<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 [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 12a-6
(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section.14a-11(c) or Section.14a-12
BLACKHAWK BANCORP, INC.
(Name of Registrant as Specified in Its Charter)
Not Applicable
--------------------------------------------------------------------
(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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:___________________________________________
2) Form, Schedule or Registration Statement No.:_____________________
3) Filing Party:_____________________________________________________
4) Date Filed:_______________________________________________________
<PAGE> 2
BLACKHAWK BANCORP, INC.
400 Broad Street
Beloit, Wisconsin 53511
(608) 364-8911
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
ON MAY 19, 1999
To the shareholders of BLACKHAWK BANCORP, INC:
The 1999 annual meeting of the shareholders of Blackhawk Bancorp, Inc.
(the "Corporation") will be held on Wednesday, May 19, 1999 at 10:00 A.M., local
time, at the Country Club of Beloit, 2327 Riverside Drive, Beloit, Wisconsin
53511 for the following purposes:
(1) To elect one class of three directors to serve for a term of three
years; and
(2) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of record on the books of the Corporation at the
close of business on March 31, 1999 will be entitled to vote at the Annual
Meeting or any adjournment thereof. Your attention is called to the Proxy
Statement accompanying this notice for a more complete statement regarding the
matters to be acted upon at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES P. KELLEY
Executive Vice President and Secretary
Beloit, Wisconsin
April 5, 1999
A PROXY, WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, IS ENCLOSED.
PLEASE INDICATE YOUR VOTING DIRECTIONS, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF FOR ANY REASON YOU LATER DESIRE
TO REVOKE YOUR PROXY, YOU MAY DO SO AT ANY TIME BEFORE IT IS VOTED.
<PAGE> 3
BLACKHAWK BANCORP, INC.
400 Broad Street
Beloit, Wisconsin 53511
(608) 364-8911
PROXY STATEMENT
=========
This Proxy Statement was first mailed to
Shareholders on or about April 5,1999
=========
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Blackhawk Bancorp, Inc., a Wisconsin
corporation (the "Corporation"), for the annual meeting of shareholders to be
held on Wednesday, May 19, 1999 beginning at 10:00 A.M.
Shareholders of record at the close of business on March 31, 1999 will
be entitled to one vote on each matter presented for each share so held. At that
date there were 2,315,373 shares of Common Stock outstanding and entitled to
vote at the meeting. Any shareholder entitled to vote may vote either in person
or by duly authorized proxy. Shares of the Corporation's Common Stock
represented by properly executed proxies received by the Corporation will be
voted at the meeting and any adjournment thereof in accordance with the terms of
such proxies, unless revoked. Proxies may be revoked at any time prior to the
voting thereof either by written notice filed with the secretary or the acting
secretary of the meeting or by oral notice to the presiding officer during the
meeting. The representation at the meeting in person or by proxy of shareholders
of the Corporation holding a majority of the Corporation's outstanding shares of
Common Stock shall constitute a quorum for the transaction of business. For the
purpose of determining the presence of a quorum, shares represented on any
matter will be counted as present and represented on all matters to be acted
upon, including any matter with respect to which the holder of such shares
abstain from voting, and including shares which are not voted by a holder of
record who is a broker because the broker has not received authority from the
beneficial owner, as required under applicable laws and rules, to vote the
shares on such matter ("broker nonvotes").
Directors are elected by a plurality of the votes cast by the holders
of the Corporation's Common Stock at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to be chosen
at the meeting. Consequently, any shares not voted (whether by abstention,
broker nonvote or otherwise) have no impact in the election of directors except
to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes. Under Wisconsin law, votes cast
"AGAINST" a director nominee are given no legal effect and are not counted as
votes cast in the election of directors.
Approval of any other matter which properly comes before the meeting
will require the affirmative vote of a majority of the shares represented at the
meeting and entitled to vote on the particular matter. In tabulating votes cast
on any such other matter, abstentions will be considered votes cast, and
accordingly will have the same effect as a negative vote. Broker nonvotes, on
the other hand, will not be counted as shares entitled to be voted on the
particular matter, and therefore will have no impact on the outcome of the vote.
<PAGE> 4
Expenses in connection with the solicitation of proxies will be paid by
the Corporation. Upon request, the Corporation will reimburse brokers, dealers,
banks and voting trustees, or their nominees, for reasonable expenses incurred
in forwarding copies of the proxy material and annual report to the beneficial
owners of shares which such persons hold of record. Solicitation of proxies will
be principally by mail. Proxies may also be solicited in person, or by
telephone, by officers and regular employees of the Corporation, who will
receive no additional or special compensation for their services. Shares held
for the accounts of participants in the Corporation's Employee Stock Ownership
Plan ("ESOP") will be voted in accordance with the instructions of the
participants or otherwise in accordance with the terms of the ESOP.
BENEFICIAL OWNERSHIP OF SECURITIES
The table below sets forth information regarding the beneficial
ownership of Common Stock of the Corporation, as of March 19, 1999, by each
director and nominee for director and by all directors and officers of the
Corporation as a group. Other than Mr. Conerton, a director and President and
Chief Executive Officer of the Corporation, no person is known to the
Corporation to be the beneficial owner of more than 5% of the outstanding shares
of the Corporation's Common Stock. Except as shown in the table, each person's
address is the same as the Corporation's: 400 Broad Street, Beloit, Wisconsin
53511. All information has been restated as necessary to reflect the
Corporation's 1994 2-for-1 stock split effected as a 100% Common Stock dividend
(the "1994 Stock Split"), and to reflect the Corporation's 1995 3-for-2 stock
split effected as a 50% Common Stock dividend (the "1995 Stock Split").
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES BENEFICIALLY OWNED AND PERCENT
OF BENEFICIAL OWNER NATURE OF BENEFICIAL OWNERSHIP(1)(2) OF CLASS
- ------------------- ------------------------------------ --------
<S> <C> <C>
Jesse L. Calkins 79,483 shares(3)(4) 3.35%
John B. Clark 79,350 shares(4) 3.41%
1840 Sherwood Drive S.W.
Beloit WI 53511
Dennis M. Conerton 186,664 shares(3) 7.68%
H. Daniel Green, DDS 13,320 shares 0.57%
419 Pleasant Street
Beloit WI 53511
Charles Hart 10,750 shares 0.46%
c/o Tricor, Inc.
520 W. Grand Avenue
Beloit WI 53511
Kenneth A. Hendricks 68,325 shares(4) 2.95%
c/o ABC Supply Co.
One ABC Parkway
Beloit WI 53511
James P. Kelley 97,544 shares(3)(4) 4.16%
</TABLE>
-2-
<PAGE> 5
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES BENEFICIALLY OWNED AND PERCENT
OF BENEFICIAL OWNER NATURE OF BENEFICIAL OWNERSHIP(1)(2) OF CLASS
- ---------------- --------------------------------------- -------
<S> <C> <C>
Frederick G. Klett 47,400 shares(4) 2.04%
c/o Klett Insurance and Financial Services
1239 E. Huebbe Pkwy.
Beloit WI 53511
George D. Merchant 75,675 shares(4) 3.26%
2413 Liberty Avenue
Beloit WI 53511
Roger K. Taylor 46,825 shares(4) 2.02%
c/o North American Tool Corporation
215 Elmwood Avenue
South Beloit IL 61080
All directors and executive officers as a group 748,557 shares 29.29%
(11 persons)
</TABLE>
- --------------------
(1) Except as noted otherwise, each person holds sole voting and
dispositive powers with respect to all shares shown opposite his name.
(2) Includes options to purchase shares exercisable currently or within 60
days of the date of this Proxy Statement for each of the persons
identified in the table as follows: Calkins -27,591; Clark - 8,400;
Conerton - 114,599; Green -8,400; Hart - 4,200; Hendricks - 1,050;
Kelley - 30,925; Klett - 7,350; Merchant - 8,400; and Taylor - 8,400.
(3) Includes shares allocated to the individual's account under the
Corporation's ESOP as follows: Mr. Calkins - 10,642 shares; Mr.
Conerton - 1,640 shares; and Mr. Kelley - 11,119 shares.
(4) For Messrs. Clark, Calkins, Hendricks, Kelley, Klett and Taylor,
includes 64,950 shares, 41,250 shares, 67,275 shares, 55,550 shares,
40,050 shares and 38,425 shares, respectively, held jointly with such
person's spouse.
The information presented in the table is based on information
furnished by the specified persons and was determined in accordance with Rule
13d-3 under the Securities Exchange Act of 1934 (the "1934 Act"), as required
for purposes of this Proxy Statement. Briefly stated, under that Rule shares are
deemed to be beneficially owned by any person or group having the power to vote
or direct the vote of, or the power to dispose or direct the disposition of,
such shares, or who has the right to acquire beneficial ownership thereof within
60 days. Beneficial ownership for the purposes of this Proxy Statement is not
necessarily to be construed as an admission of beneficial ownership for other
purposes.
ELECTION OF DIRECTORS
The Corporation's Bylaws, and actions of the Board taken pursuant
thereto, provide that there shall be 10 directors divided into three classes, as
nearly equal in number as practicable, each to serve 3-year staggered terms. At
each annual meeting the term of office of one of the three classes expires, and
a new class must be elected or re-elected to serve for a term of three
-3-
<PAGE> 6
years or until their successors are duly elected and qualified. Two of the three
nominees for election as directors to the class of directors whose term expires
this year are presently serving as directors of the Corporation, and have been
since its incorporation in 1989. The third is presently serving as a director of
the Corporation and has since 1993.
The Board recommends that the shareholders elect the three individuals
named below to serve as directors of the Corporation for a term of three years
or until their successors have been duly elected and qualified. Unless otherwise
directed, proxies will be voted for the election of the following three persons.
If any of the nominees should decline or be unable to act as a director, which
is not foreseen, proxies may be voted with discretionary authority for a
substitute nominee designated by the Board of Directors.
NOMINEES FOR ELECTION TO TERM EXPIRING IN 2002:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION(1) SINCE
- ------------ ----------------------- ------
<S> <C> <C>
John B. Clark, 56 Retired since 1997; prior thereto stockbroker, Everen 1989
Securities, Inc. (securities investment firm); Director, F&M
Bank of Darlington, 207 Wells Street, Darlington, WI.
H. Daniel Green, DDS, 64(2) Dentist in private practice. 1989
Charles Hart, 65(3)(4) Sales person at Tricor, Inc. (full service insurance agency) 1993
since 1999; previously sales person and President and
Director of Combined Insurance Group, Ltd.; Director, Hart,
Kruse & Boutelle, Inc. (real estate).
</TABLE>
In addition to those three persons, the following seven individuals
also presently serve as directors of the Corporation for the indicated terms.
CLASS OF DIRECTORS WHOSE TERM EXPIRES IN 2001:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION(1) SINCE
- ------------ ----------------------- ------
<S> <C> <C>
James P. Kelley, 55 Executive Vice President and Secretary of the Corporation 1989
and Executive Vice President of its subsidiary, Blackhawk
State Bank.
Frederick G. Klett, 68(2)(3) Sales Representative, The Prudential Life Insurance 1989
Company of America.
Roger K. Taylor, 54(2)(3) President and Chief Executive Officer, North American Tool 1989
Corporation since 1986 (manufacturer of perishable cutting
tools).
</TABLE>
-4-
<PAGE> 7
CLASS OF DIRECTORS WHOSE TERM EXPIRES IN 2000:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION(1) SINCE
- ------------ ----------------------- ------
<S> <C> <C>
Jesse L. Calkins, 58(2) Senior Vice President, Treasurer and Chief Financial Officer of 1989
the Corporation and Senior Vice President and Senior Trust
Officer of its subsidiary, Blackhawk State Bank.
Dennis M. Conerton, 48(2) President and Chief Executive Officer of the Corporation and 1989
of its subsidiary, Blackhawk State Bank, since 1995; prior
thereto, Vice President - Controller/Chief Accounting Officer,
Regal-Beloit Corporation (manufacturer of power transmission
components and perishable cutting tools) from May, 1978 to
February, 1995; Director, North American Tool Corporation
(manufacturing), 215 Elmwood Avenue, South Beloit, IL.
Kenneth A. Hendricks, 57(4) President and Chief Executive Officer of ABC Supply Co. since 1996
1982 (Roofing and Siding Wholesaler).
George D. Merchant, 66(4) Retired since 1986; prior thereto, Owner/Operator of two Dairy 1989
Queen ice cream store franchises.
</TABLE>
- --------------------
(1) Except as otherwise noted, all directors have been employed in the
principal occupations noted above for the past five years or more.
(2) Member of the executive committee in 1998, of which Mr. Klett was the
chairman. The executive committee is authorized to exercise the powers
of the Board of Directors in the management of the business and affairs
of the Corporation when the Board is not in session, except for those
powers which are non-delegable by law or have been delegated to other
committees. The executive committee met four times in 1998.
(3) Member of the audit committee in 1998, of which Mr. Klett was the
chairman. The audit committee's functions include meeting with the
Corporation's independent public accountants and making recommendations
to the Board of Directors regarding the engagement or retention of such
accountants, adoption of accounting methods and procedures, public
disclosures required to comply with securities laws and other matters
relating to the Corporation's financial accounting. The audit committee
met two times in 1998.
(4) Member of the compensation committee in 1998, of which Mr. Hart was the
chairman. The compensation committee reviews and makes recommendations
with respect to the Corporation's and its subsidiary's hiring and
compensation policies, and performs administrative functions with
respect to the Corporation's 1990 and 1994 Executive Stock Option
Plans. The compensation committee met eight times in 1998.
The Board of Directors held 13 meetings during 1998. Each of the
directors attended at least 75% of the meetings of the Board (including meetings
of committees of which he is a member) held during the period of 1998 for which
he served as a director. There are no standing nomination or similar committees
of the Board.
-5-
<PAGE> 8
The table below sets forth information with respect to persons who
served as directors or executive officers of the Corporation and/or its
subsidiary, Blackhawk State Bank (the "Bank"), during 1998, but who are not
named in the table above.
<TABLE>
<CAPTION>
NAME AND AGE POSITION WITH CORPORATION AND PRINCIPAL OCCUPATION
- ------------ --------------------------------------------------
<S> <C>
Richard J. Rusch, 54 Vice President - Commercial Lending of the Bank (1990-Present); non-
director member, executive committee of the Corporation; prior to 1990, Vice
President - Lending for M&I Marshall & Ilsley Bank of Beloit.
David A. Stearns, 52 Senior Vice President of the Bank (October 1998 to Present); President and
Chief Executive Officer of the Castle Bank Harvard, N.A., Harvard, IL (1995-
1997); President and Chief Executive Officer of the Harris Bank Woodstock,
Woodstock, IL (1992-1995).
</TABLE>
COMPENSATION OF DIRECTORS
DIRECTORS' FEES
Directors of the Corporation who are not employees of the Corporation
or of the Bank receive an annual retainer of $6,000 and $250 for each board
meeting attended and an additional $100 for each committee meeting attended,
while employee/directors receive an annual retainer of $7,000. The Corporation
has also established stock option plans in which non-employee directors are
eligible to participate.
DIRECTORS' STOCK OPTION PLANS
Prior to its expiration on January 24, 1995, the Corporation maintained
the Blackhawk Bancorp, Inc. 1990 Directors' Stock Option Plan (the "1990
Directors' Plan"), which was intended to provide an incentive for directors of
the Corporation who are not active full-time employees of the Corporation or of
a subsidiary of the Corporation ("Outside Directors") to improve corporate
performance on a long-term basis. To replace the expired 1990 Directors' Plan,
the Board of Directors adopted, and the shareholders of the Corporation on May
11, 1994 approved, the Blackhawk Bancorp, Inc. 1994 Directors' Stock Option Plan
(the "1994 Directors' Plan"), which is substantially similar in all material
respects to the 1990 Directors' Plan. The 1994 Directors' Plan has 150,000
shares of the Corporation's Common Stock reserved for issuance and provides for
the granting of non-qualified stock options.
On March 1, 1999, each of the seven Outside Directors automatically was
granted an option under the 1994 Directors' Plan to purchase 2,000 shares of the
Corporation's Common Stock at a per share exercise price of $13.75 (the per
share market price of the Corporation's Common Stock on that date). Giving
effect to that grant, the total number of shares of the Corporation's Common
Stock subject to outstanding grants under the 1990 and 1994 Directors' Plan was
69,650, and there remained available 107,650 shares for future grants under the
1994 Directors' Plan. The 1990 Directors' Plan expired on January 24, 1995,
therefore no more options will be granted under that Plan. The 1994 Directors'
Plan will expire December 31, 2003.
-6-
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table summarizes certain information for each of the last
three years concerning all compensation awarded or paid to or earned by the
Chief Executive Officer and certain other executive officers of the Corporation
whose total compensation for 1998 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------
ANNUAL COMPENSATION(1) LONG TERM COMPENSATION
Name and -----------------------------------------------------------------------------------------
Other Other Annual
Principal Position Compensation Compensation
- ------------------ ------------ Options/ ------------
Year Salary ($) Bonus ($)(2) ($)(3) SARs (#)(4) ($)(5)
---- ---------- --------- --- -------- ---
<S> <C> <C> <C> <C> <C> <C>
Dennis M. Conerton 1998 $110,250 $19,457 $10,465 19,000 $22,855
President and Chief Executive 1997 $104,558 $46,830 $11,067 -0- $25,445
Officer of Corporation and 1996 $ 93,500 $46,750 $11,414 10,000 $23,305
Bank since February 20, 1995
James P. Kelley 1998 $81,696 $ 7,938 $11,247 3,000 $10,894
Executive Vice President and 1997 $79,405 $13,232 $ 9,124 -0- $13,371
Secretary of Corporation and 1996 $77,397 $13,693 $ 8,827 -0- $13,860
Executive Vice President of
Bank
Jesse L. Calkins 1998 $76,695 $ 5,064 $ 9,413 2,000 $10,444
Senior Vice President and 1997 $75,411 $ 10,663 $ 9,844 -0- $13,190
Senior Trust Officer of Bank 1996 $73,247 $ 12,453 $ 9,244 -0- $13,613
</TABLE>
- --------------------------
(1) While the named individual received perquisites or other personal
benefits in the years shown, in accordance with SEC regulations, the
value of those benefits are not indicated since they did not exceed, in
the aggregate, the lesser of $50,000 or 10% of the individual's salary
and bonus in any year.
(2) Annual bonus amounts are earned and accrued during the years indicated
and paid at the beginning of the next calendar year.
(3) Represents amounts provided for an automobile allowance and related
expenses and $7,000 per individual for directors' fees.
(4) Consists entirely of non-qualified stock options (adjusted, as
necessary, to reflect the 1994 and 1995 Stock Splits).
(5) Includes: (a) employer contributions to each named executive's account
under the qualified, non-contributory pension plan maintained by the
Bank in the amounts of $11,076, $12,885 and $12,885 for Mr. Conerton
for the years 1996, 1997 and 1998, respectively, in the amounts of
$7,881, $8,133 and $8,131 the years 1996, 1997 and 1998, respectively,
for Mr. Kelley, and in the amounts of
-7-
<PAGE> 10
$7,502, $7,776 and $7,404 for the years 1996, 1997 and 1998,
respectively, for Mr. Calkins; (b) allocations to the account of the
named executive officers under the Corporation's ESOP in the amounts of
$2,229, $2,163 and $-0- for the years 1996, 1997 and 1998,
respectively, for Mr. Conerton, in the amounts of $3,216, $1,398 and
$-0- for the years 1996, 1997 and 1998, respectively, for Mr. Kelley
and in the amounts of $3,071, $1,340 and $-0- for the years 1996, 1997
and 1998, respectively, for Mr. Calkins; (c) premiums paid on behalf of
the named executive officers for life insurance pursuant to the Plan
for Life Insurance maintained by the Bank in the amount of $4,843 for
each of the years 1996, 1997 and 1998 for Mr. Conerton, in the amount
of $2,763 for each of the years 1996, 1997 and 1998 for Mr. Kelley, and
in the amount of $3,040 for each of the years 1996, 1997 and 1998 for
Mr. Calkins; and (d) additional insurance benefits in the amount of
$5,157 for each of the years 1996, 1997 and 1998, for Mr. Conerton.
EXECUTIVE STOCK OPTIONS
Prior to its expiration on January 24, 1995, the Corporation maintained
the Blackhawk Bancorp, Inc. 1990 Executive Stock Option Plan (the "1990
Executive Plan"), which provided an incentive for executive officers of the
Corporation or any of its subsidiaries to improve corporate performance on a
long-term basis. To replace the expired 1990 Executive Plan, the Board of
Directors of the Corporation adopted, and on May 11, 1994 the shareholders
approved, the Blackhawk Bancorp, Inc. 1994 Executive Stock Option Plan (the
"1994 Executive Plan"), which is substantially similar in all material respects
to the 1990 Executive Plan. The 1994 Executive Plan provides for the granting of
incentive stock options ("ISOs") intended to qualify as such within the meaning
of Section 422 of the Internal Revenue Code of 1986, nonqualified stock options
("NSOs") and stock appreciation rights ("SARs"). The 1994 Executive Plan has
405,000 shares of the Corporation's Common Stock reserved for issuance.
Options for 53,500 shares were granted in 1998 and at December 31, 1998
there were outstanding under this Plan options for the purchase of a total of
268,149 shares. There are 216,500 shares available for future grants under the
1994 Directors' Plan. The 1994 Executive Plan will expire December 31, 2003.
OPTIONS OF NAMED EXECUTIVES
Options to purchase shares of the Corporation's Common Stock were
granted to each of the named executives during fiscal 1998 as reflected in the
table below. Pursuant to the terms of the 1994 Executive Plan, such options will
become exercisable in equal thirds on each of the first three anniversaries of
the date of grant.
-8-
<PAGE> 11
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees in Price Expiration
Name Granted Fiscal Year ($/Share)(1) Date(2)
- ---- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Dennis M. Conerton 17,500 32.7% $15.00 1/21/08
1,500 2.8% $14.25 12/16/08
James P. Kelley 3,000 5.6% $15.00 1/21/08
Jesse L. Calkins 2,000 3.7% $15.00 1/21/08
</TABLE>
- ------------------------
(1) Represented 100% of fair market value (determined under provisions of
1994 Executive Plan) of the Corporation's Common Stock as of the date
of grant.
(2) Options generally expire three months following named executive
officer's death, disability, retirement or termination of his
employment with the Corporation and/or the Bank.
The following table sets forth certain information concerning
individual exercises of stock options by the named executive officers during
1998, including the number and value of options outstanding at the end of 1998
for each of the named executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)
------------------ ---------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis M. Conerton 0 0 108,766 22,334 503,981 -0-
James P. Kelley 0 0 29,925 3,000 263,884 -0-
Jesse L. Calkins 1,000 9,900 26,925 2,000 237,684 -0-
</TABLE>
-9-
<PAGE> 12
SEVERANCE PAYMENT AGREEMENTS
The Bank has severance payment agreements with four officers: Dennis M.
Conerton, James P. Kelley, Jesse L. Calkins and Richard J. Rusch (the "Severance
Payment Agreements"). Each agreement remains in effect until the earliest to
occur of the officer's: (i) death; (ii) disability; (iii) retirement; (iv)
termination of employment (whether voluntary or involuntary); or (v) termination
in connection with a change in control of the Bank or the Corporation.
Each of the Severance Payment Agreements provides that, in the event of
termination of his employment in connection with a change in control of the Bank
or the Corporation, the officer would receive a severance payment in an amount
equal to his average annual compensation (defined to include his then current
base annual salary plus the average bonus, if any, received by him in the three
years preceding termination) multiplied by three, plus an amount equal to the
dollar equivalent of all contributions by the Bank on behalf and for the benefit
of the officer to any pension, profit sharing or employee stock benefit plan,
including the Corporation's ESOP, during the three years prior to the
termination. One-third of the severance payment would be paid in a lump sum
within 30 days of termination and the remaining two-thirds would be paid in
monthly installments commencing in the thirteenth month following termination.
In addition to this severance payment, the officer would also be entitled to
continue receiving, for three years following termination, medical, life and
disability insurance benefits and vested benefits otherwise payable to him under
any Bank plan or agreement relating to retirement or deferred compensation
benefits, if any. In the event the particular officer finds other full-time
employment, his severance payment in the second and third year following
termination would be reduced by an amount equal to salary and other benefits
received from his new employer during the period for which he is entitled to
receive payments under his Severance Payment Agreement. Each Severance Payment
Agreement provides that, in the event the officer is under the age of 55 and
physically and medically able to perform duties with another employer comparable
to those performed by him with the Bank at the time of his termination, he must
take reasonable steps to obtain such employment within 50 miles of the Bank's
main office.
The Severance Payment Agreements define a change in control to include:
(i) acquisition of beneficial ownership of securities of the Bank or of the
Corporation in a transaction subject to the notice provisions of the Change in
Bank Control Act of 1978 or approval under the Bank Holding Company Act of 1956;
(ii) someone other than the Corporation becoming owner of more than 25% of the
voting securities of the Bank; (iii) the persons constituting the Board of
Directors of the Bank or the Corporation at any particular time ceasing, during
any two-year period thereafter, to constitute at least a majority thereof; (iv)
a person or group of persons or entity succeeds to all or substantially all of
the business and/or assets of the Bank or the Corporation as a result of a
purchase, merger, consolidation or similar transaction; or (v) the filing by the
Corporation of a report or proxy statement with the Securities and Exchange
Commission disclosing that a change in control of the Corporation has or may
have occurred pursuant to any contract or transaction. A termination of an
officer is deemed to have occurred in connection with a change in control if,
following an event defined as a change in control, either the officer's
employment is terminated by the Bank or a successor other than for death,
disability, retirement or certain wrongful conduct by the officer, or the
officer terminates his employment on 90 days prior written notice following such
change in control and the occurrence of specified events, including: (i)
demotion in his position or reduction in his duties of responsibilities; (ii)
reduction in compensation; (iii) transfer to a remote location; (iv) a good
faith determination by the officer that he is unable, and it would not be in the
best interests of the Bank for him, to carry out the authorities, powers,
functions, responsibilities or duties attached to his position; or (iv) failure
on the part of the Bank to obtain a commitment from a successor to assume the
Bank's duties and
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<PAGE> 13
obligations under the Severance Payment Agreement. If an officer is terminated
within six months prior to a change in control for reasons other than death,
disability or cause, such termination will be treated as being in anticipation
of the change in control and the officer will be entitled to receive the
benefits he would have received had the termination occurred after and in
connection with a change in control.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the Corporation's directors, executive officers and any person holding more than
10% of the Corporation's Common Stock are required to report their initial
ownership of the Corporation's Common Stock and any subsequent changes in that
ownership to the Securities and Exchange Commission. Specific due dates for
these reports have been established and the Corporation is required to disclose
in this Proxy Statement any failure to file such reports by these dates during
1998. Based solely on a review of copies of such reports furnished to the
Corporation, or written representations that no reports were required, the
Corporation believes that during 1998 all filing requirements applicable to its
directors and executive officers were satisfied.
CERTAIN TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Bank occasionally extends home mortgage loans, home improvement
loans, home equity loans, consumer loans and commercial loans to its directors,
officers and employees, and affiliates of the foregoing. Such loans are made in
the ordinary course of business, do not, in the opinion of management of the
Bank, involve more than the normal risk of collectability or present other
unfavorable features, and are made on substantially the same terms, including
interest rate and collateral, as those prevailing at the time for comparable
transactions with other persons. Where the borrower is also a director of the
Bank, it is the policy of the Bank that he must leave the meeting of the Bank's
Board of Directors while his loan is being considered and he neither
participates in that consideration nor votes on approval of the loan. Messrs.
Hendricks, Klett and Taylor or their affiliates, each had one or more loans with
the Bank with an aggregate outstanding balance at December 31, 1998 in excess of
$60,000. As of that date, those loans aggregated $3,156,986 which represented
approximately 9.67% of the capital of the Bank at December 31, 1998. Those loans
were all made in accordance with the policy described above.
OTHER INFORMATION
AUDITORS
During fiscal 1998, the Board of Directors, upon the recommendation of
the Audit Committee, appointed the firm of Wipfli Ulrich Bertelson LLP
("Wipfli") as independent public accountants to audit the books and accounts of
the Company for fiscal 1998. The Board of Directors expects to appoint Wipfli to
audit the books and accounts of the Company for fiscal 1999. Representatives of
Wipfli are expected to be present at the annual meeting to respond to
appropriate questions and to make a statement if they so desire.
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<PAGE> 14
On May 13, 1998, the Audit Committee of the Board of Directors
recommended to the Board the engagement of Wipfli as the Corporation's
independent public accountants for the fiscal year ended December 31, 1998. On
May 14, 1998, the Corporation informed Lindgren, Callihan, Van Osdol & Co., Ltd.
("Lindgren"), its previous independent public accountants, of the replacement.
During fiscal 1996 and 1997, and fiscal 1998 through May 14, 1998, there were no
disagreements with Lindgren on any matter of accounting principles or practices,
financial statement disclosures, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Lindgren would have caused
that firm to make reference in connection with its report to the subject matter
of the disagreement. Lindgren's report on the Corporation's financial statements
for the previous two fiscal years contained no adverse opinion or disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Corporation no later than
December 1, 1999 in order to be considered for inclusion in next year's annual
meeting proxy statement.
OTHER AGENDA ITEMS
The Board of Directors has not been informed and is not aware that any
other matters will be brought before the meeting. However, proxies may be voted
with discretionary authority with respect to any other matters that may properly
be presented at the meeting or any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
JAMES P. KELLEY
Executive Vice President and Secretary
Beloit, Wisconsin
April 5, 1999
A COPY (WITHOUT EXHIBITS) OF THE CORPORATION'S ANNUAL REPORT FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998 IS AVAILABLE WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER
OF SHARES OF THE CORPORATION'S COMMON STOCK AS OF MARCH 31, 1999 ON THE WRITTEN
REQUEST OF SUCH PERSON DIRECTED TO: JESSE L. CALKINS, SENIOR VICE PRESIDENT AND
TREASURER, BLACKHAWK BANCORP, INC., 400 BROAD STREET, BELOIT, WISCONSIN 53511.
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<PAGE> 15
1999 ANNUAL MEETING OF SHAREHOLDERS OF BLACKHAWK BANCORP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dennis M. Conerton, Jame P. Kelley and Jesse L.
Calkins, and each of them, proxies, each with full power of substitution, to
represent and to vote all shares of stock the undersigned is entitled to vote at
the Annual Meeting of Shareholders of Blackhawk Bancorp, Inc. to be held at the
Country Club Beloit, 2327 Riverside Drive, Beloit, Wisconsin 53511, on
Wednesday, May 19, 1999 at 10:00 a.m. (local time), and at any adjournment
thereof, hereby revoking any and all proxies previously given.
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS: | | FOR all nominees listed | | WITHHOLD AUTHORITY
below for term ending in to vote for all nominees
2002 (except as marked listed below for term
to the contrary below) ending in 2000
</TABLE>
JOHN B. CLARK, H. DANIEL GREEN, DDS AND CHARLES HART
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
| | FOR | | AGAINST | | ABSTAIN
(2) In their discretion on such other matters as may properly come before the
meeting or any adjournment thereof, all as set out in the Notice and Proxy
Statement relating to the meeting, receipt of which is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PERSONS NAMED IN PROPOSAL 1.
Please return promptly in the enclosed envelope.
Dated:____________________________________, 1999
________________________________________________
Signature of shareholder
________________________________________________
Signature of shareholder
(Please sign exactly as name appears at left. If
stock is owned by more than one person, all
owners should sign. Persons signing as
executors, administrators, trustees or in
similar capacities should so indicate. If a
corporation, please sign in full corporate name
by the president or other authorized officer. If
a partnership, please sign in partnership name
by authorized person.)
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