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The following is an excerpt from a 10KSB SEC Filing, filed by ILLINI CORP on 3/28/2003.
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ILLINI CORP - 10KSB - 20030328 - LEGAL_PROCEEDINGS

ITEM 3. - LEGAL PROCEEDINGS

 

Item 1    Legal Proceedings

Mary Quinn v. Illini Corporation and Illinois Stock Transfer Co.,

Sangamon County Case No. 98 CH 240

 

Illini Corporation adopted a Shareholder Rights Agreement on June 20, 1997, and named Illinois Stock Transfer Company (“ISTC”) as its rights agent thereunder.  Illini Corporation was notified in May 1998 of a threatened complaint against ISTC by an Illini Corporation shareholder.  The shareholder, Mary K. Quinn (“Quinn”), who owns 21 shares of stock in Illini Corporation, filed suit against ISTC on June 9, 1998 in the Seventh Judicial Circuit Court, Sangamon County, Illinois.  Quinn sought to compel ISTC to distribute rights certificates to Illini Corporation’s shareholders and further sought to certify all Illini Corporation shareholders as a class.  Quinn asserted that Ida R. Noll became an acquiring person under the Rights Agreement on April 16, 1998, and that the Rights Agreement was triggered.  ISTC has vigorously contested Quinn’s assertions that Ida R. Noll was an acquiring person, that the Rights Agreement had been triggered, and that ISTC had a duty to distribute rights certificates.

On June 9, 1998, Quinn filed a Motion to Certify the Class, which was granted on December 29, 1998.  On January 13, 1999, Quinn filed an Amended Complaint adding Illini Corporation as a defendant to her action.  Both Illini Corporation and ISTC answered the Amended Complaint and denied that Ida R. Noll was an acquiring person.  Quinn asserted that she was entitled to recover her attorneys’ fees from Illini Corporation and ISTC.

Quinn filed a Motion for Summary Judgment that asked the Court to determine as a matter of law that Ida R. Noll became an acquiring person on April 16, 1998, that the Rights Agreement was triggered as a result and that Illini Corporation and ISTC had a duty to distribute rights certificates to all shareholders as of April 16, 1998, except for Ida R. Noll.  Illini Corporation opposed Quinn’s Motion for Summary Judgment, which was heard by the Court on June 18, 1999.  On June 29, 1999, the Court entered an Opinion and Order denying Quinn’s Motion for Summary Judgment.

 

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On or about May 6, 1999, counsel for Quinn advised Illini Corporation’s counsel of her intent to seek an injunction that would preclude Illini Corporation from completing its acquisition of the Farmers State Bank of Camp Point (Camp Point), pending further order of the Court.  Quinn subsequently filed a Motion for Preliminary Injunction and a Memorandum of Law in Support of her Motion.  Quinn argued that the class (consisting of all Illini Corporation’s shareholders as of April 16, 1998, except for Ida R. Noll) would be irreparably harmed if the Camp Point merger closed prior to a determination on the merits of her suit.  Illini Corporation filed extensive briefs in opposition to the Motion for Preliminary Injunction, and the Court heard the Motion on July 1, 1999.  The Court entered a written Order on July 13, 1999, denying the Motion for Preliminary Injunction.

Quinn’s counsel filed a Motion for Reconsideration of the Orders denying Quinn’s Motion for Summary Judgment and Motion for Preliminary Injunction.  Illini Corporation and ISTC filed a Motion for Summary Judgment on August 25, 1999.  At a hearing held on October 18, 1999, the Court granted Illini Corporation and ISTC’s Motion for Summary Judgment and denied Quinn’s Motion for Reconsideration.  An Order was subsequently entered on January 12, 2000.

Quinn’s counsel announced on October 18, 1999, the intention to petition the Court for an order directing Illini Corporation and ISTC to pay Quinn’s attorneys’ fees pursuant to the attorney fee provision of the Rights Agreement.  Quinn’s fee petition was heard and denied.  Quinn  filed a pending appeal as to all adverse orders.  On July 31, 2000, the Appellate Court issued an order reversing the trial court’s order granting summary judgment to Illini Corporation and remanding the case for trial.  The Appellate Court found that genuine issue of material fact remained concerning whether the Illini Corporation board of directors acted in good faith (1) in determining on April 30, 1998 that Ida Noll’s acquisition of shares was inadvertent and (2) in amending the agreement on June 30, 1998.  The Appellate Court also reversed the trial court’s order denying Quinn’s request for costs, expenses and attorneys fees, finding that the fee provision of the Rights Agreement did not require one who brought an action to enforce the agreement to prevail in that action in order to recover fees.

The case has been remanded to the trial court. Upon Quinn’s motion the trial court permitted Quinn to add Mrs. Noll as a party to the action.  Quinn subsequently filed a motion to compel an additional deposition of Burnard K. McHone, President, Illini Corporation, with respect to a certain Stock Purchase Agreement pursuant to which shares owned by Mrs. Noll’s family were redeemed by Illini Corporation.  The trial court denied the motion to compel finding that Quinn failed to show any basis that the Stock Purchase Agreement was relevant to her claims in the lawsuit.  Defendants filed a motion to vacate the trial court’s order to add Mrs. Noll as a party to the action.  The trial court vacated the prior order in December 2001.  Quinn moved for recusal of the presiding judge on the grounds that the judge is allegedly prejudiced or biased against her.  The motion was denied.  Illini thereafter moved for removal of plaintiff’s counsel on the basis that counsel had a conflict of interest arising from his cooperation in the litigation with a non-class member and her counsel.  The court removed the counsel for the plaintiff class and appointed new counsel to represent the class.  The removed counsel filed a motion for reconsideration.  The motion was denied.  Thereafter, the remaining class counsel, William Moran, filed a Motion For Direction.  This Motion asserted that differences had arisen between Moran and the class representative, Mary K. Quinn, concerning the handling of the case.  Among other assertions, the Motion alleged that the removed class counsel James Ackerman, continued to advise Ms. Quinn regarding all issues related to the suit.  At a hearing on the Motion For Direction on January 15, 2003, the trial court removed Mary Quinn as class representative.

On March 7, 2003, the trial court appointed Richard G. Austin as successor class representative.  Illini Corporation is negotiating for a settlement of the suit with Mr. Austin and class counsel William Moran.  Mary Quinn has filed a motion to opt out of the class which Illini Corporation opposes.

 

Mary Quinn v. Ida R. Noll, Burnard McHone, et al.

Sangamon County Case No. 01 CH 377

 

On August 14, 2001, Mary Quinn filed a four count complaint against Ida Noll and several present and former members of Illini Corporation’s Board of Directors in the Seventh Judicial Circuit, Sangamon County, Illinois.  The named defendants in the action are Ida Noll, Burnard McHone, William Etherton, Ronald Thunman, Thomas Black, John Pickrell, Kenneth Deverman, Larry Curtin, Robert Olson and William McCubbin. Quinn purports to allege derivative causes of action arising out of Illini entering into a Stock Purchase Agreement with Ida R. Noll and others.  Quinn asserts that the defendants caused Illini to

 

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breach the Shareholder Rights Agreement, that the directors breached their fiduciary duty, and usurped a business opportunity of the Shareholders.  Quinn also seeks rescission of the Stock Purchase Agreement.  The directors named as defendants in the action are represented by the law firm of Samuels, Miller, Schreoder, Jackson & Sly.  Attorney James Jackson of the Samuels Miller firm moved on behalf of the defendant directors to dismiss the complaint.  The motion was granted in part and denied in part.  Quinn thereafter moved to consolidate this suit with her previously filed class action suit.  Illini intervened for the purposes of opposing consolidation.  The court denied the motion to consolidate on July 25, 2002, and ordered the derivative suit stayed pending completion of the trial in the class action suit (98 CH 240) or further order.

Quinn seeks recovery of her attorney’s fees in the derivative action pursuant to the attorney fee provision of the Shareholder Rights Agreement.

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