SCHEDULE 14A INFORAMTION
PROXY PURSUANT TO SECTION 14 (a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-
12
UNITED MORTGAGE TRUST
(Name of Registrant as Specified in Its Charter)
___________________________________________________________________
(Name of person(s) Filing Proxy Statement, if other than
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 of 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
determined0:
(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 preciously. 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 No.:
(3) Filing Party:
(4) Date Filed:
UNITED MORTGAGE TRUST
1701 N. Greenville, Suite 403
Richardson, Texas 75081
(972) 705-9805
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of United Mortgage Trust:
You are cordially invited to attend the Annual Meeting of
Shareholders of United Mortgage Trust, a Maryland real estate
investment trust (the "Company"), to be held on June 12, 2000, at 9:00
a.m., CDT, at 5740 Prospect Avenue, Suite 1000, Dallas Texas 75206,
for the following purposes:
1. The election of five Trustees to serve until the Company's
Annual Meeting of Shareholders to be held in 2001 or until such
Trustees' successors are elected and qualified;
2. Ratification of the selection of Jackson & Rhodes, P.C. as
the Company's independent public accountants for the fiscal year
ending December 31, 2000; and
3. To transact such other business as may properly come before
the annual meeting or at any adjournments thereof.
A proxy statement describing the matters to be considered at the
annual meeting is attached to this notice. Only holders of record of
the Company's shares of beneficial interest (the "Shares") at the close
of business on May 12, 2000 are entitled to notice of and to vote at
the meeting or any adjournment or adjournments thereof. A list of all
shareholders as of May 12, 2000 will be open for inspection at the
Annual Meeting.
The Board of Trustees desires to have a maximum representation of
shareholders at the Annual Meeting. The Company may incur substantial
additional proxy solicitation costs if a sufficient number of proxies
are not returned in advance of the Annual Meeting. In order that your
Shares may be represented at the Annual Meeting, the Trustees
respectfully request that you date, execute and promptly mail the
enclosed proxy in the accompanying postage-paid envelope. A proxy may
be revoked by a shareholder by notice in writing to the President of
the Company at any time prior to its use, by presentation of a later-
dated proxy, or by attending the Annual Meeting and voting in person.
By Order of the Board of Trustees
Christine Griffin, President
Richardson, Texas
May 12, 2000
YOUR VOTE IS IMPORTANT. PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE.
UNITED MORTGAGE TRUST
5740 Prospect Avenue, Suite 1000, Dallas TX 75206
(214) 237-9305
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 12, 2000
To Our Shareholders:
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of United Mortgage Trust, a Maryland
real estate investment trust (the "Company"), for use at the Annual Meeting
of Shareholders of the Company (the "Annual Meeting") to be held, on the
12th day of June 2000 at 9:00 a.m., Central Daylight Time, at 5740
Prospect Avenue, Suite 1000, Dallas TX 75206, and any adjournments
thereof. This Proxy Statement, the accompanying proxy card and the Notice
of Annual Meeting are being provided to shareholders beginning on or about
May 12, 2000.
GENERAL INFORMATION
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Trustees of the
Company. The costs of this solicitation, which represents the amounts
normally expended for solicitations relating to an uncontested election of
directors, will be borne by the Company. Proxy solicitations will be made
by mail, and also may be made by personal interview, telephone, facsimile
transmission and telegram on behalf of the Company by Trustees and
officers of the Company. Banks, brokerage houses, nominees and other
fiduciaries will be requested to forward the proxy soliciting material to
the beneficial owners and to obtain authorization for the execution of
proxies. The Company will, upon request, reimburse such parties for their
reasonable expenses in forwarding proxy materials to their beneficial
owners. The Company does not expect to engage an outside firm to solicit
votes.
VOTING RIGHTS
Holders of the shares of beneficial interest in the Company's (the
"Shares") at the close of business on March 31, 2000 (the "Record Date"),
are entitled to notice of, and to vote at, the Annual Meeting. On the
Record Date 1,339,262 Shares were outstanding. Each Share outstanding on
the Record Date is entitled to one vote on each matter presented at the
Annual Meeting.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of shareholders representing 50%
or more of the issued and outstanding Shares entitled to vote constitutes
a quorum for the transaction of business at the Annual Meeting. If a
quorum is present, (i) a plurality of the votes cast at the Meeting is
required for election as a Trustee, and (ii) the affirmative vote of the
majority of the Shares present, in person or by proxy, at the Annual
Meeting and entitled to vote is required for all other matters.
Cumulative voting in the election of Trustees is not permitted.
EFFECT OF ABSTENTION
Abstentions are considered shares present and entitled to vote, and
therefore have the same legal effect as a vote against all matters
presented at the Annual Meeting other than the election of Trustees. An
abstention with respect to the election of the Company's Trustees will not
be counted either in favor of or against the election of the nominees.
EFFECT OF BROKER NON-VOTE
Brokers holding shares for the account of their clients may vote such
shares either in the manner directed by their clients or in their own
discretion if permitted by the exchange or other organization of which
they are members. Proxies that are voted by brokers on at least one but
not all of the proposals are referred to as "broker non-votes". Broker
non-votes will be included in determining the presence of a quorum.
However, a broker non-vote is not treated as present and entitled to vote
and will therefore have no outcome as the election of Trustees or the
ratification of the selection of auditors.
REVOCABILITY OF PROXY
The giving of the enclosed proxy does not preclude the right to vote
in person should the stockholder giving the proxy so desire. A proxy may
be revoked at any time prior to its exercise by delivering a written
statement to the Secretary of the Company that the proxy is revoked, by
presenting to the Company a later-dated proxy executing the prior proxy,
or by attending the Annual Meeting and voting in person.
VOTING OF PROXIES
Shares represented by all properly executed proxies received in time
for the Annual Meeting will be voted in accordance with the choices
specified in the proxies. Unless contrary instructions are indicated on
the proxy, the shares will be voted FOR the election of the nominees named
in this proxy statement as Trustees and FOR the appointment of Jackson &
Rhodes, P.C. as the Company's auditors.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
As of the Record Date, the Company had 1,339,260 Shares issued and
outstanding. The following table sets forth certain information regarding
the beneficial ownership of the Shares as of the Record Date by (i) each
person known by the Company to be the beneficial owner of more than 5% of
the outstanding Shares, (ii) each of the Company's Trustees and executive
officers, and (iii) all of the Company's trustees and executive officers
as a group. Except as indicated in the footnotes to this table, the
persons named in the table, based on information provided by such persons,
have sole voting and sole investment power with respect to all Shares
shown as beneficially owned by them, subject to community property laws
where applicable.
Number of Percent
Name and Address Shares (1) of Class
- ---------------- --------- --------
Major Machine Co. 80,000 5.97%
Christine "Cricket" Griffin (2) 7,500(3) 0.56%
Richard D. O'Connor, Jr. (2) 0 0.0%
Paul R. Guernsey (2) 7,500(3) 0.56%
Douglas R. Evans (2) 7,500(3) 0.56%
Michele A. Cadwell (2) 7,500(3) 0.56%
All Trustees and
Executive Officers as a
Group (5 persons) 30,000(4) 2.24%
<FN>
(1) For purposes of this table, Shares indicated as being owned
beneficially include Shares not presently outstanding but which are
subject to exercise within 60 days through options, warrants, rights
or conversion privileges. For the purpose of computing the
percentage of the outstanding Shares owned by a shareholder, Shares
subject to such exercise are deemed to be outstanding securities of
the class owned by that shareholder but are not deemed to be
outstanding for the purpose of computing the percentage by any other
person.
(2) A trustee and/or executive officer of the Company. The address of
all trustees and executive officers of the Company is c/o the
Company, 5740 Prospect, Suite 1000, Dallas TX 75206.
(3) Includes 7,500 Shares issuable upon the exercise of stock options at
an exercise price of $20.00 per Share.
(4) Includes the Shares described in footnote (3) above.
PROPOSAL 1 - ELECTION OF TRUSTEES
The Company's Declaration of Trust provides for not less than three
nor more than nine Trustees, a majority of whom must be Independent
Trustees, except for a period of 60 days after the death, removal or
resignation of an Independent Trustee. There are currently five Trustees of
the Company, three of whom are Independent Trustees.
A total of five Trustees are scheduled to be elected at the 2000
annual meeting to serve for a one-year term and until their successors are
elected and duly qualified. The nominees for members of the Board of
Trustees are set forth below. Unless authorization is withheld, the
persons named as proxies will vote FOR the nominees for Trustees listed
below unless otherwise specified by the shareholder. In the event any
nominee is unable or declines to serve as a Trustee at the time of the
Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Trustees to fill the vacancy. In the
event that additional persons are nominated for election as Trustees, the
proxy holders intend to vote all proxies received by them for the nominees
listed below and against any other nominees. As of the date of this Proxy
Statement, the Board of Trustees is not aware of any nominee who is unable
or will decline to serve as Trustee. All of the nominees listed below
already are serving as Trustees of the Company and constitute all of the
current Trustees of the Company.
The election to the Board of Trustees of each of the five nominees
identified in this Proxy Statement will require a plurality of the votes
cast, in person or by proxy, at the Annual Meeting. THE BOARD OF TRUSTEES
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE FIVE NOMINEES
IDENTIFIED BELOW.
NOMINEES TO BOARD OF TRUSTEES
The names and ages of the persons nominated for election as Trustees
of the Company and the year in which each became a Trustee are set forth
below:
First Became
A Trustee of Position With
Name and Age the Company The Company
- ------------ ------------ -------------
Christine "Cricket" Griffin, 47 1996 Trustee, Chairman of the
Board & President
Richard D. O'Connor, Jr., 45 1996 Trustee
Paul R. Guernsey, 49 1996 Independent Trustee
Douglas R. Evans, 55 1996 Independent Trustee
Michele A. Cadwell, 48 1997 Independent Trustee
BUSINESS EXPERIENCE OF NOMINEES
The following is a summary of the business experience of the nominees
for election as Trustees of the Company.
CHRISTINE "CRICKET" GRIFFIN has been President and a Trustee of the
Company since July 1996. In her capacity as President, she is also the
Administrator of the Company. From June 1995 until July 1996, Ms. Griffin
served as Chief Financial Officer of SCMI, a Texas based mortgage banking
firm that is an Affiliate of the Advisor and that sells Mortgages and
provides mortgage servicing to the Company. Her responsibilities at SCMI
included day-to-day bookkeeping through financial statement preparation,
mortgage warehouse lines administration, and investor communications and
reporting. Additionally, Ms. Griffin was responsible for researching and
implementing a note servicing system for SCMI and its subservicer. Before
joining SCMI, Ms. Griffin was Vice President of Woodbine Petroleum, Inc.,
a publicly traded oil and gas company for 10 years, during which time her
responsibilities included regulatory reporting, shareholder relations, and
audit supervision. Ms. Griffin is a 1978 graduate of George Mason
University, Virginia with a Bachelor of Arts degree, summa cum laude, in
Politics and Government.
RICHARD D. O'CONNOR, JR. has been a Trustee of the Company since July
1996 and lost his independent status in 1997 when he provided significant
legal counsel to the Company. As of January 2000 he was once again
considered an independent trustee. In 1999 Mr. O'Connor became a
shareholder of Stollenwerck, Moore & Silverberg, P.C., a Dallas law firm.
From 1993 to 1999, Mr. O'Connor practiced law as a sole practitioner
specializing in the areas of real estate, business and contract law.
Between 1985 and 1993, Mr. O'Connor was a partner with the Dallas law firm
of Scoggins, O'Connor and Blanscet. Between 1989 and 1993, Mr. O'Connor
was an attorney in the real estate department of J.C. Penney Corporation.
Mr. O'Connor received a Bachelor of Business Administration degree from
the University of Texas at Austin in 1976 and a J.D. degree from the
University of Houston in 1978. Mr. O'Connor has been Board Certified in
Commercial Real Estate law by the Texas Board of Legal Specialization
since 1987.
PAUL R. GUERNSEY has been an Independent Trustee of the Company since
July 1996. Since 1993 Mr. Guernsey has been a partner and chief financial
officer of The Hartnett Group, Ltd. and related companies. These
companies invest primarily in the financial markets, income and non-income
producing real estate development, and residential mortgage loans. From
1991 through 1993 Mr. Guernsey was chief financial officer of American
Financial Network, Inc. a public company that operated a computerized loan
origination network, seven residential mortgage brokerage companies, and a
wholesale mortgage brokerage operation. From 1987 through 1991 he was
chief financial officer and then vice president of operations for
Discovery Learning Centers, Inc., a chain of child-care centers. From
1986 to 1987 he worked with James Grant & Associates, a Dallas based
merchant banking firm. From 1973 through 1985 he served in the audit, tax
and management services departments of both a regional CPA firm, and as a
partner of a local firm in Michigan. Mr. Guernsey is an Independent
Trustee. Mr. Guernsey graduated with a Bachelors Degree in Business
(Accounting) from Ferris State University, Michigan in 1973 and is a
member of the American Institute of CPA's and Texas Society of CPA's.
DOUGLAS R. EVANS has been an Independent Trustee of the Company since
July 1996. Since February 1995, Mr. Evans has been a Principal of
PetroCap, Inc., a firm that provides investment and merchant banking
services to a variety of clients active in the oil and gas industry. From
1987 until February 1995 Mr. Evans was President and Chief Executive
Officer of Woodbine Petroleum, Inc., which was a publicly traded oil and
gas company until it was taken private through a merger in September 1992.
As part of his responsibilities at Woodbine, Mr. Evans managed and
negotiated the sale of the parent company's REIT portfolio including
mortgages and real property. Mr. Evans has been a licensed real estate
broker in Texas since 1979 and a licensed real estate agent since 1976.
Mr. Evans is an Independent Trustee. Mr. Evans received an MBA from
Southern Methodist University in 1972 and a Bachelors of Arts degree from
the University of North Carolina in 1967.
MICHELE A. CADWELL has been a Trustee of the Company since August,
1997 and prior to January, 2000 was considered Independent. Since
January, 2000 Ms. Cadwell maintains an independent practice of law and
operates a closing office for Commonwealth Land Title Company providing
services to the Company. Ms. Cadwell is an attorney who has worked in the
oil and gas industry between 1980 and 1999. Ms. Cadwell was Manager-
Onshore Land Operations with EEX Corporation During 1998 and 1999. From
1980 to 1998 she was an employee of Enserch Exploration, Inc. Ms.
Cadwell's position with Enserch was Senior Land Representative. Her
primary responsibilities have included drafting and negotiating
exploration and marketing agreements, analysis of legislation and
regulatory proposals, researching complex mineral titles, organization and
management of non-core property divestitures, settlement of land owner
disputes and advising and testifying on matters before the Oklahoma
Corporation Commission. Ms. Cadwell is a 1974 graduate of the University
of Oklahoma with a Bachelors of Arts Degree in English and a Juris Doctor
Degree in 1978. She is admitted to both the Oklahoma and Texas bars.
COMMITTEES AND MEETINGS
The Company has no audit, nominating, compensation or other standing
committees of the Board of Trustees. The Board of Trustees held 3 regular
meetings in 1999. Mr. O'Connor attended fewer than 75% of the meetings of
the Board of Trustees.
COMPENSATION OF TRUSTEES
Trustees who are not Independent Trustees do not receive any
compensation for acting as Trustees. Independent Trustees are entitled to
receive the greater of $1,000 per meeting or $4,000 per year. For each
year in which they serve, each Independent Trustee shall also receive 5-
year options to purchase 2,500 Shares at an exercise price of $20 per Share
(not to exceed 12,500 shares per Trustee). During 1999, the Independent
Trustees each received $3,000 and waived their rights to additional fees
and each Independent Trustee who served during all of 1999 also received 5-
year stock options to purchase 2,500 Shares at an exercise price of $20 per
Share.
MANAGEMENT
Executive Officer
Christine Griffin, the Company's President and Administrator, is the
only executive officer of the Company. In her capacities as President and
Administrator, Ms. Griffin is responsible for managing the day-to-day
operations of the Company, subject to the supervision of the Company's
Board of Trustees. Information about Ms. Griffin's background is set forth
above under "Proposal 1 - Election of Trustees - Nominees to Board of
Trustees."
The Advisor
The Trustees have retained Mortgage Trust Advisors, Inc., a Texas
corporation (the "Advisor") to use its best efforts to seek out and present
to the Company, whether through its own efforts or those of third parties
retained by it, suitable and a sufficient number of investment
opportunities which are consistent with the investment policies and
objectives of the Company. The services of the Advisor include managing
the Company's development of investment guidelines, overseeing servicing,
negotiating purchases of loans and overseeing the acquisition or
disposition of investments, and managing the assets of the Company.
The directors and officers of the Advisor are set forth below. These
officers of the Advisor may also provide services to the Company on behalf
of the Advisor.
NAME AGE OFFICES HELD
- ---- --- ------------
Todd Etter 50 President
Timothy J. Kopacka 40 Vice President/Secretary
James P. Hollis 59 Vice President
Dan H. Hill 49 Vice President/Treasurer
Todd Etter is a 1972 graduate of Michigan State University. Since 1992
Mr. Etter has been President of South Central Mortgage, Inc. ("SCMI"), a
Dallas based mortgage banking firm that he founded. From 1987 to 1992, Mr.
Etter served as President of South Central Financial Group, a Dallas based
investment banking firm. From 1980 through 1987, Mr. Etter was President
of South Central Securities, a NASD member firm Broker-Dealer that he
founded. From 1972 through 1979, he was Vice President of Crawford, Etter
and Associates, a developer, builder and marketer of residential
properties.
Timothy J. Kopacka, a Certified Public Accountant, received a
Bachelors of Arts degree in Accounting and Finance from Michigan State
University. He is a member of the Michigan Association of CPA's, the
Hawaii Association of Public Accountants and the American Institute of
CPA's. Since 1984, he has been President of Kopacka & Associates, Inc., dba
Grosse Pointe Financial, a financial advisory firm. From 1980 to 1983, he
was employed with Deloitte, Haskins & Sells, an international accounting
and consulting firm. From 1983 through 1986, Mr. Kopacka was Chief
Financial Officer for Federal Tax Workshops, Inc., an educational and
consulting firm for CPA's. From 1987 to 1990, he served as Vice President
of Marketing and Operations for Kemper Financial Services in their
retirement plans division.
James P. Hollis is a Chartered Life Underwriter (CLU) and a Fellow,
Life Management Institute (FLMI) in pension planning. Mr. Hollis has a
business degree from Chattanooga State College, Tennessee. Mr. Hollis is
the sole proprietor of First Financial USA - Florida, a financial products
marketing company within the state of Florida. He is Vice President of S&S
Financial USA, Inc., a financial products marketing company located in
Melbourne, Florida. He is Advisor to SAFECO Life Insurance Company's
President Advisory Board since 1998. Mr. Hollis is a Brokerage General
Agent for several medium to large size life insurance companies, including
SAFECO Life, Conseco Life, F&G Life, General Electric Capital Assurance and
Jefferson Pilot Life. Mr. Hollis has been in the investments and insurance
business since 1969.
Dan H. Hill has a Bachelor of Business Administration degree in
accounting. Mr. Hill is currently licensed as an insurance general agent,
a securities principal and a Texas real estate broker. In 1998, Mr. Hill
began First Financial United Management, Inc. as a Registered Investment
Advisor to provide investment advice and fee based financial planning
services. Since 1995, Mr. Hill has been President of First Financial USA,
Inc., a national financial products marketing company. Mr. Hill is also
President of H&H Services, Inc., the general partner of First Financial
United Investments Ltd., L.L.P., a broker-dealer and Selling Group Manager.
In addition, he owns First Financial Management Group, a financial planning
firm specializing in the small business market. Since 1978, he has been
actively involved in the financial services industry, including accounting,
insurance, real estate and securities. Prior to that he was a corporate
accountant for several Halliburton companies.
Executive Compensation
The following Summary Compensation Table sets forth information
concerning compensation earned in the years ended December 31, 1999 and
1998, by the Company's Chief Executive Officer, who is the Company's only
executive officer.
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM
COMPENSATION COMPENSATION
Shares Underlying
NAME AND PRINCIPAL POSITION YEAR SALARY Bonus(1) Options
- --------------------------- ---- ------ -------- ----------------
Christine Griffin, President 1999 $74,895 $0 2,500
1998 $60,000 $0 2,500
<FN>
(1) Pursuant to her employment agreement, Ms. Griffin is entitled to
receive a bonus equal to 25% of the amount by which the Company's
administrative expenses for the year fall below the approved administrative
budget.
</FN>
The following table sets forth, for each of the executive officers
named in the Summary Compensation Table above, certain information
concerning stock options granted during the 1999 fiscal year.
Stock Options Granted in 1999
Percent Of
Number Total Options
Of Shares Granted Exercise
Underlying To Employees Price Expiration
Name Options in 1999 Per share Date
- ----------------- ---------- ------------- --------- ----------
Christine Griffin 2,500 100% $20.00 12/31/04
The following table sets forth, for the executive officers named in
the Summary Compensation Table above, certain information regarding the
exercise of stock options during the 1999 fiscal year and the value of
options held at fiscal year end:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
Number of
Shares Underlying Value of Unexercised
Shares Unexercised Options In-the-money Options
Acquired at Fiscal Year-end at Fiscal Year-end
on Value Exercisable Exercisable
Name Exercise Realized /Unexercisable /Unexercisable
- ----------------- -------- -------- -------------- --------------
Christine Griffin 0 $0 7,500/0 $0/ $0
<FN>
(1) The value of unexercised options is based on the market value of the
underlying shares at fiscal year end, minus the exercise price.
</FN>
EMPLOYMENT AGREEMENT
Christine Griffin has entered into an employment agreement with the
Company whereby she will serve as Trustee, President, Chief Operating
Officer and Administrator of the Company. That agreement is for a term of
one year, to be reviewed annually with the approval of a majority of
Independent Trustees. That agreement was amended on June 3, 1999 to
increase Ms. Griffin's salary to $79,860 and renewed by the Independent
Trustees on July 1, 1999 for an additional one year term. The agreement
provides for the Administrator to receive: (1) an annual salary of $79,860;
(2) a bonus equal to 25% of the amount by which the Company's
administrative expenses for the year fall below the approved administrative
budget; and (3) for each year of service, 5-year stock options to purchase
2,500 Shares at an exercise price of $20 per Share (up to a maximum of
options for 12,500 Shares). Certain Relationships and Related Transactions.
CERTAIN RELATIONS AND RELATED TRANSACTIONS
In addition to the employment agreement with the Company's President
and the provisions for payment of cash and issuance of options to the
Company's Trustees described above, the Company has entered into agreements
with the Advisor, First Financial United Investments Ltd., L.L.P. (a
"Selling Group Co- Manager"), IMS Securities, Inc. (a "Selling Group Co-
Manager") and South Central Mortgage, Inc. ("SCMI"), whereby the Advisor,
the Selling Group Co-Managers and SCMI may receive fees and compensation
from the Company. Mr. Dan Hill, director and officer of the Advisor, is the
principal shareholder and officer of the general partner of a Selling Group
Co-Manager. SCMI is a Texas based mortgage bank of which the sole
beneficial shareholder is Todd Etter, an officer and principal shareholder
of the Advisor. Ms. Christine Griffin, a Trustee and President of the
Company, was previously the Chief Financial Officer of SCMI.
Rent Payable to Affiliate
The Company currently leases its office space from Todd Etter, an
affiliate, under the terms of a 36-month lease at $5,409 per month and
subleases a major portion of space to South Central Mortgage, Inc.
("SCMI"), a related party, for $4,668 per month. The sublease rental rate
is approximately five percent higher than the amount paid by the Company.
Rent expense amounted to $6,681 and $7,101 for the years ended December
31, 1999 and 1998, respectively.
Commissions, Fees and Shares Issued to Selling Group Managers.
The Selling Group Co-Managers, registered broker-dealers and member of
the National Association of Securities Dealers, Inc. ("NASD"), are
distributing the Shares that the Company is selling in its initial public
offering. They are sold on a "best efforts" basis through participating
NASD member firms ("Selected Dealers") that are selected by the Selling
Group Co-Managers. The Selling Group Co-Managers will receive a commission
of 10% of the Gross Offering Proceeds (subject to any volume discounts for
Institutional Investors), plus 0.5% of the Gross Offering Proceeds as a due
diligence fee. The Selling Group Co-Managers may, in their sole
discretion, provide volume discounts of up to 2% on a negotiated basis to
Institutional Investors who purchase at least 50,000 Shares. The
application of any volume discounts will reduce the amount of commissions
that would be paid to the Selling Group Co-Managers but will not change the
net offering proceeds to the Company.
During the year ended December 31, 1999, the Selling Group Co-Managers
received a total of $948,564 in commissions and due diligence fees and no
SGM Shares from the Company.
Purchase of Mortgage Investments From SCMI.
The Company obtains Mortgage Investments from several sources,
including SCMI or other Affiliates of the Advisor. All Mortgage
Investments purchased from SCMI or other Affiliates of the Advisor are
purchased at prices no higher than would be paid to unaffiliated third
parties for mortgages with comparable terms, rates, credit risks and
seasoning. SCMI may realize a gain or a loss on the sale of a Mortgage
Investment that it sells to the Company, with the amount of that gain or
loss depending upon the price it paid for that Mortgage Investment and the
price at which it sells it to the Company.
SCMI has agreed that, in the event that the obligor on any Mortgage
sold by or through SCMI or any of its Affiliates to the Company defaults in
the making of any payment or other obligation thereon during the period
ending one year after the acquisition of such Mortgage by the Company, then
SCMI shall purchase or repurchase the Mortgage from the Company or the
Company's assignee at a price on the date of such purchase computed as the
total unpaid principal balance due thereon, plus accrued interest to the
date of the purchase, plus insurance premiums, taxes and any other amounts
expended by the Company in the maintenance, protection or defense of its
interest therein or in the real property, including reasonable attorneys'
fees. SCMI may satisfy its obligations under the foregoing purchase or
repurchase requirement by either:
(a) Assigning and transferring to the Company a replacement Mortgage
or Mortgages, provided: (i) the real property securing the
replacement Mortgage(s), the creditworthiness of the obligor on the
replacement Mortgage(s) and other general underwriting criteria are
reasonably acceptable to the Company; and (ii) the value of the
replacement Mortgage(s) at the date of transfer to the Company shall
be computed by the Company in accordance with its then applicable
pricing schedule for acquisition of such Mortgages, giving due regard
to principal balance, interest rate, term, amortization and other
general factors used by the Company for acquisition of such Mortgages
at such time; or
(b) Funding by SCMI, on a month to month basis, to the Company of all
lost interest, tax and insurance escrow payments, as well as any
costs incurred by the Company related to curing the default or
obtaining title to and possession of the property securing the
defaulted obligation, including by not limited to foreclosure, deed
in lieu of foreclosure, bankruptcy claims or motions, evictions,
maintaining and/or securing the property and remarketing costs less
any additional down payments or settlements received by the Company.
During the year ended December 31, 1999, the Company paid SCMI a total
of $6,566,568 to purchase 140 Mortgage Investments. The balance of Mortgage
Investments acquired during 1999 were purchased from unaffiliated third
parties.
Loan Servicing Fee Payable to SCMI.
The Company utilizes the services of SCMI and nonaffiliated third
parties to service the mortgages acquired by the Company. For its efforts
in servicing those mortgages, SCMI is paid a fee equal to 0.5% of the
principal balance of the mortgages being serviced by SCMI, a rate the
Company believes is a competitive rate that is no higher than the rates
charged by unaffiliated third parties. The servicing of the mortgages
includes the collection of monthly payments from the borrower, the
distribution of all principal and interest to the Company, the payment of
all real estate taxes and insurance to be paid out of escrow, regular
distribution of information regarding the application of all funds received
and enforcement of collection for all delinquent accounts, including
foreclosure of such account when and as necessary. The amount of loan
servicing fees paid to SCMI will depend upon the principal balance of the
mortgages serviced by SCMI.
During the year ended December 31, 1999, the Company paid SCMI $82,735
in loan servicing fees.
Real Estate Brokerage Commissions.
If the Company forecloses on a property securing a mortgage loan and
sells such property, the Company may pay real estate brokerage fees which
are reasonable, customary and competitive, taking into consideration the
size, type and location of the property (the "Competitive Commission"),
which shall not in the aggregate exceed 6% of the gross sales price of the
property; however, as to the Advisor, a Trustee, or an Affiliate thereof,
such fees shall be paid only if such person provides a substantial amount
of services in the sales effort, in which case such fees shall not exceed
the lesser of (i) a percentage of the gross sales price of a property equal
to 50% of the Competitive Commission, or (ii) 3 percent of the gross sales
price of a property.
During the year ended December 31, 1999, the Company did not pay any
real estate brokerage commissions.
Acquisition Fees Payable to Advisor
Acquisition Fees equal to 3.0% of the principal amount of each
Mortgage Investment are payable to the Advisor or its Affiliates for
sourcing, evaluating, structuring and negotiating the acquisition terms of
Mortgage Investments. The actual amounts of the fees paid will depend on
the amount of net offering proceeds and any borrowed funds that are
invested.
During the year ended December 31, 1999, the Company paid the Advisor
$328,129 in Acquisition Fees.
Potential Reimbursement of Expenses by Advisor.
The Declaration of Trust provides that the Total Operating Expenses
may not exceed in any fiscal year the greater of (a) 2% of the Average
Invested Assets of the Company (defined generally as the average book value
of the Company's Mortgage Investments, without regard for non-cash
reserves) or (b) 25% of the Company's Net Income. The Administrator will
have the responsibility of preparing an annual budget and submitting such
budget to the Trustees. In the event the Total Operating Expenses exceed
the limitations described above, then within 60 days after the end of the
Company's fiscal year, the Advisor shall reimburse the Company the amount
by which the aggregate annual Total Operating Expenses paid or incurred by
the Company exceed the limitation.
In 1997 the Company entered into a Funding Agreement with the Advisor
whereby the Advisor agreed to fund the Company's general and
administrative expenses. In consideration of the agreement, the Company
will contribute to the Advisor, on a monthly basis, .5% of the Company's
average invested assets for the immediately preceding month. An expense
reimbursement of $169,426 was made for the year ended December 31, 1999.
Subordinated Incentive Fee and Options Payable to Advisor
Subject to certain conditions described below, the Advisor will
receive a Subordinated Incentive Fee equal to 25% of the amount by which
the Company's Net Income for a year exceeds a 10% per annum non-compounded
cumulative return on its Adjusted Contributions. For each year which it
receives a Subordinated Incentive Fee, the Advisor shall also receive 5-
year options to purchase 10,000 Shares at the initial offering price of the
Shares (not to exceed 50,000 Shares). When the audited annual financial
statements of the Company are received each year, the Advisor shall
determine if the following conditions are satisfied:
(i) (A) the total of the Adjusted Contributions as of the end of the
most recent fiscal year and any undistributed cash as of that date
equals (B) the Gross Offering Proceeds as of that date less
cumulative Capital Distributions made through that date; and
(ii) for the year then ended, the Company's Net Income equals or
exceeds a 10% per annum non-compounded cumulative return on its
Adjusted Contributions. The determination of the Company's annual
non-compounded cumulative return on its Adjusted Contributions shall
be made by dividing the Company's total Net Income for that year by
the average of the month end Adjusted Contributions during that year.
If the Company's Trustees agree that both of those conditions are
satisfied, the Company will, subject to the restrictions set forth in the
following sentence, pay the Advisor the Subordinated Incentive Fee. In no
event may the Subordinated Incentive Fee exceed the amount permitted under
Section IV.D. of the Statement of Policy on Real Estate Investment Trusts
adopted by the North American Securities Administrators Association and in
effect on March 5, 1997 (the commencement date of the Company's initial
public offering). No Subordinated Incentive Fee was paid by the Company
in the year ending December 31, 1999.
PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Trustees has selected the accounting firm of Jackson &
Rhodes, P.C. to audit the Company's financial statements for, and
otherwise act as the Company's independent certified public accountants
with respect to, the year ended December 31, 1999. The Board of Trustees'
selection of Jackson & Rhodes, P.C. for the current fiscal year is being
presented to shareholders for ratification at the Annual Meeting. To the
Company's knowledge, neither Jackson & Rhodes, P.C. nor any of its
partners has any direct financial interest or any material indirect
financial interest in the Company, or has had any connection since the
inception of the Company in the capacity of promoter, underwriter,
Trustee, officer or employee. A representative of Jackson & Rhodes, P.C.
will be present at the Annual Meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Trustees knows of
no other matters which may properly be, or are likely to be, brought before
the meeting. To date, no shareholder proposals have been received by the
Company. However, if any proper matters are brought before the meeting,
the persons named in the enclosed Proxy will vote them as the Board of
Trustees may recommend.
At the Annual Meeting of Shareholders, in addition to the matters
described above, there will be an address by the Company's President and a
general discussion period during which shareholders will have an
opportunity to ask questions about the business and operations of the
Company.
Proposals for 2001 Annual Meeting
If a stockholder desires to submit a proposal for consideration at the
next Annual Shareholders Meeting and would like to have the proposal
submitted on the Company's proxy statement and form of proxy, such proposal
must be received by the Company no later than December 31, 2000 or 120 days
before mailing of the Proxy Statement for the next Annual Shareholders
meeting, whichever is later. The Company anticipates that it will hold its
next Annual Stockholder Meeting in June 2000.
Annual Report and Form 10-KSB
All Shareholders of record on the Record Date have been sent a copy of
the Company's 1999 Annual Report to Shareholders, which contains audited
financial statements of the Company for the years ended December 31, 1999
and 1998.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1999, that was filed with the Securities and
Exchange Commission (the "SEC"), may be obtained without charge (except
for exhibits to that Form 10-KSB, which will be furnished upon payment of
the Company's reasonable expenses in furnishing those exhibits). To
obtain a copy of that Form 10-KSB or any of those exhibits, please send a
written request to Christine Griffin, President of the Company, at the
Company's corporate offices located at 5740 Prospect, Suite 1000, Dallas
TX 75206 or from the SEC's website located at www.sec.gov.
By Order of the Board of Trustees
Christine Griffin, President
Dallas, Texas
May 12, 2000
UNITED MORTGAGE TRUST
Proxy Ballot for 2000 Annual Meeting of Shareholders
This Proxy is Solicited on Behalf of the Board of Trustees and will be
Voted.
The undersigned hereby appoints Christine Griffin and Linda K. Lunger.
or any one or more of them acting in the absence of the other, as attorneys
and proxies of the undersigned, with full power of substitution, for and in
the name of the undersigned, to represent the undersigned at the Annual
Meeting of the Shareholders of United Mortgage Trust, a Maryland real
estate investment trust (the "Company") to be held at offices of the
Company located at 5740 Prospect Avenue, Suite 1000, Dallas Texas 75206 at
9:00 a.m. local time, on June 12, 2000, and at any adjournment or
adjournments thereof, and to vote all shares of beneficial interest of the
Company standing in the name of the undersigned, with the powers the
undersigned would possess if personally present at such meeting:
1. ELECTION OF THE COMPANY'S BOARD OF TRUSTEES:
Nominees: Christine "Cricket" Griffin, Paul R. Guernsey,
Douglas R. Evans, Richard D. O'Connor, Jr. and Michele A.
Cadwell
/ /FOR / /AGAINST / /ABSTAIN
all nominees listed above, except vote withheld from the
following nominees (if any)
- -------------------- ----------------------- ----------
- ----------
2. RATIFICATION OF THE SELECTION OF JACKSON & RHODES, P.C. AS THE
COMPANY'S AUDITORS FOR THE YEAR ENDED DECEMBER 31, 2000.
/ /FOR / /AGAINST / /ABSTAIN
3. TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR APPROVAL OF ALL OF THE
NOMINEES AND THE PROPOSAL SET FORTH ABOVE.
The Proxy will be voted as directed but, where no direction is given,
it will be voted FOR approval of all of the nominees and the proposal set
forth above. Copies of the Notice of the Meeting dated May 12, 2000 and of
the Proxy Statement dated May 12, 2000 have been received by the
undersigned.
PLEASE DATE AND SIGN HERE
Dated: , 2000 Sign Name:_________________________
Print Name:_______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.
/ /Please check here if you plan to attend the meeting.
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