-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FKGajOib91WOt2kx+lkUJb8dQWH82FJQ+MZ2JgywCmtQhwd84A3guZNlPqywzm6f D9jXdr774ygV/wtWsodcKg== 0000950114-98-000204.txt : 19980430 0000950114-98-000204.hdr.sgml : 19980430 ACCESSION NUMBER: 0000950114-98-000204 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19980428 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ILLINI CORP CENTRAL INDEX KEY: 0000730037 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 371135429 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-48631 FILM NUMBER: 98603061 BUSINESS ADDRESS: STREET 1: 120 SOUTH CHATHAM ROAD CITY: SPRINGFIELD STATE: IL ZIP: 62704 BUSINESS PHONE: 2175444224 MAIL ADDRESS: STREET 1: 120 S CHATHAM RD CITY: SPRINGFIELD STATE: IL ZIP: 62704 FORMER COMPANY: FORMER CONFORMED NAME: ILLINI COMMUNITY BANCORP INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NOLL IDA R CENTRAL INDEX KEY: 0001001119 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 802 S SECOND ST CITY: SPRINGFIELD STATE: IL ZIP: 62704 BUSINESS PHONE: 2175448441 MAIL ADDRESS: STREET 1: 802 S SECOND ST CITY: SPRINGFIELD STATE: IL ZIP: 62704 SC 13D/A 1 SCHEDULE 13D AMENDMENT NO. 2 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 2) Illini Corporation - ------------------------------------------------------------------------------- (Name of Issuer) Common Stock - ------------------------------------------------------------------------------- (Title of Class of Securities) 451773105 - ------------------------------------------------------------------------------- (CUSIP Number) Dale A. Schempp, Noll Law Office 802 South Second Street, Springfield, Illinois 62704 (217) 544-8441 - ------------------------------------------------------------------------------- (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] 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). 2 SCHEDULE 13D - ------------------------- ---------------------- CUSIP No. 451773105 Page 2 of 5 Pages - ------------------------- ---------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Ida R. Noll TIN ###-##-#### - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF/OO - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - ------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.0039% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - ------------------------------------------------------------------------------- 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 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 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 EX-7.(A) 2 ILLINI CORPORATION SHAREHOLDER RIGHTS PLAN 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 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. 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. 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 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. 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 EX-7.(B) 3 CONFIRMATION OF TELEPHONE CONVERSATION 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 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) EX-7.(C) 4 SHAREHOLDER RIGHTS PLAN 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 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 EX-7.(D) 5 REDEMPTION OF FAMILY SHARES 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 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 EX-7.(E) 6 POISON PILL PLAN 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 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 EX-7.(F) 7 ILLINI CORPORATION 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) EX-7.(G) 8 ILLINI CORPORATION 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 EX-7.(H) 9 LETTER ON BEHALF OF MAE H. NOLL 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, 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 -----END PRIVACY-ENHANCED MESSAGE-----