<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.___ )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
BNC MORTGAGE, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
BNC MORTGAGE, INC.
[BNC LOGO] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
You are cordially invited to attend the Annual Meeting of Stockholders of
BNC MORTGAGE, INC., a Delaware corporation (the "Company"), to be held at the
Hyatt Regency Irvine, 17900 Jamboree Boulevard, Irvine, California 92614, on
December 14, 1999 at 10:00 a.m. local time. The Annual Meeting of Stockholders
of the Company is being held for the following purposes:
1. To elect Kelly W. Monahan and Keith C. Honig as Class II directors
to serve on the Board of Directors until the Annual Meeting of Stockholders
to be held in 2002.
2. To consider and act upon a proposal to amend the Company's
Certificate of Incorporation to enable the Board of Directors to amend or
adopt the Company's Bylaws.
3. To consider and act upon a proposal to ratify the appointment of
Ernst & Young LLP as the independent accountants of the Company for the
fiscal year ending June 30, 2000.
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October 15, 1999
as the record date for determining those stockholders who will be entitled to
vote at the meeting. The stock transfer books will not be closed between the
record date and the date of the meeting.
Representation of at least a majority of all outstanding shares of Common
Stock of the Company is required to constitute a quorum. Accordingly, it is
important that your shares be represented at the meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. Your proxy may be revoked at any
time prior to the time it is voted.
Please read the proxy material carefully. Your vote is important and the
Company appreciates your cooperation in considering and acting on the matters
presented.
Dated: October , 1999
For the Board of Directors
Evan R. Buckley,
Chairman of the Board,
Chief Executive Officer and Secretary
<PAGE> 3
BNC MORTGAGE, INC.
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING TO BE HELD
[BNC LOGO] DECEMBER 14, 1999 AT 10:00 A.M. LOCAL TIME
This proxy statement is delivered to you by the Board of Directors of BNC
Mortgage, Inc. (the "Company"), a Delaware corporation, on behalf of the
Company, in connection with the Annual Meeting of Stockholders of the Company to
be held on December 14, 1999 at 10:00 a.m. local time at the Hyatt Regency
Irvine, 17900 Jamboree Boulevard, Irvine, California 92614 (the "Meeting") and
at any adjournments thereof. The approximate mailing date for this proxy
statement and the enclosed proxy is October , 1999.
VOTING RIGHTS AND SOLICITATION
If a proxy in the accompanying form is duly executed and returned, the
shares represented by the proxy will be voted as directed. If no direction is
given, the shares represented by the proxy will be voted for the election of the
two nominees for directors named herein, the ratification of the appointment of
Ernst & Young LLP as the Company's independent accountants for the fiscal year
ending June 30, 2000, and the amendment to the Company's Certificate of
Incorporation enabling the Board of Directors to amend the Company's Bylaws. Any
proxy given may be revoked at any time prior to its exercise by notifying the
Secretary of the Company in writing of such revocation, by duly executing and
delivering another proxy bearing a later date, or by attending and voting in
person at the Meeting. The Company's principal executive office is located at
1063 McGaw Avenue, Irvine, California 92614-5532.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made by mail. In addition, the officers and regularly
engaged employees of the Company may, in a limited number of instances, solicit
proxies personally or by telephone. The Company will reimburse banks, brokerage
firms, other custodians, nominees and fiduciaries for reasonable expenses
incurred in sending proxy materials to beneficial owners of Common Stock of the
Company.
The Company's Annual Report to Stockholders for the year ended June 30,
1999, is concurrently being provided to each stockholder.
Holders of Common Stock of record at the close of business on October 15,
1999 will be entitled to vote at the Meeting. There were shares
of Common Stock, $.001 par value per share, outstanding at that date. Each share
of Common Stock is entitled to one vote and the presence in person or by proxy
of holders of a majority of the outstanding shares of Common Stock is necessary
to constitute a quorum for the Meeting. The affirmative vote of a plurality of
all of the votes cast at a meeting at which a quorum is present is necessary for
the election of a director. For purposes of the election of the Class II
directors, abstentions and broker non-votes will not be counted as votes cast
and will have no effect on the result of the vote, although they will count
toward the presence of a quorum. Broker non-votes occur when a broker holding a
customer's securities in street name has not received voting instructions from
the customer on certain matters. The amendment to the Company's Certificate of
Incorporation enabling the Board of Directors to amend the Bylaws requires the
affirmative vote of a majority of all of the shares entitled to vote thereon.
For purposes of the vote on this proposed amendment, abstentions and broker
non-votes will be counted as votes cast against the proposal. The affirmative
vote of a majority of all votes cast at a meeting at which a quorum is present
is necessary for the ratification of the appointment of Ernst & Young LLP as the
Company's independent accountants. For purposes of the vote on this matter,
abstentions will be counted as votes cast against the proposal, whereas broker
non-votes will not be counted as votes cast and will have no effect on the
result of the vote, although they will count toward the presence of a quorum.
<PAGE> 4
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors are divided into three classes, with each
class serving a three-year term and thereafter until their successors are duly
elected and qualified or until death, resignation or removal. One class of
Directors will be elected annually at the Annual Meeting of Stockholders. The
Company's Bylaws currently provide for a variable Board of Directors with a
range of between five and nine members. The Company currently has five members
on its Board of Directors. The Company's Bylaws give the Board the authority to
establish, increase or decrease the number of directors.
Unless otherwise directed by stockholders within the limits set forth in
the Bylaws, the proxy holders will vote all shares represented by proxies held
by them for the election of Kelly W. Monahan and Keith C. Honig, who are
currently members of the Company's Board of Directors. The Company has been
advised by Messrs. Monahan and Honig of their availability and willingness to
serve if elected. In the event that either Messrs. Monahan and Honig becomes
unavailable or unable to serve as a Director of the Company prior to the voting,
the proxyholders will refrain from voting for him or will vote for a substitute
nominee in the exercise of their best judgment.
INFORMATION CONCERNING NOMINEES
The following table sets forth certain information with respect to the
nominees for Director of the Company.
<TABLE>
<CAPTION>
CLASS AND YEAR
IN WHICH
NAME AGE TERM WILL EXPIRE POSITION
---- --- ---------------- ----------------------
<S> <C> <C> <C>
Kelly W. Monahan++..................... 42 Class II (2002) President and Director
Keith C. Honig+........................ 39 Class II (2002) Director
</TABLE>
- ---------------
+ Member of the Audit Committee
++ Member of the Compensation Committee
KELLY W. MONAHAN has been President of the Company since December 1997 and
a director of the Company since October 1997. Mr. Monahan has been President and
Secretary of Mortgage Logic.com, Inc., the Company's wholly-owned subsidiary,
since February 1999. From the Company's inception through March 1999, Mr.
Monahan was the Company's Chief Financial Officer, and from the Company's
inception through December 1997, he was the Company's Executive Vice President.
From July 1992 to July 1995, Mr. Monahan served as Vice President and Chief
Financial Officer of Quality Mortgage USA, Inc. ("Quality Mortgage"), where his
responsibilities included the management of all financial aspects of a national
mortgage banker, including the issuance of mortgage backed securities, secondary
marketing, interest rate hedging, cash management, financial reporting, and
strategic planning. From February 1989 to July 1992, Mr. Monahan was a
practitioner for Monahan and Associates, an accounting and consulting firm.
KEITH C. HONIG has been a director of the Company since February 1998. Mr.
Honig has been Vice President of Mortgage Lending and Real Estate of SunAmerica
Inc. ("SunAmerica"), a financial services company since April 1999. From
December 1994 to April 1999, Mr. Honig was Associate Counsel of SunAmerica, and
in addition, from July 1997 to April 1999, he was its Director of Mortgage
Lending and Real Estate. From October 1991 through December 1994, Mr. Honig was
an associate at Gibson, Dunn & Crutcher, a law firm. Mr. Honig is also a
certified public accountant.
2
<PAGE> 5
DIRECTORS NOT STANDING FOR ELECTION
The members of the Board of Directors who are not standing for election at
this year's Annual Meeting of Stockholders are set forth below.
<TABLE>
<CAPTION>
CLASS AND YEAR
IN WHICH
NAME AGE TERM WILL EXPIRE POSITION
---- --- ---------------- -------------------------------
<S> <C> <C> <C>
Evan R. Buckley+...................... 47 Class I (2001) Chairman of the Board, Chief
Executive Officer and Secretary
Joseph R. Tomkinson++................. 52 Class III (2000) Director
Richard B. Whiting.................... 52 Class III (2000) Director
</TABLE>
- ---------------
+ Member of the Audit Committee
++ Member of the Compensation Committee
EVAN R. BUCKLEY has been the Chief Executive Officer, Secretary and a
director of the Company since its inception. Mr. Buckley was the President of
the Company from its inception to December 1997. Prior to founding the Company,
Mr. Buckley was a co-founder of Quality Mortgage, a residential mortgage banker.
From November 1991 to May 1995, Mr. Buckley was the Vice President of Loan
Production of Quality Mortgage, where he was responsible for assembling and
managing loan production activities. Mr. Buckley brings over 21 years of
experience in real estate financing and mortgage banking to the Company.
JOSEPH R. TOMKINSON has been a director of the Company since February 1998.
Mr. Tomkinson has been the Chairman of the Board of Impac Mortgage Holdings,
Inc. (AMEX-IMH) since April 1998 (after being promoted from Vice Chairman of the
Board which he was since August 1995) and its Chief Executive Officer since its
inception. Mr. Tomkinson has been Chairman of the Board and Chief Executive
Officer of RAI Advisors, LLC, Impac Funding Corporation ("IFC") and Impac
Warehouse Lending Group, Inc. since their respective inceptions, and he was
Chairman of the Board and Chief Executive Officer of Impac Commercial Holdings
(AMEX-ICH) and Impac Commercial Capital Corporation from February 1997 to May
1999. Mr. Tomkinson served as President of Imperial Credit Industries, Inc.
(Nasdaq-ICII) ("ICII") from January 1992 to February 1996 and has been a
director of ICII since December 1991.
RICHARD B. WHITING has been a director of the Company since June 1999. Mr.
Whiting was a Manager at Donaldson, Lufkin & Jenrette, Securities Corporation
from May 1987 to August 1994. Mr. Whiting has been a member of the Board of
Directors at Kestrel Technologies, a company that develops software for online
trading, since August 1997, and he has been a member of the Board of Directors
at Prime Capital Funding, which is a commercial real estate lender that is
related to Prime Capital Corp. (Nasdaq-PMCP), since November 1997.
There are no family relationships between any of the Directors or executive
officers of the Company. Any vacancy on the Board of Directors for any cause
including an increase in the number of directors may be filled by a majority of
the remaining directors.
COMMITTEES AND ATTENDANCE AT BOARD MEETINGS
Fourteen meetings of the Board of Directors were held in fiscal year 1999.
For the applicable period of time during which each Director, held his position
in fiscal year 1999, each Director, except for Mr. Tomkinson, attended at least
75% of the aggregate of all meetings held by (i) the Board of Directors and (ii)
those committees of the Board of Directors on which such Director served. Mr.
Tomkinson attended more than 50% of the aggregate of all meetings held by (i)
the Board of Directors and (ii) the Compensation Committee on which he serves.
The Audit Committee was established by the Board of Directors on February
3, 1998. The purpose of the Audit Committee is to recommend engagement of the
Company's independent auditors, to approve the services performed by such
auditors, to consult with such auditors and review with them the results of
their examination, to review and approve any material accounting policy changes
affecting the Company's operating
3
<PAGE> 6
results and to review the Company's control procedures and personnel. The Audit
Committee did not meet during fiscal year 1999. The Compensation Committee was
established by the Board of Directors on February 3, 1998. The purpose of the
Compensation Committee is to review and approve the compensation benefits and
severance arrangements for the Company's officers and other employees,
administer the Company's Stock Plans and make recommendations to the Board
regarding such matters. The Compensation Committee met once during fiscal year
1999. The Board of Directors does not presently have a nominating committee.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Executive Officers of the Company who are not also directors. For information
concerning Evan R. Buckley and Kelly W. Monahan, see "Election of
Directors -- Information Concerning Nominees" and "-- Directors Not Standing For
Election."
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ----------------------------
<S> <C> <C>
Peter R. Evans................................... 38 Chief Financial Officer
Al Lapena........................................ 40 Vice President of Operations
Gary Vander-Haeghen.............................. 44 Vice President of Sales
</TABLE>
PETER R. EVANS has been the Chief Financial Officer for the Company since
March 1999. Mr. Evans has been Chief Financial Officer of Mortgage Logic.com,
Inc. since February 1999. From March 1998 to March 1999, Mr. Evans was the Vice
President of Finance for the Company. Mr. Evans served as Senior Vice President
and Partner of Koll Real Estate Group, Inc. (Nasdaq-KREG) from June 1996 to
February 1998, where he was responsible for the accounting, tax and financing of
its joint venture and development projects, and from April 1994 to June 1996, he
was its Vice President of Corporate Finance. From September 1992 to March 1994,
Mr. Evans was a Portfolio Manager for the Southern California Division of Koll
Management Services, Inc. (Nasdaq-KOLL). From October 1988 to August 1992, Mr.
Evans was Group Controller for The Koll Development Company, and from June 1984
to October 1988, he was an accountant for Deloitte Haskins & Sells.
AL LAPENA has been the Vice President of Operations for the Company since
January 1998. From July 1997 to January 1998, Mr. Lapena was the Director of
Secondary Marketing for the Company. From 1992 to 1997, Mr. Lapena was the Vice
President of the Real Estate Finance Group of the Taxable Fixed Income Division
for Donaldson, Lufkin & Jenrette, Inc. where he was responsible for the
management of whole loan trades involving prime and subprime mortgage loans
purchased from sellers/originators with contractual relationships with DLJ
Mortgage Capital, Inc.
GARY VANDER-HAEGHEN has been the Vice President of Sales for the Company
since September 1996. From November 1995 through September 1996, Mr.
Vander-Haeghen was with the Company in a non-executive capacity. From December
1991 to November 1995, Mr. Vander-Haeghen was a Branch Manager for Quality
Mortgage, where he opened and managed its San Diego branch. Mr. Vander-Haeghen
has been in the real estate financing industry for over 20 years.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Company to its
Chief Executive Officer and the other executive officers whose annual salary and
bonus were in excess of $100,000 during the fiscal year ended June 30, 1999 (the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS(#)
--------------------------- ---- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Evan R. Buckley.................. 1999 $284,615 $280,000 $ 488 15,000
Chairman of the Board and 1998 $231,923 $ 83,334 $ 406 --
Chief Executive Officer 1997 $155,769 $189,200 $ 325 --
Kelly W. Monahan................. 1999 $234,616 $220,000 $1,875 15,000
President 1998 $181,154 $ 66,667 $1,141 12,500
1997 $116,584 $ 52,500 $ 583 --
Peter R. Evans................... 1999 $136,538 $ 20,000 $1,024 10,000
Chief Financial Officer(2)
Al Lapena........................ 1999 $150,000 $ 22,500 $1,425 10,000
Vice President of Operations 1998 $136,290 $ 10,000 $ 487 12,500
1997 $ 36,538 $ 8,400 -- --
Gary Vander-Haeghen.............. 1999 $100,000 $105,000 $1,500 --
Vice President of Sales 1998 $100,000 $ 63,337 $1,500 10,000
1997 $119,800 $ 13,400 $1,900 --
</TABLE>
- ---------------
(1) Represents contributions under the Company's 401(k) Plan.
(2) Appointed Chief Financial Officer by the Company's Board of Directors on
February 9, 1999.
STOCK OPTIONS
In October 1997, the Board of Directors and stockholders of the Company
adopted the 1997 Stock Option, Deferred Stock and Restricted Stock Plan (the
"Stock Option Plan"), which provides for the grant of incentive stock options
("ISOs") that meet the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), stock options not so qualified ("NQSOs"),
deferred stock, restricted stock, stock appreciation rights and limited stock
appreciation rights awards ("Awards"). The Stock Option Plan may be administered
by the Board of Directors or a committee of the Directors (the "Administrator").
ISOs may be granted to the officers and key employees of the Company, any of its
subsidiaries or parent corporation. NQSOs and Awards may be granted to the
directors, officers and key employees of the Company or any of its subsidiaries
or parent corporation. The exercise price for any option granted under the Stock
Option Plan may not be less than 100% (or 110% in the case of ISOs granted to an
employee who is deemed to own in excess of 10% of the outstanding Common Stock)
of the fair market value of the shares of Common Stock at the time the option is
granted. The purpose of the Stock Option Plan is to provide a means of
performance-based compensation in order to attract and retain qualified
personnel and to provide an incentive to those whose job performance affects the
Company. The effective date of the Stock Option Plan was October 23, 1997.
Subject to anti-dilution provisions for stock splits, stock dividends and
similar events, the Stock Option Plan authorizes the grant of options to
purchase, and Awards of, up to 800,000 shares. If an option granted under the
Stock Option Plan expires or terminates, or an Award is forfeited, the shares
subject to any unexercised portion of such option or Award will again become
available for the issuance of further options or Awards under the Stock Option
Plan.
Under the Stock Option Plan, the Company may make loans available to stock
option holders, subject to Board of Directors' approval, in connection with the
exercise of stock options granted under the Stock Option
5
<PAGE> 8
Plan. If shares of Common Stock are pledged as collateral for such indebtedness,
such shares may be returned to the Company in satisfaction of such indebtedness.
If so returned, such shares shall again be available for issuance in connection
with future stock options and Awards under the Stock Option Plan.
Unless previously terminated by the Board of Directors, no options or
Awards may be granted under the Stock Option Plan after October 22, 2007.
Options granted under the Stock Option Plan will become exercisable in
accordance with the terms of the grant made by the Administrator. Awards will be
subject to the terms and restrictions of the award made by the Administrator.
The Administrator has discretionary authority to select participants from among
eligible persons and to determine at the time an option or Award is granted and,
in the case of options, whether it is intended to be an ISO or a NQSO, and when
and in what increments shares covered by the option may be purchased.
Under current law, ISOs may not be granted to any individual who is not
also an officer or employee of the Company, any subsidiary or parent
corporation.
Each option must terminate no more than 10 years from the date it is
granted (or 5 years in the case of ISOs granted to an employee who is deemed to
own in excess of 10% of the combined voting power of the Company's outstanding
Common Stock). Options may be granted on terms providing for exercise in whole
or in part at any time or times during their respective terms, or only in
specified percentages at stated time periods or intervals during the term of the
option, as determined by the Administrator.
ISOs generally are exercisable only by the optionee. NQSO's may be granted
to permit transfer of the option to immediate family members (as defined in the
Stock Option Plan).
The exercise price of any option granted under the Stock Option Plan is
payable in full (1) in cash, (2) by surrender of shares of the Company's Common
Stock already owned by the option holder having a market value equal to the
aggregate exercise price of all shares to be purchased including, in the case of
the exercise of NQSOs, restricted stock subject to an Award under the Stock
Option Plan, (3) by cancellation of indebtedness owed by the Company to the
option holder, (4) by a full recourse promissory note executed by the option
holder, (5) by requesting that the Company withhold whole shares of Common Stock
then issuable upon exercise of an option, (6) by arrangement with a broker
acceptable to the Administrator, or (7) by any combination of the foregoing. The
terms of any promissory note may be changed from time to time by the Board of
Directors to comply with applicable United States Internal Revenue Service or
Securities and Exchange Commission (the "Commission") regulations or other
relevant pronouncements.
The Board of Directors may from time to time revise or amend the Stock
Option Plan, and may suspend or discontinue it at any time. However, no such
revision or amendment may impair the rights of any participant under any
outstanding Award without his consent or may, without stockholder approval,
increase the number of shares subject to the Stock Option Plan or decrease the
exercise price of a stock option to less than 100% of fair market value on the
date of grant (with the exception of adjustments resulting from changes in
capitalization), materially modify the class of participants eligible to receive
options or Awards under the Stock Option Plan, materially increase the benefits
accruing to participants under the Stock Option Plan or extend the maximum
option term under the Stock Option Plan.
The Company has granted options to purchase 641,365 shares of Common Stock
at a per share exercise price ranging from $5.75 to $11.00 vesting from 33% to
50% on each anniversary of the date of grant. The Company has 158,635 shares of
Common Stock underlying options available for grant.
In the event of a change in control, any stock options not previously
exercisable and vested, any stock appreciation rights outstanding for at least
six months, restricted stock, and deferred stock will fully vest and the value
of all such awards will be cashed out by payment of cash or other property, as
determined by the Administrator, on the basis of a "change of control price."
Furthermore, any indebtedness incurred in connection with the Stock Option Plan
will be forgiven and collateral pledged in connection therewith shall be
released. A "change of control" generally occurs when (i) any person becomes the
beneficial owner, directly or indirectly, of 30% or more of the combined voting
power of the Company's securities, (ii) during any period
6
<PAGE> 9
of two consecutive years, individuals who at the beginning of such period
constitute the Board, and any new director, with certain exceptions, who was
approved by at least two-thirds of the directors still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of the Board of Directors, (iii) in some circumstances, the
stockholders approve a merger or consolidation, or (iv) the stockholders approve
the complete liquidation, sale or disposition of all or substantially all of the
Company's assets. The "change of control price" generally means the higher of
(i) the highest price per share paid or offered in any transaction related to a
change of control or (ii) the highest price per share paid in any transaction
reported on the exchange on which the Company's Common Stock is listed at any
time preceding the 60 day period as determined by the Administrator.
OPTIONS GRANTED IN FISCAL YEAR ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ----------------------------------------------------------------------------------------- ANNUAL RATES OF
PERCENTAGE OF STOCK PRICE
NUMBER OF SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM (5)
OPTIONS GRANTED EMPLOYEES EXERCISE PRICE EXPIRATION --------------------
NAME (#)(1) (%)(2) ($/SH)(3) DATE(4) 5% ($) 10% ($)
---- ---------------- ------------- -------------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Evan R. Buckley.......... 15,000 7.0 $5.75 1/4/09 34,251 137,483
Kelly W. Monahan......... 15,000 7.0 $5.75 1/4/09 34,251 137,483
Peter R. Evans........... 10,000 4.6 $5.75 1/4/09 36,168 91,655
Al Lapena................ 10,000 4.6 $5.75 1/4/09 36,168 91,655
Gary Vander-Haeghen...... -- -- -- -- -- --
</TABLE>
- ---------------
(1) Such stock options vest 50% per year on each anniversary of the date of
grant.
(2) The total number of options granted to the Company's employees (not
including 45,000 shares underlying options granted to non-employee
directors) during fiscal year 1999 was 215,625.
(3) The exercise price for all options equals the fair market value of such
shares at the date of grant as determined by the Board of Directors.
(4) Such stock options expire ten years from the date of grant or earlier upon
termination of employment.
(5) Amounts reflect the assumed risks of appreciation set forth in the
Commission's executive compensation disclosure requirements. The actual
value, if any, an executive officer may realize will depend on the excess of
the stock price over the exercise price on the date the option is exercised.
Stock appreciation gains do not represent the Company's estimate or
projection of the future Common Stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END(#) AT FISCAL YEAR END($)(1)
SHARES ---------------------- ------------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
Evan R. Buckley............... -- -- --/15,000 --/7,500
Kelly W. Monahan.............. -- -- 4,166/23,334 --/7,500
Peter R. Evans................ -- -- 5,000/20,000 --/5,000
Al Lapena..................... -- -- 4,166/18,334 --/5,000
Gary Vander-Haeghen........... -- -- 3,333/6,667 --/--
</TABLE>
- ---------------
(1) The value of in-the-money options is based on the difference between $6.25
closing price of the Company's Common Stock as reported by the Nasdaq
National Market on June 30, 1999 and the exercise price of the option,
multiplied by the number of shares subject to the option.
7
<PAGE> 10
EMPLOYMENT AGREEMENTS
The Company has entered into two and three-year employment agreements with
Messrs. Buckley and Monahan, respectively, pursuant to which they would receive
an annual base salary of $250,000 and $200,000, respectively, plus an annual
bonus of up to $250,000 and $200,000, respectively, as determined by the
Compensation Committee. In January 1999, each of their employment agreements was
amended to increase their annual base salaries to $325,000 and $275,000,
respectively, and to provide a non-discretionary stock appreciation bonus of
that amount in cash equal to the amount of the closing price of the Company's
Common Stock on December 31, 1999 in excess of $5.75 multiplied by 20,000.
Compensation is subject to increase as recommended by the Compensation Committee
of the Board of Directors of the Company.
Pursuant to the employment agreements, as amended, if either officer's
employment is terminated by the Company without cause or by either of Messrs.
Buckley or Monahan for good reason (meaning the Company's uncured breach of any
material term of the agreement or any diminution of Messrs. Buckley's or
Monahan's powers, duties or authority), Messrs. Buckley or Monahan, as the case
may be, would be paid his annual salary, a semi-annual bonus equal to 50% of his
annual salary, the stock appreciation bonus, if any, when due and $70,000
annually on a pro rata basis through the term of the agreement, and he would
receive benefits such as health insurance through the term of the agreement. If
either officer's employment is terminated by the Company with cause or by either
of Messrs. Buckley or Monahan voluntarily (meaning other than for good reason),
Messrs. Buckley or Monahan, as the case may be, would be paid his annual salary
through the date of termination, and a pro rata portion of his semi-annual bonus
equal to 50% of his annual salary which together with an additional amount would
equal an aggregate of $75,000, and he would receive benefits such as health
insurance through the date of termination.
Each officer agreed that during the term of the employment agreement and
for a period of one year from the date of termination, he will not compete with
the Company if the agreement is terminated by the Company or voluntarily by the
officer. Upon any purchase, merger, reorganization, consolidation, acquisition
of property or stock, or liquidation, the surviving corporation or successor is
bound by each officer's employment agreement. The Company has agreed to require
such surviving corporation or successor to assume and agree to perform the
employment agreement in the same manner and to the same extent that the Company
would be required to perform the agreement if no such succession had taken
place.
401(k) PLAN
The Company adopted a 401(k) savings plan (the "401(k) Plan") effective on
July 1, 1996. Eligible employees may participate in the 401(k) Plan.
Participants in the 401(k) Plan may defer compensation in an amount not in
excess of the annual statutory limit ($10,000 in 1999). The Company may make
matching contributions in the amount determined annually by the Board of
Directors. All contributions are credited to separate accounts maintained in
trust for each participant and are invested, at the participant's direction, in
one or more of the investment funds made available under the 401(k) Plan.
Matching contributions, if any, vest after three years. The 401(k) Plan is
intended to qualify under Sections 401 and 501 of the Internal Revenue Code of
1986, as amended, so that contributions to the 401(k) Plan and income earned on
the plan contributions are not taxable to employees until withdrawn so that the
contributions will be deductible by the Company when made.
COMPENSATION OF DIRECTORS
The Company pays its non-employee directors an annual fee of $20,000
payable quarterly and reimburses them for reasonable expenses incurred in
attending such meetings. In January 1999, the Company granted to each of its
non-employee directors NQSOs to purchase 15,000 shares of the Company's Common
Stock at a per share exercise price of $5.75, vesting 50% per year on each
anniversary of the date of grant. In June 1999, the Company granted to Richard
B. Whiting, a non-employee director of the Company, NQSOs to purchase 15,000
shares of the Company's Common Stock at a per share exercise price of $5.75,
vesting 50% per year on each anniversary of the date of grant.
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Company's Board of Directors is currently
comprised of Messrs. Monahan and Tomkinson. Mr. Monahan is the Company's
President, and Mr. Tomkinson is Chairman and Chief Executive Officer of IFC. See
"Certain Relationships and Related Transactions" for a description of
transactions between the Company and IFC.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors administers
the policies governing the Company's executive compensation program. All issues
pertaining to executive compensation are reviewed by the Compensation Committee
and approved by the Company's Board of Directors. The Compensation Committee is
comprised solely of one employee director and one non-employee director.
The Compensation Committee believes that executive compensation should
reward sustained earnings and long-term value created for stockholders and
reflect the business strategies and long-range plans of the Company. The guiding
principles affecting executive compensation are: (1) to attract and retain key
high caliber executives; (2) to provide levels of compensation competitive with
those offered by the Company's competitors; and (3) to motivate executives to
enhance earnings and long-term stockholder value by linking stock performance
(on a total returns basis) with long-term incentive compensation.
The Company's executive compensation philosophy is to set base salary at a
moderate market rate and then to provide performance-based variable compensation
which allows total compensation to fluctuate according to the Company's earnings
as well as to value received by stockholders. Targeted levels of executive
compensation are set at levels consistent with others in the Company's industry,
determined after comparison, with such compensation increasingly weighted
towards programs contingent upon the Company's level of annual and long-term
performance.
The executive officers' compensation is comprised of three principal
components: base salary, bonus and stock options or awards granted pursuant to
the Company's Stock Option Plan. Base salary and bonus for the Chief Executive
Officer and the President are determined by each of their respective employment
agreements with the Company and will be reviewed at least annually by the
Compensation Committee. See "Executive Compensation" for a description of the
allocation of base salary. In January 1999, the employment agreements for
Messrs. Buckley and Monahan were amended to increase their base salary and
provide an additional bonus based on the Company's stock price. In January 1999,
the Compensation Committee also approved increases to the respective base
salaries of Messrs. Evans and Lapena and an additional bonus to each of them
based on the Company's stock price. The Compensation Committee believes that the
total compensation package of the executive officers should be linked to such
factors as return on equity and to the total return of the Company's stock, both
on an absolute basis and relative to similar companies, and to the attainment of
planned objectives established at the beginning of the year. The Company uses
stock options to align the long-range interest of its executive officers with
the interests of stockholders. The amount of stock options that is granted to
executive officers is determined by taking into consideration the officer's
position with the Company, overall individual performance, the Company's
performance and an estimate of the long-term value of the award considering
current base salary and any cash bonus awarded.
The Compensation Committee applies the foregoing principles and policies in
examining the compensation of Evan R. Buckley, the Company's Chief Executive
Officer. The Compensation Committee believes that Mr. Buckley, as Chief
Executive Officer, significantly and directly influences the Company's overall
performance. Pursuant to his employment agreement with the Company, the Chief
Executive Officer's compensation for fiscal 1999 consisted of a base salary of
$284,615, plus a bonus of $280,000. Such bonus was determined based on the
operating performance of the Company. The Company also granted 15,000 stock
options to the Chief Executive Officer during fiscal 1999.
Section 162(m) was added to the Code as part of the Omnibus Budget
Reconciliation Act of 1993. Section 162(m) limits the deduction for compensation
paid to the Chief Executive Officer and the other Named Executive Officers to
the extent that compensation of a particular executive exceeds $1,000,000,
9
<PAGE> 12
unless such compensation was based upon performance goals determined by a
compensation committee consisting solely of two or more outside directors, the
material terms of which are approved by a majority vote of the stockholders
prior to the payment of such remuneration, or paid pursuant to a binding
contract that was in effect on February 17, 1993. The compensation paid in
fiscal 1999 to the Named Executive Officers was deductible.
The Committee will review the Company's existing compensation program to
determine the deductibility of future compensation paid or awarded pursuant
thereto and will seek guidance with respect to changes to the Company's existing
compensation program that will enable the Company to continue to attract and
retain key individuals while optimizing the deductibility to the Company of
amounts paid as compensation.
The Committee believes that its overall executive compensation program will
be successful in providing competitive compensation appropriate to attract and
retain highly qualified executives and also to encourage increased performance
from the executive group which will create added stockholder value.
Respectfully submitted,
Kelly W. Monahan,
Chairman of the Compensation Committee
Joseph R. Tomkinson
10
<PAGE> 13
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a performance graph comparing the cumulative total
stockholder return on the Company's Common Stock with the cumulative total
return on the S&P 500 Stock Index and the Nasdaq Financial Index for the period
commencing on March 10, 1998 through June 30, 1999. The graph assumes $100
invested on March 10, 1998 in the Company's Common Stock at the closing price of
$11.625, the S&P 500 Stock Index and the Nasdaq Financial Index. The stock price
performance shown on the graph is required by the Rules and Regulations of the
Securities and Exchange Commission and is neither intended to forecast, nor is
it necessarily indicative of, future price performance.
<TABLE>
<CAPTION>
BNC MORTGAGE, INC. S & P 500 NASDAQ FINANCIAL
------------------ --------- ----------------
<S> <C> <C> <C>
3/11/98 100 100 100
3/31/98 112 103 103
6/30/98 95 107 100
9/30/98 52 96 83
12/31/98 45 116 94
3/31/99 39 122 92
6/30/99 54 131 101
</TABLE>
ASSUMES $100 INVESTED ON MARCH 11, 1998
11
<PAGE> 14
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's Directors, officers, and persons who own more than ten
percent of a registered class of the Company's securities, to file with the
Commission initial reports of ownership and reports of changes in ownership of
the Common Stock of the Company. Officers, Directors and greater than ten
percent stockholders are required by the Commission's regulations to furnish the
Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during the fiscal year which ended June 30,
1998, all Section 16(a) filing requirements applicable to its officers,
Directors and greater than ten percent Stockholders were satisfied by such
persons.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August 1997, the Company loaned Kelly W. Monahan $100,000 at an annual
rate equal to the federal funds rate. The note is secured by 41,237 shares of
the Common Stock of the Company held by Mr. Monahan. The principal balance, with
interest, is due upon the sale of such shares of Common Stock. As of June 30,
1999, no payments had been made on the loan.
For fiscal year 1999, the Company sold $20.8 million of mortgage loans to
IFC, a company of which Joseph R. Tomkinson, a director of the Company, is the
Chief Executive Officer, a director and a significant common shareholder. In
addition, the Company entered into a $50 million optional delivery master
commitment to sell non-conforming mortgage loans to IFC.
12
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of October
15, 1999 by (1) each person known to the Company to beneficially own more than
five percent of the Company's Common Stock, (2) each Director, (3) the Named
Executive Officers, and (4) all Directors and executive officers as a group.
Unless otherwise indicated in the footnotes to the table, the beneficial owners
named have, to the knowledge of the Company, sole voting and investment power
with respect to the shares beneficially owned, subject to community property
laws where applicable.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF SHARES
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED OWNED(1)
------------------------ ------------ -------------
<S> <C> <C>
Evan R. Buckley(2)(3)....................................... 1,549,717
Greenlight Capital, L.L.C.(4)............................... 665,400
SAFECO Asset Management Company(5).......................... 586,300
Wellington Management Company, LLP(6)....................... 574,000
SAFECO Common Stock Trust(7)................................ 461,900
Bay Pond Partners, L.P.(8).................................. 340,900
Kelly W. Monahan(2)(9)...................................... 210,946
Gary Vander-Haeghen(2)(10).................................. 45,236
Al Lapena(2)(9)............................................. 25,284
Peter R. Evans(2)(11)....................................... 6,000
Joseph R. Tomkinson(12)..................................... 6,000
Keith C. Honig(13).......................................... 6,000
Richard B. Whiting(14)...................................... -- --
All directors and executive officers as a group (8
persons)(15).............................................. 1,849,183
</TABLE>
- ---------------
* less than 1%
(1) The percentage of beneficial ownership is calculated using shares
of Common Stock which were outstanding on October 15, 1999. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to the securities.
(2) Each of such persons can be reached through the Company at 1063 McGaw
Avenue, Irvine, California 92614.
(3) All of such shares are owned directly by the Buckley Family Trust, a trust
created for the benefit of Mr. Buckley and his family, of which Mr. Buckley
and his wife are co-trustees.
(4) The number of shares represented is based upon the filings of the
Securities and Exchange Commission by Greenlight Capital, L.L.C., David
Einhorn and Jeffrey A. Keswin, which states that each has sole voting power
and sole dispositive power with respect to said shares. Messrs. Einhorn and
Keswin are principals of Greenlight Capital, L.L.C. Each of Messrs. Einhorn
and Keswin and Greenlight Capital, L.L.C. can be reached at 420 Lexington
Avenue, Suite 875, New York, New York 10170.
(5) The number of shares represented is based upon filings with the Securities
and Exchange Commission as of June 30, 1999. SAFECO Asset Management
Company and SAFECO Corporation have both shared voting power and shared
dispositive power with respect to said shares. The shares are owned
beneficially by registered investment companies for which SAFECO Asset
Management Company and SAFECO Corporation serve as investment advisers, and
the shares represented include the 461,900 shares reported as owned by
SAFECO Common Stock Trust. Both of such entities disclaims beneficial
ownership of said shares. SAFECO Corporation can be reached at SAFECO
Plaza, Seattle, Washington 98185. SAFECO Asset Management Company can be
reached at 601 Union Street, Suite 2500, Seattle, Washington 98101.
13
<PAGE> 16
(6) The number of shares represented is based upon filings with the Securities
and Exchange Commission as of June 30, 1999. Wellington Management Company,
LLP has both shared voting power and shared dispositive power with respect
to said shares. Wellington Management Company, LLP beneficially owns said
shares in its capacity as an investment adviser on behalf of its clients,
including Bay Pond Partners, L.P., which are the owners of record of the
shares. Wellington Management Company, LLP, can be reached at 75 State
Street, Boston, Massachusetts 02109.
(7) The number of shares represented are based upon filings with the Securities
and Exchange Commission as of June 30, 1999. SAFECO Asset Management
Company, SAFECO Corporation and SAFECO Common Stock Trust, have both shared
voting power and shared dispositive power with respect to said shares.
SAFECO Common Stock Trust can be reached at SAFECO Plaza, Seattle,
Washington 98185.
(8) The number of shares represented is based upon information provided by Bay
Pond Partners, L.P. Bay Pond Partners, L.P., Wellington Hedge Management,
Inc. and Wellington Hedge Management LLC have both shared voting power and
shared dispositive power with respect to said shares. Each entity can be
reached at 75 State Street, Boston, Massachusetts 02109.
(9) Includes options to purchase 4,166 shares which are currently exercisable.
(10) Includes options to purchase 3,333 shares which are currently exercisable.
(11) Includes options to purchase 5,000 shares which are currently exercisable.
(12) Includes options to purchase 6,000 shares which are currently exercisable.
Mr. Tomkinson can be reached at 20371 Irvine Avenue, Santa Ana Heights,
California 92707.
(13) Includes options to purchase 6,000 shares which are currently exercisable.
Mr. Honig can be reached at 1 SunAmerica Center, Los Angeles, California
90067.
(14) Mr. Whiting can be reached at 20 Carriage Hill Drive, Far Hills, New Jersey
07931.
(15) Includes options to purchase 16,665 shares which are currently exercisable.
PROPOSAL NO. 2
AMENDMENT ENABLING THE BOARD OF DIRECTORS TO AMEND BYLAWS
This amendment would enable the Board of Directors to amend any provision
of the Company's Bylaws or to adopt any additional Bylaws, except with respect
to certain corporate actions that would otherwise require the approval of the
holders of a majority of the Company's voting stock entitled to vote on such a
proposal pursuant to the Certificate of Incorporation or the Bylaws.
The Delaware General Corporation Law ("DGCL") reserves the power to amend
or repeal a corporation's bylaws exclusively to its stockholders unless the
certificate of incorporation also confers such power upon the directors. If the
certificate of incorporation confers such power upon the directors, the
stockholders nevertheless retain the power to adopt, amend, or repeal the
company's bylaws. Unlike the certificate of incorporation of many companies, the
Company's Certificate of Incorporation currently does not allow the Board of
Directors to amend any provisions of the Bylaws or to adopt any additional
Bylaws. The amendment to the Company's Certificate of Incorporation as discussed
in this proposal is attached hereto as Exhibit A.
14
<PAGE> 17
Under the DGCL, a corporation's certificate of incorporation may be amended
by resolution of the board of directors and the affirmative vote of the holders
of a majority (or such greater proportion as is specified in the corporation's
certificate of incorporation) of the outstanding shares entitled to vote. This
proposed amendment has been duly approved by the Board of Directors, which deems
it advisable that this amendment be adopted by the Company's stockholders. By
enabling the Board of Directors to amend any Bylaws or adopt any additional
Bylaws without stockholder approval, except as set forth in the Company's
Certificate of Incorporation or Bylaws, this amendment provides the Directors
with the ability to better effectuate the Company's day-to-day business and
conduct its affairs in a timely fashion.
This proposal requires the approval of a majority of all the votes entitled
to be cast by the Company's stockholders.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has selected and appointed Ernst &
Young LLP to act as the Company's independent accountants for the year ending
June 30, 2000. In recognition of the important role of the independent
accountants, the Board of Directors has determined that its selection of such
accountants should be submitted to the stockholders for review and ratification
on an annual basis.
Ernst & Young LLP has examined the financial statements of the Company
since its inception. Management is satisfied with their performance to date.
The affirmative vote of a majority of the shares voting on this proposal is
required for its adoption. In view of the difficulty and the expense involved in
changing independent accountants on short notice, if the proposal is not
approved, it is contemplated that the appointment of Ernst & Young LLP for 2000
may be permitted to stand, unless the Board of Directors finds other compelling
reasons for making a change. Disapproval of this Proposal will be considered as
advice to the Board of Directors to select other independent accountants for the
following year. Representatives of Ernst & Young LLP are expected to be present
at the Annual Meeting and will have the opportunity to make a statement if they
desire to do so. They will also be available to respond to appropriate
questions.
STOCKHOLDERS' PROPOSALS
Stockholders are hereby notified that if they wish a proposal to be
included in the Company's Proxy Statement and form of proxy relating to the 2000
Annual Meeting of Stockholders, they must deliver a written copy of their
proposal no later than , 2000. Proposals must comply with the proxy
rules relating to stockholder proposals, in particular Rule 14a-8 under the
Exchange Act, to be included in the Company's proxy materials. Stockholders who
wish to submit a proposal for consideration at the Company's 1999 Annual Meeting
of Stockholders, but who do not wish to submit a proposal for inclusion in the
Company's Proxy Statement, must deliver a copy of their proposal no later than
September 15, 2000. In either case, proposals should be delivered to BNC
Mortgage, Inc., 1063 McGaw Avenue, Irvine, California 92614, Attention: Evan R.
Buckley, Chairman of the Board, Chief Executive Officer and Secretary. To avoid
controversy and establish timely receipt by the Company, it is suggested that
stockholders send their proposals by certified mail, return receipt requested.
15
<PAGE> 18
OTHER BUSINESS
The Board of Directors does not know of any other matter to be acted upon
at the meeting. However, if any other matter shall properly come before the
meeting, the proxyholders named in the proxy accompanying this Proxy Statement
will have authority to vote all proxies in accordance with their discretion.
By Order of the Board of Directors
Evan R. Buckley,
Chairman of the Board,
Chief Executive Officer and Secretary
Dated: October , 1999
Irvine, California
16
<PAGE> 19
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
BNC MORTGAGE, INC.
A DELAWARE CORPORATION
BNC Mortgage, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "DGCL"), DOES HEREBY
CERTIFY as follows:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended by adding ARTICLE IX as follows:
"In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized to make, amend, alter or
repeal the Bylaws of the Corporation."
SECOND: The amendment to the Certificate of Incorporation of the
Corporation set forth in this Certificate of Amendment has been duly adopted in
accordance with the provisions of Section 242 of the DGCL by (a) the Board of
Directors of the Corporation having duly adopted a resolution setting forth such
amendment and declaring its advisability and submitting it to the stockholders
of the Corporation for their approval, and (b) the stockholders of the
Corporation having duly adopted such amendment by vote of the holders of a
majority of the outstanding stock entitled to vote thereon at the annual meeting
of stockholders for 1999 called and held upon notice in accordance with Section
222 of the DGCL.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this Certificate of Amendment to be signed by Kelly W.
Monahan, its President, and attested by its Secretary, on , 1999.
--------------------------------------
Kelly W. Monahan
President
ATTEST:
-----------------------------------------------------
Evan R. Buckley
Secretary
<PAGE> 20
BNC MORTGAGE, INC.
1999 ANNUAL MEETING OF STOCKHOLDERS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS ON DECEMBER 14, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS ON BEHALF OF THE COMPANY
OCTOBER , 1999
The undersigned stockholder of BNC Mortgage, Inc., a Delaware corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated October , 1999, and hereby
appoints Evan R. Buckley and Kelly W. Monahan, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution and resubstitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 1999 Annual Meeting of Stockholders of BNC Mortgage, Inc., to be held on
December 14, 1999, at 10:00 a.m., local time, at the Hyatt Regency Irvine, 17900
Jamboree Boulevard, Irvine, California 92614, and at any adjournments thereof,
and to vote all shares of Common Stock which the undersigned would be entitled
to vote if then and there personally present, on the matters set forth below:
1. Election of Class II Directors.
Nominees: Kelly W. Monahan [ ] FOR [ ] WITHHELD
Keith C. Honig [ ] FOR [ ] WITHHELD
2. To amend the Company's Certificate of Incorporation to enable the Board
of Directors to amend or adopt Bylaws.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Ernst & Young LLP as independent accountants
for the year ending June 30, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, upon any and all such other matters as may properly
come before the meeting or any adjournment thereof.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR CHANGE OF ADDRESS AND NOTE AT LEFT [ ]
<PAGE> 21
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO
CONTRARY DIRECTION IS INDICATED, WILL BE VOTED FOR THE ELECTION OF EVAN R.
BUCKLEY AND FOR THE RATIFICATION OF ERNST & YOUNG LLP AND AS SAID PROXIES DEEM
ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
This proxy must be signed exactly as your
name appears hereon. Executors,
administrators, trustees, etc. should give
full title as such. If the stockholder is a
corporation, a duly authorized officer should
sign on behalf of the corporation and should
indicate his or her title.
Date:
----------------------------------------
---------------------------------------------
Signature
Date:
----------------------------------------
---------------------------------------------
Signature
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
