-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PPRbjLYa4ePenm3HzRVf8ph0DqL1W3WgIpmk7hfYDwC1G97Xa6mXQ0N+YEAC9530 cpzIuV+LRIo3Ky7G2JlTog== 0000926236-02-000142.txt : 20020806 0000926236-02-000142.hdr.sgml : 20020806 20020805121407 ACCESSION NUMBER: 0000926236-02-000142 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020820 FILED AS OF DATE: 20020805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED FINANCIAL MORTGAGE CORP CENTRAL INDEX KEY: 0000916823 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 363440533 STATE OF INCORPORATION: IL FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-14127 FILM NUMBER: 02719321 BUSINESS ADDRESS: STREET 1: 600 ENTERPRISE DR STREET 2: STE 206 CITY: OAK BROOK STATE: IL ZIP: 60523 BUSINESS PHONE: 6305717222 MAIL ADDRESS: STREET 1: 600 ENTERPRISE DRIVE STREET 2: STE 206 CITY: OAK BROOK STATE: IL ZIP: 60523 DEF 14A 1 ufm2002def.txt PROXY STATEMENT AUGUST 20, 2002 SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by 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 Rule 14a-11(c) or Rule 14a-12 (Name of Registrant as Specified In Its Charter) UNITED FINANCIAL MORTGAGE CORP. ___________________________________________________________________________ (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 numer of securities to which transactions 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: ___________________________________________________________________________ UNITED FINANCIAL MORTAGE CORP. 600 Enterprise Drive Suite 206 Oak Brook, Illinois 60523 August 1, 2002 Dear Stockholder: Our Annual Meeting will be held on Tuesday, August 20, 2002, at 2:00 P.M., Central Daylight Savings Time, at the Renaissance Hotel, 2100 Spring Road, Oak Brook, Illinois 60523. The formal Notice of Annual Meeting of Stockholders and Proxy Statement accompanying this letter describe the business requiring action at the meeting. A presentation by Steve Khoshabe, Executive Vice President of the Company, and the undersigned will provide information on the business and progress of our Company during fiscal 2002 and our directors and officers will be available to answer your questions. We appreciate the interest of our stockholders in United Financial Mortgage Corp. and are pleased that in the past so many of you have exercised your right to vote your shares. We hope that you continue to do so. Whether or not you plan to attend, please mark, sign, date and mail the accompanying proxy card as soon as possible. The enclosed envelope requires no postage if mailed in the United States. If you attend the meeting, you may revoke your proxy and vote personally. Cordially, Joseph Khoshabe President and Chairman of the Board UNITED FINANCIAL MORTAGE CORP. NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held August 20, 2002 To the Stockholders of UNITED FINANCIAL MORTGAGE CORP.: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of United Financial Mortgage Corp. (the "Company") will be held Tuesday, August 20, 2002, at 2:00 p.m., Central Daylight Savings Time, at the Renaissance Oak Brook Hotel, 2100 Spring Road, Oak Brook, Illinois 60523 for the following purposes: 1. To elect five (5) directors; 2. To ratify the appointment of Crowe, Chizek and Company L.L.P. as independent auditors for the fiscal year ending April 30, 2003; and 3. To transact such other business as may properly come before the meeting and any adjournment thereof. The Board of Directors has fixed the close of business on July 26, 2002 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are urged to mark, date and sign the enclosed proxy and return it promptly so your vote can be recorded. If you are present at the meeting, you may revoke your proxy and vote in person. Date: August 1, 2002 By Order of the Board of Directors /s/ Robert S. Luce Robert S. Luce Secretary YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND PROMPLY RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. UNITED FINANCIAL MORTGAGE CORP. 600 Enterprise Drive, Suite 206 Oak Brook, Illinois 60523 PROXY STATEMENT GENERAL INFORMATION Use of Proxies This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of United Financial Mortgage Corp. (the "Company") of proxies to be voted at the Annual Meeting of Stockholders to be held on Tuesday, August 20, 2002, in accordance with the foregoing notice. This Proxy Statement and accompanying proxy are being mailed to stockholders on or about August 1, 2002. Any proxy may be revoked by the person giving it at any time before it is voted by delivering to the Secretary of the Company a written notice of revocation or a duly executed proxy bearing a later date. Shares represented by a proxy, properly executed and returned to the Company and not revoked, will be voted at the Annual Meeting. Shares will be voted in accordance with the directions of the stockholder as specified on the proxy. In the absence of directions, the proxy will be voted FOR the election of the directors named as the nominees in this Proxy Statement and FOR the ratification of the appointment of Crowe, Chizek and Company LLP as the Company's independent auditors for the fiscal year ending April 30, 2003. Any other matters that may properly come before the meeting will be acted upon by the persons named in the accompanying proxy in accordance with their discretion. Record Date and Voting Securities The close of business on July 26, 2002 has been fixed as the record date (the "Record Date") for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and any adjournment thereof. As of the Record Date, the Company had 4,095,029 shares of Common Stock outstanding and entitled to vote. Each share of Common Stock is entitled to one vote, exercisable in person or by proxy. There are no other outstanding securities of the Company entitled to vote, and there are no cumulative voting rights with respect to the election of directors. The presence, in person or by proxy, of a majority of the outstanding shares of the Common Stock of the company is necessary to constitute a quorum at the Annual Meeting. The Company's transfer agent tabulates the votes. Abstentions and broker non-votes are included in the number of shares present and voting for the purpose of determining if a quorum is present. Abstentions also are included in the tabulation of votes cast on proposals presented to the stockholders, but broker non-votes are not. Expenses of Solicitation All expenses of the solicitation of proxies will be paid by the Company. Officers, directors and employees of the Company also may solicit proxies by telephone, facsimile or in person. PRINCIPAL HOLDERS OF SECURITIES The following table shows: (i) each person who is known to be the beneficial owner as of April 30, 2002 of more than 5% of the Company's Common Stock and (ii) with respect to each of the directors and nominees for director of the Company, the executive officers named in the Summary Compensation Table, and all directors and executive officers as a group, in number, (a) the total number of shares of Common Stock beneficially owned as of April 30, 2002 and (b) the percent of Common Stock so owned as of the same date. Amount & Percent Nature of of Beneficial Common Name of Beneficial Owner Ownership(1)(4) Stock ------------------------ --------------- ----- Joseph Khoshabe (2) (5) 2,531,842(2) 61.8% Steve Khoshabe 11,700 * John A. Clark(3) 50,000 1.2% Robert S. Luce(3) 1,100 * Laurence B. Woznicki 384,870 9.3% All directors and executive officers as a group (6 persons) 2,594,642 63.36% _____________________ * Less than 1% (1) Calculated pursuant to Rule 13d-3(d) under the Securities Exchange Act of 1934. Unless otherwise stated in these notes, each person has sole voting and investment power with respect to all such shares. Under Rule 13d-3(d), shares not outstanding which are subject to options exercisable within sixty days are deemed outstanding for the purpose of computing the number and percentage owned by such person, but are not deemed outstanding for the purpose of computing the percentage owned by each other person listed. Includes shares which the listed beneficial owner has a right to acquire within sixty days as follows: None. All directors and executive officers as a group six (6) persons hold 2,594,642 shares. (2) Held by the Joseph Khoshabe Trust under Trust Agreement, dated September 22, 1995 (the "J. K. Trust"). (3) Held Beneficially. (4) The computations exclude 80,000 shares relating to an Underwriter's Warrant and 220,500 shares subject to option under the Company's Stock Option Plan. (5) 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. - 2 - ITEM 1: ELECTION OF DIRECTORS The nominees each were elected as directors at the Company's 2001 Annual Meeting of Shareholders. The terms of the directors will expire at the 2002 Annual Meeting. No person, other than the directors of the Company acting solely in that capacity, is responsible for the naming of the nominees. Information as to each nominee follows. Unless otherwise indicated, each nominee has served for at least 5 years in the business position currently or most recently held. NOMINEES FOR DIRECTORS Joseph Khoshabe - Director since 1986, Age 57 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 a Bachelor of Science/Accounting from Tehran University. John A. Clark - Director since July 19, 1998, Age 54 Member: Audit Committee and Stock Plans Committee Common Shares: Beneficially owned 50,000 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 S. Luce - Director since July 19, 1998, Age 55 Member: Audit Committee and Stock Plans Committee Common Shares: Beneficially owned 1,100 Robert S. Luce is an attorney who has been practicing financial services law for 30 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 (Chicago) 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. - 3 - Elliot R. Jacobs - Director nominee, Age 57 Common Shares: None Beneficially owned Elliot R. Jacobs is a professional in the mortgage banking industry. Mr. Jacobs is a frequent speaker and contributing author on topics for the Mortgage Bankers Association of America. Mr. Jacobs has been a director of the mortgage banking strategies group of First Fidelity Capital Markets, Inc. of Boca Raton, Florida since 1998. During the period from 1993 to 1998, Mr. Jacobs was the director of the Mergers and Acquisitions group of CoreStates Capital Markets, a division of CoreStates Bank of Fort Lauderdale, Florida. Mr. Jacobs earned a B. S. in Accounting and an MBA in Management Information Systems, with honors, from the American University. James R. Zuhlke - Director nominee, Age 56 Member: Audit Committee (Chairman) Common Shares - None beneficially owned James R. Zuhlke has over 22 years of experience as an insurance executive. During that time, Mr. Zuhlke started and managed seven different insurance companies, including both domestic and overseas captives. Mr. Zuhlke was founder, President and Chairman of the Board of Intercargo Corporation, which became publicly traded in 1988. Mr. Zuhlke currently is the President of Kingsway America, Inc.; a holding company for six (6) operating subsidiaries of the Kingsway Financial Services Group, which Mr. Zuhlke assisted in becoming a public company in 1995. Mr. Zuhlke received his BBA from the University of Wisconsin in 1968 and also received his law degree (JD) from the University of Wisconsin in 1971. Board of Directors The Company's Board of Directors has the responsibility to review the overall operations of the Company. The Board members are kept informed of the Company's results of operations and proposed plans and business objectives by the Company's management. During 2001, the Board of Directors met six times. All of the directors attended at least 75% of those meetings and meetings of the committees on which they served. Included among the committees of the Board are standing Audit Committee and the Stock Plans Committee. Audit Committee The Audit Committee of the Board of Directors is composed of 3 directors, none of whom is an employee of the Company. The Committee is governed by a charter approved by the Board of Directors. In accordance with its Charter, the Committee assists the Board in carrying out its responsibilities for monitoring management's accounting for the Company's financial results and for the timeliness and adequacy of the reporting of those results; discusses and makes inquiry into the audits of the Company's books made internally and by outside independent auditors, the Company's financial and accounting policies, its internal controls and its financial - 4 - reporting; and investigates and makes a recommendation to the Board each year with respect to the appointment of independent auditors for the following year. Current members of the Committee are John A. Clark, Robert S. Luce and Mr. James R. Zuhlke (Chairman) who was appointed to the committee at the June 12, 2002 Board of Directors meeting. Each of the members meet the independence and experience requirements of the Chicago Stock Exchange. The Audit Committee met four times in 2001. Notwithstanding anything to the contrary set forth in any of the Company's filings under the Securities Act of 1933 or the Securities Exchange Act of 1934 that might incorporate filings, including this Proxy Statement, in whole or in part, the following report shall not be incorporated by reference into any such filings. Report of the Audit Committee In discharging its oversight responsibility as to the audit process, the Committee obtained from the independent auditors a formal written statement describing all relationships between the auditors and the Company that might bear on the auditors' independence consistent with Independence Standards Board Standard No. 1 "Independence Discussions with Audit Committees" and discussed with the auditors any relationships that may impact their objectivity and independence. The Committee discussed and reviewed with the independent auditors all communications required by generally accepted auditing standards, including those described in Statement on Auditing Standards No. 61, as amended, "Communication with Audit Committees". The Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the fiscal year ended April 30, 2002, with management and the independent auditors. Management of the Company is responsible for the preparation, presentation and integrity of the Company's financial statements, the Company's accounting and financial reporting principles, and internal controls designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditors are responsible for auditing the Company's financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States. Management has represented to the Committee that the Company's financial statements were prepared in accordance with generally accepted accounting principles. It is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements are complete and accurate and in accordance with generally accepted accounting principles. Based on the above-mentioned review and discussions with management and the independent auditors, the Committee recommended to the Board that the Company's audited consolidated financial statements be included in its Annual Report on Form 10-KSB for the fiscal year ended April 30, 2002, for filing with the Securities and Exchange Commission. Audit Committee John A. Clark Robert S. Luce James R. Zuhlke (Chairman) A copy of the Audit Committee Charter is attached hereto as Appendix B. - 5 - Stock Plans Committee The Stock Plans Committee periodically reviews Management requests for grants of stock options and reviews plan administration matters. The Committee members are John A. Clark and Robert S. Luce. - 6 - SUMMARY COMPENSATION TABLE Annual Compensation Other Annual Name and Compensation Principal Position Year Salary Bonus (1)(2)(3) -------------------------- ---- -------- -------- ------------ Joseph Khoshabe, President 2002 $250,500 $130,000 $10,354 2001 $250,000 $157,000 $10,354 2000 $250,000 -0- $10,354 1999 $244,166 $ 47,561 $11,565 1998 $180,000 -0- $ 3,161 Steve Y. Khoshabe, Executive Vice President 2002 $140,000 $120,000 $ 3,739 2001 $140,000 -0- $ 3,739 2000 $ 90,000 -0- $ 3,739 1999 $ 86,500 -0- $ 3,475 1998 $ 50,063 -0- $ 2,210 ___________________________________ (1) Includes: $10,354 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 Steve Khoshabe. 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 220,500 shares have been granted to 24 employees at an average weighted exercise price of $5.03 per share. Mr. Steve Khoshabe, the Executive Vice President of the Company was granted stock options for 90,000 shares with an average weighted exercise price of $5.38. Each of the nominee directors was granted a stock option for 5,000 shares at an option exercise price of $1.10 per share during fiscal 2002. - 7 - EMPLOYMENT AGREEMENT FOR JOSEPH KHOSHABE The Company entered into an Employment 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: Actual Cost (2) Car Allowance: Actual Cost (2) Long Term Disability Insurance: Actual Cost (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) Commencing 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 only by Unanimous vote and Mr. Khoshabe will be a member of the Board of Directors after election of directors at the 2002 Annual Meeting. The Company's regular terms of office for the directors expire at the 2003 Annual Meetings of Stockholders. Five persons are to be elected at the meeting to hold office as directors for a term of one (1) year and until their respective successors are elected and qualified. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company has entered into a compensation agreement with Fidelity Capital Markets, Inc. ("Fidelity") of which Mr. Elliot Jacobs is a principal. The Agreement provides for Fidelity to receive as compensation ten percent (10%) of net revenues earned by any mortgage banking or other opportunity introduced by Fidelity to the Company. It is contemplated that Fidelity's services may include locating and analyzing mortgage banking transactions that may have potential interest to the Company and its present or future business operations; the presentation of this analysis to senior management of the Company for their review and consideration; negotiation and liaison between the Company and prospective business candidates and the provision of consulting services to the Company about issues that arise during the course of contract negotiations; closing matters and operational advice after the consummation of a transaction. As of the date hereof, the Company has entered into one (1) mortgage banking transaction with a person introduced to the Company by Fidelity. - 8 - Management and Fidelity both believe that the compensation arrangement is competitive in the marketplace and fair to the Company. ITEM 2 - RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING APRIL 30, 2003 The Audit Committee has considered the qualifications of Crowe, Chizek and Company, LLP ("Crowe, Chizek") and recommended that the Board of Directors appoint them as independent auditors of the Company for the fiscal year ending April 30, 2003. The Board of Directors desires to obtain stockholders' ratification of the Board's action in such appointment. A resolution ratifying the appointment will be offered at the meeting. If the resolution is not adopted, the adverse vote will be considered as a direction to the Board to select other auditors for the following year. Because of the difficulty and expense of making any substitution of auditors so long after the beginning of the current year, it is contemplated that the appointment for the year 2003 will stand unless the Board finds other good reason for making a change. Fees paid to Crowe, Chizek for professional services rendered to the Company during 2002 were as follows: Audit fees and all other fees, including audit related services of $30,000 and other non-audit related services of $10,000. Other non-audit related services include tax return preparation and consultation. No services were performed or fees incurred in connection with financial information systems design and implementation projects during 2002. The Audit Committee considered the effects that the provision of non-audit services may have on the Company's independent auditors' independence. A representative of Crowe, Chizek will be present at the Annual Meeting to respond to appropriate questions and to make a statement if the representative so desires. Ratification requires the affirmative vote by holders of at least a majority of outstanding shares voting at the Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK AS THE COMPANY'S INDEPENDENT AUDITORS FOR 2003 - 9 - 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 also are required by Securities and Exchange Commission rules to furnish the Company with 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, 2002, 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 2003 Annual Meeting of Stockholders must be received by the Company no later than February 1, 2003 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 addition to the use of the 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 materials 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., 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209 will assist in the distribution of proxy solicitation materials, for a fee estimated at $3,000.00 plus out-of-pocket expenses. The Company will pay the cost of proxy solicitation. APPENDIX A The Summary of Selected Financial Data; Management'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, 2002 are incorporated herein by reference from the Company's Annual Report on Form 10-KSB as filed with the United States Securities and Exchange Commissions on or about July 30, 2002. By Order of the Board of Directors /S/ Robert S. Luce Secretary, Robert S. Luce Dated: August 1, 2002 - 10 - APPENDIX B UNITED FINANCIAL MORTGAGE CORP CHARTER OF THE AUDIT COMMITTEE Purpose: The Audit Committee ("Committee") reviews the Company's quarterly and annual financial statements and other financial information included in or incorporated by reference in the Company's Proxy Statement, Form 10-KSB and other reports to shareholders. The Committee also reviews recommendations of the Company's independent auditors and internal auditors on accounting methods and internal controls. The Committee may make recommendations to the Board of Directors on the scope of the audits. The Committee may review reports prepared by the independent public accountants and internal auditors on management's compliance with laws and the Company's business conduct and ethics policies. The Committee may conduct independent inquiries. The Committee recommends to the Board of Directors the appointment of independent auditors. The Committee shall be entitled to call upon the service of the Company's officers and outside advisors for such assistance as it may request in the fulfillment of these purposes. Membership: The Audit Committee shall be composed of three (3) non-employee members of the Board of Directors. The Board shall be entitled to fill any vacancies in its membership. The Committee may appoint a Chairman and Secretary of the Committee. Decision Making: Actions of the Committee shall be taken by a vote of not less than a majority of its members. Meeting Schedules: The Committee shall meet on a calendar quarter basis at such places and times as shall be convenient to the members of the Committee. June 19, 1998 PROXY BALLOT FORM ----------------- UNITED FINANCIAL MORTGAGE CORP. Proxy Solicited on Behalf of The Board of Directors For The Annual Meeting of Stockholders - August 20, 2002 The undersigned appoints Joseph Khoshabe and Robert S. Luce and each of them, as proxies, with full power of substitution and revocation, to vote, as designated below, all the Common Stock of United Financial Mortgage Corp. which the undersigned has power to vote, with all powers which the undersigned would possess if personally present, at the annual meeting of stockholders to be held on August 20, 2002 or at any adjournment thereof. Unless otherwise marked, this proxy will be voted FOR the election of the nominees named, and FOR Proposal No. 2 and in their discretion, the Proxies may vote upon any other business that properly comes before the meeting. PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY BALLOT FORM PROMPTLY USING THE ENCLOSED ENVELOPE. BALLOT ------ ANNUAL MEETING OF STOCKHOLDERS - August 20, 2002 ------------------------------------------------ 1. For Election of Directors (Mark only one) [ ] Vote FOR all nominees listed [ ] Vote WITHHELD below (Except as directed to from all nominees the contrary below) Joseph Khoshabe Joseph Khoshabe John A. Clark John A. Clark Robert S. Luce Robert S. Luce Elliot R. Jacobs Elliot R. Jacobs James R. Zuhlke James R. Zuhlke INSTRUCTIONS: To withhold vote for any individual nominee, write that nominee's name in the space provided below. ____________________________________________________________________________ For Against Abstain 2. For Independent Accountants [ ] [ ] [ ] ____________________________________________________________________________ Print Name of Stockholder Signature of Stockholder or Proxy ____________________________________________________________________________ Address Number of Shares -----END PRIVACY-ENHANCED MESSAGE-----