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-6(e)(2))
[X] Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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 9, 1999
The annual meeting of stockholders of BNCCORP, Inc. ("BNC") will be held
at 10:00 a.m. (Central Daylight Time) on Wednesday, June 9, 1999, 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;
and
2. To ratify the appointment of Arthur Andersen LLP as BNC's
independent public accountants for 1999.
The Board of Directors has set the close of business on Thursday, April
15, 1999 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
Annette Eckroth
Secretary
Bismarck, North Dakota
May 12, 1999
<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 9, 1999 and
at any adjournments thereof (the "Annual Meeting"). Only stockholders of record
of Common Stock at the close of business on April 15, 1999 (the "Record Date")
will be entitled to notice of and to vote at the Annual Meeting. On the Record
Date, there were 2,410,980 shares of Common Stock outstanding. This proxy
statement and BNC's 1998 Annual Report is being mailed to each stockholder of
record on the Record Date commencing May 13, 1999.
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. 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. The election of directors requires
the plurality of the votes that could be cast by stockholders who are present in
person or represented by proxy at the Annual Meeting. Shares may be voted for or
withheld for each nominee as a director. The ratification of the selection of
independent public accountants requires a majority of the votes that could be
cast by stockholders who are present in person or represented by proxy at the
Annual Meeting. The total number of votes that could be cast at the Annual
Meeting is the sum of votes cast and abstentions. Abstentions are counted as
"shares present" at the Annual Meeting for purposes of determining the presence
of a quorum and have the effect of a vote "against" any matter as to which they
are specified. Proxies submitted by brokers that do not indicate a vote for any
or all matters (broker "non-votes") are not considered "shares present" and will
not affect the outcome of the vote. Under BNC's bylaws, no business other than
that stated in the notice of Annual Meeting may be transacted at the annual
meeting.
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. Johnsen, Shaffer and Woodcox as members of
the class to serve until the 2002 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.
1
<PAGE>
Information about Nominees, Directors and Executive Officers
The following table provides certain information, as of April 1, 1999,
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.
<TABLE>
<CAPTION>
Principal Occupation, Period of Service
as a Director, Business Experience and Board Committee
Name and Age Other Information Memberships
- --------------------- ---------------------------------------------- ------------------
<S> <C> <C>
Nominees:
Johnsen, Richard
M.,Jr 54 Richard M. Johnsen, Jr., who was elected to Member of the Audit Committee
BNC's Board of Directors in June 1995, has
served since 1979 as 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.
Shaffer, John M. 52 John M. Shaffer was elected to BNC's Board of Member of the Audit Committee
June 1995. Since 1988, Mr. Shaffer has served as
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.
Woodcox, Jerry R. 56 Jerry R. Woodcox, who was elected to BNC's Member of the Compensation Committee
Board of Directors in June 1995, has served since
1970 as President of Arrowhead Cleaners and
Laundry, Inc., a laundry and dry cleaning services
business operating in Bismarck, North Dakota.
Other Directors:
Cleveland,
Gregory K. 51 Gregory K. Cleveland, a Certified Public Member of the Executive Committee
Accountant, has served as an executive officer
and director of BNC since its inception in 1987.
He has served as President of BNC since March 1995
and as Chief Operating Officer since January 1998.
He served as Chief Financial Officer of BNC from
February 1994 to January 1998. Mr. Cleveland's
term on the Board of Directors will expire in 2001.
Hipp, John A.,
M.D. 52 John A. Hipp, M.D., who has been a director Member of Compensation Committee
since 1988, has practiced medicine in Bismarck
since 1980 as a 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.
Dr. Hipp's term on the Board of Directors will expire
in 2001.
Pifer, Kevin D. 40 Kevin D. Pifer has served as President and Chief Member of the Executive Committee
Executive Officer of BNC National Bank since June 1998.
From 1997 to 1998, he was Senior Product Manager for
First National Bank North Dakota. From 1990 to 1997,
Mr. Pifer served as Executive Vice President and CEO
of Nodak Mutual Insurance Company. Mr. Pifer was
appointed to the Board by the Directors in July
1998 to fill a vacancy. Mr. Pifer's term on the Board
will expire in 2000.
2
<PAGE>
Principal Occupation, Period of Service
as a Director, Business Experience and Board Committee
Name and Age Other Information Memberships
- --------------------- ---------------------------------------------- ------------------
Scott, Brad J. 40 Brad J. Scott serves as BNC -- North Dakota's N/A
Executive Vice President. He served as BNC's Chief
Credit Officer between July 1992 and January 1997
and has been a director since May 1994. He joined
BNC -- North Dakota in January 1991 as the Senior
Vice President of Commercial Lending. Mr. Scott's
term on the Board will expire in 2000.
Scott, Tracy J. 51 Tracy J. Scott, a Certified Public Accountant, has Member of the Executive Committee
served as Chairman of the Board, Chief Executive
Officer and a director of BNC since he and Gregory
K. Cleveland founded the Company in 1987. Mr.
Scott's term on the Board of Directors will expire
in 2001.
Strinden, Jon E. 42 Jon E. Strinden, an Attorney and Certified Public Member of the Executive Committee
Accountant, has served as General Counsel for BNC
and Executive Vice President of BNC National Bank
since January 1999. From 1989 to December 1998,
he was engaged in the practice of law with Gunhus,
Grinnell, Klinger, Swenson & Guy, Ltd., a law firm
with offices in Moorhead, Minnesota and Fargo, North
Dakota. Mr. Strinden was appointed to the Board by
the Directors in January 1999 to fill a vacancy.
His term will expire in 2000.
Other Executive Officers:
LaBreche, James D. 52 James D. LaBreche became President and Chief Operating N/A
Officer of BNC National Bank of Minnesota ("BNC--
Minnesota") in February 1999. From 1994 to 1999, he
served as Vice President - Business Development for
National City Bank, Minneapolis, MN. From 1991 to
1994, Mr. LaBreche served as Senior Vice President
and Senior Lending Officer for Marquette Bank Golden
Valley.
Peiler, Mark E. 28 Mark E. Peiler has served as Investment Officer for N/A
BNC since May 1998. From 1997 to 1998, Mr. Peiler
served as Assistant Vice President/Asset Liability
Management with MidAmerica Bank, and from 1996 to 1997
as Financial Analyst with BancServices Company,
MidAmerica's parent company. From 1995 to 1996, he
was a Registered Representative with Prudential
Preferred in St. Louis Park, Minnesota.
Rebel, Brenda L. 40 Brenda L. Rebel, a Certified Public Accountant, N/A
has served as Senior Vice President -- Chief
Financial Officer since January 1998. She served as
Vice President -- Corporate Controller from August
1995 to January 1998 and as Vice President --
Regulatory Compliance from June 1991 to July 1995.
Reed, Jeffrey A. 44 Jeffrey A. Reed has served as President and CEO of BNC N/A
Financial Corporation since its inception in May 1996,
and as Chief Credit Officer for BNC since January 1998.
From March 1995 to May 1996, Mr. Reed served as
President of Cambridge Bank Professionals, LLC,
St. Cloud, Minnesota, a consulting firm specializing
in credit administration. From 1991 to 1995,
Mr. Reed was employed by National City Bank of
Minneapolis, Minnesota as President and Manager of
Special Loans/Collateral Audit Divisions.
3
<PAGE>
Principal Occupation, Period of Service
as a Director, Business Experience and Board Committee
Name and Age Other Information Memberships
- --------------------- ---------------------------------------------- ------------------
Sorum, David J. 43 David J. Sorum joined BNC in November 1998 as N/A
President of BNC National Bank's branch office
in Fargo, North Dakota. Prior to joining BNC,
he served as Senior Vice President for Community
First National Bank, Fargo, ND, from 1997 to 1998,
and as Market Manager for American Federal Bank
from 1995 to 1997. From 1993 to 1995 he served
as Senior Vice President / District Manager of
Metropolitan Federal Bank, fsb, Fargo, North
Dakota.
Woo, Melanie J. 29 Melanie J. Woo, a Certified Public Accountant, N/A
has served as Corporate Controller since January
1998. She served as Chief Accountant from August
1995 to January 1998. From February 1995 to July
1995, she served as Senior Accountant of David
Berdon and Company, LLP, New York City, New York.
Prior to that time, Ms. Woo was employed by Charles
Bailly and Company, LLP, Fargo, North Dakota.
</TABLE>
There are no family relationships among any of the directors and executive
officers of BNC.
Board of Directors Meetings and Committees
During 1998, the Board held 12 regular meetings. The Board has established
three committees, the Executive Committee, Audit Committee and Compensation
Committee, each of which is briefly described below. During 1998, the Audit
Committee met 2 times, the Compensation Committee met once, and the Executive
Committee met 12 times. During 1998, each director attended at least 75 percent
of the total of the Board and committee meetings which he was obligated to
attend, other than Dr. Hipp whose professional responsibilities require
occasional travel outside of the Bismarck area.
The members of the Executive Committee are Tracy J. Scott (Chairperson),
Gregory K. Cleveland, Kevin D. Pifer, and Jon E. Strinden. 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 interest 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.
Director Compensation
Each non-employee director of BNC receives $500 for each Board committee
meeting attended and options to purchase 650 shares of Common Stock on the date
of the Annual Meeting. The options are granted under the Company's 1998 Non-
Employee Director Stock Option Plan and become exercisable six months from date
of grant and expire on the earlier to occur of ten years from date of grant or
two years after a non-employee director ceases to be a director. The exercise
price of the options is the closing price of Common Stock on the date of grant
on the Nasdaq Stock Market.
4
<PAGE>
Principal Stockholders
The following table sets forth, as of April 1, 1999, 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 percent 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.
<TABLE>
<CAPTION>
Percent of
Number of shares outstanding
Name of beneficial owner (1) beneficially owned Common Stock
- ----------------------------
-------------------- ----------
<S> <C> <C>
Tracy J. Scott.................................. 127,820(2)(3)(4)(5) 5.3%
Gregory K. Cleveland............................ 111,845(2)(3)(4)(6)(10) 4.6%
Brad J. Scott................................... 42,031(2)(3)(4) 1.7%
David A. Erickson............................... 161,691(2)(7) 6.7%
Kevin D. Pifer.................................. 7,182(3) *
Jon E. Strinden................................. 12,500(3) *
Jeffrey A. Reed................................. 1,200 *
John A. Hipp, M.D............................... 88,150(4)(8) 3.7%
Richard M. Johnsen, Jr.......................... 3,650(4) *
John M. Shaffer................................. 7,150(4) *
Jerry R. Woodcox................................ 3,150(4) *
BNC National Bank, as Trustee (the "Trustee") of the
BNCCORP, Inc. 401(k) Savings Plan (9)..... 174,834 7.3%
All directors and executive officers as a group
(15 persons)................................ 420,454(2)(3)(4) 17.3%
</TABLE>
- --------------------
* Less than 1 percent.
(1) The address of Mr. T. Scott, Mr. Erickson, and the "other named executive
officers" is c/o BNCCORP, Inc., 322 East Main, Bismarck, North Dakota
58501, 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 March 1, 1999 under the Company's 401(k) Savings Plan: Mr.
T. Scott (15,115 shares), Mr. Cleveland (3,782 shares), Mr. B. Scott
(18,497 shares), Mr. Erickson (38,871 shares) and all directors and
executive officers as a group (39,655 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), Mr. Pifer (5,000), Mr. Strinden (5,000), and all directors
and executive officers as a group (38,399). See "Stock Incentive Plan."
(4) Includes shares that may be acquired within 60 days through exercise of
stock options: Mr. T. Scott (7,227), Mr. Cleveland (9,326), Mr. B. Scott
(4,850), Dr. Hipp (650), Mr. Johnsen (650), Mr. Shaffer (650),
Mr. Woodcox (650) and all directors and executive officers as a group
(27,127).
(5) Includes 1,000 shares owned by Mr. Scott's children.
(6) Includes 78,480 shares owned by Mr. Cleveland's wife.
(7) Includes 38,820 shares owned by Mr. Erickson's wife.
(8) Includes 50,000 shares owned by Dr. Hipp's wife and 7,500 shares owned by
Dr. Hipp's children.
(9) Each participant of the Company's 401(k)Savings Plan is entitled to direct
the Trustee as to the manner in which to vote the shares allocated to the
participant's account.
(10) Includes 13,000 shares under Gregory K. Cleveland PC Employees' Defined
Benefit Plan.
5
<PAGE>
Compensation of Executive Officers
The following table summarizes the compensation that BNC paid to its chief
executive officer and each of its most highly compensated executive officers
during the three year period ended December 31, 1998 whose total annual salary
and bonus exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Annual compensation Awards Payouts
----------------------- ----------------------- ------------
Restricted Securities Long-Term
Stock Underlying Incentive Plan All other
Name and principal position Year Salary Bonus Awards ($) Options (#) Payouts ($) compensation (1)(2)
- -------------------------- ------ ------ ----- ---------- ------------ -----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tracy J. Scott.... 1998 $200,000 $-- -- 12,000 -- $6,434
Chairman of The Board 1997 178,000 -- -- -- -- 6,220
and Chief Executive 1996 178,000 -- -- -- -- 6,247
Officer
Gregory K. Cleveland..... 1998 175,000 -- -- 24,000 -- 6,434
President and Chief 1997 150,000 -- -- -- -- 5,970
Operating Officer 1996 150,000 -- -- -- -- 5,997
Brad J. Scott..... 1998 120,000 12,263 -- 9,000 -- 5,234
Executive Vice President, 1997 120,000 -- -- -- -- 5,020
BNC National Bank 1996 120,000 -- -- -- -- 5,043
Jeffrey A. Reed... 1998 120,000 23,971 -- 6,000 -- 234
President of 1997 100,000 -- -- -- -- 270
BNC Financial 1996 56,667 2,238 -- -- -- 124
Corporation
</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 ($5,000 in 1998,
$4,750 in 1997, and $4,750 in 1996), Mr. Cleveland ($5,000 in 1998, $4,500
in 1997, and $4,500 in 1996), and Mr. B. Scott ($5,000 in 1998, $4,750 in
1997, and $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 ($1,434 in 1998, $1,470 in 1997, and
$1,497 in 1996), Mr. Cleveland ($1,434 in 1998, $1,470 in 1997, and $1,497
in 1996), Mr. B. Scott ($234 in 1998, $270 in 1997, and $293 in 1996), and
Mr. Reed ($234 in 1998, $270 in 1997, and $124 in 1996).
(2) Perquisites and other personal benefits are not included because the
aggregate amount of such compensation does not exceed the lesser of
$50,000 or 10 percent of the total of annual salary and bonus reported for
the named executive officers.
6
<PAGE>
Options/SAR Grants During 1998
Under the 1995 Stock Incentive Plan (the "Stock Plan") the Company granted
142,200 stock options to employees on January 2, 1998, at an exercise price
equal to the market price on the date of grant. Beginning one year following the
grant date, the employee's options vest in 20% increments each year until fully
vested five years after the grant date and ending ten years after the grant
date. The number of options and percent of total options granted to the
Company's chief executive officer and each of its most highly compensated
executive officers in 1998, whose annual salary and bonus exceeded $100,000, is
set forth in the following table.
Option Grants in 1998
Individual Grants
-----------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options/ Employees Base Price Expiration
Name Granted (#) in 1998 ($/Sh) Date
---- ------------ ---------- ------------- ---------------
Tracy J. Scott 12,000 8.4% $17 January 2, 2008
Gregory K. Cleveland 24,000 16.9 17 January 2, 2008
Brad J. Scott 9,000 6.3 17 January 2, 2008
Jeffrey A. Reed 6,000 4.2 17 January 2, 2008
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 most highly compensated executive
officers at December 31, 1998, whose annual salary and bonus exceeded $100,000,
is set forth in the following table. No stock options were exercised by these
individuals during the year ended December 31, 1998.
Value of Unexercised
Number of Unexercised In-the-Money Options
Options at December 31, 1998 at December 31, 1998 (1)
Name Exercisable Unexercisable Exercisable Unexercisable
------------------------- -------------------------
Tracy J. Scott 4,827 13,207 $3,620 $906
Gregory K. Cleveland 4,526 25,131 3,394 849
Brad J. Scott 3,050 9,763 2,288 572
Jeffrey A. Reed 0 6,000 0 0
- --------------------
(1) Calculated based on the market price at December 31, 1998, less the share
price to be paid upon exercise.
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.
7
<PAGE>
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
percent 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.
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 is administered solely by the Committee, each full-time employee of
BNC 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
BNC has employment agreements with each of Tracy J. Scott, Gregory K.
Cleveland, Kevin D. Pifer, David J. Sorum, Jon E. Strinden, and James D.
LaBreche, (the "Executives"). Each of the Executives' employment agreements
provides for a minimum annual salary and an annual incentive bonus as may, from
time to time, be fixed by the Committee. The employment agreements with Messrs.
Scott and Cleveland, each entered into in May 1995, provide for minimum annual
salaries of $156,000 and $128,000, respectively. Mr. Pifer's employment
agreement, entered into in June 1998, provides for a minimum annual salary of
$140,000. Mr. Sorum's employment agreement, entered into in October 1998,
provides for a minimum annual salary of $100,000. The agreements for Messrs.
Strinden and LaBreche, entered into in January 1999 and March 1999,
respectively, provide for a minimum annual salary of $140,000 each. Each of the
employment agreements has an initial term of three years and thereafter
automatically renews for consecutive one-year terms unless either the Company or
the Executive terminates the agreement upon 90 day's notice prior to such
automatic renewal.
Under the employment agreements, each Executive receives such benefits as
the Company provides under its employee benefits plan for its employees
generally, or for its senior executive officers in particular, on the same terms
as are applicable to other senior executives of the Company. If either Mr.
Scott's or Mr. Cleveland's employment is terminated for any reason other than
death, disability, or cause (as defined in the agreements), or if they terminate
their employment for good reason (as defined in the agreements), or following a
change in control (as defined in the agreements), then the Company must pay them
a lump-sum amount equal to three times their current annual compensation. If the
employment of the other Executives is terminated following a change of control
(as defined in the agreements) of the Company, then these Executives will be
paid a lump-sum payment equal to three times their current annual compensation.
If the employment of the other Executives, except for Mr. Sorum, is terminated
for any reason other than death, disability, or cause, or if they terminate
their employment for good reason, except in the event of a change in control of
the Company, than these Executives will be paid a lump-sum equal to 1/12 of
their current annual compensation multiplied by the number of months remaining
under the employment agreement.
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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 percent of the
Common Stock to file reports of ownership and changes in ownership on Forms 3,
4, and 5 with Nasdaq Stock Market. BNC believes that all of the persons
obligated to file these reports complied with all the filing requirements
applicable to them with respect to transactions during 1998, other than Mr.
Woodcox, a director of the Company, who made a late filing in 1998 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 BNC -- North Dakota and BNC -- Minnesota,
(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, 1998, the aggregate
balance of the Banks' loans and advances under existing lines of credit to these
parties was approximately $1.5 million, or 0.55 percent of the Banks' total
loans.
Effective January 1997, BNC -- North Dakota acquired all of the outstanding
common stock of the J.D. Meier Insurance Agency (the "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.
In August 1997, BNC--North Dakota purchased a management agreement between
Preferred Investment Services, Inc., and Preferred Pension Investors I-87, an
Illinois Partnership. Mr. Cleveland owned 33 percent of the stock of Preferred
Investment Services, Inc. Under the management agreement, BNC--North Dakota,
through its trust and private banking division, will provide administrative
management services for pension assets. The purchase price was $394,000, or 4.71
percent of total assets under management at the time of purchase, and was based
upon projected earnings under the management agreement and sales of similar
asset management contracts by unrelated entities.
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, 1999. The firm has audited the financial statements of BNC for the
past five fiscal years and has advised BNC that neither the firm nor any of its
partners has any connection during the past five 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 1999.
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AVAILABILITY OF FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998, as filed with the Securities and Exchange Commission,
is available without charge upon written request to:
Gregory K. Cleveland
President & COO
BNCCORP, INC.
322 East Main
Bismarck, ND 58501
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 2000 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 3, 2000.
Under BNC's By-laws, advance notice of stockholder proposals must be
received by March 24, 2000 in order to be considered at the 2000 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
Annette Eckroth
Secretary
Bismarck, North Dakota
May 12, 1999
10
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 9, 1999 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:
Richard M. Johnsen, Jr.
John M. Shaffer
Jerry R. Woodcox
2. Ratify selection of Arthur Andersen LLP as the Company's independent public
accountants for 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(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: , 1999
Signature of Stockholder
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.
