UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 5)
DAMEN FINANCIAL CORPORATION
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
235906104
(CUSIP Number)
Paul J. Duggan
Jackson Boulevard Fund, Ltd.
53 W. Jackson
Chicago, Illinois 60604
(312) 294-6440
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 23, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
<PAGE>
CUSIP No. 235906104
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Paul J. Duggan
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: WC, OO
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
246,400 shares
Number of
Shares 8 Shared Voting Power
Beneficially 116,000 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 246,400 shares
10 Shared Dispositive Power
116,000 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
362,400 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
11.6%
14 Type of Reporting Person
IN
<PAGE>
CUSIP No. 235906104
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Jackson Boulevard Fund, Ltd.
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: WC, OO
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Illinois
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 116,000 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
116,000 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
116,000 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
3.7%
14 Type of Reporting Person
CO
<PAGE>
CUSIP No. 235906104
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Jackson Boulevard Equities, L.P.
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: WC, OO
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6 Citizenship or Place of Organization
Illinois
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 86,422 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
86,422 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
86,422 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
2.7%
14 Type of Reporting Person
PN
<PAGE>
CUSIP No. 235906104
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Jackson Boulevard Investments, L.P.
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: WC, OO
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) []
6 Citizenship or Place of Organization
Illinois
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 29,578 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
29,578 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
29,578 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
1.0%
14 Type of Reporting Person
PN
<PAGE>
This is Amendment No. 5 to the Schedule 13D filed jointly by
Paul J. Duggan, Jackson Boulevard Fund, Ltd. ("Jackson Fund"), Jackson
Boulevard Equities, L.P. ("Jackson Equities") and Jackson Boulevard
Investments, L.P. ("Jackson Investments") (collectively, the "Group") on
October 10, 1995 (as earlier amended, the "Original 13D"), and relates to
the common stock, $.01 par value (the "Common Stock"), of Damen Financial
Corporation (the "Issuer"). The following items in the Original 13D are
amended to read in their entirety as follows:
1. Security and Issuer
This Schedule 13D is being filed jointly by Paul J. Duggan,
Jackson Fund, Jackson Equities and Jackson Investments and relates to the
Common Stock of the Issuer. The address of the principal executive
offices of the Issuer is 200 West Higgins Road, Schaumburg, Illinois
60195.
2. Identity and Background
(a)-(c) Jackson Fund is an Illinois corporation. Jackson
Equities and Jackson Investments are Illinois limited partnerships. The
address of the principal business and the principal office of Jackson
Fund, Jackson Equities, and Jackson Investments is 53 West Jackson
Boulevard, Suite 400, Chicago, Illinois 60604.
The principal business of Jackson Fund is serving as the general
partner of Jackson Equities, Jackson Investments and other investment-
oriented limited partnerships. The principal business of Jackson Equities
and Jackson Investments is buying and selling securities for investments,
including in particular securities related to financial industries
(including banks and thrifts).
Jackson Fund is the sole general partner of both Jackson
Equities and Jackson Investments. Mr. Duggan is the sole stockholder,
sole executive officer and sole director of Jackson Fund. Mr. Duggan's
principal occupation is money manager (through Jackson Fund) and his
business address is 53 West Jackson Boulevard, Suite 400, Chicago,
Illinois 60604.
Jackson Fund has a 7.7% ownership interest in Jackson Equities
and a 5.1% ownership interest in Jackson Investments. Duggan is a limited
partner of both Jackson Equities and Jackson Investments.
The joint filing agreement of the members of the Group is filed
herewith as Exhibit 1.
(d)-(e) During the past five years, none of Mr. Duggan,
Jackson Fund, Jackson Equities or Jackson Investments has been convicted
in a criminal proceeding (excluding traffic violations), and none of Mr.
Duggan, Jackson Fund, Jackson Equities or Jackson Investments has been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any of them were or are
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Mr. Duggan is a citizen of the United States.
3. Source and Amount of Funds or Other Consideration
The amount of funds expended to date by the Group to acquire
shares of the Common Stock as reported herein is $4,235,796. Such funds
were provided in part from the available capital of members of the Group
and in part by loans from subsidiaries of The Bear Stearns Companies, Inc.
("Bear Stearns"). Mr. Duggan, Jackson Equities and Jackson Investments
each have customer margin accounts with Bear Stearns and have used the
proceeds from loans made to them by Bear Stearns to purchase a portion of
the shares of the Common Stock that they presently own. The obligations
of Mr. Duggan, Jackson Equities and Jackson Investments under those margin
accounts are secured by the marginable equity securities owned by each of
them.
4. Purpose of Transaction
The Group's goal is to profit from appreciation in the market
price of the Common Stock. The Group expects to actively assert
shareholder rights, in the manner described below, with the purpose to
influence the policies of the Issuer, in particular with the intent of
influencing a business combination involving the Issuer.
By letter dated February 3, 1997, Mr. Duggan expressed to the
Issuer his disappointment with the Issuer's business situation and
suggested courses of action, including the addition of a specific
individual as a member of the Issuer's Board of Directors. A copy of that
letter is attached as Exhibit 2. By letter dated December 5, 1997, Mr.
Duggan wrote to the members of the Issuer's Board of Directors to advise
the Issuer of his continued disappointment with the financial performance
of the Issuer. The letter listed certain steps that the Issuer should
implement. A copy of that letter is attached as Exhibit 3.
By letter dated December 17, 1997, Mr. Duggan submitted a notice
of intent to introduce a stockholders' proposal at the 1998 annual meeting
of stockholders of the Issuer and to nominate two persons for election as
directors at that meeting. A copy of that letter is attached as Exhibit
4. By letter dated December 23, 1997, the Issuer refused to allow Mr.
Duggan to present the stockholder's proposal or to nominate candidates for
election to the Board of Directors. A copy of that letter is attached as
Exhibit 5.
By letter dated December 30, 1997, Mr. Duggan suggested an
alternative stockholders' proposal. A copy of that letter is attached as
Exhibit 6. Also by letter dated December 30, 1997, Mr. Duggan requested
that the Issuer provide him with a stockholder list and certain other
related materials. A copy of that letter is attached as Exhibit 7. After
additional discussion and correspondence, the Issuer provided Mr. Duggan
with access to stockholder list materials. Prior to the annual meeting of
stockholders, Mr. Duggan also corresponded and held discussions with the
Issuer regarding the inability of Mr. Duggan to vote shares held in excess
of the 10% voting limitation contained in the Issuer's Certificate of
Incorporation.
By letter dated December 30, 1997, Mr. Duggan gave notice of his
intent to nominate two persons for election to the Board of Directors of
the Issuer. A copy of that letter is attached as Exhibit 8. By letter
dated January 2, 1998, the Issuer refused to permit the presentation of a
stockholder proposal by Mr. Duggan or the nomination of candidates for
election to the Board of Directors. A copy of that letter is attached as
Exhibit 9. By letter of his counsel dated January 5, 1998, Mr. Duggan
responded to the Issuer. A copy of that letter is attached as Exhibit 10.
By letter dated January 7, 1998, the Issuer responded to the letter of Mr.
Duggan's counsel. A copy of that letter is attached as Exhibit 11. The
Issuer, Mr. Duggan and the other individual Mr. Duggan intended to
nominate for election to the Board of Directors discussed circumstances
under which Mr. Duggan would withdraw his notice of intent to nominate. A
copy of a letter written by counsel to the Issuer regarding those
discussions, dated January 8, 1998, is attached as Exhibit 12.
The Group intends to continue to evaluate the Issuer and its
business prospects and intends to consult with management of the Issuer,
other shareholders of the Common Stock or other persons to further its
objectives. The Group may make further purchases of shares of the Common
Stock or may dispose of any or all of its shares of the Common Stock at
any time. At present, and except as disclosed herein, the Group has no
specific plans or proposals that relate to, or could result in, any of the
matters referred to in paragraphs (a) through (j), inclusive, of Item 4 of
Schedule 13D. The Group intends to continue to explore the options
available to it. The Group may, at any time or from time to time, review
or reconsider its position with respect to the Issuer and may formulate
plans with respect to matters referred to in Item 4 of Schedule 13D
5. Interest in Securities of the Issuer
(a) By virtue of his control over the stock personally owned by
him and that owned by Jackson Fund, Jackson Equities, and Jackson
Investments, Mr. Duggan beneficially owns all of the 362,400 shares of the
Common Stock owned by members of the Group, constituting approximately
11.6% of the issued and outstanding shares of the Common Stock, based on
the number of outstanding shares reported on the Issuer's Proxy Statement
filed on December 18, 1997. Jackson Fund beneficially owns only the
116,000 shares held in the names of Jackson Equities and Jackson
Investments, constituting approximately 3.7% of the issued and outstanding
shares of the Common Stock. Jackson Equities beneficially owns only the
86,422 shares of the Common Stock it holds in its own name, constituting
approximately 2.7% of the issued and outstanding shares of the Common
Stock. Jackson Investments beneficially owns only the 29,578 shares of
the Common Stock it holds in its own name, constituting approximately 1.0%
of the issued and outstanding shares of the Common Stock. None of Mr.
Duggan, Jackson Fund, Jackson Equities, or Jackson Investments otherwise
beneficially owns any shares of the Common Stock.
(b) With respect to the shares described in (a) above, Mr.
Duggan has sole voting and investment power with regard to the 246,400
shares held by Mr. Duggan. Mr. Duggan, Jackson Fund, Jackson Equities and
Jackson Investments have shared voting and investment power with regard to
the 116,000 shares held by Jackson Equities and Jackson Investments.
(c) On January 23, 1998, 29,578 shares of the Common Stock were
distributed from Jackson Equities to Jackson Investments, at a price of
$17.00 per share. (This distribution of assets from Jackson Equities to
Jackson Investments was made for the purpose of reorganizing the entities
in connection with new rules of the Securities and Exchange Commission
regarding investment companies.)
6. Contracts, Arrangements, Understandings or Relationships With
Respect to
Securities of the Issuer.
See Item 2 regarding disclosure of the arrangements among members of
the Group, which disclosure is incorporated herein by reference.
7. Material to be Filed as Exhibits
No. Description
1 Joint Filing Agreement
2 Letter from Paul J . Duggan to Mary Beth Poronsky Stull,
dated February 3, 1997.
3 Letter from Paul J . Duggan to the Board of Directors of
the Issuer, dated December 5, 1997.
4 Letter from Paul J . Duggan to Janine M. Poronsky, dated
December 17, 1997.
5 Letter from Janine M. Poronsky to John M. Klimek, dated
December 23, 1997.
6 Letter from Paul J . Duggan to Janine M. Poronsky, dated
December 30, 1997.
7 Letter from Paul J . Duggan to Janine M. Poronsky, dated
December 30, 1997.
8 Letter from Paul J . Duggan to Janine M. Poronsky, dated
December 30, 1997.
9 Letter from Janine M. Poronsky to John M. Klimek, dated
January 2, 1998.
10 Letter from John M. Klimek to Janine M. Poronsky, dated
January 5, 1998.
11 Letter from Janine M. Poronsky to John M. Klimek, dated
January 7, 1998.
12 Letter from Kip A. Weissman, P.C. to Vincent Cainkar, dated
January 8, 1998.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
Date: February 6, 1998
/s/ Paul J. Duggan
Paul J. Duggan, an individual
Jackson Boulevard Fund, Ltd.
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Equities, L.P.
By: Jackson Boulevard Fund, Ltd.,
General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Investments, L.P.
By: Jackson Boulevard Fund, Ltd.,
General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
EXHIBIT 1
JOINT FILING AGREEMENT
Pursuant to Rule 13d-1(f)(1) under the Securities Exchange Act of
1934, as amended, the undersigned hereby agree that the Schedule 13D to
which this Joint Filing Agreement is being filed as an exhibit shall be a
joint statement filed on behalf of each of the undersigned.
Date: February 6, 1998
/s/ Paul J. Duggan
Paul J. Duggan, an individual
Jackson Boulevard Fund, Ltd.
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Equities, L.P.
By: Jackson Boulevard Fund, Ltd.,
General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Investments, L.P.
By: Jackson Boulevard Fund, Ltd.,
General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
EXHIBIT 2
[ON JACKSON BOULEVARD FUND, LTD. LETTERHEAD]
February 3, 1997
Ms. Mary Beth Poronsky Stull
Damen Financial Corp.
200 West Higgins
Schaumburg, IL 60195
Dear Mary Beth;
We are in receipt of many pieces of recent correspondence from Damen
Financial Corporation including your year-end proxy statement and various
press releases. My office has also had conversations with you and Jerry
Gartner.
I recently voted 370,000 shares in favor of your re-election and that of
Janine's.
I am writing to express my disappointment with the current situation
regarding Damen Financial Corporation.
The stock opened in October of 1996 at around $11.75 per share. Since
that opening day, the stock has grown approximately 10%. This 10% growth
is very low relative to all the other savings and loans, not only in the
Chicagoland area, but on a national level. The average thrift stock
during the same period of time is probably up in excess of 30%.
I think there are two primary reasons for the poor performance of Damen
Financial.
1. Damen's failure to properly carry out a stock buy back program.
2. The ever increasing cost of running Damen Financial (salaries,
overhead, etc.) versus the lack of increase in additional
revenues. Officers' compensation, for example, is up
dramatically without any stock price increase.
Book value of the company is virtually unchanged in the last 15 months.
No buybacks have taken place since approximately October 1st.
Additionally, no special dividends have been paid.
As I have indicated to you in telephone conversations, I find fault with
the advice that Damen has been receiving. I think you need to reconsider
your source of advice. I think you need someone to guide you through
buyback programs, return of capital issues, and efficiency ratio analysis.
I urge you to consider adding two spots to the Board of Director. I think
these two spots could be filled from the quality financial talent
available in the Chicagoland area. I would be available to give you a
number of qualified individuals that would be capable of serving on your
Board.
I would suggest you consider interviewing Mr. J. Dennis Huffman as a
possible board member. Mr. Huffman was Chief Lending Officer and COO at
Beverly Bank in Chicago. He also served three years with the Resolution
Trust Corporation (RTC) in their Savings and Loan area. He could assist
you in strategic planning, corporate restructuring, various corporate
lending areas and perhaps coordinate with advisors such as Robert Baird or
Chicago Corp. I urge you to reinstate your buyback program and pay a
special dividend. I stand ready to meet with you at your earliest
convenience to discuss these issues and look forward to seeing you at the
annual meeting.
I am sure, with the proper implementation of these procedures, Damen
Financial can thrive in this marketplace and all shareholders will be
properly compensated for their investment and risk.
Thanks, in advance, for your cooperation on these issues.
Very truly yours,
/s/ Paul J. Duggan
Paul J. Duggan
PJD/sr
EXHIBIT 3
[ON JACKSON BOULEVARD FUND, LTD. LETTERHEAD]
December 5, 1997
The Board of Directors
Damen Financial Corp.
200 West Higgins Road
Schaumburg, IL 60195-3780
To the Board:
I am in receipt of your press release of October 23, 1997
regarding Damen Financial Corporation. My attitude is one of continued
disappointment.
I have recently been approached by several southside banks who
are interested in acquiring Damen. I have also had corporate activists
and other funds inquire about my shares. I have resisted all overtures to
date in an effort to let Damen find it's own style and/or niche in the
public market.
Damen recently became a two-year-old public institution.
Jackson Boulevard Fund has been very patient with its investment and given
Damen adequate time to find its own style. However at this point we have
lost patience with management and its Board of Directors.
I have gone through the exercises of comparing Damen to many of
its contemporaries in the Chicago area. My simple analysis is as follows:
When compared to the competition at Hemlock, Preferred, and Park Federal,
Damen has the highest efficiency ratio, the lowest interest margin, the
lowest return on equity, the lowest return on assets and the lowest
percentage price increase during 1997. As they say, "the proof is in the
pudding", Damen Financial's Management and it's Board of Directors has
failed terribly.
It appears to me that the company is clearly going backwards.
Net earnings per share (exclusive of the SAIF special assessment) were 17
cents per share for the quarter ended September 30, 1996 and now, a year
later, are only 16 cents per share.
The efficiency ratio for the twelve months ended September 1997
has gone to 70.84% up from the previous years 61.11%.
The Modified Dutch Auction obviously was not the answer. The
investing community is amazed that Damen would have turned down an
opportunity to repurchase shares in price ranges from $11.50 to $12.00 a
share so they could later convert to a national bank and buy shares back
at $14.75. This makes no sense at all, upsets the investment community,
and is indicative of poor financial advice and management.
Damen has now admitted what I have understood to be a fact all
along, i.e. Damen will not be granted the right to pay a one time special
return of capital (tax free dividend). The IRS has failed to approve
Damen's application because Damen filed consolidated tax returns.
I remind you of our first meeting in the Fall of 1995. I asked
Mr. Gartner not to file a consolidated return, but to file an extension
and seek advice on that issue. Mr. Gartner indicated at that time that he
was anxious to file a tax return. Apparently, he did so without seeking
advice of competent counsel and, accordingly, has caused Damen to lose an
opportunity to deal with its excess capital.
This single act has caused Damen to lose its best chance to
reduce capital and enhance shareholder value. Who is responsible? Mr.
Gartner? Your CPA firm? Your law firm?
I have previously requested that Damen add two seats to its
board in order to add people with sophisticated financial backgrounds.
Management and Damen's Board of Directors has ignored the suggestion to
add two seats. I feel Damen currently suffers from an excess of outside
advice from lawyers and poor inside advice from directors and management.
Ultimately, the Board of Directors is responsible and liable for
the actions of its elected officers. The Board is also compensated in
part with options which are tied to the price of the stock. The advice
offered by Jackson Boulevard Fund, e.g. re: buybacks and dividends, would
have helped the share price and enhanced the value of management's and
directors stock and stock options as well as all outside shareholders.
All the advice to date has been ignored to the detriment of all
shareholders.
I feel Damen's stock should trade at 130% of book value or
$19.00 or more per share. This would put Damen at parity with its peer
group (over capitalized thrifts with 16 to 20% capital). This valuation
change will only come with drastic changes.
Based on the continuing poor operating results, poor return on
equity, and failure to increase the shareholder's value using any
yardstick, I think it is now time for Damen to take drastic measures.
I feel the Board of Directors should implement or instruct
management to take the following steps:
1) Immediate reduction in all management salaries.
2) Consideration of an immediate decision to hire an
investment banker to market the company for sale.
3) Look to find an immediate merger partner among Chicago area
thrifts such as Alliance or Park Federal.
4) Consider selling out to a local or regional bank in a stock
transaction.
5) Pay a one-time dividend of $1.00. This should be a
substantially tax-free return of capital.
6) Increase the dividend to 20 cents per quarter (as a method
to deal with excess capital).
7) Move for immediate sale of the Schaumburg facility.
8) Sell the original Damen branch.
9) Obtain competent advice to manage a stock buy back program.
The stock buy back program continues to be a dismal
failure.
10) Streamline operations to bring Damen efficiency ratio in
line with its competitors.
11) Increase the Board of Directors by 2 or more individuals to
add financial sophistication.
I look forward to meeting with you to discuss these issues.
Very truly yours,
/s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Fund, Ltd.
PJD/sr
cc: Ms. Mary Beth Stull
Ms. Carol Diver
Mr. Nick Raino
Mr. Edward Tybor
Ms. Janine Poronsky
Mr. Charles Caputo
Mr. Gerald Gartner
EXHIBIT 4
[ON JACKSON BOULEVARD FUND, LTD. LETTERHEAD]
December 17, 1997
VIA FACSIMILE AND
VIA FEDERAL EXPRESS
Damen Financial Corporation
200 West Higgins Road
Schaumburg, Illinois 60195-3788
Attn: Janine M. Poronsky, Secretary
Re: Stockholders Proposal
Dear Ms. Poronsky:
I am the beneficial owner of 246,400 shares of the common stock,
par value $.01 per share (the "Common Stock") of Damen Financial
Corporation (the "Company"). In addition, I am the President of Jackson
Boulevard Fund, Ltd. ("Jackson Fund") which is the General Partner of
Jackson Boulevard Equities, L.P. ("Jackson Equities"). Jackson Equities
is the beneficial owner of 116,000 shares of the Company's Common Stock.
The record address of Jackson Equities, and myself as it appears on the
Company's books, is 53 West Jackson Boulevard, Chicago, Illinois 60604.
On behalf of myself and Jackson Equities, I hereby give notice
of my intent to introduce the enclosed stockholders resolution (the
"Proposal") at the 1998 annual meeting of stockholders of the Company
pursuant to Article 1, Section 6(b) of the Company's By-laws. I know of
no material interest of either Jackson Equities or myself in such Proposal
aside from our interest as a stockholder in the Company.
As indicated, the undersigned intends to present the Proposal at
the annual meeting of stockholders and requests that the Proposal and the
accompanying Supporting Statement be included in the Company's proxy
materials for the 1998 annual meeting. If the Company elects not to
include the Proposal and Supporting Statement in the Company's proxy
materials, the undersigned intends, in compliance with federal securities
laws, to distribute such materials to stockholders and to solicit proxies
in favor of the Proposal.
Notice is further given pursuant to Article 1, Section 6(c) of
the Company's By-laws that the undersigned intends to nominate himself,
Paul Duggan, and Vincent Cainkar, as nominees for directors to be elected
at the 1998 meeting of stockholders. I shall provide supplementally all
information relating to such nominees that is required to be disclosed in
solicitations for proxies for election of directors, or as otherwise
required, pursuant to Regulation 14a under the Securities Exchange Act of
1934, as amended, including each of such person's written consent to being
named in the Proxy Statement as a nominee and to serving as a director if
elected. This information will be provided to you prior to the time
period set forth in Section 6(c), but I am providing you with advance
notice as a courtesy in connection with your preparation of the Proxy
Statement and Proxy.
Please do not hesitate to call should you have any questions.
Very truly yours,
/s/ Paul Duggan
Paul Duggan
<PAGE>
RESOLUTION
RESOLVED, that the stockholders of the Company, believing that
the value of their investment in the Company can best be maximized through
a sale or merger of the Company, hereby request that the Board of
Directors promptly proceed to effect such a sale or merger by (i)
retaining a leading qualified investment banking firm for the specific
purpose of soliciting offers to acquire the Company by sale or merger and
(ii) establishing a committee of the Board of Directors consisting of all
directors, who are not current or former officers or employees of the
Company or related by blood or marriage to a current or former officer or
employee of the Company, to consider and recommend to the full Board of
Directors for approval the best available offer to acquire the Company by
sale or merger.
SUPPORTING STATEMENT
I believe that in view of the poor historical returns of the
Company and the failure by management to improve the Company's
performance, the best method of maximizing stockholder value is the
creation of a committee of independent directors and the engagement of an
investment banking firm to actively explore the possiblity of the sale or
merger of the Company.
The Company has been "public" for a little over two years and
the indices of stockholder value, efficiency ratio, return on equity,
return on assets and percentage price increase are all well below peer
group averages. The Company has shown a steady downward trend. Net
earnings per share (exclusive of the SAIF special assessment) were $.17
per share for the quarter ended September 30, 1996, as compared to only
$.16 per share for the quarter ended September 30, 1997. The efficiency
ratio for the 12 months ended September 30, 1997, has worsened to 70.84%
from the previous year's 61.11%. Return on average equity for the 12
months ended September 30, 1997, was 3.45% and return on average assets
.75%, results far below industry standards of 10.1% and 1.03%,
respectively. The Company's stock price also continues to stagnate near
book value at a time when the market price of its peer group, capitalized
thrifts with 16% to 20% capital, trade at approximately 130% of book value
and Midwestern banks at approximately 200% of book value. As further
evidence of the poor performance of the Company's Common Stock, the recent
acquisition price of Chicago area thrifts sold during the first three
quarters of 1997, has been as high as 200% of book value and nationally
has averaged 249% of book value for banks with less than $500 million in
assets.
Management has failed to effectively correct these inherent
weaknesses in the Company. The Company's attempt to repurchase its stock
has failed to enhance stockholder value. In addition, management has lost
an opportunity to grant a one time special return of capital (tax-free
dividend). The Internal Revenue Service never approved the Company's
application to make such dividend and could not have approved such
application in my opinion as a result of the Company's filing of a
consolidated return. The consolidated filing was done in spite of my
specific advice not to file a consolidated return so as to allow the
Company to make the tax free distribution.
Management has ignored requests made by several stockholders
including myself to seek outside professional assistance to enhance
stockholder value. Consequently, I recommend out of fairness to
stockholders of the Company that the Board of Directors engage an
investment banker and create a special committee to pursue a sale of the
Company to maximize stockholder value and better serve the interests of
all the stockholders.
EXHIBIT 5
[ON DAMEN FINANCIAL CORPORATION LETTERHEAD]
VIA FACSIMILE AND FEDERAL EXPRESS
December 23, 1997
John M. Klimek, Esq.
Fishman, Merrick, Miller, Genelly,
Springer, Klimek & Anderson, P.C.
90 North LaSalle Street
Suite 3500
Chicago, IL 60602
Dear Mr. Klimek:
This letter is in response to your request for clarification as to why
Damen Financial Corporation (the "Company") cannot accept your client's
nominations for election as directors or permit your client to present his
proposal at the Company's upcoming Annual Meeting of Stockholders (the
"Meeting"). Under Article I, Section 6 of the Company's Bylaws, the
Company cannot accept the nominations or allow the presentation of the
proposal because the Company's records do not reflect that your client is
a stockholder entitled to vote at the Meeting and because your client's
address does not appear in the Company's record of stockholders. The
notice of the nominations is also defective under the Bylaws because it
does not include all information relating to each nominee that is required
to be disclosed in solicitations of proxies for election of directors or
is otherwise required under Regulation 14A under the Securities Exchange
Act of 1934, as amended. Finally, we are not inclined to accept the
shareholder proposal since it is substantially duplicative of another
shareholder proposal which is included in the Company's proxy statement
and which will be presented at the Meeting.
Sincerely,
/s/ Janine M. Poronsky
Janine M. Poronsky
Vice President and Secretary
JMP/mc
EXHIBIT 6
[ON JACKSON BOULEVARD FUND, LTD. LETTERHEAD]
December 30, 1997
VIA FACSIMILE
Ms. Janine Poronsky
Damen Financial Corp.
200 West Higgins Road
Schaumburg, IL 60195-3780
Dear Ms. Poronsky:
On December 17, 1997, we sent you a letter (Exhibit 1) with
attachments regarding stockholder proposals to be considered at the 1998
annual meeting. You initially rejected our proposal, and later wrote Mr.
Klimek (Exhibit 2) details regarding the rejection.
We are in receipt of your letter of December 23, 1997 sent to
Mr. John M. Klimek, Esq. In this letter you state that "Finally, we are
not inclined to accept the shareholder proposal since it is substantially
duplicative of another shareholder proposal which is included in the
company's proxy statement and which will be presented at the meeting."
We do not agree with your statement that my shareholder proposal
is substantially duplicative of another shareholder proposal (the
Sonnenberg proposal). I am inserting my resolution below. I further have
highlighted in bold the possible portion of my statement which might be
considered duplicative.
RESOLVED, that the stockholders of the Company, believing that
the value of their investment in the Company can best be maximized through
a sale or merger of the Company, hereby request that the Board of
Directors promptly proceed to effect such a sale or merger by (i)
retaining a leading qualified investment banking firm for the specific
purpose of soliciting offers to acquire the Company by sale or merger and
(ii) establishing a committee of the Board of Directors consisting of all
directors, who are not current or former officers or employees of the
Company or related by blood or marriage to a current or former officer or
employee of the Company, to consider and recommend to the full Board of
Directors for approval the best available offer to acquire the Company by
sale or merger.
Mr. Sonnenberg's resolution of September 22, 1997 does indeed
ask that Damen Financial engage the services of a leading investment
banking firm. However, the remainder of my resolution is not duplicative
and, accordingly, should be presented at Damen's annual meeting in
January, 1998. If you choose not to accept my resolution in whole, I
would offer the following alternative.
RESOLVED, that the stockholders of the Company, believing that
the value of their investment in the Company can best be maximized through
the sale or merger of the Company, hereby request that the Board of
Directors promptly proceed to effect such a sale or merger by establishing
a committee of the Board of Directors consisting of all directors, who are
not current or former employees of the Company or related by blood or
marriage to a current or former officer or employee of the Company, to
consider and recommend to the full Board of Directors for approval the
best available offer to acquire the Company by sale or merger.
This edited resolution is in no way duplicative with the
resolution of Mr. Sonnenberg. Mr. Sonnenberg's proposal does not provide
for a committee of the Board of Directors as my proposal does. We intend
on raising my proposal or my proposal as amended at the stockholder's
meeting. If you choose not to mail my proposal to the eligible
shareholders, please provide me with a shareholder list so I may solicit
proxies for my proposal.
In response to this letter, please call my lawyer, Mr. John
Klimek, at (312) 726-1224 or write him at Fishman, Merrick, Miller,
Genelly, Springer, Klimek & Anderson, PC, 30 North LaSalle Street, Suite
3500, Chicago, IL 60602.
Very truly yours,
/s/ Paul J. Duggan
Paul J. Duggan, shareholder
Damen Financial Corporation
EXHIBIT 7
[ON JACKSON BOULEVARD FUND, LTD. LETTERHEAD]
December 30, 1997
VIA FACSIMILE
Ms. Janine Poronsky
Damen Financial Corp.
200 West Higgins Road
Schaumburg, IL 60195-3780
Dear Ms. Poronsky:
Pursuant to Rule 14a-7, promulgated under the Securities
Exchange Act of 1934, as amended, we hereby request you to provide the
undersigned, at this address, a list of security holders of Damen
Financial Corporation, or in the alternative, to mail the materials I plan
on sending to the Security holders. Note that pursuant to Rule 14a-7 you
are required to deliver to me within 5 business days of your receipt of
this request, notification of whether you have elected to mail my
soliciting materials or provide a list of security holders. Note that you
are also required under Rule 14a-7 to provide us with certain information
with respect to the number of record holders and beneficial holders of the
Company as well as the estimate cost of mailing our soliciting materials.
Very truly yours,
/s/ Paul J. Duggan
Paul J. Duggan, an individual
A shareholder
/s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Fund, Ltd.
General Partner of
Jackson Boulevard Equities, L.P.
A shareholder
PJD/sr
Enclosure
EXHIBIT 8
[ON JACKSON BOULEVARD FUND, LTD. LETTERHEAD]
December 30, 1997
VIA FACSIMILE
Ms. Janine Poronsky
Damen Financial Corp.
200 West Higgins Road
Schaumburg, IL 60195-3780
Dear Ms. Poronsky:
I am in receipt of the Notice of Annual Meeting of Stockholders
for Damen Financial Corporation. This notice was mailed by D.F. King and
Company, Inc. (your agent) on December 22, 1997.
Pursuant to Article I Section 6(c) of the bylaws of Damen
Financial Corporation, I am hereby submitting notice that I propose to
nominate and hereby nominate the following two individuals as eligible for
election to the Board of Directors of Damen Financial Corporation.
1. Paul J. Duggan
2. Vincent Cainkar
Pursuant to your Bylaws, I am including the following for each
individual:
Written consent to being named in the proxy statement as a nominee
and to serving as a director if elected.
Biographies of Paul Duggan and Vincent Cainkar which comply with the
information requirements of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended.
The name and addresses as they appear in the corporation books of
such stockholder and the class and number of shares of the
corporation's capital stock that is beneficially owned by each
stockholder.
As you know, not only do I individually own 246,400 shares of
Damen Financial Corporation common stock held in my name for my account,
but additionally, I vote 116,000 shares of Damen financial Corporation
common stock for the account of Jackson Boulevard Equities, L.P. This
voting power arises from my Presidency of Jackson Boulevard Fund, Ltd.,
the general Partner of Jackson Boulevard Equities, L.P. All these shares
are held in street name by Bear Stearns Securities Corp., One Metrotech
Center North, 4th Floor, Brooklyn, NY 11201-3859. I am enclosing
letters from Bear Stearns which indicate my ownership and copies of proxy
forms received from Bear Stearns as further proof.
Very truly yours,
/s/ Paul J. Duggan
Paul J. Duggan, an individual
/s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Fund, Ltd.
General Partner of
Jackson Boulevard Equities, L.P.
PJD/sr
Enclosure
EXHIBIT 9
[ON DAMEN FINANCIAL CORPORATION LETTERHEAD]
VIA FACSIMILE AND FEDERAL EXPRESS
January 2, 1998
John M. Klimek, Esq.
Fishman, Merrick, Miller, Genelly,
Springer, Klimek & Anderson, P.C.
90 North LaSalle Street
Suite 3500
Chicago, IL 60602
Dear Mr. Klimek:
Damen Financial Corporation (the "Company") is in receipt of the letters
from your client, Paul J. Duggan, to the Company dated December 17, 1997
and December 30, 1997 purporting to nominate Mr. Duggan and Vincent
Cainkar for election as directors at the Company's upcoming Annual Meeting
of Stockholders. The Company is also in receipt of Mr. Duggan's letters
to the Company dated December 17, 1997 and December 30,1997 regarding his
intention to present a stockholder proposal at the Meeting. I am writing
to inform you that the Company cannot accept such nominations for election
as directors or permit the presentation of such proposal at the Meeting.
As previously noted, under Article I, Section 6 of the Company's Bylaws,
the Company cannot accept the nominations or allow the presentation of the
proposal because the Company's records do not reflect that your client is
a stockholder entitled to vote at the Meeting and because your client's
name and address do not appear in the Company's record of stockholders.
Sincerely,
/s/ Janine M. Poronsky
Janine M. Poronsky
Vice President and Secretary
cc: Paul J. Duggan
JMP/mc
EXHIBIT 10
[ON LETTERHEAD OF
FISHMAN, MERRICK, MILLER, GENELLY, SPRINGER, KLIMEK & ANDERSON, P.C.]
January 5, 1998
VIA FACSIMILE AND
VIA FEDERAL EXPRESS
Ms. Janine Poronsky
Damen Financial Corporation
200 West Higgins Road
Schaumburg, IL 60195-3788
Dear Ms. Poronsky:
I am in receipt of your letter dated January 2, 1997, wherein
you have indicated Damen Financial Corporation's refusal to allow Mr.
Duggan to make his nominations for the election of directors and to
present his shareholder proposal at the meeting of shareholders to be held
on January 27, 1998. The sole reason you have given for the Company's
failure to allow the nomination and proposal is the fact that the
Company's records do not reflect that Mr. Duggan is a stockholder entitled
to vote at the meeting and because Mr. Duggan's name and address do not
appear in the Company's record. In light of the fact that we have
provided the Company with a letter from Bear Stearns indicating that Paul
J. Duggan is the beneficial owner of 246,400 shares of the Company's
common stock, the Company's position is completely unfounded, in violation
of its own by-laws, and is a transparent attempt to delay if not
completely void Mr. Duggan's rights as a shareholder.
Article I, Section 6(b) of the Company's by-laws provides that
business may be brought before a shareholders meeting "by any stockholder
of the Company who is entitled to vote with respect thereto and who
complies with the notice procedure set forth in this Section 6(b)".
Nowhere do the by-laws provide that such shareholder must be a shareholder
of record rather than a beneficial holder of the Company's common stock.
The only requirement is that such shareholder be entitled to vote at such
meeting. Mr. Duggan received a Proxy Statement from Bear Stearns relating
to the meeting as further proof of his status as a shareholder and he is
entitled to vote at the meeting. Note that the notice provisions of
Section 6(b) require that the shareholder provide "the class and number of
shares of the Corporation's capital stock that are beneficially owned by
such stockholder" (emphasis added). The by-laws themselves contemplate a
beneficial owner of such shares having the right to bring business before
the meeting of shareholders. The notice provision also requires, as you
indicated, that a shareholder provide its name and address as they appear
on the Corporation's books. However, such notice has been complied with
by Mr. Duggan by indicating that his shares are held in street name by
Bear Stearns.
Please notify us by the end of business on Wednesday, January 7,
1998, whether you intend to change your position and allow Mr. Duggan to
present his proposal and make his nominations for directors. As Mr.
Duggan's good faith compliance with the Company's by-laws, and other
rules, have been met with delay and obstruction on the Company's part, in
the event the Company does not change its position, we will have no choice
but to pursue legal remedies available to Mr. Duggan to enforce his rights
as a shareholder of the Company.
Mr. Duggan has also made a request pursuant to Rule 14a-7 for a
shareholders list or, in lieu thereof, the Company's agreement to mail out
proxy materials he intends to distribute to shareholders. The Company's
obligations under Rule 14a-7 are wholly independent of its determination
of whether or not Mr. Duggan's shareholder proposal or nominations may be
brought before the shareholders meeting. The Company's response to Mr.
Duggan, under Rule 14a-7, is due by the close of business on Wednesday,
January 7, 1998. Note that Section 14a-7 specifically applies to any
record or beneficial holder of securities. Again, if a response in
compliance with Rule 14a-7 is not timely received, we will have no choice
but to pursue all legal remedies available to Mr. Duggan including
remedies provided under the Federal Securities Laws.
Very truly yours,
/s/ John M. Klimek
John M. Klimek
JMK/db
EXHIBIT 11
[ON DAMEN FINANCIAL CORPORATION LETTERHEAD]
VIA FACSIMILE AND FEDERAL EXPRESS
January 7, 1998
John M. Klimek, Esq.
Fishman, Merrick, Miller, Genelly,
Springer, Klimek & Anderson, P.C.
90 North LaSalle Street
Suite 3500
Chicago, IL 60602
Dear Mr. Klimek:
Damen Financial Corporation (the "Company") is in receipt of your letter
dated January 5, 1998 in which you argued that your client's attempted
director nominations and stockholder proposal were in compliance with the
Company's bylaws. However, as was made very clear in my letters dated
December 23, 1997 and January 2, 1998, the Company cannot accept the
nominations or allow the presentation of the proposal because they do not
comply with the Company's bylaws.
The Company's response to the Rule 14a-7 request is begin made directly to
the parties who made such request.
Sincerely,
/s/ Janine M. Poronsky
Janine M. Poronsky
Vice President and Secretary
cc: Paul J. Duggan
JMP/mc
EXHIBIT 12
[ON SILVER, FREEDMAN & TAFF, L.L.P. LETTERHEAD]
January 8, 1998
Vincent Cainkar
6215 West 79th Street, Suite 2A
Burbank, Illinois 60459-1102
Dear Mr. Cainkar:
In accordance with your discussions with Al Baldermann, I have
enclosed drafts of a settlement agreement and joint press release which
will serve to settle the dispute between the Paul Duggan group and Damen
Financial Corporation. We believe these materials address all of the
issues raised in your discussions with Al Baldermann (note particularly
Section 5 of the settlement agreement), except as follows:
Tax free return of capital. As Al may have indicated, Grant
Thornton, which has counseled Damen with respect to its ability to make
tax free distributions and represented it on its related IRS filings, has
advised Damen that it may not be in a position to make any tax free
distributions. Accordingly, the materials enclosed herewith indicate that
Damen will make a special dividend of at least $1.50 per share but are
silent as to the tax treatment.
Increase in quarterly dividend. In your correspondence with Al,
you indicated that the quarterly dividend should be increased in stages
over the next three quarters from $.06 to $.15 per share. While Damen
certainly agrees that this scheme could have a favorable impact on its
stock price, it is concerned about committing to a specific level of
dividends in advance, especially since the terms of the settlement
agreement will probably become public through its inclusion in SEC
filings. Accordingly, Damen thought it more prudent to commit instead to
increasing its quarterly dividend payout ratio to 90% or more of post-tax
operating income.
If you have any questions, or any comments on these matters,
please do not hesitate to call.
Sincerely,
/s/ Kip A. Weissman
Kip A. Weissman, P.C.
cc: Mary Beth Stull
Albert Baldermann
Paul Duggan
