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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
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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)
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POSSIBLE TOPICS FOR DISCUSSION IN CONNECTION
WITH COMMUNICATIONS WITH SHAREHOLDERS OF
ILLINI CORPORATION
REGARDING 1999 ANNUAL MEETING OF SHAREHOLDERS
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1. PURPOSE OF CALL.
POSSIBLE RESPONSES:
Inform shareholders that a proposal which may be submitted for
consideration by shareholders at this year's meeting is different from proposals
shareholders have been asked to consider in the past. We thought it might be
helpful for you to have the opportunity to discuss with us issues you may have
about the proposals.
2. CONTENT OF PROPOSALS 1 AND 2.
POSSIBLE RESPONSES:
Proposals 1 and 2 relate to the election of Directors and the
appointment of KPMG as independent auditors of the Corporation and are
consistent with prior years proposals. The Board of Directors recommends a vote
in favor of those proposals.
3. WHAT IS PROPOSAL 3?
POSSIBLE RESPONSES:
Mae H. Noll, a shareholder of the Company, has submitted a proposal
which is included in this years Proxy Statement and she has stated her intention
to present the proposal at the Annual Meeting. The proposal requests that the
Board of Directors of the Company terminate the Company's Shareholders' Rights
Plan and refrain from adopting in the future any similar plan without the prior
approval of shareholders. The Board of Directors strongly opposes this proposal
and recommends that shareholders of the Company vote against the proposal.
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4. WHAT IS A SHAREHOLDER RIGHTS AGREEMENT?
POSSIBLE RESPONSES:
The Company's Shareholder Rights Agreement is a plan that the Board of
Directors has adopted which makes it more difficult for a single shareholder, or
a group of shareholders acting together, to acquire control of the Company
unless all shareholders are treated the same. In the absence of the Shareholder
Rights Agreement, a would be acquiror might attempt to acquire control of the
Company by paying a high price to shareholders to acquire a majority of the
shares and then to possibly pay a lower price to the remaining shareholders. The
Shareholder Rights Agreement effectively would dilute the interest of a
shareholder who acquires a significant block of the Company's stock. The
Shareholder Rights Agreement is intended to encourage would be acquirors to deal
directly with the Board of Directors so that the Board can become fully informed
about the acquiror's intentions and thereby permit the Board to make an informed
recommendation to the shareholders.
5. WHY IS MAE NOLL MAKING THIS PROPOSAL?
POSSIBLE RESPONSES:
The Company receives many suggestions from shareholders, some formal
and some informal. All suggestions received from shareholders are given careful
consideration. Some suggestions are implemented. After discussion with the
Company and clarification of the Company's position, most suggestions are
withdrawn.
We don't know whether Mae Noll will make the proposal at the Annual
Meeting. However, she has indicated her intent to do so. Mae Noll currently owns
approximately 14.3% of the outstanding stock of the Company. Together with other
family members, the Nolls own approximately 32% of the Company's stock. While a
suggestion made by a significant shareholder is entitled to careful
consideration, the Board believes that all shareholders are entitled to be
treated fairly and that the interest of Mae Noll and her family members could be
at odds with the interests of the Company's other shareholders.
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6. WHAT IS THE BOARD'S POSITION?
POSSIBLE RESPONSES:
The Shareholder 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. The Shareholder Rights Agreement is designed to encourage any
potential acquiror of the Company to negotiate directly with the Board, which
the Company believes is in the best position to negotiate on behalf of the
shareholders. The Shareholder Rights Agreement does not affect any takeover
proposal which the Board may determine adequately reflects the value of the
Company and is in the best interests of all of the Company's shareholders. The
overriding objective of the Board in adopting the Shareholders Rights Agreement
was, and continues to be, the preservation and maximization of the Company's
value for all shareholders. The Shareholder 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.
7. HOW DOES MAE NOLL'S INTEREST DIFFER FROM THOSE OF OTHER
SHAREHOLDERS?
POSSIBLE RESPONSES:
Termination of the Shareholder Rights Agreement may currently be in the
best interest of the Company's largest shareholder. The Board does not believe,
however, that termination of the of the Shareholder 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 termination of the
Shareholder Rights Agreement is when a specific offer is made to acquire the
Company's stock. Termination of the Shareholder Rights Agreement at this time
would remove any incentive for a potential acquiror to negotiate with your Board
and eliminate a tool designed to ensure that all shareholders are treated fairly
and equally.
8. DO OTHER BANK HOLDING COMPANIES HAVE SIMILAR AGREEMENTS IN
PLACE?
POSSIBLE RESPONSES:
Hundreds of companies, including many bank holding companies, have
shareholder rights agreements in place. Studies by a prominent shareholder
relations firm indicate that all shareholders are more likely to receive a
higher price for their stock in the event that a company is sold if the Company
has a shareholder rights agreement in place.
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9. ISN'T THERE LITIGATION PENDING REGARDING THE SHAREHOLDER
RIGHTS PLAN?
POSSIBLE RESPONSES:
Yes. A shareholder, Mary Quinn, has brought a class action lawsuit
claiming that the Shareholder Rights Plan has been triggered by the acquisition
by Ida Noll of shares of the Company's stock. You will or have received a letter
from the Company giving you further information about the lawsuit. We ask that
you read the letter and that you follow the instructions contained in the
letter.
10. WHAT WILL HAPPEN IF PROPOSAL 3 IS APPROVED BY SHAREHOLDERS?
POSSIBLE RESPONSES:
This proposal is advisory in nature. In other words, approval of the
proposal by shareholders will not require the Board to terminate the Shareholder
Rights Agreement. However, the Board is very concerned about shareholder issues
and would certainly carefully consider how to respond in the event a majority of
shareholders not associated with Mae Noll vote to approve the proposal.
11. WHAT DO YOU WANT US TO DO?
POSSIBLE RESPONSES:
Please mark your proxy card in favor of the persons nominated for
election to the Board of Directors and in favor of the selection of KPMG as the
Company's independent auditors. Please mark your proxy card against the proposal
to rescind the Company's Shareholder Rights Agreement and return the Proxy
Statement as soon as possible. If you have already returned your proxy card and
have voted in favor of Proposal 3, we will send you a new proxy card. If your
shares are held in the name of a bank or broker, only your bank or broker can
vote your shares and only upon receipt of your specific instructions. Please
instruct your bank or broker (in writing) to vote your shares against Proposal
3.
In any event, if you are contacted by other shareholders, please
indicate that you are opposed to Proposal 3 and that you have voted against such
proposal and that you do not intend to change your vote. We encourage you to
attend the shareholder meeting and to express your support for the Board of
Directors.
