SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
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
14a-6(e)(2))
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Section 240.14a-11(c) or
___ Section 240.14a-12
ILLINI CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
_X_ No fee required.
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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___ 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:
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(2) Form, Schedule or Registration Statement:
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(3) Filing Party:
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(4) Date Filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF ILLINI CORPORATION
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS OF
ILLINI CORPORATION:
The Annual Meeting of Shareholders of Illini Corporation will be held at Illini
Bank, 3200 West Iles Avenue, Springfield, Illinois, on Thursday, May 20, 1999,
at 10:00 a.m. local time for the purpose of:
l. The election of four Directors, each of whom is to hold office for a
term of three years and until their successors have been duly
elected and qualified.
2. The ratification of approval of KPMG as independent auditors for
1999.
3. To consider and vote upon the shareholder proposal to rescind or
otherwise terminate Illini Corporation's Shareholder Rights
Agreement.
4. Transaction of other business that may be properly brought before
the meeting or any adjournment thereof.
The close of business on March 22, 1999 has been fixed by the Board of Directors
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN
THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE.
BY RESOLUTION OF THE BOARD OF DIRECTORS
/s/ William B. McCubbin
William B. McCubbin
Secretary
SPRINGFIELD, ILLINOIS
APRIL 15, 1999
<PAGE>
ILLINI CORPORATION
3200 West Iles Avenue
Springfield, Illinois 62707
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1999
This proxy statement is furnished in connection with the solicitation by the
Board of Directors, each a "Director" and collectively, the "Directors" of
Illini Corporation ("Illini"), an Illinois corporation, of proxies for use at
the Annual Meeting of Shareholders of Illini to be held at 10:00 A.M. local
time, Thursday, May 20, 1999, at Illini Bank, 3200 West Iles Avenue,
Springfield, Illinois, and any adjournments thereof. The Board of Directors has
fixed the close of business on March 22, 1999, as the record date for
determining shareholders entitled to notice of, and to vote at the Annual
Meeting. On the record date, Illini had 448,456 outstanding shares of $10.00 par
value common stock (the "Common Stock"), all of which are entitled to vote at
the annual meeting. This proxy statement and form of proxy are first being
mailed to Illini's shareholders on or about April 15, 1999.
The proxy provides instructions for voting for all Director nominees or for
withholding authority to vote for one or more Director nominees. Shareholders
have cumulative voting rights in the election of Directors. Accordingly, each
shareholder is entitled to such number of votes as equals the number of shares
owned by him as of the record date multiplied by the number of Directors to be
elected (4), all of which votes may be cast for one nominee or distributed among
two or more nominees as the shareholder may see fit. There are no
state-prescribed requirements that shareholders must meet prior to making use of
cumulative voting. On all other matters, shareholders are entitled one vote per
share.
Shares of Common Stock represented by properly executed proxies received by
Illini will be voted at the meeting in accordance with instructions thereon. If
there are no such instructions, the shares will be voted by the proxy holders at
their discretion FOR the election of the four nominees listed below, FOR the
ratification of KPMG as independent auditors for 1999, AGAINST the proposal to
terminate the Shareholder Rights Agreement, and in the discretion of the proxy
holders on other matters. Abstentions and broker non-votes are counted as shares
present for determination of a quorum but are not counted as affirmative or
negative votes on any item to be voted upon and are not counted in determining
the amount of shares voted on any item. A shareholder may revoke his proxy by a
later proxy or by giving notice of such revocation to Illini in writing before
or at the time of the meeting. Attendance at the meeting will not in and of
itself constitute the revocation of a proxy.
The cost of solicitation of proxies will be paid by Illini. In addition to the
solicitation by mail, officers, directors, and employees of Illini may solicit
proxies by telephone, telegram, or by personal interviews. Such persons will
receive no additional compensation for such services. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares held of record by them
and will be reimbursed for their reasonable expenses.
A copy of Illini's Annual Report on Form 10-KSB for 1998 is enclosed, but is not
incorporated into this proxy statement or made a part of the proxy soliciting
material.
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PROPOSAL I -- ELECTION OF DIRECTORS
Under Illini's Articles of Incorporation, as amended, the Board of Directors is
divided into three classes. The Board of Directors presently consists of twelve
(12) members. Each year, the shareholders are asked to elect the members of a
class for a term of three years. The Board of Directors, therefore, recommends
the following nominees for election as Directors for a term ending at the Annual
Meeting in 2001:
Messrs. Charles H. Delano, III, Kenneth Deverman, William N. Etherton,
and John H. Pickrell
It is expected that all shares of Common Stock represented by an executed proxy
in the accompanying form will be voted equally for the election of the persons
listed above as Directors for whom authority to vote has not been withheld
unless some other allocation of votes is specified on such proxy.
Notwithstanding the foregoing, the proxy holders reserve the right, exercisable
in their sole discretion, to vote proxies cumulatively so as to elect all or as
many as possible of such Director nominees depending upon circumstances at the
meeting. Whether or not any shares are voted cumulatively, the four persons
receiving the highest number of votes will be elected as Directors. The Board of
Directors has no reason to believe that any of the nominees will not be
available to serve if elected. However, if any of the nominees are not available
to serve if elected, proxies may be voted for election of other persons selected
by the Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
The information on the following page is provided with respect to each nominee
for Director and each Director whose term of office extends beyond the date of
the Annual Meeting and who will continue in office for their existing terms. On
November 4, 1993, Illini Bank East, Illini Bank Menard County, and Illini Bank
North were merged with, into, and under the charter of Illini Bank, a
wholly-owned subsidiary of Illini (the "Illini Banks Merger"). As discussed
herein, certain of the Directors were directors of the Illini Banks prior to the
Illini Bank Merger.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE FOUR DIRECTOR NOMINEES.
Name, Age, Principal Occupation Director of
and other Directorships Illini Since
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NOMINEES FOR THE TERM ENDING IN 2002
Charles H. Delano III - 58, Attorney New
Mr. Delano has been an owner and president of Delano Law Office since
1964. Mr. Delano is counsel to Mae H. Noll and had been asked by Mae H.
Noll to seek a position on the Company's Board of Directors.
Kenneth G. Deverman - 49, Farmer 1987
Mr. Deverman has been a grain and livestock farmer in Greenview since
1972. He served as a director of Illini Bank of Menard County until the
Illini Banks Merger was completed.
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Name, Age, Principal Occupation Director of
and other Directorships Illini Since
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William N. Etherton - 72, Farmer 1994
Mr. Etherton owns and operates a large grain and livestock farm and has
been in farming his entire life. He also serves as a director of Illini
Bank.
John H. Pickrell - 79, Farm Manager 1983
Mr. Pickrell has operated a farm and has been engaged in farm management
since 1978. He was appointed as a director and Treasurer of Illini Bank
upon consummation of the Illini Banks Merger. Mr. Pickrell is also
Treasurer of Illini and has held such position since 1983.
CONTINUING DIRECTORS FOR THE TERM ENDING IN 2000:
Thomas A. Black - 61, Management 1983
Mr. Black has been employed by Caterpillar Tractor Company since 1956 and
has held a management position since 1973. He served as a director of
Illini Bank-East until the Illini Banks Merger was consummated, and now
serves as a director and Chairman of the Board of Illini Bank. Mr. Black
also serves as Chairman of the Board of Illini and has held such position
since 1983.
Ronald E. Cramer - 57, Real Estate 1987
Mr. Cramer has operated a real estate management and construction business
for the majority of his life. He previously served as President of Illini
Bank of Menard County until August of 1991 and as a director and Chairman
of the Board of Illini Bank of Menard County until the Illini Banks Merger
was complete. He also serves as a director of Illini Bank.
Lawrence B. Curtin - 72, Farmer 1983
Mr. Curtin owns and operates a large corn and soybean farm and has been in
farming his entire life. He served as a director and Chairman of the Board
of Illini Bank-East until the Illini Banks Merger was completed. He also
serves as a director of Illini Bank.
CONTINUING DIRECTORS FOR THE TERM ENDING IN 2001:
William B. McCubbin - 61, Farmer 1983
Mr. McCubbin has engaged in farming in Sangamon County since 1961. He
served as a director of Illini Bank-Coffeen until its consolidation with
Illini Bank in 1991 and 1993. Mr. Cramer now serves as a director and
secretary for both Illini and Illini Bank.
3
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Name, Age, Principal Occupation Director of
and other Directorships Illini Since
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Burnard K. McHone - 59, Banking Executive 1992
Mr. McHone assumed the position of President of Illini on January 1, 1992,
and was subsequently elected a Director at the 1992 Annual Meeting. Prior
to accepting these positions, Mr. McHone had over 15 years of bank
management experience as President, Chairman and Controller of Farmers
National Bank of Geneseo and Farmers National Bancorp, Inc. Effective with
the consummation of the merger of Illini Bank in 1993, Mr. McHone was
appointed as a Director and President of Illini Bank.
Robert F. Olson - 68, Retired State Representative 1988
Mr. Olson has been retired as State Representative from the Illinois
General Assembly since 1994. He is also a retired farmer. He currently
operates a Farm Management Service for out of state landowners. He served
as a director and Chairman of the Board of Illini Bank-North until the
Illini Banks Merger. Mr. Olson also serves as a director of Illini Bank.
N. Ronald Thunman - 67, President of CAE Electronics 1997
Mr. Thunman is the President of CAE Electronics Corporation in Leesburg,
Virginia since March 1995. Previously, Mr. Thunman was Chairman of the
Board of Directors of ABB Government Services Corporation from 1990
through 1995. Mr. Thunman is a retired Vice Admiral from the United States
Navy. Mr. Thunman also serves as a director of Illini Bank.
William G. Walschleger Jr. - 76, Retired Land Surveyor 1986
Mr. Walschleger has owned Walschleger Land Surveyors since 1963. Mr.
Walschleger operated the business until his retirement in 1995. He served
as Chairman of the Board of Illini Bank-Danvers until the August 1991
directorate consolidation. He continues to serve as a director of Illini
Bank.
Perry Williams - 74, Retired 1988
Mr. Williams retired in 1986 as a property manager, formerly employed by
the State of Illinois. He served as President of the Elkhart Bank before
its merger. He served as a director of Illini Bank-North until the
consummation of the Illini Banks Merger.
Messrs. McCubbin, Pickrell, Black, and Curtin have each held the position
indicated since Illini was chartered in 1983. Mr. Walschleger was added to the
Board of Directors of Illini in 1986 upon consummation of Illini's acquisition
of Sherman Banc Shares, Inc. Likewise, Messrs. Cramer and Deverman were added to
Illini's Board in 1987 upon consummation of Illini's acquisition of Greenview
Banc Shares, Inc. Messrs. Olson and Williams were added to the Board in 1988
upon consummation of Illini's acquisition of Elkhart Banc Shares, Inc. Messrs.
McHone and Etherton were added to the Board in 1992 and 1994, respectively, upon
reorganization of Illini's corporate structure. Mr. Thunman was added to the
Board of Directors of Illini in 1997 to replace the seat vacated by the death of
Robert Goldman.
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During 1998, the Board of Directors of Illini held thirteen meetings. Each of
the current Directors attended more than 75% of the total number of meetings of
the Board of Directors and of all Committees of which they were members.
The Board of Directors has established Committees to assist in the discharge of
its responsibilities. In 1989, the Audit Committee was established and assigned
the responsibility of oversight of the external and internal audit functions.
Accordingly, this Committee enters into engagement agreements with Illini's
external auditors and monitors the progress and scope of external and internal
audits and their reported results. The present Directors serving on this
Committee are Messrs. Curtin, Black, Cramer, Etherton, McCubbin and Pickrell.
During 1998, the Audit Committee met five times.
In 1991, the Board established a Compensation Committee, which met one time
during 1998 and consists of Messrs. Black, Deverman, Olson, Walschleger, and
Williams. This Committee was created by Illini to oversee and control all
administration of employee compensation and benefit matters for Illini and its
subsidiary bank.
In 1992, the Board established a Shares Committee that did not meet during 1998
and consists of Messrs. Black, Cramer, Etherton, McHone, Pickrell, and
Walschleger. The Shares Committee was established for the principal purpose of
representing the ownership interests of the Company's shareholders. In addition,
the Committee shall be responsible for continuously reviewing the trading in the
capital shares of the Company and reporting thereon to the full Board.
In 1996, the Board established a Nominating Committee, which did not meet during
1998 and consists of Messrs. Black, Cramer, Curtin, Etherton, McHone, and Olson.
The Nominating Committee was created by Illini to oversee the duties of
nominating a slate for election to the Board of Directors and with reviewing and
determining the qualifications and eligibility of any nominee.
EXECUTIVE OFFICERS
The following table provides information with respect to the executive officers
of Illini as of March 31, 1999 (or earlier), including all positions and offices
with Illini.
Name Age Office
- ------------------------------------------------------------
Thomas A. Black 61 Chairman of the Board
Burnard K. McHone 59 President and Vice Chairman of the Board
William B. McCubbin 61 Secretary
John H. Pickrell 79 Treasurer
James L. Adkins 51 Vice President of Commercial Lending
Douglas F. Finn 43 Vice President of Retail Sales
William B. Littreal 29 Senior Vice President of Operations & Admin.
Ronald E. Wenger 44 Senior Vice President of Credit Administration
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BUSINESS EXPERIENCE OF NON-DIRECTOR EXECUTIVE OFFICERS
James L. Adkins - 51 Vice President of Commercial Lending
Mr. Adkins joined Illini and Illini Bank in February 1999 as Vice
President of Commercial Lending. His primary responsibilities include
generating new commercial business while maintaining a relationship with
our existing commercial customers. Prior to joining Illini, Mr. Adkins
served as Vice President of Central Illinois Bank located out of Normal,
Illinois.
Douglas F. Finn - 43 Vice President of Sales & Service
Mr. Finn joined Illini in October 1997 as Banking Center Manager of Iles &
Koke Mill. In February 1999, he was promoted to Vice President of Sales &
Service after the departure of Tony McLain. From 1981 to 1997, Mr. Finn
was employed by Bank One and held the title of Assistant Vice President
from 1995 to 1997.
William B. Littreal - 29 Senior Vice President of Operations &
Administration
Mr. Littreal joined Illini and Illini Bank in June 1998 as Vice President
of Operations & Administration. In February 1999, he was promoted to
Senior Vice President and added the title of Senior Staff Officer to his
responsibilities. Prior to joining Illini, Mr. Littreal managed the
technical department of a $280 million financial institution in West Port,
Virginia.
Ronald W. Wenger - 44 Senior Vice President of Credit
Administration
Mr. Wenger joined Illini in August of 1978. He worked for First State Bank
until Illini Banks merger when he was named Vice President of Commercial
Loans. In June 1998, Mr. Wenger was named Vice President of Credit
Administration for Illini and Illini Bank and was recently promoted to
Senior Vice President in February 1999.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 28, 1999, with respect
to all shareholders known to Illini to have been the beneficial owners of more
than five percent of its Common Stock and the shares of Common Stock of Illini
beneficially owned by each Director, Nominee and by all Directors and executive
officers of Illini as a group based upon information received from such persons.
Beneficial ownership of securities generally means the power to vote or dispose
of securities, regardless of any economic interest. Unless otherwise indicated,
all persons shown in the table below have sole voting and dispositive power or
share voting and dispositive power with members of their immediate families with
respect to the number of shares listed next to their names.
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-------------------------------
Number of Percentage
Name of Beneficial Owner Address (3) Shares of Total
- ------------------------ -------------------------- --------- ----------
<S> <C> <C> <C>
Mae H. Noll 903 South Lincoln Ave. 63,989 (1) 14.27%
Springfield, IL 62704-2338
Ida R. Noll (2) 1190 Williams Blvd. 44,863 10.00%
Springfield, IL 62704-2833
Thomas A. Black 7,349 1.64%
Ronald E. Cramer 2,786 0.62%
Lawrence B. Curtin 2,696 0.60%
Charles H. Delano, III 737 0.16%
Kenneth Deverman 1,073 0.25%
William N. Etherton 8,091 1.80%
William B. McCubbin 2,685 0.60%
Burnard K. McHone 4,387 0.98%
Robert F. Olson 2,297 0.51%
John H. Pickrell 4,055 0.90%
N. Ronald Thunman 800 0.18%
William G. Walschleger Jr. 6,308 1.41%
Perry Williams 444 0.10%
All 13 Directors, Nominees, and
Executive Officers as a group 43,708 9.75%
</TABLE>
(1) The information regarding the beneficial ownership of the Common Stock by
this individual is based on a Schedule 13D filed by this individual with
the Securities and Exchange Commission on January 28, 1999.
(2) Ida R. Noll is the daughter-in-law of Mae H. Noll
(3) Provided for beneficial owners of more than five percent of Common Stock.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation for 1998 awarded to or earned by
the Chief Executive Officer of the Company.
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Summary Compensation Table
Annual Compensation
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Name and Principal Position
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Year Salary($) Bonus($)
---- --------- --------
Burnard McHone 1998 $110,000 $0
President 1997 $108,500 $0
1996 $107,000 $1,177
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EMPLOYMENT AGREEMENT
Illini and Illini Bank have entered into employment agreements with Burnard K.
McHone, James L. Adkins, Douglas F. Finn, William B. Littreal, and Ronald
Wenger. Mr. McHone, Mr. Littreal and Mr. Wenger's employment agreements were
effective as of November 24, 1998, under which they shall be employed until
December 31, 2000. Mr. Adkins' employment agreement was effective as of February
5, 1999, and Mr. Finn's as of March 2, 1999, under which they shall be employed
until December 31, 2001. Unless sooner terminated in accordance with the terms
outlined in the employment agreements, all obligations shall terminate after the
expiration of the Terms. The Officers may, with the consent of the Company,
continue to be employed by Illini and Illini Bank after the expiration of the
Term on such terms and conditions as may be agreed upon by Illini and the
Officers. These Officers may terminate the employment agreements at any time
upon 30 days' prior notice to Illini.
Illini may terminate the Agreements without cause prior to the Term, by
providing thirty days notice to the Officer. In such event, the Officer shall
have no further obligation to Illini, except the duty to not disclose
confidential information outlined in the Agreement, and Illini shall have no
further obligation to the Officer hereunder from the date of such termination
except (a) to pay to the Officer the salary payment in the amount in effect on
the date of termination, for a period of six months from the date of
termination, (b) to pay to the Officer any other benefits due under the
Compensation and Benefit Plans for a period of six months from the date of
termination, and (c) to pay to the Officer reasonable expenses of out placement
within the financial institutions industry during the six month period following
the date of termination; provided, however, out placement expenses shall be paid
only upon actually incurring such expenses and Officer's furnishing of evidence
thereof to Illini and shall not include moving or relocation expenses.
In the event there is a Change in Control of the Company during the Term, and
(a) within the period commencing three months prior to the date of a Change in
Control and ending six months following the date of the Change in Control, the
Officer's employment hereunder is terminated by Illini other than for Cause; or
(b) within the Term, the Officer resigns from his employment hereunder upon
thirty days written notice given to the Company within thirty days following a
material change in the Officer's title, authorities of duties, in effect
immediately prior to the Change in Control, a reduction in the compensation or a
reduction in benefits provided pursuant to the Agreement or the Compensation and
Benefit Plans below the amount of compensation and benefits in effect
immediately prior to the Change in Control, or a change of the Officer's
principal place of employment without his consent to a city more than 25 miles
from Springfield, Illinois, then the Officer shall have no further obligation to
the
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Company hereunder, except the duty not to disclose confidential information in
accordance with the Agreement. Illini shall have no further obligation to the
Officer from the date of termination except to pay the Officer the salary amount
in effect on the date of termination for a period of twelve months from the date
of termination. The remaining obligations hereunder described under termination
without cause will apply as well.
COMPENSATION OF DIRECTORS
Directors of Illini receive $200 for each Director's meeting attended and $100
for each Committee meeting attended on which they serve. Those Directors who
also serve as salaried officers of Illini do not receive Directors' fees from
Illini. Certain Directors also receive fees as a director of Illini's
subsidiary, which is $400 for each Director's meeting attended and $100 for each
Loan Committee meeting attended. The Chairman of the Board receives fees in the
amount of one and one-half the amount paid to other Directors.
In 1998, Illini Corporation Directors engaged the legal services of Samuels,
Miller, Schroeder, Jackson & Sly to represent the directors in connection with
the actions by Ida R. Noll against Illini Corporation and all members of Illini
Corporation's Board of Directors except William Walschleger, Jr. (See legal
proceedings below). As of March 31, 1999, Illini has paid this firm a total of
$12,319.64.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND ASSOCIATES
Since January 1, 1993, some of the Directors and executive officers of Illini
(and members of their immediate families and corporations, organizations and
trusts with which these individuals are associated) have been indebted to one or
more of the subsidiary banks in amounts of $60,000 or more. All such loans were
made in the ordinary course of business, did not involve more than normal risk
of collectibility or present other unfavorable features, and were made on
substantially the same terms, including interest rates and collateral
requirements, as those prevailing at the same time for comparable loan
transactions with unaffiliated persons. No such loan was classified by any of
the subsidiary banks as of December 31, 1998 as a non-accrual, past due,
restructured or potential problem loan.
Outside of normal customer relations, none of the Directors, executive officers,
or 5% shareholders of Illini (or members of their immediate families) currently
maintains or has maintained since January 1, 1993, any significant business or
personal relationship with Illini or any of its subsidiaries other than such as
might arise by virtue of such person's ownership interest in, or position with,
Illini.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Illini's executive
officers and Directors, and persons who own more than ten percent of a
registered class of Illini's equity securities, to file reports of ownership on
Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange
Commission (the "SEC"). Such executive officers, Directors and ten percent
shareholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms that they file.
Based solely on a review of the copies of such forms received by Illini, Illini
believes that, during the period from January 1, 1998 until December 31, 1998,
all Section 16(a) filing requirements applicable to its executive officers,
Directors and ten percent shareholders were met.
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PROPOSAL II -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
KPMG, Certified Public Accountants, served as the Company's independent auditors
for the year 1998. The Board of Directors has retained this firm as Illini's
independent auditors for the year 1999, subject to ratification by shareholders
at the Annual Meeting. A representative of KPMG will be present at the annual
meeting, will be available to respond to questions of shareholders, and will be
permitted to make a statement if he desires to do so.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE RATIFICATION OF KPMG.
SHAREHOLDER PROPOSALS
Under our Bylaws, certain procedures are provided which a shareholder must
follow to nominate persons for Director or to introduce an item of business at
an Annual Meeting of Shareholders. Nominations for Directors or introduction of
an item of business should be submitted in writing to the Company's secretary at
P.O. Box 13257, Springfield, Illinois 62791-3257. The submission of a proposed
item must be received:
* Not earlier than 90 days nor later than 60 days before the first
anniversary of the preceding year's annual meeting.
The proposal must contain the following information:
* A brief description of the matter and the reasons for introducing
such matter at the Annual Meeting:
* Any material interest of the shareholder in such business;
* The beneficial owner, if any, on whose behalf the proposal is made;
* The shareholder's name and address and the name and address of the
beneficial owner, if any; and
* The class and number of shares of common stock held by the
shareholder and the beneficial owner, if any.
Notice of any nomination for the Board of Directors must be received:
* Not earlier than 90 days nor later than 60 days before the first
anniversary of the preceding year's annual meeting.
The notice of nomination by any shareholder must contain the following
information:
* A representation that: (1) the shareholder is, and will be on the
record date, a beneficial owner or a holder of record of stock of
the Corporation entitled to vote at such meeting; (2) the
shareholder has, and will have on the record date, full voting power
with respect to
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such shares; and (3) the shareholder intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the
notice.
Additionally, each notice shall include:
* The name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated;
* A description of all arrangements or understandings between the
shareholder and each proposed nominee and any other person or
persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder;
* The number and kinds of securities of the Corporation held
beneficially or of record by each proposed nominee;
* Other information regarding each proposed nominee as would be
required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission for the
initial election of such proposed nominee for director (including
the person's written consent to be named in the proxy statement as a
nominee);
* The consent of each proposed nominee to serve as a director if so
elected; and
* A completed Director Qualification, Eligibility and Disclosure
Questionnaire.
The chairman of the meeting may refuse to allow the transaction of any business
not presented beforehand, or to acknowledge the nomination of any person not
made in compliance with the foregoing procedures.
A shareholder complying with the above procedures may still not be entitled to
have its proposals included in next year's proxy statement. Under the rules of
the SEC, shareholder proposals must be received by us in writing addressed to
the Secretary of the Company at the address set forth above no later than
January 21, 2000 for inclusion in the proxy statement and form of proxy relating
to that meeting. Under Rule 14a-4 of Regulation 14A under the Securities
Exchange Act of 1934, the persons named as proxies have the right, and intend to
vote in their discretion any shares for which they receive proxies as to any
matter which is presented at the Annual Meeting of Shareholders for which notice
was not properly received.
Shareholders seeking to include a proposal or to nominate a director for next
year's meeting should consult the Company's Bylaws, a copy of which is available
at no charge by writing to the Secretary of the Company.
SHAREHOLDER PROPOSAL - TERMINATION OF SHAREHOLDER RIGHTS AGREEMENT
Mae H. Noll, a shareholder of the Company, has submitted the following proposal
and supporting statement for inclusion in this Proxy Statement and stated her
intention to present the same at the Annual Meeting. Proponent's address and the
number of securities held by proponent are set forth in this Proxy Statement
under the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."
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SHAREHOLDER PROPOSAL
RESOLVED: That the shareholders of Illini Corporation request that the Board of
Directors redeem the rights previously issued pursuant to, or otherwise
terminate or rescind, the Company's "Shareholders' Rights Plan," as amended,
which was adopted by the Board of Directors without prior shareholder approval
on June 20, 1997, and to refrain from adopting in the future any similar plan
without the prior approval of the shareholders.
SHAREHOLDER SUPPORTING STATEMENT
A shareholder rights plan, commonly known as a "poison pill plan," is an
anti-takeover device which is designed to prevent a change in control of a
company without the prior approval of its board of directors. Such plans are
intended to force potential acquirers to negotiate an acquisition with
management, instead of taking an offer directly to the shareholders.
By forcing potential acquirers to negotiate exclusively with the board, however,
I believe that poison pill plans generally tend to promote the entrenchment of
management by making them less responsive to the interests of shareholders.
In addition, as the Company's largest shareholder, I believe that the particular
provisions of the Company's poison pill plan, as adopted and amended, fail to
make reasonable accommodations for the legitimate interests of Company
shareholders. Moreover, I also believe that the Company's poison pill plan is
unduly restrictive and violates fundamental principles of fairness.
Such a corporate anti-takeover defense as a poison pill, I believe, can
adversely impact shareholder value and liquidity of stock. In my opinion as the
Company's largest shareholder, it should be eliminated. While I agree that
management and the Board of Directors should ensure that all shareholders
benefit from any proposal to acquire the Company, it is my belief that other
adequate protections to achieve that end are already available to them.
The Company's poison pill plan is the subject of certain lawsuits which are
currently pending. While it is unclear how these suits may ultimately be
resolved, and specifically whether or not the Company's poison pill plan may
already have been triggered, this shareholder resolution is in response to the
position being taken by the Company's Board of Directors and management to the
effect that the Company's poison pill plan is valid, enforceable and has not
been triggered.
THE PROPONENT URGES YOU TO VOTE FOR THIS RESOLUTION.
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OPPOSITION STATEMENT TO SHAREHOLDER PROPOSAL
RESPONSE OF YOUR BOARD OF DIRECTORS
Your Board of Directors (the "Board) unanimously recommends a vote "AGAINST"
this Proponent's proposal for the following reasons:
In June 1997, the Board unanimously adopted a Rights Agreement and declared a
dividend distribution of one Right on each outstanding share of the Company's
Common Stock. The Rights Agreement is designed to provide your Board with the
ability to take steps to protect and maximize the value of shareholders'
investment in the Company in the event an unsolicited attempt is made to acquire
the Company.
Th Rights Agreement is designed to encourage any potential acquirer of the
Company to negotiate directly with the Board, which the Company believes is in
the best position to negotiate on behalf of all shareholders. The Rights do not
affect any takeover proposal which the Board may determine, in the exercise of
its fiduciary duties, adequately reflects the value of the Company and is in the
best interests of the Company's shareholders, because under the terms of the
Rights Agreement, the Board has the power to redeem the Rights to permit such an
acquisition.
The overriding objective of the Board in adopting the Rights Agreement was, and
continues to be, the preservation and maximization of the Company's value for
all shareholders. The Rights Agreement is a valuable negotiating tool that
inhibits abusive conduct and is designed to protect shareholders against
practices which do not treat all shareholders fairly and equally (unsolicited
takeover attempts can include a gradual accumulation of shares in the open
market, a partial or two-tier tender offer that does not treat all shareholders
equally, a squeeze-out merger that squeezes out certain shareholders, or other
abusive takeover tactics).
Proponent advocates redemption of the Rights or rescission of the Rights
Agreement, while admitting that her position is based on her status as the
Company's largest shareholder. Redemption of the Rights or rescission of the
Rights Agreement may currently be in the best interest of the Company's largest
shareholder. The Board does not believe, however, that redemption of the Rights
or rescission of the Rights Agreement would be in the best interests of the
Company and all of its shareholders. In fact, the Board believes that the only
proper time to consider redemption of the Rights or rescission of the Rights
Agreement is when a specific offer is made to acquire the Company's stock.
Redemption of the Rights or rescission of the Rights Agreement at this time
would remove any incentive for a potential acquirer to negotiate with your Board
and eliminate a tool designed to ensure that all shareholder are treated fairly
and equally.
Shareholder rights agreements have become very common for public companies. The
adoption of the Rights Agreement does not in any way weaken the financial
strength of the Company or interfere with its business plans, has no dilutive
effect, does not affect reported earnings per share, is not taxable to the
Company or to shareholders and does not change the way in which shares of the
Company presently can be traded. The Board believes there is strong empirical
evidence that such plans better position the Board to negotiate the most
attractive and fair price for all shareholders. For example, a recent study
prepared by Georgeson & Company, Inc., a leading solicitation firm, concluded
that:
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* Premiums paid to acquire companies with shareholders rights
agreements were on average 8% higher than companies without such
agreements;
* Shareholder rights agreements contributed an additional $13 billion
in shareholder value in the aggregate from 1992 to 1996, and
shareholders of acquired companies without shareholder rights
agreements gave up $14.5 billion in potential premiums;
* The presence of a shareholder rights agreement did not increase the
likelihood of the withdrawal of a friendly bid nor the defeat of a
hostile bid; and
* Shareholder rights agreements did not reduce the likelihood of a
company becoming a takeover target.
The Georgeson study is available on the Internet at www.Georgeson.com. Many
companies with rights agreements have received unsolicited offers and have
redeemed their rights after their directors were satisfied that the offer, as
negotiated by the company's board of directors, adequately reflected the
underlying value of the company and was fair and equitable to all shareholders.
Thus, experience indicates that rights agreements neither prevents unsolicited
offers from occurring, nor prevent companies from being acquired at prices that
are fair and adequate to shareholders.
The adoption of the Rights Agreement by action of the Board is in accord with
the Board's responsibility under Illinois law to manage and direct the
management of the Company's business and affairs and, as a legal matter, does
not require shareholder approval.
FOR ALL OF THESE REASONS, YOUR BOARD UNANIMOUSLY RECOMMENDS
THAT THE SHAREHOLDERS VOTE AGAINST THE PROPOSAL. PROXIES
SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS A SHAREHOLDER
SPECIFIES A CONTRARY CHOICE IN HIS OR HER PROXY.
VOTE REQUIRED FOR APPROVAL
Approval of this shareholder proposal requires the affirmative vote of a
majority of the shares present, in person or by proxy, at the Annual Meeting and
entitled to vote on the subject matter. Unless otherwise directed, the persons
name in the enclosed proxy will vote the stock represented by all proxies
received prior to the Annual Meeting, and not properly revoked, excluding broker
non-votes, against this shareholder proposal.
LEGAL PROCEEDINGS
On or about July 17, 1998, Ida R. Noll filed a 14 count complaint against Illini
Corporation and all members of Illini Corporation's Board of Directors except
William Walschleger, Jr. in the Seventh Judicial Circuit, Sangamon County,
Illinois. On September 28, 1998, Judge Carmody dismissed the complaint and
granted Plaintiff 21 days in which to file an amended complaint. The Plaintiff
filed her amended pleading on October 19, 1998. This pleading was also
dismissed, but Plaintiff was granted leave to file a second amended complaint.
Illini and the directors recently answered the second amended complaint. The
second amended complaint arises out of Illini Corporation's subsequent adoption
of a First Amendment to the Rights Agreement on July 1, 1998, and the
Plaintiff's assertion that she became an "acquiring person" under the Rights
Agreement on April 16, 1998. The Plaintiff seeks declaratory and injunctive
relief from Illini and the directors regarding the alleged triggering of
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the Rights Agreement and the enforceability and validity of the First Amendment
to the Rights Agreement. The Plaintiff also seeks compensatory and punitive
damages against the directors arising out of the directors' alleged breaches of
fiduciary duty committed in connection with the Rights Agreement and the First
Amendment to the Rights Agreement. The Plaintiff seeks recovery of her
attorneys' fees and costs in connection with her action. Ida Noll asserted that
her attorneys' fees through October 23, 1998 were approximately $50,000 and that
her expenses at that time were approximately $5,000. Illini and the directors
intend to vigorously contest and oppose the allegations made by Ida R. Noll, and
the parties are just beginning discovery in the case.
ADDITIONAL INFORMATION AVAILABLE
Upon written request, without charge to any shareholder, Illini will provide a
copy of its Annual Report on Form 10-KSB and the schedules thereto filed with
the Securities Exchange Commission for fiscal year 1998 including the
consolidated financial statements and schedules thereto. All such inquiries
should be directed to Burnard K. McHone, President, Illini Corporation, P.O. Box
13257, Springfield, Illinois 62791-3257.
OTHER BUSINESS
The Board of Directors of Illini is not aware of any other matters that may come
before the Annual Meeting of Shareholders. However, the proxies may be voted
with discretionary authority with respect to any other matters that may properly
come before the Meeting or any adjournment thereof.
BY RESOLUTION OF THE BOARD OF DIRECTORS
/s/ William B. McCubbin
William B. McCubbin
Secretary
Date: April 15, 1999
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ILLINI CORPORATION
PLEASE COMPLETE BOTH SIDES OF THE PROXY CARD,
DETACH AND RETURN IN THE ENCLOSED ENVELOPE.
DETACH PROXY CARD HERE
- --------------------------------------------------------------------------------
SOLICITED BY THE BOARD OF DIRECTORS OF ILLINI CORPORATION
The undersigned appoints John H. Pickrell and William B. McCubbin, and each of
them as attorneys and proxies with power of substitution to vote, as indicated
hereon, all shares of common stock of Illini Corporation held of record in the
name of, at the close of business on March 22, 1999 and, in their discretion, to
vote on all other matters which may properly come before the May 20, 1999 Annual
Meeting of Shareholders of Illini Corporation and at all adjourned sessions
thereof, all as set forth in the Notice and Proxy Statement relating to the
meeting.
If joint account, each joint
owner should sign. State title
when signing as executor,
administrator, trustee,
guardian, etc.
DO NOT FOLD
DATED __________________________
SIGNED____________________________________
____________________________________
<PAGE>
ILLINI CORPORATION
[MAP] 3200 WEST ILES AVENUE
SPRINGFIELD, IL 62707
The votes represented by this proxy, if properly executed, will be voted as
indicated by you. If you sign and return the proxy unmarked, such votes will be
voted "FOR" the election of directors, cumulatively for some if the proxies
shall determine at their sole discretion, and "FOR" approval of the appointment
of auditors, and "Against" the proposal to rescind the Shareholder Rights
Agreement. No proposal is related to or conditioned on any other proposal.
Please mark your votes with an [X]. Then DATE PROXY AND
SIGN ON REVERSE side exactly as name(s) are shown and
return signed proxy in enclosed envelope.
DIRECTORS RECOMMEND a Vote "FOR" Items 1 and 2 and "Against" 3.
1. Election of Directors For [ ] Withhold Authority [ ]
all nominees listed below (except as to vote for all nominees
marked to the contrary)
Charles H. Delano, III William N. Etherton
Kenneth G. Deverman John H. Pickrell
To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list above.
2. Approval of the appointment For Against Abstain
of KPMG LLP as independent [ ] [ ] [ ]
public accountants for 1999.
3. Proposal to rescind the Shareholder For Against Abstain
Rights Agreement. [ ] [ ] [ ]
(To be signed on reverse side)
