<PAGE> 1
SCHEDULE 14A
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
................................................................................
CROGHAN BANCSHARES, INC.
................................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) 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.
<PAGE> 2
1) Amount Previously Paid:
................................................................................
2) Form, Schedule or Registration Statement No.:
................................................................................
3) Filing Party:
................................................................................
4) Date Filed:
................................................................................
<PAGE> 3
CROGHAN BANCSHARES, INC.
323 CROGHAN STREET
FREMONT, OHIO 43420
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 9, 2000
Notice is hereby given that the 2000 Annual Meeting of
Shareholders of Croghan Bancshares, Inc., an Ohio corporation (the
"Corporation"), will be held at PK's Banquet Hall, 2270 West Hayes Avenue,
Fremont, Ohio, 43420, on May 9, 2000, at 1:00 p.m., local time (the "Annual
Meeting"), for the following purposes, all of which are described more fully in
the accompanying Proxy Statement:
1. To consider and vote upon the adoption of the Amended
and Restated Articles of Incorporation;
2. To consider and vote upon the adoption of the Amended
and Restated Code of Regulations;
3. (A) If the Amended and Restated Code of
Regulations is adopted, to elect three
directors for terms expiring in 2001, three
directors for terms expiring in 2002, and
three directors for terms expiring in 2003;
(B) If the Amended and Restated Code of
Regulations is not adopted, to elect twelve
directors for terms expiring in 2001;
4. To consider and vote upon a shareholder proposal
requiring confidential voting of proxies and
independent inspectors of election;
5. To consider and vote upon a shareholder proposal
requiring the disclosure of offers to purchase or
merge with the Corporation; and
6. To consider and vote upon a shareholder proposal
prohibiting service on the Board of Directors of
individuals who are 72 or older.
Only shareholders of record at the close of business on March
17, 2000, will be entitled to receive notice of and to vote at the Annual
Meeting and any adjournments thereof. Whether or not you expect to attend the
Annual Meeting, we urge you to consider the accompanying Proxy Statement
carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR
SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM
MAY BE ASSURED. The giving of a Proxy does not affect your right to vote in
person in the event you attend the Annual Meeting.
By order of the Board of Directors
Thomas F. Hite, President
and Chief Executive Officer
March 24, 2000
<PAGE> 4
CROGHAN BANCSHARES, INC.
PROXY STATEMENT
Dated March 24, 2000
For Annual Meeting of Shareholders
to be Held Tuesday, May 9, 2000
The enclosed Proxy is being solicited by the Board of Directors of
Croghan Bancshares, Inc., an Ohio corporation (the "Corporation"), for use at
the 2000 Annual Meeting of Shareholders of the Corporation to be held at PK's
Banquet Hall, 2270 West Hayes Avenue, Fremont, Ohio 43420, on Tuesday, May 9,
2000, at 1:00 p.m., local time, and at any adjournments thereof (the "Annual
Meeting"). Without affecting any vote previously taken, your Proxy may be
revoked before your shares are voted by executing a later-dated Proxy or by
giving notice of revocation to the Corporation in writing or at the Annual
Meeting. Attendance at the Annual Meeting will not, of itself, revoke your
Proxy.
Each properly executed Proxy received before the Annual Meeting and not
revoked will be voted as specified on the Proxy or, in the absence of specific
voting instructions on the Proxy, will be voted:
FOR the adoption of the Amended and Restated Articles of
Incorporation (the "New Articles") attached to this Proxy
Statement as Exhibit I; and
FOR the adoption of the Amended and Restated Code of
Regulations (the "New Regulations") attached to this Proxy
Statement as Exhibit II.
If the New Regulations are adopted, each properly executed Proxy
received before the Annual Meeting and not revoked will be voted as specified on
the Proxy or, in the absence of specific voting instructions on the Proxy, will
be voted:
FOR the election to the Board of Directors of the twelve
persons listed below under the section of this Proxy Statement
entitled "ELECTION OF DIRECTORS" to serve in three classes
with terms expiring in successive years and until their
respective successors are elected and qualified, or until
their earlier resignation, removal from office or death.
If the New Regulations are NOT adopted, each properly executed Proxy
received before the Annual Meeting and not revoked will be voted as specified on
the Proxy or, in the absence of specific voting instructions on the Proxy, will
be voted:
FOR the election to the Board of Directors of the twelve
persons listed below under the section of this Proxy Statement
entitled "ELECTION OF DIRECTORS" to serve until the next
annual meeting of shareholders in 2001 and until their
respective successors are elected and qualified, or until
their earlier resignation, removal from office or death.
<PAGE> 5
Each properly executed Proxy received before the Annual Meeting and not
revoked will be voted as specified on the Proxy or, in the absence of specific
voting instructions on the Proxy, will be voted:
AGAINST the adoption of the shareholder proposal to require
confidential voting of proxies and independent inspectors of
election (the "Mandatory Confidential Voting Resolution");
AGAINST the adoption of the shareholder proposal to require
disclosure of offers to purchase or merge with the Corporation
(the "M&A Resolution"); and
AGAINST the adoption of the shareholder proposal to prohibit
service on the Board of Directors of individuals who are 72 or
older (the "Age Restriction Resolution").
Proxies may be solicited by the Directors, officers and other employees
of the Corporation and The Croghan Colonial Bank, a wholly-owned subsidiary of
the Corporation (the "Bank"), in person or by telephone, telecopy, mail or other
electronic media. The Corporation may reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending Proxy materials to beneficial owners. The cost of soliciting proxies
will be borne solely by the Corporation.
This Proxy Statement is first being mailed to shareholders of the
Corporation on or about March 24, 2000.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record as of the close of business on March 17,
2000 (the "Voting Record Date"), are eligible to vote at the Annual Meeting. The
Corporation's records disclose that, as of the Voting Record Date, there were
[1,908,500] outstanding common shares, par value $12.50 per share, of the
Corporation (the "Outstanding Common Shares") entitled to vote at the Annual
Meeting. Each shareholder of record will be entitled to cast one vote for each
Outstanding Common Share registered in his or her name on the books of the
Corporation at the close of business on March 17, 2000, on all matters which
come before the Annual Meeting. Holders of a majority of the Outstanding Common
Shares must be either present or represented by proxy at the Annual Meeting to
constitute a quorum for the transaction of business. To the knowledge of the
Board of Directors, no person or entity owns beneficially, directly or
indirectly, 5% or more of the Corporation's Outstanding Common Shares as of the
date hereof.
VOTES REQUIRED
Under Ohio law, the Amended Articles of Incorporation of the
Corporation (the "Current Articles") and the Code of Regulations of the
Corporation (the "Current Regulations"), the following matters must receive the
corresponding vote of Outstanding Common Shares:
<TABLE>
<CAPTION>
Proposal Required Vote
-------- -------------
<S> <C>
1) Adoption of the New Articles Affirmative vote of the holders of at
least two-thirds of the Outstanding Common
Shares, voting in person or by proxy.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
Proposal Required Vote
-------- -------------
<S> <C>
2) Adoption of the New Regulations Affirmative vote of the holders of at
least a majority of the Outstanding Common
Shares, voting in person or by proxy.
3) Election of Directors The twelve nominees receiving the greatest
number of votes will be elected to the
Board of Directors.
4) Adoption of the Mandatory Affirmative vote of the holders of at
Confidential Voting Resolution least a majority of the Outstanding Common
Shares, voting in person or by proxy.
5) Adoption of the M&A Resolution Affirmative vote of the holders of at
least a majority of the Outstanding Common
Shares, voting in person or by proxy.
6) Adoption of the Age Restriction Affirmative vote of the holders of at
Resolution least a majority of the Outstanding Common
Shares, voting in person or by proxy.
</TABLE>
Notwithstanding the required vote outlined above, the New Articles and
the New Regulations will not be adopted unless both proposals receive the
required vote for adoption. For example, if the New Regulations are approved by
the affirmative vote of at least a majority of the Outstanding Common Shares,
but the New Articles do not receive the affirmative vote of at least two-thirds
of the Outstanding Common Shares, then neither the New Articles nor the New
Regulations will be adopted. Similarly, if the New Articles are approved by the
affirmative vote of at least two-thirds of the Outstanding Common Shares, but
the New Regulations do not receive the affirmative vote of at least a majority
of the Outstanding Common Shares, then neither the New Articles nor the New
Regulations will be adopted.
The required vote for the election of Directors and the adoption of the
other proposals listed above is not dependent upon the outcome of the vote for
the New Articles or the New Regulations.
If the accompanying Proxy is signed and dated by the shareholder, but
no vote is specified thereon, the Outstanding Common Shares held by such
shareholder will be voted:
(i) FOR the adoption of the New Articles;
(ii) FOR the adoption of the New Regulations;
(iii) FOR the election to the Board of Directors of the
twelve nominees listed below;
(iv) AGAINST the adoption of the Mandatory Confidential
Voting Resolution;
(v) AGAINST the adoption of the M&A Resolution; and
(vi) AGAINST the adoption of the Age Restriction Resolution.
3
<PAGE> 7
Broker/dealers, who hold Outstanding Common Shares in street name for their
customers may, under applicable rules of the exchange and other self-regulatory
organizations of which the broker/dealers are members, sign and submit Proxies
for such Outstanding Common Shares and may vote such Outstanding Common Shares
on some matters, but broker/dealers may not vote such Outstanding Common Shares
on other matters without specific instructions from the customer who owns such
Outstanding Common Shares. Proxies signed and submitted by broker/dealers which
have not been voted on certain matters as described in the previous sentence are
referred to as broker non-votes. Such Proxies count toward the establishment of
a quorum.
The effect of an abstention or a non-vote on the proposals to adopt the
New Articles, the New Regulations, the Mandatory Confidential Voting Resolution,
the M&A Resolution and the Age Restriction Resolution will be the same as a vote
against the adoption of such matters.
ADOPTION OF THE NEW ARTICLES AND NEW REGULATIONS
The Board of Directors unanimously recommends the adoption of the New
Articles and the New Regulations. The Board of Directors recommends that the
Corporation's shareholders vote FOR the adoption of the New Articles and FOR the
adoption of the New Regulations.
The New Articles contain several provisions which are different from
the provisions in the Current Articles. Under the Current Articles, an
affirmative vote of the holders of at least two-thirds of the voting power of
the Corporation is required for all shareholder actions except the adoption of
amendments to the Current Regulations (which requires an affirmative vote of the
holders of at least a majority of the voting power of the Corporation). The New
Articles decrease the required shareholder vote for all actions recommended by
the Board of Directors from two-thirds to a majority of the voting power of the
Corporation.
If the New Articles are approved and adopted at the Annual Meeting,
therefore, a two-thirds shareholder vote will be required only when the Board of
Directors recommends against approval of the following matters:
(i) The adoption of an amendment to the New Articles or the New
Regulations;
(ii) A change in the number of Directors by shareholder action; or
(iii) The adoption of an agreement of merger or other significant
transaction involving the Corporation.
The New Articles also contain other provisions which have the following effect:
(i) The expansion of the authority of the Board of Directors to
hold, sell, transfer or otherwise deal in the shares of, or
any other security of, the Corporation;
(ii) An increase in the number of authorized common shares; and
(iii) The prohibition of the removal of Directors, except for cause
and with the approval of two-thirds of the voting power of the
Corporation.
The New Regulations also contain many provisions which are different
from the provisions in the Current Regulations. The most significant of these
provisions would:
4
<PAGE> 8
(i) Classify the Board of Directors into three classes with each
class serving three year terms and with one class being
elected each year;
(ii) Impose advance notice requirements for shareholder nominations
for the Board of Directors and allow Directors to fill
vacancies on the Board of Directors;
(iii) Increase the required number of outstanding shares entitled to
call a meeting of the shareholders from 25% to 50%; and
(iv) Provide certain changes in the indemnification of Directors
and officers of the Corporation.
As more fully discussed below, the Board of Directors believes that the
proposed New Articles and New Regulations would, if adopted, reduce the
possibility that another person or entity could affect a sudden or surprise
change in control of the Corporation without the support of the incumbent Board
of Directors. The changes to the Current Articles and Current Regulations are
intended in part to encourage persons seeking to acquire control of the
Corporation to initiate such efforts through negotiations with the Corporation.
The Board of Directors believes the adoption of the New Articles and the New
Regulations will help give the Board of Directors the time necessary to evaluate
unsolicited offers, as well as appropriate alternatives, in a manner which will
assist the Board of Directors in protecting the interests of the Corporation's
shareholders.
If adopted, the New Articles and the New Regulations could have the
effect of discouraging another person or entity from making a tender offer or
otherwise attempting to obtain control of the Corporation, even though such
attempt might be beneficial to the Corporation's shareholders. The New Articles
and the New Regulations also may have significant effects on the ability of
shareholders of the Corporation to change the composition of the incumbent Board
of Directors. As a result, shareholders should read carefully the following
sections of this Proxy Statement which describe the New Articles and the New
Regulations in detail.
EXISTING ANTI-TAKEOVER PROTECTIONS UNDER OHIO LAW AND THE CURRENT ARTICLES
The Corporation is an Ohio corporation and, therefore, is subject to
the provisions of Section 1701.831 of the Ohio Revised Code (the "Ohio Control
Share Acquisition Statute"), Chapter 1704 of the Ohio Revised Code (the "Ohio
Merger Moratorium Statute") and the tender offer regulations of the Ohio
Division of Securities. The Corporation is also the sole shareholder of an Ohio
chartered bank and, as such, is subject to the provisions of Chapter 1115 of the
Ohio Revised Code governing bank acquisitions and reorganizations. These
statutes and regulations provide the Corporation with certain protections from
hostile takeovers and will continue to apply to the Corporation regardless of
whether the Proposals are adopted.
The Current Articles do not permit shareholders to cumulate votes in
the election of Directors. Accordingly, the holders of a majority of the
Outstanding Common Shares can elect all of the Directors then being elected at
any annual or special meeting of the Corporation's shareholders. As a result, a
holder of a substantial minority interest in the Corporation may not be able to
assure the election of a representative to the Board of Directors.
PURPOSES AND EFFECTS OF THE PROPOSED AMENDMENTS
Ohio, like most other states, permits a corporation to adopt
protections through the amendment of its Articles or Regulations which, along
with certain provisions of Ohio General Corporation Law, may have the effect of
delaying or deterring unsolicited takeover attempts. If adopted, the New
Articles and
5
<PAGE> 9
the New Regulations are intended in part to discourage certain types of coercive
takeover practices and inadequate takeover bids and to encourage persons seeking
to acquire control of the Corporation to negotiate first with the Corporation's
Board of Directors.
One method used by third parties to accomplish a takeover or
restructuring or other similar extraordinary transaction is the accumulation of
substantial ownership of the shares of the target company. Such actions are
often undertaken by a third party without advance notice to, or consultation
with, the board of directors of the target company. In many cases, the purchaser
seeks representation on the target company's board of directors in order to
increase the likelihood that the target company will implement the purchaser's
proposal. If the target company resists the efforts of the purchaser to obtain
representation on the target company's board of directors, the purchaser may
commence a proxy contest to have its own nominees elected to the board of
directors of the target company. In other cases, the purchaser may not be truly
interested in taking over the target company, but may use the threat of a proxy
fight and/or a bid to take over the target company as a means of forcing the
target company to buy the purchaser's equity position in the target company at a
substantial premium over market price.
The Board of Directors believes that an imminent threat of removal
severely curtails its ability to negotiate effectively with such purchasers. The
Board of Directors may be deprived of the time and information necessary to
evaluate a takeover proposal, to study alternative proposals and to help ensure
that the best interests of the Corporation's shareholders are protected. When
the real purpose of a takeover bid is to force the Corporation to repurchase the
Corporation's shares held by the purchaser at a premium price, the Board of
Directors faces the risk that if it does not buy the purchaser's interest, the
Corporation's business and management will be disrupted, perhaps irreparably.
The Board of Directors believes that the benefits of seeking to protect
its ability to negotiate with the proponent of an unfriendly or unsolicited
proposal to take over or restructure the Corporation outweigh any potential
disadvantages. You should note, however, that there are potential disadvantages
in adopting the New Articles and the New Regulations. Adopting the New Articles
and the New Regulations could discourage proxy contests or make more difficult
the assumption of control of the Corporation by the holder of a substantial
block of the Corporation's shares. Adopting the New Articles and the New
Regulations also will make more difficult the removal of the Board of Directors
and could thus have the effect of entrenching the incumbent Board of Directors.
The New Articles and the New Regulations are not the result of any
specific efforts of which the Corporation is aware to accumulate the
Corporation's securities or to obtain control of the Corporation. The Board of
Directors does not presently contemplate recommending the adoption of any
further amendments to the Current Articles or Current Regulations which would
affect the ability of third parties to take over or affect a change in control
of the Corporation.
The complete texts of the New Articles and New Regulations are set
forth on Exhibit I and Exhibit II to this Proxy Statement. The following
descriptions of the New Articles and the New Regulations are qualified in their
entirety by reference to Exhibit I and Exhibit II .
DESCRIPTION OF CHANGES TO THE CURRENT ARTICLES
SUPERMAJORITY VOTE REQUIREMENT
The New Articles include a "supermajority vote requirement." This
provision reduces the shareholder vote required for approval or adoption of any
action recommended by the Board of Directors from two-thirds to a majority of
the voting power of the Corporation. The supermajority vote requirement requires
a two-thirds vote for the following matters if the Board of Directors recommends
against the approval of or adoption of such actions:
6
<PAGE> 10
(i) Any amendment or repeal of any of the provisions of the New
Articles;
(ii) Any amendment or repeal of any provisions of the New
Regulations (the Current Regulations may be amended or
repealed by a majority of the Corporation's shareholders);
(iii) A proposal to change the number of Directors by action of the
shareholders;
(iv) Approval of any agreement of merger or consolidation;
(v) A proposed combination or majority share acquisition that
requires shareholder approval;
(vi) A proposal to sell, exchange, transfer, or otherwise dispose
of all or substantially all of the assets of the Corporation;
or
(vii) A proposed dissolution of the Corporation.
You should note that the supermajority vote requirement will prevent a
shareholder with a majority of the voting power of the Corporation from avoiding
the requirements of the New Articles and the New Regulations by simply repealing
them or by causing a majority of the Board of Directors to do so. However, you
also should note that the supermajority vote requirement will grant shareholders
holding a significant minority position a veto power over certain changes to the
New Articles or the New Regulations, even if a majority of shareholders favors
such changes.
REDEMPTION OF SHARES
The New Articles expand the power of the Board of Directors under
Article Seventh to redeem and otherwise deal in the securities of the
Corporation. The Current Articles provide that the Board of Directors, without
the action or approval of the shareholders, may redeem, purchase, or contract to
purchase at any time and from time to time shares of any class issued by the
Corporation subject to terms and conditions as the Board of Directors may
determine. The New Articles would give the Board of Directors the same power to
deal in any other securities or obligations of the Corporation. This includes
securities which are convertible into shares of the Corporation and securities
which grant options or give the right to purchase shares of the Corporation. The
New Articles also expand the authority of the Board of Directors to deal in the
shares of any class or series of securities or other obligations issued by the
Corporation or authorized by the New Articles.
AUTHORIZATION OF ADDITIONAL COMMON SHARES
Under the Current Articles, the Corporation is authorized to issue a
total of three million (3,000,000) common shares, par value $12.50 per share
(the "Authorized Common Shares"). The Corporation had [1,908,500] Outstanding
Common Shares as of the Voting Record Date, leaving only [1,091,500] Authorized
Common Shares available for future issuance. The New Articles increase the
number of Authorized Common Shares to ten million (10,000,000). The Board of
Directors believes that it is advisable for the additional Authorized Common
Shares to be available for issuance at the discretion of the Board of Directors
without the Board of Directors having to obtain shareholder approval in
connection with acquisitions, stock dividends, stock splits, and for any other
purpose determined by the Board of Directors to be in the best interest of the
Corporation and its shareholders. Where approval by shareholders is otherwise
required for the issuance of Authorized Common Shares, whether by Ohio law or
other applicable requirement, such approval by shareholders will be sought.
7
<PAGE> 11
All Authorized Common Shares, including those now authorized and those
which would be authorized by the New Articles, are equal in rank and have the
same voting, dividend and liquidation rights. Holders of the Outstanding Common
Shares do not have preemptive rights. Any increase in the number of Authorized
Common Shares will have no immediate dilutive effect on the proportion of voting
power of shareholders. However, the future issuance of additional Authorized
Common Shares of the Corporation could have a dilutive effect on the proportion
of voting power, earnings per share, and book value per share of present
shareholders. Under some circumstances, the issuance of new Authorized Common
Shares may discourage certain potential business combinations which some
shareholders may believe to be in their best interest and make more difficult
management changes which might occur if the potential business combination were
successful.
REMOVAL OF DIRECTORS
The New Articles place restrictions on the ability of shareholders to
remove members of the Board of Directors. The New Articles provide that
Directors may be removed only for cause, whereas at present a Director, or the
entire Board of Directors, may be removed by the shareholders with or without
cause. The New Articles also provide that the affirmative vote of at least
two-thirds of the voting power of the Corporation's shares entitled to vote for
the election of Directors would be required to remove a Director from office.
Currently, any Director may be removed from the Board of Directors with or
without cause by the affirmative vote of the holders of the majority of the
Outstanding Common Shares.
The effect of this change should be considered in conjunction with the
proposed New Regulations. Article II of the Current Regulations provides that a
vacancy on the Board of Directors created by a removal may be filled by the
majority vote of the shareholders. The New Regulations, as discussed more fully
below under the section of this Proxy Statement entitled "DESCRIPTION OF CHANGES
TO THE CURRENT REGULATIONS," provide that any vacancy, including a vacancy
created by removal, may be filled by the remaining Directors. The New
Regulations do not permit shareholders to fill any vacancies on the Board of
Directors, even where Directors are removed by the shareholders for cause. Any
person named by the remaining Directors to fill a vacancy on the Board of
Directors would serve only until the next annual meeting of shareholders.
The provisions relating to removal and the filling of vacancies on the
Board of Directors will preclude a third party from removing incumbent Directors
without cause and simultaneously gaining control of the Board of Directors by
filling the vacancies created by removals with its nominees. The provisions also
will reduce the power of shareholders, even those with a majority interest in
the Corporation, to remove incumbent Directors and to fill vacancies on the
Board of Directors. Shareholders will have the power to remove Directors for
cause with a two-thirds vote, but only the Directors will have the power to fill
the vacancies created by such removal.
DESCRIPTION OF CHANGES TO THE CURRENT REGULATIONS
The New Regulations include numerous changes. The following discussion
details the most important changes to the New Regulations. The table at the end
of this section of the Proxy Statement outlines many of the other significant
changes to the Current Regulations.
CLASSIFICATION OF THE BOARD OF DIRECTORS
The Current Regulations provide that all Directors are to be elected
annually for a term of one year. Ohio law permits provisions in a company's
Articles or Regulations, if approved by shareholders, that classify the Board of
Directors. The New Regulations provide for a Classified Board of Directors that
would stagger the number of Directors into three classes, as nearly equal in
number of Directors as possible. The Corporation currently has twelve Directors,
which is the maximum number of Directors
8
<PAGE> 12
permitted under the Current Regulations. The New Regulations will allow up to
sixteen Directors, but no more than three classes. Although the New Regulations
allow up to sixteen Directors, the current number of Directors will be fixed at
twelve, and the Board of Directors does not anticipate any change in this number
at this time.
All of the Directors will be elected at the Annual Meeting. See the
section of this Proxy Statement entitled "ELECTION OF DIRECTORS." If the New
Regulations are not adopted, all of the Directors will serve terms until the
Corporation's next annual meeting of shareholders in 2001 and until their
respective successors are elected and qualified, or until their earlier
resignation, removal from office or death. If the New Regulations are adopted,
the Board of Directors will be classified in the following manner:
<TABLE>
<CAPTION>
Class of Directors Names of Directors Initial Term Expires
------------------ ------------------ --------------------
<S> <C> <C>
Class I [Janet E. Burkett], [Thomas F. Hite], 2001 Annual Meeting
[Claire F. Johansen] and [John P.
Keller]
Class II [Stephen A. Kemper], [Daniel W. 2002 Annual Meeting
Lease], [Allan E. Mehlow] and [Robert
H. Moyer]
Class III [K. Brian Pugh], [J. Terrence Wolfe], 2003 Annual Meeting
[Claude E. Young] and [Gary L.
Zimmerman]
</TABLE>
If the New Regulations are adopted, at each annual meeting following this
initial classification and election, the successors to the class of Directors
whose terms expired at that meeting would be elected for a term of office to
expire at the third succeeding annual meeting after their election or until
their successors have been duly elected and qualified, or until their earlier
resignation, removal from office or death.
Classifying the Board of Directors will extend significantly the time
required to affect a change in control of the Board of Directors and may
discourage hostile takeover bids for the Corporation. Currently, changes in
control of the Board of Directors can be made by shareholders holding a majority
of the votes cast at a single annual meeting. If the Corporation implements a
Classified Board of Directors, it will take at least two annual meetings for a
majority of shareholders to make a change in control of the Board of Directors,
because only a minority of the Directors will be elected at each meeting. See
the section of this Proxy Statement entitled "ADOPTION OF THE NEW ARTICLES AND
NEW REGULATIONS."
A Classified Board of Directors is designed to assure continuity and
stability in the Corporation's leadership and policies. While the Board of
Directors has not experienced any problems with such continuity in the past, it
wishes to ensure that this experience will continue. The Board of Directors also
believes that classifying the Board of Directors will assist in protecting the
interests of the Corporation's shareholders in the event of an unsolicited offer
for the Corporation.
Because of the additional time required to change control of the Board
of Directors, the Classified Board of Directors will tend to perpetuate present
management. Without the ability to obtain immediate control of the Board of
Directors, a potential acquirer will not be able to take action to remove other
impediments to its acquisition of the Corporation, including, as discussed
above, the supermajority vote requirement. This will tend to discourage certain
tender offers, including perhaps some tender offers that shareholders may feel
would be in their best interests. Classification of the Board of Directors also
will
9
<PAGE> 13
make it more difficult for the shareholders to change the composition of the
Board of Directors, even if the shareholders believe such a change would be
desirable.
PROCEDURES FOR MAKING NOMINATIONS
The New Regulations provide that shareholder nominations of Directors
for election to the Board of Directors must be made in writing and must be
received at the principal offices of the Corporation on or before the December
31st immediately preceding the annual meeting at which the proposed nominee is
to be presented for election, or within a reasonable time prior to the date of
the meeting as determined by the Board of Directors. If a nominee is proposed
for election as a Director at a special meeting of shareholders, the written
notice of the proposed nominee must be received by the secretary of the
Corporation no later than the close of business on the seventh (7th) day
following the day on which notice of the special meeting was mailed to the
shareholders.
The notification for the proposed nominee must contain the following
information: (1) the name, age, business or residence address of each nominee
proposed in such notice, (2) the principal occupation or employment of such
nominee, and (3) the number of shares of the Corporation owned beneficially
and/or of record by each such nominee and the length of time any such shares
have been so owned. Any attempted nomination that is not made in accordance with
this procedure would be invalid and disregarded, unless the person acting as
chairman of the shareholder meeting at which the election of Directors is to
take place determines that the facts warrant the acceptance of such nomination.
The purpose of the nomination provisions is to avoid the possibility of
a surprise nomination that would preclude the Board of Directors from
investigating and the shareholders from adequately assessing the competence,
experience, integrity and other relevant factors concerning the qualification of
the proposed nominee. In the absence of such provisions, the nominations could
be made from the floor, and such nominees could be elected to the Board of
Directors without any information about the nominees furnished to the
shareholders in advance for their consideration. The Board of Directors believes
that shareholders are entitled to know basic information about the
qualifications of persons nominated for election as Directors, and the
nomination provisions substantially assist the Board of Directors in ensuring
the availability of such information.
A possible adverse effect of the nomination provisions may be that a
person who is otherwise qualified to serve as a Director and who is proposed for
nomination and election by holders of a sufficient number of the Outstanding
Common Shares to elect one Director may not be nominated or elected due to
inadvertence. Also, the nomination provisions may make it easier for incumbent
Directors to solicit proxies to resist a dissident slate of directors and thus
retain their status as Directors. In this sense, the nomination provisions can
be viewed as advantageous to the incumbent Directors and executive officers and
may discourage takeover attempts. However, the Board of Directors believes that
the benefits to the shareholders of the nomination provisions outweigh any
possible disadvantages and that the nomination provisions are reasonable rules
to govern the nominating process. See the section of this Proxy Statement
entitled "ADOPTION OF THE NEW ARTICLES AND NEW REGULATIONS."
FILLING OF VACANCIES
As discussed above, under the New Articles and the New Regulations, a
Director may be removed from office prior to the expiration of his or her term,
with cause, by the affirmative vote of the holders of two-thirds of the voting
power of the Corporation. Vacancies may be filled by the remaining Directors,
acting by a vote of the majority, even if less than a quorum. A Director elected
by the Board of Directors to fill a vacancy would hold office until the next
annual meeting.
10
<PAGE> 14
These provisions are designed to limit the ability of a shareholder to
gain control of the Board of Directors by removing Directors and filling the
resulting vacancies. The Board of Directors believes that these provisions
enhance the likelihood of continuity within the Board of Directors (although
such continuity has not presented problems in the past), thereby facilitating
long range planning in the best interest of shareholders.
REQUIRED VOTE TO CALL SHAREHOLDER MEETINGS
The Current Regulations provide that a special meeting of the
shareholders may be called by the president, the Board of Directors or by the
holders of 25% of all the shares of the Corporation outstanding and entitled to
vote. The New Regulations would increase the percentage of outstanding shares
entitled to call a special meeting of the shareholders from 25% to 50%. Under
Ohio General Corporation Law, the holders of 25% of the outstanding shares may
call a special meeting of shareholders unless the Articles or Regulations
specify a smaller or larger percentage. The percentage may not, however, exceed
50%. The New Regulations would, therefore, increase to the maximum the
percentage of outstanding shares of the Corporation that would be required to
call a special meeting.
The purpose of this change is to make it more difficult for a person to
call a special meeting of shareholders. In the context of an unsolicited tender
offer, a special meeting called without the Board of Directors' consent may
prevent the Corporation from pursuing other alternatives and may undermine the
bargaining power of the Board of Directors. Increasing the required vote would
not, however, preclude the calling of a special meeting with the consent of the
holders of 50% or more of the outstanding shares of the Corporation. Further,
the proposal would not preclude any shareholder from proposing business or
nominating candidates for election as Directors, at an annual meeting of
shareholders provided applicable procedures were followed. This 50% requirement
would apply to every special meeting of shareholders, whether or not in the
context of an unsolicited tender offer.
DIRECTOR LIABILITY AND INDEMNIFICATION
The New Regulations modify the indemnification provisions which provide
protection to the Directors and officers of the Corporation in making decisions
relating to matters affecting the interest of the Corporation, including
takeover proposals. Under both the Current and New Regulations, Directors and
officers are entitled to advancements for expenses and reimbursement for any
costs, judgments, fines and amounts paid in settlement in connection with their
actions as representatives of the Corporation. Under the Current Regulations,
Directors and officers are indemnified by the Corporation as long as they have
acted in good faith and in a manner they reasonably believe to be in or not
opposed to the best interests of the Corporation. Under the New Regulations,
Directors and officers are entitled to indemnification from the Corporation as
long as the act or omission giving rise to any claim for indemnification was not
occasioned by an intent to cause injury to the Corporation or by the reckless
disregard for the best interests of the Corporation. The New Regulations also
allow an indemnitee to petition a court to review a determination of
indemnification and to make certain that a determination about the indemnitee's
right to indemnification is made. Finally, the New Regulations require the
Corporation to advance expenses incurred in defending any action, suit or
proceeding if the Director or officer seeking the advance first agrees in
writing to repay the advance to the Corporation if it is proved by clear and
convincing evidence that the Director or officer is not entitled to
indemnification.
The Board of Directors may be deemed to have a conflict of interest in
recommending the adoption of the new indemnification provisions by the
shareholders. If the members of the Board of Directors are sued in their
capacity as Directors, they may be able to take advantage of the indemnification
provisions of the New Regulations and the provisions of the Ohio General
Corporate Law limiting their liability for monetary damages. The Board of
Directors believes, however, the broad right of indemnification is necessary to
encourage and retain capable persons to serve as Directors. The
11
<PAGE> 15
quality of a corporation's board of directors is a major factor in its long-term
success, and any steps which improve the capacity of a corporation to attract
and retain the best possible directors is of considerable value to the
shareholders. The Board of Directors also believes that the broad right of
indemnification and limitations upon Directors' liability for monetary damages
are necessary to promote the desirable end that Directors will resist vigorously
what they consider unjustified suits and claims brought against them in their
representative capacities.
The Board of Directors recognizes that, despite any provision in the
New Regulations to the contrary, the Corporation's ability to indemnify
Directors and officers pursuant to the provisions of the New Regulations, or
pursuant to any indemnification agreement, at all times would be subject to
federal and state public policy limitations which may prevent indemnification.
The Board of Directors believes that public policy would prevent indemnification
for egregious and intentional wrongdoing, such as self-dealing or willful fraud.
Insofar as indemnification for liabilities under the Securities Act of 1933, as
amended, may be permitted under the indemnification provisions of the New
Regulations, the Corporation understands that the Securities and Exchange
Commission believes such indemnification is against public policy and is,
therefore, unenforceable.
The Corporation is not aware of any current or past indemnification or
liability issues that will or could be presented to the Corporation in the event
that the New Regulations are adopted.
The following table briefly summarizes the foregoing and many of the
other significant changes contained in the New Regulations.
<TABLE>
<CAPTION>
PROVISIONS UNDER THE CURRENT PROVISIONS UNDER THE
REGULATIONS NEW REGULATIONS
- ------------------------------------------------------- -----------------------------------------------------
<S> <C>
1. Meetings of shareholders may be called by 25% of 1. Meetings of shareholders may be called by 50%
the outstanding shares of the Corporation. of the outstanding shares of the Corporation.
2. Annual Meeting can be held anywhere within the 2. Annual Meeting can be held anywhere within or
State of Ohio. outside the State of Ohio.
3. Notice of shareholder meetings required to be 3. Notice of shareholder meetings required to be
delivered within 10 to 60 days before the meeting. delivered within 7 to 60 days before the meeting.
Record date for shareholders entitled to vote is set Directors can set the record date in any manner
by closing the books or by the Directors and is to be allowed by law, the New Articles or the New
within 10 to 60 days of the meeting. Regulations. The record date must not be earlier
than the date the record date is fixed and not more
than 60 days before the meeting.
4. Indemnification required where the Director acted 4. Indemnification required if the act or omission
in good faith and in a manner he reasonably believed giving rise to the claim for indemnification was not
to be in or not opposed to the best interests of the occasioned by the Director's intent to cause injury to
Corporation. the Corporation or reckless disregard for the best
interests of the Corporation.
</TABLE>
12
<PAGE> 16
<TABLE>
<CAPTION>
PROVISIONS UNDER THE CURRENT PROVISIONS UNDER THE
REGULATIONS NEW REGULATIONS
- ------------------------------------------------------- -----------------------------------------------------
<S> <C>
5. The number of Directors must be within the range 5. The number of Directors is set at 12, but can
of 5 to 12. be increased or decreased within the range of 5 to 16.
6. No procedures provided for nominating Directors. 6. Specific nomination procedures to ensure notice to
the Board of Directors and the shareholders.
7. Directors can be removed, with or without cause, 7. The removal of Directors must be in accordance
by majority vote of the shareholders. with the New Articles, which provide that Directors may
be removed only for cause and only with the affirmative
vote of at least two-thirds of the voting power of the
Corporation.
8. Vacancies in the Board of Directors, except those 8. Vacancies in the Board of Directors may be
occurring by removal, may be filled by a vote of the filled by a vote of the majority of remaining
majority of remaining Directors. Vacancies created Directors.
by removal can be filled by the remaining Directors
only if the shareholders fail to elect new Directors.
9. Amendments to the Current Regulations may be 9. Amendments to the New Regulations must be
adopted by the affirmative vote of a majority of the adopted in accordance with the provisions of the New
voting power of the Corporation. Articles. Amendments that are approved by the
Board of Directors can be adopted with the affirmative
vote of a majority of the voting power of the
Corporation. Amendments opposed by the Board of
Directors require the affirmative vote of at least
two-thirds of the voting power of the Corporation to
be adopted.
10. Proxies must be submitted in writing. 10. Proxies must be submitted in writing or by any
other verifiable communication.
</TABLE>
The Board of Directors recommends that the shareholders vote FOR the
adoption of the New Articles and New Regulations. Accordingly, the shareholders
of the Corporation will be asked to adopt the following resolutions at the
Annual Meeting:
To adopt the New Articles:
RESOLVED, that the Amended and Restated Articles of
Incorporation of Croghan Bancshares, Inc., in substantially
the form attached to the Proxy Statement of the Corporation,
dated March 24, 2000, as Exhibit I, be, and they hereby are,
adopted to supercede and take the place of the Amended
Articles of Incorporation of Croghan Bancshares, Inc.;
provided, however, that the Amended and Restated Articles of
Incorporation shall not be adopted to supercede the Amended
Articles of
13
<PAGE> 17
Incorporation of Croghan Bancshares, Inc. if the Amended and
Restated Code of Regulations, in substantially the form
attached hereto as Exhibit II, is not adopted at the 2000
Annual Meeting.
To adopt the New Regulations:
RESOLVED, that the Amended and Restated Code of Regulations of
Croghan Bancshares, Inc., in substantially the form attached
to the Proxy Statement of the Corporation, dated March 24,
2000, as Exhibit II, be, and they hereby are, adopted to
supercede and take the place of the Code of Regulations of
Croghan Bancshares, Inc.; provided, however, that the Amended
and Restated Code of Regulations shall not be adopted to
supercede the Code of Regulations of Croghan Bancshares, Inc.,
if the Amended and Restated Articles of Incorporation, in
substantially the form attached hereto as Exhibit I, are not
adopted at the 2000 Annual Meeting.
ELECTION OF DIRECTORS
The term of office of each current Director of the Corporation will
expire at the 2000 Annual Meeting. The Current Regulations of the Corporation
provide that the Board of Directors shall consist of not less than five nor more
than twelve members who must be shareholders of the Corporation, with the number
of Directors within such range fixed or changed by the shareholders at a meeting
for the election of Directors. The Current Regulations provide that the
Directors may increase the number of Directors by no more than two and may
appoint additional Directors to fill any such new Board of Directors seats,
provided that the total number of Directors may not exceed twelve. The number of
Directors has been fixed previously by the shareholders at twelve, and no change
in such number is proposed this year.
If the New Regulations are adopted, four Directors will be elected
initially for terms expiring in 2001, four Directors will be elected initially
for terms expiring in 2002 and four Directors will be elected for terms expiring
in 2003, as indicated in the table below. If the New Regulations are not
adopted, the twelve nominees will be elected for terms expiring in 2001. See the
section of this Proxy Statement entitled "DESCRIPTION OF CHANGES TO THE CURRENT
REGULATIONS."
Nominations for election of Directors are determined by the Board of
Directors. The Current Articles and the Current Regulations do not contain any
restrictions on shareholder nominations for the election of Directors. If any
nominee is unable to stand for election, the Proxy Committee, which consists of
Directors Thomas F. Hite, Janet E. Burkett and J. Terrence Wolfe, will vote for
such other person or persons as the Board of Directors recommends. At this time,
the Board of Directors knows of no reason why any nominee would be unable to
serve if elected. Shareholders may vote for up to twelve nominees, and the
twelve nominees receiving the highest number of votes shall be elected as
Directors. Shareholders may not cumulate their votes in the election of
Directors.
The following is a list of twelve nominees proposed for election as
Directors together with their respective ages, occupations, and amount and
nature of beneficial ownership of Outstanding Common Shares as of December 31,
1999. The Board of Directors recommends that you vote "FOR" the election of such
nominees as Directors of the Corporation. Each nominee contributes to the
breadth of business experience represented on the Board of Directors, and most
have long-standing records of service to the Corporation and the Bank as
Directors.
14
<PAGE> 18
<TABLE>
<CAPTION>
=====================================================================================================================
BENEFICIAL
PRINCIPAL OCCUPATION DIRECTOR OWNERSHIP PERCENT
NAME OF DIRECTOR NOMINEE AGE DURING PAST FIVE YEARS SINCE OF COMMON OF
(1) STOCK (2) CLASS
---------------------------------------------------------------------------------------------------------------------
[NOMINEES FOR TERMS EXPIRING IN 2001 (IF THE NEW REGULATIONS ARE ADOPTED.)]
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JANET E. BURKETT 65 Treasurer of Burkett Industries, 1991 6,795 (3) .4%
Inc., an electrical contracting
firm located in Fremont, Ohio.
---------------------------------------------------------------------------------------------------------------------
THOMAS F. HITE 60 President and Chief Executive 1987 6,456 (4) .3%
Officer of the Corporation and
the Bank.
---------------------------------------------------------------------------------------------------------------------
CLAIRE F. JOHANSEN (12) 46 President of Ohio Outdoor 2000 15 .1%
Advertising Corp. located in
Fremont, Ohio.
---------------------------------------------------------------------------------------------------------------------
JOHN P. KELLER 66 Vice President of 1973 14,338 .8%
Keller-Ochs-Koch Funeral Home
located in Fremont, Ohio.
---------------------------------------------------------------------------------------------------------------------
[NOMINEES FOR TERMS EXPIRING IN 2002 (IF THE NEW REGULATIONS ARE ADOPTED.)]
---------------------------------------------------------------------------------------------------------------------
STEPHEN A. KEMPER 60 Owner of Kemper Iron and Metal 1996 3,738 (5) .2%
Corporation, a recycler and scrap
processor located in Bellevue,
Ohio.
---------------------------------------------------------------------------------------------------------------------
DANIEL W. LEASE 51 President of Wahl Refractories, 1994 1,500 (6) .1%
Inc., a refractory products
manufacturer located in Fremont,
Ohio.
---------------------------------------------------------------------------------------------------------------------
ALLAN E. MEHLOW (13) 44 Treasurer of the Corporation and 2000 518 .1%
Vice-President/Chief Operating
Officer of the Bank.
---------------------------------------------------------------------------------------------------------------------
ROBERT H. MOYER 71 Chairman of Mosser Construction, 1973 16,308 (7) .9%
Inc., a commercial construction
and contracting company located
in Fremont, Ohio.
---------------------------------------------------------------------------------------------------------------------
[NOMINEES FOR TERMS EXPIRING IN 2003 (IF THE NEW REGULATIONS ARE ADOPTED.)]
---------------------------------------------------------------------------------------------------------------------
K. BRIAN PUGH 60 President of Clyde Parts 1996 2,400 (8) .1%
Corporation, an automotive parts
distributor located in Clyde,
Ohio.
---------------------------------------------------------------------------------------------------------------------
J. TERRENCE WOLFE 59 Vice President in charge of the 1994 30,000 (9) 1.6%
paper converting operation of the
Robert F. Wolfe Co. located in
Fremont, Ohio.
---------------------------------------------------------------------------------------------------------------------
CLAUDE E. YOUNG 67 Chairman of the Board of 1979 19,356 (10) 1.0%
Directors of Progress Plastic
Products, Inc., a plastics parts
manufacturer with locations in
Bellevue and Tiffin, Ohio.
---------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 19
<TABLE>
<CAPTION>
=====================================================================================================================
BENEFICIAL
PRINCIPAL OCCUPATION DIRECTOR OWNERSHIP PERCENT
NAME OF DIRECTOR NOMINEE AGE DURING PAST FIVE YEARS SINCE OF COMMON OF
(1) STOCK (2) CLASS
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GARY L. ZIMMERMAN 53 Vice President of Swint-Reineck 1991 840 .1%
Hardware, Inc., a hardware store
located in Fremont, Ohio.
---------------------------------------------------------------------------------------------------------------------
All Directors and Executive -- -- -- 117,066 6.1%
Officers as a Group (17
Persons) (11)
=====================================================================================================================
</TABLE>
(1) Directorships were with the Bank only until 1983 and with the Bank and
the Corporation since such date.
(2) All shares are held of record with sole voting and investment power
unless otherwise indicated. Beneficial ownership numbers are as of
December 31, 1999.
(3) Includes 6,495 shares held in trust as co-trustee with Mrs. Burkett's
husband.
(4) Includes 930 shares owned by Mr. Hite's wife.
(5) Includes 162 shares owned by Mr. Kemper's wife.
(6) Includes 600 shares owned jointly by Mr. Lease and his wife.
(7) Includes 6,072 shares owned by Mr. Moyer's wife in trust.
(8) Includes 1,262 shares owned jointly by Mr. Pugh and his wife, 30 shares
owned jointly by Mr. Pugh and his grandson, and 338 shares owned
individually by his wife.
(9) Includes 29,900 shares held in trust as co-trustee with Mr. Wolfe's
wife.
(10) Includes 9,916 shares owned jointly by Mr. Young and his wife and 7,855
shares owned individually by his wife.
(11) Includes all executive officers of the Corporation and all executive
officers of the Bank.
(12) Clemens J. Szymanowski resigned from the Board of Directors as of
December 31, 1999. Claire F. Johansen was appointed by the Board of
Directors effective January 3, 2000 to fill the vacancy created by Mr.
Szymanowski's resignation.
(13) Albert C. Nichols resigned as a Director and as Chairman of the Board
of Directors as of January 28, 2000. Allan E. Mehlow was appointed by
the Board of Directors [effective February 15, 2000], to fill the
vacancy created by Mr. Nichols' resignation as a Director.
No family relationships exist between the Corporation's Directors,
nominees and executive officers, except that Janet E. Burkett, a current
Director, is an aunt by marriage to William C. Hensley, a Vice President of the
Bank. There are no arrangements or understandings between any Director or
nominee and any other person concerning service or nomination as a Director.
Each Director of the Corporation is also a Director of the Bank. The
Board of Directors of the Bank met fourteen (14) times during 1999, and meetings
of the Board of Directors of the Corporation were held immediately following on
nine (9) of these occasions. Each Director attended at least seventy-five
percent (75%) of the total number of Board of Directors meetings and meetings of
committees on which he or she served.
The Bank has standing audit and compensation committees that function
in lieu of audit and compensation committees of the Corporation. The Audit
Committee, which consists of Directors Kemper, Lease and Zimmerman, met five (5)
times during 1999. The Audit Committee's primary responsibility is overseeing
the activities of the internal and external auditors for the Corporation and the
Bank.
The Compensation Committee, which consists of Directors Keller, Moyer
and Young, met three (3) times during 1999. The Compensation Committee's primary
responsibility is to review the annual compensation and benefits of the Chief
Executive Officer and other officers of the Corporation and the
16
<PAGE> 20
Bank and make recommendations to the Board of Directors regarding annual
increases and other appropriate changes.
Neither the Corporation nor the Bank has a standing nominating
committee or a committee performing a similar function.
During 1999, the Directors received Director's fees at the rate of $500
per Bank Board of Directors meeting attended and $250 per committee meeting
attended. No separate compensation is paid for meetings of the Corporation's
Board of Directors. Directors who are also officers of the Corporation or the
Bank do not receive compensation for attendance at any committee meetings.
EXECUTIVE OFFICERS
The following information is furnished concerning executive officers of
the Corporation and the Bank, all of whom are elected annually and serve at the
pleasure of the Board of Directors of the Corporation and the Bank:
<TABLE>
<CAPTION>
Name Age Position and Business Background
---- --- --------------------------------
<S> <C> <C>
Thomas F. Hite 60 Mr. Hite is President and Chief Executive Officer of the Corporation
and the Bank and has served in such position since 1988. He joined the
Bank in 1957 and served as Executive Vice President of the Bank from
1984 to 1988 and Vice President and Secretary of the Corporation from
1983 to 1988.
James K. Walter 63 Mr. Walter has served as Senior Vice President/Commercial Loans of the
Bank since 1991 and as Senior Vice President of the Bank from 1988 to
1991. He has also served as Vice President of the Corporation since
1984, Secretary of the Corporation since 1991, and Treasurer of the
Corporation from 1984 to 1992. He joined the Bank in 1959 and served as
Vice President/Personnel and Marketing of the Bank from 1980 to 1988.
James A. Draeger 59 Mr. Draeger has served as a Vice President of the Bank since 1980, as
officer in charge of Real Estate Loans since 1985 and as Agricultural
Administrator of the Bank since joining the Bank in 1975.
William C. Hensley 56 Mr. Hensley has served as Vice President/Chief Lending Officer of the
Bank since 1991. He joined the Bank in 1963 and served as Vice
President and Manager of Consumer Loans from 1980 to 1991. He is the
nephew of Janet E. Burkett, a Director of the Corporation and the Bank.
Barry F. Luse 47 Mr. Luse has served as Vice President/Trust Officer of the Bank since
October 1993. He first joined the Bank in 1990 and served as a Trust
Officer of the Bank from 1990 to 1993. He has been a member of the Ohio
Bar since 1983.
</TABLE>
17
<PAGE> 21
<TABLE>
<CAPTION>
Name Age Position and Business Background
---- --- --------------------------------
<S> <C> <C>
Allan E. Mehlow 44 Mr. Mehlow has served as Vice President/Chief Operating Officer of the
Bank since October 1999 and as Vice-President/Chief Financial Officer
from 1993 to October 1999. He also served as Controller from 1990 to
October 1993. He has also served as Treasurer of the Corporation since
1992. He joined the Bank in 1975 and served as Auditor from 1988 to
1990. He has carried a CPA designation since 1992.
Joseph W. Berger 37 Mr. Berger has served as Vice-President/Chief Financial Officer of the
Bank since October 1999. He joined the Bank in 1987 and served as
Assistant Vice-President and Manager of Consumer Loans from 1991 to 1999.
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth information as to the compensation paid
or accrued by the Corporation or the Bank during 1997, 1998 and 1999 for Mr.
Thomas F. Hite, President and the Chief Executive Officer of the Corporation and
the Bank. No other executive officer of the Corporation received compensation
for services to the Corporation or the Bank during 1999 in excess of $100,000.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------------
LONG TERM ALL OTHER
COMPENSATION COMPENSATION
ANNUAL COMPENSATION AWARDS ($)(3)
-------------------------------------- -------------------------- ---------------
OTHER ANNUAL RESTRICTED
NAME AND SALARY BONUS COMPENSATION STOCK
PRINCIPAL POSITION YEAR ($)(1) ($) ($)(2) AWARDS($) OPTION(#)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas F. Hite, 1999 148,402 N/A N/A N/A N/A 22,005
President and Chief 1998 143,722 N/A N/A N/A N/A 13,511
Executive Officer 1997 139,353 N/A N/A N/A N/A 3,915
</TABLE>
- --------------------
(1) Mr. Hite's salary includes fees received by him for services as a
Director of the Corporation and the Bank of $6,000 in 1999, $5,400 in
1998 and $5,400 in 1997.
(2) No other annual compensation was provided to Mr. Hite for services to
the Corporation or the Bank during 1997, 1998 or 1999 in amounts
sufficient to require disclosure.
(3) All other compensation consists of amounts contributed by the Bank to
the 401(k) Profit Sharing Plan on behalf of Mr. Hite of $14,373 in
1999, $13,511 in 1998, and of $3,915 in 1997. It also includes $7,632
contributed in 1999 for split dollar life insurance.
COMPENSATION COMMITTEE REPORT
The Corporation's executive compensation program is structured to
provide competitive compensation based upon an employee's job performance
relative to his/her area of responsibility. To achieve this goal, the Committee
authorizes salaries that are competitive with salaries for comparable positions
at other banks and bank holding companies of comparable size and performance.
The
18
<PAGE> 22
Corporation does not pay performance based bonuses and does not have any stock
option or other compensation plans based on the long term performance of the
Corporation.
To aid in establishing accurate peer group comparison data, the
Committee employs the services of an outside consulting firm and also uses
compensation surveys provided by the Bank Administration Institute, Employer's
Association of Toledo and Ohio Bankers Association.
To set an individual's salary within the range indicated by the peer
group comparison data for the individual's level of responsibility, the
Compensation Committee primarily considers the employee's job performance and
contribution to the objectives of the Corporation. These latter factors are
determined in the subjective judgment of the Compensation Committee for the
Chief Executive Officer and with the benefit of performance reviews and salary
recommendations by the Chief Executive Officer for other executive officers of
the Corporation. To a lesser extent, the Committee also considers local and
national economic conditions and future business prospects of the Bank in
setting salary levels for executive officers.
The Committee established the Chief Executive Officer's salary for 1999
at $148,402, which represents approximately a 3.3% increase over the previous
year's salary of $143,722. The Committee's determination of the Chief Executive
Officer's salary for 1999 was based upon the previously noted criteria,
including its subjective evaluation of the Chief Executive Officer's
performance.
This report is submitted by the members of the Compensation Committee.
JOHN P. KELLER ROBERT H. MOYER CLAUDE E. YOUNG
19
<PAGE> 23
PERFORMANCE GRAPH
The following graph is a comparison of the cumulative total shareholder
return (change in share price plus reinvested dividends) through December 31,
1999 of an initial $100 investment on December 31, 1994 in (i) the common shares
of the Corporation, (ii) the AMEX Stock Market (American Stock Exchange-U.S.
Companies Stock Index), and (iii) the NASDAQ Bank Index. The comparisons in this
table are required by the Securities and Exchange Commission. The cumulative
return performance shown on the graph is not intended to forecast or be
indicative of future performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
NASDAQ STOCK MARKET (US COMPANIES)
Prepared by the Center for Research in Security Prices
Produced on 01/25/2000 including data to 12/31/1999
<TABLE>
<CAPTION>
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
CROGHAN BANCSHARES, INC. 100.00 121.69 143.41 176.11 224.63 195.51
AMEX STOCK MARKET
U.S. COMPANIES STOCK INDEX 100.00 128.7 130.7 163.5 175.5 224.2
NASDAQ BANK INDEX 100.00 149.0 196.7 329.4 327.1 314.4
</TABLE>
Notes:
A. The lines represent monthly index levels derived from
compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market
capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not
a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on
12/30/1994.
SHAREHOLDER PROPOSAL REGARDING CONFIDENTIAL VOTING
Jared E. Danziger, 305 E. 63rd Street, Apartment 8C, New York, NY
10021, claiming that he has owned for more than one year common shares of the
Corporation with a market value of at least $2,000 and that he will continue to
hold such shares through the date of the Annual Meeting, has submitted the
following resolution and supporting statement for inclusion in this Proxy
Statement and has stated his intention to present same at the Annual Meeting.
THE CORPORATION'S BOARD OF DIRECTORS OPPOSES THIS RESOLUTION FOR THE REASONS
STATED BELOW.
20
<PAGE> 24
------------------------------------------------
MANDATORY CONFIDENTIAL VOTING RESOLUTION
OF
JARED E. DANZIGER
RESOLVED: that the shareholders of Croghan Bancshares, Inc.,
("Corporation") direct the Board of Directors to take the
necessary steps to adopt and implement a policy of
confidential voting at all meetings of its shareholders which
includes the following provision:
"That the voting of all proxies, consents and authorizations
be secret and that the receipt, certification and tabulation
of such votes shall be performed by independent election
inspectors."
SUPPORTING STATEMENT
OF
JARED E. DANZIGER
"The adoption of a system of confidential proxy voting would
be in the best interest of Croghan Bancshares and its shareholders.
Confidential balloting is a basic tenet of our country's electoral
process and should always be available given the importance of
corporate elections and the corporate policies and practices that are
determined through the corporate voting processes."
"The implementation of a confidential voting system would
enhance shareholder right in several ways. First, in the absence of a
system of confidential voting at the Corporation, incumbent managers
and directors have the power to review incoming proxy votes prior to a
tabulation of those votes. This access to the vote affords management
and directors an opportunity to resolicit proxies from shareholders
voting against the management and directors. Independent shareholders
submitting advisory proposals or by-law changes are not afforded the
same opportunity, providing the management and directors unfair
advantage over shareholders presenting important issues for a
shareholder vote."
"Second, a confidential corporate ballot would help eliminate
concerns of retribution that shareholders may have concerning a
decision to oppose the management's and directors' issue positions. It
is especially important that individual investors who may feel that
their voting positions may jeopardize actual or potential
21
<PAGE> 25
business with the Corporation have the confidence to vote without
concern for anything but the merits of the issue presented for
shareholder consideration. Also, without confidential voting bank
employees owning shares in the Corporation, individually or through the
Corporation's pre-tax savings plan, would absolutely feel they may be
subject to retribution by management over voting a proxy in opposition
to the Directors' issue position."
"Confidential voting is gaining popularity. Approximately 156
major U.S. publicly traded corporations have adopted confidential proxy
voting procedures for corporate elections. The list of fortune 500
companies with confidential voting includes AT&T, US West, American
Express, American Brands, Coca Cola, Citicorp, Gillette, Exxon, Sara
Lee, JP Morgan, Bear Stearns, General Electric, General Mills, General
Motors, Colgate-Palmolive, American Home Products, Honeywell, Avon
Products, 3M, Du Pont, Boeing, Lockheed, Rockwell International, Amoco,
Mobil, Eastman Kodak, IBM, Xerox and many others. It's time for our
company to do the same. The cost estimate would be less than $5,000
annually, or about $.002 per share."
"For the reasons outlined above, I urge you to vote `for' the
proposal to establish confidential shareholder voting at Croghan
Bancshares, Inc."
------------------------------------------------
RESPONSE OF THE CORPORATION'S BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE "MANDATORY
CONFIDENTIAL VOTING RESOLUTION" FOR THE FOLLOWING REASONS:
The Corporation's current proxy voting procedures comply in all
respects with the proxy rules of the Securities Exchange Commission (the "SEC")
and the General Corporation Law of the State of Ohio. The SEC does not require
confidential voting and has revised the proxy rules to facilitate the ability of
shareholders to communicate among themselves. In light of SEC's view on
shareholder communication, the Board of Directors believes that its ability to
communicate with shareholders during a proxy solicitation should not be limited
under any circumstances.
A confidential voting policy would greatly hinder the Corporation's
ability to communicate with shareholders. When an issue critical to the success
of the Corporation is involved, the Board of Directors needs to be informed of
shareholder opinions so that they may argue effectively for a position that they
believe is in the best interests of the Corporation and its shareholders.
Especially in the case of a contested election, the party conducting the
solicitation may not be acting in the best interests of all shareholders, though
such party would have the ability to communicate with such shareholders with few
restrictions. In addition, the Corporation may need to contact shareholders who
have not returned their proxies to assure a quorum, or to contact those whose
proxy cards contain errors or deficiencies so that such shareholders may correct
their proxies and cast their votes as intended.
A confidential voting policy would also effectively eliminate a
convenient, cost-effective method for shareholders to communicate with the
Corporation. Many shareholders use the proxy card to communicate with the
Corporation on various matters of concern to them, such as changes of address,
or lost or stolen stock certificates, as well as matters relating to the
Corporation's business. These shareholders intend and expect the Corporation to
be able to identify them from the proxy card. The Corporation values this
opportunity to receive communication from its shareholders.
22
<PAGE> 26
The supporting statement of the proponent asserts that confidential
voting "would help eliminate concerns of retribution that shareholders may have
concerning a decision to oppose the management's and directors' issue
positions." Any suggestion by the proponent that the Corporation might take
action against a shareholder in retribution for a voting decision is ludicrous.
The Directors, officers and employees of the Corporation respect the right of
each shareholder to vote in accordance with his or her own best judgment free
from any form of coercion. Further, shareholders can always sell their shares if
they disagree with any action of the Board of Directors, or if they disagree
with any shareholder vote.
Under the Corporation's current proxy procedures, any shareholder who
desires confidential voting may achieve this goal by registering his shares in
the name of a bank, broker or other nominee. In this way, each shareholder may
choose whether his vote will be disclosed, rather than having this decision made
in advance by the adoption of a confidential voting policy. BECAUSE THE BOARD OF
DIRECTORS DOES NOT BELIEVE THAT THE SHAREHOLDER PROPOSAL DESCRIBED ABOVE IS IN
THE BEST INTERESTS OF ALL OF THE SHAREHOLDERS OF THE CORPORATION, THE BOARD OF
DIRECTORS VIGOROUSLY OPPOSES THE SHAREHOLDER PROPOSAL DESCRIBED ABOVE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "AGAINST" THIS SHAREHOLDER PROPOSAL.
REQUIRED VOTE
The approval of this proposal requires the affirmative vote of a
majority of the Outstanding Common Shares, voting in person or by proxy.
Abstentions and broker non-votes will be counted in determining the presence of
a quorum, but will not be counted as votes cast and will have the same effect as
a vote against the proposal.
SHAREHOLDER PROPOSAL REGARDING DISCLOSURE
OF OFFERS TO PURCHASE THE CORPORATION
Nathan G. Danziger, 3014 Pembroke Drive, Toledo, Ohio 43606, claiming
that he has owned for more than one year common shares of the Corporation with a
market value of at least $2,000 and that he will continue to hold such shares
through the date of the Annual Meeting, has submitted the following resolution
and supporting statement for inclusion in this Proxy Statement and has stated
his intention to present same at the Annual Meeting. THE CORPORATION'S BOARD OF
DIRECTORS OPPOSES THIS RESOLUTION FOR THE REASONS STATED BELOW.
------------------------------------------------
M&A RESOLUTION
OF
NATHAN G. DANZIGER
RESOLVED that the Code of Regulations of Croghan Bancshares,
Inc., ("CORPORATION"), be amended by adding an Article as
follows:
NOTIFICATION TO STOCKHOLDERS OF ACQUISITION OR MERGER
PROPOSALS:
Within ten (10) days from the Corporation's receipt of a
written Proposal, for the purchase of the assets or stock of
the Corporation or for
23
<PAGE> 27
the merger of the Corporation, the Corporation shall mail to
each stockholder the details of such Proposal if it meets the
following criteria:
(A) If the Proposal is for cash and is not less than 2.00
times the book value of the Common Stock of Croghan
Bancshares, as of the date of its last audited
financial statement; or
(B) If the Proposal is for stock of the Offeror and each
of the following requirements is met:
(1) The aggregate book value of the shares to be
issued by the Offeror shall not be less than
the aggregate book value of the shares of
Croghan Bancshares to be exchanged;
(2) The indicated dividends payable by the
Offeror on securities to be issued to
shareholders of Croghan Bancshares shall not
be less than 2.00 times the dividends paid
by Croghan Bancshares;
(3) The shareholders' equity of the Offeror
shall be at least equal to that of Croghan
Bancshares; and
(4) The aggregate market value of the securities
to be issued by the Offeror shall not be
less than the aggregate market value of the
shares of Croghan Bancshares to be
exchanged."
SUPPORTING STATEMENT
OF
NATHAN G. DANZIGER
"During the past years thousands of banks have been acquired
or merged. In fact, the corporation's bank itself is a merger of the
Croghan Bank and the Colonial Bank. The bank also purchased the shares
of First Union Bank of Bellevue on August 1, 1996."
"The Board of Directors has no policy for the submission to
shareholders of any written proposal for the purchase of the
corporation, if one is received. A policy should be in place so that
all offers are submitted to the shareholders on the basis that the
shareholders are promptly informed and permitted to consider the
offer."
"If you agree that you, as a shareholder, are entitled to be
notified when the corporation receives a written proposal for the
purchase of your shares, or for the merger of the corporation with
another corporation, vote `for' the proposal."
24
<PAGE> 28
------------------------------------------------
RESPONSE OF THE CORPORATION'S BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE "M&A
RESOLUTION" FOR THE FOLLOWING REASONS:
Your Board of Directors is not aware of any community bank holding
company having a disclosure policy similar to the M&A Resolution. Your Board of
Directors strongly believes that any such policy would be contrary to the best
interests of all shareholders of the Corporation, as a group, and recommends
that you vote AGAINST the M&A Resolution.
Unsolicited Proposals
- ---------------------
Although unsolicited merger or acquisition proposals are unusual for
the Ohio community banks and their holding companies, it is a fact of business
life that many companies receive occasional unsolicited merger or other
acquisition proposals from other entities. The proponents of these unsolicited
bids have the option of making their acquisition proposal directly to
shareholders of their target or of presenting the proposal, on a confidential
basis, to target management. If the proponent presents its proposal to
management, and not to shareholders, the inescapable conclusion is that the
proponent prefers target management consider and approve the proposal before it
is communicated to target shareholders, if ever.
The M&A Resolution could compel your Board of Directors to disclose
unsolicited proposals which a potential bidder is unwilling to have disclosed.
Thus, the effect of the M&A Resolution may be to discourage or prevent
unsolicited proposals that your Board of Directors might otherwise find to be in
your best interests. That result would, in turn, conflict with important
objectives of the New Articles and the New Regulations, which are intended to
encourage bidders to initiate acquisition efforts through negotiations with the
Board of Directors. See the section of this Proxy Statement entitled "ADOPTION
OF THE NEW ARTICLES AND NEW REGULATIONS."
Solicited Proposals
- -------------------
While the Corporation currently has no plans to solicit merger or
acquisition proposals, it is of course possible that your Board of Directors
may, in the future, elect to pursue a sale of the Corporation. That process
would typically involve the engagement of an investment banker to invite
acquisition proposals from qualified bidders. There are many reasons why both
the bidders and the Corporation would desire to keep the solicitation and making
of these proposals confidential. Because the M&A Resolution might require your
Board of Directors to disclose a proposal that the bidder prefers to be strictly
confidential, the M&A Resolution also could deter or prevent acquisition
proposals that the Board of Directors has actively encouraged. Accordingly, the
M&A Resolution could have a detrimental impact on any future efforts to pursue a
sale of the Corporation to the highest bidder (and might also discourage your
Directors from seeking such a proposal).
Disruption of the Marketplace
- -----------------------------
If a merger or acquisition proposal were to be announced to
shareholders in accordance with the M&A Resolutions, the resulting public
speculation may interfere with the duty of the Board of Directors to evaluate
and consider the proposal carefully and also may hinder the effort of the Board
of Directors to obtain the best possible terms and conditions for shareholders.
For example, the announcement of a proposal may create an expectation that the
Corporation will be sold. Such expectation may increase the pressure on the
Board of Directors to consummate a transaction which could be less than optimum
for
25
<PAGE> 29
shareholders. If the transaction was not consummated, either because the Board
of Directors did not believe that the proposal was fair to the shareholders or
because the parties failed to reach an agreement on terms and conditions left
open by the initial proposal, the expectations of the public would be dashed.
This would cause a serious disruption not only to the shareholders, but also to
the employees, customers and the community of the Corporation.
The potential for this type of disruption may preclude the Board of
Directors from pursuing transactions that could be in the best interests of
shareholders. In some instances, speculation about a possible sale or merger has
had such an impact on the marketplace that corporations were forced to
discontinue negotiations. Thus, the M&A Resolution may discourage the Board of
Directors from pursuing proposals that could be beneficial to shareholders.
SUMMARY
You have elected the members of the Board of Directors to exercise
judgment in the management and affairs of the Corporation. The adoption of the
M&A Resolution prohibits the exercise of judgment, defeating the very purpose
for which the Directors are elected. It also discourages proposals for
acquisition of the Corporation and future efforts to pursue a sale of the
Corporation. BECAUSE THE BOARD OF DIRECTORS DOES NOT BELIEVE THAT THE
SHAREHOLDER PROPOSAL DESCRIBED ABOVE IS IN THE BEST INTERESTS OF ALL OF THE
SHAREHOLDERS OF THE CORPORATION, THE BOARD OF DIRECTORS VIGOROUSLY OPPOSES THE
SHAREHOLDER PROPOSAL DESCRIBED ABOVE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "AGAINST" THE ADOPTION OF THIS SHAREHOLDER PROPOSAL.
REQUIRED VOTE
The approval of this proposal requires the affirmative vote of a
majority of the Outstanding Common Shares, voting in person or by proxy.
Abstentions and broker non-votes will be counted in determining the presence of
a quorum, but will not be counted as votes cast and will have the same effect as
a vote against the proposal.
SHAREHOLDER PROPOSAL REGARDING AGE RESTRICTIONS ON DIRECTORS
Samuel R. Danziger, 7740 Camino Real, Apt., #G-211, Miami, Florida
33143, claiming that he has owned for more than one year common shares of the
Corporation with a market value of at least $2,000 and that he will continue to
hold such shares through the date of the Annual Meeting, has submitted the
following resolution and supporting statement for inclusion in this Proxy
Statement and has stated his intention to present same at the Annual Meeting.
THE CORPORATION'S BOARD OF DIRECTORS OPPOSES THIS RESOLUTION FOR THE REASONS
STATED BELOW.
26
<PAGE> 30
------------------------------------------------
AGE RESTRICTION RESOLUTION
OF
SAMUEL R. DANZIGER
RESOLVED that the Code of Regulations of Croghan Bancshares,
Inc., ("CORPORATION"), Article III, Section 2, be amended by
adding the following sentence, to wit:
"Individuals who have past their seventy-second (72nd)
birthday shall not be allowed to commence service nor continue
service as a director of the corporation."
SUPPORTING STATEMENT
OF
SAMUEL R. DANZIGER
"Certain things are inevitable including aging. To avoid
emotional decisions about aging, often a defined measure is used
whether it is individually applicable or not. For example, one becomes
eligible for social security and medicare at age 65 like it or not;
some need it earlier and some not at all at age 65. Many corporations
use a mandatory retirement age, some 65 and some 70."
"The Vanguard Group has a 70 mandatory retirement age. In an
Associated Press article on August 13, 1999, it was stated `Vanguard
said Thursday, that it's founder must step down under a policy that
requires board of directors members to resign in December of the year
in which they reach 70. Bogle turned 70 in May.' No emotion to it for
John Bogle, the founder of the $500 billion Vanguard Funds, which
includes the famous Vanguard 500 Index Fund."
"An unemotional decision is needed to prevent ossification of
the Board of Directors and I urge each shareholder to vote `for' the
proposal to establish a 72 age limit for service on the Board of
Directors."
------------------------------------------------
RESPONSE OF THE CORPORATION'S BOARD OF DIRECTORS
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE "AGE
RESTRICTION RESOLUTION" FOR THE FOLLOWING REASONS:
The Board of Directors believes that shareholders should be able to
consider and evaluate the qualifications, experience and the ability of each
nominee to serve as a Director on an individual basis, regardless of the
person's race, sex, religion or age.
In the Board of Directors' view, a policy mandating retirement from the
Board of Directors at the age of 72, in all cases without regard to the
capabilities and potential contributions of the individuals in question, could
deprive the Corporation and its shareholders of the services of extremely able,
dedicated and hard-working Directors. It will also deprive the Corporation and
the Board of Directors of the wisdom and perspective which can be gained only
from age.
27
<PAGE> 31
Our society has recognized the detrimental effect of the type of
irrational thinking represented by this proposal. Every state in the union, as
well as the Federal government, has adopted laws against discrimination on the
basis of age because it represents stereotyping at its worst. Your Board of
Directors does not believe that age is an appropriate barometer of a Director's
ability to serve the Corporation and does not agree with the proponent that an
open and tolerant policy will create an "ossification" of the Board of
Directors.
The flexibility inherent in the current policy permits your Board of
Directors to nominate those whom we believe to be most capable of overseeing the
management of the Corporation's business. The Board of Directors believes it
would be a misfortune for the Corporation and its shareholders for that
discretion to be withheld. BECAUSE THE BOARD OF DIRECTORS DOES NOT BELIEVE THAT
THE SHAREHOLDER PROPOSAL DESCRIBED ABOVE IS IN THE BEST INTERESTS OF ALL OF THE
SHAREHOLDERS OF THE CORPORATION, THE BOARD OF DIRECTORS VIGOROUSLY OPPOSES THE
SHAREHOLDER PROPOSAL DESCRIBED ABOVE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "AGAINST" THE ADOPTION OF THIS SHAREHOLDER PROPOSAL.
REQUIRED VOTE
The approval of this proposal requires the affirmative vote of a
majority of the Outstanding Common Shares, voting in person or by proxy.
Abstentions and broker non-votes will be counted in determining the presence of
a quorum, but will not be counted as votes cast and will have the same effect as
a vote against the proposal.
INDEBTEDNESS OF AND TRANSACTIONS WITH OFFICERS AND DIRECTORS
The Bank has had and expects to have banking transactions in the
ordinary course of business with Directors, officers and principal shareholders
of the Corporation and the Bank and associates of such persons on substantially
the same terms, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with other persons and that do not
involve more than normal risk of collectability or present other unfavorable
features. The Corporation and the Bank also have had and expect to have other
transactions in the ordinary course of business with their Directors, officers,
principal shareholders and their associates on the same terms as those
prevailing at the same time for comparable transactions with others. Loans to
Directors and executive officers, including their immediate families and
companies in which they are principal owners, totaled $8,186,000, or 23.4% of
total shareholders' equity at December 31, 1999. The nature and amount of such
indebtedness and transactions during 1999 is such that no disclosure is required
for any individual items.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors and persons who own 10% or more of the
Outstanding Common Shares to file reports of ownership and changes in ownership
on Forms 3, 4 and 5 with the Securities and Exchange Commission. Officers,
Directors and 10% or greater shareholders are required by the Commission's
regulations to furnish the Corporation with copies of all Forms 3, 4 and 5 they
file.
Based on the Corporation's review of the copies of such forms it has
received, the Corporation believes that all of its officers, Directors and 10%
or greater shareholders complied with all filing requirements applicable to them
with respect to transactions during 1999.
28
<PAGE> 32
RELATIONSHIP WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Corporation has engaged the firm of Clifton Gunderson Ltd.,
independent certified public accountants, to report upon the consolidated
financial statements included in the Annual Report submitted herewith. A
representative from said firm will be in attendance at the Annual Meeting, will
have the opportunity to make a statement if desired, and will be available to
respond to any questions from those in attendance. The Corporation has not yet
selected an accounting firm to report upon its 2000 financial statements,
although it intends to again engage Clifton Gunderson Ltd. for such purpose.
OTHER BUSINESS
Management of the Corporation does not know of any other business that
may be presented at the Annual Meeting. If any matter not described herein
should be presented for shareholder action at the Meeting, the persons named in
the enclosed Proxy will vote the shares represented thereby in accordance with
their best judgment.
SHAREHOLDER PROPOSALS FOR PRESENTATION AT THE 2001 ANNUAL MEETING
The Board of Directors requests that any shareholder proposals intended
for presentation at the 2001 Annual Meeting be submitted to Thomas F. Hite,
President, in writing no later than November 25, 2000 for consideration for
inclusion in the Corporation's proxy materials for such meeting. Unless the
Corporation has been given written notice by February 7, 2001 of a shareholder
proposal to be presented at the 2001 Annual Meeting other than by means of
inclusion in the Corporation's proxy materials for the meeting, persons named in
the Proxies solicited by the Board of Directors for the meeting may use their
discretionary voting authority to vote against the proposal.
By Order of the Board of Directors
Thomas F. Hite, President
and Chief Executive Officer
29
<PAGE> 33
EXHIBIT I
<PAGE> 34
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CROGHAN BANCSHARES, INC.
FIRST. The name of the corporation shall be Croghan
Bancshares, Inc.
SECOND. The place in Ohio where the principal office of the
corporation is to be located is Fremont, Sandusky County.
THIRD. The purposes for which the corporation is formed are:
to engage in any lawful act or activity for which corporations
may be formed under Section 1701.01 through 1701.98 of the
Ohio Revised Code, including, but not limited to, borrowing
from any source and performing any and all actions permitted
under the Bank Holding Company Act of 1956, as amended from
time to time (12 U.S.C. Sections 1841 et seq.).
FOURTH. The authorized number of shares of the corporation
shall be ten million (10,000,000), all of which shall be
common shares, each with a par value of $12.50 per share. The
directors of the corporation may adopt an amendment to the
Articles of Incorporation in respect of any unissued or
treasury shares of any class and thereby fix or change: (i)
the division of such shares into series and the designation
and authorized number of each series; (ii) the dividend rate;
(iii) the dates of payment of dividends and the dates from
which they are cumulative; (iv) liquidation price; (v)
redemption rights and price; (vi) sinking fund requirements;
(vii) conversion rights; and (viii) restriction on the
issuance of shares of any class or series.
FIFTH. No holder of shares of this corporation shall have any
preemptive right to subscribe for or to purchase any shares of
this corporation of any class whether now or hereafter
authorized.
SIXTH. The amount of stated capital with which the corporation
shall begin business is six hundred dollars ($600.00).
SEVENTH. (A) The board of directors of the corporation shall
have the power to cause the corporation from time to time and
at any time to purchase, hold, sell, transfer or otherwise
deal in (i) shares of any class or series issued by the
corporation; (ii) any security or other obligation of the
corporation which may confer upon the holder thereof the right
to convert the same into shares of any class or series
authorized by the Articles of Incorporation of the
corporation; and (iii) any security or other obligation which
may confer upon the holder thereof the right to purchase
shares of any class or series authorized by the Articles of
Incorporation of the corporation;
<PAGE> 35
(B) The corporation shall have the right to
repurchase, if and when any shareholders desire to sell, or on
the happening of any event is required to sell, shares of any
class or series issued by the corporation;
(C) The authority granted in this Article Seventh
shall not limit the plenary authority of the directors to
purchase, hold, sell, transfer or otherwise deal with shares
of any class or series, securities, or other obligations
issued by the corporation or authorized by the Articles of
Incorporation of the corporation.
EIGHTH. The shareholders of this corporation may not cumulate
votes in the election of directors.
NINTH. Notwithstanding any provision of the Ohio Revised Code
requiring for any purpose the vote, consent, waiver or release
of the holders of shares of the corporation entitling them to
exercise any proportion of the voting power of the corporation
or of any class or classes thereof, any action pursuant to
such provision, unless expressly otherwise provided by
statute, may be taken by the vote, consent, waiver or release
of the holders of shares entitling them to exercise not less
than the majority of the voting power of the corporation or of
such class or classes; provided, however, that if the board of
directors of the corporation shall recommend against the
approval of any of the following matters, the affirmative vote
of the holders of shares entitling them to exercise not less
than two-thirds of the voting power of any class or classes of
shares of the corporation, which entitle the holders thereof
to vote in respect of any such matters of class shall be
required to adopt:
(A) A proposed amendment to the Articles of
Incorporation of the corporation;
(B) A proposed amendment to the Code of
Regulations of the corporation;
(C) A proposal to change the number of directors
by action of the shareholders;
(D) An agreement of merger or consolidation
providing for the proposed merger or
consolidation of the corporation with or
into one or more other corporations;
(E) A proposed combination or majority share
acquisition involving the issuance of shares
of the corporation and requiring shareholder
approval;
(F) A proposal to sell, exchange, transfer or
otherwise dispose of all, or substantially
all, of the assets, with or without good
will, of the corporation; or
2
<PAGE> 36
(G) A proposed dissolution of the corporation.
TENTH. Any director or the entire Board of Directors may be
removed only by the affirmative vote of the holders of shares
then entitling them to exercise not less than two-thirds of
the voting power of the corporation at an election of
directors, and shareholders may affect such removal only for
cause; provided, however, that if any class or series of
shares shall entitle the holders thereof to elect one or more
directors, any director or all the directors elected by such
holders may be removed only by the affirmative vote of the
holders of shares of such class or series then entitling them
to exercise not less than two-thirds of the voting power of
such class or series at any election of such directors, and
such removal may be effected only for cause. Any such removal
shall be deemed to create a vacancy in the board of directors.
ELEVENTH. These Amended and Restated Articles of Incorporation
take the place of and supersede the existing Articles of
Incorporation as heretofore amended.
3
<PAGE> 37
EXHIBIT II
<PAGE> 38
AMENDED AND RESTATED
CODE OF REGULATIONS
OF
Croghan Bancshares, Inc.
INDEX
<TABLE>
<CAPTION>
Section Caption Page No.
- ------- ------- --------
<S> <C> <C>
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings....................................................................................1
Section 1.02. Calling of Meetings................................................................................1
Section 1.03. Place of Meetings..................................................................................1
Section 1.04. Notice of Meetings.................................................................................1
Section 1.05. Waiver of Notice...................................................................................2
Section 1.06. Quorum.............................................................................................2
Section 1.07. Votes Required.....................................................................................2
Section 1.08. Order of Business..................................................................................2
Section 1.09. Shareholders Entitled to Vote......................................................................2
Section 1.10. Proxies............................................................................................2
Section 1.11. Inspectors of Election.............................................................................3
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications.......................................................................3
Section 2.02. Number of Directors and Term of Office.............................................................3
Section 2.03. Election...........................................................................................4
Section 2.04. Nomination.........................................................................................4
Section 2.05. Removal............................................................................................5
Section 2.06. Vacancies..........................................................................................5
Section 2.07. Meetings...........................................................................................5
Section 2.08. Notice of Meetings.................................................................................5
Section 2.09. Waiver of Notice...................................................................................6
Section 2.10. Quorum.............................................................................................6
Section 2.11. Executive Committee................................................................................6
Section 2.12. Compensation.......................................................................................7
Section 2.13. By-Laws............................................................................................7
ARTICLE THREE
OFFICERS
Section 3.01. Officers...........................................................................................7
</TABLE>
i
<PAGE> 39
<TABLE>
<S> <C> <C>
Section 3.02. Tenure of Office...................................................................................7
Section 3.03. Duties of the Chairman of the Board................................................................7
Section 3.04. Duties of the President............................................................................7
Section 3.05. Duties of the Vice Presidents......................................................................7
Section 3.06. Duties of the Secretary............................................................................8
Section 3.07. Duties of the Treasurer............................................................................8
ARTICLE FOUR
SHARES
Section 4.01. Certificates.......................................................................................8
Section 4.02. Transfers..........................................................................................8
Section 4.03. Transfer Agents and Registrars.....................................................................9
Section 4.04. Lost, Wrongfully Taken or Destroyed Certificates...................................................9
Section 4.05. Uncertificated Shares..............................................................................9
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. Indemnification...................................................................................10
Section 5.02. Court-Approved Indemnification....................................................................10
Section 5.03. Indemnification for Expenses......................................................................11
Section 5.04. Determination Required............................................................................11
Section 5.05. Advances for Expenses.............................................................................12
Section 5.06. Article Five Not Exclusive........................................................................12
Section 5.07. Insurance.........................................................................................12
Section 5.08. Certain Definitions...............................................................................13
Section 5.09. Venue.............................................................................................13
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Amendments........................................................................................13
Section 6.02. Action by Shareholders or Directors Without a Meeting.............................................13
</TABLE>
ii
<PAGE> 40
AMENDED AND RESTATED
CODE OF REGULATIONS
OF
Croghan Bancshares, Inc.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the
shareholders for the election of directors, for the consideration of reports to
be laid before such meeting and for the transaction of such other business as
may properly come before such meeting, shall be held on the second Tuesday in
May in each year or on such other date as may be fixed from time to time by the
directors.
Section 1.02. Calling of Meetings. Meetings of the
shareholders may be called only by the chairman of the board of directors, the
president, or, in case of the president's absence, death, or disability, the
vice president authorized to exercise the authority of the president, the
secretary, the directors by action at a meeting, or a majority of the directors
acting without a meeting, or the holders of at least fifty percent (50%) of all
shares outstanding and entitled to vote thereat.
Section 1.03. Place of Meetings. All meetings of shareholders
shall be held at the principal office of the corporation, unless otherwise
provided by action of the directors. Meetings of shareholders may be held at any
place within or outside the State of Ohio.
Section 1.04. Notice of Meetings. (A) Written notice stating
the time, place and purposes of a meeting of the shareholders shall be given
either by personal delivery or by mail not less than seven (7) nor more than
sixty (60) days before the date of the meeting, (1) to each shareholder of
record entitled to vote at the meeting, (2) by or at the direction of the
president or the secretary. If mailed, such notice shall be addressed to the
shareholder at his address as it appears on the records of the corporation.
Notice of adjournment of a meeting need not be given if the time and place to
which it is adjourned are fixed and announced at such meeting. In the event of a
transfer of shares after the record date for determining the shareholders who
are entitled to receive notice of a meeting of shareholders, it shall not be
necessary to give notice to the transferee. Nothing herein contained shall
prevent the setting of a record date in any manner provided by law, the Articles
or the Regulations for the determination of shareholders who are entitled to
receive notice of or to vote at any meeting of shareholders or for any purpose
required or permitted by law.
(B) Following receipt by the president or the secretary of a
request in writing, specifying the purpose or purposes for which the persons
properly making such request have called a meeting of the shareholders,
delivered either in person or by registered mail to such officer by any persons
entitled to call a meeting of shareholders, such officer shall cause to be given
to the shareholders entitled thereto notice of a meeting to be held on a date
not less than
<PAGE> 41
seven (7) nor more than sixty (60) days after the receipt of such request, as
such officer may fix. If such notice is not given within thirty (30) days after
the receipt of such request by the president or the secretary, then, and only
then, the persons properly calling the meeting may fix the time of meeting and
give notice thereof in accordance with the provisions of the Regulations.
Section 1.05. Waiver of Notice. Notice of the time, place and
purpose or purposes of any meeting of shareholders may be waived in writing,
either before or after the holding of such meeting, by any shareholders, which
writing shall be filed with or entered upon the records of such meeting. The
attendance of any shareholder, in person or by proxy, at any such meeting
without protesting the lack of proper notice, prior to or at the commencement of
the meeting, shall be deemed to be a waiver by such shareholder of notice of
such meeting.
Section 1.06. Quorum. At any meeting of shareholders, the
holders of a majority of the voting shares of the corporation then outstanding
and entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for such meeting. The holders of a majority of the voting shares
represented at a meeting, whether or not a quorum is present, or the chairman of
the board, the president, or the officer of the corporation acting as chairman
of the meeting, may adjourn such meeting from time to time, and if a quorum is
present at such adjourned meeting any business may be transacted as if the
meeting had been held as originally called.
Section 1.07. Votes Required. At all elections of directors
the candidates receiving the greatest number of votes shall be elected. Any
other matter submitted to the shareholders for their vote shall be decided by
the vote of such proportion of the shares, or of any class of shares, or of each
class, as is required by law, the Articles or the Regulations.
Section 1.08. Order of Business. The order of business at any
meeting of shareholders shall be determined by the officer of the corporation
acting as chairman of such meeting unless otherwise determined by a vote of the
holders of a majority of the voting shares of the corporation then outstanding,
present in person or by proxy, and entitled to vote at such meeting.
Section 1.09. Shareholders Entitled to Vote. Each shareholder
of record on the books of the corporation on the record date for determining the
shareholders who are entitled to vote at a meeting of shareholders shall be
entitled at such meeting to one vote for each share of the corporation standing
in his name on the books of the corporation on such record date. The directors
may fix a record date for the determination of the shareholders who are entitled
to receive notice of and to vote at a meeting of shareholders, which record date
shall not be a date earlier than the date on which the record date is fixed and
which record date may be a maximum of sixty (60) days preceding the date of the
meeting of shareholders.
Section 1.10. Proxies. At meetings of the shareholders any
shareholder of record entitled to vote thereat may be represented and may vote
by a proxy or proxies appointed by an instrument in writing signed by such
shareholder, or appointed by a verifiable
2
<PAGE> 42
communication authorized by such shareholder. Any transmission appointing a
proxy to represent a shareholder that creates a record capable of
authentication, including, but not limited to, a telegram, a cablegram,
electronic mail or other transmission that appears to have been transmitted by
such shareholder is a sufficient verifiable communication to appoint a proxy.
Proxies shall be filed with the secretary of the meeting before the person
holding such proxy shall be allowed to vote thereunder. No proxy shall be valid
after the expiration of eleven months after the date of its execution, unless
the shareholder executing it shall have specified therein the length of time it
is to continue in force.
Section 1.11. Inspectors of Election. In advance of any
meeting of shareholders, the directors may appoint inspectors of election to act
at such meeting or any adjournment thereof; if inspectors are not so appointed,
the officer of the corporation acting as chairman of any such meeting may make
such appointment. In case any person appointed as inspector fails to appear or
act, the vacancy may be filled only by appointment made by the directors in
advance of such meeting or, if not so filled, at the meeting by the officer of
the corporation acting as chairman of such meeting. No other person or persons
may appoint or require the appointment of inspectors of election.
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications. Except where the
law, the Articles or the Regulations otherwise provide, all authority of the
corporation shall be vested in and exercised by its directors.
Section 2.02. Number of Directors and Term of Office.
(A) Until changed in accordance with the provisions of the
Regulations, the number of directors of the corporation shall be twelve (12).
(B) The number of directors may be fixed or changed at a
meeting of the shareholders called for the purpose of electing directors, at
which a quorum is present, only in accordance with the Articles of the
corporation.
(C) The directors may fix or change the number of directors
and may fill any director's office that is created by an increase in the number
of directors; provided, however, that the directors may not increase the number
of directors to more than sixteen (16) nor reduce the number of directors to
less than five (5).
(D) No reduction in the number of directors shall of itself
have the effect of shortening the term of any incumbent director.
(E) The board of directors shall be divided into three classes
as nearly equal in number as the then fixed number of directors permits, with
the term of office of one
3
<PAGE> 43
class expiring each year. A separate election for each class of directors shall
be held at the 2000 annual meeting of the shareholders. The directors elected to
the first class shall hold office for a term expiring in 2001; the directors
elected to the second class shall hold office for a term expiring in 2002; and
the directors elected to the third class shall hold office for a term expiring
in 2003. At each annual meeting of shareholders, successors to the class of
directors whose term expires shall be elected to hold office for a three-year
term. A director shall hold office until the annual meeting for the year in
which his term expires and until his successor is duly elected and qualified, or
until his earlier resignation, removal from office, or death. In the event of
any increase in the number of directors of the corporation, the additional
directors shall be similarly classified in such a manner that each class of
director shall be as equal in number as possible. In the event of any decrease
in the number of directors of the corporation, such decrease shall be effected
in such a manner that each class of directors shall be as equal in number as
possible.
Section 2.03. Election. At each annual meeting of shareholders
for the election of directors, the successors to the directors whose term shall
expire in that year shall be elected, but if the annual meeting is not held or
if one or more of such directors are not elected thereat, they may be elected at
a special meeting called for that purpose. The election of directors shall be by
ballot whenever requested by the officer of the corporation acting as chairman
of the meeting or by the holders of a majority of the voting shares outstanding,
entitled to vote at such meeting and present in person or by proxy, but unless
such request is made, the election shall be by viva voce.
Section 2.04. Nomination. (A) Any nominee for election as a
director of the corporation may be proposed only by the directors or by any
shareholder entitled to vote for the election of directors. No person, other
than a nominee proposed by the directors, may be nominated for election as a
director of the corporation unless such person shall have been proposed in a
written notice, delivered or mailed by first-class United States mail, postage
prepaid, to the secretary of the corporation at the principal offices of the
corporation. In the case of a nominee proposed for election as a director at an
annual meeting of shareholders, such written notice of a proposed nominee shall
be received by the secretary of the corporation on or before the December 31st
immediately preceding such annual meeting, or within a reasonable time prior to
the date of such annual meeting as determined by the board of directors. In the
case of a nominee proposed for election as a director at a special meeting of
shareholders at which directors are to be elected, such written notice of a
proposed nominee shall be received by the secretary of the corporation no later
than the close of business on the seventh (7th) day following the day on which
notice of the special meeting was mailed to shareholders. Each such written
notice of a proposed nominee shall set forth: (1) the name, age, business or
residence address of each nominee proposed at such notice, (2) the principal
occupation or employment of such nominee, and (3) the number of common shares of
the corporation owned beneficially and/or of record by each such nominee and the
length of time any such shares have been so owned.
(B) If any shareholder shall attempt to nominate one or more
persons for election as director at any meeting at which directors are to be
elected without having identified each such person in a written notice given as
contemplated by, and/or without having provided
4
<PAGE> 44
therein the information specified in subparagraph (A) of this section, each such
attempted nomination shall be invalid and shall be disregarded unless the
officer of the corporation acting as chairman of the meeting determines that the
facts warrant the acceptance of such nomination.
Section 2.05. Removal. Any director or the entire board of
directors may be removed only in accordance with the Articles of the
corporation.
Section 2.06. Vacancies. The remaining directors, though less
than a majority of the whole authorized number of directors, may, by the vote of
a majority of their number, fill any vacancy in the board of directors. A
vacancy in the board of directors exists within the meaning of this Section 2.06
in case the shareholders increase the authorized number of directors but fail at
the meeting at which such increase is authorized, or an adjournment thereof, to
elect the additional directors provided for, or in case the shareholders fail at
any time to elect the whole authorized number of directors. Any person named by
the directors to fill a vacancy in the board of directors shall serve only until
the next annual meeting.
Section 2.07. Meetings. A meeting of the directors shall be
held immediately following the adjournment of each annual meeting of
shareholders at which directors are elected, and notice of such meeting need not
be given. The directors shall hold such other meetings as may from time to time
be called, and such other meetings of directors may be called only by the
chairman of the board, the president, or any two directors. All meetings of
directors shall be held at the principal office of the corporation in Fremont,
Ohio or at such other place within or outside the State of Ohio, as the
directors may from time to time determine by a resolution. Meetings of the
directors may be held through any communications equipment if all persons
participating can hear each other and participation in a meeting pursuant to
this provision shall constitute presence at such meeting.
Section 2.08. Notice of Meetings. Notice of the time and place
of each meeting of directors for which such notice is required by law, the
Articles, the Regulations or the By-Laws shall be given to each of the directors
by at least one of the following methods:
(1) In a writing mailed not less than three days before such
meeting and addressed to the residence or usual place of business of a director,
as such address appears on the records of the corporation; or
(2) By telegraph, cable, radio, electronic mail, wireless, or
a writing sent or delivered to the residence or usual place of business of a
director as the same appears on the records of the corporation, not later than
the day before the date on which such meeting is to be held; or
(3) Personally or by telephone not later than the day before
the date on which such meeting is to be held.
5
<PAGE> 45
Notice given to a director by any one of the methods specified in the
Regulations shall be sufficient, and the method of giving notice to all
directors need not be uniform. Notice of any meeting of directors may be given
only by the chairman of the board, the president or the secretary of the
corporation. Any such notice need not specify the purpose or purposes of the
meeting. Notice of adjournment of a meeting of directors need not be given if
the time and place to which it is adjourned are fixed and announced at such
meeting.
Section 2.09. Waiver of Notice. Notice of any meeting of
directors may be waived in writing, either before or after the holding of such
meeting, by any director, which writing shall be filed with or entered upon the
records of the meeting. The attendance of any director at any meeting of
directors without protesting, prior to or at the commencement of the meeting,
the lack of proper notice, shall be deemed to be a waiver by him of notice of
such meeting.
Section 2.10. Quorum. A majority of the whole authorized
number of directors shall be necessary to constitute a quorum for a meeting of
directors, except that a majority of the directors in office shall constitute a
quorum for filling a vacancy in the board of directors. The act of a majority of
the directors present at a meeting at which a quorum is present is the act of
the board of directors, except as otherwise provided by law, the Articles or the
Regulations.
Section 2.11. Executive Committee. The directors may create an
executive committee or any other committee of directors, to consist of not less
than two (2) directors, and may authorize the delegation to such executive
committee or other committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors or in the
executive committee or in any other committee of the directors.
Such executive committee or any other committee of directors
shall serve at the pleasure of the directors, shall act only in the intervals
between meetings of the directors, and shall be subject to the control and
direction of the directors. Such executive committee or other committee of
directors may act by a majority of its members at a meeting or by a writing or
writings signed by all of its members.
Any act or authorization of any act by the executive committee
or any other committee within the authority delegated to it shall be as
effective for all purposes as the act or authorization of the directors. No
notice of a meeting of the executive committee or of any other committee of
directors shall be required. A meeting of the executive committee or of any
other committee of directors may be called only by the president or by a member
of such executive or other committee of directors. Meetings of the executive
committee or of any other committee of directors may be held through any
communications equipment if all persons participating can hear each other and
participation in such a meeting shall constitute presence thereat.
6
<PAGE> 46
Section 2.12. Compensation. Directors shall be entitled to
receive as compensation for services rendered and expenses incurred as
directors, such amounts as the directors may determine.
Section 2.13. By-Laws. The directors may adopt, and amend from
time to time, By-Laws for their own government, which By-Laws shall not be
inconsistent with the law, the Articles or the Regulations.
ARTICLE THREE
OFFICERS
Section 3.01. Officers. The officers of the corporation to be
elected by the directors shall be a president, a secretary, a treasurer, and, if
desired, one or more vice presidents and such other officers and assistant
officers as the directors may from time to time elect. The directors may elect a
chairman of the board of directors, who must be a director. Officers need not be
shareholders of the corporation, and may be paid such compensation as the board
of directors may determine. Any two or more offices may be held by the same
person, but no officer shall execute, acknowledge, or verify any instrument in
more than one capacity if such instrument is required by law, the Articles, the
Regulations or the By-Laws to be executed, acknowledged, or verified by two or
more officers.
Section 3.02. Tenure of Office. The officers of the
corporation shall hold office at the pleasure of the directors. Any officer of
the corporation may be removed, either with or without cause, at any time, by
the affirmative vote of a majority of all the directors then in office; such
removal, however, shall be without prejudice to the contract rights, if any, of
the person so removed.
Section 3.03. Duties of the Chairman of the Board of
Directors. The chairman of the board of directors, if any, shall preside at all
meetings of the directors and over all meetings of shareholders. He shall have
such other powers and duties as the directors shall from time to time assign to
him.
Section 3.04. Duties of the President. The president shall be
the chief executive officer of the corporation and shall exercise supervision
over the business of the corporation and shall have, among such additional
powers and duties as the directors may from time to time assign to him, the
power and authority to sign all certificates evidencing shares of the
corporation and all deeds, mortgages, bonds, contracts, notes and other
instruments requiring the signature of the president of the corporation. In the
absence of the chairman of the board of directors, or in the event that no
chairman is elected, it shall be the duty of the president to preside at all
meetings of shareholders.
Section 3.05. Duties of the Vice Presidents. In the absence of
the president or in the event of his inability or refusal to act, the vice
president, if any (or in the event there be more than one vice president, the
vice presidents in the order designated, or in the absence of any
7
<PAGE> 47
designation, then in the order of their election), shall perform the duties of
the president, and when so acting, shall have all the powers of and be subject
to all restrictions upon the president. The vice presidents shall perform such
other duties and have such other powers as the directors may from time to time
prescribe.
Section 3.06. Duties of the Secretary. It shall be the duty of
the secretary, or of an assistant secretary, if any, in case of the absence or
inability to act of the secretary, to keep minutes of all the proceedings of the
shareholders and the directors and to make a proper record of the same; to
perform such other duties as may be required by law, the Articles or the
Regulations; to perform such other and further duties as may from time to time
be assigned to him by the directors or the president; and to deliver all books,
paper and property of the corporation in his possession to his successor, or to
the president.
Section 3.07. Duties of the Treasurer. The treasurer, or an
assistant treasurer, if any, in case of the absence or inability to act of the
treasurer, shall receive and safely keep in charge all money, bills, notes,
choses in action, securities and similar property belonging to the corporation,
and shall do with or disburse the same as directed by the president or the
directors; shall keep an accurate account of the finances and business of the
corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, stated capital and shares, together with such
other accounts as may be required and hold the same open for inspection and
examination by the directors; shall give bond in such sum with such security as
the directors may require for the faithful performance of his duties; shall,
upon the expiration of his term of office, deliver all money and other property
of the corporation in his possession or custody to his successor or the
president; and shall perform such other duties as from time to time may be
assigned to him by the directors.
ARTICLE FOUR
SHARES
Section 4.01. Certificates. Certificates evidencing ownership
of shares of the corporation shall be issued to those entitled to them. Each
certificate evidencing shares of the corporation shall bear a distinguishing
number; the signatures of the chairman of the board of directors, the president,
or a vice president, and of the secretary, an assistant secretary, the
treasurer, or an assistant treasurer (except that when any such certificate is
countersigned by an incorporated transfer agent or registrar, such signatures
may be facsimile, engraved, stamped or printed); and such recitals as may be
required by law. Certificates evidencing shares of the corporation shall be of
such tenor and design as the directors may from time to time adopt and may bear
such recitals as are permitted by law.
Section 4.02. Transfers. Where a certificate evidencing a
share or shares of the corporation is presented to the corporation or its proper
agents with a request to register transfer, the transfer shall be registered as
requested if:
8
<PAGE> 48
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or transfer of shares
evidenced by each such certificate, or signs a power to assign or transfer such
shares, or when the signature of an appropriate person is written without more
on the back of each such certificate; and
(2) Reasonable assurance is given that the endorsement of each
appropriate person is genuine and effective; the corporation or its agents may
refuse to register a transfer of shares unless the signature of each appropriate
person is guaranteed by an "eligible guarantor institution" as defined in Rule
17Ad-15 under the Securities Act of 1934 or any successor rule or regulation;
and
(3) All applicable laws relating to the collection of transfer
or other taxes have been complied with; and
(4) The corporation or its agents are not otherwise required
or permitted to refuse to register such transfer.
Section 4.03. Transfer Agents and Registrars. The directors
may appoint one or more agents to transfer or to register shares of the
corporation, or both.
Section 4.04. Lost, Wrongfully Taken or Destroyed
Certificates. Except as otherwise provided by law, where the owner of a
certificate evidencing shares of the corporation claims that such certificate
has been lost, destroyed or wrongfully taken, the directors must cause the
corporation to issue a new certificate in place of the original certificate if
the owner:
(1) So requests before the corporation has notice that such
original certificate has been acquired by a bona fide purchaser; and
(2) Files with the corporation, unless waived by the
directors, an indemnity bond, with surety or sureties satisfactory to the
corporation, in such sums as the directors may, in their discretion, deem
reasonably sufficient as indemnity against any loss or liability that the
corporation may incur by reason of the issuance of each such new certificate;
and
(3) Satisfies any other reasonable requirements which may be
imposed by the directors, in their discretion.
Section 4.05. Uncertificated Shares. Anything contained in
this Article Four to the contrary notwithstanding, the directors may provide by
resolution that some or all of any or all classes and series of shares of the
corporation shall be uncertificated shares, provided that such resolution shall
not apply to:
9
<PAGE> 49
(1) Shares of the corporation represented by a certificate
until such certificate is surrendered to the corporation in accordance with
applicable provisions of Ohio law; or
(2) Any certificated security of the corporation issued in
exchange for an uncertificated security in accordance with applicable provisions
of Ohio law. The rights and obligations of the holders of uncertificated shares
and the rights and obligations of the holders of certificates representing
shares of the same class and series shall be identical, except as otherwise
expressly provided by law.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. Indemnification. The corporation shall indemnify
any officer or director of the corporation who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted by or in the
right of the corporation), by reason of the fact that he is or was a director,
officer, employee, agent or volunteer of the corporation, or is or was serving
at the request of the corporation as a director, trustee, officer, employee,
member, manager, agent or volunteer of another corporation (domestic or foreign,
nonprofit or for profit), limited liability company, partnership, joint venture,
trust or other enterprise, against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if his act or omission
giving rise to any claim for indemnification under this Section 5.01 was not
occasioned by his intent to cause injury to the corporation or by his reckless
disregard for the best interests of the corporation, and in respect of any
criminal action or proceeding, he had no reasonable cause to believe his conduct
was unlawful. It shall be presumed that no act or omission of a person claiming
indemnification under this Section 5.01 that gives rise to such claim was
occasioned by an intent to cause injury to the corporation or by a reckless
disregard for the best interests of the corporation and, in respect of any
criminal matter, that such person had no reasonable cause to believe his conduct
was unlawful; the presumption recited in this Section 5.01 can be rebutted only
by clear and convincing evidence, and the termination of any action, suit or
proceeding by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, rebut such presumption.
Section 5.02. Court-Approved Indemnification. Anything
contained in the Regulations or elsewhere to the contrary notwithstanding:
(A) The corporation shall not indemnify any officer or
director of the corporation who was a party to any completed action or suit
instituted by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee,
agent or volunteer of the corporation, or is or was serving at the request of
the
10
<PAGE> 50
corporation as a director, trustee, officer, employee, member, manager, agent or
volunteer of another corporation (domestic or foreign, nonprofit or for profit),
limited liability company, partnership, joint venture, trust or other
enterprise, in respect of any claim, issue or matter asserted in such action or
suit as to which he shall have been adjudged to be liable for an act or omission
occasioned by his deliberate intent to cause injury to the corporation or by his
reckless disregard for the best interests of the corporation, unless and only to
the extent that the Court of Common Pleas of Sandusky County, Ohio or the court
in which such action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the circumstances of
the case, he is fairly and reasonably entitled to such indemnity as such Court
of Common Pleas or such other court shall deem proper; and
(B) The corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contemplated by this
Section 5.02.
Section 5.03. Indemnification for Expenses. Anything contained
in the Regulations or elsewhere to the contrary notwithstanding, to the extent
that an officer or director of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in Section
5.01, or in defense of any claim, issue or matter therein, he shall be promptly
indemnified by the corporation against expenses (including, without limitation,
attorneys' fees, filing fees, court reporters' fees and transcript costs)
actually and reasonably incurred by him in connection therewith.
Section 5.04. Determination Required. Any indemnification
required under Section 5.01 and not precluded under Section 5.02 shall be made
by the corporation only upon a determination that such indemnification is proper
in the circumstances because the officer or director has met the applicable
standard of conduct set forth in Section 5.01. Such determination may be made
only (a) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, or threatened with, any such
action, suit or proceeding, or (b) if such a quorum is not obtainable or if a
majority of a quorum of disinterested directors so directs, in a written opinion
by independent legal counsel other than an attorney, or a firm having associated
with it an attorney, who has been retained by or who has performed services for
the corporation, or any person to be indemnified, within the past five years, or
(c) by the shareholders, or (d) by the Court of Common Pleas of Sandusky County,
Ohio or (if the corporation is a party thereto) the court in which such action,
suit or proceeding was brought, if any; any such determination may be made by a
court under division (d) of this Section 5.04 at any time [including, without
limitation, any time before, during or after the time when any such
determination may be requested of, be under consideration by or have been denied
or disregarded by the disinterested directors under division (a) or by
independent legal counsel under division (b) or by the shareholders under
division (c) of this Section 5.04]; and no failure for any reason to make any
such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (a) or by
independent legal counsel under division (b) or by the shareholders under
division (c) of this Section 5.04 shall be evidence in rebuttal of the
presumption recited in Section 5.01. Any determination made by the disinterested
directors under division (a) or by independent legal counsel under division (b)
of this Section 5.04 to make
11
<PAGE> 51
indemnification in respect of any claim, issue or matter asserted in an action
or suit threatened or brought by or in the right of the corporation shall be
promptly communicated to the person who threatened or brought such action or
suit, and within ten (10) days after receipt of such notification such person
shall have the right to petition the Court of Common Pleas of Sandusky County,
Ohio or the court in which such action or suit was brought, if any, to review
the reasonableness of such determination.
Section 5.05. Advances for Expenses. The provisions of Section
1701.13(E)(5)(a) of the Ohio Revised Code do not apply to the corporation.
Expenses (including, without limitation, attorneys' fees, filing fees, court
reporters' fees and transcript costs) incurred in defending any action, suit or
proceeding referred to in Section 5.01 shall be paid by the corporation in
advance of the final disposition of such action, suit or proceeding to or on
behalf of the officer or director promptly as such expenses are incurred by him,
but only if such officer or director shall first agree, in writing, to repay all
amounts so paid in respect of any claim, issue or other matter asserted in such
action, suit or proceeding in defense of which he shall not have been successful
on the merits or otherwise if it is proved by clear and convincing evidence in a
court of competent jurisdiction that, in respect of any such claim, issue or
other matter, his relevant action or failure to act was occasioned by his
deliberate intent to cause injury to the corporation or his reckless disregard
for the best interests of the corporation, unless, and only to the extent that,
the Court of Common Pleas of Sandusky County, Ohio or the court in which such
action or suit was brought shall determine upon application that, despite such
determination, and in view of all of the circumstances, he is fairly and
reasonably entitled to all or part of such indemnification.
Section 5.06. Article Five Not Exclusive. The indemnification
provided by this Article Five shall not be exclusive of, and shall be in
addition to, any other rights to which any person seeking indemnification may be
entitled under the Articles, the Regulations, any agreement, a vote of
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be an officer or director of the
corporation and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
Section 5.07. Insurance. The corporation may purchase and
maintain insurance, or furnish similar protection, including but not limited to
trust funds, letters of credit, or self-insurance, for or on behalf of any
person who is or was a director, officer, employee, agent or volunteer of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee, member, manager, agent or volunteer of
another corporation (domestic or foreign, nonprofit or for profit), limited
liability company, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the obligation or the power to indemnify him against such liability
under the provisions of this Article Five. Insurance may be purchased from or
maintained with a person in which the corporation has a financial interest.
12
<PAGE> 52
Section 5.08. Certain Definitions. For purposes of this
Article Five, and as an example and not by way of limitation:
(A) A person claiming indemnification under this Article Five
shall be deemed to have been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 5.01, or in defense of any
claim, issue or other matter therein, if such action, suit or proceeding shall
be terminated as to such person, with or without prejudice, without the entry of
a judgment or order against him, without a conviction of him, without the
imposition of a fine upon him and without his payment or agreement to pay any
amount in settlement thereof (whether or not any such termination is based upon
a judicial or other determination of the lack of merit of the claims made
against him or otherwise results in a vindication of him).
(B) References to an "other enterprise" shall include employee
tax benefit plans; references to a "fine" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries.
Section 5.09. Venue. Any action, suit or proceeding to
determine a claim for, or for repayment to the corporation of, indemnification
under this Article Five may be maintained by the person claiming such
indemnification, or by the corporation, in the Court of Common Pleas of Sandusky
County, Ohio. The corporation and (by claiming or accepting such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Sandusky County, Ohio in any
such action, suit or proceeding.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Amendments. The Regulations of the corporation
may only be amended or new regulations adopted in accordance with the provisions
of the Articles of the corporation or the law.
Section 6.02. Action by Shareholders or Directors Without a
Meeting. Anything contained in the Regulations to the contrary notwithstanding,
except as provided in Section 6.01, any action which may be authorized or taken
at a meeting of the shareholders or of the directors or of a committee of the
directors, as the case may be, may be authorized or taken without a meeting with
the affirmative vote or approval of, and in a writing or writings signed by, all
the shareholders who would be entitled to notice of a meeting of the
shareholders held for such purpose, or all the directors, or all the members of
such committee of the directors, respectively, which writings shall be filed
with or entered upon the records of the corporation.
13
<PAGE> 53
REVOCABLE PROXY
CROGHAN BANCSHARES, INC.
323 CROGHAN STREET
FREMONT, OHIO 43420
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 9, 2000.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned, having received notice of the Annual Meeting of
Shareholders of Croghan Bancshares, Inc. to be held at 1:00 p.m. local time on
Tuesday, May 9, 2000, hereby designates and appoints Thomas F. Hite, Janet E.
Burkett and J. Terrence Wolfe, and each of them, with authority to act without
the others, as attorneys and proxies for the undersigned, with full power of
substitution, to vote all Common Shares, par value $12.50 per share, of Croghan
Bancshares, Inc., that the undersigned is entitled to vote at such Annual
Meeting or at any adjournment thereof, with all the powers the undersigned would
possess if personally present, such proxies being directed to vote as specified
below and in their discretion on any other business that may properly come
before the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 AND FOR
THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 3.
1. To adopt the Amended and Restated Articles of Incorporation of Croghan
Bancshares, Inc.
_____ FOR _____ AGAINST _____ ABSTAIN
2. To adopt the Amended and Restated Code of Regulations of Croghan
Bancshares, Inc.
_____ FOR _____ AGAINST _____ ABSTAIN
3. If proposals 1 and 2 are adopted, to elect four (4) Directors for terms
expiring in 2001, to elect four (4) Directors for terms expiring in
2002 and to elect four (4) directors for terms expiring in 2003. If
proposals 1 and 2 are not adopted, to elect twelve (12) Directors for
terms expiring in 2001.
For terms expiring in 2001:
[JANET E. BURKETT, THOMAS F. HITE, CLAIRE F. JOHANSEN, AND JOHN P.
KELLER.]
_____FOR ALL NOMINEES ____WITHHOLD AUTHORITY FOR ALL NOMINEES
(EXCEPT AS MARKED BELOW)
IF YOU WISH TO WITHHOLD AUTHORITY FOR INDIVIDUAL NOMINEE(S), ENTER THE
NAME(S) IN THE FOLLOWING SPACE:_______________________________________
For terms expiring in 2002:
[STEPHEN A. KEMPER, DANIEL W. LEASE, ALLAN E. MEHLOW, AND ROBERT H.
MOYER.]
_____FOR ALL NOMINEES ____WITHHOLD AUTHORITY FOR ALL NOMINEES
(EXCEPT AS MARKED BELOW)
IF YOU WISH TO WITHHOLD AUTHORITY FOR INDIVIDUAL NOMINEE(S), ENTER THE
NAME(S) IN THE FOLLOWING SPACE:_______________________________________
<PAGE> 54
For terms expiring in 2003:
[K. BRIAN PUGH, J. TERRENCE WOLFE, CLAUDE E. YOUNG, AND GARY L.
ZIMMERMAN.]
_____FOR ALL NOMINEES ____WITHHOLD AUTHORITY FOR ALL NOMINEES
(EXCEPT AS MARKED BELOW)
IF YOU WISH TO WITHHOLD AUTHORITY FOR INDIVIDUAL NOMINEE(S), ENTER THE
NAME(S) IN THE FOLLOWING SPACE:_______________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4, 5 AND 6.
4. To adopt the Shareholder Proposal requiring confidential voting of
proxies and independent inspectors of election.
_____ FOR _____ AGAINST _____ ABSTAIN
5. To adopt the Shareholder Proposal requiring disclosure of offers to
purchase or merge with the Corporation.
_____ FOR _____ AGAINST _____ ABSTAIN
6. To adopt the Shareholder Proposal prohibiting service on the Board of
Directors of individuals who are 72 or older.
_____ FOR _____ AGAINST _____ ABSTAIN
THIS PROXY WILL BE VOTED: (1) AS DIRECTED ON THE MATTERS LISTED ABOVE;
(2) IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATION WHERE A CHOICE IS NOT
SPECIFIED; AND (3) IN ACCORDANCE WITH THE JUDGMENT OF THE PROXIES ON ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
The undersigned reserves the right to revoke this Proxy at any time
prior to the Proxy being voted at the Annual Meeting. The Proxy may be revoked
by delivering a signed revocation to the Corporation at any time prior to the
Annual Meeting, by submitting a later-dated Proxy, or by attending the Annual
Meeting in person and casting a ballot. The undersigned hereby revokes any proxy
previously given to vote such shares at the Annual Meeting.
Dated:____________________________________
To aid the Corporation in making __________________________________________
arrangements for the Annual Signature of Shareholder
Meeting, please indicate your
preliminary intentions for __________________________________________
attendance: Signature of Shareholder
_____I/We plan to attend the (Please sign Proxy as your name appears on
luncheon and the meeting. your stock certificate(s). JOINT OWNERS
SHOULD EACH SIGN PERSONALLY. When signing as
_____I/We plan to attend only attorney, executor, administrator, trustee,
the meeting. guardian or corporate officer, please give
your full title as such.)
_____I/We do not plan to attend.
PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
