CUSIP No. 235906104 Page 1 of 62 Pages
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 10)
DAMEN FINANCIAL CORPORATION
(Name of Issuer)
Common Stock, $.01 par value
(Title of Class of Securities)
235906104
(CUSIP Number)
Paul J. Duggan
Jackson Boulevard Capital Management, Ltd.
53 W. Jackson
Chicago, Illinois 60604
(312) 294-6440
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 30, 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>
Page 2 of 62 pages
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
400 shares
Number of
Shares 8 Shared Voting Power
Beneficially 266,200 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 400 shares
10 Shared Dispositive Power
266,200 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
266,600 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
9.5%
14 Type of Reporting Person
IN
<PAGE>
Page 3 of 62 pages
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Jackson Boulevard Capital Management, 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 92,200 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
92,200 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
92,200 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
3.3%
14 Type of Reporting Person
CO
<PAGE>
Page 4 of 62 pages
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 60,622 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
60,622 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
60,622 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
2.1%
14 Type of Reporting Person
PN
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Page 5 of 62 pages
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 31,578 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
31,578 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
31,578 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
1.1%
14 Type of Reporting Person
PN
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Page 6 of 62 pages
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Jackson Offshore 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
Tortolla, British Virgin Islands
7 Sole Voting Power
0 shares
Number of
Shares 8 Shared Voting Power
Beneficially 0 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 0 shares
10 Shared Dispositive Power
0 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
0 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
0.0%
14 Type of Reporting Person
CO
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Page 7 of 62 pages
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Jackson Boulevard Partners
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
Tortolla, British Virgin Islands
7 Sole Voting Power
174,000 shares
Number of
Shares 8 Shared Voting Power
Beneficially 0 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 174,000 shares
10 Shared Dispositive Power
0 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
174,000 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
6.2%
14 Type of Reporting Person
PN
<PAGE>
Page 8 of 62 pages
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
Vincent Cainkar
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: PF
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
100 shares
Number of
Shares 8 Shared Voting Power
Beneficially 4100 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 100 shares
10 Shared Dispositive Power
4100 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,200 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
0.1%
14 Type of Reporting Person
IN
<PAGE>
Page 9 of 62 pages
1 Name of Reporting Person
S.S. or I.R.S. Identification Number of Above Person (optional)
J. Dennis Huffman
2 Check The Appropriate Box If a Member of a Group (a)[X]
(b)[ ]
3 SEC Use Only
4 Source of Funds: PF
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
3,000 shares
Number of
Shares 8 Shared Voting Power
Beneficially 0 shares
Owned By
Each Reporting 9 Sole Dispositive Power
Person With 3,000 shares
10 Shared Dispositive Power
0 shares
11 Aggregate Amount Beneficially Owned by Each Reporting Person
3,000 shares
12 Check Box If The Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13 Percent of Class Represented By Amount in Row (11)
0.1%
14 Type of Reporting Person
IN
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Page 10 of 62 pages
This is Amendment No. 10 to the Schedule 13D filed jointly by Paul J.
Duggan, Jackson Boulevard Capital Management, Ltd. (formerly known as Jackson
Boulevard Fund, Ltd.) ("Jackson Capital"), Jackson Boulevard Equities, L.P.
("Jackson Equities"), Jackson Boulevard Investments, L.P. ("Jackson
Investments"), Jackson Offshore Fund, Ltd. ("Jackson Offshore") (as of Amendment
No. 6 to such Schedule 13D), Vincent Cainkar (as of Amendment No. 7 to such
Schedule 13D), Jackson Boulevard Partners ("Jackson Partners") and J. Dennis
Huffman (as of Amendment No. 8 to such Schedule 13D) (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:
Item 1. Security and Issuer
This Schedule 13D is being filed jointly by Paul J. Duggan, Vincent
Cainkar, J. Dennis Huffman, Jackson Capital, Jackson Equities, Jackson
Investments, Jackson Offshore and Jackson Partners 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.
Item 2. Identity and Background
(a)-(c) Jackson Capital and Jackson Offshore are Illinois
corporations. Jackson Equities and Jackson Investments are Illinois limited
partnerships. Jackson Offshore is a Tortolla, British Virgin Islands,
corporation. Jackson Partners is an Illinois general partnership. The address of
the principal business and the principal office of Jackson Capital, Jackson
Equities, Jackson Partners and Jackson Investments is 53 West Jackson Boulevard,
Suite 400, Chicago, Illinois 60604. The address of the principal business and
the principal office of Jackson Offshore is 31 Kildare Street, Dublin 2,
Ireland.
The principal business of Jackson Capital is serving as the
general partner of Jackson Equities, Jackson Investments and other
investment-oriented limited partnerships. The principal business of Jackson
Equities, Jackson Investments Jackson Partners and Jackson Offshore is buying
and selling securities for investments, including in particular securities
related to financial industries (including banks and thrifts).
Jackson Capital is the sole general partner of Jackson Equities and
Jackson Investments. Mr. Duggan is the sole stockholder, sole executive officer
and sole director of Jackson Capital. Mr. Duggan controls (through Jackson
Capital) all decisions regarding voting and investment of the shares of the
Issuer held by Jackson Offshore. Mr. Duggan, David Blair and Peter Poole are the
directors of Jackson Offshore; Mr. Blair is the managing director of Jackson
Offshore. The business address of Mr. Blair and Mr. Poole is 31 Kildare Street,
Dublin 2, Ireland. Mr. Blair's principal occupation is that of certified public
accountant. Mr. Poole's principal occupation is that of money manager with
Rathbone
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Page 11 of 62 pages
Management Services, a British Virgin Islands corporation. Mr. Duggan's
principal occupation is money manager (through Jackson Capital) and his business
address is 53 West Jackson Boulevard, Suite 400, Chicago, Illinois 60604.
Jackson Capital 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 only partners of Jackson Partners are Paul J. Duggan and Deborah
Duggan, Paul J. Duggan's spouse, both of whom are general partners. Deborah
Duggan's principal occupation is serving as a general partner of Jackson
Partners and providing accounting, administrative and managerial services for
Jackson Partners. Deborah Duggan's business address is 53 West Jackson
Boulevard, Suite 400, Chicago, Illinois 60604.
Vincent Cainkar is an individual whose principal occupation is the
practice of law, particularly as bound counsel. Mr. Cainkar currently serves as
Attorney for the City of Burbank, Village of Evergreen Park, City of Hickory
Hills, Village of McCook, Stickney Township and other local governmental
entities. Mr. Cainkar's residential address is 8206 South Mobile, Burbank, IL
60459. Mr. Cainkar does not have any ownership interest in, nor does he serve as
a partner, director or officer of Jackson Capital, Jackson Equities, Jackson
Investments, or Jackson Offshore.
J. Dennis Huffman is an individual whose principal occupation is
serving as a partner in DHK Development Corp., a developer and leasing agent for
commercial and residential real estate. Mr. Huffman also is a trader on the
floor of the Chicago Board of Trade, trading U.S. Treasury Bond contracts. Mr.
Huffman's residential address is 10549 South Talman Avenue, Chicago, IL 60655.
Mr. Huffman does not have any ownership interest in, nor does he serve as a
partner, director or officer of Jackson Capital, Jackson Investments, or Jackson
Offshore. Mr. Huffman has a non-voting limited partnership interest in Jackson
Equities.
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, Mr. Cainkar,
Mr. Huffman, Jackson Capital, Jackson Equities, Jackson Offshore Jackson
Partners or Jackson Investments has been convicted in a criminal proceeding
(excluding traffic violations), and none of Mr. Duggan, Mr. Cainkar, Jackson
Capital, Jackson Equities, Jackson Offshore, Jackson Partners 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 and Mr. Cainkar are citizens of the United States.
<PAGE>
Page 12 of 62 pages
Item 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.
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Page 13 of 62 pages
By letter dated August 18, 1998, Mr. Duggan submitted a notice of
intent to introduce a stockholders' proposal at the 1999 annual meeting of
stockholders of the Issuer. A copy of that letter is attached as Exhibit 13. By
letter dated August 24, 1998, Mr. Duggan expressed to the Issuer his
disappointment with the Issuer's business situation and suggested courses of
action. A copy of that letter is attached as Exhibit 14.
By letter dated November 16, 1998, Mr. Duggan submitted a notice of
proposal to nominate Paul J. Duggan, Vincent Cainkar and J. Dennis Huffman for
election to the Board of Directors of the Issuer. A copy of the letter and the
supporting materials thereto is attached as Exhibit 15. Also by letter dated
November 23, 1998, Mr. Duggan requested, pursuant to Section 220 of the Delaware
General Corporation Law, that the Issuer provide him with a stockholder list and
certain other related materials. A copy of that letter is attached as Exhibit
16.
By letter dated November 27, 1998, the Issuer responded to Mr.
Duggan's notice of proposal to nominate directors, requesting certain additional
information from the nominees through a questionnaire prepared by the Issuer. A
copy of the letter is attached as Exhibit 17. On December 10, 1998, completed
copies of the questionnaire where delivered by each of the director nominees to
the Issuer. Copies of these questionnaires are attached as Exhibit 18.
By letter dated December 3, 1998, the Issuer responded to Mr. Duggan's
request for a stockholder list and additional information, asserting that the
request was governed by Rule 14a-7 under the Securities Exchange Act of 1934
(the "Exchange Act") and requesting an affidavit from Mr. Duggan pursuant to
Rule 14a-7(c). A copy of the letter is attached as Exhibit 19. By letter dated
December 7, 1998, Mr. Duggan reiterated his demand for a stockholder list and
certain other information, pursuant to Section 220 of the Delaware General
Corporation Law and Rule 14a-7 under the Exchange Act; attached to such letter
was an affidavit from Mr. Duggan containing certain representations pursuant to
Rule 14a-7(c). A copy of the letter and affidavit is attached as Exhibit 20.
By letter dated December 10, 1998, the Issuer responded to Mr.
Duggan's letter dated December 7, 1998, asserting that the Issuer would advise
Mr. Duggan on December 15, 1998 as to whether it provide the requested materials
at that time to Mr. Duggan or whether it would mail materials from Mr. Duggan to
stockholders. A copy of the letter is attached as Exhibit 21. By letter dated
December 11, 1998, Mr. Duggan responded to the Issuer's letter dated December
10, 1998, asserting that pursuant to Section 220 of the Delaware General
Corporation Law, Mr. Duggan would be available on December 15, 1998 to receive
the materials he requested in his letter dated December 7, 1998 and would submit
to the Issuer at that time a check to cover the Issuer's expenses in producing
such material. A copy of this letter is attached as Exhibit 22.
By facsimile correspondence dated December 14, 1998, the Issuer
responded to Mr. Duggan's December 11, 1998 letter, asserting that it would
provide Mr. Duggan with the
<PAGE>
Page 14 of 62 pages
shareholder materials as required by Rule 14a-7(a)(2)(ii) on December 15, 1998.
A copy of that letter is attached as Exhibit 23.
On December 22, 1998, Mr. Duggan and the Committee to Enhance
Shareholder Value (the "Committee"), whose members include Mr. Duggan, Vincent
Cainkar, J. Dennis Huffman, Jackson Boulevard Partners, Jackson Boulevard
Equities, L.P., Jackson Boulevard Investments, L.P., Jackson Boulevard Capital
Management, Ltd., and Jackson Offshore Fund, Ltd., filed a preliminary proxy
statement on Schedule 14A ("Preliminary Proxy Statement") with the U.S.
Securities and Exchange Commission ("SEC"). A copy of the Preliminary Proxy
Statement is attached as Exhibit 24. On December 22, 1998, a letter to the
Issuer by representatives of the Paul J. Duggan and the Committee informing the
Issuer of the filing of the Preliminary Proxy Statement. A copy of this letter
is attached as Exhibit 25.
On December 23, 1998, Paul J. Duggan and the Committee prepared a
letter to the stockholders of the Issuer urging shareholders to refrain from
completing any proxy cards that may be sent to them by the Issuer until they
had reviewed the proxy statement to be sent to them by Mr. Duggan and the
Committee. This letter was filed with the SEC on December 24, 1998. This letter
has not yet been delivered to stockholders of the Issuer . A copy of this letter
is attached as Exhibit 26.
On December 24, 1998, the Issuer issued a press release announcing
its intention to change the date of the Issuer's annual meeting of stockholders
from January 25, 1999 to February 26, 1999. A copy of this press release is
attached as Exhibit 27. On December 30, 1998, Paul J. Duggan filed a complaint
against the Issuer in Delaware Chancery Court, asserting that the attempt to
change the date of the meeting is invalid and in violation of the law. A copy of
this complaint is attached as Exhibit 28.
On December 31, 1998, in response to comments from the SEC, Mr. Duggan
and the Committee filed Amendment No. 1 to the Preliminary Proxy Statement. This
Amendment No. 1 is attached as Exhibit 29. On January 6, 1999, Mr. Duggan and
the Committee prepared a letter to the stockholders of the Issuer to be
attached to the definitive proxy statement of Mr. Duggan and the Committee when
the proxy statement is sent to stockholders. This letter was filed with the SEC
on January 6, 1999. This letter, which has not yet been delivered to
stockholders of the Issuer, is attached as Exhibit 30.
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
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Page 15 of 62 pages
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.
Item 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 Capital, Jackson Equities, Jackson Investments and Jackson
Offshore, Mr. Duggan beneficially owns 266,600 of the 273,800 shares of the
Common Stock owned by members of the Group, constituting approximately 9.5% of
the issued and outstanding shares of the Common Stock, based on the number of
outstanding shares (2,820,154) reported on the Issuer's Annual Report on Form
10-K filed on Dec. 30, 1998. Jackson Capital beneficially owns only the 92,200
shares held in the names of Jackson Equities and Jackson Investments,
constituting approximately 3.3% of the issued and outstanding shares of the
Common Stock. Jackson Equities beneficially owns only the 60,622 shares of the
Common Stock it holds in its own name, constituting approximately 2.1% of the
issued and outstanding shares of the Common Stock. Jackson Investments
beneficially owns only the 31,578 shares of the Common Stock it holds in its own
name, constituting approximately 1.1% of the issued and outstanding shares of
the Common Stock. Jackson Partners Beneficially owns only the 174,000 shares of
the Common Stock it holds in itw own name, consituting a[proximately 6.2 % of
the issued & Putstanding shares of the COmmon Stock. After the sale of 29,800
shares of the Common Stock on December 2, 1998 (as reported in Item 5(c) below),
Jackson Offshore no longer beneficially owns any of the Common Stock. None of
Mr. Duggan, Jackson Capital, Jackson Equities, Jackson Investments or Jackson
Offshore otherwise beneficially owns any shares of the Common Stock. Vincent
Cainkar beneficially owns 4,200 shares of the Common Stock, including 100 shares
of Common Stock held in his own name and 4,100 shares of Common Stock held
jointly by him and Cathy M. Cainkar, constituting 0.1% of the issued and
outstanding shares of Common Stock. J. Dennis Huffman beneficially owns 3000
shares of Common Stock, all of which are held in his own name, constituting 0.1%
of the issued and outstanding shares of Common Stock.
(b) With respect to the shares described in (a) above, Mr. Duggan has
sole voting and investment power with regard to the 400 shares held by Mr.
Duggan. Mr. Duggan, Jackson Capital, Jackson Equities, and Jackson Investments
have shared voting and investment power with regard to the 92,200 shares held by
Jackson Equities and Jackson Investments. Mr. Duggan and Deborah Duggan, Mr.
Duggan's spouse, have shared voting and investment power with regard to the
174,000 shares held by Jackson Partners. Deborah Duggan's principal occupation
is serving as a general partner of Jackson Partners and providing accounting,
administrative and managerial services for Jackson Partners. Deborah Duggan's
business address is 53 West Jackson Boulevard, Suite 400, Chicago, Illinois
60604. Mr. Cainkar has sole voting and investment power with regard to the 100
shares held in his own name and has shared voting and investment power with
respect to the 4,100 shares held jointly by him and Cathy M. Cainkar. Cathy M.
Cainkar is an individual whose residential address is 8206 South Mobile,
Burbank, IL 60459. Mrs. Cainkar does not have any ownership interest
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Page 16 of 62 pages
in, nor does he serve as a partner, director or officer of Jackson Capital,
Jackson Equities or Jackson Offshore. Mrs. Cainkar has a non-voting limited
partnership interest in Jackson Investment. During the past five years, neither
Mrs. Cainkar nor Mrs. Duggan has been convicted in a criminal proceeding
(excluding traffic violations), or has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
either 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.
(c) The following purchases of the Common Stock are the only
transactions in the Common Stock made by J. Dennis Huffman during the past sixty
days, all of which were made in open market purchases on the Nasdaq National
Market System:
- -------------- ----------------------------------- -----------------------------
DATE NUMBER OF SHARES COST PER SHARE
- -------------- ----------------------------------- -----------------------------
12/3/98 1,000 $14 3/4
- -------------- ----------------------------------- -----------------------------
12/3/98 1,000 $15
- -------------- ----------------------------------- -----------------------------
The following purchase of the Common Stock is the only transactions in
the Common Stock made by Jackson Equities during the past sixty days, which
purchase was made from Jackson Offshore at a market-determined price:
- -------------- ------------------------------------- ---------------------------
DATE NUMBER OF SHARES COST PER SHARE
- -------------- ------------------------------------- ---------------------------
12/2/98 4,000 $14 1/2
- -------------- ------------------------------------- ---------------------------
The following purchase of the Common Stock is the only transactions in
the Common Stock made by Jackson Investments during the past sixty days, which
purchase was made from Jackson Offshore at a market-determined price:
- -------------- ------------------------------------- ---------------------------
DATE NUMBER OF SHARES COST PER SHARE
- -------------- ------------------------------------- ---------------------------
12/2/98 4,000 $14 1/2
- -------------- ------------------------------------- ---------------------------
The following sales of the Common Stock are the only transactions in
the Common Stock made by Jackson Offshore during the past sixty days:
- -------------- ------------------------------------- ---------------------------
DATE NUMBER OF SHARES COST PER SHARE
- -------------- ------------------------------------- ---------------------------
12/2/98 23,800 $14 1/2
- -------------- ------------------------------------- ---------------------------
12/2/98 4,000 $14 1/2
- -------------- ------------------------------------- ---------------------------
12/2/98 2,000 $14 1/2
- -------------- ------------------------------------- ---------------------------
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Page 17 of 62 pages
The first of the transactions by Jackson Offshore listed above was
made in open market sales on the Nasdaq National Market System. The second
transaction listed above was a sale made to Jackson Equities at a
market-determined price. The third transaction listed above was a sale made to
Jackson Investments at a market-determined price.
Except as set forth below, the following sale of the Common Stock is
the only transaction in the Common Stock made by Paul J. Duggan during the past
sixty days, which sale was made in open market sales on the Nasdaq National
Market System:
- ---------------------- ----------------------------- ---------------------------
DATE NUMBER OF SHARES COST PER SHARE
- ---------------------- ----------------------------- ---------------------------
12/2/98 72,000 $14 1/2
- ---------------------- ----------------------------- ---------------------------
Mr. Duggan also transferred 174,000 shares of the Common Stock held in
his own name to Jackson Partners on December 2, 1998. No consideration was paid
by Jackson Partners in this transaction.
Item 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.*
<PAGE>
Page 18 of 62 pages
12 Letter from Kip A. Weissman, P.C. to Vincent Cainkar, dated January 8,
1998.*
13 Letter from Paul J . Duggan to Janine M. Poronsky, dated August 18, 1998.*
14 Letter from Paul J . Duggan to Mary Beth Poronsky Stull, dated August 24,
1998.*
15. Letter from Paul J. Duggan to Janine M. Poronsky, dated November 16, 1998.*
16. Letter from Paul J. Duggan to Janine M. Poronsky, dated November 23, 1998.*
17. Letter from Janine M. Poronsky to Paul J. Duggan, dated November 27, 1998.*
18. Completed Questionnaires from J. Dennis Huffman, Paul J. Duggan and Vincent
Cainkar, delivered to Damen Financial Corporation on December 10, 1998.*
19. Letter from Janine M. Poronsky to Paul J. Duggan, dated December 3, 1998.*
20. Letter from Paul J. Duggan to Janine M. Poronsky, dated December 7, 1998.*
21. Letter from Janine M. Poronsky to Paul J. Duggan, dated December 10, 1998.*
22. Letter from Paul J. Duggan to Janine M. Poronsky, dated December 11, 1998.*
23. Correspondence by facsimile from Janine M. Poronsky to Paul J. Duggan, dated
December 14, 1998.*
24. Preliminary Proxy Statement filed with the SEC on December 22, 1998 by Paul
J. Duggan and the Committee to Enhance Shareholder Value.*
25. Letter to Mary Beth Poronsky-Stull, dated December 22, 1998.* 26.
Letter from Paul J. Duggan and the Committee to Enhance Shareholder
Value to the shareholders of the Company filed with the SEC on December 24,
1998.*
27. Press release from Damen Financial Corporation dated December 24, 1998.
28. Complaint filed by Paul J. Duggan on December 30, 1998.
29. Amendment No. 1 to Preliminary Proxy Statement, filed with the SEC on
December 31, 1998.
30. Letter from Paul J. Duggan and the Committee to Enhance Shareholder
Value to the shareholders of the Company, filed with the SEC on January 6,
1999.
<PAGE>
Page 19 of 62 pages
*Filed as part of the Original 13D.
<PAGE>
Page 20 of 62 pages
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: January 8, 1998
/s/ Paul J. Duggan
Paul J. Duggan, an individual
Jackson Boulevard Capital Management, Ltd.
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Equities, L.P.
By: Jackson Boulevard Capital
Management, Ltd., General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Investments, L.P.
By: Jackson Boulevard Capital Management, Ltd.,
General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Offshore Fund, Ltd.
By: /s/ Paul J. Duggan
Paul J. Duggan
/s/ Vincent Cainkar
Vincent Cainkar, an individual
<PAGE>
Page 21 of 62 pages
/s/ J. Dennis Huffman
J. Dennis Huffman, an individual
Page 22 of 62 pages
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: December 12, 1998
/s/ Paul J. Duggan
Paul J. Duggan, an individual
Jackson Boulevard Capital Management, Ltd.
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Equities, L.P.
By: Jackson Boulevard Capital
Management, Ltd., General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
Jackson Boulevard Investments, L.P.
By: Jackson Boulevard Capital Management, Ltd
General Partner
By: /s/ Paul J. Duggan
Paul J. Duggan, President
/s/ Vincent Cainkar
Vincent Cainkar, an individual
/s/ J. Dennis Huffman
J. Dennis Huffman, an individual
Page 23 of 62 pages
EXHIBIT 27
(c) 1999 PR Newswire Association Inc. All rights reserved.
Damen Financial Corporation Announces Change of Annual Meeting Date
12:32 EST
WORD COUNT: 101
SCHAUMBURG, Ill. Dec. 24 /PRNewswire/ -- Damen Financial Corporation (Nasdaq:
DFIN), a $230 million asset bank holding company, headquartered in Schaumburg,
Ill., announced today that it has changed the date of its annual meeting for the
fiscal year ended September 30, 1998 from January 25, 1999 to February 26, 1999.
Damen Financial Corporation is the holding company for Damen National Bank,
which is headquartered in Schaumburg, Ill. The Bank serves the communities in
its market areas through offices located in Schaumburg, Chicago and Burbank,
Ill.
SOURCE: Damen Financial Corporation
CONTACT: Janine M. Poronsky, EVP of Damen Financial Corporation, 847-882-5320
Page 24 of 62 pages
EXHIBIT 28
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
PAUL J. DUGGAN, )
)
Plaintiff, )
)
v. ) C.A. No. _________
)
DAMEN FINANCIAL CORPORATION, )
a Delaware corporation, CAROL )
A. DIVER, NICHOLAS J. RAINO, )
MARY BETH PORONSKY STULL, )
EDWARD R. TYBOR, JANINE M. )
PORONSKY, CHARLES J. CAPUTO, )
and ALBERT C. BALDERMANN,)
)
Defendants. )
VERIFIED COMPLAINT FOR
DECLARATORY AND INJUNCTIVE RELIEF
Plaintiff Paul J. Duggan ("Duggan"), by his undersigned attorneys, for
his complaint against defendants, alleges upon knowledge with respect to himself
and his own acts and upon information and belief as to all other matters, as
follows:
NATURE OF ACTION
1. This action is brought by plaintiff for injunctive and declaratory
relief arising out of breaches of fiduciary duty under Delaware law by the
individual defendants - the directors of Damen Financial Corporation ("DFC" or
the "Company"). The defendant directors have taken steps, without offering any
justification (let alone a compelling one), designed to impermissibly manipulate
the corporate election machinery and delay and impede the exercise of voting
rights by Duggan and other DFC stockholders by changing the previously
established date of DFC's 1999 annual meeting of stockholders from January 25,
1999 to February 26, 1999, and also changing the previously established record
date for the 1999 annual meeting from December 9, 1998 to January 11, 1999, in
the face of a challenge to their incumbency by Duggan's solicitation of proxies
in connection with DFC's 1999 annual meeting.
THE PARTIES
2. Plaintiff Duggan is a resident of the State of Illinois. Duggan is
Manager of Jackson Boulevard Partners ("Jackson Partners"), an investment
consulting firm
<PAGE>
Page 25 of 62 pages
in Chicago, Illinois, and President of Jackson Boulevard Capital Management,
Ltd. ("Jackson Capital Management"), an investment management company with an
emphasis on securities of savings and loans, banks and other companies in the
banking field. As of December 15, 1998, Duggan beneficially owned or controlled
approximately 266,600 shares of DFC common stock (400 of which are held in
Duggan's name), representing approximately 9% of DFC's outstanding common stock.
3. DFC is a Delaware corporation with its principal executive offices
in Schaumburg, Illinois. DFC is the holding company for Damen National Bank (the
"Bank"), which is also headquartered in Schaumburg, Illinois. DFC became a
publicly traded company in October 1995 and its common stock is listed and
principally traded on the NASDAQ National Market System. As of June 30, 1998,
according to DFC's Form 10-Q filed with the Securities and Exchange Commission
("SEC") on August 14, 1998, there were 2,967,154 issued and outstanding shares
of DFC common stock. DFC has a staggered board consisting of seven directors.
4. Defendant Mary Beth Poronsky Stull ("Stull"), age 51, is President,
Chief Executive Officer, Chairman of the Board, and a director of DFC. Stull has
been an employee of the Bank since 1965 and has been a director of the Company
or the Bank since 1990. Stull is the sister of defendant director Janine M.
Poronsky. Stull's term expires in 2000.
5. Defendant Janine M. Poronsky ("Poronsky"), age 40, is a Vice
President, Corporate Secretary and director of DFC. Poronsky has been an
employee of the Bank since 1991 and has been a director of the Company or the
Bank since 1995. Poronsky's term expires in 1999.
6. Defendant Edward R. Tybor ("Tybor"), age 81, is Chairman of the
Board of the Bank and a director of DFC. Tybor has owned and operated the
Kubina-Tybor funeral home located in Chicago, Illinois since 1951. Tybor has
been a director of the Company or the Bank since 1965. Tybor's term expires in
1999.
7. Defendant Charles J. Caputo ("Caputo"), age 78, is a director of
DFC. From 1947 until his retirement in 1996, Caputo owned Caputo Southwest
Cement. Caputo has been a director the Company of the Bank since 1976. Caputo's
term expires in 1999.
8. Defendant Nicholas J. Raino ("Raino"), age 66, is a director of
DFC. Raino is the Chairman and former President and Chief Executive Officer of
Dale, Smith & Associates, Inc., a firm that specializes in financial marketing
and communications. Raino has been a director of the Company or the Bank since
1997. Raino's term expires in 2001.
9. Defendant Carol A. Diver ("Diver"), age 58, is a director of DFC.
Diver has been the corporate secretary for the Chicago Park District since 1991.
Prior to that time, Diver was a legal secretary and office manager for a small
Chicago law firm. Diver has been a director of the Company or the Bank since
1983. Diver's term expires in year 2001.
<PAGE>
Page 26 of 62 pages
10. Defendant Albert C. Baldermann ("Baldermann") is a director of
DFC. On information and belief, Baldermann was appointed to the board just prior
to the 1998 annual meeting of DFC stockholders in order to fill a seat created
by an expansion of the DFC board from six members to seven.
FACTUAL BACKGROUND
11. Since DFC went public in October 1995, Duggan (or entities which
he owns or controls) has been a large stockholder of DFC and has been a Schedule
13D filer with respect to his (or entities which he owns or controls) DFC common
stock. Although Duggan originally acquired his shares of DFC common stock for
passive investment purposes, over time, as the performance of the Company has
suffered under its current leadership, Duggan's purpose has changed from passive
to actively asserting shareholder rights in the manner described in his various
Schedule 13D amendments, including attempting to influence the policies of the
Company, particularly with the intent of influencing the Company to enter into a
business combination.
12. By letter dated February 3, 1997, Duggan expressed to the Company
his disappointment with the Company's business situation and suggested various
courses of action, including the addition of a specific individual as a member
of the Company's board of directors.
13. On December 5, 1997, Duggan again wrote the Company's board of
directors expressing his continued disappointment with the Company's financial
performance, and suggesting various steps the Company should implement.
14. By letter dated December 17, 1997, Duggan submitted a notice of
intent to introduce a stockholders' proposal at the 1998 annual meeting of
stockholders and to nominate two persons for election as directors at that
meeting. The stockholder proposal requested that the board (i) retain a leading
qualified investment banking firm to solicit offers to acquire the Company by
sale or merger and (ii) establish a committee of independent directors to
consider and recommend to the full board for approval the best available offer
to acquire the Company by sale or merger.
15. On December 23, 1997, the Company refused to allow Duggan to
present his stockholders' proposal (purportedly because it was substantially
duplicative of another stockholders' proposal submitted by another holder) or to
nominate candidates for election to the board at the 1998 annual meeting of DFC
stockholders (purportedly because it did not comply with the Company's bylaws).
16. By letter dated December 30, 1997, Duggan informed the Company
that his proposal was not substantially duplicative of the other stockholder
proposal because, while both suggested the engagement by the Company of a
leading qualified investment banking firm, Duggan's also suggested that the
board appoint an independent committee to consider and recommend the best
available alternative found by the investment banking firm retained. Duggan's
December 30, 1997 letter also suggested a slightly revised stockholders'
proposal to avoid any potential duplication.
<PAGE>
Page 27 of 62 pages
17. Also by separate letters dated December 20, 1997, Duggan formally
requested the Company to provide him with certain stocklist materials and again
gave notice of his intent to nominate two persons for election to the board at
the 1998 annual meeting of stockholders. On January 2, 1998, the Company refused
to permit the presentation of Duggan's stockholder proposal or the nomination of
director candidates for election at the 1998 annual meeting (purportedly because
Duggan was not a stockholder of record).
18. Despite the Company's refusal to permit the presentation of
Duggan's stockholder proposal or the nomination of Duggan's director candidates
for election at the 1998 annual meeting of DFC stockholders held on January 27,
1998, another stockholder proposal to hire an investment banker to solicit
offers to purchase the Company was voted on at that meeting. A majority of votes
cast at the meeting were in favor of hiring an investment banker. Despite this
ground-swell of support for the stockholder proposal, however, since the
Company's certificate of incorporation restricts the voting shares (by one
individual or group) in excess of 10% of the total votes outstanding, the
proposal did not pass because the number of votes in favor of the proposal was
reduced (these same shares being controlled by Duggan).
DFC Establishes The Date For The 1999 Annual Meeting
19. On August 12, 1998, DFC publicly announced that its board had
established a date for the 1999 annual meeting of DFC stockholders and that "its
annual meeting will be held at 9:30 a.m. Central Time on January 25, 1999 at the
Holiday Inn, 3405 Algonquin Road, Rolling Meadows, Illinois."
20. On August 18, 1998, in compliance with the Company's bylaws and
SEC rules and regulations, Duggan gave notice to the Company of his intent to
introduce a stockholders' resolution at the 1999 annual meeting of DFC
stockholders to be held on January 25, 1998. The resolution provides:
[T]hat 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.
21. By letter dated August 24, 1998, Duggan expressed to the Company
his continued disappointment with the Company's business situation and suggested
various courses of action.
22. On November 16, 1998, in compliance with DFC's advance notice
bylaw, Duggan submitted a notice to the Company of his proposal to nominate
three
<PAGE>
Page 28 of 62 pages
individuals for election to the DFC board at the 1999 annual meeting of DFC
stockholders, Duggan, Vincent Cainkar and J. Dennis Huffman. Also pursuant to
DFC's bylaws, Duggan provided additional information to the Company regarding
his nominees for election to the DFC board, including their written consent to
be named as nominees and biographies on the nominees in compliance with the
requirements of Regulation 14A promulgated under the Securities Exchange Act of
1934.
23. On November 25, 1998, in connection with his previously stated
intention to solicit proxies in support of his nominees for election to the DFC
board and in support of his stockholder proposal at the upcoming 1999 annual
meeting of DFC stockholders to be held on January 25, 1999, Duggan formally made
a request pursuant to Section 220 of the Delaware General Corporation Law
("DGCL") to inspect and copy the Company's stocklist materials.
24. By letter dated November 27, 1998, the Company requested
additional information regarding Duggan's nominees to the DFC board through a
questionnaire prepared by the Company. Despite his belief that the additional
information was not required, on December 10, 1998, completed copies of the
questionnaire were delivered to the Company by each of the director nominees.
25. By letter dated December 3, 1998, the Company denied Duggan's
request pursuant to Section 220 of the DGCL to inspect the Company's stocklist
materials, purportedly on the grounds that "the Company believes that Rule 14a-7
governs [the] request and not Section 220 of the Delaware General Corporation
Law." Thereafter, on December 7, 1998, Duggan reiterated his formal request to
exercise his right to inspect and copy the Company's stocklist materials
pursuant to Section 220 and Rule 14a-7 of the Securities Exchange Act of 1934
("1934 Act"). By letter dated December 10, 1998, the Company responded to
Duggan's December 7 request and finally agreed to either provide the requested
material or notify Duggan of the Company's election under Rule 14a-7 to mail
Duggan's proxy materials by December 15, 1998. The Company ultimately provided
the requested stocklist materials to Duggan.
26. On December 16, 1998, approximately one year after Duggan
originally submitted his proposal to retain an investment banker to explore
selling the Company (and to appoint an independent committee of the board) and
40 days prior to the annual meeting of DFC stockholders scheduled to be held on
January 25, 1999, DFC publicly announced that "it hired Keefe Bruyette and Woods
Inc. to help review its strategic options, including a possible sale of the
company."
27. On December 22, 1998, Duggan and The Committee to Enhance
Shareholder Value (the "Committee") filed preliminary proxy materials with the
SEC in connection with the solicitation of proxies with respect to Duggan's
nominees to the DFC board and the stockholder proposal to be considered at the
previously scheduled January 25, 1999 annual meeting of DFC stockholders. Duggan
notified the Company of this filing with the SEC by letter dated December 22,
1998. Duggan's December 22 letter also notified the Company that any proxy
materials mailed by the Company at that time would be in violation
<PAGE>
Page 29 of 62 pages
of rules under the 1934 Act if those materials commented on or referred to a
solicitation in opposition since the Company had not filed preliminary proxy
materials with the SEC ten (10) days prior to mailing.
28. On December 24, 1998, approximately 30 minutes before the close of
the market and just two days after Duggan filed his preliminary proxy materials
and notified the Company of its failure to file its preliminary proxy materials,
and despite having previously set the date for the 1999 annual meeting of DFC
stockholders and a record date for that meeting, DFC issued a press release
announcing that it "changed the date of its annual meeting for the fiscal year
ended September 30, 1998 from January 25, 1999 to February 26, 1999."
Thereafter, on information and belief, DFC purported to establish a new record
date of January 11, 1999 for the 1999 annual meeting of DFC stockholders.
29. DFC has offered no justification, let alone a compelling one, for
its impermissible postponement of the 1999 annual meeting of DFC stockholders
and its purported change in the record date for that meeting.
THE DFC DIRECTORS' BREACH OF FIDUCIARY DUTIES
30. Plaintiff repeats, realleges, and incorporates by reference
paragraphs 1-29 above as if fully set forth herein.
31. Under the circumstances here, including the Company's prior
establishment of a date for the 1999 annual meeting of DFC stockholders (January
25, 1999) and a record date for that meeting (December 9, 1998), the individual
defendants' decision -- in the face of a challenge to their incumbency by Duggan
in the proxy contest -- to postpone the 1999 annual meeting of DFC stockholders
and to change the record date constitutes an impermissible manipulation of the
corporate election machinery having the effect of disenfranchising stockholders
and unilaterally extending the terms of those directors who were originally
slated to stand for election on January 25, 1999 in the face of a likely and
expected defeat by the Duggan nominees.
32. The wrongful postponement of the 1999 annual meeting of DFC
stockholders and wrongful change in the record date for the 1999 annual meeting
intentionally and impermissibly impede and delay plaintiff and other DFC
stockholders from exercising their voting rights without a compelling
justification and constitute an inequitable manipulation of the corporate
election machinery. Moreover, defendants' unlawful actions in response to
Duggan's proxy contest constitute an unreasonable and disproportionate response
to a non-cognizable threat under Delaware law. As such, these actions, have
caused and will, unless enjoined by this Court, continue to cause permanent and
irreparable harm to plaintiff and other DFC stockholders. These actions also
constitute a breach of the fiduciary duties owed by the individual defendants to
plaintiff and the other DFC stockholders under Delaware law.
33. Plaintiff has no adequate remedy at law.
<PAGE>
Page 30 of 62 pages
WHEREFORE, plaintiff respectfully requests the following relief:
A. Declaring that the individual defendants have breached their
fiduciary duties to DFC's stockholders under Delaware law by impermissibly
postponing the 1999 annual meeting of DFC stockholders and changing the record
date for the 1999 annual meeting;
B. Declaring defendants' postponement of the 1999 annual meeting of
DFC stockholders, and the purported change of the record date for the 1999
annual meeting, to be null and void;
C. Directing defendants to conduct the annual meeting of DFC
stockholders on January 25, 1999, with a record date of December 9, 1998;
D. Enjoining defendants, pendente lite, from using the corporate
machinery of DFC to take any further action to delay, impede, postpone or thwart
the voting or other rights of DFC stockholders in connection with the 1999
annual meeting of DFC stockholders, or otherwise improperly influencing, or
attempting to influence, the result of the election of directors to be held at
the 1999 annual meeting of DFC stockholders;
E. Awarding plaintiff his costs and disbursements incurred in
connection with this action, including reasonable attorneys' and experts' fees;
and
F. Granting such other and further relief, including damages from the
individual defendants by reason of the breach of fiduciary duty of loyalty, as
the Court may deem just and proper.
MORRIS, NICHOLS, ARSHT & TUNNELL
--------------------------------
Kenneth J. Nachbar
William M. Lafferty
David J. Teklits
1201 N. Market Street
Wilmington, Delaware 19801
(302) 658-9200
Attorneys for Plaintiff
Paul J. Duggan
OF COUNSEL:
FOLEY & LARDNER
One IBM Plaza
330 North Wabash, Suite 3300
Chicago, Illinois 60611
<PAGE>
Page 31 of 62 pages
(312) 755-1900
December 30, 1998
<PAGE>
Page 32 of 62 pages
VERIFICATION
I, Paul J. Duggan, being duly sworn, depose and say:
1. I have read the foregoing Verified Complaint for
Declaratory and Injunctive Relief and am familiar with the contents thereof.
2. The allegations of the Verified Complaint for Declaratory
and Injunctive Relief are true and correct to the best of my knowledge,
information and belief.
/s/ Paul J. Duggan
Paul J. Duggan
SWORN TO AND SUBSCRIBED before
me this ___ day of December, 1998.
- -----------------------------
Notary Public
Page 33 of 62 pages
EXHIBIT 29
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
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-11(c) or Section 240.14a-12
DAMEN FINANCIAL CORPORATION
(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>
Page 34 of 62 pages
PRELIMINARY PROXY MATERIALS DATED DECEMBER 31, 1998
The information included herein is as it is expected to be when the
definitive proxy statement is mailed to stockholders of Damen Financial
Corporation. This proxy statement will be revised to reflect actual facts at the
time of the filing of the definitive proxy statement.
1999
ANNUAL MEETING OF STOCKHOLDERS
OF
DAMEN FINANCIAL CORPORATION
PROXY STATEMENT OF
PAUL J. DUGGAN
AND THE COMMITTEE TO ENHANCE SHAREHOLDER VALUE
--------------
IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING
Why You Were Sent This Proxy Statement
This Proxy Statement and the enclosed BLUE proxy card are first being
furnished to you on or about January 4, 1999 by Paul J. Duggan and the Committee
to Enhance Shareholder Value (the "Committee") in connection with the
solicitation of proxies for the 1999 Annual Meeting of Stockholders of Damen
Financial Corporation ("Damen" or the "Company"), whenever held, and any
adjournment(s) or postponement(s) thereof (the "Annual Meeting"). On August 12,
1998, the Company announced that the next Annual Meeting of stockholders would
be held on January 25, 1999 at 9:30 a.m. (local time) at the Holiday Inn,
located at 3405 Algonquin Road, Rolling Meadows, Illinois.
On December 24, 1998, Damen announced that it intended to delay the
Annual Meeting until February 26, 1999. It is the Committee's understanding that
Damen intends to change the record date of the Annual Meeting from December 9,
1998 to January 11, 1999. It is the Committee's position that the attempt to
delay the Annual Meeting and to change the record date is invalid and in
violation of the law. These issues are the subject of litigation filed by Paul
J. Duggan in Delaware Chancery Court on December 30, 1998. Specifically, in
order to preserve the Stockholders' right to elect directors and vote on the
stockholder proposal described below on January 25, 1999, Mr. Duggan has
petitioned the court to enjoin the delay in the Annual Meeting date and the
change in the record date.
Mr. Duggan and the Committee are soliciting proxies in the
anticipation that the Annual Meeting will be held on January 25, 1999, and we
request that stockholders complete, sign,
<PAGE>
Page 35 of 62 pages
date and mail the enclosed BLUE proxy card with this anticipated Annual Meeting
date in mind. We note that the Company may advise you to consider its proxy
materials and request that you return proxy materials to the Company's
representatives or proxy solicitors in accordance with a different schedule, and
that the Delaware Chancery Court may fail to enjoin the delay in the Annual
Meeting. If the Annual Meeting is held on a date other than January 25, 1999,
the enclosed proxy materials should still be considered applicable to the Annual
Meeting. We request Damen stockholders to read and consider these materials and
return the BLUE Proxy Card promptly in the event the Annual Meeting takes place
on the originally scheduled date of January 25, 1999.
MR. DUGGAN AND THE COMMITTEE STRONGLY RECOMMEND A VOTE FOR PAUL
DUGGAN, VINCENT CAINKAR AND J. DENNIS HUFFMAN AS DIRECTORS AND A VOTE "FOR" THE
STOCKHOLDER PROPOSAL TO APPOINT AN INVESTMENT BANKER AND ESTABLISH AN
INDEPENDENT COMMITTEE TO EVALUATE PROPOSALS TO SELL OR MERGE THE COMPANY.
Paul Duggan is a Damen stockholder and Manager of Jackson Boulevard
Partners ("Jackson Partners"), an investment consulting firm in Chicago,
Illinois, and President of Jackson Boulevard Equities, Ltd., ("Jackson
Equities"), an investment fund with an emphasis on securities of savings and
loans, banks and other companies in the banking field. The members of the
Committee are Paul Duggan, Vincent Cainkar, a Damen stockholder and bond
attorney who has represented many financial institutions, J. Dennis Huffman, a
Damen stockholder and a former chief operating officer of Beverly Bank, and
Jackson Partners, Jackson Equities, Jackson Boulevard Investments, L.P.
("Jackson Investments"), Jackson Boulevard Capital Management Ltd. ("Jackson
Fund") and Jackson Offshore Fund, Ltd. ("Jackson Offshore"), which are
investment funds of which Paul Duggan serves as Manager or President. The
members of the Committee have beneficial ownership of a total of 273,800 shares
of Common Stock, par value $.01 per share, of the Company ("Damen Common
Stock"), representing approximately 9.7% of issued and outstanding Damen Common
Stock.
What You Are Voting On
At the Annual Meeting, among other things, the stockholders of the
Company will be asked to vote to:
* elect three directors;
* ratify the appointment of Cobitz, VandenBerg & Fennessy as the auditors of
the Company for the fiscal year ending September 30, 1999; and
* approve a stockholder proposal directing the Board of Directors of the
Company to appoint an investment banker to pursue merger or acquisition
candidates for the Company and to establish a committee consisting of all
directors who are not current or former officers or employees or relatives
of current or former officers or employees of the Company in order to
consider and recommend to the full Board of Directors for approval the best
available offer to acquire the Company by sale or merger.
On December 16, 1998, Damen announced that it engaged Keefe Bruyette
and Woods, Inc. to serve as its financial advisor to assist it in reviewing its
strategic options, including a possible sale of the Company. As discussed in
more detail under the caption "Stockholder Proposal to Appoint
<PAGE>
Page 36 of 62 pages
an Investment Banker," Mr. Duggan and the Committee believe that these actions
do not constitute substantial implementation of the stockholder proposal
discussed above.
Who Can Vote at the Annual Meeting
Stockholders who owned shares of Damen Common Stock at the close of
business on the record date set by the Board of Directors of the Company (the
"Record Date") are entitled to vote at the Annual Meeting. It is the Committee's
understanding that the Damen Board of Directors originally set December 9, 1998
as the Record Date, but have attempted to redesignate the Record Date as January
11, 1999 in connection with its attempted delay in the Annual Meeting. The
Committee's position is that the redesignation of the Record Date is invalid and
in violation of the law and has filed litigation against the Company and the
Damen Board of Directors seeking an injunction against the redesignation of the
Record Date. On December 9, 1998, according to the Company's annual report on
Form 10-K filed by the Company with the U.S. Securities and Exchange Commission
(the "SEC") on December 30, 1998, there were 2,820,154 issued and outstanding
shares of the Company's Common Stock. Each share of Damen Common Stock held on
the Record Date is entitled to one (1) vote at the Annual Meeting.
How to Vote by Proxy
To elect Mr. Duggan's nominees to the Board, and to vote in favor of
the stockholder proposal set forth in this Proxy Statement, promptly complete,
sign, date and mail the enclosed BLUE proxy card in the enclosed postage-paid
envelope. Whether you plan to attend the Annual Meeting or not, we urge you to
complete and return the enclosed BLUE proxy card.
Properly executed proxies will be voted in accordance with the
directions indicated thereon. If you sign the BLUE proxy card but do not make
any specific choices, your proxy will vote your shares as follows:
* "FOR" the election of Mr. Duggan's three nominees to the Board of
Directors, Paul J. Duggan, Vincent Cainkar and J. Dennis Huffman.
* "FOR" the ratification of the appointment of Cobitz, VandenBerg &
Fennessy as the auditors of the Company for the fiscal year ending
September 30, 1999.
* "FOR" the stockholder proposal directing the Board of Directors of
the Company to appoint an investment banker to pursue merger or
acquisition candidates for the Company and to establish a
committee consisting of all directors who are not current or
former officers or employees or relatives of current or former
officers or employees of the Company in order to consider and
recommend to the full Board of Directors for approval the best
available offer to acquire the Company by sale or merger.
If any other matter is presented at the Annual Meeting, your proxy
will vote in accordance with his best judgment. At the time this Proxy Statement
was mailed, we knew of no matters which needed to be acted on at the Annual
Meeting, other than those discussed in this Proxy Statement.
If any of your shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the record date, only that entity can vote
your shares and only upon its receipt of your specific instructions.
Accordingly, please contact the person responsible for your account at such
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Page 37 of 62 pages
entity and instruct that person to execute and return the BLUE proxy card on
your behalf. You should also sign, date and mail the voting instruction form
your broker or banker sends you when you receive it. Please do this for each
account you maintain to ensure that all of your shares are voted.
How You Can Revoke a Proxy
If you have executed the Board of Directors' proxy card before
receiving Mr. Duggan's Proxy Statement, you have every right to change your vote
by completing, signing, dating and returning the enclosed BLUE proxy card. ONLY
YOUR LATEST DATED PROXY WILL COUNT AT THE ANNUAL MEETING. Any proxy may be
revoked at any time before it is voted by (i) submitting a duly executed proxy
card bearing a later date to the Secretary of the Company or to Mr. Duggan, (ii)
filing with the Secretary of the Company a written revocation, or (iii)
attending and voting at the Annual Meeting in person.
Who You Can Call If You Have Questions
If you have any questions concerning this Proxy Statement or need
assistance in voting your shares, please call Paul J. Duggan at (888) 522-5332
or Mr. Duggan's proxy solicitor:
THE ALTMAN GROUP, INC.
60 East 42nd Street,
Suite 1241
New York, NY 10165
(212) 681-9600
ANNUAL MEETING PROPOSALS
At the Annual Meeting, the Company's stockholders will be asked to vote
on the following matters: the election of three directors, the ratification of
the appointment of Cobitz, VandenBerg & Fennessy as the auditors of the Company,
and a stockholder proposal directing the Company to appoint an investment banker
to pursue merger or acquisition candidates for the Company and establish a
committee composed of independent directors to evaluate proposals to sell or
merge the Company. As discussed in more detail below, we believe that the
current Board of Directors as a group have not been acting in your best
interests as stockholders of the Company. The election of the directors
nominated by Mr. Duggan and the approval of the stockholder proposal is, in our
opinion, in your best interest as a stockholder.
1. ELECTION OF THREE DIRECTORS
Damen's Board of Directors consists of seven directors, who serve
three-year terms. Three of the seven directors are being elected at this year's
Annual Meeting. Mr. Duggan and the Committee are proposing three nominees for
election as directors of Damen: Mr. Duggan himself, Vincent Cainkar and J.
Dennis Huffman.
We are asking you to elect the three directors nominated by Mr. Duggan and
supported by the Committee, instead of the directors nominated by the Company.
We believe it is in your best interest as a stockholder to do so because we
believe that the performance of the current Board of Directors has been
inadequate in the areas of increasing stockholder value, increasing the
profitability of the Company and taking advantage of opportunities available to
the Company.
<PAGE>
Page 38 of 62 pages
We believe that Mr. Duggan's nominees have superior experience in the
management and supervision of financial institutions and the successful sales of
financial institutions, are more independent and will be more dedicated to
enhancing stockholder value than the Company's anticipated nominees and the
current membership of the Company's Board of Directors.
In addition, Mr. Duggan and the Committee have concluded that Damen should
seriously explore whether it can be acquired or merged. Mr. Duggan's three
nominees for director, Mr. Duggan, Mr. Cainkar and Mr. Huffman, will recommend
that the Board engage an investment banker and aggressively pursue the
acquisition or merger of Damen as an alternative for increasing the value of
Damen to stockholders. In this respect, if elected, Mr. Duggan's nominees will
constitute only three of seven directors and therefore cannot compel the Board
to act and can only advise that Damen seriously consider proposals of
acquisition or merger.
How We Disagree With Current Directors on Operation of the Company - Our
Objectives
We believe that the current management and Board of Directors of the
bank have failed to maximize stockholder value and the profitability of the
Company and that this is evident in the performance of the Company as compared
to other financial institutions in the following areas: stock price, capital
ratio and efficiency ratio.
Stock Price
Over the three years since Damen's Common Stock commenced trading on
the NASDAQ National Market System, the return on Damen's Common Stock has
underperformed each of the NASDAQ Bank Index (an index of U.S. banks stock
traded on NASDAQ published by NASDAQ), the SNL Thrift Index (an index of savings
and loans institutions published by SNL Securities) and the SNL Bank & Thrift
Index (an index of bank and thrift institutions published by SNL Securities). A
table comparing the returns of Damen's Common Stock to these indices as well as
to the Dow Jones Industrial Average and S&P 500 is set forth below.
Name 10/02/95 12/16/98 % Change
- -------------------------------------------------------------------------------
DAMEN FINANCIAL CORPORATION(1) 11.500 13.750 19.57%
NASDAQ BANK INDEX 962.090 1,751.490 82.05%
SNL THRIFT INDEX 361.100 650.900 80.25%
SNL BANK & THRIFT INDEX 189.400 387.300 104.49%
DOW JONES INDUSTRIAL AVERAGE 4,761.260 8,790.600 84.63%
S&P 500 581.720 1,161.940 99.74%
- -------------------------------------------------------------------------------
(1) Damen converted from a mutual to stock form of ownership in 1995.
Damen issued its initial stock on October 2, 1995. The price shown for Damen is
its closing price on the first day of trading.
Capital Ratio, Dividends and Stock Buybacks
The Company's capital ratio (tangible equity divided by assets) is
significantly higher than that of many other profitable financial institutions.
According to the April 17, 1998 issue of Sandler O'Neill Bank Stock Monthly, the
mean tangible equity to asset ratio for banks with assets of less than $500
million was 10.46% as of December 31, 1997. Damen's equity to asset ratio as of
December 31, 1997, according to the same publication, was 19.88%. Additionally,
Damen's capital
<PAGE>
Page 39 of 62 pages
ratio is significantly higher than the capital required by The Office of the
Controller of the Currency ("OCC"). The OCC requires minimum capital ratios
between 3 and 5% of adjusted total assets (according to Damen's report on Form
10-Q for the quarter ended June 30, 1998 filed with the SEC on August 14, 1998
(the "Form 10-Q")). Despite the lower OCC minimum, we believe that the optimum
capital ratio for a financial institution such as the Company is in the range of
8-10%. According to the Form 10-Q, the Company's current Tier 1 Capital (as
defined in the Form 10-Q) is 17.8%. We believe that through more aggressive use
of a stock buyback program or declaration of dividends, the Company could
decrease its excess capital and enhance stockholder value.
Management contends they are addressing the problem of excess capital.
However, for the first nine months of fiscal year ended September 30,1998 the
Company earned $.51 per share and only distributed $.28 to shareholders. We
believe we can influence management through our Board of Directors'
participation to increase dividends. Given the high capital ratio the Company
enjoys currently, we believe that dividends can be raised immediately to $1.00
per year or higher until such time as the excess capital ratio is reduced to a
figure closer to the industry average. This move not only would help reduce the
excess capital but also support the stock price of the Company. A dividend of
$1.00 would give the stockholders a current yield of more than 7% based on the
stock price of $13.75.
A formal, well-planned stock buyback program is an important
cornerstone in management of the Company's excess capital. We have been a
consistent proponent of stock buybacks. Although the Company had in place a
stock buyback program earlier this year, that program terminated in early August
and the Company did not immediately enact a new stock program. Throughout much
of the month of August, the stock price of the Company fell along with the broad
stock market. Because management did not have a formal stock buyback plan in
place, the Company could not take advantage of the falling stock price to
repurchase share at prices below book value. Members of the Committee made
repeated phone calls to members of the Company's management and Board of
Directors in an effort to initiate another stock buyback, and in a letter to the
Company dated August 24,1998, a copy of which is attached as Exhibit 1, proposed
a 20% stock buyback. Management failed to respond promptly to our suggestion.
The Company's Board of Directors did not announce a new stock buyback
program until September 11, 1998. The action in the stock market in late August
had given the Company opportunities, but the failure of management and the
Company's Board of Directors to have a program in place cost the Company and all
its stockholders. The Company had missed an opportunity to support the stock
price, redeem shares at prices far below book value and make effective use of
the excess capital. During the period of time between the Company's buybacks,
over 200,000 shares of the Company's stock were traded. Most shares traded below
book value. The Committee believes it can help the Company by implementing an
open stock buyback program, which will reduce excess capital issue and be
accretive to book value and ultimately franchise value.
The Board of Directors takes credit for seven buyback programs, yet
did not promptly put in place a stock buyback program when the Company's stock
was at 52 week lows. Our director nominees will attempt to insure that stock
buybacks are handled more aggressively and are continually in place in order to
reduce excess capital. Ironically, the Company's management claimed they moved
to an OCC charter to take advantage of the buybacks allowed under OCC
regulations, yet when the market and the Company's stock suffered in late
August, the Company had no program in place.
In the Company's response to the stockholder proposal of Mr. Duggan
that is set forth below in this Proxy Statement, the Company asserts that "it is
unrealistic to expect the Company's stock price to be unaffected by a turbulent
stock market." While Mr. Duggan and the Committee acknowledge that
<PAGE>
Page 40 of 62 pages
the stock price of the Company can be expected to be affected by the broader
market, we believe that given the Company's excess capital ratio, it is clearly
the responsibility of the Company's Board of Directors and management to have in
place an open stock buyback program to take advantage of those instances when
the Company's stock price does fall below its book value.
Efficiency Ratio and Leverage
We also believe that the salaries and other expenses paid by the
Company are excessive as evidenced by the Company's high efficiency ratio, which
measures the amount of capital expended by the Company to earn each dollar of
profit. The higher the efficiency ratio, the more money the Company is expending
per dollar of profit. Many financial institutions have a lower efficiency ratio
than Damen's. According to the April 17, 1998 edition of issue of Sandler
O'Neill Bank Stock Monthly, as of December 31, 1997, the mean efficiency ratio
for banks with assets of less than $500 million was 62.5%. According to the same
publication, Damen's efficiency ratio as of December 31, 1997 was 70.8%.
Moreover, the Company's efficiency ratio is increasing, not decreasing, from
61.11% for the fiscal year ended September 30, 1996 to 72.12% for the fiscal
year ended September 30, 1998, and increased again to 75.53% for the three
months ended September 30, 1998. We believe that we can reduce the Company's
efficiency ratio by reducing officers' salaries and other related compensation
costs. The Company's conversion from a thrift charter under the Office of Thrift
Supervision to a national bank charter under the OCC brings with it increased
costs. A merger or sale of the Company would save the Company and its
stockholders from experiencing a period of increasing costs as the Company tries
to become a bank. It should be noted that as of the last annual meeting and a
year after converting to a bank charter, the Company still was not open for
business on Wednesday and did not have a full-time commercial loan officer on
its payroll.
The increased borrowings of the Company from the Federal Home Loan
Board (from $56,500,000 for the fiscal year ended September 30, 1997 to
$61,800,000 for the fiscal year ended September 30, 1998) also may pose a danger
to the Company if interest rates increase. The use of borrowings (essentially a
margin loan) allows the Company to leverage its investment portfolio. We
believe, in light of recent incidents in which other financial institutions
incurred substantial losses as a result of the use of leverage in their
investment portfolio, that most stockholders would not favor the Company
increasing its borrowings for speculation in the purchase of a bond portfolio.
In addition, the Company does not have an adequate market strategy
because its three branches are not located within close proximity to each other.
For example, the Schaumburg branch is approximately 24 miles from Burbank branch
and 26 miles from the Chicago branch. The Committee supports sale of the
Schaumburg branch in order to maximize stockholder value and reduce expenses.
To maximize share values, Mr. Duggan and the Committee have concluded
that Damen should seriously explore the feasibility of being acquired by or
merging with another institution. If elected, our nominees will recommend that
the Board engage an investment banker and aggressively pursue the acquisition of
Damen as an alternative for increasing share values, although these nominees
will be open minded and will consider all recommendations from other
stockholders or directors. Mr. Duggan and the Committee, therefore, support the
stockholder proposal set forth in the Damen Board of Directors Proxy Statement
that recommends the appointment of an investment banker. If you share this view,
then you should vote for our nominees. If elected, our nominees would constitute
only three of seven directors and could not compel action by the Board. However,
by electing our candidates, we believe you will be sending a message to the
remaining Board members that you wish them to focus on enhancing share values.
<PAGE>
Page 41 of 62 pages
None of the members of the Committee know of any agreements or
understandings concerning the possible acquisition of Damen and there can be no
assurance that an acquisition can be effected at prices materially above the
current market value for Damen Common Stock.
Summary of Our Objectives
Mr. Duggan's nominees, if elected, intend to take all reasonable
actions necessary to increase shareholder value. These actions may include one
or more of the following:
1. Utilizing an investment banker to solicit bids for the sale of the
Company at the highest price available to shareholders;
2. Immediately increasing dividends in order to reduce the Company's
excess capital;
3. Initiating and maintaining a stock buyback program in order to
purchase shares if Damen's stock price falls below its book value again;
4. Reducing operating expenses, including a potential decrease in
management salaries, in order to bring Damen's efficiency ratio more in line
with Damen's competitors;
5. Evaluating and potentially replacing Damen's officers, management
and advisers in order to ensure competent management of the operations of the
Company and a greater dedication to maximization of shareholder value; and
6. Evalutaing the need for, and potentially closing, Damen's
Schaumburg branch.
However, because our nominees, if elected, would constitute only three
of seven directors and could not compel action by the Board of Directors, there
can be no assurance that any of the above-listed actions would be taken.
Why the Directors Nominated by Paul Duggan Will Better Serve Investors Than
Damen's Anticipated Nominees
Mr. Duggan and the other members of the Committee have collectively
invested more than $3,000,000 in shares of Damen Common Stock, and as of
December 15, 1998, Mr. Duggan himself beneficially owned 266,600 shares of Damen
Common Stock. Mr. Duggan and the Committee believe that this significant
investment entitles Mr. Duggan to representation on the Board of Directors and
uniquely qualifies him to represent stockholders who are concerned about
enhancing stock values. All of the shares purchased by Mr. Duggan and the other
members of the Committee have been purchased at market price and not at
favorable option prices, as is the case with many of the shares held by the
Directors supported by management. In our opinion, Mr. Duggan's significant
stockholdings in the Company more closely align his interests with your
interests as stockholders as compared to current members of the Board of
Directors.
Mr. Duggan has over 20 years of experience in investing in securities
of banks and financial institutions. Since 1993, Mr. Duggan has served as
Managing General Partner of Jackson Equities, which was organized as a limited
partnership for the purpose of investing in marketable securities with an
emphasis on securities of savings and loans, banks and other companies in the
banking field. Mr. Duggan is also President of Jackson Fund, a hedge fund
management firm.
<PAGE>
Page 42 of 62 pages
Jackson Fund offers money management and venture capital activities in addition
to managing hedge funds which concentrate in investing in the thrift and small
cap bank areas. In this position, Mr. Duggan has invested in over 150 financial
institutions, including over 40 financial institutions that have been acquired
or that have merged with other financial institutions.
Vincent Cainkar is a nationally recognized bond counsel and has
rendered legal opinions on bond issues in excess of $200 million and has
rendered legal advice to several Chicago area banking institutions. Mr. Cainkar
is an independent investor and founder of several real estate entities that have
developed Chicago area commercial and residential projects, including the
172-unit Burbank Manors Senior Citizen Apartments.
J. Dennis Huffman spent 20 years in banking before leaving the
position of chief operating officer of Beverly Bank, the lead bank for Beverly
Bancorp, a $600 million institution with 5 branches. He was a bank director and
served as board liaison between the client banks. During Mr. Huffman's term at
Beverly, the bank merged with Matteson Richton Bank, opened branches in Orland
Park and West Beverly, as well as acquired a bank in Wilmington, Illinois.
Beverly Bancorp. recently merged with St. Paul Bancorp.
Information with respect to these nominees is set forth under the
caption "Paul Duggan's Nominees".
As of the date of this Proxy Statement, Damen has not publically
announced the nominees selected by the Board of Directors' Nominating Committee
for the three director positions to be elected at the 1999 Annual Meeting. The
three directors whose terms exprire this year include Edward R. Tybor, who since
1951 has owned and operated the Kubina-Tybor funeral home, Charles J. Caputo,
who from 1947 until his retirement in 1996, owned Caputo Southwest Cement, a
construction company located in Orland Hills, Illinois, and Janine M. Poronsky,
the sister of Damen's President, Mary Beth Poronksy Stull, who until joining
Damen as a compliance officer in 1991 was employed as an attorney for the United
States Internal Revenue Service.
The biographies for Messrs. Tybor and Caputo contained in the proxy
statement filed by Damen with the SEC on January 13, 1998 do not describe the
existence of any experience in the operation or supervision of any financial
institutions other than such individuals' service on Damen's Board of Directors.
In addition, the biography for Ms. Poronsky does not describe the existence of
any experience with any other financial institution other than Damen.
None of Messrs. Duggan, Cainkar or Huffman have served as officers or
directors of Damen, are related to any current or former officers or directors
of Damen, or have received any direct or indirect compensation by Damen. Mr.
Duggan and the Committee believe that the shareholders might best be served by
outside directors that do not familial or financial ties to Damen and its
management and that have not served on the Damen Board of Directors for long
periods of time. Of the seven current directors of Damen, two are officers of
the Company, and of the five outside directors, one director, Nicholas J. Raino,
has a greater than 10% equity interest in a firm (Dale Smith & Associates, Inc.)
that has long been utilized by the Company to provide marketing, advertising and
other services. During the Company's 1997 fiscal year, this firm was paid
$89,225 by the Company for its services and reimbursed $326,551 for services and
products provided by third party sources, according to the Company's Proxy
Statement filed on January 13, 1998. Moreover, three of the remaining outside
directors, Carol A. Diver, Charles J. Caputo and Edward R. Tybor have served on
the board for 15, 22 and 31 years, respectively, and thus have extensive
relationships with the Company's management that extend prior to the Company's
conversion into a public company.
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Paul Duggan's Nominees
The table set forth below identifies our three nominees for election
as new directors of Damen and provides information concerning each of these
nominees.
- ------------------ ---- -------------------------------------------------------
Name Age Business Experience During Past Five Years
- ------------------ ---- -------------------------------------------------------
Paul Duggan 48 Manager/Owner, Duggan & Associates; Manager, Jackson
(Nominee) Boulevard Partners; President, Jackson Boulevard Capital
Management, Ltd.
- ------------------ ---- -------------------------------------------------------
Vincent Cainkar 49 Attorney for the City of Burbank, Village of Evergreen
(Nominee) Park, City of Hickory Hills, Village of McCook, and
Stickney Township
- ------------------ ---- -------------------------------------------------------
J. Dennis Huffman 55 Partner, DHK Development Corp.; Trader, Chicago Board of
(Nominee) Trade; Senior Loan Workout Agent, Resolution Trust
Corporation
- ------------------ ---- -------------------------------------------------------
Further biographical information about Paul Duggan's nominees is set
forth below:
Paul J. Duggan, a life long resident of Chicago, is a licensed CPA in
the State of Illinois. Mr. Duggan owns and has managed a consulting firm, Duggan
and Associates, which specializes in litigation consulting, since 1976, and has
managed Jackson Partners, an investment consulting firm in Chicago, since 1991.
Mr. Duggan has served as an expert witness in commercial litigation issues, in
damages analysis areas and has testified in federal and state courts on issues
concerning business valuation, intellectual property, unjust enrichment, and
various damages areas. Mr. Duggan is also President of Jackson Fund, a hedge
fund management firm. Jackson Fund offers money management and venture capital
activities in addition to managing hedge funds which concentrate in investing in
the thrift and small cap bank areas. Mr. Duggan currently manages portfolios
with investments in thrifts in excess of $70 million as well as over $50 million
in venture capital and private real estate partnerships. Mr. Duggan serves on
the Boards of Directors of Marinette Marine Corporation in Marinette, Wisconsin
(a manufacturer of ocean going vessels for the U.S. Coast Guard, U.S. Navy, and
commercial customers), Marigold Services of Chicago, Illinois (a dry and liquid
sugar storage terminal) and Napleton St. Louis Honda in St. Peters, Missouri (a
retail Honda dealer). Mr. Duggan received his B.B.A. in business administration
from Loyola University of Chicago in 1974 and his CPA in the State of Illinois
in 1975.
Vincent Cainkar, a life long resident of the Chicago area, is a
licensed attorney in the States of Illinois and Florida and a licensed real
estate broker in the State of Illinois. He has been in private legal practice
since 1974 and currently serves as an attorney for the City of Burbank, Village
of Evergreen Park, City of Hickory Hills, Village of McCook, Stickney Township
and other local governmental entities. He is a nationally recognized bond
counsel and rendered legal opinions on bond issues in excess of $200 million and
has rendered legal advice to several Chicago area banking institutions. Mr.
Cainkar is an independent investor and founder of several real estate entities
that have developed Chicago area commercial and residential projects, including
the 172-unit Burbank Manors Senior Citizen Apartments. Mr. Cainkar received his
B.A. in Chemistry from St. Louis University in 1971 and his J.D. from the DePaul
University College of Law in 1974.
J. Dennis Huffman graduated from DePaul University and holds an MBA
from Northwestern University's Kellogg Graduate School of Management. Mr.
Huffman spent 20 years in the banking business before leaving the position of
chief operating officer of Beverly Bank, the lead bank for Beverly Bancorp. He
was a bank director and served as board liaison between the client banks. Mr.
<PAGE>
Page 44 of 62 pages
Huffman also served as a Senior Loan Workout Agent for Resolution Trust
Corporation. He is currently a partner in DHK Development Corp, developer and
leasing agent for commercial and residential real estate and an active trader of
U.S. Treasury Bond contracts on the floor of the Chicago Board of Trade. DHK
controls over $5,000,000 of commercial and residential real estate.
There are no arrangements or understandings between Mr. Duggan's
nominees and any other person pursuant to which they were selected as nominees,
except that the nominees named above have consented to serve as directors if
elected. Mr. Duggan and the Committee do not expect that the nominees will be
unable to stand for election; but, in the event that any nominee should be
unable to stand for election, the Common Stock represented by the enclosed BLUE
proxy card will be voted for a substitute candidate selected by Mr. Duggan.
Compensation of Director Nominees
None of the persons nominated by Paul Duggan to serve as directors of
the Company is or has been a director or officer of the Company nor have any of
them received any compensation from the Company. No discussions have been held
and, except as indicated in the Proxy Statement, there are no understandings
with respect to any proposed remuneration from any source for these nominees in
connection with serving as a director of Damen if elected. However, if our
nominees are elected as directors of Damen, it is anticipated they will receive
the same compensation as other directors. According to the Proxy Statement filed
by the Company with the SEC dated on January 13, 1998, each member of the Board
of Directors of the Company is paid a fee of $500 per Board meeting.
2. STOCKHOLDER PROPOSAL TO APPOINT AN INVESTMENT BANKER AND TO ESTABLISH
AN INDEPENDENT COMMITTEE
At the Annual Meeting, the stockholders will be asked to vote to
approve or disapprove a stockholder proposal directing the Company's Board of
Directors to appoint an investment banker and establishing a committee
consisting of all directors who are not current or former officers or employees
or relatives of current or former officers or employees of the Company in order
to consider and recommend to the full Board of Directors for approval the best
available offer to acquire the Company by sale or merger. The specific
resolution reads as follows:
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. Duggan and the Committee have concluded that Damen should
seriously explore whether it can be acquired or merged to take advantage of
opportunities currently existing in the banking industry. Accordingly, on
numerous occasions, Mr. Duggan requested the Company to consider appointing an
investment banking firm for the purposes of evaluating and soliciting offers to
acquire the Company. See letters of Mr. Duggan dated August 24, 1998 and
December 5, 1997, which are attached hereto as Exhibits 1 and 2.
<PAGE>
Page 45 of 62 pages
On December 16, 1998, Damen announced that it engaged Keefe Bruyette
and Woods, Inc. ("Keefe") to serve as its financial advisor to assist it in
reviewing its strategic options, including a possible sale of the Company. We
believe that although the appointment of Keefe is a positive step, it does not
constitute substantial implementation of the stockholder proposal. The
stockholder proposal specifically requests the Board of Directors to promptly
proceed to effect a sale or merger of the Company, not merely to review
strategic options, one of which may be a sale of the Company. Damen has not
disclosed publicly whether it has specifically directed Keefe to solicit offers
for the sale of the Company. Accordingly, we believe that approval of the
stockholder proposal is necessary to ensure that the Board of Directors will
specfically direct Keefe, or any other investment banking firm appointed by the
Company to not only review its strategic options, but to solicit offers for the
sale of the Company.
In addition, we believe the appointment of a committee of independent
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 evaluate and recommend an offer is necessary to ensure the selection
of the best possible offer.
We believe that the reluctance of the current Board of Directors to
appoint an investment banker until less than 45 days prior to a stockholder vote
requiring such action, despite repeated stockholder requests to take such
action, is evidence of the influence of management over the Board of Directors
and the insufficient responsiveness of the Board of Directors to the concerns of
stockholders.
For these reasons, we believe that it is necessary to appoint an
committee of independent directors to evaluate acquisition proposals, and to
direct the investment bank retained by the Company to solicit offers for the
purchase of the Company.
At the annual meeting of stockholders held on January 27, 1998 a
similar proposal was made. The majority of votes cast at the meeting were in
favor of hiring an investment banker. The vote count was 1,180,889 cast in favor
of the proposal and 1,168,000 votes against. However, the Company's bylaws
restrict voting of shares (by one individual or group) in excess of 10% of total
votes outstanding. Accordingly, the number of votes for the proposal was reduced
by 51,672 shares. Such reduction allowed the proposal to fail.
Although management knew that if not for the bylaw restriction
described above the stockholder proposal would have passed, the Company did not
announce the appointment of an investment banker until December 16, 1998. The
appointment of the investment banker does not make this issue moot and does not
lessen the need for passage of the stockholder proposal. The current stockholder
proposal directs the Board to appoint an investment banking firm for the
specific purpose of soliciting offers to acquire the Company, not merely to
evaluate its strategic options. Moreover, the current stockholder proposal calls
for the recommendations of the investment bankers to be reviewed by only outside
independent directors. This outside review protects all stockholders, not just
stockholder employees.
None of the members of the Committee have any agreement or
understanding concerning the possible acquisition of Damen and there can be no
assurance that an acquisition can be effected at prices materially above the
current market value of Damen Common Stock. We are not aware of any proposals
for acquisition of Damen.
<PAGE>
Page 42 of 62 pages
Required Votes and Other Matters
By signing and returning the enclosed BLUE proxy card, you can vote to
elect Paul J. Duggan, Vincent Cainkar and J. Dennis Huffman as directors of
Damen and vote for the stockholder proposal included in the Board of Directors'
Proxy Statement.
According to the Company's bylaws, directors shall be elected by a
plurality of the votes cast. The ratification of the appointment of Cobitz,
VanderBerg & Fennessy as auditors and approval of the stockholder proposal each
require the affirmative vote of a majority of the votes cast on the matter.
Proxies marked to abstain with respect to a proposal have the same effect as
votes against the proposal. Votes withheld (for election of directors) and
broker non-votes will have no effect on the vote. One-third of the shares of the
Common Stock, present in person or represented by proxy, shall constitute a
quorum for purposes of the Annual Meeting. Abstentions and broker non-votes are
counted for purposes of determining a quorum.
OTHER INFORMATION
How Proxies Will be Solicited
We may solicit proxies for the Annual Meeting by mail, advertisement,
telephone, telecopier or in person. The persons identified on Schedule 1 to this
Proxy Statement also may make solicitations. None of these persons will receive
additional compensation for participating in the solicitation. We have requested
banks, brokerage houses and other custodians, nominees and fiduciaries to
forward all of our solicitation materials to the beneficial owners of the Damen
Common Stock they hold.
Important Instructions For "Street Name" Stockholders
If any of your shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the record date, only that entity can vote
your shares and only upon its receipt of your specific instructions.
Accordingly, please contact the person responsible for your account at such
entity and instruct that person to execute and return the BLUE proxy card on
your behalf. You should also sign, date and mail the voting instruction form
your broker or banker sends you when you receive it. Please do this for each
account you maintain to ensure that all of your shares are voted.
Information About the Proxy Solicitor
Mr. Duggan and the Committee have retained The Altman Group, Inc.
("Altman") to assist in the solicitation of proxies. Mr. Duggan and the
Committee have agreed to pay Altman a fee of $_____________ and to reimburse it
for its reasonable out-of-pocket expenses. Approximately ______________ persons
will be used by Altman in its solicitation efforts.
Costs of Soliciting Proxies
The entire expense of preparing, assembling, printing and mailing this
Proxy Statement and related materials and the cost of soliciting proxies
pursuant to this Proxy Statement will be borne by Mr. Duggan, Jackson Equities
and certain other members of the Committee. Mr. Duggan and the Committee
estimate that the total expenditures relating to the solicitation of proxies
will be approximately $______________. To date, approximately $________________
of expenses have been incurred. Mr. Duggan, Jackson Equities and certain other
members of the Committee will pay the
<PAGE>
Page 47 of 62 pages
costs of soliciting proxies. Mr. Duggan and the Committee intend to seek
approval from the Board of Directors for the reimbursement of the Committee's
cost of soliciting policies. In the event of the Board of Directors does not
approve this reimbursement, Mr. Duggan and the Committee intend to seek
reimbursement from the Company through any other available means, including if
necessary submitting a stockholder proposal for consideration at the next
meeting of Damen's stockholders that would direct Damen's Board of Directors to
reimburse Mr. Duggan and the Committee for their solicitation expenses.
Information About Stockholder Proposals - Next Annual Meeting
To be eligible for inclusion in the Company's proxy materials for the
next annual meeting of stockholders, any stockholder proposal to take action at
such annual meeting must be received at the Company's office located at 200 West
Higgins Road, Schaumburg, Illinois 60195, no later than the date set forth in
the Company's definitive proxy statement. Any such proposal shall be subject to
the requirements of the proxy rules adopted under the Exchange Act.
Information About Paul J. Duggan and the Committee to Enhance Shareholder Value
Certain information about persons who may participate in the
solicitation of proxies is set forth in Schedule 1 to this Proxy Statement.
Schedule 2 to this Proxy Statement sets forth certain information relating to
beneficial ownership of shares of Damen Common Stock by such persons (including
our nominees and persons involved in this solicitation known to us to
beneficially own more than five percent of Damen Common Stock), and Schedule 3
lists all transactions in Damen Common Stock effected by such persons in the two
years prior to the date of this proxy statement.
MR. DUGGAN AND THE COMMITTEE STRONGLY RECOMMEND A VOTE FOR PAUL J.
DUGGAN, VINCENT CAINKAR AND J. DENNIS HUFFMAN AS DIRECTORS AND A VOTE "FOR" THE
STOCKHOLDER PROPOSAL TO APPOINT AN INVESTMENT BANKER AND APPOINT A COMMITTEE
COMPOSED OF INDEPENDENT DIRECTORS TO EVALUATE PROPOSALS TO SELL OR MERGE THE
COMPANY.
<PAGE>
Page 42 of 62 pages
IT IS IMPORTANT THAT YOU RETURN YOUR PROXY PROMPTLY. PLEASE SIGN AND
DATE YOUR BLUE PROXY CARD PROMPTLY AND RETURN IT IN THE ENCLOSED ENVELOPE TO
AVOID UNNECESSARY EXPENSE AND DELAY. NO POSTAGE IS NECESSARY.
Sincerely,
Paul J. Duggan
Chairman, Committee to Enhance Shareholder Value
January 4, 1999
<PAGE>
Page 49 of 62 pages
SCHEDULE 1
PARTICIPANTS IN THE SOLICITATION
The following table identifies and provides certain information as of
December 15, 1998 about individuals and entities that might be deemed
participants in this proxy solicitation within the meaning of Rule 14a-11(b)
promulgated under the Securities Exchange Act of 1934, as amended:
1. Paul J. Duggan
53 West Jackson Boulevard, Suite 400
Chicago, IL 60604
Paul Duggan is an individual who is Manager/Owner of Duggan &
Associates, a consulting firm specializing in consulting, since 1976,
and has managed Jackson Partners, an investment consulting firm in
Chicago, since 1991. Mr. Duggan is also President of Jackson Fund, a
hedge fund management firm.
Mr. Duggan, together with reporting group members Jackson Boulevard
Capital Management, Ltd., Jackson Boulevard Equities, L.P., Jackson
Boulevard Investments, L.P., Jackson Offshore Fund, Ltd., Jackson
Boulevard Partners, Vincent Cainkar and J. Dennis Huffman, has filed a
Schedule 13D and will make amendments as required by law with respect
to beneficial ownership of Common Stock.
2. Jackson Boulevard Capital Management, Ltd.
53 West Jackson Boulevard, Suite 400
Chicago, IL 60604
Jackson Fund is an Illinois corporation, and hedge fund management
firm. Jackson Fund offers money management and venture capital
activities, in addition to managing hedge funds which concentrate in
investing in the thrift and small cap bank areas. Jackson Fund is the
sole General Partner of Jackson Equities and Jackson Investments.
3. Jackson Boulevard Equities, L.P.
53 West Jackson Boulevard, Suite 400
Chicago, IL 60604
Jackson Equities is an Illinois limited partnership. Jackson Equities
invests in marketable securities with an emphasis on securities of
savings & loans, banks and of other companies in the banking field.
<PAGE>
Page 50 of 62 pages
4. Jackson Boulevard Investments, L.P.
53 West Jackson Boulevard, Suite 400
Chicago, IL 60604
Jackson Investments is an Illinois limited partnership. Jackson
Investments specializes in buying and selling securities for
investments, particularly securities related to the financial industry
(including banks and thrifts).
5. Jackson Offshore Fund
31 Kildare Street
Dublin 2
IRELAND
Jackson Offshore is an Illinois corporation and a Tortolla, British
Virgin Island corporation. Jackson Offshore specializes in buying and
selling securities for investments, particularly securities related to
the financial industry (including banks and thrifts).
6. Jackson Boulevard Partners
53 West Jackson Boulevard, Suite 400
Chicago, IL 60604
Jackson Partners is an Illinois general partnership and Jackson
Partners is an investment consulting firm.
7. Vincent Cainkar
6215 West 79th Street, Suite 2A
Burbank, IL 60459
Vincent Cainkar, an individual, is an attorney for the City of Burbank,
Village of Evergreen Park, City of Hickory Hills, Village of McCook,
and Stickney Township.
8. J. Dennis Huffman
10549 South Talman Avenue
Chicago, IL 60655
J. Dennis Huffman Partner, an individual, is a Partner of DHK
Development Corp. and a trader with the Chicago Board of Trade .
Except as described in this Proxy Statement, none of the above-listed
participants in the solicitation is now, or was within the last two years, a
party to any contract, arrangement or understanding with any person with respect
to any securities of Damen, future employment by Damen or future transactions
involving Damen.
<PAGE>
Page 51 of 62 pages
SCHEDULE 2
Beneficial Ownership of Shares by Participants in the Solicitation
The following table shows, as of December 15, 1998 (except as
otherwise noted), the shares of Damen Common Stock beneficially owned by the
participants in the solicitation of proxies pursuant to this Proxy Statement.
Unless otherwise indicated, each participant has sole voting and investment
power over the shares beneficially owned.
Shares Beneficially
Owned at Percent
Beneficial Owner December 15, 1998 Of Class
- ---------------- ------------------ --------
Paul J. Duggan 1 266,600 9.5%
Jackson Boulevard Capital Management, Ltd. 2 92,200 3.3%
Jackson Boulevard Equities, L.P. 60,622 2.1%
Jackson Boulevard Investment, L.P. 31,578 1.1%
Jackson Offshore Funds 0 0%
Jackson Boulevard Partners 174,000 6.2%
Vincent Cainkar 3 4,200 0.1%
J. Dennis Huffman 3,000 0.1%
- --------
1 Includes 400 shares held in Mr. Duggan's own name, 174,000 shares
held by Jackson Partners, 60,622 shares held by Jackson Equities and 31,578
shares held by Jackson Investments. Mr. Duggan is one of two general partners of
Jackson Partners and shares voting and investment power concerning the shares
held by Jackson Partners with Deborah Duggan, Mr. Duggan's spouse. Mr. Duggan is
the sole stockholder and a director and officer of Jackson Boulevard Capital
Management, Ltd. which is the sole general partner of Jackson Equities and
Jackson Investments. Mr. Duggan, Jackson Capital, Jackson Equities, and Jackson
Investments have shared voting and investment power with regard to the 92,200
shares held by Jackson Equities and Jackson Investments.
2 All 92,000 shares are beneficially owned as sole General Partner of
Jackson Equities and Jackson Investments.
3 Mr. Cainkar has sole voting and investment power with regard to 100
shares held in his own name and has shared voting and investment power with
respect to the 4,100 shares held jointly by him and Cathy Cainkar, Mr. Cainkar's
wife.
<PAGE>
SCHEDULE 3
The following table sets forth all shares of Damen Common Stock purchased or
sold during the two years ended January 4, 1999 by participants in the
solicitations of proxies pursuant to this Proxy Statement.
SHARES
PURCHASED /
DATE (SOLD)
- ---------------------------------------------------------------------
JACKSON BOULEVARD EQUITIES, L.P.
01/01/98 transferred (1) (12,749)
01/01/98 transferred (1) (5,100)
01/01/98 transferred (1) (1,351)
01/01/98 transferred (1) (5,278)
01/01/98 transferred (1) (5,100)
08/01/98 distribution (2) (5,529)
08/01/98 distribution (2) (4,014)
08/01/98 distribution (2) (5,529)
08/01/98 distribution (2) (4,014)
08/01/98 distribution (2) (5,357)
08/01/98 distribution (2) (5,357)
10/12/98 6,100
10/30/98 (6,100)
12/02/98 4,000
(1) Transferred to Jackson Boulevard Investments, L.P. pursuant to partnership
reorganization.
(2) Certain Jackson Boulevard Equities, L.P. investors received stock in lieu
of cash for a distribution of their interests.
JACKSON BOULEVARD INVESTMENTS, L.P.
01/01/98 transferred (1) 12,749
01/01/98 transferred (1) 5,100
01/01/98 transferred (1) 1,351
01/01/98 transferred (1) 5,278
01/01/98 transferred (1) 5,100
10/12/98 500
10/30/98 (500)
12/02/98 2000
(1) Transferred from Jackson Boulevard Equities, L.P. pursuant to partnership
reorganization.
JACKSON OFFSHORE FUND, LTD.
08/01/98 distribution (1) 5,529
08/01/98 distribution (1) 4,014
08/01/98 distribution (1) 5,529
08/01/98 distribution (1) 4,014
08/01/98 distribution (1) 5,357
08/01/98 distribution (1) 5,357
12/02/98 (2,000)
12/02/98 (4,000)
12/02/98 (23,800)
<PAGE>
(1) Certain Jackson Offshore Fund, Ltd. investors received stock in lieu of cash
for a distribution from jackson Boulevard Equities, L.P. of their interests.
JACKSON BOULEVARD PARTNERS
01/30/97 (300)
01/30/97 (1,700)
02/18/97 (1,000)
02/19/97 (3,400)
08/01/97 transfer (1) (246,400)
12/02/98 transfer (2) 174,000
(1) Transferred into Paul J. Duggan personal stock account.
(2) Transferred into partnership from a partner of Jackson Boulevard Partners,
L.P.
VINCENT CAINKAR
10/27/97 5,000
10/28/97 5,000
12/12/97 (1,800)
01/27/98 (3,000)
02/06/98 (3,000)
08/21/98 2,000
DENNIS HUFFMAN
01/24/97 (1,000)
02/05/97 (2,000)
05/22/97 (400)
07/24/97 (300)
08/20/97 (300)
09/18/97 (1,000)
09/03/98 1,000
12/03/98 1,000
12/03/98 1,000
PAUL J. DUGGAN
08/01/97 transfer (1) 246,400
12/02/98 (72,000)
12/02/98 transfer (2) (174,000)
(1) Transferred to Paul J. Duggan stock account from Jackson Boulevard
Investments, L.P.
(2) Transferred into Jackson Boulevard Investments, L.P.
<PAGE>
PAGE 53 of 62
EXHIBIT 1
PAUL DUGGAN
53 W. JACKSON BLVD-SUITE 400
CHICAGO, ILLINOIS 60604
(312) 294-6440
(312) 294-6449 FAX
August 24, 1998
Ms. Mary Beth Poronsky-Stull
Damen Financial Corp.
200 West Higgins Road
Schaumburg, IL 60195-3780
Dear Mary Beth:
You should be in receipt of my shareholder proposal. In recent weeks, the market
price of stock at Damen Financial (Damen) has gone down dramatically. It
currently trades at $15 per share, which is down from its 52 week high of 19 1/4
and near its 52 week low of $14.
I am in receipt of management's letter to shareholders (accompanying the
dividend check) which discusses how well things are going. The market obviously
sees the performance of Damen's stock in a fashion other than the way you and
management look at it. If the market was excited, this stock would be setting
new highs not nearing new lows. The stock has been down since the annual meeting
and now trades at around book value.
I believe the time has come to sell the company. There are a number of things
that can be done to add value now while you market the company for sale. I offer
the following outline as a possible way for you to enhance the price of your
stock and the ultimate sellout value of the company.
1. Initiate a new buyback program. Approve and announce a buyback program for
up to 20% of the stock of Damen Financial. Indicate that the program will
be in place over the next year. This approach, which would be consistent
with your change to a national bank charter (the benefits of which you have
not availed yourself of) would have the following advantages.
a. For every share of stock Damen purchased, Damen would not
have to pay a 48 cent annual dividend on those shares.
b. With the stock currently trading at/or below book value,
stock purchases in this range would be accretive to earnings per share
and to book value.
c. All stock repurchases would help your excess capital
problems.
d. Rather than having Mr. Gartner handle this buyback, I would
use the services of Sandler O'Neill & Partners or Robert Baird &
Company. I think an outside
<PAGE>
PAGE 54 of 62
advisor would be helpful.
When looking at buybacks, Damen should assess the impact on earnings. Net
interest margin is only 2.95% (pre-tax). This would be about 1.77% after
tax. Dividends currently cost 48 cents per year with after-tax money. This
is a 3.2% cost (after tax) on a $15 buyback. It clearly is cheaper to use
excess capital to do buybacks than to invest in marginal investments with a
1.77% after tax yield.
2. Dividend Increase. Your current dividend is 12 cents per quarter or 48
cents per year. Consider an instant increase of 25% to 15 cents per quarter
and 60 cents per year based on the following thoughts:
a. A 60 cent dividend would infer a 4% yield on a $15 stock
price (a strong support for the stock).
b. A dividend in excess of current earnings would help
reduce your excess capital.
c. There is no reason a dividend cannot exceed earnings per
share. I refer you to the recently sold Southwest Financial (SWBI).
SWBI paid 25 cents per quarter in dividends as a way to reduce their
excess capital.
d. You can pay a 60 cent per share dividend on 80% of
current shares with the same amount of money as a 48 cent dividend on
100% of shares. Current shares outstanding are 2,967,154, with an
inferred annual dividend cost of $1,424,234. If 20% of the shares are
repurchased before the next dividend, you could go to a 60 cent annual
rate and have the same annual dividend cost.
3. Reconfigure your Board of Directors. You currently have 3 directors up for
re-election at the next annual meeting. Why not have your two senior
directors retire early and appoint two outside directors now.
This would have a number of advantages.
a. Adding Board of Directors with financial expertise would
assist you in considering strategies such as dividend increases and
buybacks.
b. A change in the Board would be a signal to outside
investors that you are making a move forward.
c. In conjunction with the appointment of Mr. Baldermann,
you would have added strong financial advisors to your core group. I
could give you a list of quality advisors with banking, lending, and
financial experience. I think you and your board should be receiving
better advice.
4. Consider changing your option programs. Does your current option program
provide for acceleration of vesting upon change in control? Does your
current option program call for a reduction of the option strike prices in
the event the special dividend is paid? If your current plan does not have
these provisions, you should add them to the agenda for your annual meeting
and you should question the legal advice that you are currently receiving.
<PAGE>
PAGE 55 of 62
I think you have a tremendous opportunity to enhance shareholder value, retire
shares at book value or a discount to book value and increase short term and
long term shareholder value. You must take advantage of these market conditions.
You must move quickly to do so.
Please feel free to call me at (312) 294-6440 if you wish to discuss the issues
outlined in this letter.
Very truly yours,
/s/ Paul J. Duggan
Paul J. Duggan, an individual shareholder
53 West Jackson Boulevard, Suite 400
Chicago, IL 60604
<PAGE>
Page 56 of 62 Pages
EXHIBIT 2
[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
<PAGE>
Page 57 of 62 Pages
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.
<PAGE>
Page 58 of 62
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
<PAGE>
Page 59 of 62
[Face of Proxy Card]
PROXY
Damen Financial Corporation
1999 Annual Meeting of Stockholders
The undersigned appoints Paul J. Duggan and Vincent Cainkar, and each
of them, each with full power to act without the other, and each with full power
of substitution, proxies for the undersigned, to represent and vote, as
designated below, all shares of Common Stock of Damen Financial Corporation (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held as originally scheduled on January 25,
1999 at 9:30 a.m. (local time) or such other date and time as may be determined
by the Company or a court of competent jurisdiction and at any adjournments or
postponements thereof, at the Holiday Inn, located at 3405 Algonquin Road,
Rolling Meadows, Illinois.
This proxy, when properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR the election of Paul J. Duggan, Vincent Cainkar and J. Dennis
Huffman as directors of the Company, FOR the ratification of the appointment of
Cobitz, VandenBerg & Fennessy as the auditors of the Company for the fiscal year
ending September 30, 1999, and FOR the stockholder proposal directing the Board
of Directors to appoint an investment banker to pursue merger or acquisition
candidates for the Company and to establish a committee consisting of all
directors who are not current or former officers or employees or relatives of
such persons in order to recommend to the Board of Directors the best available
offer to acquire the Company.
This proxy is solicited on behalf of Paul J. Duggan and the Committee
to Enhance Shareholder Value.
- --------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[Reverse of Proxy Card]
The Committee to Enhance Shareholder Value recommends that you vote FOR
the election of Paul J. Duggan, Vincent Cainkar and J. Dennis Huffman as
directors of the Company, FOR the ratification of the appointment of Cobitz,
VandenBerg & Fennessy as the auditors of the Company for the fiscal year ending
September 30, 1999, and FOR the stockholder proposal directing the Board of
Directors to appoint an investment banker to pursue merger or acquisition
candidates for the Company and to establish a committee consisting of all
directors who are not current or former officers or employees or relatives of
such persons in order to recommend to the Board of Directors the best available
offer to acquire the Company.
1. To elect three nominees as directors of the Company.
|_| FOR all nominees listed below (except |_| WITHHOLD authority to vote
as marked to the contrary below) for all nominees listed below
Paul J. Duggan, Vincent Cainkar and J. Dennis Huffman
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
--------------------------------------------
2. To ratify the appointment of Cobitz, VandenBerg & Fennessy as the auditors of
the Company for the fiscal year ending September 30, 1999.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To approve the stockholder proposal directing the Board of Directors to
appoint an investment banker to pursue merger or acquisition candidates for the
Company and to establish a committee consisting of all directors who are not
current or former officers or employees or relatives of such persons in order to
recommend to the Board of Directors the best available offer to acquire the
Company.
|_| FOR |_| AGAINST |_| ABSTAIN
<PAGE>
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Please sign your name exactly as it
appears on this card. If you are a
joint owner, each owner should sign.
When signing as executor,
administrator, attorney, trustee, or
guardian, or as custodian for a
minor, please give your full title
as such. If you are signing for a
corporation, please sign the full
corporate name and indicate the
signer's office. If you are a
partner, sign in the partnership
name.
------------------------------------
Shareholder sign here Date
------------------------------------
Co-owner sign here Date
If you need assistance in voting your shares, please call Paul J. Duggan at
(888) 522-5332 or The Altman Group, Inc., which is assisting the Committee in
its solicitation of your proxy for the Annual Meeting, at (212) 681-9600.
Page 61 of 62 pages
EXHIBIT 30
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DAMEN FINANCIAL CORPORATION
(Name of Registrant as Specified in its Charter)
PAUL J. DUGGAN AND THE COMMITTEE TO ENHANCE SHAREHOLDER VALUE
(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>
Page 62 of 62 pages
PAUL J. DUGGAN
and
THE COMMITTEE TO ENHANCE SHAREHOLDER VALUE
53 West Jackson Boulevard
Chicago, IL 60604
(312) 294-6440
--------------------------------------------
IN OPPOSITION TO THE BOARD OF DIRECTORS
OF DAMEN FINANCIAL CORP.
--------------------------------------------
Dear Fellow Stockholder:
Enclosed are proxy materials in opposition to the Board of Directors of
Damen Financial Corporation ("Damen" or the "Company"). These materials set out
the reasons I believe you should support our efforts to:
1. elect three directors to the Damen Board of Directors, and
2. pass a stockholder proposal to appoint an investment banker
and establish a committee composed of independent directors to
evaluate proposals to sell or merge the Company.
Our director candidates and the stockholder proposal are outlined in
greater detail in the enclosed proxy statement.
We believe that the current management and Board of Directors of Damen
have failed to maximize stockholder value and the profitability of the Company.
You can support my efforts to bring change to Damen's Board by signing,
dating, completing and returning the enclosed BLUE proxy card. Please remember,
if you do not return a proxy card your shares will not be voted on important
matters being considered at Damen's annual meeting.
If you have any questions please call me at (312) 294-6440, or my proxy
solicitor:
The Altman Group
(212) 681-9600 (call collect)
Thank you for your consideration.
Sincerely,
Paul J. Duggan
Committee to Enhance Shareholder Value
