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[LOGO WAYNE BANCORP, INC.]
February 11, 1997
Dear Fellow Shareholder:
This is to notify you that the adjourned Special Meeting (the "Special
Meeting") of Stockholders of Wayne Bancorp, Inc. (the "Company") called to
consider the approval of the Wayne Bancorp, Inc. 1996 Stock-Based Incentive
Plan (the "Incentive Plan") will be held on February 25, 1997, at 2:00 p.m.
Eastern Time, at the Paris Inn, 1292 Alps Road, Wayne, New Jersey.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL
OF THE INCENTIVE PLAN AT THE SPECIAL MEETING; AND A PROXY CARD IS ENCLOSED FOR
YOUR CONVENIENCE. IF YOU HAVE ALREADY SUBMITTED A PROXY CARD FOR THE SPECIAL
MEETING TO THE BOARD OF DIRECTORS AND YOU DO NOT WISH TO CHANGE YOUR VOTE, YOU
DO NOT HAVE TO SUBMIT ANOTHER PROXY CARD.
IF YOU WISH TO RECEIVE ANOTHER COPY OF THE COMPANY'S PROXY STATEMENT FOR THE
SPECIAL MEETING WHICH GIVES DETAILED INFORMATION REGARDING THE INCENTIVE PLAN,
PLEASE CALL (201) 305-5500.
As you may well be aware, the Special Meeting to consider approval of the
Incentive Plan was convened as scheduled on January 30, 1997 and was adjourned
to 2:00 p.m. Eastern Time on February 25, 1997. Such meeting will be held at
the Paris Inn, 1292 Alps Road, Wayne, New Jersey. Such adjournment was taken
in order to provide time for the Company to discuss and attempt to resolve
issues with The Committee to Preserve Shareholder Value (the "Committee"),
which solicited proxies in opposition to the Board of Directors' proposal to
approve the Incentive Plan. The members of the Committee were identified as
Lawrence B. Seidman, Seidman and Associates, L.L.C., Seidman and Associates
II, L.L.C., Seidman Investment Partnership, L.P., The Benchmark Company, Inc.,
Benchmark Partners, LP, Richard Whitman, and Lorraine DiPaolo. In addition, at
the request of Mr. Seidman and in order to facilitate negotiations with the
Committee, the Board of Directors extended the deadline under the Company's
Bylaws by which Mr. Seidman would have to submit nominees for election as
Directors at the Company's 1997 Annual Meeting of Stockholders scheduled to be
held on April 30, 1997. The Board understood that Mr. Seidman intended to
nominate two persons, including Dennis Pollack, for election as Directors of
the Company at its 1997 Annual Meeting, and that the Committee intended to
conduct a solicitation for the election of such persons as Directors in
opposition to the Company's solicitation of proxies for the election of
Directors at such 1997 Annual Meeting.
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Your Board of Directors determined that this adjournment and negotiations
with the Committee were appropriate because the Committee was receiving
significant support from other shareholders in its proxy solicitation in
connection with the Special Meeting. In particular, shortly prior to the
initial scheduled date for the Special Meeting, the Company's largest
institutional shareholder (the "Institutional Investor"), which apparently has
the ability to vote or cause the vote of approximately 7.9% of the Company's
outstanding common stock as of the December 2, 1996 Record Date for the
Special Meeting, indicated to management of the Company that it believed,
given Mr. Seidman's percentage of stock ownership in the Company, that Mr.
Seidman was entitled to have representation on the Company's Board of
Directors. Moreover, such Institutional Investor indicated that, while it did
not object to the Incentive Plan, it would vote against the Board of
Directors' proposal seeking approval of the Incentive Plan at the Special
Meeting unless the Board of Directors agreed to provide Mr. Seidman with such
representation on the Board of Directors. More importantly, the Board of
Directors was concerned about the possible prospective disruption to the
Company's operations that could arise, particularly as a result of time
demands on management, if there were continued and prolonged proxy fights
between the Company and the Committee, and the Board of Directors was also
concerned about the continuing costs to the Company of conducting such proxy
contests.
As a result of negotiations, the Company and the Committee entered into an
agreement (the "Agreement") on February 10, 1997, which generally becomes
binding if the Incentive Plan is approved at the Special Meeting by more than
50% of the outstanding shares of the Company's common stock. Such Agreement
obligates the Company as follows:
(1) The Board of Directors of the Company and its subsidiary bank, Wayne
Savings Bank, F.S.B., each will increase by one the size of their
respective Boards of Directors and, to fill such vacancies, Mr. Pollack
will be appointed as a Director for a term expiring at the Company's
1997 Annual Meeting of Stockholders, subject to any required prior
notice or approval by regulatory authorities.
(2) The Company also will include Mr. Pollack as one of its nominees for
re-election with the other members of that class of Directors at its
1997 Annual Meeting of Stockholders.
(3) Further, upon termination of William J. Lloyd's next term as a Director
or his earlier resignation, the Board will reduce the number of
Directors back to nine, or such greater number to reflect any increase
in the size of the Board as a result of any acquisition transaction.
(4) As a result of the increase in the number of Directors, the Board of
Directors will revise its fee arrangement for Directors so that such
increase will not increase the total fees owed to Directors.
(5) In addition, the Company will reimburse the Committee for actual
expenses, not to exceed $15,000, incurred by it in connection with its
solicitation of proxies for the Special Meeting.
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The Agreement obligates Mr. Seidman and each of the other members of the
Committee as follows:
(1) The common stock of the Company owned of record or beneficially by the
members of the Committee (the "Committee Stock"), an aggregate of
approximately 201,000 shares, or 9% of the outstanding shares, as of
the December 2, 1996 Record Date for the Special Meeting, will be voted
at the Special Meeting to approve the Incentive Plan.
(2) The Committee Stock will be voted in favor of the election of the
persons nominated by the Board of Directors of the Company to be
elected Directors at the 1997 Annual Meeting of Stockholders.
(3) The Committee can solicit proxies and vote for one Director at the
Company's 1998 Annual Meeting of Stockholders; and, except for such one
Director position, the Committee Stock will be voted for the election
of persons nominated by the Company's Board of Directors for the other
Directors to be elected at the 1998 Annual Meeting.
(4) Except for any solicitation for one Director at the 1998 Annual
Meeting, prior to the Company's 1999 Annual Meeting of Stockholders,
the Committee will not solicit or participate in any solicitations of
proxies or consents of stockholders of the Company; provided, however,
that the Committee is not prevented from engaging in a solicitation in
opposition to a solicitation by the Company that would involve the
acquisition of the Company by another person, or the acquisition of
more than 25% of the ownership of the Company by another person.
(5) Members of the Committee, together with their associates and
affiliates, and Mr. Pollack will not acquire, directly or indirectly
and beneficially or of record, any additional shares of the Company's
outstanding common stock to the extent that their aggregate ownership
would exceed 10% of such outstanding common stock; provided, however,
such persons are not prevented, in the aggregate, from exceeding the
10% ownership level to the extent repurchases of common stock by the
Company cause their ownership to exceed the 10% level.
(6) The members of the Committee will not seek to influence or control the
Company or its management, business, policies or affairs, except they
can seek to influence members of the Board of Directors in their
capacity as Directors.
Your Board of Directors believes that the Agreement with the Committee is in
the best interests of the Company and its stockholders because it ends the
costly and disruptive proxy contests with which the Company was confronted in
connection with the Special Meeting and the 1997 Annual Meeting and should
enable your Board of Directors to proceed with the job of managing the
Company's operations to promote shareholder value. Your Board of Directors
would like to thank you for your understanding, consideration and patience in
connection with this Special Meeting, and urges all stockholders to vote in
favor of the Incentive Plan at the Special Meeting. A proxy card is enclosed
with this letter for your convenience.
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IF YOU HAVE ALREADY SUBMITTED A PROXY CARD FOR THE SPECIAL MEETING, YOU DO
NOT HAVE TO SUBMIT A NEW PROXY CARD UNLESS YOU WISH TO CHANGE YOUR VOTE. UNLESS
MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF
EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE INCENTIVE PLAN.
Sincerely yours,
Harold P. Cook, III
Chairman of the Board and Chief
Executive Officer
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SOLICITATION OF PROXIES
The cost of soliciting Management proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable and appropriate expenses incurred by them
in sending Management proxy materials to the beneficial owners of Wayne
Bancorp's Common Stock. The Company has retained Regan & Associates, Inc.,
a professional proxy solicitation firm, to assist in the solicitation of
proxies for a fee not to exceed $15,000, plus reimbursement of expenses
not to exceed $10,000. Approximately ten persons will be utilized by Regan
& Associates, Inc. in such solicitation. The total amount estimated to be
expended in connection with this proxy contest is $125,000, which excludes
the amount normally expended in connection with a solicitation for similar
compensation plans in the absence of a contest, and costs represented by
salaries and wages of regular employees and officers of the Company.
Approximately $44,000 has been paid to date. In addition to solicitation
by mail, directors, officers and regular employees of the Company and/or
the Bank may solicit proxies personally, by telegraph, by facsimile
transmission or by telephone without additional compensation.
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- VERY IMPORTANT -
IF YOU HAVE ANY QUESTIONS ABOUT HOW TO VOTE "FOR" THE INCENTIVE PLAN,
PLEASE CALL OUR PROXY SOLICITOR, REGAN & ASSOCIATES, INC. AT (800) 737-
3426.
AS A "GENERAL" RULE, OUR "WHITE" PROXY CARD SHOULD BE RETURNED ONLY IN
THE PREPAID ENVELOPE THAT WAS SUPPLIED TO YOU. IF YOUR SHARES ARE HELD BY
A BROKER OR BANK, IT IS NECESSARY THAT YOUR PROXY INSTRUCTIONS BE RETURNED
TO THEM FIRST, SO THAT THEY CAN ISSUE A VOTE ON YOUR BEHALF.
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