CONFIDENTIAL
HF FINANCIAL CORP.
QUESTIONNAIRE FOR STOCKHOLDER NOMINATIONS
This Questionnaire is designed to furnish to HF Financial Corp. (together with its subsidiaries and affiliated companies, the "Company") certain information about the background and qualifications of stockholder nominees and nominating stockholders required under the Company’s Bylaws.
The questions below should be given careful consideration so that all material information is reported. Each descriptive response must include all information sought by the question. Unless stated otherwise, answers should be given as of the date you complete this Questionnaire. Please feel free to attached additional sheets as needed.
Please complete and sign one copy of this Questionnaire and return it as soon as practicable, and in any event not later than August 19, 2011, to Pamela F. Russo, Secretary of the Company.
If at any time after returning this Questionnaire, and prior to the decision of the Company’s Corporate Governance and Nominating Committee on such nomination, any of your answers are modified as a result of changed facts, please so advise.
Nominee: John W. Palmer
Nominating Stockholder: Richard J. Lashley
Preferred Contact regarding this Nomination:
Name: Richard J. Lashley
Phone: 973-360-1666
Email: bankfund@aol.com
I. Questions for the Nominee
POSITIONS / EXPERIENCE
1. Name, Address and Birthdate. Please state your name as you would like it to appear in the Company’s filings, your home address and your date of birth.
Answer: John W Palmer
4216 Richwood Ct
Naperville, Il 60564
2. Biographical Information. Please provide a biography which describes your business experience during the last five years, including: principal organizations and employment; the name and principal business of any corporation or other organization in which such occupations and employment were carried on; and whether such corporation or organization is an "affiliate" (as defined below) of the Company. The term "affiliate" of the Company or person "affiliated" with the Company includes any of the following persons: i) any director or officer of the Company; ii) any person that directly or indirectly controls, or is controlled by, or is under common control with, the Company; and iii) any person performing general management or advisory services for the Company.
Mr. Palmer is the co-founder of PL Capital, LLC, an investment firm specializing in the banking industry that was formed in 1995. PL Capital focuses on publicly traded banks and thrifts with market capitalizations ranging from $20 million to $5 billion. Since January, 1996, Mr. Palmer has been a principal, co-owner and managing member of PL Capital, LLC. Prior to forming PL Capital, LLC, Mr. Palmer worked at KPMG Peat Marwick from 1983 to 1996. Mr. Palmer is a former Certified Public Accountant. None of the above referenced entities are affiliates of the Company.
Mr. Palmer currently serves on the board of CFS Bancorp, Inc. which is the parent holding company of Citizens Financial Bank, a $1.1 billion asset federal savings bank which operates 23 offices throughout adjoining markets in Chicago’s Southland and Northwest Indiana. Mr. Palmer is the former Chairman of the Board of Directors of Security Financial Bancorp, Inc., a publicly-traded $200 million in assets thrift located in St. John, Indiana which was sold in 2003. Mr. Palmer also previously served as a director of Franklin Bancorp and its wholly owned subsidiary Franklin Bank, NA, a $700 million in assets commercial bank located in Southfield, Michigan, where he also served on the audit, compensation, and loan committees of the board. Mr. Palmer also served as Chairman of the strategic planning committee of Franklin Bancorp. He formerly served on the Board of Directors of Clever Ideas, Inc., a privately-held specialty finance company located in Chicago, Illinois from 1998 to 2006.
3. Relationships with Other Companies. Please describe all executive or board positions with publicly traded companies or investment companies registered pursuant to the Investment Company Act of 1940, as amended, either current, prior, or to which to you have been selected to serve in the future. Please include your dates of service. Please note, the five-year look back limitation is not applicable to this request.
Answer: CFS Bancorp, Inc. (Director since 2010)
Security Financial Bancorp, Inc. (Director: 2000-2003)
Franklin Bancorp, Inc. (Director: 2001-2004)
4. Family Relationships. Please state the nature of any family relationship (by blood, marriage or adoption, not more remote than first cousin) between you and any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer.
Answer: None.
5. Risk Assessment Skills. Please describe any specific risk assessment experience, qualifications or skills you have.
Answer: See biography.
6. Arrangements or Understandings Regarding Election. Please describe any arrangement or understanding between (a) you and (b) any other person or entity (except a director or an officer of the Company acting solely in that capacity) pursuant to which you were or will be selected as an officer, a director, or a nominee for director. Name all persons involved in such arrangement or understanding.
Answer: None. However, please note that I have agreements with the limited partnerships and companies managed and advised by PL Capital, LLC, Goodbody/PL Capital, LLC and PL Capital Advisors, LLC, whereby I will be indemnified by the limited partnerships and companies for any liabilities I may incur in connection with the solicitation of proxies for use at the 2011 Annual Meeting of Shareholders of the Company. See the nomination letter from Richard Lashley and PL Capital’s Schedule 13D filings with the SEC, which are incorporated herein by reference, for detailed information on the referenced entities.
STOCK OWNERSHIP
7. Beneficial Ownership. How many shares of Company common stock did you "beneficially own" (as defined below) as of August 1, 2011?
Please include shares underlying both exercisable and unexercisable stock option awards, restricted stock awards, warrants to purchase stock, and stock appreciation rights, that you hold through the Company's stock ownership plans and shares underlying unexercised options granted to you by the Company. If applicable, please indicate with whom you share either voting or investment power or both, and briefly describe the contract, relationship, arrangement, understanding or other basis on which your voting or investment power is shared. Please also note the number of shares pledged as security, if any.
The terms "beneficial" and "beneficially" as applied to an interest in securities describe any interest in the securities in question which entitles you to any of the rights or benefits of ownership, even though you are not the holder or owner of record. Interests in securities held in an estate, trust, or partnership, or by a nominee, are examples of beneficial interests. If you have any contract, understanding, relationship, agreement, or other arrangement with any other person with respect to securities, pursuant to which you obtain benefits substantially equivalent to the ownership of securities, you should consider such securities as beneficially owned by you. For purposes of this questionnaire, you will be regarded as having benefits substantially equivalent to ownership of securities if:
| | (1) | directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise you have or share |
| | (a) | voting power, which includes the power to vote, or to direct the voting of, the security; or |
| | (b) | investment power, which includes the power to dispose of, or to direct the disposition of, the security; |
| | (2) | you have the right to acquire beneficial ownership of the security, including but not limited to any right to acquire |
| | (a) | through the exercise of any option, warrant, or right; |
| | (b) | through the conversion of a security; |
| | (c) | pursuant to a power to revoke a trust, discretionary account, or similar arrangement; or |
| | (d) | pursuant to the automatic termination of a trust, discretionary account, or similar arrangement; or |
| | (3) | you can apply income from securities to meet expenses which you otherwise would meet from other sources. |
You are also considered to be the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement, or any other contract, arrangement, or device with the purpose or effect of divesting yourself of beneficial ownership of such security or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended.
The SEC has taken the view that a person may be regarded as the beneficial owner of securities held in the name of the person's spouse, minor children, or other relatives of the person or the person's spouse who share the person's home, if such relationship results in such person obtaining benefits substantially equivalent to ownership of such securities.
Answer: 567,852 shares
8. Rights to Acquire Beneficial Ownership. If any security was included in your responses to this section because the beneficial owner (as defined above) had the right to acquire beneficial ownership (whether upon the automatic termination of or pursuant to the power to revoke a trust, discretionary account or similar arrangement), please set forth the affected number of securities and the details concerning the right to acquire beneficial ownership, including exact dates when the right first comes into existence and the number of shares to which the right relates.
Answer: None
9. Disclaiming Beneficial Ownership. As to any shares included in your responses to this section, if you wish expressly to disclaim beneficial ownership (as defined above) for any purpose, please indicate the number of shares and the reason for disclaiming beneficial ownership, including the name of the actual beneficial owner and the relationship of such person to you.
Answer: None.
CHANGE IN CONTROL OF CORPORATION
10. Group 5% Holders. Do you know of any person or "group" who or which is the "beneficial" owner (as defined in Question 7) of more than 5% of the Company's outstanding Common Stock? A "group" for this purpose is any partnership, limited partnership, syndicate or other group, whether formally organized or not, formed for the purpose of acquiring, holding, voting or disposing of Common Stock of the Company.
Answer: Yes [X ] No [ ] (If you answered "yes", please describe below).
The requested information is as follows (please include sufficient cross-references regarding any shares which are beneficially owned by more than one person and include details concerning any right to acquire beneficial ownership):
Name of beneficial owner and relationship to you | | Number of shares beneficially owned | | Nature of beneficial ownership (give full details) |
PL Capital Group—I am a Member of the PL Capital Group and a Nominee on their slate of Directors for the 2011 Annual Meeting of HF Financial | | 572,352 | | See the nomination letter from Richard Lashley and PL Capital’s Schedule 13D filings with the SEC, which are incorporated herein by reference. |
11. Change in Control. Do you know of any arrangements, including any pledge of securities of the Company, which resulted in the last fiscal year, or may result in the future, in a change in control of the Company? If the answer is "yes," please describe such arrangement(s).
Answer: No.
12. Voting Trusts. Do you know of any arrangement whereby more than 5% of the shares of the outstanding Common Stock or other class of voting security of the Company is held or is to be held subject to any voting trust or similar agreement? If the answer is "yes," please describe such arrangement, giving the names and addresses of the voting trustees and outlining briefly their voting rights and other powers under the trust agreement.
LEGAL PROCEEDINGS
13. Legal Proceedings.
a) Have any of the following events occurred within the past ten years? If the answer is "yes," please specify the subsection(s) of this question to which the response relates and describe such event or events, giving dates, the name of the court and its jurisdiction, and other pertinent information.
(1) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against you, or a receiver, fiscal agent or similar officer was appointed by a court for your business or property, or any partnership in which you were a general partner at or within two years before the time of such filing or appointment, or any corporation or business association of which you were an executive officer at or within two years before the time of such filing or appointment.
(2) You were convicted in a criminal proceeding (excluding traffic violations and other minor offenses) or are a named subject of a criminal proceeding that is presently pending.
(3) You were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court enjoining you from, or otherwise limiting your involvement in, any of the following activities:
(a) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission (the "CFTC"), or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(b) engaging in any type of business practice; or
(c) engaging in any activity in connection with the purchase or sale of any security or commodity, or in connection with any violation of federal or state securities laws or federal commodities laws or regulation.
(4) You were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, barring, suspending or otherwise limiting for more than 60 days your right to engage in any activity described in subparagraph (3) (a) above, or to be associated with persons engaged in any such activity.
(5) You were found by a court, the SEC, or by the CFTC to have violated any federal or state securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated.
(6) You were convicted of fraud.
(7) You were the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated, relating to any of the following:
(a) an alleged violation of any federal or state securities or commodities law or regulation.
(b) an alleged violation of any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order.
(c) an alleged violation of any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity.
(8) You were the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
(9) Any person alleged in a lawsuit that you breached a fiduciary duty, had a conflict of interest, or violated any federal or state securities or commodities law or regulation, or any criminal indictment or criminal proceeding (excluding traffic violations and other minor offenses) has been filed against any entity of which you were then an officer or director.
(10) Any other pending, contemplated, or threatened legal proceeding that the Company should evaluate in order to assess its materiality.
Answer: None.
b) If any event listed in (a) above has occurred within the past ten years, but you believe that such event is not material to an evaluation of your ability or integrity, please state the reasons for your belief.
Answer: N/A
14. Proceedings Adverse to the Company. Describe briefly any legal proceedings to which you or any "associate" of yours (as defined below) is a party adverse to the Company or has or had an interest adverse to the Company, including the name of the court or agency in which the proceedings are or were pending, the date instituted, the principal parties thereto, a description of the factual basis alleged to underlie the proceeding and the relief sought.
Each of the following is an "associate" of yours: (a) any corporation or organization (other than the Company) of which you are an executive officer or partner or are, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities (i.e., any stock
or similar security, or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security, or any such warrant or right), (b) any trust or other estate in which you have a substantial beneficial interest, or as to which you serve as trustee, executor or in a similar fiduciary capacity, and (c) your spouse or any relative of yours or your spouse, who shares your home.
Answer: None.
COMPENSATION COMMITTEE INTERLOCKS
15. Interlocks. At any time since July 1, 2010, have you served as a:
a) member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the compensation committee of the Company;
b) director of another entity, one of whose executive officers served on the compensation committee of the Company; or
c) member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of the Company?
If the answer is "yes," please set forth below the name of the other entity, your position(s) with such entity, the name of the other person(s) described above, and the position(s) of each such person with such other entity.
Answer: No.
INDEPENDENCE OF THE NOMINEE
16. Transactions with the Company. Please briefly describe any proposed or actual transactions or series of similar transactions since July 1, 2010, involving more than $120,000, to which the Company was or is to be a participant, in which you or a "family member" (as defined below) have had or will have an interest. Include indebtedness to the Company (other than amounts either due to the Company for purchases of goods and services subject to usual trade terms, for business travel or expense payments, or other transactions in the ordinary course of business).
If applicable, please provide the following information: your interest in the transactions (such as your position in the entity conducting the transaction), the approximate dollar value of the amount involved in the transaction, and the approximate dollar value of your interest in the transaction, regardless of your actual profit or loss. If indebtedness, please describe such indebtedness in detail.
A "family member" means your spouse, parents, children and siblings, whether by blood, marriage or adoption, or any person (other than a tenant or employee) sharing your household.
Answer: None.
17. Compensation from the Nominating Stockholder. Please describe all direct and indirect compensation and other material paid or payable monetary agreements, arrangements and understandings during the past three (3) years by the Nominating Stockholder to you and your affiliates and associates.
For purposes of this Questionnaire, the “Nominating Stockholder” means the person or entity listed on the second page of this Questionnaire as the Nominating Stockholder, along with his, her, or its affiliates, associates and others acting in concert with him, her, or it for purposes of this nomination.
Answer: Mr. Lashley and I are both 50% owners of PL Capital, LLC; Goodbody/PL Capital, LLC and PL Capital Advisors, LLC. Those entities are entitled to certain profits and management fees from the LPs they manage, as more fully described in Mr. Lashley’s nomination letter and PL Capital’s Schedule 13D filings, which are incorporated herein by reference. There are no other arrangements.
18. Transactions with the Nominating Stockholder. Please briefly describe any proposed or actual transactions or series of similar transactions since July 1, 2010, involving more than $120,000, to which Nominating Stockholder was or is to be a participant, in which you or a "family member" (as defined above) have had or will have an interest.
If applicable, please provide the following information: your interest in the transactions (such as your position in the entity conducting the transaction), the approximate dollar value of the amount involved in the transaction, and the approximate dollar value of your interest in the transaction, regardless of your actual profit or loss. If indebtedness, please describe such indebtedness in detail.
Answer: None except as noted in item 17 above.
19. Other Material Relationships with the Nominating Stockholder. Please describe any positions held by you and your affiliates with the Nominating Stockholder during the past five (5) years and any other material relationships between the Nominating Stockholder, you and your affiliates that have not yet been described.
Answer: None except as noted in item 17 and Mr. Lashley’s nomination letter.
20. Competition. To your knowledge, are you or were you at any time since July 1, 2010 a director or officer of any company that competes with, supplies to, or is a customer of, the Company?
Answer: No.
21. Relationship with Independent Auditor. Have you, or has one of your "family members" (as defined above), had any actual or proposed "business relationship" with the Company's independent auditor, Eide Bailly LLP, or any "covered person" (as defined below) within Eide Bailly LLP, or have you provided services to Eide Bailly LLP, during the last fiscal year? If so, please describe the relationship and any fees or revenues received or receivable.
A "business relationship" is broadly defined as formal or informal arrangement with any third party (clients and nonclients of the firm) for services or products provided to the firm by an individual or company such as a vendor, consultant, facilitator, sub-contractor, independent contractor, licensor, licensee, reseller, or distributor. This includes arrangements involving alliances, joint ventures, joint marketing, co-ventures, sponsorships, co-marketing, cooperative arrangements, investing, lending, or borrowing monies or acting as a lessor or lessee. Business relationships do not include relationships between Eide Bailly LLP and its clients for the firm's performance of professional services to that client.
The term "covered person" means the following: partners, principals, shareholders, and employees of an accounting firm: the audit engagement team, the chain of command (all persons who supervise or have direct management responsibility for the audit, including at all successively senior levels through the accounting firms' chief executive, who evaluate the performance or recommend the compensation of the audit engagement partner or who provide quality control or other oversight of the audit), any other partner, principal, shareholder or managerial employee who has provided 10 or more hours of non-audit services to the Company during the past two years, or expects to provide 10 or more hours of non-audit services on a recurring basis, and any other partner, principal, or shareholder from an office (a distinct sub-group whether distinguished along geographic or practice lines) of the independent auditor in which the lead engagement partner primarily practices in connection with the audit.
Answer: None.
INDEPENDENCE UNDER NASDAQ RULES
22. Have you, or any member of your family, been an employee of the Company or any of its subsidiaries during the past three years? Please note that "family member" is defined above.
Answer: [ ] Yes [ X ] No
23. During any period of twelve consecutive months within the past three fiscal years, did you, or did any of your family members, accept any compensation from the Company or any of its subsidiaries in excess of $120,000 (excluding compensation for board or committee service, benefits under a tax-qualified retirement plan, or non-discretionary compensation, and compensation paid to a family member who is a non-executive employee of the Company)?
Answer: [ ] Yes [ X] No
24. Is any family member currently serving as an executive officer of the Company or any of its subsidiaries, or have any of your family members been serving in such capacity during the past three years?
Answer: [ ] Yes [ X] No
25. Are you, or are any of your family members, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments (other than payments arising solely from investments in the Company's securities, or payments under non-discretionary charitable contribution matching programs) for property or services in the current or any of the past three fiscal years that exceed 5% of the other company's consolidated gross revenues for that year, or $200,000, whichever is more?
Answer: [ ] Yes [ X ] No
26. Are you, or are any of your family members, employed as an executive officer of another entity where at any time during the past three years any of the Company's executive officers served on the compensation committee of the other entity?
Answer: [ ] Yes [ X ] No
27. Are you, or are any of your family members currently a partner of the Company's independent auditor, or have you or any of your family members worked on the Company's audit as a partner or of the Company's independent auditors at any time during the past three years?
Answer: [ ] Yes [ X ] No
28. Are you now or have you been at any time a member or employee of, or counsel to, a law firm which the Company has retained during the Company's last fiscal year, or that the Company proposes to retain during its current fiscal year?
Answer: [ ] Yes [ X ] No (If yes, supply details)
29. Are you now or have you been at any time a partner or executive officer of any investment banking firm that has performed services for the Company during the Company's last fiscal year, or that the Company proposes to have perform services during its current fiscal year?
Answer: [ ] Yes [ X ] No (If yes, supply details)
30. Do you have any other relationships (i.e., as a partner, shareholder or officer of an organization that has any commercial, industrial, banking, consulting, legal, accounting, charitable, familial or any other relationships with the Company or any of its subsidiaries) that could be seen as interfering with your exercise of independent judgment in carrying out the responsibilities as a director of the Company?
Answer: [ ] Yes [ X] No
If you answered "yes" to any of the questions above, please explain below:
COMPENSATION COMMITTEE INDEPENDENCE
31. Are you a former employee (at any time) of the Company receiving compensation from the Company for past services (other than tax-qualified retirement plan benefits)?
Answer: [ ] Yes [ X ] No
32. Have you at any time in the past been an officer of the Company?
Answer: [ ] Yes [ X ] No
33. Do you receive or have you received from the Company, in the Company's current or previous taxable year, any direct or indirect payments, or is the Company now contractually obligated to pay you directly or indirectly, for goods or services in any capacity other than as a director?
Answer: [ ] Yes [ X ] No
34. Does the Company make, has the Company made in the Company's current or previous taxable year, or is the Company now contractually obligated to make, any payments for goods or services to any business, professional or other entity that (A) employs you, (B) to which you render any substantial services, or (C) in which you have at least a 5% ownership interest?
Answer: [ ] Yes [ X ] No
If you answered "yes" to any of the questions above, please explain below:
AUDIT COMMITTEE INDEPENDENCE
35. Are you able to read and understand fundamental financial statements, including a company's balance sheet, income statement, and cash flow statement?
Answer: [ X ] Yes [ ] No
36. Have you participated in the preparation of the financial statements of the Company at any time during the past three years?
Answer: [ ] Yes [ X ] No
37. Have you accepted, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries, other than fees for services rendered as a member of the Audit Committee, the board of directors or any other board committee? (Note: You do not need to report any compensation paid to you under a retirement plan, including deferred compensation, for prior service to the Company so long as that compensation is not contingent in any way on continued service).
Answer: [ ] Yes [ X ] No
38. Are you an affiliated person of the Company or any of its subsidiaries, other than as a director of the Company? (Note: If you are not an executive officer or holder of more than 10% of any class of the Company's voting securities, you should check "no").
Answer: [ ] Yes [ X ] No
If you answered "yes" to any of the questions above, please explain below:
I have prior business and public accounting experience which has enabled me to understand financial statements.
AUDIT COMMITTEE FINANCIAL EXPERTISE
39. Financial Expertise Under SEC Standards. Please indicate whether you satisfy the following criteria:
a) Do you have an understanding of generally accepted accounting principles and financial statements?
Answer: [ X] Yes [ ] No
b) Do you have the ability to assess the general application of such principles in connection with accounting for estimates, accruals and reserves?
Answer: [ X] Yes [ ] No
c) Do you have experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of accounting issues that can reasonably be expected to be raised by the Company's financial statements, or experience actively supervising one or more persons engaged in such activities?
Answer: [ X] Yes [ ] No
d) Do you have an understanding of internal control over financial reporting?
Answer: [ X] Yes [ ] No
e) Do you have an understanding of audit committee functions?
Answer: [ X] Yes [ ] No
If you answered "yes" to the questions above, please complete the following questions as applicable:
40. I acquired the above attributes through the following:
a) Education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions.
Answer: [ X] Yes [ ] No
b) Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions.
Answer: [ X] Yes [ ] No
c) Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements.
Answer: [ X] Yes [ ] No
d) Please describe any other relevant experience:
Answer:
Prior to co-founding PL Capital Mr. Palmer was a Managing Director in KPMG Peat Marwick’s Corporate Finance Group, where he specialized in bank mergers and acquisitions. Prior to joining the Corporate Finance Group, Mr. Palmer was a CPA in KPMG’s bank auditing practice, where he specialized in the audits of banks and thrifts based in the Midwest from 1983 to 1994. He has served on the audit committee of 3 different publicly traded banks since 2000. He is a CPA (status inactive).
41. Financial Expertise under NASDAQ Standards. Do you have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in your financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities?
Answer: [ X] Yes [ ] No
If the answer is "Yes," please describe your education, experience or other factors underlying this answer.
See answer to item 40 (d) above.
The answers I have supplied to the questions in this questionnaire are true, complete, and correct to the best of my knowledge after reasonable inquiry. I will promptly notify Pam Russo, Secretary of the Company, if any event of which I become aware should occur between now and the 2011 Annual Meeting of Stockholders that would cause my answer to any question to change.
Dated: August 16, 2011
| | | | NOMINEE | |
| | | | | |
| | | | /s/ John W Palmer | |
| | | | Signature | |
| | | | John W Palmer (Print Name and Title) | |
| | | | | |
| | | | Home Address: 4216 Richwood Ct
Naperville, Il 60564 | |
II. Questions for the Nominating Stockholder
STOCK OWNERSHIP
1. Beneficial Ownership. How many shares of Company common stock did you "beneficially own" (as defined below) as of August 1, 2011?
Please include shares underlying both exercisable and unexercisable stock option awards, restricted stock awards, warrants to purchase stock, and stock appreciation rights, that you hold through the Company's stock ownership plans and shares underlying unexercised options granted to you by the Company. If applicable, please indicate with whom you share either voting or investment power or both, and briefly describe the contract, relationship, arrangement, understanding or other basis on which your voting or investment power is shared. Please also note the number of shares pledged as security, if any.
The terms "beneficial" and "beneficially" as applied to an interest in securities describe any interest in the securities in question which entitles you to any of the rights or benefits of ownership, even though you are not the holder or owner of record. Interests in securities held in an estate, trust, or partnership, or by a nominee, are examples of beneficial interests. If you have any contract, understanding, relationship, agreement, or other arrangement with any other person with respect to securities, pursuant to which you obtain benefits substantially equivalent to the ownership of securities, you should consider such securities as beneficially owned by you. For purposes of this questionnaire, you will be regarded as having benefits substantially equivalent to ownership of securities if:
| | (1) | directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise you have or share |
| | (a) | voting power, which includes the power to vote, or to direct the voting of, the security; or |
| | (b) | investment power, which includes the power to dispose of, or to direct the disposition of, the security; |
| | (2) | you have the right to acquire beneficial ownership of the security, including but not limited to any right to acquire |
| | (a) | through the exercise of any option, warrant, or right; |
| | (b) | through the conversion of a security; |
| | (c) | pursuant to a power to revoke a trust, discretionary account, or similar arrangement; or |
| | (d) | pursuant to the automatic termination of a trust, discretionary account, or similar arrangement; or |
| | (3) | you can apply income from securities to meet expenses which you otherwise would meet from other sources. |
You are also considered to be the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement, or any other contract, arrangement, or device with the purpose or effect of divesting yourself of beneficial ownership of such security or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended.
The SEC has taken the view that a person may be regarded as the beneficial owner of securities held in the name of the person's spouse, minor children, or other relatives of the person or the person's spouse who share the person's home, if such relationship results in such person obtaining benefits substantially equivalent to ownership of such securities.
Answer: 572,252 shares
2. Rights to Acquire Beneficial Ownership. If any security was included in your responses to this section because the beneficial owner (as defined above) had the right to acquire beneficial ownership (whether upon the automatic termination of or pursuant to the power to revoke a trust, discretionary account or similar arrangement), please set forth the affected number of securities and the details concerning the right to acquire beneficial ownership, including exact dates when the right first comes into existence and the number of shares to which the right relates.
Answer: N/A
3. Disclaiming Beneficial Ownership. As to any shares included in your responses to this section, if you wish expressly to disclaim beneficial ownership (as defined above) for any purpose, please indicate the number of shares and the reason for disclaiming beneficial ownership, including the name of the actual beneficial owner and the relationship of such person to you.
Answer: N/A
4. Rights to Vote Additional Shares. If you have the right to vote shares of the Company which are not set forth above, pursuant to any proxy, contract, arrangement, understanding or relationship, please set forth the affected number of securities and the details concerning the right to vote such additional shares, including the circumstances in which such right applies and the number of shares to which the right relates.
Answer: N/A
The answers I have supplied to the questions in this questionnaire are true, complete, and correct to the best of my knowledge after reasonable inquiry. I will promptly notify Pam Russo, Secretary of the Company, if any event of which I become aware should occur between now and the 2011 Annual Meeting of Stockholders that would cause my answer to any question to change.
Dated: August 17, 2011
| | | | NOMINATING STOCKHOLDER | |
| | | | | |
| | | | /s/ Richard J. Lashley | |
| | | | Richard J. Lashley | |
| | | | | |
| | | | Address:
2 Trinity Place
Warren, NJ 07059 | |
Questionnaire prepared by Briggs and Morgan, Professional Association
JOHN W. PALMER
Mr. Palmer is the co-founder of PL Capital, LLC, an investment firm specializing in the banking industry. PL Capital focuses on publicly traded banks and thrifts with market capitalizations ranging from $20 million to $5 billion.
Prior to co-founding PL Capital in 1996, Mr. Palmer was employed by KPMG LLP, an international public accounting firm, from 1983 to 1996. While at KPMG, Mr. Palmer specialized as an auditor and a strategic advisor to companies in the commercial banking, consumer finance, thrift, mortgage banking and discount brokerage industries, serving public and privately held clients ranging in size from $25 million to $25 billion. He has extensive involvement in merger and acquisition transactions, public and private securities offerings, and filings with the Securities and Exchange Commission (SEC) and regulatory authorities, including offerings to convert mutual thrift organizations to stock form thrifts. He has advised numerous banking organizations in strategic decisions regarding acquisition alternatives, mergers of equals and opportunities to enhance or expand existing lines of business. In 1994, Mr. Palmer was promoted to the position of Director, KPMG Financial Services - Capital Strategies Group, a national corporate finance practice providing merger and acquisition advisory services to thrifts, banks, mortgage companies and other financial services companies. In this capacity, Mr. Palmer developed expertise in financial industry mergers and acquisitions, thrift mutual to stock conversions, valuation, capital restructurings, strategic planning and asset purchases and divestitures. He has been involved in numerous mergers and acquisitions with transaction values of up to $600 million.
Mr. Palmer also instructed financial institution classes for KPMG and spoke at numerous national and regional banking industry conferences. Mr. Palmer has previously been designated as an “audit committee financial expert” due to his prior experience, understanding of generally accepted accounting principles and financial statements; the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; experience preparing, auditing, analyzing and evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised in financial statements of publicly traded banks and thrifts; an understanding of internal control over financial reporting; and an understanding of audit committee functions. Mr. Palmer acquired these attributes through his education and experience as a certified public accountant. Mr. Palmer has served on the audit committee of a public company (Franklin Bancorp, Inc.) where he was designated as an “audit committee financial expert.”
Mr. Palmer currently serves on the board of CFS Bancorp, Inc. which is the parent holding company of Citizens Financial Bank, a $1.1 billion asset federal savings bank which operates 23 offices throughout adjoining markets in Chicago’s Southland and Northwest Indiana. Mr. Palmer is the former Chairman of the Board of Directors of Security Financial Bancorp, Inc., a publicly-traded $200 million in assets thrift located in St. John, Indiana which was sold in 2003. Mr. Palmer also previously served as a director of Franklin Bancorp and its wholly owned subsidiary Franklin Bank, NA, a $700 million in assets commercial bank located in Southfield, Michigan, where he also served on the audit, compensation, and loan committees of the board. Mr. Palmer also served as Chairman of the strategic planning committee of Franklin Bancorp. He formerly served on the Board of Directors of Clever Ideas, Inc., a privately-held specialty finance company located in Chicago, Illinois from 1998 to 2006.
Mr. Palmer is a past member of the Board of Directors for the Victory Gardens Theater in Chicago, where he served as President of the Board for four years. In his capacity as President, Mr. Palmer oversaw the purchase of the Biograph Theater in Chicago and its re-development into a state of the art live performance theater. Mr. Palmer also oversaw the Capital Campaign for the renovation of the theater, which raised $11 million.
Additionally, he has served as treasurer for the River Run Club, a community swim and tennis club. He previously served as a member of the Founders Society of the Detroit Institute of Arts and as Chairman of the Professional Outreach Program at the art institute and is a past member of the Membership Committee of the Board of Trustees. He is the past secretary and treasurer of the Intermediate’s Council for the Detroit Athletic Club. Additionally, he has served as Chairman of the Walsh College Fundraising Drive.
Mr. Palmer obtained his Bachelor of Accounting Degree from Walsh College in 1983. He formerly practiced as a Certified Public Accountant in Michigan and Illinois and is currently a member of the American Institute of Certified Public Accountants and the Illinois CPA Society. Mr. Palmer, age 51, is married, has three children, and resides in Naperville, Illinois.
HF FINANCIAL CORP.
REPRESENTATION AND AGREEMENT
THIS REPRESENTATION AND AGREEMENT (this "Agreement") is entered into this 17th day of August, 2011, by Kevin V. Schieffer, a resident of the State of South Dakota ("Candidate").
RECITALS
A. The Candidate has been named by Richard Lashley as a potential nominee for election to the board of directors of HF Financial Corp. (the “Company”).
B. Under Section 6(c)(iv) of the Company’s Amended and Restated Bylaws, the Candidate must, among other requirements, deliver this written representation and agreement to be considered as a candidate for election to the Company’s board of directors.
REPRESENTATIONS OF THE CANDIDATE
The Candidate hereby represents the following:
| 1. | The Candidate is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such Candidate, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation in writing, or any Voting Commitment that could limit or interfere with such Candidate’s ability to comply, if elected as a director of the Corporation, with such Candidate’s fiduciary duties under applicable law. |
| 2. | The Candidate is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director of the Company that has not been disclosed herein. |
| 3. | The Candidate will comply with any stock ownership guidelines that may be in effect for Company directors from time to time. |
| 4. | In such Candidate’s individual capacity and on behalf of any person or entity on whose behalf the director nomination is being made, the Candidate would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock trading policies and guidelines of the Corporation. |
| 5. | Any disclosures required to be made pursuant to this Agreement are attached hereto. |
| | | | Address:
| 5704 Prairie View CourtSioux Falls, SD 57108 | |
CONFIDENTIAL
HF FINANCIAL CORP.
QUESTIONNAIRE FOR STOCKHOLDER NOMINATIONS
This Questionnaire is designed to furnish to HF Financial Corp. (together with its subsidiaries and affiliated companies, the "Company") certain information about the background and qualifications of stockholder nominees and nominating stockholders required under the Company’s Bylaws.
The questions below should be given careful consideration so that all material information is reported. Each descriptive response must include all information sought by the question. Unless stated otherwise, answers should be given as of the date you complete this Questionnaire. Please feel free to attached additional sheets as needed.
Please complete and sign one copy of this Questionnaire and return it as soon as practicable, and in any event not later than August 19, 2011, to Pamela F. Russo, Secretary of the Company.
If at any time after returning this Questionnaire, and prior to the decision of the Company’s Corporate Governance and Nominating Committee on such nomination, any of your answers are modified as a result of changed facts, please so advise.
Nominee: ______Kevin V Schieffer_____________________________
Nominating Stockholder: _Richard J Lashley_____________________
Preferred Contact regarding this Nomination:
Name: _Richard J Lashley_____________________________________
Phone: _973-360-1666_____________________________________
Email: _bankfund@aol.com_____________________________________
I. Questions for the Nominee
POSITIONS / EXPERIENCE
1. Name, Address and Birthdate. Please state your name as you would like it to appear in the Company’s filings, your home address and your date of birth.
Answer: Kevin V. Schieffer
5704 Prairie View Court
Sioux Falls, SD 57108
DOB: 26Feb1958
2. Biographical Information. Please provide a biography which describes your business experience during the last five years, including: principal organizations and employment; the name and principal business of any corporation or other organization in which such occupations and employment were carried on; and whether such corporation or organization is an "affiliate" (as defined below) of the Company.
The term "affiliate" of the Company or person "affiliated" with the Company includes any of the following persons: i) any director or officer of the Company; ii) any person that directly or indirectly controls, or is controlled by, or is under common control with, the Company; and iii) any person performing general management or advisory services for the Company.
3. Relationships with Other Companies. Please describe all executive or board positions with publicly traded companies or investment companies registered pursuant to the Investment Company Act of 1940, as amended, either current, prior, or to which to you have been selected to serve in the future. Please include your dates of service. Please note, the five-year look back limitation is not applicable to this request.
4. Family Relationships. Please state the nature of any family relationship (by blood, marriage or adoption, not more remote than first cousin) between you and any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer.
Answer: None.
5. Risk Assessment Skills. Please describe any specific risk assessment experience, qualifications or skills you have.
Answer: See biography.
6. Arrangements or Understandings Regarding Election. Please describe any arrangement or understanding between (a) you and (b) any other person or entity (except a director or an officer of the Company acting solely in that capacity) pursuant to which you were or will be selected as an officer, a director, or a nominee for director. Name all persons involved in such arrangement or understanding.
Answer: None except for the following. The PL Capital Group has agreed to indemnify me for any liabilities and reimburse me for any expenses incurred in connection with my nomination to the Board of Directors of the Company. Such indemnity and reimbursement will cease upon my election or appointment to the Board.
STOCK OWNERSHIP
7. Beneficial Ownership. How many shares of Company common stock did you "beneficially own" (as defined below) as of August 1, 2011?
Please include shares underlying both exercisable and unexercisable stock option awards, restricted stock awards, warrants to purchase stock, and stock appreciation rights, that you hold through the Company's stock ownership plans and shares underlying unexercised options granted to you by the Company. If applicable, please indicate with whom you share either voting or investment power or both, and briefly describe the contract, relationship, arrangement, understanding or other basis on which your voting or investment power is shared. Please also note the number of shares pledged as security, if any.
The terms "beneficial" and "beneficially" as applied to an interest in securities describe any interest in the securities in question which entitles you to any of the rights or benefits of ownership, even though you are not the holder or owner of record. Interests in securities held in an estate, trust, or partnership, or by a nominee, are examples of beneficial interests. If you have any contract, understanding, relationship, agreement, or other arrangement with any other person
with respect to securities, pursuant to which you obtain benefits substantially equivalent to the ownership of securities, you should consider such securities as beneficially owned by you. For purposes of this questionnaire, you will be regarded as having benefits substantially equivalent to ownership of securities if:
| | (1) | directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise you have or share |
| | (a) | voting power, which includes the power to vote, or to direct the voting of, the security; or |
| | (b) | investment power, which includes the power to dispose of, or to direct the disposition of, the security; |
| | (2) | you have the right to acquire beneficial ownership of the security, including but not limited to any right to acquire |
| | (a) | through the exercise of any option, warrant, or right; |
| | (b) | through the conversion of a security; |
| | (c) | pursuant to a power to revoke a trust, discretionary account, or similar arrangement; or |
| | (d) | pursuant to the automatic termination of a trust, discretionary account, or similar arrangement; or |
| | (3) | you can apply income from securities to meet expenses which you otherwise would meet from other sources. |
You are also considered to be the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement, or any other contract, arrangement, or device with the purpose or effect of divesting yourself of beneficial ownership of such security or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended.
The SEC has taken the view that a person may be regarded as the beneficial owner of securities held in the name of the person's spouse, minor children, or other relatives of the person or the person's spouse who share the person's home, if such relationship results in such person obtaining benefits substantially equivalent to ownership of such securities.
Answer: 116,365 shares
8. Rights to Acquire Beneficial Ownership. If any security was included in your responses to this section because the beneficial owner (as defined above) had the right to acquire beneficial ownership (whether upon the automatic termination of or pursuant to the power to
revoke a trust, discretionary account or similar arrangement), please set forth the affected number of securities and the details concerning the right to acquire beneficial ownership, including exact dates when the right first comes into existence and the number of shares to which the right relates.
Answer: None
9. Disclaiming Beneficial Ownership. As to any shares included in your responses to this section, if you wish expressly to disclaim beneficial ownership (as defined above) for any purpose, please indicate the number of shares and the reason for disclaiming beneficial ownership, including the name of the actual beneficial owner and the relationship of such person to you.
Answer: NA
CHANGE IN CONTROL OF CORPORATION
10. Group 5% Holders. Do you know of any person or "group" who or which is the "beneficial" owner (as defined in Question 7) of more than 5% of the Company's outstanding Common Stock? A "group" for this purpose is any partnership, limited partnership, syndicate or other group, whether formally organized or not, formed for the purpose of acquiring, holding, voting or disposing of Common Stock of the Company.
Answer: Yes [X ] No [ ] (If you answered "yes", please describe below).
The requested information is as follows (please include sufficient cross-references regarding any shares which are beneficially owned by more than one person and include details concerning any right to acquire beneficial ownership):
Name of beneficial owner and relationship to you | | Number of shares beneficially owned | | Nature of beneficial ownership (give full details) |
PL Capital Group—I am a Nominee on their slate of Directors for the 2011 Annual Meeting of HF Financial | | 572,352 | | See the nomination letter from Richard Lashley and PL Capital’s Form 13D filings with the SEC |
11. Change in Control. Do you know of any arrangements, including any pledge of securities of the Company, which resulted in the last fiscal year, or may result in the future, in a change in control of the Company? If the answer is "yes," please describe such arrangement(s).
Answer: No.
12. Voting Trusts. Do you know of any arrangement whereby more than 5% of the shares of the outstanding Common Stock or other class of voting security of the Company is held or is to be held subject to any voting trust or similar agreement? If the answer is "yes," please describe such arrangement, giving the names and addresses of the voting trustees and outlining briefly their voting rights and other powers under the trust agreement.
LEGAL PROCEEDINGS
13. Legal Proceedings.
a) Have any of the following events occurred within the past ten years? If the answer is "yes," please specify the subsection(s) of this question to which the response relates and describe such event or events, giving dates, the name of the court and its jurisdiction, and other pertinent information.
(1) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against you, or a receiver, fiscal agent or similar officer was appointed by a court for your business or property, or any partnership in which you were a general partner at or within two years before the time of such filing or appointment, or any corporation or business association of which you were an executive officer at or within two years before the time of such filing or appointment.
(2) You were convicted in a criminal proceeding (excluding traffic violations and other minor offenses) or are a named subject of a criminal proceeding that is presently pending.
(3) You were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court enjoining you from, or otherwise limiting your involvement in, any of the following activities:
(a) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission (the "CFTC"), or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(b) engaging in any type of business practice; or
(c) engaging in any activity in connection with the purchase or sale of any security or commodity, or in connection with any violation of federal or state securities laws or federal commodities laws or regulation.
(4) You were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, barring, suspending or otherwise limiting for more than 60 days your right to engage in any activity described in subparagraph (3) (a) above, or to be associated with persons engaged in any such activity.
(5) You were found by a court, the SEC, or by the CFTC to have violated any federal or state securities or commodities law or regulation, and the judgment has not been reversed, suspended, or vacated.
(6) You were convicted of fraud.
(7) You were the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated, relating to any of the following:
(a) an alleged violation of any federal or state securities or commodities law or regulation.
(b) an alleged violation of any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order.
(c) an alleged violation of any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity.
(8) You were the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
(9) Any person alleged in a lawsuit that you breached a fiduciary duty, had a conflict of interest, or violated any federal or state securities or commodities law or regulation, or any criminal indictment or criminal proceeding (excluding traffic violations and other minor offenses) has been filed against any entity of which you were then an officer or director.
(10) Any other pending, contemplated, or threatened legal proceeding that the Company should evaluate in order to assess its materiality.
Answer: None.
b) If any event listed in (a) above has occurred within the past ten years, but you believe that such event is not material to an evaluation of your ability or integrity, please state the reasons for your belief.
Answer: NA
14. Proceedings Adverse to the Company. Describe briefly any legal proceedings to which you or any "associate" of yours (as defined below) is a party adverse to the Company or has or had an interest adverse to the Company, including the name of the court or agency in which the proceedings are or were pending, the date instituted, the principal parties thereto, a description of the factual basis alleged to underlie the proceeding and the relief sought.
Each of the following is an "associate" of yours: (a) any corporation or organization (other than the Company) of which you are an executive officer or partner or are, directly or indirectly, the beneficial owner of 10% or more of any class of equity securities (i.e., any stock or similar security, or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security, or any such warrant or right), (b) any trust or other estate in which you have a substantial beneficial interest, or as to which you serve as trustee, executor or in a similar fiduciary capacity, and (c) your spouse or any relative of yours or your spouse, who shares your home.
Answer: None.
COMPENSATION COMMITTEE INTERLOCKS
15. Interlocks. At any time since July 1, 2010, have you served as a:
a) member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served on the compensation committee of the Company;
b) director of another entity, one of whose executive officers served on the compensation committee of the Company; or
c) member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire board of directors) of another entity, one of whose executive officers served as a director of the Company?
If the answer is "yes," please set forth below the name of the other entity, your position(s) with such entity, the name of the other person(s) described above, and the position(s) of each such person with such other entity.
Answer: No.
INDEPENDENCE OF THE NOMINEE
16. Transactions with the Company. Please briefly describe any proposed or actual transactions or series of similar transactions since July 1, 2010, involving more than $120,000, to which the Company was or is to be a participant, in which you or a "family member" (as defined below) have had or will have an interest. Include indebtedness to the Company (other than amounts either due to the Company for purchases of goods and services subject to usual trade terms, for business travel or expense payments, or other transactions in the ordinary course of business).
If applicable, please provide the following information: your interest in the transactions (such as your position in the entity conducting the transaction), the approximate dollar value of the amount involved in the transaction, and the approximate dollar value of your interest in the transaction, regardless of your actual profit or loss. If indebtedness, please describe such indebtedness in detail.
A "family member" means your spouse, parents, children and siblings, whether by blood, marriage or adoption, or any person (other than a tenant or employee) sharing your household.
Answer: N/A
17. Compensation from the Nominating Stockholder. Please describe all direct and indirect compensation and other material paid or payable monetary agreements, arrangements and understandings during the past three (3) years by the Nominating Stockholder to you and your affiliates and associates.
For purposes of this Questionnaire, the “Nominating Stockholder” means the person or entity listed on the second page of this Questionnaire as the Nominating Stockholder, along with his, her, or its affiliates, associates and others acting in concert with him, her, or it for purposes of this nomination.
Answer: The PL Capital Group has agreed to indemnify me against any liabilities, and to reimburse me for any expenses, incurred in connection with my nomination for Director of the Company. Such indemnity and reimbursement will cease upon my appointment or election to the Board of Directors of the Company.
18. Transactions with the Nominating Stockholder. Please briefly describe any proposed or actual transactions or series of similar transactions since July 1, 2010, involving more than $120,000, to which Nominating Stockholder was or is to be a participant, in which you or a "family member" (as defined above) have had or will have an interest.
If applicable, please provide the following information: your interest in the transactions (such as your position in the entity conducting the transaction), the approximate dollar value of the amount involved in the transaction, and the approximate dollar value of your interest in the
transaction, regardless of your actual profit or loss. If indebtedness, please describe such indebtedness in detail.
Answer: None.
19. Other Material Relationships with the Nominating Stockholder. Please describe any positions held by you and your affiliates with the Nominating Stockholder during the past five (5) years and any other material relationships between the Nominating Stockholder, you and your affiliates that have not yet been described.
Answer: None.
20. Competition. To your knowledge, are you or were you at any time since July 1, 2010 a director or officer of any company that competes with, supplies to, or is a customer of, the Company?
Answer: No.
21. Relationship with Independent Auditor. Have you, or has one of your "family members" (as defined above), had any actual or proposed "business relationship" with the Company's independent auditor, Eide Bailly LLP, or any "covered person" (as defined below) within Eide Bailly LLP, or have you provided services to Eide Bailly LLP, during the last fiscal year? If so, please describe the relationship and any fees or revenues received or receivable.
A "business relationship" is broadly defined as formal or informal arrangement with any third party (clients and nonclients of the firm) for services or products provided to the firm by an individual or company such as a vendor, consultant, facilitator, sub-contractor, independent contractor, licensor, licensee, reseller, or distributor. This includes arrangements involving alliances, joint ventures, joint marketing, co-ventures, sponsorships, co-marketing, cooperative arrangements, investing, lending, or borrowing monies or acting as a lessor or lessee. Business relationships do not include relationships between Eide Bailly LLP and its clients for the firm's performance of professional services to that client.
The term "covered person" means the following: partners, principals, shareholders, and employees of an accounting firm: the audit engagement team, the chain of command (all persons who supervise or have direct management responsibility for the audit, including at all successively senior levels through the accounting firms' chief executive, who evaluate the performance or recommend the compensation of the audit engagement partner or who provide quality control or other oversight of the audit), any other partner, principal, shareholder or managerial employee who has provided 10 or more hours of non-audit services to the Company
during the past two years, or expects to provide 10 or more hours of non-audit services on a recurring basis, and any other partner, principal, or shareholder from an office (a distinct sub-group whether distinguished along geographic or practice lines) of the independent auditor in which the lead engagement partner primarily practices in connection with the audit.
Answer: Eide Bailly is my accountant.
INDEPENDENCE UNDER NASDAQ RULES
22. Have you, or any member of your family, been an employee of the Company or any of its subsidiaries during the past three years? Please note that "family member" is defined above.
Answer: [ ] Yes [ X ] No
23. During any period of twelve consecutive months within the past three fiscal years, did you, or did any of your family members, accept any compensation from the Company or any of its subsidiaries in excess of $120,000 (excluding compensation for board or committee service, benefits under a tax-qualified retirement plan, or non-discretionary compensation, and compensation paid to a family member who is a non-executive employee of the Company)?
Answer: [ ] Yes [ X] No
24. Is any family member currently serving as an executive officer of the Company or any of its subsidiaries, or have any of your family members been serving in such capacity during the past three years?
Answer: [ ] Yes [ X ] No
25. Are you, or are any of your family members, a partner in, or a controlling shareholder or an executive officer of, any organization to which the Company made, or from which the Company received, payments (other than payments arising solely from investments in the Company's securities, or payments under non-discretionary charitable contribution matching programs) for property or services in the current or any of the past three fiscal years that exceed 5% of the other company's consolidated gross revenues for that year, or $200,000, whichever is more?
Answer: [ ] Yes [ X ] No
26. Are you, or are any of your family members, employed as an executive officer of another entity where at any time during the past three years any of the Company's executive officers served on the compensation committee of the other entity?
Answer: [ ] Yes [ X ] No
27. Are you, or are any of your family members currently a partner of the Company's independent auditor, or have you or any of your family members worked on the Company's audit as a partner or of the Company's independent auditors at any time during the past three years?
Answer: [ ] Yes [ X ] No
28. Are you now or have you been at any time a member or employee of, or counsel to, a law firm which the Company has retained during the Company's last fiscal year, or that the Company proposes to retain during its current fiscal year?
Answer: [ ] Yes [ X ] No (If yes, supply details)
29. Are you now or have you been at any time a partner or executive officer of any investment banking firm that has performed services for the Company during the Company's last fiscal year, or that the Company proposes to have perform services during its current fiscal year?
Answer: [ ] Yes [ X ] No (If yes, supply details)
30. Do you have any other relationships (i.e., as a partner, shareholder or officer of an organization that has any commercial, industrial, banking, consulting, legal, accounting, charitable, familial or any other relationships with the Company or any of its subsidiaries) that could be seen as interfering with your exercise of independent judgment in carrying out the responsibilities as a director of the Company?
Answer: [ ] Yes [ X ] No
If you answered "yes" to any of the questions above, please explain below:
COMPENSATION COMMITTEE INDEPENDENCE
31. Are you a former employee (at any time) of the Company receiving compensation from the Company for past services (other than tax-qualified retirement plan benefits)?
Answer: [ ] Yes [ X ] No
32. Have you at any time in the past been an officer of the Company?
Answer: [ ] Yes [ X ] No
33. Do you receive or have you received from the Company, in the Company's current or previous taxable year, any direct or indirect payments, or is the Company now
contractually obligated to pay you directly or indirectly, for goods or services in any capacity other than as a director?
Answer: [ ] Yes [ X ] No
34. Does the Company make, has the Company made in the Company's current or previous taxable year, or is the Company now contractually obligated to make, any payments for goods or services to any business, professional or other entity that (A) employs you, (B) to which you render any substantial services, or (C) in which you have at least a 5% ownership interest?
Answer: [ ] Yes [ X ] No
If you answered "yes" to any of the questions above, please explain below:
AUDIT COMMITTEE INDEPENDENCE
35. Are you able to read and understand fundamental financial statements, including a company's balance sheet, income statement, and cash flow statement?
Answer: [ X ] Yes [ ] No
36. Have you participated in the preparation of the financial statements of the Company at any time during the past three years?
Answer: [ ] Yes [ X ] No
37. Have you accepted, directly or indirectly, any consulting, advisory or other compensatory fee from the Company or any of its subsidiaries, other than fees for services rendered as a member of the Audit Committee, the board of directors or any other board committee? (Note: You do not need to report any compensation paid to you under a retirement plan, including deferred compensation, for prior service to the Company so long as that compensation is not contingent in any way on continued service).
Answer: [ ] Yes [ X ] No
38. Are you an affiliated person of the Company or any of its subsidiaries, other than as a director of the Company? (Note: If you are not an executive officer or holder of more than 10% of any class of the Company's voting securities, you should check "no").
Answer: [ ] Yes [ X ] No
If you answered "yes" to any of the questions above, please explain below:
I have prior business experience that has enabled me to understand financial statements.
AUDIT COMMITTEE FINANCIAL EXPERTISE
39. Financial Expertise Under SEC Standards. Please indicate whether you satisfy the following criteria:
a) Do you have an understanding of generally accepted accounting principles and financial statements?
Answer: [ X ] Yes [ ] No
b) Do you have the ability to assess the general application of such principles in connection with accounting for estimates, accruals and reserves?
Answer: [ X ] Yes [ ] No
c) Do you have experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of accounting issues that can reasonably be expected to be raised by the Company's financial statements, or experience actively supervising one or more persons engaged in such activities?
Answer: [ X] Yes [ ] No
d) Do you have an understanding of internal control over financial reporting?
Answer: [ X ] Yes [ ] No
e) Do you have an understanding of audit committee functions?
Answer: [ x ] Yes [ ] No
If you answered "yes" to the questions above, please complete the following questions as applicable:
40. I acquired the above attributes through the following:
a) Education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions.
Answer: [ ] Yes [ x] No
b) Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions.
Answer: [ x ] Yes [ ] No
c) Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements.
Answer: [ x ] Yes [ ] No
d) Please describe any other relevant experience:
Answer:
41. Financial Expertise under NASDAQ Standards. Do you have past employment experience in finance or accounting, requisite professional certification in accounting, or any other comparable experience or background which results in your financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities?
Answer: [ ] Yes [ X ] No
If the answer is "Yes," please describe your education, experience or other factors underlying this answer.
The answers I have supplied to the questions in this questionnaire are true, complete, and correct to the best of my knowledge after reasonable inquiry. I will promptly notify Pam Russo, Secretary of the Company, if any event of which I become aware should occur between now and the 2011 Annual Meeting of Stockholders that would cause my answer to any question to change.
Dated: August 17, 2011
| | | | NOMINEE | |
| | | | | |
| | | | /s/ Kevin V Schieffer | |
| | | | Signature | |
| | | | Kevin V Schieffer | |
| | | | (Print Name and Title) | |
| | | | | |
| | | | Home Address:
5704 Prairie View Court
Sioux Falls, SD 57108 | |
II. Questions for the Nominating Stockholder
STOCK OWNERSHIP
1. Beneficial Ownership. How many shares of Company common stock did you "beneficially own" (as defined below) as of August 1, 2011?
Please include shares underlying both exercisable and unexercisable stock option awards, restricted stock awards, warrants to purchase stock, and stock appreciation rights, that you hold through the Company's stock ownership plans and shares underlying unexercised options granted to you by the Company. If applicable, please indicate with whom you share either voting or investment power or both, and briefly describe the contract, relationship, arrangement, understanding or other basis on which your voting or investment power is shared. Please also note the number of shares pledged as security, if any.
The terms "beneficial" and "beneficially" as applied to an interest in securities describe any interest in the securities in question which entitles you to any of the rights or benefits of ownership, even though you are not the holder or owner of record. Interests in securities held in an estate, trust, or partnership, or by a nominee, are examples of beneficial interests. If you have any contract, understanding, relationship, agreement, or other arrangement with any other person with respect to securities, pursuant to which you obtain benefits substantially equivalent to the ownership of securities, you should consider such securities as beneficially owned by you. For purposes of this questionnaire, you will be regarded as having benefits substantially equivalent to ownership of securities if:
| | (1) | directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise you have or share |
| | (a) | voting power, which includes the power to vote, or to direct the voting of, the security; or |
| | (b) | investment power, which includes the power to dispose of, or to direct the disposition of, the security; |
| | (2) | you have the right to acquire beneficial ownership of the security, including but not limited to any right to acquire |
| | (a) | through the exercise of any option, warrant, or right; |
| | (b) | through the conversion of a security; |
| | (c) | pursuant to a power to revoke a trust, discretionary account, or similar arrangement; or |
| | (d) | pursuant to the automatic termination of a trust, discretionary account, or similar arrangement; or |
| | (3) | you can apply income from securities to meet expenses which you otherwise would meet from other sources. |
You are also considered to be the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement, or any other contract, arrangement, or device with the purpose or effect of divesting yourself of beneficial ownership of such security or preventing the vesting of such beneficial ownership as part of a plan or scheme to evade the reporting requirements of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended.
The SEC has taken the view that a person may be regarded as the beneficial owner of securities held in the name of the person's spouse, minor children, or other relatives of the person or the person's spouse who share the person's home, if such relationship results in such person obtaining benefits substantially equivalent to ownership of such securities.
Answer: 572,252 shares
2. Rights to Acquire Beneficial Ownership. If any security was included in your responses to this section because the beneficial owner (as defined above) had the right to acquire beneficial ownership (whether upon the automatic termination of or pursuant to the power to revoke a trust, discretionary account or similar arrangement), please set forth the affected number of securities and the details concerning the right to acquire beneficial ownership, including exact dates when the right first comes into existence and the number of shares to which the right relates.
Answer:
3. Disclaiming Beneficial Ownership. As to any shares included in your responses to this section, if you wish expressly to disclaim beneficial ownership (as defined above) for any purpose, please indicate the number of shares and the reason for disclaiming beneficial ownership, including the name of the actual beneficial owner and the relationship of such person to you.
Answer:
4. Rights to Vote Additional Shares. If you have the right to vote shares of the Company which are not set forth above, pursuant to any proxy, contract, arrangement, understanding or relationship, please set forth the affected number of securities and the details concerning the right to vote such additional shares, including the circumstances in which such right applies and the number of shares to which the right relates.
Answer:
The answers I have supplied to the questions in this questionnaire are true, complete, and correct to the best of my knowledge after reasonable inquiry. I will promptly notify Pam Russo, Secretary of the Company, if any event of which I become aware should occur between now and the 2011 Annual Meeting of Stockholders that would cause my answer to any question to change.
Dated: August 17, 2011
| | | | NOMINATING STOCKHOLDER | |
| | | | | |
| | | | /s/ Richard J. Lashley | |
| | | | By: Richard J. Lashley Its: | |
| | | | | |
| | | | Address:
2 Trinity Place
Warren, NJ 07059 | |
| | | | | |
Questionnaire prepared by Briggs and Morgan, Professional Association
Kevin V. Schieffer
5704 S. Prairie View Court
Sioux Falls, SD 57108
Professional Career:
Self employed investor. 2008 – present. Schieffer Consulting, Inc.
President & Chief Executive Officer. 1996-2008. Cedar American Rail Holdings, Inc. (and Dakota, Minnesota & Eastern Railroad Corporation (DM&E) and Iowa, Chicago & Eastern Railroad Corporation (IC&E)).
Owner/Managing Partner. 1993-1996. Schieffer, Cutler & Donahoe Law Firm, LLC.
United States Attorney (District of South Dakota). 1991-1993.
Chief of Staff, U.S. Senator Larry Pressler (R-SD). 1982-1991.
Adjunct Professor of Law, Georgetown University Law Center. 1990-1991.
Education:
Georgetown University Law Center, J.D. 1986.
| | · | Law Review, Law & Policy in International Business |
University of South Dakota, B.A. 1982.
Publications:
“Joint & Several Liability: A Case for Reform,” Denver Univ. Law Review, Vol. 64, No. 4 (1988).
“A Proposal for Universal Telecommunications Service,” UCLA Federal Communications Law Journal, Vol. 40, No. 3 (May 1989).
