SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6 (e)(2)
[X] Definitive Proxy Statement
[_] Definitive Addtional Materials
[_] Soliciting Material Pursuant to Section 240.141-11(c) or section
240.14a-12
UNITED FINANCIAL MORTGAGE CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
UNITED FINANCIAL MORTGAGE CORP.
600 Enterprise Drive, Suite 206
Oak Brook, Illinois 60523
July 30, 1999
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Stockholders of United Financial Mortgage
Corp.("Company") will be held at the Hyatt Regency Oak Brook Hotel,
1909 Spring Road, Oak Brook, Illinois 60523 on Wednesday, August 25,
1999, at 1:00 p.m., for the following purposes:
1. To elect six (6) directors;
2. To vote on the recommendation of the Board of Directors
that Craig Shaffer and Associates, LTD., CPA be appointed
as the Company's independent auditors for Fiscal 2000.
3. To vote on the recommendation of the Board of Directors to
approve Amendment No. 1 to the Non-Qualified and Incentive
Stock Option Plan.
4. To transact such other business as may properly come before
the meeting.
By Order of the Board of Directors,
/s/ Robert S. Luce
Robert S. Luce
Secretary
UNITED FINANCIAL MORTGAGE CORP.
PROXY STATEMENT
July 30, 1999
The Board of Directors of United Financial Mortgage Corp.
("The Company") is soliciting proxies from its stockholders for the
annual meeting of stockholders to be held on August 25, 1999.
You are entitled to vote at that meeting if you were a stockholder of
record at the close of business on July 1, 1999. On July 1, 1999, there
were 3,900,029 common shares outstanding. On July 30, 1999, the Company
began mailing to all such stockholders a proxy card and this proxy statment.
Your signed proxy card appoints Joseph Khoshabe and/or Robert S. Luce
as proxy holders to vote your shares.
If you sign and return your proxy card without giving voting direction
the proxy holders will vote your shares:
(i) For all of the nominees for director listed in this
proxy statement; and
(ii) For the appointment of Craig Shaffer and Associates,
LTD., CPA as independent auditors for Fiscal 2000.
(iii) For approval of Amendment No. 1. to the Non-Qualified
and Incentive Stock Option Plan.
The proxy ballot form permits you to direct the proxy holders to
withhold your votes from particular director nominees, and to vote "for",
"against", or "abstain" from the appointment of auditors.
Signing and returning your proxy ballot form will not prevent you from
voting in person at the meeting. If you vote in person at the meeting, your
previously voted proxy ballot fomr will be automatically revoked. You also
may revoke your proxy ballot any time before it is voted by sending notice
prior to the meeting to:
Corporate Stock Transfer, Inc.
370 Seventeenth Street, Suite 2350
Denver, Colorado 80202
If you submit more than one proxy ballot form, each later-dated proxy
ballot form will revoke all previous proxies.
The Board of Directors expects all nominees named below to be available
for election. In case any nominee is not available, the proxy holders may
vote your shares for a substitute if you have submitted a signed proxy
ballot form.
As far as the Company knows, the only matters to be brought before the
meeting are those referred to in this proxy statement. As to any other
matters presented at the meeting, if you send in a signed proxy ballot form,
the proxy holders may vote your shares in their discretion.
No business can be conducted at the meeting unless a majority of all
outstanding shares entitled to vote are either present at the meeting in
person or represented by proxy.
The six (6) nominees who receive the most votes will be elected to the
six (6) open directorships even if they get less than a majority of the
votes. For approval of the appointment of Craig Shaffer and Associates,
LTD., CPA. as auditors (Item 2) and approval of Amendment No. 1 to the
Non-Qualified and Incentive Stock Option Plan (Item 3) more shares must be
voted "for" than "against" those proposals.
Abstention with respect to Items 1, 2 or 3 will be counted as shares
present at the meeting and will have the effect of a vote against the Item.
Broker non-votes (that is, if the broker holding your shares in street name
does not vote with respect to an Item) on Item 1, 2 or 3 will not be counted
as shares voted on the Item and will have no effect on the outcome of the
vote on the Item.
All proxies, ballots and tabulations that identify the vote of a
particular stockholder are kept confidential, except as necessary (i) to
allow the inspectors of election to certify the voting results, or (ii) to
meet certain legal requirements, for example, in the pursuit of defense of
lawsuits.
Comments written on proxies or ballots may be transcribed and provided
to the Secretary of the Company with the name and address of the
stockholder. The comments will be provided without reference to the vote of
the stockholder, unless the vote is mentioned in the comment or disclosure
of the vote is necessary to address the comment. At the Company's request,
those counting votes may provide the Company with a list of stockholders
that have not voted and periodic status reports on the aggregate vote.
These status reports may include break-downs of vote totals by different
types of stockholders.
ITEM 1: ELECTION OF DIRECTORS
Except for Robert G. Jones, Vito P. Cali, and Anthony DiMucci who are
first term nominees, the remaining nominees for director each were elected
as directors at the Company's 1998 Annual Meeting of Shareholders. The
terms of the directors will expire at the 2000 Annual Meeting. No person,
other than the directors of the Company acting solely in that capacity, is
responsible for the naming of the nominees. Dr. David B. Mirza and Rocco
Cappiello resigned from the Board of Directors effective as of August 24,
1999 to puruse other business interests. These resignations were unrelated
to any disagreements with management.
Information as to each nominee follows. Unless otherwise indicated,
each nominee has served for at least 5 years in business position currently
or most recently held.
NOMINEES FOR DIRECTORS
Joseph Khoshabe - Director since 1986, Age 54
Common Shares: Beneficially owned 2,531,842
Joseph Khoshabe has been President and Chief Executive Officer of the
Company since its formation in 1986. Mr. Khoshabe is responsible for the
day-to-day administration of all operating activities at the Company,
including supervision of all loan origination activities; personnel
management and financial matters affecting the Company. Prior to formation
of the Company, Mr. Khoshabe was an executive with the Cracker Jack Division
of Borden, Inc., where he was employed for approximately 17 years. Mr.
Khoshabe holds a Bachelor of Arts Degree in Business
Administration/Economics from Governors State University and Bachelor of
Science/Accounting from Tehran University.
John A. Clark - Director since July 19, 1998, Age 51
Member: Audit Committee and Stock Option Committee
Common Shares: Beneficially owned 10,000
John A. Clark retired as President and Chief Executive Officer of a
Chicago area-banking group with $1.2 billion in assets in April of 1997.
Mr. Clark has a B.S. degree from the University of Wisconsin at Stevens
Point, Wisconsin.
Robert G. Jones - Nominee, Age 51
Member: Stock Option Committee
Robert G. Jones is and has been the President of Duneland Mortgage
Corporation located in Northwest Indiana, since 1998. Prior to establishing
Duneland, Mr. Jones was the President of Northwest Indiana Investment
Corporation, a residential real estate and appraisal firm from 1994 to 1998.
Mr. Jones holds a Bachelor of Science Degree from Indiana University and an
MBA from the University of Chicago.
Anthony DiMucci - Nominee, Age 65
Anthony DiMucci is the President of DiMucci Development Corporation.
DiMucci Development Corporation was founded in 1935 and has developed over
one billion dollars worth of real estate including single family homes,
multifamily developments, shopping centers, office buildings and industrial
developments.
Currently, DiMucci Development Corporation is developing properties in
the Chicagoland area, Florida, Virginia, and Tennessee; and its business
activities include property development and acquistions, including single
family homes, condominiums, apartments and shopping centers; construction
and construction management and property management and leasing.
Mr. DiMucci is a graduate of Marquette University of
Milwaukee, Wisconsin
Robert S. Luce - Director since July 19, 1998, Age 52
Member: Audit Committee and Stock Option Committee
Common Shares: Beneficially owned 1,100
Robert S. Luce is an attorney who has been practicing financial
services law for 27 years. Mr. Luce did his undergraduate work at the
University of Illinois and received his law degree from Loyola University
School of Law (Chicago) in 1972. Mr. Luce was an attorney with the United
States Securities and Exchange Commission from 1972 to 1976. Mr. Luce was
an adjunct professor of law at Loyola University of Law (Chiago) in the area
of securities regulations from 1972 to 1980. Mr. Luce has served as
corporate counsel to Fortune 500 companies and has been a partner in two
Chicago area law firms. Mr. Luce started his own law firm in 1989 and
continues in that capacity.
Vito P. Cali - Nominee, Age 62
Member: Audit Committee
Vito P. Cali is and has been the President of Vito P. Cali Insurance
Agency, Ltd. for the past 35 years. The Vito P. Cali Insurance Agency, LTD.
is a State Farm Insurance Agency, and writes both personal and business
insurance. Mr. Cali is a graduate of DePaul University of Chicago.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as to shares of
voting stock of the Company beneficially owned by each director, each
executive officer, and by all executive officers and directors of the
Company. Except with respect to the J.K. Trust, the percentage of shares
beneficially owned by any director or nominee or by all directors and
officers does not exceed 1%. Unless indicated otherwise in the footnotes
below, all shares are directly owned as of June 30, 1999.
Amount and Nature of
Beneficial Ownership
Name of Shares (a)
Joseph Khoshabe (a) 2,531,842
Steve Y. Khoshabe (b) 300
John A. Clark (b) 10,000
David B. Mirza 0
Robert S. Luce (b) 1,100
Rocco M. Cappiello (b) 210,455
All directors and executive 2,753,697
officers as a group
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(a) Held by the Joseph Khoshabe Trust under Trust Agreement, dated
September 22, 1995 the ("J.K. Trust").
(b) Held beneficially.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information known to the Company
regarding beneficial ownership of the Company's Common Stock at the date of
this Proxy Statement, by (i) each person known by the Company to
beneficially own more than 5% of the Company's Common Stock, and (ii) the
officers and directors of the Company beneficially owning such Common Stock.
The Company believes that Mr. Joseph Khoshabe as trustee of the J.K. Trust
has sole investment and voting power with respect to the shares beneficially
owned by the J.K. Trust.
Name and Address of
Beneficial Owner Number of Shares Percent Owned (1)
J.K. Trust 2,531,842 61.8%
c/o United Financial
Mortgage Corp.
600 Enterprise Dr. Suite 206
Oak Brook, IL 60523
Rocco M. Cappiello (2) 210,455 (2) 5.4%
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(1) The computations include the issuance of 322,000 shares of Common Stock
upon exercise of various outstanding warrants.
(2) Mr. Rocco Cappiello has the right to acquire 195,000 of such shares
upon exercise of a certain Advisor Warrant.
The J.K. Trust is the principal shareholder of the Company. Mr.
Khoshabe originally purchased the shares and then had them registered in
the name of the J.K. Trust for estate planning purposes. Mr. Khoshabe as
the trustee of the J.K. Trust is the beneficial owner of 2,531,842 shares
of the Common Stock of the Company. In connection with the organization
of the Company and its initial capitalization, the J.K. Trust paid a total
of $103,070 for 100% of the Company's common stock. Therefore, the J.K.
Trust purchased its ownership interest in the Company for $.051 per share.
In connection with the public offering of the Company's common stock,
the J.K. Trust agreed with the Underwriter and the Company, with the
exception of 100,000 shares which may be sold six (6) months after the
effective date of the registration statement (May 26, 1998), that it will
not sell the remainder of the shares held by it for a period of twelve (12)
months after such effective date.
FURTHER INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board currently has two active standing committees: Audit and
Stock Plans Committee.
The Audit Committe. The Audit Committee reviews the Company's annual
financial statements and other financial information included in or
incorporated by reference in the Company's Proxy Statement, 10-K and annual
reports to stockholders. The Committee reviews recommendations by the
independent auditors and internal auditors on accounting methods and
internal controls. The Committee makes recommendations to the Board on
various audit matters. The Committee reviews reports by the independent
public accountants and internal auditors on compliance by management with
laws and with the Company's business policies. The Committee may conduct
independent inquiries. The Committee recommends to the Board the
appointment of independent auditors. The Committee Members are John A.
Clark, Vito P. Cali and Robert S. Luce.
The Stock Plans Committee. The Stock Plans Committee periodically
reviews Management requests for grants of stock options and reviews plan
administration matters. The Committe members are John A. Clark, Robert S.
Luce and Robert G. Jones.
Since June 1, 1998, the Board of Directors met eleven times and each
of the continuing directors attended at least 75% of the Boarda and of the
committees of the Board on which he or she attended.
DIRECTOS COMPENSATION AND BENEFITS
The following describes the compensation and benefits to be provided
to directos for Fiscal 2000 ("Directors"):
Non-employee director compensation and benefits include a monthly
retainer of $1,000.00; $500.00 for attendace at each Board of Director's
meeting and $250.00 for attendance at each committee meeting, (e.g. Audit
Committee and Stock Option Committee).
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information on
compensation earned in Fiscaly 1995, 1996, 1997, 1998 and 1999 by Mr.
Khoshabe and by each of the three most highly compensated executive
officers (the "Named Executives") of the Company. Mr. Joseph Khoshabe, as
an employee director, has waived the opportunity to receive any director
compensation from the Company>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
Other Annual
Name and Compensation
Principal Position Year Salary Bonus (1)(2)(3)(4)
Joseph Khoshabe, President 1999 $244,166 $47,561 $11,565
1998 $180,000 $ 0 $ 3,161
1997 $180,000 $ 0 $ 3,161
1996 $170,000(4) $ 0 $ 3,161
1995 $160,000 $ 0 $ 3,161
Steve K. Khoshabe, Executive
Vice President (5) 1999 $ 86,500 $ 0 $ 3,475
1998 $ 46,093 $ 0 $ 2,210
1997 $ 46.093 $ 0 $ 2,210
1996 $ 40,393 $ 0 $ 2,210
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(1) Includes: 41,980 for annual disability premiums; and $9,505 for annual
health insurance premiums for Mr. Joseph Khoshabe and his dependents.
(2) Does not include a $25,000 annual car allowance payable to Mr. Joseph
Khoshabe.
(3) Does not include a $12,000 annual car allowance payable to Mr. Steve
Khoshabe.
(4) This salary amount was not paid to Mr. Joseph Khoshabe. This salary
amount is included to satisfy applicable accounting requirements.
(5) On June 15, 1998, Mr. Steve Khoshabe's annual base salary was increased
to $90,000. This is attributable to the increase in Mr. Khoshabe's
responsibilities as a consequence of the public offering by the
Company.
STOCK OPTION PLAN
On December 19, 1993, the Company adopted a Non-Qualified and Incentive
Stock Option Plan ("Plan") which provides for the grant of non-qualified
stock options and incentive stock options. 500,000 shares of Common Stock
have been reserved for issuance under the Plan. Non-qualified stock options
for 74,500 shares were granted to nineteen (19) employees at an option price
of $6.50 per share. Mr. Steve. Khoshabe, the Executive Vice President of the
Company was granted a stock option for 50,000 shares.
EMPLOYEMENT AGREEMENT FOR JOSEPH KHOSHABE
The Company entered into an Employement Agreement with Mr. Joseph
Khoshabe to retain his services to the Company as President and Chief
Executive Officer. The Employment Agreement contains the following important
terms:
Term Five (5) Years (1)
Annual Salary $250,000
Annual Increases 10%
Health Insurance for Mr.
Khoshabe and his family $9,505 (Annual Est. Premium)(2)
Car Allowance $25,000 (Per Annum)
Long Term Disability Ins. $ 1,980 (Annaul Premium)(2)
Incentive Compensation: Additional Compensation in the amount
of ten percent (10%) of any increase in
the Company's net income before income
taxes as compared to the preceding
fiscal year.
_______________
(1) Commecing from May 26, 1998.
(2) These items may increase in the future subject to premium costs.
The Employment Agreement may be terminated by the Board of Directors
by unanimous vote and Mr. Khoshabe will be a member of the Board of Directors
after election of directors at the 1999 Annual Meeting.
ITEM 2: APPROVAL OF AUDITORS
Item 2 concerns the recommendation of the Board of Directors that
Craig Shaffer and Associates, LTD, CPA be appointed auditors for Fiscal
2000, which is being presented to stockholders for approval. Representatives
of Craig Shaffer and Associates, LTD., CPA will be present at the meeting,
to respond to questions, and may make a statement is they so desire.
ITEM 3: APPROVAL OF AMENDMENT NO. 1 TO NON-QUALIFIED AND
INCENTIVE STOCK OPTION PLAN
Ammendment No. 1 to the Non-Qualified and Incentive Stock Option Plan
("Stock Option Plan") amends the Stock Option Plan to permit non-employee
members of the Board of Directos to receive options under the Plan.
Management believes that the grant of options to non-employee members of
the Board of Directors will increase the interest in the growth and success
by the non-employee members of the Board of Directos.
A copy of Amendment No. 1. Is set forth in Appendix A attached hereto.
On July 1, 1999, the closing price of the Company's common stock on the
Chicago Stock Exchange was $3.0625 per share.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file certain reports
regarding ownership of, and transactions in, the Company's securities with
the Securities and Exchange Commission. Such officers, directors and 10%
stockholders are also required by Securities and Exchange Commission rules to
furnish the Company wiht copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that for the year ended April 30, 1999, all reporting persons complied
with Section 16(a) filing requirements.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's 2000 Annual Meeting of
Stockholders must be received by the Company no later than March 31, 2000
to be included in the proxy statement and form of proxy relating to that
meeting.
OTHER MATTERS
Officers and other employees of the Company and its subsidiaries may
solicit proxies by personal interview, telephone and telegram, in addtion to
the use of mails. None of these individuals will receive special
compensation for these services which will be performed in addition to their
regular duties, and some of them may not necessarily solicit proxies. The
Company also has made arrangements with brokerage firms, banks, nominees and
other fiduciaries to forward proxy solicitation for shares held of record by
them to the beneficial owners of such shares. The Company will reimburse
them for reasonable out-of-pocket expenses. Corporate Stock Transfer, Inc.,
370 17th Street, Suite 2350, Denver, Colorado 80202 will assist in the
distribution of proxy solicitation materials, for a fee estimated at $3,000
plus out-of-pocket expenses. The Company will pay the cost of all proxy
solicitation.
APENDIX A
Ammendment No. 1
to
United Financial Mortgage Corp.
Non-Qualified and Incentive
Stock Option Plan
The Non-Qualified and Incentive Stock Option Plan (Plan) shall be
ammended in the following respects:
- The title of Section 5 of the Plan shall be amended
from "Employees to Whom Awards May Be Granted" to
"Persons to Whom Awards May Be Granted".
- An additional sentence shall be added to the first
paragraph of Section 5 of the plan as follows:
"Awards also may be granted in each calendar
year or portion thereof while the Plan is in
effect to such of the non-employee members of
the Company's Board of Directors as the
Committee, in its discretion, shall determine".
This ammendment No. 1 shall be effective on and after August 25, 1999,
or on such later date when the shareholders of the Company approve the
Amendement.
APENDIX B
The Summary of Selected Financial Data; Managment's Discussion and
Analysis of Financial Condition and Results of Operations; the Financial
Statements, including: Statements of Operations, Statements of Financial
Position, Statement of Shareholders' Equity, and Statements of Cash Flows;
Notes to Consolidated Financial Statements; and Independent Auditor's
Report for the fiscal year ended April 30, 1999 are incorporated herein
by reference from the Company's Annual Report on From 10-KSB as filed with
the United States Securities and Exchange Commissions on July 29, 1999.
By Order of the Board of Directors
/s/ Robert S. Luce
Secretary, Robert S. Luce
Dated: July 30, 1999