<PAGE>
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
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 Section
240.14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CHAPMAN HOLDINGS, INC.
--------------------------------
(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)(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>
CHAPMAN HOLDINGS, INC.
World Trade Center-Baltimore
28th Floor
401 East Pratt Street
Baltimore, Maryland 21202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
An annual meeting of stockholders of Chapman Holdings, Inc. (the
"Company"), will be held at the offices of the Company, World Trade
Center-Baltimore, 28th Floor, 401 East Pratt Street, Baltimore, Maryland, on May
25, 1999 at 10:00 A.M. local time to act on the following matters:
1. Election of directors to serve until their successors
are elected and qualify;
2. Ratification of the selection of Arthur Andersen LLP
as certified independent auditors for the Company;
3. Such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on April 14, 1999,
are entitled to notice of and to vote at such meeting or any adjournments
thereof.
/s/ EARL U. BRAVO, SR.
---------------------------
April 23, 1999 Earl U. Bravo, Sr.
Secretary
PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY
REVOKE YOUR PROXY.
<PAGE>
CHAPMAN HOLDINGS, INC.
World Trade Center-Baltimore
28th Floor
401 East Pratt Street
Baltimore, Maryland 21202
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1999
The enclosed proxy is solicited by the Board of Directors of Chapman
Holdings, Inc. (the "Company") for use at the annual meeting of stockholders of
the Company to be held at the offices of the Company, World Trade
Center-Baltimore, 28th Floor, 401 East Pratt Street, Baltimore, Maryland, on
March 25, 1999, at 10:00 A.M. local time. This Proxy Statement and form of Proxy
were first mailed to stockholders on or about April 23, 1999.
The Board of Directors has selected Nathan A. Chapman, Jr. and Earl U.
Bravo, Sr., or either of them, to act as proxies with full power of
substitution. Proxies will be solicited by mail and may be solicited in person
or by telephone or telegraph by directors, officers and employees of the Company
with no additional compensation to them. Nominees will, upon request, be
supplied with additional proxy materials and will be reimbursed by the Company
for their reasonable expenses in sending these materials to their principals.
The cost of printing and mailing this notice and proxy statement and proxy form
and of soliciting proxies will be borne by the Company.
Management knows of no business to be brought before the meeting except
as set forth in the notice of the meeting. If any other matters should come
before the meeting, the persons named in the enclosed form of proxy intend to
vote on such matters in accordance with their best judgment.
A stockholder may revoke his proxy by notifying the Company in writing
prior to the meeting, by subsequently executing another proxy or by attending
the meeting and giving oral notice of revocation to the Chairman of the meeting.
Stockholders are urged to return their proxies promptly in order to
ensure action by a quorum and to avoid the expense of additional solicitation.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF THE ANNUAL REPORT
ON FORM 10-KSB TO ANY STOCKHOLDER UPON REQUEST. ANY SUCH REQUEST SHOULD BE
DIRECTED TO EARL U. BRAVO, SECRETARY, CHAPMAN HOLDINGS, INC., WORLD TRADE
CENTER-BALTIMORE, 28TH FLOOR, 401 EAST PRATT STREET, BALTIMORE, MARYLAND 21202,
TELEPHONE (800) 752-1013.
<PAGE>
Stockholders of record at the close of business on April 14, 1999
("Record Date"), are entitled to vote at the meeting. On the Record Date the
Company had outstanding 2,953,622 shares of Common Stock. In the election of
directors, each share is entitled to one vote for each director to be elected;
however, cumulative voting is not permitted. For all matters except the election
of directors, each share is entitled to one vote. The presence in person or by
proxy of the holders of one-third of the shares entitled to vote at the meeting
is required to constitute a quorum for the transaction of business.
PROPOSAL 1 - ELECTION OF DIRECTORS
Four directors are to be elected at the Meeting to serve until the 2000
Annual Meeting of Stockholders and until their successors are duly elected and
qualified. Directors are elected by a plurality of the votes cast by the holders
of shares of Common Stock present or represented by proxy at the Meeting with a
quorum present. Abstentions and broker non-votes are not considered to be votes
cast.
Unless otherwise indicated in the enclosed proxy, the persons named in
such proxy intend to nominate and vote for the election of the following four
nominees for the office of director of the Company, to serve as directors until
the 2000 Annual Meeting of Stockholders and until their successors are duly
elected and qualified. Each nominee has consented to the nomination and has
agreed to serve if elected. If any of the nominees should not be available for
election, the persons named as proxies may vote for other persons in their
discretion. The Board of Directors has no reason to believe that any of the
nominees will be unable or unwilling to serve if elected.
The Board of Directors has nominated the persons specified below, each
of whom is currently a director of the Company, for election as directors. The
names and ages (as of April 23, 1999) of the nominees and executive officers of
the Company are set forth below:
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
--------------- ---
<S> <C> <C>
Nathan A. Chapman, Jr. 41 Mr. Chapman has been President and Director since 1986 of The Chapman Co.,
President, Chairman of the President and Director since 1988 of Chapman Capital Management, Inc.,
Board and Nominee for Director President and Director of Chapman Holdings, Inc. since 1997, President and
Director of Chapman Capital Management Holdings, Inc. since 1998 and
President and Director of The Chapman Funds, Inc. since 1988. Mr. Chapman
is a Certified Public Accountant, a General Securities Principal,
Registered Options Principal, and Registered Municipal Principal.
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Earl U. Bravo, Sr. 51 Mr. Bravo has been Secretary and Assistant Treasurer since 1997 of The
Senior Vice President, Chapman Co., Senior Vice President, Secretary, Assistant Treasurer and
Secretary, Assistant Treasurer Director of Chapman Holdings, Inc. since 1997, Vice President, Secretary,
and Nominee for Director Assistant Treasurer and Director of Chapman Capital Management Holdings,
Inc. since 1998. Mr. Bravo is Secretary and Assistant Treasurer of The
Chapman Funds, Inc. Mr. Bravo has been employed in various senior
executive positions with The Chapman Co. and Chapman Capital Management,
Inc. since 1990. Mr. Bravo is a General Securities Principal, Financial
and Operations Principal, and Registered Representative.
Lottie H. Shackelford 57 Ms. Shackelford has been Executive Vice President of Global USA since
Nominee for Director 1994. From 1978 to 1992, Ms. Shackelford was City Director of Little
Rock, Arkansas. In 1988 and 1989, Ms. Shackelford was Vice-Chair and
Co-Chair, respectively, of the Democratic National Committee. Ms.
Shackelford is a Director of The Chapman Funds, Inc and has been a
Director of the Company since 1997.
Donald V. Watkins 50 Mr. Watkins has been President of Donald V. Watkins, PC, a law firm
Nominee for Director located in Birmingham, Alabama, since 1973. Mr. Watkins has been Director
of Chapman Holdings, Inc. since 1997.
M. Lynn Ballard 56 Ms. Ballard has been Treasurer and Assistant Secretary since 1997 of The
Treasurer and Assistant Chapman Co., Treasurer and Assistant Secretary of Chapman Holdings, Inc.
Secretary since 1997 and Chapman Capital Management Holdings, Inc. since 1998. Ms.
Ballard has been employed as a senior financial executive of The Chapman
Co. and Chapman Capital Management, Inc. since 1988. Ms. Ballard is
Treasurer and Assistant Secretary of The Chapman Funds, Inc.
</TABLE>
The Board of Directors held three meetings during 1998. All directors
of the Company attended each meeting after their election to the Board of
Directors.
The Board of Directors has two standing committees, Compensation and
Audit. In addition, the Board of Directors, from time to time, establishes
special committees which have a limited duration. The Board of Directors has not
established a Nominating Committee. The functions customarily attributable to a
Nominating Committee are performed by the Board of Directors as a whole. The
Board of Directors will not consider nominees submitted by the Company's
stockholders.
The Audit Committee consists of Directors Watkins and Shackelford. The
Audit Committee did not meet during 1998. The Committee is responsible for
overseeing the Company's internal accounting controls; recommending to the Board
of Directors the selection of the Company's independent auditors; reviewing the
annual audit plan, annual report and results of the independent audit; reviewing
supervisory examination reports; and initiating other special reviews when
deemed necessary.
3
<PAGE>
The Compensation Committee consists of Directors Watkins and
Shackelford. The Compensation Committee met two times during 1998. All members
of the Compensation Committee attended each meeting. The Committee sets the
compensation of the President and administers the Company's Stock Option Plan.
COMPENSATION OF DIRECTORS
Directors of the Company receive no cash compensation for their service
to the Company as directors; however, they are reimbursed for all out-of-pocket
expenses relating to attendance at meetings of the Board of Directors and any
committee thereof. Members of the Board of Directors are eligible to receive
stock options pursuant to the Company's Stock Option Plan. On September 28,
1998, Directors Watkins and Shackelford were awarded 3-year stock options to
purchase 10,000 shares and 1,000 shares, respectively, at $9.50 per share, the
then current market price.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company's directors and executive officers, and persons who
own more than 10% of a registered class of the Company's equity securities, file
with the Securities and Exchange Commission (the "Commission") initial reports
of ownership and reports of change in ownership of Common Stock of the Company.
The same persons are also required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company, and written representations that no other
reports were required during the fiscal year ended December 31, 1998, compliance
was made with all Section 16(a) filing requirements applicable to the Company's
executive officers and directors. With respect to greater than 10% beneficial
owners, other than Nathan A. Chapman, Jr., the Company has not received copies
of any reports filed by any such persons with the Commission and has received no
written representations from any such persons.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF EACH OF THE
NOMINEES NAMED ABOVE AS A DIRECTOR OF THE CORPORATION.
PROPOSAL 2 - RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS
4
<PAGE>
Arthur Andersen LLP served as independent auditors of the Company for
its fiscal year ended December 31, 1998. Arthur Andersen LLP has no direct or
material indirect interest in the Company or its subsidiaries. At a meeting held
on January 27, 1999, the Company's Directors who are not employees of the
Company, with the concurrence of the Board of Directors, selected Arthur
Andersen LLP as independent auditors of the Company for the current fiscal year,
subject to ratification by the stockholders.
The Board of Directors of the Company has determined that utilizing the
services of Arthur Andersen LLP is in the best interests of the Company.
Arthur Andersen LLP is not currently expected to have a representative
present at the Meeting and, therefore, will not make a statement or respond to
questions at the Meeting.
The affirmative vote of a majority of the shares voted at the Meeting,
assuming a quorum is present, is required to ratify the selection of auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS OF
THE COMPANY.
5
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of shares of the Company's Common Stock as of February 28,
1999 by (i) each person known by the Company to own beneficially 5% or more of
its outstanding shares of Common Stock, (ii) each director, (iii) each executive
officer named in the executive compensation , and (iv) all directors and
executive officers of the Company as a group. Except as otherwise indicated, the
Company believes that the beneficial owners of the Common Stock listed below,
based on information furnished by such owners, have sole voting and investment
power with respect to such shares, subject to community property laws where
applicable.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF SHARES OUTSTANDING
------------------- -------------------- -----------------------------
<S> <C> <C>
Nathan A. Chapman, Jr................... 2,170,429 shares (1) 73.5%
401 E. Pratt Street
Baltimore, MD 21202
The Chapman Co. ........................ 118,047 shares (2) 4.0%
401 E. Pratt Street
Baltimore, MD 21202
Chapman Capital Management, Holdings,
Inc. ................................ 224,267 shares (3) 7.6%
401 E. Pratt Street
Baltimore, MD 21202
Lottie H. Shackelford................... 1,000 shares (4) *
401 E. Pratt Street
Baltimore, MD 21202
Donald V. Watkins....................... 17,000 shares (5) *
401 E. Pratt Street
Baltimore, MD 21202
Earl U. Bravo, Sr....................... 6,900 shares (6) *
401 E. Pratt Street
Baltimore, MD 21202
M. Lynn Ballard......................... 5,000 shares (7) *
401 E. Pratt Street
Baltimore, MD 21202
All Directors and Executive Officers as
a Group.............................. 2,200,329 shares 74.0%
</TABLE>
- -----------
* Represents less than one percent of the outstanding shares of Common
Stock.
(1) Includes shares held by The Chapman Co. and Chapman Capital Management
Holdings, Inc. Mr. Chapman is President and Director of each of The
Chapman Co. and Chapman Capital Management Holdings, Inc. and Chairman
and majority stockholder of Chapman Capital Management Holdings, Inc.
Mr. Chapman disclaims beneficial ownership of the shares held by The
Chapman Co. and Chapman Capital Management Holdings, Inc.
(2) Represents shares held in inventory, as market-maker, that have no
voting rights as long as they are held by a subsidiary of the Company.
(3) Represents shares held by Chapman Capital Management, Inc., its
wholly-owned subsidiary, in investment advisory accounts over which CCM
exercises voting and dispository discretion.
(4) Represents shares subject to stock options that are currently
exercisable.
(5) Includes 10,000 shares subject to stock options that are currently
exercisable.
(6) Includes 5,000 shares subject to stock options that are currently
exercisable.
(7) Represents shares subject to stock options that are currently
exercisable.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation paid
by the Company during the last three fiscal years, for services rendered in all
capacities to the Company and its subsidiary, The Chapman Co., to the chief
executive officer and the other most highly paid executive officers of the
Company whose total annual salary and bonus exceeded $100,000 during the year
ended December 31, 1998. No other executive officer of the Company received
salary and bonus of $100,000 or more during such years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS
--------------------------- ---- ------ -----
<S> <C> <C> <C>
Nathan A. Chapman, Jr.................................. 1998(1) $200,000 $100,000
President 1997(2) $159,500 $100,000
1996(2) $144,000 $-0-
Earl U. Bravo, Sr. (1)................................. 1998(1) $105,000 $10,000
Senior Vice President, Secretary and Assistant 1997(2) $100,000 $5,000
Treasurer 1996(3) (3) (3)
</TABLE>
(1) Includes approximately 50% allocated to CCM and The Chapman Insurance
Agency, Incorporated pursuant to certain expense sharing arrangements. See
"Certain Transactions."
(2) Includes amounts allocated to CCM and The Chapman Insurance Agency,
Incorporated, then subsidiaries of the Company, pursuant to certain informal
allocation arrangements.
(3) Annual salary and bonus received by Mr. Bravo in fiscal year ended December
31, 1996 was less than $100,000.
The Board of Directors of the Company has established the 1998 Chapman
Holdings, Inc. Omnibus Stock Plan (the "Plan") to enable the Company to grant
equity compensation to the Company's directors, officers, employees and
consultants. Pursuant to the Plan, 150,000 shares have been reserved for award
thereunder. The Plan is administered by the Compensation Committee of the Board
of Directors.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL EXERCISE OR BASE EXPIRATION DATE
SECURITIES OPTIONS GRANTED TO PRICE ($/SHARE)
UNDERLYING OPTIONS EMPLOYEES IN FISCAL
NAME GRANTED (#) YEAR
<S> <C> <C> <C> <C>
Earl U. Bravo, Sr. 5,000 11% 9.50 9/28/2001
Senior Vice
President, Secretary
and Assistant
Treasurer
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 26, 1998, the Company and its subsidiary The Chapman Co.
effected tax-free spin-off transactions pursuant to which all of the outstanding
shares of stock of the former
7
<PAGE>
subsidiaries of The Chapman Co., Chapman Capital Management Holdings, Inc.,
parent of Chapman Capital Management, Inc. ("CCM") and Chapman Insurance
Holdings, Inc. parent of The Chapman Insurance Agency, Inc. were distributed to
the Company's stockholders.
CCM is registered with the Commission as an investment adviser and
manages funds for institutional investors and individuals on a separate account
basis, for three registered open-end investment companies, DEM Equity Fund, DEM
Index Fund and The Chapman U.S. Treasury Money Fund, each a portfolio of The
Chapman Funds, Inc., and a private group trust for qualified employee benefit
plans. The Chapman Insurance Agency, Inc. is a variable annuity provider formed
primarily to serve retail clients and its operations have not been significant
to date.
Nathan A. Chapman, Jr., the President, Chairman of the Board of
Directors and majority stockholder of the Company, is the President and Chairman
of the Board of Directors of each of Chapman Capital Management Holdings, Inc.,
CCM, Chapman Insurance Holdings, Inc., The Chapman Insurance Agency, Inc. and
The Chapman Funds, Inc. and majority stockholder of Chapman Capital Management
Holdings, Inc. and Chapman Insurance Holdings, Inc. Earl U. Bravo, Sr., Senior
Vice President, Secretary, Assistant Treasurer and a Director of the Company and
M. Lynn Ballard, Treasurer, Assistant Secretary of the Company are each senior
executive officers of Chapman Capital Management Holdings, Inc., CCM, Chapman
Insurance Holdings, Inc., The Chapman Insurance Agency, Inc. and The Chapman
Funds, Inc. Mr. Bravo is a Director of Chapman Capital Management Holdings, Inc.
Lottie H. Shackelford, a Director of the Company, is a Director of The Chapman
Funds, Inc. Until its liquidation in 1998, Mr. Chapman, Mr. Bravo and Ms.
Ballard served as senior executive officers and Mr. Chapman and Ms. Shackelford
served as Directors of DEM, Inc., a closed-end registered investment company
managed and sponsored by CCM.
The Company acted as the underwriter, on a best efforts basis, for the
sale of DEM, Inc. common stock. The Company was paid $432,008 and $0 in
management fees and commissions in the years ended December 31, 1997 and
December 31, 1998, respectively.
The Company acted as the underwriter, on a best efforts basis, for the
sale of Chapman Capital Management Holdings, Inc. common stock. The Company was
paid $296,623 in underwriting fees and commissions in the year ended December
31, 1998.
The Company is the distributor for The Chapman U.S. Treasury Money
Fund, DEM Equity Fund and DEM Index Fund pursuant to distribution agreements
between the Company and The Chapman Funds, Inc. Such distribution agreements
must be extended annually for one-year periods by the board of directors of The
Chapman Funds, Inc. or they expire by their terms. Further, such agreements are
terminable on 60 days notice and terminate automatically upon assignment. The
Company receives no compensation for the distribution of shares of The Chapman
U.S. Treasury Money Fund. The DEM Index Fund had no operations in 1999. The
Company was paid $14,221 in management fees and commissions in the year ended
December 31, 1998 pursuant to its distribution agreement with The Chapman Funds,
Inc. pertaining to the
8
<PAGE>
DEM Equity Fund. The Company has entered into distribution agreements with The
Chapman Funds, Inc. with respect to three additional funds; however, such funds
have not yet commenced operations.
As of October 31, 1997, CCM executed a 10-year note to the Company in
the amount of $771,889 accruing interest at .6.68% per annum. CCM repaid this
note in full during 1998. The largest amounts owed to the Company by CCM,
including this loan and CCM's allocation of shared overhead, and other advances
as set forth below, were $958,302 and $800,672 during fiscal years ended
December 31, 1998 and 1997, respectively.
As of December 31, 1996, Mr. Chapman executed a promissory note to the
Company in the amount of $106,923. As of February 11, 1998, Mr. Chapman executed
a three-year note in the amount of $176,250 which accrues interest at 5.54% per
annum and no payments of principal or interest are required until maturity, to
replace the note executed December 31, 1996. On March 11, 1998, Mr. Chapman
executed a three-year promissory note in the amount of $285,587 which accrues
interest at 5.5% per annum. As of May 1, 1998, Mr. Chapman executed a demand
promissory note in the amount of $100,000 which accrues interest at 5.5% per
annum. As of December 31, 1998, Mr. Chapman executed a three-year promissory
note in the amount of $51,690 which accrues interest at 4.33% per annum. As of
December 31, 1997 and 1998, Mr. Chapman owed the Company $164,601 and $638,314,
respectively, in connection with these notes.
Mr. Chapman is President and Treasurer and Mr. Bravo is Secretary of
Chapman General Partner One, Inc., the general partner of Chapman Limited
Partnership I (the "Partnership"). The Company leases furniture and equipment
from the Partnership. The lease requires monthly payments of $9,846 and contains
one year renewable terms, at the option of the Company, through September 2000,
at which time the Company can purchase the furniture and equipment at fair
value. Rent expense under this lease agreement was $118,152 in each of 1998 and
1997 of which $0 and $9,846 were payable to the Partnership as of December 31,
1998 and 1997, respectively. Management believes that the terms of these
transactions were substantially as favorable to the Company as those available
from non-affiliates. The rent expense under the lease agreement has been shared
equally between the Company and CCM.
The Company shares office space, certain employees and other overhead
with certain other entities controlled by Mr. Chapman including CCM and The
Chapman Insurance Agency, Inc. The Company allocates compensation and benefits
expense to CCM and The Chapman Insurance Agency, Inc. based on actual
compensation and benefits expense and the estimated percentage of the employee's
time spent performing services for each entity. The Company allocates other
expenses based on estimated usage. Pursuant to such allocation arrangements, as
of December 31, 1997 and 1998, CCM owed the Company $28,782 and $275,562,
respectively. The Company treats such outstanding allocation amounts as normal
receivables to be paid in the ordinary course of business. The common management
and/or ownership among the Company and other entities controlled by Mr. Chapman
may involve potential conflicts of interest. See
9
<PAGE>
"Risk Factors--Certain Transactions; Relationships with Other Chapman Entities;
Conflicts of Interest."
On November 10, 1998, the Company erroneously deposited $291,207 in the
securities account of CCM. As of December 31, 1998, CCM owed the Company
$104,270 of this amount. CCM repaid the Company in full on January 12, 1999.
The Company and Mr. Chapman have entered into a non-exclusive,
royalty-free licensing agreement pertaining to the Company's use of the DEM and
Domestic Emerging Markets trademarks that are owned by Mr. Chapman.
All transactions with affiliates of the Company are approved by a
majority of the Board of Directors, including a majority of the disinterested
Directors.
STOCKHOLDER PROPOSALS
From time to time, stockholders of the Company submit proposals which
they believe should be voted upon at the Annual Meeting or nominate persons for
election to the Board of Directors. In accordance with the Company's Bylaws, any
such proposal or nomination must be submitted in writing to the Secretary of the
Company not earlier than the close of business on the 120th day and not later
than the close of business on the 90th day prior to the date of the annual
meeting. This submission must include certain specified information concerning
the proposal or nominee, as the case maybe, and information as to the
proponent's ownership of Common Stock of the Company. Proposals or nominations
not meeting these requirements will not be entertained at an annual meeting. The
Secretary should be contacted in writing at the address on the first page of
this Proxy Statement to make any submission or to obtain additional information
as to the proper form and content of submissions.
Pursuant to applicable rules under the Securities Exchange Act of 1934,
some stockholder proposals may be eligible for inclusion in the Company's 2000
Proxy Statement. Any such stockholder proposals must be submitted in writing to
the Secretary of the Company no later than December 29, 1999. Stockholders
interested in submitting such a proposal are advised to contact knowledgeable
counsel with regards to the detailed requirements of such securities rules. It
is suggested that proposals be forwarded by certified mail, return receipt
requested.
OTHER MATTERS
At the date hereof, there are no other matters which the Board of
Directors intends to present or has reason to believe others will present at the
Annual Meeting. If other matters come before the Meeting, the persons named in
the accompanying form of proxy will vote in accordance with their best judgment
with respect to such matters.
10
<PAGE>
REPORT ON FORM 10-KSB
The Annual Report on Form 10-KSB and applicable exhibits are available
to stockholders free of charge upon written request. Requests should be sent to
Chapman Holdings, Inc., World Trade Center-Baltimore, 28th Floor, 401 East Pratt
Street, Baltimore, Maryland 21202. Attention: Earl U. Bravo, Sr., Secretary.
By Order of the Board of Directors
April 23, 1999 /s/ EARL U. BRAVO, SR.
----------------------
Earl U. Bravo, Sr.
Secretary
11
<PAGE>
CHAPMAN HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Nathan A. Chapman, Jr. and Earl U. Bravo, Sr.,
or either of them, the proxy or proxies of the undersigned with full powers of
substitution, to vote all shares of Common Stock of Chapman Holdings, Inc. held
of record by the undersigned at the close of business on April 14, 1999, at the
Annual Meeting of Stockholders of the Company to be held on Tuesday, May 25,
1999 at 10:00 a.m., local time and at any adjournment or adjournments thereof,
upon the matters set forth herein.
PLEASE MARK YOUR CHOICE IN BLUE OR BLACK INK, PLEASE SIGN, DATE AND RETURN
THIS PROXY PROMPTLY USING THE ACCOMPANYING ENVELOPE
|X| Please mark If properly executed, the shares represented by this proxy
will be voted in the votes as in manner directed herein by the
undersigned stockholder, or to the extent this example directions are
not given, such shares will be voted FOR each of the nominees and
each other proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW AND A
VOTE "FOR" PROPOSAL 2 AND 3.
1. ELECTION OF DIRECTORS.
Nominees: Nathan A. Chapman, Jr., Earl U. Bravo, Sr., Lottie H.
Shackelford and Donald V. Watkins.
|_| FOR ALL NOMINEES LISTED (EXCEPT AS |_| WITHHOLD AUTHORITY FOR
INDICATED) ALL NOMINEES LISTED
To withhold authority to vote for any nominee, write that nominee's name in the
space provided.
------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C> <C>
2. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP |_| |_| |_|
AS INDEPENDENT AUDITORS.
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO |_| |_| |_|
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
MARK HERE FOR ADDRESS
_______________________________ CHANGE AND NOTE SUCH CHANGE |_|
AT LEFT
_______________________________
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Please sign. Persons acting in a fiduciary capacity should so indicate. PLEASE
NOTE any change of address and supply any missing Zip Code number.
Signature: Date:
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Signature: Date:
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