SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-7(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BNCCORP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed minimum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
BNCCORP, INC.
322 East Main
Bismarck, North Dakota 58501
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 18, 1997
The annual meeting of stockholders of BNCCORP, Inc. ("BNC") will be held at
10:00 a.m. (Central Daylight Standard Time) on Wednesday, June 18, 1997, at the
Holiday Inn, 605 East Broadway Avenue, Bismarck, North Dakota, to consider and
take action upon the following matters:
1. To elect three directors to hold office for three years and until their
respective successors shall have been elected and qualified;
2. To ratify the appointment of Arthur Andersen LLP as BNC's independent
public accountants for 1997; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has set the close of business on Monday, May 1, 1997
as the record date for the determination of the stockholders entitled to notice
of and to vote at the meeting or any adjournments.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. A PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO THE VOTING THEREOF.
By Order of the Board of Directors
/s/ Annette Eckroth
------------------------------------
Annette Eckroth
Secretary
Bismarck, North Dakota
May 14, 1997
<PAGE>
BNCCORP, INC.
322 EAST MAIN
BISMARCK, NORTH DAKOTA 58501
PROXY STATEMENT
This Proxy Statement is furnished to holders of common stock ("Common
Stock") of BNCCORP, Inc. ("BNC" or the "Company"), in connection with the
solicitation on behalf of the Board of Directors (the "Board") of proxies for
use at the annual meeting of stockholders of BNC to be held on June 18, 1997 and
at any adjournments thereof (the "Annual Meeting"). Only stockholders of record
of Common Stock at the close of business on May 1, 1997 (the "Record Date") will
be entitled to notice of and to vote at the Annual Meeting. On the Record Date,
there were 2,338,720 shares of Common Stock outstanding. This proxy statement
and BNC's 1996 Annual Report is being mailed to each stockholder of record on
the Record Date commencing May 14, 1997.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum. Shares of Common Stock present at the Annual Meeting that
are abstained from voting or that are the subject of broker "non-votes" will be
counted as present for the purposes of determining a quorum.
Stockholders are urged to sign the accompanying form of proxy and return it
in the envelope provided for that purpose. Proxies will be voted in accordance
with each stockholder's directions. If no directions are given, proxies will be
voted for the election of the nominees for directors and for the approval of the
independent accountants set forth in this Proxy Statement. Granting the enclosed
proxy does not affect the right to vote in person at the Annual Meeting and may
be revoked at any time before it is voted. If a stockholder wishes to give a
proxy to someone other than the proxies designated by the Board of Directors, he
may strike out the names appearing on the enclosed form of proxy, insert the
name of some other person, sign the form and transmit it to that person for use
at the Annual Meeting.
Abstentions and broker non-votes are each included in the determination of
the number of shares present and voting for purposes of determining the presence
or absence of a quorum at the Annual Meeting. Abstentions are counted in
determining the total number of votes present. While not counted as votes for or
against a proposal, abstentions have the same effect as votes against the
proposal. If a broker or other nominee holding shares for a beneficial owner
does not vote on a proposal (broker non-votes) the shares will not be counted in
determining the number of votes present. With respect to the election of
directors, shareholders can withhold authority to vote for all nominees for
director or can withhold authority to vote for certain nominees for director.
Shares that are withheld and broker non-votes will have no effect on the outcome
of the election of directors because they will be elected by a plurality of the
shares voted for directors. In order to be elected, a nominee must receive the
vote of a plurality of the outstanding shares of common stock presently
represented at the meeting and entitled to vote.
PROPOSAL 1: ELECTION OF DIRECTORS
General
At the Annual Meeting, three directors are to be elected to serve a
three-year term, each to hold office until his successor is elected and
qualified. The Board of Directors consists of three classes, each having a
three-year term of office, with one class being elected each year. The persons
named in the enclosed proxy intend to vote such proxy, unless otherwise
directed, for the election of Messrs. Malmberg, Resch and (Brad) Scott as
members of the class to serve until the 2000 annual meeting of stockholders. If,
contrary to present expectations, any of the nominees to be elected at the
Annual Meeting should become unavailable for any reason, the Board of Directors
may reduce the size of the Board or votes may be cast pursuant to the
accompanying form of proxy for a substitute nominee designated by the Board.
<PAGE>
Information about Nominees, Directors and Executive Officers
The following table provides certain information, as of April 1, 1997, with
respect to each nominee, each other director whose term will continue after the
Annual Meeting and each executive officer of the Company. Unless otherwise
indicated, each person has been engaged in the principal occupation shown for
the past five years.
Principal Occupation, Period of Service
as a Director, Business Experience and Board Committee
Name and Age Other Information Memberships
- --------------------------------------------------------------------------------
Tracy J. Scott 49 Tracy J. Scott has served as Chairman of Member of the
the Board, Chief Executive Officer and a Executive
director of BNC since he and Gregory K. Committee
Cleveland founded the Company in 1987.
He served as the President of BNC National
Bank ("BNC -- North Dakota") from September
1990 to March 1993. Mr. Scott also served
as the President of Farmers & Merchants
Bank of Beach ("FMB") from 1985 to 1990
and as a loan officer of FMB from 1982 to
1985. Prior to 1982, Mr. Scott, a Certified
Public Accountant, practiced accounting at
an accounting firm that he established in
1972. He was previously employed by Arthur
Young and Co. from 1969 to 1972. Mr. Scott
holds a B.S. in business administration with
a minor in accounting from Dickinson State
College.
Gregory K. 49 Gregory K. Cleveland has served as an Member of the
Cleveland officer and director of BNC since its Executive
inception in 1987. He has served as Committee
Chief Financial Officer of BNC since
February 1994 and as President of BNC
since March 1995. From 1978 to 1996,
Mr. Cleveland, a Certified Public
Accountant, was also a partner of the
accounting firm Gregory K. Cleveland
and Company, which he established. From
1974 to 1977, Mr. Cleveland served as
Vice President--Taxation for First &
Merchants Corporation, a bank holding
company in Virginia that was the
predecessor of Sovran Bank Corporation.
Prior to that time, Mr. Cleveland
was employed by Arthur Andersen LLP
from 1970 to 1974. He holds a B.S. in
business administration with a major
in accounting from the University of
North Dakota.
Brad J. Scott 38 Brad J. Scott serves as BNC -- North Member of the
Dakota's Executive Vice President of Executive
Corporate Finance. He served as BNC's Committee
Chief Credit Officer between July 1992
and January 1997 and has been a director
since January 1993. He joined BNC --
North Dakota in January 1991 as the
Senior Vice President of Commercial
Lending. Mr. Scott previously worked
with the Bismarck branch of First Bank
where he served as a Vice President in
the Commercial Loan Department from
November 1986 to December 1990 and as
Agricultural Loan Manager from 1984 to
1986. He also served as a loan officer
for Norwest Bank in Marshall, Minnesota
from 1981 to 1984. Mr. Scott holds an
A.S. degree in agricultural business from
Bismarck State College, a B.S. degree in
agricultural economics from North Dakota
State University and has an accounting
major from the University of Mary,
Bismarck, North Dakota.
<PAGE>
Principal Occupation, Period of Service
as a Director, Business Experience and Board Committee
Name and Age Other Information Memberships
- --------------------------------------------------------------------------------
John A. 52 John A. Malmberg has served as President Member of the
Malmberg of BNC -- North Dakota and a director Executive
since April 1993. Mr. Malmberg has over Committee
20 years of experience in the banking
industry. He served as Executive Vice
President and Chief Operating Officer of
the Bank of North Dakota from February
1989 to December 1992 at which time he
became Acting President and Chief Executive
Officer, a position he held until April
1993. From 1977 to 1989, Mr. Malmberg
served in various capacities for First
American National Bank, Wausau,
Wisconsin, including a broad range of
senior managerial positions. He also
served as a Trust Officer for American
National Bank, St. Paul, Minnesota from
1973 to 1977. Mr. Malmberg holds a B.S.
degree from the University of Minnesota
and a M.B.A. from Golden Gate University,
San Francisco and is a graduate of the
Stonier Graduate School of Banking,
Rutgers University.
Thomas J. 50 Thomas J. Resch became President and Member of the
Resch Chief Executive Officer of BNC Executive
National Bank of Minnesota ("BNC -- Committee
Minnesota") in January 1996 and has
been a director of BNC since June 1995.
From June 1995 to January 1996, he
served as Senior Vice President -- Loan
Production of BNC -- North Dakota. Mr.
Resch has over 20 years of experience in
the banking industry. He served as Vice
President at National City Bank of
Minneapolis from March 1989 to May 1995
and as Department Manager of the Business
Banking division. From 1985 to 1989,
Mr. Resch served as Vice President of
Midwest Federal and as Manager of the
St. Paul Corporate Banking division.
From 1984 to 1985 he served as Vice
President of United Financial Savings
Bank. Mr. Resch served in various
capacities for American National Bank
of St. Paul from 1972 to 1984, including
Managing Vice President of Commercial
Lending. He holds a B.S. degree from the
University of Minnesota and is a
graduate of the Stonier Graduate School
of Banking, Rutgers University.
John A. 50 John A. Hipp, M.D., who has been a Member of the
Hipp, M.D. director since 1988, has practiced Compensation
medicine in Bismarck since 1980 as a Committee
principal in Pathology Consultants, a
professional corporation specializing in
medical laboratory and computer consulting
services. Dr. Hipp is board certified in
anatomic and clinical pathology by the
American Board of Pathology.
Richard M. 52 Richard M. Johnsen, Jr., who was Member of the
Johnsen, Jr. elected to BNC's Board of Directors in Audit
June 1995, has served since 1979 as Committee
Chairman of the Board and Chief
Executive Officer of Johnsen Trailer
Sales, Inc., which sells and services
trailers in Bismarck and Fargo, North
Dakota. Since 1990, Mr. Johnsen has also
been a partner in Johnsen Real Estate
Partnership, which owns and operates
rental property in Bismarck and Fargo,
North Dakota.
<PAGE>
Principal Occupation, Period of Service
as a Director, Business Experience and Board Committee
Name and Age Other Information Memberships
- --------------------------------------------------------------------------------
Jerry R. 54 Jerry R. Woodcox, who was elected to Member of the
Woodcox BNC's Board of Directors in June 1995, Compensation
has served since 1970 as President of Committee
Arrowhead Cleaners and Laundry, Inc., a
laundry and dry cleaning services
business operating in Bismarck, North
Dakota.
John M. 50 John M. Shaffer was elected to BNC's Member of the
Shaffer Board of Directors in June 1995. Since Audit
1988, Mr. Shaffer has served as Committee
President of Atlas, Inc., a ready mix
concrete producer and concrete
construction company based in
Bismarck, North Dakota. Since 1979,
Mr. Shaffer has also been a partner
in Capital Investments, which invests
in property and equipment in North Dakota.
Brenda L. 38 Brenda L. Rebel, a Certified Public N/A
Rebel Accountant, has served as Vice President--
Corporate Controller since August 1995. She
served as Vice President -- Regulatory
Compliance from June 1991 to July 1995.
From January 1990 to May 1991, she served
as Financial Reporting Manager of
Comprecare Health Care Services, Inc.,
Aurora, Colorado. From 1988 to 1990, Ms.
Rebel was employed by Arthur Andersen LLP,
Denver, Colorado. She holds a B.S. degree
in social and behavioral sciences from the
University of Mary and a Master of
Accountancy from the University of North Dakota.
There are no family relationships among any of the directors and executive
officers of BNC.
Board of Directors Meetings and Committees
During 1996, the Board held 11 regular meetings. The Board has established
three committees, the Executive Committee, Audit Committee and Compensation
Committee, each of which is briefly described below. During 1996, the Audit
Committee met 2 times and the Compensation Committee met once. The Executive
Committee generally meets monthly. During 1996, each incumbent member of the
Board attended 75% or more of the total number of meetings of the Board and
committees on which he served.
The members of the Executive Committee are Tracy J. Scott (Chairperson),
Gregory K. Cleveland, Brad J. Scott, John A. Malmberg and Thomas J. Resch, as
well as Michael Miller, the Executive Vice President of Lending at BNC -- North
Dakota. The Executive Committee is authorized to exercise all powers of the
Board of Directors to the extent permitted by Delaware law. All actions taken by
the Executive Committee are submitted to the full Board for ratification.
The Audit Committee, on which Messrs. Johnsen and Shaffer serve, is
responsible for: (i) making recommendations to the Board concerning the
engagement of independent public accountants, (ii) consulting with the
independent public accountants with regard to the plan of audit, (iii)
consulting directly with BNC's Chief Financial Officer on any matter that the
Audit Committee or the Chief Financial Officer deems appropriate in connection
with carrying out the audit, (iv) reviewing the results of audits of BNC by its
independent public accountants and certain regulatory agencies, (v) discussing
audit recommendations with management and reporting results of its reviews to
the Board of Directors, (vi) reviewing all related party transactions and all
other potential conflict of interests situations, and (vii) performing such
other functions as may be prescribed by the Board.
The Compensation Committee is responsible for administering BNC's 1995
Stock Incentive Plan and Incentive Bonus Plan and performing such other
functions as may be prescribed by the Board. The current members of the
Compensation Committee are Messrs. Hipp and Woodcox.
<PAGE>
Director Compensation
Each director who is not an employee of BNC is paid a director's fee of
$7,200 per year and fees of $500 for each committee meeting attended. Directors
are reimbursed for expenses incurred in attending board and committee meetings.
Principal Stockholders
The following table sets forth, as of April 1, 1997, certain information
regarding beneficial ownership of the Common Stock by (i) each stockholder known
by BNC to be the beneficial owner of more than 5% of the outstanding Common
Stock, (ii) each director of BNC, (iii) each executive officer of BNC listed in
the Summary Compensation Table set forth elsewhere herein, and (iv) all of BNC's
directors and executive officers as a group. Unless otherwise indicated, BNC
believes that the stockholders listed below have sole investment and voting
power with respect to their shares based on information furnished to BNC by such
owners.
Percent of
Number of shares outstanding
Name of beneficial owner(1) beneficially owned common stock
- --------------------------- ------------------ ------------
Tracy J. Scott . . . . . . . . . . . . . . . . 129,700 (2)(3)(4)(5) 5.5%
Gregory K. Cleveland . . . . . . . . . . . . . . 91,182 (2)(3)(4)(6) 3.9%
Brad J. Scott. . . . . . . . . . . . . . . . . . 36,303 (2)(3)(4) 1.7%
John A. Malmberg . . . . . . . . . . . . . . . . 42,993 (2)(4) 1.8%
Thomas J. Resch. . . . . . . . . . . . . . . . . 8,328 (2)(4)(7) *
David A. Erickson. . . . . . . . . . . . . . . 169,191 (2)(8) 7.2%
John A. Hipp, M.D. . . . . . . . . . . . . . . . 99,900 (9) 4.3%
Richard M. Johnsen, Jr.. . . . . . . . . . . . . 1,000 *
John M. Shaffer. . . . . . . . . . . . . . . . . 3,500 *
Jerry R. Woodcox . . . . . . . . . . . . . . . . 2,500 *
BNC National Bank, as Trustee (the "Trustee")
of the BNCCORP, Inc. 401(k) Savings
Plan (10) . . . . . . . . . . . . . . . . 174,501 7.5%
All directors and executive officers as
a group (10 persons) . . . . . . . . . . 417,298 (2)(3)(4) 17.8%
- --------------------
* Less than 1%.
(1) The address of Mr. T. Scott is c/o BNCCORP, Inc., 322 East Main, Bismarck,
North Dakota 58501, the address of Mr. Erickson is 500 East Elm Street,
Linton, North Dakota, 58552 and the address of the Trustee is 322 East
Main, Bismarck, North Dakota 58501.
(2) Includes the following number of shares allocated to such individual's
accounts as of April 1, 1997 under the Company's 401(k) Savings Plan:
Mr. T. Scott (13,458 shares), Mr. Cleveland (3,182 shares), Mr. B. Scott
(16,105 shares), Mr. Malmberg (34,443 shares), Mr. Resch (1,038 shares),
Mr. Erickson (38,871 shares) and all directors and executive officers as a
group (68,955 shares).
(3) Includes the following number of shares of restricted stock under the 1995
Stock Incentive Plan: Mr. T. Scott (7,508), Mr. Cleveland (7,257), Mr. B.
Scott (2,533), and all directors and executive officers as a group
(17,899). See "Stock Incentive Plan."
(4) Includes shares that may be acquired within 60 days through exercise of
stock options: Mr. T. Scott (2,414), Mr. Cleveland (2,263), Mr. B. Scott
(1,525), Mr. Malmberg (1,290), Mr. Resch (1,290) and all directors and
executive officers as a group (9,144).
(5) Includes 2,000 shares owned by Mr. Scott's children.
(6) Includes 78,480 shares owned by Mr. Cleveland's wife.
(7) Includes 3,000 shares owned by Mr. Resch's wife.
(8) Includes 38,820 shares owned by Mr. Erickson's wife.
(9) Includes 60,000 shares owned by Dr. Hipp's wife and 3,000 shares owned by
Dr. Hipp's children.
(10) Each participant of the Company's 401(k) Savings Plan will be entitled to
direct the Trustee as to the manner in which to vote the shares allocated
to the participant's account.
<PAGE>
Compensation of Executive Officers
The following table summarizes the compensation that BNC paid to its chief
executive officer and each of its four other most highly compensated executive
officers during the three year period ended December 31, 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
--------------------------------------------
Annual compensation Awards Payouts
-------------------------------------- -------------------------- --------------
Restricted Securities Long-Term
Name and All other Stock Underlying Incentive Plan
principal position Year Salary Bonus compensation(1) Awards($)(2) Options(#) Payouts($)
---- -------- ----- --------------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tracy J. Scott . . . . . . . 1996 $178,000 $-- $6,247 -- -- --
Chairman of The Board 1995 156,000 -- 4,902 $75,080 6,034 --
and Chief Executive 1994 156,000 24,305 5,205 -- -- --
Officer
Gregory K. Cleveland . . . . 1996 150,000 -- 5,997 -- -- --
President and Chief 1995 128,000 -- 4,235 72,570 5,657 --
Financial Officer 1994 128,000 19,942 4,432 -- -- --
John A. Malmberg . . . . . . 1996 140,000 -- 5,047 -- -- --
President of 1995 140,000 -- 5,022 -- 3,226 --
BNC National Bank 1994 140,000 20,054 2,954 -- -- --
Thomas J. Resch. . . . . . . 1996 123,333 -- 5,047 -- -- --
President and Chief 1995 58,333 30,000 117 -- 3,226 --
Executive Officer of
BNC National Bank of
Minnesota (3)
Brad J. Scott. . . . . . . . 1996 120,000 -- 5,043 -- -- --
Executive Vice President 1995 100,000 27,750 5,006 25,330 3,813 --
of Corporate Finance of 1994 72,000 148,720 5,171 -- -- --
BNC National Bank
</TABLE>
- --------------------
(1) Consists of (i) the Company's matching contributions to the Company's
401(k) Savings Plan in the following amounts: Mr. T. Scott ($4,750 in 1996,
$4,500 in 1995, and $4,701 in 1994), Mr. Cleveland ($4,500 in 1996, $3,840
in 1995, and $3,928 in 1994), Mr. B. Scott ($4,750 in 1996, $4,620 in 1995,
and $4,840 in 1994), Mr. Malmberg ($4,750 in 1996, $4,620 in 1995, and
$2,450 in 1994) and Mr. Resch ($4,750 in 1996); and (ii) premium payments
for life insurance policies providing death benefits to the executive
officers' beneficiaries in the following amounts: Mr. T. Scott ($1,497 in
1996, $402 in 1995, and $504 in 1994), Mr. Cleveland ($1,497 in 1996, $395
in 1995, and $504 in 1994), Mr. B. Scott ($293 in 1996, $386 in 1995, and
$331 in 1994), Mr. Malmberg ($297 in 1996, $402 in 1995, and $504 in 1994),
and Mr. Resch ($297 in 1996 and $117 in 1995).
(2) As of December 31, 1996, the Company had outstanding a total of 20,000
restricted shares valued at $250,000 (based on the closing sales price of
the Company's common stock at December 31, 1996 of $12.50 per share). The
restricted shares will vest in 33 1/3% increments on July 10, 1998, 1999
and 2000. The Company does not plan to pay dividends on its restricted
shares.
(3) Mr. Resch joined the Company in June 1995.
<PAGE>
Options/SAR Grants During 1996
There were no stock options granted during the year ended December 31,
1996.
Aggregated Option/SAR Exercises in Last Fiscal Year And Year-end Option/SAR
Values
The number and value of unexercised stock options held by the Company's
chief executive officer and each of its four most highly compensated executive
officers at December 31, 1996 is set forth in the following table. No stock
options were exercised during the year ended December 31, 1996.
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at December 31, 1996 at December 31, 1996 (1)
---------------------------- ----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Tracy J. Scott 2,414 3,620 $6,035 $9,050
Gregory K. Cleveland 2,263 3,394 5,658 8,485
Brad J. Scott 1,525 2,288 3,813 5,720
John A. Malmberg 1,290 1,936 3,225 4,840
Thomas J. Resch 1,290 1,936 3,225 4,840
- --------------------
(1) Market value of Common Stock at year-end minus option price. The values of
unexercised in-money stock options at December 31, 1996 shown above are
presented pursuant to SEC rules. The actual amount, if any, realized upon
exercise of stock options will depend upon the market value of the Common
Stock relative to the exercise price per share of the stock option at the
time the stock option is exercised.
Stock Incentive Plan
In June 1995, BNC adopted the 1995 Stock Incentive Plan (the "Stock Plan")
to provide long-term incentives to its key employees, including officers and
directors who are employees of BNC (the "Eligible Employees"). Under the Stock
Plan, which is administered by the Compensation Committee of the Board of
Directors (the "Committee"), BNC may grant Eligible Employees incentive stock
options, non-qualified stock options, restricted stock, stock awards or any
combination thereof (the "Incentives"). The Committee establishes the exercise
price of any stock options granted under the Stock Plan, provided that the
exercise price may not be less than the fair market value of a share of Common
Stock on the date of grant.
A total of 250,000 shares of Common Stock are available for issuance under
the Stock Plan. Incentives, with respect to no more than 50,000 shares of Common
Stock, may be granted to any single Eligible Employee in one calendar year.
Proportionate adjustments will be made to the number of shares of Common Stock
subject to the Stock Plan, including the shares subject to outstanding
Incentives, in the event of any recapitalization, stock dividend, stock split,
combination of shares or other change in the Common Stock. In the event of such
adjustments, the purchase price of any outstanding option will be adjusted as
and to the extent appropriate, in the reasonable discretion of the Committee, to
provide participants with the same relative rights before and after such
adjustment.
All outstanding Incentives will automatically become exercisable and fully
vested and all performance criteria will be deemed to be waived by the Company
upon (a) a reorganization, merger or consolidation of BNC in which BNC is not
the surviving entity, (b) the sale of all or substantially all of the assets of
BNC, (c) a liquidation or dissolution of BNC, (d) a person or group of persons,
other than any employee benefit plan of BNC, becoming the beneficial owner of
30% or more of BNC's voting stock or (e) the replacement of a majority of BNC's
Board in a contested election (a "Significant Transaction"). The Committee also
has the authority to take several actions regarding outstanding Incentives upon
the occurrence of a Significant Transaction, including requiring that
outstanding options remain exercisable only for a limited time, providing for
mandatory conversion of outstanding options in exchange for either a cash
payment or Common Stock, making equitable adjustments to Incentives or providing
that outstanding options will become options relating to securities to which a
participant would have been entitled in connection with the Significant
Transaction if the options had been exercised.
<PAGE>
Incentive Bonus Plan
In June 1995, BNC adopted an Incentive Bonus Plan (the "Incentive Plan") to
provide annual incentive cash bonuses to BNC's employees. Under the Incentive
Plan, which will be administered solely by the Committee, each full-time
employee of BNC other than loan officers is eligible to receive a cash bonus
based on a percentage of his or her annual salary to be calculated according to
a formula based on elements of the Company's performance during the annual
performance period. Officers designated by the Committee will also be eligible
to receive an additional annual cash bonus based on a percentage of his or her
annual salary according to a formula based on an increase in the Company's stock
price during the annual performance period.
Employment Agreements
In May 1995, BNC and each of Tracy J. Scott, Gregory K. Cleveland, Brad J.
Scott, and Thomas J. Resch (the "Executives") entered into an employment
agreement providing for minimum annual salaries of $156,000, $128,000, $120,000,
and $100,000 respectively, throughout the term of the agreement, and an annual
incentive bonus as may from time to time be fixed by the Committee. In addition,
Mr. Resch received a $30,000 bonus upon entering into his agreement. Under the
agreement, the Executives will also be provided with benefits under any employee
benefit plan maintained by BNC for its employees generally, or for its senior
executive officers in particular, on the same terms as are applicable to other
senior executives of BNC. The term of the employment agreements will continue
until June 1, 1998, unless earlier terminated as described below. Thereafter,
the employment agreements automatically renew for consecutive one year terms
unless either party terminates the agreement on 90 days' prior notice.
Each employment agreement provides for the termination of the Executive's
employment (i) upon the Executive's death; (ii) by the Company upon the
Executive's disability; (iii) by the Company for cause which includes willful
and continuing failure to perform the Executive's duties, conviction of a felony
or willful engaging in gross misconduct injurious to the Company; provided,
however, that prior to termination, three-fourths of the entire Board of
Directors, not including the Executive, must find that the Executive was guilty
of such conduct; (iv) by the Executive for good reason, which includes changing
the Executive's current position with the Company or diminishing the duties,
responsibilities or position of the Executive; (v) by either the Company or the
Executive for a material breach not cured within thirty days; or (vi) upon the
occurrence of a "change in control" of BNC. Under the agreement, a "change in
control" occurs if (a) any person or group of persons (other than an employee
benefit plan of BNC) acquires the beneficial ownership of 30% or more of BNC's
Common Stock, excluding certain acquisitions approved by BNC's Board of
Directors, or (b) a majority of BNC's Board is replaced within any two year
period by directors not approved by two-thirds of the Board. If the Executive
terminates his employment with BNC for other than good reason, the Executive
will be prohibited from competing with BNC for a two year period following such
termination.
Upon termination due to death or disability, the Company will pay the
Executive, all compensation owing through the date of termination, plus any
deferred compensation and accrued vacation (the "Accrued Obligations") and
benefits ("Other Benefits"), reduced by the amount of any disability benefits
received, if applicable. Upon termination by the Company for cause or for
termination by the Executive for other than good reason, the Executive will be
entitled to all compensation owing through the date of termination and Other
Benefits. Upon termination by the Executive for good reason, due to a change in
control or due to a breach of the agreement by the Company, the Executive is
entitled to all compensation owing through the date of termination plus three
times his current compensation and benefits, office space, secretarial
assistance and other facilities and services for a period of three years.
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires BNC's
executive officers, directors, and persons who own more than 10% of the Common
Stock to file reports of ownership and changes in ownership on Forms 3, 4 and 5
with Nasdaq National Market. BNC believes that all of the persons obligated to
file these reports complied with all filing requirements applicable to them with
respect to transactions during 1996, other than Mr. Woodcox, a director of the
Company, who made a late filing in 1996 reporting a purchase of shares of Common
Stock.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
The executive officers, directors and principal stockholders of BNC and
members of their immediate families and businesses in which they hold
controlling interests are customers of the BNC's subsidiary banks (the "Banks")
and it is anticipated that such parties will continue to be customers of the
Banks in the future. All outstanding loans and extensions of credit by the Banks
to these parties were made in the ordinary course of business in accordance with
applicable laws and regulations and on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other unaffiliated persons, and in the opinion of management
do not involve more than the normal risk of collectibility or present other
unfavorable features. At December 31, 1996, the aggregate balance of the Banks'
loans and advances under existing lines of credit to these parties was
approximately $320,000, or 0.16% of the Banks' total loans.
As of May 31, 1995, Tracy J. Scott, Gregory K. Cleveland and David A.
Erickson (a beneficial owner of more than 5% of the Company's outstanding Common
Stock) beneficially owned 113, 112 and 50 shares of common stock of FMB,
respectively, which represented 2.83%, 2.80% and 1.25% of the outstanding shares
of common stock of FMB, respectively. Messrs. Scott, Cleveland and Erickson
received $121,475, $120,400 and $53,750, respectively in the sale of FMB.
In December 1996, BNC -- North Dakota acquired the accounting firm of
Gregory K. Cleveland & Company, Bismarck, North Dakota (the "Accounting Firm").
The Accounting Firm was owned by Mr. Cleveland. The purchase price for the
Accounting Firm was approximately $368,000 and was determined by an independent
appraisal. Employees of the Accounting Firm now staff the newly established
trust and private banking division at BNC -- North Dakota.
Effective January 1997, BNC -- North Dakota acquired all of the outstanding
common stock of the J.D. Meier Insurance Agency. Each of Messrs. T. Scott,
Cleveland, and David A. Erickson owned 1,000 shares of common stock in the
Agency. The purchase price was determined by an independent appraisal resulting
in an approximately $26,000 purchase price. The Agency is currently operating
as a subsidiary of BNC -- North Dakota and engages in insurance business.
PROPOSAL 2: APPROVAL AND RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has,
subject to ratification by the stockholders, appointed Arthur Andersen LLP to
act as principal independent accountants for BNC for the fiscal year ending
December 31, 1997. The firm has audited the financial statements of BNC for the
fiscal years ended December 31, 1994, 1995, and 1996 and has advised BNC that
neither the firm nor any of its partners has any connection during the past
three years with BNC, in any capacity other than that of independent accountants
and auditors. The firm will have representatives at the Annual Meeting who will
have an opportunity to make a statement and will be available to respond to
appropriate questions.
The Board of Directors unanimously recommends a vote FOR ratification of
the appointment of Arthur Andersen LLP as independent auditors for 1997.
<PAGE>
AVAILABILITY OF FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996, as filed with the Securities and Exchange Commission,
is available without charge upon written request to:
Gregory K. Cleveland
President and Chief Financial Officer
BNCCORP, INC.
322 East Main
Bismarck, ND 58501
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of the
Company does not know of any matters to be presented at the Annual Meeting other
than those specifically set forth in the Notice of Annual Meeting of
Stockholders. If other proper matters, however, should come before the Annual
Meeting or any adjournment thereof, the persons named in the enclosed proxy
intend to vote the shares represented by them in accordance with their best
judgment in respect to any such matters.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company. The
solicitation will be primarily by mail. In addition to the use of the mails,
some of the officers, directors and regular employees of the Company and its
subsidiaries may solicit proxies by telephone, telegram or personal interview
without additional remuneration therefor. The Company will reimburse banks,
brokerage houses and other institutions, custodians, nominees and fiduciaries
for reasonable expenses in forwarding proxy material to their principals.
Regardless of the number of shares you hold, it is important that your
Common Stock be represented at the Annual Meeting in order that the presence of
a quorum can be secured. If you are unable to attend the Annual Meeting, you are
urged to date and sign your proxy and return it without delay in the enclosed
addressed envelope. The Common Stock represented by each proxy so signed and
returned will be voted in accordance with the stockholder's directions.
Stockholder Proposals
Eligible stockholders who desire to present a proposal qualified for
inclusion in the proxy materials relating to the 1998 annual meeting of BNC,
pursuant to regulations of the Securities and Exchange Commission, must forward
such proposals to the Secretary of BNC at the address listed on the first page
of this Proxy Statement in time to arrive at BNC prior to January 14, 1998.
Under BNC's By-laws, advance notice of stockholder proposals must be
received by April 20, 1998 in order to be considered at the 1998 annual meeting.
The notice must give the following information with respect to any business the
stockholder wishes to bring before the meeting: the name and address of the
stockholder proposing the business, as they appear on BNC's stock records; class
and number of shares of BNC Common Stock which the stockholder holds of record
or beneficially, the dates upon which such shares were acquired, and documentary
support for a claim of beneficial ownership; a copy of the proposal and
supporting statement limited to not more than an aggregate of 500 words; and any
material interest of the stockholder in the business.
By Order of the Board of Directors
/s/ Annette Eckroth
------------------------------------------
Annette Eckroth
Secretary
Bismarck, North Dakota
May 14, 1997
<PAGE>
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF BNCCORP, INC.
The undersigned hereby appoints Tracy J. Scott and Gregory K. Cleveland, or each
of them, as proxies, each with full power of substitution, to vote all of the
shares of Common Stock, par value $.01 per share, of BNCCORP, Inc., which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be held
on June 18, 1997 at 10:00 A.M., local time, and at any adjournments thereof,
upon the following matters set forth in the notice of such meeting.
The Board of Directors recommends a vote FOR the nominee(s) listed below.
1. Election of Directors.
FOR [ ] The nominee(s) listed below (except as marked to the contrary below)
WITHHOLD AUTHORITY [ ] to vote for the nominee listed below.
INSTRUCTIONS: To withhold authority to vote for any nominee, strike a line
through the nominee's name below:
John A. Malmberg
Thomas J. Resch
Brad J. Scott
2. Ratify selection of Arthur Andersen LLP as the Company's independent public
accountants for 1997.
[ ] FOR [ ] AGAINST
3. In their discretion, to transact such other business as may properly come
before the Annual Meeting and any adjournments thereof.
(Please See Reverse Side)
This Proxy, when properly executed, will be voted as specified above. If not
otherwise specified, this Proxy will be voted FOR the election of the nominees
of the Board of Directors named in Proposal 1 and FOR Proposal 2.
Date: , 1997
Signature of Shareholder
Signature if held jointly
Please sign exactly as name appears on the certificate or certificates
representing shares to be voted by this proxy, as shown on the label to the
left. When signing as executor, administrator, attorney, trustee, or
guardian please give full title as such. If a corporation, please sign full
corporation name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized persons.
Please mark, sign, date and return this proxy promptly using the enclosed
envelope.
