<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)<F*>
Illini Corporation
- -------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- -------------------------------------------------------------------------------
(Title of Class of Securities)
451773105
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(CUSIP Number)
Dale A. Schempp, Noll Law Office
802 South Second Street, Springfield, Illinois 62704
(217) 544-8441
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
April 28 1998
- -------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
[FN]
<F*>The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act bust shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE> 2
SCHEDULE 13D
- ------------------------- ----------------------
CUSIP No. 451773105 Page 2 of 5 Pages
- ------------------------- ----------------------
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1 NAME OF REPORTING PERSON
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Ida R. Noll TIN ###-##-####
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP<F*> (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS<F*>
PF/OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
NUMBER OF 44,863
SHARES -------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH
REPORTING -------------------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
44,863
-------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
44,863
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES<F*> [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.0039%
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14 TYPE OF REPORTING PERSON<F*>
IN
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<PAGE> 3
ITEM 4. PURPOSE OF TRANSACTION.
- ------
Except as described in the second paragraph of this Item 4, the
Reporting Person does not have any present plans or proposals that relate to
or would result in (i) the acquisition by any person of additional securities
of the Company or the disposition of securities of the Company; (ii) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; (iii) a sale
or transfer of a material amount of assets of the Company or any of its
subsidiaries; (iv) any change in the present Board of Directors or management
of the Company, including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the Board; (v) any material
change in the present capitalization or dividend policy of the Company; (vi)
any other material change in the Company's business or corporate structure;
(vii) any change in the Company's articles of incorporation, bylaws, or
instruments corresponding thereto or other actions which may impede the
acquisition of control of the company by any person; (viii) causing a class
of securities of the Company to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities
association; (ix) a class of equity securities of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended; or (x) any action similar to any
of those enumerated above.
The Company has notified Reporting Person that the gifts of stock
received by her as reported in Reporting Person's recently filed Amendment
No. 1 to this Schedule 13D triggered the Company's Shareholder Rights Plan
dated June 20, 1997. Reporting Person has notified the Company's Directors
that she intends to hold them personally liable for any damaged suffered by
her on account of the Shareholders Rights Plan.
The Reporting Person reserves the right to determine in the future to
change the purpose or purposes described above.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
- ------
(a) The Reporting Person beneficially owns 44,863 shares,
representing 10.0039% of the outstanding shares of the Company.
(Correction of typographical error in Amendment No. 1 to this
Schedule 13D, where percentage was stated as 10.039%.)
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
- ------
(a) Letter, dated April 28, 1998, from attorney for Reporting Person
----------------------------
advising of Reporting Person's position regarding triggering of
Company's Shareholder Rights Plan.
3
<PAGE> 4
(b) Letter, dated April 24, 1998, from attorney for Company advising
----------------------------
of Directors' assertion that Company's Shareholder Rights Plan
had been triggered and proposing curative disposition of shares
by Reporting Person.
(c) Letter, dated March 23, 1998, from attorney for Company advising
----------------------------
of Directors' refusal to terminate the Shareholder Rights Plan.
(d) Letter, dated March 2, 1998, from attorney for Company setting
----------------------------
forth Company's offer to repurchase shares of Company common
stock from Reporting Person and certain other principal
shareholders.
(e) Letter, dated January 7, 1998, from attorney for Reporting Person
-----------------------------
setting forth Reporting Person's position regarding, and asking
Directors to terminate, the Shareholder Rights Plan.
(f) Letter, dated June 23, 1997, from attorney for Company advising
---------------------------
of Company's adoption of Shareholders Rights Plan.
(g) Letter, dated April 30, 1997, from attorney for Company advising
----------------------------
of retention of financial advisor.
(h) Letter, dated February 6, 1997, filed by Mrs. Mae Noll (the
------------------------------
Company's largest shareholder and mother-in-law of Reporting
Person) as an Exhibit to her Schedule 13D Amendment filed with
the S.E.C., advising Directors of Company of her dissatisfaction
with Company's performance, requesting that Company be sold, and
notifying Directors of her intention to sell her stock if the
Directors chose not the sell the entire Company.
4
<PAGE> 5
SCHEDULE 13D
CUSIP NO. 451773105
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
April 28, 1998
------------------
(Date)
/s/ Ida R. Noll
------------------
Ida R. Noll
5
<PAGE> 1
Exhibit 7(a)
- ------------
[LETTERHEAD OF LEWIS, RICE & FINGERSH, L.C.]
April 28, 1998
VIA FAX AND FEDEX
- -----------------
Theodore L. Eissfeldt, Esq.
HOWARD & HOWARD, L.C.
The Creve Coeur Building, Ste. 200
321 Liberty Street
Peoria, IL 61602-1403
Re: Illini Corporation Shareholder Rights Plan
------------------------------------------
Dear Ted:
Mrs. Ida ("Pinky") Noll has asked us to respond to your letter dated
April 24, 1998 (addressed to the Noll Law Office) regarding Mrs. Noll's
recent Schedule 13D Amendment No. 1. As you know, by that Amendment Pinky
Noll reported the receipt by her, and members of her immediate family, of
gifts of an aggregate 1,450 shares from Mrs. Amy Rock, who is Mrs. Noll's
mother.
We understand the Directors' position to be that this gift caused Mrs.
Noll to cross the 10% ownership threshold and thereby become an "Acquiring
Person" under Illini Corporation's Shareholder Rights Plan. To forestall
this result, the Directors now propose (pursuant to Section 1(a) of the Plan)
that they declare that Mrs. Noll so became an "Acquiring Person"
inadvertently and that she then promptly dispose of sufficient shares to take
her ownership position back below 10%. Please be advised that Mrs. Noll has
considered the Directors' proposal and determined that she is under no duty
to, nor will she, dispose of any of her shares (nor those of her children).
Instead, she will hold the Directors personally liable for any damages
suffered by her or her children on account of the Shareholder Rights Plan.
Mrs. Noll's position is that the Directors breached their fiduciary
duties to her and other shareholders by adopting the Shareholder Rights Plan.
In this regard, we believe that the most pertinent facts are as follows:
1. February 6, 1997 -- Mae Noll urges sale of Company. By letter
--------------------------------------------------
dated February 6, 1997, Mae Noll (the Company's largest
shareholder owning
<PAGE> 2
Theodore L. Eissfeldt, Esq.
Page 2
April 28, 1998
approximately 14.3% and the mother-in-law of Pinky Noll), through
her attorney, advised the Directors of her displeasure with the
Company's performance, urged the Directors to sell the Company or
merge it into a larger banking organization to maximize
shareholder value for all the shareholders, and put the Directors
on notice that if they chose not to follow such recommended
course, that she intended to sell her stock at the best
obtainable price.
2. April 30, 1997 - Directors preliminarily reply to Mae Noll's
------------------------------------------------------------
request. By letter dated April 30, 1997, the Directors, through
-------
their attorney, replied to Mae Noll's request by indicating that
they had engaged a financial advisor to assist them in reviewing
the matters raised by the letter, and that, after they had
reviewed the financial advisor's report, the Directors would
contact Mae Noll "... to discuss the resolution of the issues
raised in your letter and any other differences between the
Company and Mae Noll."
3. June 20, 1997 -- Directors respond to Mae Noll by adopting
----------------------------------------------------------
"Poison Pill" Plan. In response to Mae Noll's stated intention
------------------
to sell her block of stock (and prior to receiving their
financial advisor's report and discussing the issues, as
promised, with Mae Noll), the Directors adopted the "poison pill"
Shareholder Rights Plan on June 20, 1997. The effect of creating
this "Poison Pill" Plan (and, we submit, one of its primary
objectives) was to prevent Mrs. Noll from selling her stock. By
choosing a 10% ownership "trigger" for the "Poison Pill" instead
of the more typical 20% trigger, the Directors assured that any
sale by Mae Noll of her 14.3% interest to another person would
trigger the Plan and cause her, and any proposed buyer,
substantial loss of value and voting rights.
4. January 7, 1998 -- Pinky Noll advises the Directors that the
------------------------------------------------------------
"Poison Pill" Plan is unreasonable and demands its termination.
--------------------------------------------------------------
By letter dated January 7, 1998, Pinky Noll (the Company's
second largest shareholder then owning approximately 9.7%),
through her attorney, advised the Directors that the "Poison
Pill" Plan constitutes an unreasonable restriction on the
alienability of the Company's stock and therefore is illegal and
unenforceable against her. The letter pointed out to the
Directors their failure to balance the Plan's extremely punitive
results with the benign nature of the "threats" that could cause
it to be triggered. The letter also set forth Pinky Noll's
position that the "Poison Pill" Plan, because of the Company's
specific and somewhat unusual shareholder situation, is readily
distinguishable from that of most public companies that have
similar plans in effect; this plan was targeted not at some
future theoretical threat to the Company, but instead was aimed
specifically at the principal shareholders' longstanding
ownership interests.
<PAGE> 3
Theodore L. Eissfeldt, Esq.
Page 3
April 28, 1998
5. March 2, 1998 -- Company offers to repurchase Noll shares. By
---------------------------------------------------------
letter dated March 2, 1998, the Directors caused the Company to
offer to repurchase the shares of Company stock owned by Mae
Noll, Pinky Noll and certain other principal shareholders. By
adopting the "Poison Pill" Plan, the Directors had placed Illini
in the monopolistic position of being the only party that could
purchase the shares owned by members of the Noll family without
causing the "Poison Pill" Plan to be triggered (and thus causing
severe losses to all parties to any such transaction). To put
this repurchase offer in context, it is important to understand
that due to the lack of liquidity of the Company's stock (which
trades only very sporadically and very thinly in the over-the-
counter market), the principal shareholders have no practical
ability to "bleed out" their shares into the marketplace; there
is insufficient demand for the stock in small quantities on the
open market to permit an orderly dissolution of the Noll
family's interests (in any reasonable period of time and in a
fashion that would not unduly depress the price). Accordingly,
we believe that a court would view the Directors' recent
repurchase offer for exactly what it is - an oppressive attempt
by the Directors to use the monopoly created by the "Poison Pill"
Plan to reacquire the principal shareholders' stock on their own
terms; knowing that, as a practical matter, their "Poison Pill"
Plan had eliminated any other plausible avenue for the principal
shareholders to exit their longstanding ownership interests.
6. March 23, 1998 -- Directors refuse to terminate the Shareholder
---------------------------------------------------------------
Rights Plan. By letter dated March 23, 1998, the Directors
-----------
responded to the January 7, 1998, letter from Pinky Noll's
attorney stating that the "Poison Pill" Plan would not be
terminated.
7. April 24, 1998 - Directors assert that Shareholder Rights Plan is
-----------------------------------------------------------------
"triggered". By letter dated April 24, 1998, the Directors,
-----------
through their attorney, assert that Pinky Noll has "triggered"
the Poison Pill Plan by receipt of gifts of an aggregate 1,450
shares (0.32%) made by Amy Rock to Pinky Noll, her husband and
three children (with each individual gift having a value of less
than the annual Federal gift tax excludable amount of $10,000).
Mrs. Amy Rock is 87 years old and, as part of her general estate
planning efforts, has an established practice of making gifts of
Illini stock to her daughter, Pinky Noll. The Directors propose
that Pinky Noll dispose of shares of her stock (or her
children's stock) to fix this problem.
<PAGE> 4
Theodore L. Eissfeldt, Esq.
Page 4
April 28, 1998
* * *
We are aware of the considerable case law precedent that exists for the
validity of shareholder rights plans generally. Nevertheless, we believe
that the Directors breached their fiduciary duties to the Company's principal
shareholders by adopting this particular Plan in these rather unusual factual
circumstances. We also believe that a court properly will judge the
Directors conduct under the heightened scrutiny standard of review, and not
under the more deferential business judgment rule, given that the Directors
adopted the Plan in direct response to the perceived "threat" posed by Mae
Noll's stated intention to sell her stock. We also note that it would be
relevant to any consideration of whether management entrenchment motives may
have influenced the Directors' decision to adopt this "Poison Pill" Plan,
that the Directors' aggregate ownership is substantially less than the
holdings of Mae Noll and Pinky Noll -- the 12 Directors combined own less
stock than either Mae Noll or Pinky Noll own individually.
Among the more material inequities and defects of the "Poison Pill"
Plan adopted by the Directors are: (i) upon adoption, it was virtually
inevitable that the Plan would be triggered against the Company's second
largest shareholder, Pinky Noll; (ii) the Plan froze in place the holdings of
the Company's largest shareholder, Mae Noll; and (iii) the Company has far
fewer authorized but unissued shares available than are required to honor the
exercise of the Rights, or even to effect the optional one share-for-one
Right exchange provision of Section 25 of the Plan.
Triggering Virtually Inevitable
-------------------------------
When the Directors adopted their "Poison Pill" on June 20, 1997, it was
virtually inevitable that it would be triggered to the detriment and severe
loss of Pinky Noll, the Company's second largest shareholder (who, as you
know, owned just slightly less than 10% of the Company's stock at that time).
The natural and readily foreseeable transfer of shares of Illini stock from
one generation of Pinky Noll's immediate family to the next made inevitable
the "Poison Pill" Plan being triggered against her. No exception was made to
permit bona fide gifts from parent to child or even for inheritances to occur
without the "Poison Pill" being activated. Moreover, the Directors
exacerbated this clear inequity by choosing a 10% trigger threshold instead
of the more widely-used 20% trigger -- we must question whether Pinky Noll's
9.7% ownership interest was actually one of the motivations of this
particular decision.
All of Illini's Directors had constructive, if not actual, knowledge of
the relationship of Mae Noll (age 82 and the owner of 14.3% of the Company
stock) and Pinky Noll; in fact, the Company's own annual proxy statement
discloses that Mae Noll is the mother-in-law of Pinky Noll. In addition,
many, if not all, of the Directors had knowledge that Amy Rock (age 87 and
also a long-time shareholder of Illini) is Pinky Noll's mother. The
Directors should have foreseen that the "Poison Pill" Plan, as they
<PAGE> 5
Theodore L. Eissfeldt, Esq.
Page 5
April 28, 1998
adopted it on June 20, 1997, would be triggered upon the death of either
Pinky Noll's 87 year-old mother or 82 year-old mother-in-law. In fact, the
testamentary documents of both Mae Noll and Amy Rock, as in effect on June
20, 1997, assured this result; if either of them had died on June 21, 1997,
the Plan would have been triggered against Pinky Noll the day after the
Directors created it. Nonetheless, no reasonable provision was made to
exclude transfers upon death from the triggering events of this "Poison Pill"
Plan. In addition, there is a history of small (gift tax excludable) gifts
evident in Pinky Noll's 13D filings with the S.E.C. Nonetheless, no
reasonable provision was made to exclude bona fide gifts between family
members from the triggering events of this "Poison Pill" Plan.
The Directors, through their counsel's letter dated March 23, 1998,
(wherein they responded to Pinky Noll's position that the "Poison Pill" Plan
is unreasonable by refusing her request that it be terminated), indicated
that they were "unable to ascertain how the impact on [Pinky Noll] of the
Illini Corporation Shareholder Rights Plan is distinguishable from the impact
on shareholders of countless other corporations whose shareholder rights
plans have been upheld by the courts." We believe that the Directors were
grossly negligent and breached their fiduciary duties in failing to
distinguish Illini's rather distinct shareholder circumstances, well known to
them, from those of more widely-held public corporations that do not have a
principal shareholder family. We submit that the Directors, had they wanted
to, could have crafted a Shareholder Rights Plan that would have protected
the Company's legitimate anti-takeover interests while not working an
unreasonable, if not oppressive, restraint on the very legitimate, very
non-threatening and very foreseeable intra-family succession rights of the
Company's principal shareholders.
Largest Shareholder's Interest Frozen
-------------------------------------
As the facts outlined above make clear, the Directors adopted their
"Poison Pill" Plan in response to the recommendation of Mae Noll, their
largest shareholder, that the Company be sold and her stated intention to
sell her own stock if the Directors chose not to take her advice. Because of
the illiquidity of the Company's stock in the over-the-counter market, the
Directors' decision to create the "Poison Pill" Plan with a 10% trigger
effectively usurped Mae Noll's right to dispose of her stock. Further, by
providing in Section 1(g) of the Plan for the "grandfathering" of Mae Noll,
by name, so long as she owns no more than her present 14.3% of the stock, the
Directors also usurped her right to acquire any additional shares. Thus,
the Directors froze Mae Noll's ownership interest in place - they made it
impossible for her to sell her stock, buy more stock or even die without the
"Poison Pill" Plan being triggered. We believe that this action of the
Directors against the Company's largest shareholder was unreasonable in
relation to the perceived "threat" posed by her stated desire to sell her
stock and, therefore, a breach of the Directors' fiduciary duties to her.
<PAGE> 6
Theodore L. Eissfeldt, Esq.
Page 6
April 28, 1998
Insufficient Shares
-------------------
The Company has 800,000 shares of common stock authorized and 448,456
shares issued. Thus, the Directors have 351,544 unissued shares to work with
in executing the terms of their "Poison Pill" Plan. In any scenario, this
number of shares is far short of that needed.
If the "Poison Pill" Plan is valid and has been triggered by Amy Rock's
gift to her daughter and grandchildren, as the Directors now assert, then
stock purchase rights are distributable with respect to 403,593 shares (which
represents the 448,456 shares outstanding less the 44,863 shares beneficially
owned by Pinky Noll). By our calculations, the aggregate number of shares
that could be purchased upon exercise of such Rights would be in excess of
2,200,000 (which represents the approximate 5.6 shares that could be
purchased per Right for the $80.00 purchase price pursuant to Sections 7(b)
and 11(a)(ii) of the Plan). Furthermore, even if the Directors should choose
to utilize the optional exchange provisions of Section 25 of the "Poison
Pill" Plan (whereunder one share of stock could be exchanged for each Right),
they still would be substantially short of having the number of shares
needed. Since, we submit, it is highly unlikely that the Directors would
succeed in getting additional shares authorized in a timely fashion to meet
the Plan's requirements (which, we note, the Directors would be obligated to
attempt to do in this scenario pursuant to Section 25(c) of the Plan), then
the Directors would be left under the Plan with no recourse but to substitute
cash or other assets of the Company for such shortfall, to the detriment of
the Company's financial condition.
The number of authorized shares and the number of issued shares of
Company stock has not changed since the Directors created their "Poison Pill"
Plan on June 20, 1997. We believe that a court may find that the Directors
breached their fiduciary duties to the shareholders by adopting this
particular Plan in these particular circumstances without even having
sufficient shares authorized by the Company's shareholders to meet their
Plan's own requirements.
* * *
In sum, Pinky Noll's position is that the "Poison Pill" Plan is
unreasonable and oppressive, and its adoption by the Directors of Illini
Corporation was in clear breach of their fiduciary duties to her and other
shareholders. Mrs. Noll intends to hold the Directors personally liable for
any damages suffered by her or her children on account of the "Poison Pill"
Plan.
Very truly yours,
/s/ Thomas C. Erb
Thomas C. Erb
TCE/jns
cc: Mrs. Ida R. Noll
<PAGE> 1
Exhibit 7(b)
- ------------
[LETTERHEAD OF HOWARD & HOWARD]
April 24, 1998
VIA FACSIMILE THEN CERTIFIED MAIL -
RETURN RECEIPT REQUESTED
Dale A. Schempp, Esq.
Noll Law Office
802 South Second Street
Springfield, IL 62704
Dear Mr. Schempp:
This letter will confirm our telephone conversation yesterday during
which I indicated that my client, Illini Corporation (the "Company"), has
received a Schedule 13D filed by your client, Ida R. Noll, on April 16, 1998.
The Schedule 13D reported an increase in the amount of the Company's common
stock beneficially owned by Ida Noll to 44,863 shares which represent
10.0039% of the total amount of issued and outstanding shares of the
Company's common stock. The Schedule 13D indicates that the increase in the
amount of the Company's common stock beneficially owned by Mrs. Noll was a
result of recent gifts of the Company's common stock from Mrs. Noll's mother,
Mrs. Amy Rock.
As I indicated during our telephone conversation, Mrs. Noll has become
an "Acquiring Person" as defined by the Company's Rights Agreement (the
"Plan") dated June 20, 1997 as a result of the gifts reported in the Schedule
13D. As you know, under the terms of the Plan the existence of an Acquiring
Person triggers the issuance of the Company's common stock purchase rights
authorized by the Plan (the "Rights"), which will result in significant
economic and voting dilution of the equity interest of the Acquiring Person.
The Company is assuming that Mrs. Noll became an Acquiring Person
inadvertently as a result of the gifts reported in the Schedule 13D.
Section 1(a) of the Plan provides that "no
<PAGE> 2
Dale A. Schempp, Esq.
April 24, 1998
Page 2
Person shall become an "Acquiring Person". . . if the Board of Directors
determines that such Person became an Acquiring Person inadvertently, and
such Person promptly divests itself of a sufficient number of shares of
Common Stock so that such Person is the Beneficial Owner of such number of
shares of Common Stock so that such Person no longer would be an Acquiring
Person." Section 3 of the Plan provides that the rights agent will mail
certificates representing the Rights to the company's stockholders a soon as
practicable after the Distribution Date, which, in this case, is defined as
the 10th business day after April 16, 1998, the date of filing of Mrs. Noll's
Schedule 13D. Accordingly, as permitted by Section 1 of the Plan, the Board
of Directors will determine that Mrs. Noll became an Acquiring Person
inadvertently if Mrs. Noll provides to the Company no later than Thursday,
April 30, 1998 satisfactory evidence that she has divested a sufficient
number of shares of the Company's common stock so that she would beneficially
own less than 10% of the total number of issued and outstanding shares of the
Company's common stock.
I believe you already have a copy of the Rights Agreement; however, if
you need a copy please contact me immediately and I will fax a copy to you.
I look forward to hearing from you.
Very truly yours,
HOWARD & HOWARD ATTORNEYS
/s/ Theodore L. Eissfeldt
Theodore L. Eissfeldt
TLE/pw
cc: Mrs. Ida Noll
(via certified mail-return
receipt requested)
Mr. Burnard K. McHone
(via facsimile)
<PAGE> 1
Exhibit 7(c)
- ------------
[LETTERHEAD OF HOWARD & HOWARD]
March 23, 1998
Mr. Dale A. Schempp
Noll Law Office
802 South Second Street
Springfield, Illinois 62704
RE: ILLINI CORPORATION SHAREHOLDER RIGHTS PLAN
Dear Mr. Schempp:
We are legal counsel to Illini Corporation. The purpose of this letter
is to respond to your letter concerning the shareholder rights plan adopted
by Illini Corporation. Please direct all future correspondence with respect
to the subject matter hereof to the undersigned.
Shareholder rights plans have become the preeminent device to enable
boards of directors to obtain maximum value for shareholders either by
remaining independent or by maintaining the flexibility to obtain the best
price available for all shareholders of the company. Recent estimates
indicate that there are more than 2,500 companies which currently have
shareholder rights plans in place, including hundreds of bank holding
companies.
Please be advised that, in considering whether to adopt the shareholder
rights plan, the Board of Directors of Illini Corporation was presented with
adequate information and the information presented to the Board was
thoroughly considered. The adoption and implementation of the shareholder
rights plan was an appropriate exercise of business judgment by the Board of
Directors.
Based on the content of your letter, we are unable to ascertain how the
impact on your client of the Illini Corporation shareholder rights plan is
distinguishable from the impact on shareholders of countless other
corporations whose shareholder rights plans have been upheld by the courts.
The Board of Directors of the Illini Corporation had, and continues to have, a
<PAGE> 2
Mr. Dale A. Schempp
March 23, 1998
Page -2-
legitimate interest in taking appropriate action to ensure that all
shareholders of the Corporation are treated fairly and consistently. The
Board has a well-established plan to enhance value for all shareholders. The
Board's action in adopting and implementing the shareholder rights plan is a
legitimate method of furthering such plan and is both proportionate and
reasonable.
If you have further questions concerning the foregoing, please do not
hesitate to contact me.
Very truly yours,
HOWARD & HOWARD ATTORNEYS
/s/ Theodore L. Eissfeldt
Theodore L. Eissfeldt
cc: Mr. Burnard K. McHone
Mr. Thomas Black
<PAGE> 1
Exhibit 7(d)
- ------------
[LETTERHEAD OF HOWARD & HOWARD]
March 2, 1998
VIA FACSIMILE THEN U.S. MAIL
THOMAS C. ERB, ESQ.
Lewis, Rice & Fingersh
500 North Broadway, Suite 200
St. Louis, Missouri 63102-2147
RE: REDEMPTION OF NOLL FAMILY SHARES
Dear Tom:
As I indicated to you during our recent telephone conversation, Illini
Corporation (the "Company") is interested in exploring the possibility of a
redemption of the shares of common stock of the Company owned by Mae Noll,
the other Noll family members and Tom Benyon. As you requested, this letter
is intended to be a nonbinding expression of the Company's interest in a
potential transaction.
The Company would be prepared to offer $40 per share in cash for all of
Mae Noll's shares. The Company understands that Mae Noll owns, individually
or jointly, a total of 63,989 shares of the Company's common stock. The
Company would also be prepared to make the same offer to Conrad Noll III,
Judith Noll, Gail Linn Noll, Ida R. Noll, Jon G. Noll, Nancy Noll Shaver,
Robert Shaver, Robert Shaver, Jr. and Thomas Benyon. The Company understands
that the total number of shares of the Company's common stock owned by such
individuals is 92,334 shares. Based on recent analysis by its investment
banking firm, the Company believes this price to be fair to both the selling
stockholders and the Company's remaining stockholders but still a substantial
premium to the current market price.
Although the Company's strong preference would be a cash redemption,
the Company would also consider structuring the transaction as a spin off in
which the selling stockholders would exchange their shares of common stock of
the Company for all of the shares of a newly-formed subsidiary which would
own certain of the Company's branch offices and related assets
<PAGE> 2
THOMAS C. ERB, ESQ.
March 2, 1998
Page 2
and liabilities. Based on preliminary analysis from its accounting firm,
KPMG Peat Marwick LLC, the Company believes the spin off could be structured
as a tax free transaction. KPMG, however, has advised the Company that a
more formal analysis should be undertaken and that a private letter ruling
from the IRS would be advisable.
In addition to the tax issue, the proposed spin off transaction would
also involve significant bank regulatory, valuation and strategic business
issues. Moreover, a spin off transaction would be significantly more
expensive and time consuming than a cash redemption. For these reasons, the
Company would prefer the cash redemption.
The Board of Directors and management of the Company are anxious to
negotiate and conclude a transaction promptly and on terms fair to all
concerned. I look forward to hearing from you.
Very truly yours,
HOWARD & HOWARD ATTORNEYS, P.C.
/s/ Theodore L. Eissfeldt
THEODORE L. EISSFELDT
TLE/pw
cc: Mr. Thomas Black
Mr. Burnard K. McHone
<PAGE> 1
Exhibit 7(e)
- ------------
[LETTERHEAD OF NOLL LAW OFFICE]
January 7, 1998
Mr. Thomas A. Black
Chairman of the Board
Illini Corporation
Box 440
103 East 4th Street
Stonington, Illinois 62567
Subject: Illini Corporation "Poison Pill" Plan
Reference: 30-432
Dear Mr. Black:
The undersigned has been retained to represent Mrs. Ida R. Noll in connection
with her ownership of shares of common stock of Illini Corporation. In this
capacity, we have had an opportunity to analyze the Rights Agreement which
was adopted by the Board of Directors of Illini Corporation on June 20, 1997.
We are aware that many public companies have implemented shareholder right
plans similar to Illini's plan. We are also mindful of the fact that such
plans have, on occasion, withstood judicial challenges of their legality.
However, we nevertheless believe that the subject plan, as adopted by Illini
Corporation in these particular facts and circumstances, is illegal and
unenforceable.
My review has led me to conclude that the subject Rights Plan places an undue
and impermissible restriction on the alienability of Illini common stock and
is not in the best interests of shareholders.
Our client, Mrs. Noll, as well as other similarly situated shareholders,
would be subjected to extreme dilution of her ownership interest should this
Rights Plan be triggered by her. We must question whether the Board of
Directors of Illini Corporation was fully advised of and understood the terms
and provisions of this Rights Plan, given the harshness of its potential
consequences. Moreover, it appears to me that this plan is readily
distinguishable from those of most public companies in that upon adoption it
was targeted not at some possible, future theoretical threat to the
<PAGE> 2
Thomas A. Black
January 7, 1998
Page 2
30-432
company's interests, but instead was aimed specifically at my client (and
perhaps other existing holders of large blocks of Illini common stock).
While we can appreciate the legitimate interests served by a corporation's
adoption of defensive measures to protect against potential hostile and
coercive takeover threats, you should be advised that even these measures
must be reasonable in relation to the possible threat posed. Illini
Corporation's Rights Plan is anything but reasonable in relation to the
perceived threat. This plan wholly fails to balance the severely punitive
nature of its effects with the benign nature of the "threat" which could be
present in the particular circumstances causing it to be triggered. As a
result, the subject Rights Plan, as drafted, is an unreasonable restriction
on my client's property rights and is therefore illegal and unenforceable.
Based upon the foregoing, we hereby demand that the Board of Directors of
Illini Corporation immediately terminate the Rights Plan so as to remove any
cloud on the transferability of Illini Corporation common stock.
Very truly yours,
/s/ Dale A. Schempp
Dale A. Schempp
DAS:n
cc. Mrs. Ida R. Noll
<PAGE> 1
Exhibit 7(f)
- ------------
[SCHIFF HARDIN & WAITE LETTERHEAD]
June 23, 1997
VIA FAX THEN U.S. MAIL
- ----------------------
Thomas C. Erb, Esq.
Lewis, Rice & Fingersh
500 North Broadway, Suite 200
St. Louis, Missouri 63102-2147
RE: ILLINI CORPORATION
Dear Mr. Erb:
As I indicated to you in my previous letter, the Board of Directors of
Illini Corporation is currently completing its strategic planning process.
Last week the Board participated in three days of strategic planning sessions
which were also attended by representatives of Robert W. Baird & Co.
Incorporated and KPMG Peat Marwick. The Board expects to complete its
strategic planning process in the next thirty to forty-five days. As I
indicated in my previous letter, at that point I will contact you to discuss
the resolution of the issues raised in your letter dated February 6, 1997 on
behalf of May Noll.
Finally, for your information, the Board of Directors adopted a
Shareholder Rights Plan on Friday, June 20. I am enclosing copies of the
letter to shareholders, summary and press release, all relating to the Plan.
If you have any questions concerning the Shareholder Rights Plan or the
Board's strategic planning process, please feel free to contact me.
Otherwise, I will contact you immediately after the Board completes its
strategic planning process.
Sincerely,
/s/ Theodore L. Eissfeldt
Theodore L. Eissfeldt
TLE/jtk
Enclosures
cc: Mr. Burnard K. McHone
(w/o enclosures via fax)
<PAGE> 1
Exhibit 7(g)
- ------------
[LETTERHEAD OF SCHIFF HARDIN & WAITE]
April 30, 1997
VIA FAX THEN U.S. MAIL
- ----------------------
Thomas C. Erb, Esq.
Lewis, Rice & Fingersh
611 Olive Street, Suite 1400
St. Louis, Missouri 63101
Re: Illini Corporation
Dear Mr. Erb:
We have recently been retained by Illini Corporation to replace Heyl,
Royster, Voelker & Allen as the company's corporate counsel. We are in the
process of reviewing files, consulting with management and otherwise
familiarizing ourselves with the company. In this regard, the company has
made us aware of your letter dated February 6, 1997 on behalf of Mae Noll.
As I believe you know, the company has retained Robert W. Baird & Co.
Incorporated to assist the company in its review of the matters raised in
your letter. We will also be providing the company our legal advice with
respect to those matters.
After the company has received Baird's report, we will contact you to
discuss the resolution of the issues raised in your letter and any other
differences between the company and Mae Noll. I will look forward to
speaking with you then.
Sincerely,
/s/ Theodore L. Eissfeldt
Theodore L. Eissfeldt
TLE/pw
cc: Mr. Burnard K. McHone
<PAGE> 1
Exhibit 7(h)
- ------------
[LETTERHEAD OF LEWIS, RICE & FINGERSH, L.C.]
February 6, 1997
Board of Directors
Illini Corporation
120 South Chatham Road
Springfield, IL 62704
Attn: Mr. Thomas A. Black, Chairman
Gentlemen:
Our client, Mrs. Mae H. Noll, has asked us to deliver this letter to
you on her behalf.
As you previously were made aware, Mrs. Noll has been considering the
possibility of selling her substantial ownership interest in Illini
Corporation stock. While at this point in time she has not actively sought
potential buyers, she has received expression of interest from certain
parties at prices far in excess of both the current market price and book
value of the stock.
Given the long history of her ownership - since the founding of the
Company - and her status as the Company's largest shareholder, Mrs. Noll
naturally has given much thought to a possible sale of her shares as well as
the future of Illini Corporation.
Mrs. Noll generally is very disappointed in the Company's recent
financial results. Illini Corporation continues to be burdened with an
excessively high cost structure which is reflected in its low profitability.
The Company ranks poorly in most of the important measures of bank
performance, including its return on assets, return on equity, efficiency
ratio, etc. This poor performance, in turn, is reflected in the market price
of Illini stock, which has traded at substantial discounts to book value
while better performing banks, and even average performing banks, are trading
at substantial premiums to book value.
These observations are not meant to criticize the Board of Directors of
Illini Corporation. The Company's poor performance may be attributable more
to the general difficulties inherent in competing against the much larger and
more sophisticated regional banking organizations that dominate the
Springfield marketplace,
<PAGE> 2
Illini Corporation
February 6, 1997
Page 2
than to specific management shortcomings. As you are well aware, these
large regional banks are able to offer a broader array of financial products
and services in a more cost effective and convenient manner than is a Company
of Illini's modest size.
In any event, Mrs. Noll is requesting that the Board of Directors
pursue a merger of Illini Corporation with a larger banking organization. A
merger with a larger organization could be structured as a tax-free
stock-for-stock exchange at a value (based upon the expressions of interest
which Mrs. Noll has received for her minority ownership block) that reasonably
could exceed two times the recently prevailing market price of Illini
Corporation stock. It doesn't seem plausible to us that an independent
strategy could rival the value that such a merger would provide all the
shareholders of Illini Corporation. It makes sense to capitalize on Illini's
franchise now, before the Company's continuing weak financial performance and
competitive handicaps deteriorate its value any further.
Accordingly, as the Company's largest shareholder, Mrs. Noll urges you
to retain independent professional investment banking expertise to put
together a merger which will realize the full value of the shares owned by
every single shareholder of Illini Corporation.
While Mrs. Noll would greatly prefer such a merger transaction which
would benefit every Company shareholder, she has made it clear that she
intends to dispose of her stock at the best price obtainable if you should
fail to undertake such a merger. That would be most unfortunate, however, as
the smaller shareholders of the Company would be denied the opportunity to
receive a premium price for their stock, which Mrs. Noll is confident that
she will receive in either scenario for her shares as the Company's largest
shareholder.
In closing, Mrs. Noll requests that the Board of Directors of Illini
Corporation fulfill its fiduciary duty to every shareholder by arranging a
merger transaction which will benefit everyone.
Very truly yours,
/s/ Thomas C. Erb
Thomas C. Erb
TCE/jns
