<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[X] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DAMEN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
DAMEN FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
LOGO
MARCH 5, 1999
Dear Fellow Stockholder:
As you know, Damen Financial Corporation ("Damen") has entered into an
Agreement and Plan of Merger with MidCity Financial Corporation ("MidCity")
pursuant to which MidCity will acquire all of Damen's Common Stock for $18.35
per share in cash.
Your Board believes that this transaction is in the best interest of Damen
and ALL of its stockholders. To ensure that the Merger proceeds as planned, we
believe it is important that the current members of your Board of Directors
continue to serve you and, therefore, that you re-elect the slate proposed by
your Board.
IF YOU HAVE NOT ALREADY DONE SO, PLEASE PROMPTLY SIGN AND DATE AND MAIL THE
ENCLOSED WHITE PROXY CARD INDICATING YOUR VOTE FOR DAMEN'S NOMINEES FOR
DIRECTORS AND THE SELECTION OF DAMEN'S AUDITORS AND YOUR VOTE AGAINST THE
STOCKHOLDER PROPOSAL.
In its February 25, 1999 letter, the so-called Committee has promised that
it will review and complete the MidCity transaction or, if possible, seek to
create an auction to achieve an even better offer for Damen. As is customary in
transactions like the Merger, the Merger Agreement prohibits Damen from
soliciting any Takeover Proposals or entering into any negotiations with any
person over a Takeover Proposal. Thus, the Committee's promise may be difficult,
if not impossible, to fulfill without exposing Damen to liability for breaching
the Merger Agreement. Don't you think the Committee has spent enough of your
money in the proxy fight? Do you want to allow them to spend more of your money?
The Committee has stated in its proxy materials it intends to ask Damen's
Board of Directors for reimbursement of the Committee's expenses of conducting
its proxy contest. The Committee also stated it would seek reimbursement at a
stockholders meeting if Damen's Board denies reimbursement. The Board believes
that one of the reasons Duggan continues pressing this fight, even though the
Board has achieved Duggan's goal of selling Damen, is to pressure the Board to
reimburse the Committee for his expenses. The Committee did not have to incur
these expenses, however, because the Committee knew before it began this proxy
fight that the Board was seeking potential buyers for Damen.
YOUR BOARD BELIEVES YOU SHOULD KNOW THAT PRIOR TO THE MAILING OF THE
COMMITTEE'S PROXY MATERIALS ON OR ABOUT JANUARY 13, 1999, DAMEN ADVISED DUGGAN
THAT IT HAD RECEIVED AN EXPRESSION OF INTEREST FROM MIDCITY TO PURCHASE DAMEN
FOR $17.50 CASH PER SHARE AND THAT DAMEN INTENDED TO PURSUE THIS EXPRESSION OF
INTEREST. DESPITE DUGGAN'S POSSESSION OF THIS INFORMATION, HE CHOSE TO PURSUE A
COSTLY, DISRUPTIVE PROXY CONTEST.
The Committee's comments in its most recent letter regarding severance
payments to the executive officers if the Merger is consummated, implies, in the
Board's view, that management is receiving some special inducement to pursue the
Merger. The severance payments are not an inducement to pursue the Merger. Damen
is contractually required, through employment agreements, to make severance
payments if Damen were to be acquired by any company (including MidCity). Damen
disclosed its intent to enter into employment agreements, and disclosed the
terms of these agreements, including the change in control payments, in its
initial public offering. These severance payments, which are contractual
obligations of Damen incurred over three years ago, are reasonable and normal
for transactions like the Merger.
<PAGE> 3
Unvested stock options representing approximately 167,835 shares of Damen
Common Stock held by your directors and executive officers will not vest prior
to the consummation of the Merger and will be canceled upon the consummation of
the Merger. Damen's directors and executive officers will not receive payment
for these unvested options which have a value, if vested, of approximately
$1,130,000 based on an $18.35 per share price. In addition, 66,657 unvested
shares of Common Stock held by directors and executive officers under Damen's
Recognition and Retention Plan ("RRPs") will also be canceled upon the
consummation of the Merger. Again, the directors and executive officers of Damen
will not be paid for these shares which have a value, if vested, of
approximately $1,223,00 based on an $18.35 per share price. These funds,
totalling approximately $2.3 million, provided a significant part of the
increase in the purchase price from MidCity's original offer of $17.50 to $18.35
per share.
Your Board of Directors understood that by entering into the Merger
Agreement, the directors and executive officers would be required to forego over
$2.3 million in payments for these unvested options and RRPs. Rather than
discontinue discussions with MidCity and seek a buyer who might make these
payments to your directors and executive officers, your Board elected to forego
these payments and to enter into the Merger Agreement because your Board
believes the Merger is in the best interests of Damen and its stockholders.
THE BOARD UNANIMOUSLY AND VIGOROUSLY OPPOSES THE COMMITTEE'S SOLICITATION
OF PROXIES AND URGES YOU NOT TO SIGN ANY PROXY YOU MIGHT RECEIVE FROM THE
COMMITTEE.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER OR OTHER NOMINEE, WE
URGE YOU TO CONTACT THE PARTY RESPONSIBLE FOR YOUR ACCOUNT AND DIRECT HIM OR HER
TO VOTE DAMEN'S NOMINEES AND AGAINST THE STOCKHOLDER PROPOSAL ON DAMEN'S WHITE
PROXY CARD.
Very truly yours,
LOGO
Mary Beth Poronsky Stull
Chairman, President and Chief Executive Officer
If you have any questions or require any assistance, please contact our proxy
solicitor, D. F. King & Co., Inc. at 1 800 628-8538.
