SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
November 26, 1999 (November 18, 1999)
ILLINI CORPORATION
(Exact name of registrant as specified in its charter)
Illinois 0-13343 37-1135429
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
3200 West Iles Avenue, Springfield, Illinois 62707
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 217-787-5111
Not Applicable
(Former name or former address, if changed since lastreport.)
Page 1 of 12
The Exhibit Index is on Page 5
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 19, 1999, Illini Corporation (the "Company") consummated
its previously announced agreement to acquire all of the outstanding shares of
Farmers State Bank of Camp Point through the merger of Farmers State Bank with a
wholly-owned subsidiary of the Company. As a result of the merger, the
stockholders of Farmers State Bank received a total of 123,333 shares of Company
common stock and cash in the aggregate amount of $3,456,260. The terms of the
merger were determined through negotiations with the executive management of the
Company and the executive management and principal shareholder of Farmers State
Bank. The Company considered, among other things, the significant potential
benefits to the Company and its shareholders, a fairness opinion delivered to
the board by Legacy Securities, Inc. opining that the transaction was fair from
a financial point of view, the similarity in the community banking philosophies
of the two companies, and how the combination would further implement the
long-term strategic plan that the board of directors has implemented to enhance
shareholder value. The source of funds used to pay the cash portion of the
purchase price was the Company's working capital acquired through dividends from
the Company's wholly-owned subsidiary bank, Illini Bank, and borrowings from an
unrelated financial institution, Marine Bank, Springfield, IL.
Prior to the execution of the Agreement and Plan of Reorganization,
there was no material relationship between the Company and Farmers State Bank or
between any officers or directors of the Company and the officers or directors
of Farmers State Bank.
ITEM 5. OTHER EVENTS
On November 18, 1999, the Board of Directors of the Company approved a
Third Amendment to Rights Agreement dated as of November 18, 1999 (the "Third
Amendment") to that certain Rights Agreement by and between the Company and
Illinois Stock Transfer Company dated as of June 20, 1997, as amended. The Third
Amendment affects the definition of "Beneficial Owner" under Sections 1(c) of
the Rights Agreement to expressly provide that a person shall not be deemed the
beneficial owner of, or to "beneficially own" any shares of Company common stock
as a result of the operation of a Non-Compete, Standstill and Sale of Personal
Goodwill Agreement entered into by the Company and Ernest H. Huls as part of the
merger. The Non-Compete, Standstill and Sale of Personal Goodwill Agreement is
included as Exhibit 10.1 to this Form 8-K.
The foregoing description of the Rights Agreement does not purport to
be complete and is qualified in its entirety by reference to the Third
Amendment, which is attached hereto as an exhibit and incorporated herein by
reference. All terms not otherwise defined above shall have the meanings
ascribed to them in the Rights Agreement.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
The required financial statements for Farmers State Bank of
Camp Point are not included in this report. Such financial
statements will be filed not later than 60 days after the date
that this report is required to be filed.
(b) PRO FORMA Financial Information
The required PRO FORMA financial information is not included
in this report. Such PRO FORMA financial information will be
filed not later than 60 days after the date that this report
is required to be filed.
(c) Exhibits
4.1 Third Amendment to Rights Agreement, dated November 18,
1999 to Rights Agreement, dated as of June 20, 1997 by
and between Illini Corporation and Illinois Stock
Transfer Company
10.1 Non-Compete, Standstill and Sale of Personal Goodwill
Agreement dated as of November 19, 1999 by and between
Illini Corporation and Ernest H. Huls.
99.1 Press Release issued November 24, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ILLINI CORPORATION
Dated: November 23, 1999 By: /s/Burnard K. McHone
------------------------
Burnard K. McHone
President
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EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
4.1 Third Amendment to Rights Agreement, dated November 18, 1999
to Rights Agreement, dated as of June 20, 1997 by and between
Illini Corporation and Illinois Stock Transfer Company
10.1 Non-Compete, Standstill and Sale of Personal Goodwill
Agreement dated as of November 19, 1999 by and between Illini
Corporation and Ernest H. Huls.
99.1 Press Release issued November 24, 1999.
Page 5
EXHIBIT 4.1
THIRD AMENDMENT TO RIGHTS AGREEMENT
This amendment is made as of November 18, 1999 by and between Illini
Corporation, an Illinois corporation (the "Company"), and Illinois Stock
Transfer Company, an Illinois corporation (the "Rights Agent").
WHEREAS, the Company and the Rights Agent entered into a Rights
Agreement dated as of June 20, 1997, as amended July 1, 1998 and July 6, 1999
(the "Rights Agreement");
WHEREAS, the Company and the Rights Agent may from time to time
supplement or amend the Rights Agreement pursuant to Section 28 of the Rights
Agreement;
WHEREAS, no Distribution Date (as defined in the Rights Agreement) has
occurred;
WHEREAS, an appropriate officer of the Company has delivered a
certificate to the Rights Agent which states that this amendment complies with
the terms of Section 28 of the Rights Agreement; and
WHEREAS, all acts and things necessary to make this Third Amendment a
valid, legal and binding instrument of the Company and the Rights Agent have
been duly done, performed and fulfilled, and the execution and delivery hereof
by each of the Company and the Rights Agent have been in all respects duly
authorized by the Company and the Rights Agent, respectively;
NOW, THEREFORE, the Company and the Rights Agent hereby agree that:
I. Pursuant to Section 28 of the Rights Agreement, Section 1(c) of the
Rights Agreement is hereby amended by adding a new final paragraph as follows:
Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, a Person shall not be deemed the Beneficial
Owner of, or to "beneficially own," any shares of Common Stock of the
Company as a result of the operation of that certain Non-compete,
Standstill and Sale of Personal Goodwill Agreement to be entered into
on November 19, 1999 between the Company and Ernest H. Huls.
II. This Third Amendment may be executed in two (2) or more
counterparts, each of such counterparts shall for all purposes be deemed to be
an original and all such counterparts shall together constitute but one in the
same instrument.
III. Terms not defined herein shall, unless the context otherwise
requires, have the meanings described to such terms in the Rights Agreement.
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IV. In executing and delivering this Third Amendment, the Rights Agent
shall be entitled to all of the privileges and immunities afforded to the Rights
Agent under the terms and conditions of the Rights Agreement.
V. The parties restate all of the provisions of the Rights Agreement
and agree that all such provisions remain in effect. If there is any conflict
between the provisions of this Third Amendment and the provisions of the Rights
Agreement, the provisions of this Third Amendment shall control.
VI. The effective date of this Third Amendment is November 18, 1999.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be duly executed and attested, all as of the day and year first written
above.
ATTEST: ILLINI CORPORATION
By: /s/ James L. Adkins By: /s/ Burnard K. McHone
------------------- ---------------------
James Adkins Burnard K. McHone
Title: Chief Operating Officer Title: President
ATTEST: ILLINOIS STOCK TRANSFER
COMPANY
By: /s/ DeAnne Dicke By: /s/ Robert G. Pearson
---------------- ---------------------
DeAnne Dicke Robert G. Pearson
Title: President and CEO
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EXHIBIT 10.1
NON-COMPETE, STANDSTILL AND
SALE OF PERSONAL GOODWILL AGREEMENT
THIS NON-COMPETE, STANDSTILL AND SALE OF PERSONAL GOODWILL AGREEMENT
("Agreement") is made by and between ILLINI CORPORATION ("Illini"), an Illinois
corporation, and ERNEST H. HULS ("Huls") as of the 19th day of November, 1999.
WHEREAS, Illini and Farmers State Bank of Camp Point have entered into
an Agreement and Plan of Reorganization (the "Merger Agreement") dated as of
March 2, 1999, whereby Illini will acquire Farmers State Bank of Camp Point and
whereby Huls will become a shareholder of Illini; and
WHEREAS, Section 5.1(o) of the Merger Agreement requires that Illini
and Huls enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
ARTICLE I
REPRESENTATIONS
1.1 Representations of Illini. Illini represents that it has full legal
right, power and authority to enter into and perform this Agreement.
1.2 Representations of Huls. Huls represents that (i) he has full legal
right, power and authority to enter into and perform this Agreement, (ii) upon
consummation of the transactions contemplated by the Merger Agreement (the
"Closing Date"), Huls will be the beneficial owner (within the meaning of Rule
13(d)-3 (as such rules are currently in effect) under the Securities and
Exchange Act of 1934, as amended) of 123,333 shares of Illini Common Stock (the
"Huls Illini Stock"), and (iii) Huls does not have any agreements, arrangements
or understanding with any other persons regarding the Huls Illini Stock.
ARTICLE II
SALE OF PERSONAL GOODWILL
2.1 Personal Goodwill. Huls acknowledges that he has been actively
involved with the Farmers State Bank of Camp Point since 1969 and that during
this period he has developed close relationships with customers, employees,
correspondent bankers and vendors of Farmers State Bank of Camp Point. These
relationships are attributable to Huls' own personal goodwill and are being sold
separate and apart from Farmers State Bank of Camp Point.
ARTICLE III
STANDSTILL AND VOTING
3.1 Standstill Provisions. For a period ending on the fifth anniversary
of the Closing Date, Huls and his affiliates will not, alone or in concert with
others, directly or indirectly, unless specifically
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requested in writing in advance by Illini: (i) purchase or otherwise acquire, or
agree to acquire, ownership (including, but not limited to, beneficial
ownership) of any Illini Common Stock, or direct or indirect rights (including
convertible securities) or options to acquire such ownership other than as
specifically contemplated by the Merger Agreement and other than as may be
acquired by virtue of any stock dividend, stock split or similar distribution of
Illini Common Stock; (ii) make any public announcement with respect to, or
submit any proposal for, the acquisition of beneficial ownership of Illini
Common Stock (or direct or indirect rights, including convertible securities, or
options to acquire such beneficial ownership) or for or with respect to any
merger, consolidation, sale of substantial assets or business combination
involving Illini or any of its affiliates; (iii) initiate or propose any
shareholder proposals for submission to a vote of shareholders with respect to
Illini or any of its affiliates or propose any person for election to the Board
of Directors of Illini or any of its affiliates; or (iv) otherwise seek to
control the management or policies of Illini or any of its affiliates.
3.2 Voting. For a period ending on the fifth anniversary of the Closing
Date, Huls will vote (whether by proxy or otherwise) all shares of Illini Common
Stock then beneficially owned by Huls in the manner recommended by Illini in the
election of directors of Illini and on all other matters submitted to a vote of
shareholders.
3.3 Binding Nature of Restrictions. Huls hereby agrees that the
requirements contained in this Article III shall be binding on any transferee of
the Huls Illini Stock and that the Huls Illini Stock will not be transferred to
any person unless prior to the transfer, the transferee agrees in writing to be
bound by the terms of this Article III. Huls further agrees that a restrictive
legend will be placed on the certificate(s) representing Huls Illini Stock which
will set forth the requirements of this Article III.
ARTICLE IV
NON-COMPETE
4.1 Non-Compete Agreement. For a period ending on the third anniversary
date of the Closing Date, Huls will not engage in the business of banking or in
any other manner compete with the business of Illini and its affiliates in Adams
County, Illinois or any county in Illinois contiguous to Adams County (the
"Non-Compete Area") or own stock in any bank or bank holding company (other than
Illini) or any savings association or savings association holding company which
has an office in the Non-Compete Area, except that Huls may own not more than
five percent (5%) of the stock of a bank or bank holding company or a savings
association or savings association holding company whose stock is listed on a
national securities exchange.
ARTICLE V
CONSIDERATION
5.1 Consideration. In consideration of the foregoing, Illini shall pay
Huls the sum of Fifty Thousand and 00/100 ($50,000.00) Dollars on the Closing
Date and shall pay Huls three (3) successive annual installments of Fifty
Thousand and 00/100 ($50,000.00) Dollars each on each anniversary date of the
Closing Date ($200,000.00 in the aggregate).
5.2 Allocation. The parties hereby agree that the Consideration shall
be allocated for tax purposes as follows: One Hundred Ninety Thousand and 00/100
($190,000.00) Dollars to the Sale of
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Personal Goodwill and Ten Thousand and 00/100 ($10,000.00) Dollars to the
Non-Compete Agreement. Each party further agrees that they will file all tax
returns in a manner which is consistent with such allocation.
ARTICLE VI
GENERAL PROVISIONS
6.1 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective successors, heirs, devisees and the like
of the parties hereto.
6.2 Termination. This Agreement will terminate in the event that the
Merger Agreement is terminated.
6.3 Notices. All notices and other communications hereunder shall be
delivered in writing and shall be deemed given (i) when delivered personally;
(ii) on the second business day after being deposited in the United States mail,
registered or certified (return receipt requested) postage prepaid; (iii) on the
first business day after being deposited with Federal Express or any other
recognized national overnight courier service for overnight deliver; or (iv) on
the business day on which it is sent and received by facsimile, in each case to
the parties at the following address or facsimile number (or at such other
address or facsimile number for a party as shall be specified by like notice):
If addressed to Illini:
Illini Corporation
120 South Chatham Road
P.O. Box 13257
Springfield, Illinois 62704
Attention: Burnard K. McHone, President and
Chief Executive Officer
Facsimile: (217) 547-9659
with a copy to:
Theodore L. Eissfeldt
Howard & Howard Attorneys, P.C.
One Technology Plaza
211 Fulton Street, Suite 600
Peoria, Illinois 61602-1350
Facsimile: (309) 672-1568
If to Huls:
Ernest H. Huls
7850 East Via Costa
Scottsdale, Arizona 85258
Facsimile: (602) 607-0039
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with a copy to:
Samuel J. Witsman, Esq.
Hart, Southworth & Witsman
One North Old State Capitol Plaza
Suite 501
Springfield, Illinois 62701-1323
Facsimile: (217) 753-1056
6.4 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the internal laws of the State of Illinois,
without giving affect to the conflict of laws principles thereof.
6.5 Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart will be an original instrument.
IN WITNESS WHEREOF, Illini and Huls have executed this Agreement as of
the day and year first above written.
ILLINI CORPORATION
By: /s/ Burnard K. McHone
---------------------
Burnard K. McHone
Its: President and Chief Executive Officer
/s/ Ernest H. Huls
------------------
Ernest H. Huls
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
PRESS RELEASE
Illini Corporation Contact: Burnard K. McHone
3200 West Iles Avenue President/Chief Executive Officer
Springfield, Illinois 62707 (217) 787-5111
ILLINI CORPORATION COMPLETES FARMERS STATE
BANK ACQUISITION AND AMENDS RIGHTS AGREEMENT
SPRINGFIELD, ILLINOIS (November 24, 1999)
Illini Corporation announced today that it has completed the acquisition of
Farmers State Bank of Camp Point in Camp Point, Illinois. As a result of the
acquisition, the stockholders of Farmers State Bank received cash in the amount
of $3,456,260 and 123,333 shares of Illini common stock, increasing the number
of Illini's outstanding shares to approximately 571,789.
Illini also announced today that immediately prior to the closing of the
acquisition, Illini amended its Rights Agreement by and between Illini and
Illinois Stock Transfer Company. The amendment affects the definition of
"beneficial owner" under Section 1(c) of the Rights Agreement to provide that a
person will not be deemed the beneficial owner of any shares of Illini common
stock as a result of the operation of a Non-Compete, Standstill and Sale of
Personal Goodwill Agreement entered into by and between Illini and Ernest H.
Huls, the former majority stockholder of Farmers State Bank. As result of the
acquisition, Mr. Huls now owns approximately 22% of Illini's common stock. The
agreement with Mr. Huls, among other things, provides that for a period of five
years after the closing date of the acquisition, in the election of directors
and in any matter submitted to a vote of shareholders, Mr. Huls will vote his
shares of Illini common stock in accordance with the recommendations of Illini.
Illini Corporation owns 100% of the stock of Illini Bank, Springfield, Illinois
and Farmers State Bank of Camp Point, Camp Point, Illinois. The banks offer a
wide range of retail and corporate services through 18 offices located
throughout central Illinois. At September 30, 1999, Illini Corporation had total
assets of $174.9 million, total loans of $114.2 million and total deposits of
$157.2 million.
Illini Corporation common stock is quoted on the OTC Bulletin Board under the
symbol ILIN.
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