<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST ENTERPRISE FINANCIAL GROUP, INC.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[FEFG LOGO]
500 DAVIS STREET, SUITE 1005
EVANSTON, ILLINOIS 60201
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 6, 1997
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of First
Enterprise Financial Group, Inc. will be held at LaSalle National Bank, 135
South LaSalle Street, 43rd Floor, Chicago, Illinois on Tuesday, May 6, 1997, at
9:00 a.m., Chicago time, for the following purposes:
1. to elect seven directors; and
2. to transact such other business as may properly come before the meeting.
By order of the Board of Directors,
Paul A. Stinneford
Secretary
April 1, 1997
<PAGE> 3
[FEFG LOGO]
500 DAVIS STREET, SUITE 1005
Evanston, Illinois 60201
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 6, 1997
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of First Enterprise Financial
Group, Inc. (the "Company") for use at the annual meeting of shareholders to be
held on May 6, 1997 and at any adjournment thereof. Only shareholders of
record at the close of business on March 14, 1997 will be entitled to notice of
and to vote at the meeting. The Company had outstanding 5,323,329 shares of
common stock ("Common Stock") as of the close of business on February 1, 1997.
There are no other voting securities. This proxy statement and form of proxy
are first being sent to shareholders on or about April 1, 1997. Each
shareholder is entitled to one vote per share for the election of directors, as
well as on other matters. If the accompanying proxy form is signed and
returned, the shares represented thereby will be voted; such shares will be
voted in accordance with the directions on the proxy form, or in the absence of
direction as to any proposal, they will be voted for such proposal; and it is
intended that they will be voted for the nominees named herein, except to the
extent authority to vote is withheld. The shareholder may revoke the proxy at
any time prior to the voting thereof by giving written notice of such
revocation to the Company, by executing and duly delivering a subsequent proxy
or by attending the meeting and voting in person.
In case the nominees named herein for election as directors are not available
when the election occurs, proxies in the accompanying form may be voted for a
substitute. The Company expects the nominees to be available and knows of no
matters to be brought before the meeting other than those referred to in the
accompanying notice of annual meeting. If, however, any other matters properly
come before the meeting, it is intended that proxies in the accompanying form
will be voted thereon in accordance with the judgment of the persons voting
such proxies.
The presence at the annual meeting, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock is necessary to constitute a
quorum. Abstentions will be treated as shares that are present and entitled to
vote for purposes of determining the presence of a quorum but as unvoted for
purposes of determining the approval of any matter submitted to the
shareholders for a vote from which such shareholder abstained. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, although counted for purposes of
determining the presence of a quorum such shares will
<PAGE> 4
not be considered as present and entitled to vote with respect to that matter.
The favorable vote of the holders of a majority of the shares of Common Stock
represented at the meeting will be required to elect the directors to be
elected.
In addition to the use of the mails, proxies may be solicited by directors,
officers, or regular employees of the Company in person, by telegraph, by
telephone or by other means. The cost of the proxy solicitation will be paid
by the Company.
2
<PAGE> 5
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of February 1, 1997 (except as
otherwise indicated) regarding the beneficial ownership of Common Stock by each
director and Named Officer (as defined herein) of the Company, by all directors
and executive officers of the Company as a group, and by each person known to
the Company to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Shares Beneficially Owned(2)
----------------------------
Shareholder(1) Number Percent
- -------------- ------ -------
<S> <C> <C>
Michael P. Harrington............................ 1,467,128 27.6
Paul A. Stinneford(3)............................ 541,296 10.2
Thomas G. Parker(4).............................. 467,624 8.7
Kenneth L. Stucky................................ 311,312 5.8
Robert J. Harker(5).............................. 282,092 5.3
Louis J. Glunz................................... 1,000 *
M. William Isbell(8)............................. 41,900 *
Joseph H. Stegmayer.............................. 5,000 *
All directors and officers as a group
(9 persons).................................... 3,181,325 59.0
Kramer Spellman L.P(6)........................... 371,300 7.0
Safeco Asset Management Company(7)............... 373,400 7.0
</TABLE>
- ---------------
* Less than 1%.
(1) The business address of all shareholders who are executive officers or
directors, excluding Thomas G. Parker and Kenneth L. Stucky, is 500 Davis
Street, Suite 1005, Evanston, Illinois 60201. The address of Mr. Parker
and Mr. Stucky is 1032 Boll Weevil Circle, P.O. Box 1420, Enterprise,
Alabama 36331. The business address of Kramer Spellman L.P., Orin S.
Kramer and Jay Spellman is 2050 Center Avenue, Suite 300, Fort Lee, New
Jersey 07024. The business address of Safeco Asset Management Company,
Safeco Common Stock Trust and Safeco Corp. is Safeco Plaza, Seattle,
Washington 98185.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally
includes voting or investment power with respect to securities. Shares of
Common Stock subject to options or warrants
3
<PAGE> 6
exercisable or convertible within 60 days are deemed outstanding for
computing the percentage of the person or group holding such options or
warrants, but are not outstanding for computing the percentage of any
other person. Except as indicated in the footnotes to this table and
subject to applicable community property laws, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned.
(3) Mr. Stinneford had shared voting and dispositive power with regard to
386,640 of such shares.
(4) Includes options to purchase 45,108 shares of Common Stock. Mr. Parker
had shared voting and dispositive power with regard to 100 of such
shares.
(5) Includes options to purchase 32,220 shares of Common Stock.
(6) According to a 13D filed with the Securities and Exchange Commission
("SEC") as of January 27, 1997, such shareholder had shared voting and
dispositive power with regard to all of such shares. Mr. Orin S. Kramer
and Mr. Jay Spellman, the general partners of the reporting person, are
also beneficial owners of such shares. The reporting person, Mr. Kramer
and Mr. Spellman disclaim beneficial ownership with respect to all of
such shares.
(7) According to a 13G/A filed with the SEC as of February 10, 1997,
Safeco Asset Management Company, a wholly owned subsidiary of Safeco
Corp., beneficially owns such shares as a result of acting as an
investment advisor for registered investment companies. Such shares
include 247,600 shares beneficially owned by Safeco Common Stock Trust.
Safeco Asset Management and Safeco Corp. disclaim beneficial ownership
with respect to all of such shares.
(8) Beneficial ownership is disclaimed with respect to all of such
shares.
4
<PAGE> 7
BOARD OF DIRECTORS
MEMBERS AND NOMINEES FOR ELECTION
The Board of Directors of the Company consists of seven members. The term of
office of each director expires each year at the annual meeting of
shareholders. The term of all present directors will expire at this annual
meeting. Every member of the Board of Directors has been nominated for
election for a one-year term expiring at the annual meeting in 1998 or until
their successors have been elected and qualified. Messrs. Harrington and
Stinneford were previously elected as directors by the shareholders of the
Company; Messrs. Glunz, Isbell, Parker, Stegmayer and Stucky were elected by
the Board of Directors upon the consummation of the initial public offering of
Common Stock on July 29, 1996 (the "Offering"). The following table sets forth
certain information regarding the directors of the Company:
<TABLE>
<CAPTION>
Principal Occupation, Name of
First Became a Organization in which Occupation is
Director of the Carried on, Offices and Position,
Name Company if any, with the Company and Age
- ---- -------------------- ------------------------------------
<S> <C> <C>
Michael P. Harrington 1990 Chairman of the Board of Directors;
Age 61
Louis J. Glunz, Ph.D. 1996 President and Chairman of the Board
of Regis Chemical Company and Regis
Technologies, Inc.; Age 66
M. William Isbell 1996 Private investor; Age 60
Thomas G. Parker 1996 President and Chief Operating
Officer of First Enterprise
Acceptance Company; Age 56
Joseph H. Stegmayer 1996 Director, President and Chief
Operating Officer of Clayton Homes,
Inc.; Age 46
Paul A. Stinneford 1990 Vice President and Secretary; Age 65
Kenneth L. Stucky 1996 Vice President and Chief
Administrative Officer of First
Enterprise Acceptance Company; Age
58
</TABLE>
5
<PAGE> 8
Michael P. Harrington has served as Chairman of the Board, President and
Chief Executive Officer of the Company since the Company commenced operations
in 1990. Prior to the formation of the Company, Mr. Harrington served as
President and Treasurer of First Illinois Finance Company ("First Illinois"),
the predecessor company of Mercury Finance Company ("Mercury") which is a
publicly held company. He was a co-founder of First Illinois in 1983. Prior to
the commencement of First Illinois, Mr. Harrington served as the interim Chief
Executive Officer of General Finance Corporation ("General Finance") and had
previously been Financial Vice President, Treasurer, and a Director of General
Finance.
Louis J. Glunz, Ph.D. has been President and Chairman of the Board of
Regis Chemical Company and, subsequently, Regis Technologies, Inc., specialty
chemical companies, since 1956. Dr. Glunz received his Bachelor of Science from
Loyola University of Chicago and his Philosophiae Doctor from the University of
Notre Dame.
M. William Isbell has been a private investor since 1981 and former
Chairman of the Board, President and Chief Executive Officer of Ramada Inns,
Inc.
Thomas G. Parker has served as President and Chief Operating Officer of
First Enterprise Acceptance Company since 1992. Prior to joining the Company,
Mr. Parker was employed by Mercury from 1984 to 1992; his last position was as
a District Director. Prior to joining Mercury, Mr. Parker was the Senior Vice
President of Operations for Atlantic Discount Company, a company he had joined
in 1974. From 1963 through 1974 Mr. Parker was employed at General Finance at
which his last capacity was as a Director of Supervision.
Joseph H. Stegmayer has been the President and Chief Operating Officer of
Clayton Homes, Inc. ("Clayton") since July 1993. Mr. Stegmayer has been a
Director of Clayton since 1986. Prior to joining Clayton in 1993, Mr. Stegmayer
was employed by Worthington Industries since 1973 and most recently served as
Vice President, Chief Financial Officer and Treasurer. Mr. Stegmayer is a
Director of the Cardinal Funds, a group of mutual investment funds. Mr.
Stegmayer graduated from the University of Louisville and serves on the boards
of The United Way of Knoxville, Tennessee, The Knoxville Zoo, the Knoxville
Chamber of Commerce and the University of Tennessee Chancellors Associates.
Paul A. Stinneford has served as a Director, Vice President, the Secretary
and the General Counsel of the Company since the Company commenced operations
in 1990. Prior to the formation of the Company, Mr. Stinneford was Vice
President, Secretary and General Counsel of Spiegel, Inc. Prior to joining
Spiegel, Inc. in 1972, Mr. Stinneford was employed as an attorney with Sears,
Roebuck and Co. which he had joined in 1958.
Kenneth L. Stucky has served as Vice President and Chief Administrative
Officer of First Enterprise Acceptance Company since 1992. Prior to joining the
Company, Mr. Stucky was a
6
<PAGE> 9
Financial Business Consultant. From 1981 through 1986 he was the Business
Manager for a law firm in Jacksonville, FL. From 1975 through 1981 he served as
Administrative Vice President for Atlantic Discount Company, a consumer finance
company doing business in several southeastern states. Prior to joining
Atlantic Discount Company, Mr. Stucky was employed at General Finance for 13
years in a number of administrative, planning and financial positions.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held meetings or acted by consent 20
times during 1996. The Company has standing, audit and compensation
committees.
AUDIT COMMITTEE. The Audit Committee, which consists of Louis J. Glunz, M.
William Isbell and Joseph H. Stegmayer, makes recommendations concerning the
engagement of independent public accountants, reviews with the independent
public accountants, the plans and results of the audit engagement, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accounts, considers the range of
audit and non-audit fees and reviews any recommendations made by the Company's
auditors regarding the Company's accounting methods and the adequacy of its
system of internal control. The Audit Committee did not meet or act by consent
during 1996.
COMPENSATION COMMITTEE. The Compensation Committee, which consists of Louis J.
Glunz, M. William Isbell and Joseph H. Stegmayer approves the compensation of
the Corporation's executive officers, including bonuses, subject to the terms
of any employment agreement, makes recommendations to the Corporation's Board
of Directors regarding the Corporation's compensation policies and administers
the Corporation's 1992 Stock Option Plan, as amended and restated. The
Compensation Committee acted by consent one time during 1996.
COMPENSATION OF DIRECTORS
Directors who are not officers of or employed by the Company ("Non-employee
Directors") are paid an annual fee of $7,500 and a meeting fee of $1,000 for
each meeting of the Board of Directors or a committee of the Board of Directors
attended, in person or telephonically as compensation for service as a
director. Non-employee Directors are granted stock options under the Company's
1995 Director Stock Option Plan. Each Non-employee Director receives an option
to purchase 6,000 shares of Common Stock under the Company's 1995 Director
Stock Option Plan on the date he or she is first elected to the Board of
Directors. Thereafter, on the date of each annual meeting of the Company's
shareholders, each Non-employee Director elected to office at such meeting will
automatically receive an option to purchase 2,000 shares of Common Stock.
Non-employee Directors are also reimbursed for their out-of-pocket expenses.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information with respect to the compensation of
the Chief Executive Officer and the four other most highly compensated
executive officers of the Company whose individual total annual salary and
bonus exceeds $100,000 during 1996 (the "Named Officers") for services in all
capacities while an executive officer during 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL
COMPENSATION(1)
--------------------------- SECURITIES
NAME AND SALARY BONUS UNDERLYING
PRINCIPAL POSITIONS YEAR ($) ($) OPTIONS(#)
- ------------------------------- ---- ------- ---------- ----------
<S> <C> <C> <C> <C>
Michael P. Harrington 1996 160,000 0 --
(Chairman, President 1995 150,000 47,476 --
and Chief Executive 1994 115,000 40,000 --
Officer)
Thomas G. Parker 1996 155,000 0 --
(President and Chief 1995 145,000 47,476 --
Operating Officer-First 1994 135,000 103,000(2) 64,440
Enterprise Acceptance Company)
Kenneth L. Stucky 1996 145,000 0 --
(Vice President and 1995 135,000 33,738 --
Chief Administrative 1994 125,000 81,412(2) --
Officer-First Enterprise
Acceptance Company)
</TABLE>
__________________
(1) Annual compensation does not include the cost to the Company of certain
benefits. The aggregate amount of such benefits, as to each executive
officer, did not exceed $25,000.
(2) The 1994 bonus amounts for Messrs. Parker and Stucky include $68,000 and
$56,412, respectively, to cover certain expenses incurred by these
officers in connection with the exercise of certain stock options.
8
<PAGE> 11
OPTION GRANTS IN FISCAL 1996
No stock options were granted during fiscal 1996 to any Named Officer.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END (#) FISCAL YEAR-END ($)
-------------------- --------------------
SHARES ACQUIRED ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
(A) (B) (C) (D) (E)
- --------------------- -------------------- ------------------ -------------------- --------------------
<S> <C> <C> <C> <C>
Michael P. Harrington -- -- --/-- --/--
Thomas G. Parker -- -- 45,108/19,332 371,915/159,392
Kenneth L. Stucky -- -- --/-- --/--
</TABLE>
9
<PAGE> 12
REPORT OF COMPENSATION COMMITTEE OF BOARD
OF DIRECTORS ON EXECUTIVE COMPENSATION
The compensation, including bonus, of the executive officers of the
Company is approved, subject to such executive officer's employment
contract, by the Compensation Committee (the "Committee") of the Board of
Directors, which is a standing committee that consists entirely of
independent directors. No member of the Committee is eligible to
participate in any of the compensation plans or programs it administers.
The Company's goal in structuring executive compensation is to closely
align the interests of executive officers with those of the Company's
shareholders. The Company's executive compensation package is
accordingly comprised of the following four elements:
- - Annual salary set at levels sufficient to attract and retain employees
capable of contributing materially to the Company's long-term success;
- - Annual incentive compensation related to the Company's results of
operations;
- - Stock options to provide long-term incentives; and
- - Participation in other benefit programs available to employees generally.
In carrying out its responsibilities, the Committee reviews the executive
compensation programs and policies of the Company's competitors to ensure
that the Company's plans and practices are competitive and appropriate
based on the Company performance and compensation goals.
The Company has entered into employment agreements that establish the
base salaries of the Company's executive officers and has adopted stock
option and bonus plans.
Annual Salary. Each executive officer's employment agreement provides
for a minimum annual salary of $150,000 in the case of Mr. Harrington,
$145,000 in the case of Mr. Parker, $135,000 in the case of Mr. Stucky,
$83,000 in the case of Mr. Stinneford and $78,000 in the case of Mr.
Harker. The Company expects to target future executive officer's annual
minimum salaries at the average of a compared group of competitors by
conducting compensation surveys to determine base salary levels are in
line with the Company's objectives, with consideration given to such
factors as the executive officer's scope of responsibility, performance,
future potential and overall competitive positioning relative to
comparable positions at competitors.
Annual Incentive Compensation. Annual incentive compensation is granted,
subject to such executive officer's employment agreement, related to the
results of operations of the Company.
10
<PAGE> 13
Due to recent events in the automobile finance industry, the Company
determined to increase its allowance for credit losses to a more
conservative level and make certain changes in its charge-off practices.
As a result, management bonuses payable for 1996 were eliminated, which
partially offset the effects of these changes. Consequently, the
Committee did not approve any awards of annual incentive compensation to
executive officers for 1996.
Stock Options. The Company's 1992 Stock Option Plan (the "1992 Plan")
provides officers and other key employees with long-term incentives in
order to create an interest in the Company parallel to that of the
Company's shareholders. Options granted under the 1992 Plan with respect
to 469,950 shares of Common Stock are outstanding as of December 31,
1996. As of such date, 1,068,407 shares of Common Stock had been issued
pursuant to options granted under the 1992 Plan and 993,673 additional
shares of Common Stock may be sold pursuant to options granted under the
1992 Plan. Stock options are granted to reinforce the importance of
improving shareholder value over the long-term, and to encourage and
facilitate the stock ownership by executive officers. Stock options are
granted at not less than 100% of the fair market value of the Common
Stock on the date of grant to ensure that executive officers could only
be awarded for appreciation in the price of Common Stock when the
Company's shareholders are similarly benefitted. While all of the
Company's executive officers are eligible to receive stock options, the
size of annual grants, if any, to executive officers is contingent on
their performance and future potential. During 1996 the Company did not
grant any stock options to executive officers pursuant to the 1992 Plan.
Louis J. Glunz
M. William Isbell
Joseph H. Stegmayer
Members of the Compensation Committee
STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph compares the percentage change in the
cumulative total shareholder return on the Company's Common Stock with
the cumulative total returns of the Standard and Poor's 500 Stock Index
(the "S&P 500 Index") and the cumulative total returns of five nonprime
automobile finance companies (the "Peer Group Index"). The comparison
assumes $100 investments on July 22, 1996, the first date of registration
of the Company's Common Stock under Section 12 of the Securities Exchange
Act of 1934, in the Company's Common Stock, the S&P 500 Index and the
Peer Group, and further assumes reinvestment of dividends, in the
Company's Common Stock, the S&P 500 Index and the Peer Group.
[GRAPH]
<TABLE>
<CAPTION>
Index Period Ending
7/22/96 8/31/96 9/30/96 10/31/96 11/30/96 12/31/96
<S> <C> <C> <C> <C> <C> <C>
First Enterprise
Financial Group, Inc. 100.0 144.64 142.86 151.79 157.14 133.93
S&P 500 100.0 103.16 108.97 111.97 120.35 117.96
Peer Group 100.0 121.70 134.59 135.41 140.34 135.72
</TABLE>
11
<PAGE> 14
On December 31, 1996 and February 3, 1997, the last sale prices of the
Common Stock, as reported by the Nasdaq Stock Market's National Market
were $9.375 and $13.375 per share, respectively.
CERTAIN TRANSACTIONS
In December 1994, in order to refinance a junior subordinated note,
the Company issued a subordinated note in the amount of $4.0 million to
Michael P. Harrington, its Chairman, President and Chief Executive
Officer. Under the terms of such note, interest was payable at the end
of each quarter at a fixed rate of 13.5% and was due on September 30,
1996. Simultaneously, Mr. Harrington issued a $4.0 million secured note
to LaSalle National Bank ("LaSalle"). Under the terms of the note issued
to LaSalle, interest was payable at the end of each quarter at a fixed
rate of 13.5% and was due on September 30, 1996. In connection with this
note issuance, the Company issued to LaSalle a detachable warrant to
purchase 193,320 shares of Common Stock. The warrant was exercised in
whole to purchase Common Stock at a price of $1.13 per share in
connection with the Offering. Additionally, upon consummation of the
Offering, the Company repaid the note issued to Mr. Harrington and Mr.
Harrington repaid the note issued to LaSalle.
The Company guaranteed loans made by certain financial institutions
to employees in the aggregate amount of approximately $395,000, including
$194,000 for Thomas G. Parker and $145,000 for Kenneth L. Stucky. The
proceeds of such loans were used to exercise options. The loans were for
a period of one year with an original maturity of October 1, 1995 and
were renewed for an additional term of one year with a maturity of
October 1, 1996. Such loans were secured by such employee's interest in
the Company and accrued interest at the financial institutions' prime
rate (8.75% at September 30, 1995). The loans that were guaranteed were
classified as a liability of the Company. The Company was released from
the guarantees upon the consummation of the Offering.
Prior to closing of the Offering, the Company and its existing
shareholders at December 31, 1995, entered into an indemnification
agreement, relating to certain federal, state and local income tax
liabilities of the Company and the existing shareholders, for the tax
years during which the Company had elected to be treated as an S
Corporation. This agreement provides that the Company will indemnify the
existing shareholders, and the existing shareholders will indemnify the
Company, against any increase in the indemnified party's income tax
benefits or liabilities (including interest and penalties and all
expenses, attorneys' fees and accountants' fees incurred in connection
therewith) as a result of any adjustment associated with a return filed
with respect to a period during which the Company was an S Corporation.
Payments under the agreement in favor of the existing shareholders must
be approved by a majority of the directors who are not affiliated with
the Company as being consistent with the terms of the agreement. No
payments were made during 1996 under the agreement.
12
<PAGE> 15
In connection with the termination of its S Corporation status, the
Company distributed approximately $2,070,000 to the S Corporation
shareholders as of December 29, 1995 upon a determination by the Board of
Directors that the payment of the S Corporation distribution would not
have a material adverse effect on the Company's 1997 funding needs. Of
such distribution, approximately $1,970,000 was paid to the Company's
directors and executive officers, including approximately $1,012,000 to Michael
P. Harrington, approximately $313,000 to Paul A. Stinneford, approximately
$286,000 to Thomas G. Parker, approximately $215,000 to Kenneth L. Stucky and
approximately $143,000 to Robert J. Harker.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
M. William Isbell failed to file on a timely basis a Statement of
Changes in Beneficial Ownership of Securities on Form 4 for November,
1996 on which a total of one transaction was reported.
AUDITORS
Representatives of Grant Thornton LLP, the Company's auditors, are
expected to be present at the annual meeting and will be available to
respond to questions and may make a statement if they so desire.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder intends to present at the annual meeting
of shareholders in 1998 must be received by the Company by December 2,
1997 in order to be eligible for inclusion in the proxy statement and
proxy form relating to such meeting.
IMPORTANT
All shareholders are cordially invited to attend the annual meeting in
person.
If you cannot be present at the meeting, please sign and date the
enclosed Proxy and mail it PROMPTLY in the enclosed self-addressed
envelope. No postage need be affixed if mailed in the United States.
13
<PAGE> 16
FIRST ENTERPRISE FINANCIAL GROUP, INC.
500 Davis Street, Suite 1005
Evanston, Illinois 60201
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST ENTERPRISE
FINANCIAL GROUP, INC.
The undersigned hereby appoints Michael P. Harrington, Jan W. Erfert
and Paul A. Stinneford, and each of them, proxies, with power of
substitution and revocation, acting by majority of those present and
voting or if only one is present and voting then that one, to vote the
shares of stock of First Enterprise Financial Group, Inc. which the
undersigned is entitled to vote as designated herein, at the annual
meeting of shareholders to be held in Chicago, Illinois on Tuesday, May
6, 1997 at 9:00 a.m., Chicago time, and at any adjournment thereof,
with all the powers the undersigned would possess if present.
1. ELECTION OF DIRECTORS
NOMINEES: Michael P. Harrington, Louis J. Glunz, M. William Isbell, Thomas
G. Parker, Joseph H. Stegmayer, Paul A. Stinneford and Kenneth L. Stucky
/ / FOR all nominees / / WITHHOLD
(except indicated to AUTHORITY to
the contrary). vote for all
nominees.
To withhold authority to vote for any nominee, write nominee's name
in the space provided below.
_______________________________________________________________
2. Upon any other matter which may properly come before the meeting.
<PAGE> 17
<TABLE>
<S><C>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS INSTRUCTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES LISTED.
PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE
UNITED STATES.
Please sign exactly as name appears on this Proxy.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by an authorized officer.
If a partnership, please sign in partnership name
by an authorized person.
The undersigned hereby revokes any proxy or
proxies heretofore given to vote such shares at
said meeting or any any adjournment thereof.
___________________________________________, 1997
Signature Date
___________________________________________, 1997
Signature, if held jointly Date
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