIA, INC.
100 South Main Street
Kilmarnock, Virginia 22482
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 18, 1998
To Our Stockholders:
The Annual Meeting of Stockholders of Bay Banks of Virginia, Inc.
(the "Company") will be held at Indian Creek Yacht & Country Club, Kilmarnock,
Virginia, on May 18, 1998 at 1:00 p.m. for the following purposes:
1. To elect two directors to serve for a three-year term and
until their successors are elected and qualified;
2. To approve the Company's 1998 Non-Employee Directors Stock
Option Plan;
3. To ratify the selection of Eggleston Smith P.C., independent
certified public accountants, as auditors of the Company for
the year ending December 31, 1998; and
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 3, 1998
will be entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof.
By Order of the Board of Directors
Hazel S. Pittman
Corporate Secretary
April 17, 1998
PLEASE MARK, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE>
BAY BANKS OF VIRGINIA, INC.
100 S. Main Street
Kilmarnock, Virginia 22482
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 18, 1998
GENERAL
The enclosed proxy is solicited by the Board of Directors of Bay Banks
of Virginia, Inc. (the "Company") for its Annual Meeting of Stockholders (the
"Annual Meeting") to be held on Monday, May 18, 1998, at the time and place and
for the purpose set forth in the accompanying Notice of the Annual Meeting or
any adjournment thereof. The approximate mailing date of this Proxy Statement
and accompanying Proxy is April 17, 1998.
Revocation and Voting of Proxies
Execution of a proxy will not affect a stockholder's right to attend
the Annual Meeting and to vote in person. Any stockholder who has executed and
returned a proxy may revoke it by attending the Annual Meeting and requesting to
vote in person. A stockholder may also revoke his proxy at any time before it is
exercised by filing a written notice with the Company or by submitting a proxy
bearing a later date. Proxies will extend to, and will be voted at, any
adjourned session of the Annual Meeting.
Voting Rights and Solicitation
Only stockholders of record at the close of business on April 3, 1998
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. The number of shares of common stock of the Company outstanding and
entitled to vote as of the record date was 1,155,087. The Company has no other
class of stock outstanding. A 60% majority of the shares entitled to vote,
represented in person or by proxy, will constitute a quorum for the transaction
of business.
Each share of common stock entitles the recordholder thereof to one
vote upon each matter to be voted upon at the Annual Meeting. Shares for which
the holder has elected to abstain or to withhold the proxies' authority to vote
(including broker non-votes) on a matter will count toward a quorum, but will
not be included in determining the number of votes cast with respect to such
matter.
The cost of solicitation of proxies will be borne by the Company.
Solicitation is being made by mail, and if necessary may be made in person, by
telephone, or special letter by officers and regular employees of the Company,
acting without compensation other than regular compensation.
Principal Stockholders
The only beneficial owner of 5% or more of the common stock of the
Company is the Bank of Lancaster Employee Stock Ownership Plan (the "Plan")
which owns 63,163 shares, or 5.5%, of the outstanding common stock. Four
members of the Board of Directors of the Bank of Lancaster (the "Bank") are
trustees of the Plan.
<PAGE>
As of the record date, the directors, including those nominated for
re-election, and executive officers of the Company beneficially owned as a group
67,955 shares, or 5.89%, of the Company's common stock, including shares for
which they hold currently exercisable stock options.
II. ELECTION OF DIRECTORS
The Company's Board is divided into three classes (I, II and III). The
term of office for Class I directors will expire at the Annual Meeting. The two
persons named immediately below, each of whom currently serves as a director of
the Company, will be nominated to serve as Class I directors. If elected, the
two nominees will serve until the Annual Meeting of Stockholders held in 2001.
The persons named in the proxy will vote for the election of the nominees named
below unless authority is withheld. If for any reason any of the persons named
as nominees below should become unavailable to serve, an event which management
does not anticipate, proxies will be voted for the remaining nominees and such
other person or persons as the Board of Directors may designate.
The Board of Directors recommends that stockholders vote for the two
nominees set forth below. The two nominees receiving the greatest number of
affirmative votes cast at the Annual Meeting will be elected.
<TABLE>
<CAPTION>
Bank Company
Director Director Principal Occupation
Name (Age) Since Since During Past Five Years
---------- ------- -------- ----------------------
<S> <C>
1998 Class (Nominees for Election):
William A. Creager (65) 1994 1997 Retired, was founder and formerly served as
President and Chairman of Capital Systems
Group (a professional services and information
systems company), Rockville, MD
Ammon G. Dunton, Jr. (62) 1977 1997 Chairman of the Board of the Company and the
Bank; Attorney, Senior Partner of Dunton,
Simmons & Dunton, White Stone, VA
Other Directors Not Standing for Re-election at this Time:
1999 Class (Directors Serving Until the 1999 Annual Meeting):
Austin L. Roberts, III (51) 1990 1997 President and Chief Executive Officer of the
Company and the Bank
W. Bruce Sanders (47) 1983 1997 Owner and President of Rappahannock Yachts
(marina), Irvington, VA
2000 Class (Directors Serving Until the 2000 Annual Meeting):
Weston F. Conley, Jr. (63) 1979 1997 President and Manager of RCV Seafood
Corporation (seafood processor and wholesaler),
Morattico, VA
Thomas A. Gosse (51) 1994 1997 President and Chief Executive Officer since
1997 of Northern Neck Insurance Company,
Irvington, VA; formerly a principal in the
accounting firm of Braun, Dehnert, Clarke &
Co., P.C., Irvington, VA
</TABLE>
In accordance with the Company's By-Laws, stockholders intending to
nominate director candidates at a stockholder meeting must deliver notice within
specified timeframes and must follow a specific procedure. A stockholder
desiring information on timeframes and procedures should request the information
from the Corporate Secretary.
Board Committees and Attendance
During 1997 there were three meetings of the Board of Directors. Each
director attended at least 75% of all meetings of the Board. The entire Board of
Directors serves as the Audit and Nominating Committees.
Directors' Compensation
Non-officer directors of the Company receive $200 for each meeting of
the Company's Board of Directors. Directors who are employees of the Company and
Bank are not compensated for attendance at Board meetings and do not receive any
fees for attendance at committee meetings. The Chairman of the Board, Mr. Ammon
G. Dunton, Jr., is a Company and Bank officer. As an officer, he received
$28,500.00 in compensation in 1997, but receives no annual retainer or Board or
committee attendance fees.
Certain Relationships and Related Transactions
Some of the Company directors, executive officers, and members of their
immediate families, and corporations, partnerships and other entities of which
such persons are officers, directors, partners, trustees, executors or
beneficiaries, are customers of the Bank. All loans and loan commitments to them
were made in the ordinary course of business, upon substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more than normal
risk of collectibility or present other unfavorable features. It is the policy
of the Bank to provide loans to officers who are not executive officers and to
employees at more favorable rates than those prevailing at the time for
comparable transactions with other persons. These loans do not involve more than
the normal risk of collectibility or present other unfavorable features.
The law firm of Dunton, Simmons & Dunton serves as legal counsel to the
Company and the Bank. Mr. Ammon G. Dunton, Jr., is a senior member of the firm.
In addition, American Standard Insurance, of which John Cardwell is the manager,
provided insurance to the Company and the Bank.
<PAGE>
There are two family relationships involving the Board and Bank
officers. Mr. Fletcher L. Brown, III is the brother-in-law of the Bank's
Auditor, Margaret Brown, and Mr. W. Bruce Sanders is the brother of the Bank's
Credit Administration Officer, Anita Sanders.
None of the directors serves as a director of any other publicly-held
company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), directors and executive officers of the Company
are required to file reports with the Securities and Exchange Commission
indicating their holdings of and transactions in Company common stock. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, insiders of the Company complied with all filing requirements during
the fiscal year ended December 31, 1997.
OWNERSHIP OF COMPANY COMMON STOCK
The following table sets forth, as of the record date, certain
information with respect to the beneficial ownership of Company common stock
held by each director and nominee and each executive officer named in the
Summary Compensation Table below, and by the directors and all executive
officers as a group.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent
Name Ownership (1) of Class
---- -------------------- ---------
<S> <C>
William A. Creager........................................ 2,200 (2) (3)
Weston F. Conley, Jr...................................... 26,378 (2) 2.3%
Ammon G. Dunton, Jr....................................... 18,595 (2) 1.6%
Thomas A. Gosse........................................... 1,400 (2) (3)
Austin L. Roberts, III.................................... 12,277 (2)(4) (3)
W. Bruce Sanders.......................................... 1,452 (3)
All directors and executive officers as a group........... 67,955 (4) 5.5%
</TABLE>
- ------------------
(1) For purposes of this table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 of the Exchange Act under
which, in general, a person is deemed to be the beneficial owner of a
security if he has or shares the power to vote or direct the voting of the
security or the power to dispose of or direct the disposition of the
security, or if he has the right to acquire beneficial ownership of the
security within sixty days.
(2) Includes shares held by affiliated corporations, close relatives and
children, and shares held jointly with spouses or as custodians or
trustees, as follows: Mr. Creager, 200 shares, Mr. Conley, 4,876 shares;
Mr. Dunton, 2,876 shares; Mr. Gosse, 1,000 shares; and Mr. Roberts, 800
shares.
(3) Represents less than 1% of Company common stock.
(4) Includes: (i) 10,450 shares that may be acquired by Mr. Roberts pursuant to
currently exercisable stock options; and (ii) 14,200 shares that may be
acquired by all executive officers as a group pursuant to currently
exercisable stock options.
<PAGE>
Board of Directors of the Bank
As the parent company of the Bank, the Company will appoint the
directors of the Bank. The following persons have been appointed to serve as
directors of the Bank.
<TABLE>
<CAPTION>
Bank Director
Name (Age) Since Principal Occupation
---------- ------------- ---------------------
<S> <C>
Fletcher L. Brown, III (52) 1994 Owner and President of Eubank & Son Hardware,
Kilmarnock, VA
John J. Cardwell (65) 1989 Manager of American Standard Insurance Company
(independent insurance agency), Kilmarnock, VA
David W. Cheek (49) 1995 General Manager of Kilmarnock Motor Sales (John
Deere farm equipment dealer), Kilmarnock, VA
Weston F. Conley, Jr. (63) 1979 President and Manager of RCV Seafood
Corporation (seafood processor and wholesaler),
Morattico, VA
William A. Creager (65) 1994 Retired, was founder and formerly served as
President and Chairman of Capital Systems
Group (a professional services and information
systems company), Rockville, MD
Ammon G. Dunton, Jr. (62) 1977 Chairman of the Board of the Company and the
Bank; Attorney, Senior Partner of Dunton,
Simmons & Dunton, White Stone, VA
Thomas A. Gosse (51) 1994 President and Chief Executive Officer of
Northern Neck Insurance Company, Irvington, VA
W. T. James, III (68) 1979 Chairman of the Board of Northern Neck
Insurance Company, Irvington, VA
Patricia N. Lawler (54) 1998 President of Lawler Real Estate, Inc., White
Stone, VA
Austin L. Roberts, III (51) 1990 President and Chief Executive Officer of the
Company and the Bank
W. Bruce Sanders (47) 1983 Owner and President of Rappahannock Yachts
(marina), Irvington, Va.
A. Wayne Saunders (61) 1992 Accountant and President of A. Wayne Saunders,
P.C., Burgess, VA
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
No officer receives compensation from the Company. All compensation is
paid through the Bank.
The following table presents compensation information on the Chief
Executive Officer of the Company. No other officer of the Company or Bank earned
over $100,000 in 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-term
Compensation
---------------------
Securities
Name and Annual Compensation (1) Underlying All Other
--------------------------------
Principal Position Year Salary Bonus Options (2) Compensation (3)
------------------ ---- ------ ----- ----------- ----------------
<S> <C>
Austin L. Roberts, III 1997 $122,000 -- 1,000(2) $9,247
President/Chief 1996 112,000 $10,000 2,450 9,401
Executive Officer 1995 105,000 -- 1,500 6,862
</TABLE>
- ------------------
(1) Mr. Roberts did not receive perquisites or other personal benefits in
excess of the lesser of $50,000 or 10% of the total of his salary and
bonus.
(2) The Company's Incentive Stock Option Plan does not permit the granting
of restricted stock awards or stock appreciation rights. The Plan is
the Company's only stock-based long term compensation plan currently in
effect.
(3) Mr. Roberts has received other compensation as follows:
<TABLE>
<caption.
1997 1996 1995
---- ---- ----
<S> <C>
401(k) Plan $ 2,743 $ 2,745 $ 2,362
ESOP 6,504 6,656 4,500
----- ----- --------
TOTAL $ 9,247 $ 9,401 $ 6,862
</TABLE>
Stock Option Grants in 1997
The Company's Stock Option Plan provides for the granting of both
incentive and non-qualified stock options to executive officers and key
employees of the Company and its subsidiaries.
<PAGE>
The following table provides certain information concerning stock
options granted during 1997 to Mr. Roberts.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------
Percent of
Number of Total
Shares Options
Underlying Granted to Exercise Potential
Options Employees Price per Expiration Realizable Value (2)
Name Granted (1) in 1997 Share Date 5% 10%
---- ----------- ------- ----- ---- -- ---
<S> <C>
Austin L. Roberts, III 1,000 7.7% $23.50 5/15/07 $14,779 $37,453
</TABLE>
- --------------
(1) The option grant is subject to certain performance criteria being
achieved. As of this date, there has not been a determination whether
the granted options have been earned.
(2) Potential realizable value at the assumed annual rates of stock price
appreciation based on actual option term (10 years) and annual
compounding.
Stock Option Exercises in 1997 and year-end Option Values
The following table shows certain information with respect to the
number and value of unexercised options at year-end. No stock options were
exercised during 1997 by Mr. Roberts.
<TABLE>
<CAPTION>
Number of Value of
Shares Underlying Unexercised
Number of Unexercised In-the-Money
Shares Acquired Value Options at Options at
Name on Exercise Realized December 31, 1997 December 31, 1997 (1)
---- ----------- -------- ----------------- ---------------------
<S> <C>
Austin L. Roberts, III None $0 11,450 (2) $128,275
</TABLE>
- -------------
(1) Calculated by subtracting the exercise price from the fair market
value of the stock at December 31, 1997.
(2) 1,000 of Mr. Roberts' option shares are subject to certain performance
criteria being achieved. As of this date, there has not been a
determination whether this option grant has been earned.
Benefit Plans
Pension Plan. The Bank has a non-contributory defined benefit pension
plan which covers substantially all salaried employees who have reached the age
of twenty-one and who have completed one-year of service. A participant's
monthly retirement benefit (if they have twenty-five years of credited service
at their normal retirement date) is 25% of their final average pay, plus an
additional 18.75% if their pay is in excess of the participant's Social Security
covered pay. The Social Security covered pay is the average pay of the
participant's working lifetime prior to the year the participant attains their
Social Security retirement age. If the participant has less than twenty-five
years of service at his or her normal retirement date, the participant's monthly
retirement benefit will be actuarially reduced by 1/25 for each year of credited
service less than twenty-five years. Cash benefits under the plan generally
commence on retirement, death or other termination of employment and are payable
in various forms at the election of the participant.
<PAGE>
401(k) Plan. The Bank has a contributory 401(k) Plan. All salaried
employees are eligible to participate after having worked six months
consecutively; there is no age requirement. Participants may elect to defer
between 1% to 15% of their base compensation which will be contributed to the
plan, providing the amount deferred does not exceed the dollar maximum election
deferral for each year. The Bank's match is 100% up to a 2% deferral; the Bank
will provide a 25% match on employee contributions up to 4% of salary. Under the
Plan, an employee is vested 20% after three years and 20% each year thereafter
for the next four years of service. If an employee leaves prior to the
three-year period, he or she forfeits any accrued Bank match contribution.
Distribution to participants are made at death, retirement or other
termination of employment in a lump sum payment. The Plan permits certain
in-service withdrawals. Normal retirement age is considered sixty-five; early
retirement is considered at fifty-five with ten years of vested service;
disability retirement has no age requirements but a service requirement of ten
years of vested service.
Stock Option Plan. The Company has two incentive Stock Option Plans,
the 1985 Plan (which has expired, but options granted thereunder are still
exercisable) and the 1994 Plan. The 1994 Plan provides for the award of
incentive stock options to key employees of the Bank as selected by the Board of
Directors. The Board of Directors makes awards under the Plan and fixes the
terms and conditions of each award pursuant to a separate agreement entered into
with each optionee. The price of shares of stock to be issued upon the exercise
of options is 100% of the fair market value on the date of the award. The option
is not exercisable after the expiration of ten years from the date such option
is granted. An option is not transferable by a person to whom it is granted
other than by will or the laws of descent and distribution.
Under the 1985 Plan, accounting for two 10% stock dividends and a
2-for-1 split, 31,080 shares were reserved, all of which have been granted or
exercised. Under the 1994 Plan, 75,000 shares have been authorized and 26,815
have been granted.
Employee Stock Ownership Plan (ESOP). The Company provides an Employee
Stock Ownership Plan that is a non-contributory plan supported by annual
contributions made at the discretion of the Board of Directors.
The Plan is a Stock Bonus Plan qualified under Section 401(a) of the
Internal Revenue Code and an Employee Ownership Plan under Section 4975(E)(7) of
the Code. The plan is administered by Trustees and an Administrative Committee
both elected by the Board of Directors for the exclusive benefit of
participants.
The plan is eligible to each Bank employee over the age of
twenty-one and credited with at least 1,000 hours of service for the plan year.
Other Benefit Plans. The Bank provides life, medical, dental and
disability insurance to all eligible employees of the Bank.
<PAGE>
II. APPROVAL OF THE 1998 NON-EMPLOYEE DIRECTORS
STOCK OPTION PLAN
The Board of Directors proposes that the stockholders approve the 1998
Non-Employee Directors Stock Option Plan (the "Plan"). The Board of Directors
adopted the Plan on February 19, 1998, subject to stockholder approval at the
Annual Meeting. Approval of the Plan requires the affirmative vote of the
holders of more than 60% of the shares present or represented by properly
executed and delivered proxies at the Annual Meeting.
The following paragraphs summarize the principal features of the Plan.
Such summary is subject, in all respects, to the terms of the Plan. The Company
will provide promptly, upon request and without charge, a copy of the full text
of the Plan to each person to whom a copy of this Proxy Statement is delivered.
Requests should be directed to Paul T. Sciacchitano, Treasurer, Bay Banks of
Virginia, 100 South Main Street, Kilmarnock, Virginia 22482.
The Board of Directors recommends a vote "FOR" approval of the Plan.
Purposes. The Board of Directors believes that the Plan will benefit
the Company by promoting a greater identity of interest between non-employee
directors of the Company and its subsidiaries (each referred to as a
"Participant") and its stockholders by increasing each Participant's proprietary
interest in the Company through the award of options to purchase Company common
stock (each referred to as an "Option").
Eligibility. Each non-employee director of the Company and any of its
subsidiaries is eligible to participate in the Plan. The Company and Bank
currently have ten non-employee directors. Each Participant will receive an
Option for 250 shares of Company common stock on May 18, 1998 and on each
succeeding anniversary (the "Grant Date") during the term of the Plan. If an
individual serves as a director of both the Company and the Bank or any other
subsidiary, that individual will be eligible only for a single grant under the
Plan in any one year.
Administration. The Plan will be administered by the Board of
Directors. The Board has no discretion in determining who will receive an Option
or the number of shares allocated to a Participant or the terms of any Option.
The terms are set forth in the Plan and are summarized below.
Options. A total of 25,000 shares of Company common stock may be issued
upon the exercise of Options granted under the Plan. The maximum number of
shares that may be issued under the Plan, and the terms of outstanding Options,
will be proportionately adjusted to reflect any future stock dividend, stock
split or similar changes in the capitalization of the Company.
Terms of the Options. The exercise price per share of an Option will be
the fair market value of the common stock on the Grant Date. The price may be
paid in cash or by surrendering shares of Company common stock to the Company.
Options will first become exercisable six months after the Grant Date and will
have a term of ten years.
Options are nontransferable except by will or the laws of descent and
distribution. During the Participant's lifetime, the Participant's Options may
be exercised only by the Participant.
A Participant will not have any rights as a stockholder with respect to
shares covered by Options until the Option is exercised.
<PAGE>
Federal Income Tax Consequences. No income is recognized by a
Participant on account of the grant of an Option. Income is recognized on the
date that an Option is exercised. The amount of income recognized by the
Participant is equal to the difference between the fair market value of the
shares received upon such exercise and the Option's price. Any gain or loss that
is recognized on a subsequent disposition of the shares is taxed as long- or
short-term capital gain or loss.
The Company is entitled to claim a federal income tax deduction upon
the exercise of an Option. The amount of the Company's deduction is equal to the
amount of income recognized by the Participant.
Amendments. The Board of Directors may amend or discontinue the Plan at
any time, provided that no amendment may impair the rights of any Option holder
without his or her consent, and further provided that any amendment shall be
subject to approval of stockholders if such approval is necessary to comply with
any tax or regulatory requirement.
III. RATIFICATION OF SELECTION OF ACCOUNTANTS
On the recommendation of the Audit Committee, the Board of Directors
has appointed Eggleston Smith, P.C., certified public accountants, as the
Company's independent auditors for 1998, subject to ratification of the
stockholders. Eggleston Smith P.C. rendered audit services to the Company during
1997. These services consisted primarily of the examination and audit of the
institution's financial statements, tax reporting assistance, and other audit
and accounting matters. Stockholders are requested to ratify the selection by
vote at the Annual Meeting.
Representatives of Eggleston Smith P. C. are expected to be
present at the Annual Meeting and are expected to be available to respond to
your questions during and after the meeting.
OTHER MATTERS
Management knows of no other business to be brought before the Annual
Meeting. Should any other business properly be presented for action at the
meeting, the shares represented by the enclosed proxy shall be voted by the
persons named therein in accordance with their best judgment and in the best
interests of the Company.
<PAGE>
1999 ANNUAL MEETING OF STOCKHOLDERS
In accordance with the By-Laws of the Company, as currently in effect,
the Annual Meeting of Stockholders for 1999 will be held on May 17, 1999. The
Board of Directors need not include an otherwise appropriate stockholder
proposal in its proxy statement or form of proxy for that meeting unless the
proposal is received by the Company at its main office on or before January 15,
1999. A stockholder desiring additional information on timeframes and procedures
should request the information from the Corporate Secretary.
ANNUAL FINANCIAL DISCLOSURE STATEMENT
An annual Financial Disclosure Statement containing information
about the Bay Banks of Virginia, Inc. financial condition is available upon
request from:
Paul T. Sciacchitano
Treasurer
Bay Banks of Virginia, Inc.
P. O. Box 1869
Kilmarnock, Virginia 22482
(804) 435-1171
<PAGE>
BAY BANKS OF VIRGINIA, INC.
This Proxy is solicited on behalf of the Board of Directors
The undersigned, revoking all prior proxies, hereby appoints Ammon G.
Dunton, Jr. and Austin L. Roberts, III, or either of them, as proxies with full
power of substitution to represent the undersigned and vote, as designated
below, all the shares of Common Stock of Bay Banks of Virginia, Inc. held of
record by the undersigned on April 3, 1998, at the Annual Meeting of
Stockholders to be held on May 18, 1998, at 1:00 p.m. at the Indian Creek Yacht
and Country Club, Kilmarnock, Virginia, or any adjournment thereof, on each of
the following matters:
1. Election of directors.
[ ] FOR all Nominees listed below [ ] WITHHOLD AUTHORITY to vote
for those indicated below
William A. Creager Ammon G. Dunton, Jr.
NOTE: You may line through the name of any individual
nominee for whom you wish to withhold your vote.
2. To approve the Company's 1998 Non-Employee Directors Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the selection by the Board of Directors of Eggleston, Smith,
P.C., independent certified public accountants, as auditors of the
Company for 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. The Board of
Directors has not been notified of any such matters.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned stockholder. If no direction is made, this proxy
will be voted "FOR" each proposal. All joint owners MUST sign.
Please sign exactly as your name appears below. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such.
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Signature
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Signature (if jointly owned)
Dated:____________________, 1998
Please mark, sign, date and return this Proxy promptly in the enclosed envelope.
