<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 240.14a-11(c) or Section 240.14a-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 17, 2000
To the shareholders of BLACKHAWK BANCORP, INC.:
The 2000 annual meeting of the shareholders of Blackhawk Bancorp, Inc. (the
"Corporation") will be held on Wednesday, May 17, 2000 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 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, 2000 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 7, 2000
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 YOUR PROXY 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 7, 2000
=============
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 17, 2000 beginning at 10:00 A.M.
Shareholders of record at the close of business on March 31, 2000 will be
entitled to one vote on each matter presented for each share so held. At that
date there were 2,322,899 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 31, 2000, 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.
<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 80,197 shares(3)(4) 3.41%
John B. Clark 80,717 shares(4) 3.46%
1840 Sherwood Drive S.W.
Beloit WI 53511
Dennis M. Conerton 196,410 shares(3) 8.03%
H. Daniel Green, DDS 13,637 shares .58%
419 Pleasant Street
Beloit WI 53511
Charles Hart 16,117 shares .69%
c/o Tricor, Inc.
520 W. Grand Avenue
Beloit WI 53511
Kenneth A. Hendricks 69,692 shares(4) 3.00%
c/o ABC Supply Co.
One ABC Parkway
Beloit WI 53511
James P. Kelley 99,215 shares(3)(4) 4.22%
Frederick G. Klett 48,767 shares(4) 2.09%
c/o Klett Insurance and Financial Services
1239 E. Huebbe Pkwy.
Beloit WI 53511
</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>
George D. Merchant 77,042 shares(4) 3.30%
2413 Liberty Avenue
Beloit WI 53511
Richard Rusch 44,809 shares 1.91%
David Stearns 1,667 shares .07%
Roger K. Taylor 46,917 shares(4) 2.01%
c/o North American Tool Corporation
215 Elmwood Avenue
South Beloit IL 61080
All directors and executive officers as a group 775,187 shares 30.08%
(12 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: Messrs. Calkins - 26,658; Clark - 8,717; Conerton -
124,267; Green - 8,717; Hart - 5,567; Hendricks - 2,417; Kelley - 28,325;
Klett - 8,717; Merchant - 8,717; Rusch - 21,926; Stearns - 1,667; and
Taylor - 8,717.
(3) Includes shares allocated to the individual's account under the
Corporation's ESOP as follows: Mr. Calkins - 10,689 shares; Mr. Conerton -
1,718 shares; Mr. Kelley - 11,124 shares; and Mr. Rusch - 7,072.
(4) For Messrs. Clark, Calkins, Hendricks, Kelley, Klett, Rusch and Taylor,
includes 67,275 shares, 42,850 shares, 67,275 shares, 59,766 shares, 40,050
shares, 3,600 shares and 38,200 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 years
-3-
<PAGE> 6
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 since
its incorporation in 1989. The third is presently serving as a director of the
Corporation and has since 1996.
Ordinarily the class of directors standing for reelection this year would
involve Mr. Jesse Calkins, in addition to the three individuals listed below.
Mr. Calkins has determined that, in light of his pending retirement from his
officer positions with the Corporation, he will not stand for reelection to the
Board. The Board has determined to leave this Board seat vacant for the present
time. The Board wishes to thank Mr. Calkins for his years of dedicated service
as a Director of the Corporation.
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 2003:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION(1) SINCE
- ------------ ----------------------- -----
<S> <C> <C>
Dennis M. Conerton, 49(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, 58(4) Chairman and Chief Executive Officer of ABC Supply Co. since 1996
1982 (Roofing and Siding Wholesaler).
George D. Merchant, 67(3)(4) Retired since 1986; prior thereto, Owner/Operator of two Dairy 1989
Queen ice cream store franchises.
</TABLE>
In addition to those three persons, the following six individuals also
presently serve as directors of the Corporation for the indicated terms.
CLASS OF DIRECTORS WHOSE TERM EXPIRES IN 2002:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION(1) SINCE
- ------------ ----------------------- -----
<S> <C> <C>
John B. Clark, 57 Retired since 1997; prior thereto stockbroker, Everen 1989
Securities, Inc. (securities investment firm).
H. Daniel Green, DDS, 65(2)(3) Dentist in private practice. 1989
</TABLE>
-4-
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION(1) SINCE
- ------------ ----------------------- -----
<S> <C> <C>
Charles Hart, 66(2) 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>
CLASS OF DIRECTORS WHOSE TERM EXPIRES IN 2001:
<TABLE>
<CAPTION>
DIRECTOR
NAME AND AGE PRINCIPAL OCCUPATION(1) SINCE
- ------------ ----------------------- -----
<S> <C> <C>
James P. Kelley, 56(2) Executive Vice President and Secretary of the Corporation and 1989
Executive Vice President of its subsidiary, Blackhawk State
Bank.
Frederick G. Klett, 69(4) Sales Representative, The Prudential Life Insurance Company 1989
of America.
Roger K. Taylor, 55(2)(3) President and Chief Executive Officer, North American Tool 1989
Corporation since 1986 (manufacturer of perishable cutting
tools).
</TABLE>
The Board of Directors held 12 meetings during 1999. 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.
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 1999, but who are not named in the
table above.
<TABLE>
<CAPTION>
NAME AND AGE POSITION WITH CORPORATION AND PRINCIPAL OCCUPATION
- ------------ --------------------------------------------------
<S> <C>
Jesse L. Calkins, 59(2) Senior Vice President, Treasurer and Chief Financial Officer of the Corporation
and Senior Vice President and Senior Trust Officer of its subsidiary, Blackhawk
State Bank.
</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 1999, of which Mr. Taylor 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 5 times in 1999.
(3) Member of the audit committee in 1999, of which Mr. Taylor 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
-5-
<PAGE> 8
with securities laws and other matters relating to the Corporation's
financial accounting. The audit committee met 2 times in 1999.
(4) Member of the compensation committee in 1999, of which Mr. Merchant 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 2 times in 1999.
COMPENSATION OF DIRECTORS
DIRECTORS' FEES
Directors of the Corporation who are not employees of the Corporation or of
the Bank receive a $6,000 annual retainer and $250 for each board meeting
attended and $100 for each committee meeting attended. Directors who are
employees 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, 2000, each of the seven Outside Directors automatically was
granted an option under the 1994 Directors' Plan to purchase 2000 shares of the
Corporation's Common Stock at a per share exercise price of $9.375 (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 as
of March 2, 2000 was 79,450, and there remained available 93,650 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.
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 1999 exceeded $100,000.
-6-
<PAGE> 9
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
------------------------------------------------------------------------
Other Options/ Other Annual
Compensation SARs Compensation
Name and ------------ -------- ------------
Principal Position Year Salary ($) Bonus ($)(2) ($)(3) (#)(4) ($)(5)
- ------------------ ---- ---------- ------------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Dennis M. Conerton 1999 $115,762 $ 0 $ 9,249 0 $ 21,226
President and Chief Executive Officer 1998 $110,250 $ 19,457 $ 10,465 19,000 $ 22,855
of Corporation and Bank since 1997 $104,558 $ 46,830 $ 11,067 -0- $ 25,445
February 20, 1995
James P. Kelley 1999 $ 89,083 $ 838 $ 11,042 0 $ 11,592
Executive Vice President and 1998 $ 81,696 $ 7,938 $ 11,247 3,000 $ 10,894
Secretary of Corporation and 1997 $ 79,405 $ 13,232 $ 9,124 -0- $ 13,371
Executive Vice President of Bank
Jesse L. Calkins 1999 $ 83,333 $ 0 $ 9,058 0 $ 10,928
Senior Vice President and Senior 1998 $ 76,695 $ 5,064 $ 9,413 2,000 $ 10,444
Trust Officer of Bank 1997 $ 75,411 $ 10,663 $ 9,844 -0- $ 13,190
</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
for 1997 and 1998 and a 401(k) profit sharing plan for 1999 in the amounts
of $12,885, $12,885 and $11,226 for Mr. Conerton in the years 1997, 1998
and 1999, respectively, in the amounts of $8,133 $8,131 and $8,829 for Mr.
Kelley in the years 1997, 1998 and 1999, respectively, and in the amounts
of $7,776, $7,404 and $7,888 for Mr. Calkins in the years 1997, 1998 and
1999, respectively; (b) allocations to the account of the named executive
officers under the Corporation's ESOP in the amounts of $2,163, $ -0- , and
$ -0- for Mr. Conerton in the years 1997, 1998 and 1999, respectively, in
the amounts of $1,398, $-0-, and $ -0- for Mr. Kelley in the years 1997,
1998 and 1999, respectively, and in the amounts of $1,340, $ -0- , and $
-0- for Mr. Calkins in the years 1997, 1998 and 1999; (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
Mr. Conerton in each of the years 1997, 1998 and 1999, in the amount of
$2,763 for Mr. Kelley in each of the years 1997, 1998 and 1999, and in the
amount of $3,040 for Mr. Calkins in each of the years 1997, 1998 and 1999;
and (d) additional insurance benefits in the amount of $5,157 for Mr.
Conerton in each of the years 1997, 1998 and 1999.
-7-
<PAGE> 10
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 11,500 shares were granted in 1999 and at December 31, 1999
there were outstanding under this Plan options for the purchase of a total of
266,349 shares. There are 191,000 shares available for future grants under the
1994 Executive Plan. The 1994 Executive Plan will expire December 31, 2003.
OPTIONS OF NAMED EXECUTIVES
No options to purchase shares of the Corporation's Common Stock were
granted to Dennis M. Conerton, James P. Kelley, and Jesse L. Calkins during
fiscal 1999.
The following table sets forth certain information concerning individual
exercises of stock options by the named executive officers during 1999,
including the number and value of options outstanding at the end of 1999 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 AT FISCAL
YEAR-END(#) YEAR-END($)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis M. Conerton 0 0 118,433 12,667 401,050 -0-
James P. Kelley 1,000 9400 29,925 2,000 224,559 -0-
Jesse L. Calkins 600 6090 28,325 1,334 191,925 -0-
</TABLE>
-8-
<PAGE> 11
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
-9-
<PAGE> 12
the Bank's duties and 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 1999. 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 1999 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, 1999 in excess of
$60,000. As of that date, those loans aggregated $4,021,910 which represented
approximately 17.24% of the capital of the Bank at December 31, 1999. 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 1999. The Board of Directors expects to appoint Wipfli to audit the
books and accounts of the Company for fiscal 2000. 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.
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
-10-
<PAGE> 13
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 8, 2000 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 7, 2000
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, 1999 IS AVAILABLE WITHOUT CHARGE TO EACH RECORD OR BENEFICIAL OWNER
OF SHARES OF THE CORPORATION'S COMMON STOCK AS OF MARCH 31, 2000 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.
-11-
<PAGE> 14
2000 ANNUAL MEETING OF SHAREHOLDERS OF BLACKHAWK BANCORP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Dennis M. Conerton, James 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 of Beloit, 2327 Riverside Drive, Beloit, Wisconsin 53511, on
Wednesday, May 17, 2000 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
2003 (except as marked to listed below for term ending
the contrary below) in 2003
</TABLE>
DENNIS M. CONERTON, KENNETH A. HENDRICKS AND GEORGE D. MERCHANT
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
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: , 2000
---------------------
------------------------------------------------
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.)
-12-
