EXHIBIT 10.1

 

SEPARATION AGREEMENT AND RELEASE

 

THIS SEPARATION AGREEMENT AND RELEASE (“Agreement”) is made and entered into by
and between David A. Brown (“Employee” or “Brown”) and Home Federal Bank (the
“Company” or “Home Federal”).

 

WHEREAS, Brown is Senior Vice President/Community Banking of Home Federal; and

 

WHEREAS, Brown and Home Federal wish to provide for the termination of their
employment relationship and all agreements that may have existed between them
(consistent with the terms of this Agreement), and fully and finally resolve any
and all matters arising out of Brown’s employment by Home Federal or the
termination of his employment, without any admission of any kind by either
party; and

 

WHEREAS, the parties wish to document their understanding and agreement with
respect to the terms of Brown’s separation from employment with Home Federal.

 

NOW, THEREFORE, in consideration of the provisions and agreements set forth
hereinafter, and for good and valuable consideration, the sufficiency of which
is acknowledged by both parties, the parties agree as follows:

 

1.             Separation Payment.  In consideration for the mutual promises
exchanged herein, the Company will pay to Employee $83,200.00, less required
withholdings, an amount equal to six months of Employee’s annual base salary at
the rate currently in effect (the “Separation Payment”).  The Separation Payment
will be paid in regular installments pursuant to the Company’s normal payroll
practices, less applicable withholdings, commencing with the first payroll date
that is more than twenty (20) days after Employee’s execution of the Agreement,
provided that Employee signs the Agreement and does not exercise his right of
rescission under Section 10 herein.

 

If Employee elects to continue participating in the Company’s group medical and
dental plans pursuant to applicable federal COBRA regulations following the
Separation Date, then as further consideration to Employee, and provided
Employee does not exercise his right of rescission under Section 10 herein, the
Company will subsidize Employee’s group medical and dental premiums, as set
forth in Section 7 herein.

 

The parties acknowledge that, with or without this Agreement, the Company will
pay Employee his accrued vacation, which the parties acknowledge is equivalent
to $16,000.00, and any compensation earned and accrued as of Employee’s
Separation Date, less applicable withholdings.  Employee understands and agrees
that, except as provided in this Section and in Section 12 below, he has no
rights to, options under, or claims arising under the Company’s vacation and
holiday policies, that he has no rights to or claims for any bonuses, profit
sharing payments or variable pay payments and that he is not a participant in
any stock option or incentive plans or similar programs.

 

The Company makes no representations regarding the tax consequences of the
payments or benefits provided hereby and advises Employee to consult with a tax
advisor or attorney.

 

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2.             Discharge of Claims.  Employee, on behalf of himself, his agents,
representatives, attorneys, assignees, heirs, executors, and administrators,
hereby covenants that he will not sue and hereby releases and forever discharges
the Company, and its past and present employees, agents, insurers, officials,
members, officers, directors, divisions, parents, subsidiaries and successors,
and all affiliated entities (including, but not limited to, HF Financial Corp.)
and all of their respective past and present employees, agents, insurers,
officials, members, officers and directors from any and all claims and causes of
action of any type arising, or which may have arisen, out of or in connection
with his employment or termination of employment, including but not limited to
claims, demands or actions arising under Title VII of the Civil Rights Act of
1964, 42 U.S.C. § 2000e, et seq., the Americans with Disabilities Act, 29 U.S.C.
§ 2101, et seq., the Family and Medical Leave Act, the Age Discrimination in
Employment Act of 1967, 29 U.S.C. §626, as amended by the Older Workers Benefit
Protection Act, South Dakota Human Relations Act, Sec. 20-13-10, the South
Dakota Equal Pay Act, Sec. 60-12-15, any statute regarding the payment of wages,
any other federal, state or local statute, ordinance, regulation or order
regarding employment, compensation for employment, termination of employment, or
discrimination in employment, and the common law of any state.  Employee further
understands that this release of claims extends to, but is not limited to, all
claims which he may have as of the date of this Agreement based upon statutory
or common law claims for defamation, libel, slander, assault, battery, negligent
or intentional infliction of emotional distress, negligent hiring or retention,
breach of contract, promissory estoppel, fraud, retaliation, whistle-blowing,
wrongful discharge, violation of public policy, or any other theory, whether
legal or equitable, and any and all claims for wages, salary, bonuses,
commissions, damages, attorney’s fees or costs.  Employee acknowledges that the
release in this paragraph includes and applies to all claims that he is legally
permitted to release, and, as such, does not apply to any vested rights under
the Company’s retirement plans, nor does it preclude him from filing an
administrative charge of discrimination, though he will not be able to recover
any damages if he does file such a charge or if he has filed such a charge.

 

3.             Agreement Not to Compete.  The Employee agrees that for a period
of one (1) year after the execution of this Agreement, the Employee will not:
either directly or indirectly, on the Employee’s own behalf or as a partner,
member, officer, employee, consultant, stockholder (except by ownership of less
than 1% of the outstanding stock of a publicly held corporation, or the
ownership does not involve any managerial or operation responsibility), director
or trustee of any person, firm, or corporation or otherwise, engage in or assist
others to engage in any business, competing with the business carried on by the
Company, or solicit business from any customers of the Company, within the
States of South Dakota and Minnesota, in which states the Company currently
conducts business or is preparing to conduct business.  If the Employee violates
the non-competition provisions of this Section 3, the Employee shall forfeit his
right to any paid or unpaid Separation Payment and COBRA subsidy and shall
return to Home Federal any Separation Payment and COBRA subsidy received in
accordance with this Agreement, and Employee shall sign a Confession of Judgment
for return of such payment in the event of a breach in a form acceptable to
Company.  Employee acknowledges that any violation of this non-competition
provision shall entitle Company to appropriate injunctive relief and to any
damages which it may sustain due to the improper competition, and is not limited
by the amount of the Separation Payment.

 

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4.             Solicitation of Employees.  The Employee agrees that for a period
of one (1) year after the execution of this Agreement, the Employee will not
induce or attempt to induce any person who is an employee of the Company to
leave the employ of the Company and engage in any business which competes with
the Company’s business.  If the Employee violates the non-solicitation
provisions of this Section 4, the Employee shall forfeit his right to any paid
or unpaid Separation Payment and COBRA subsidy and shall return to Home Federal
any Separation Payment and COBRA subsidy received in accordance with this
Agreement, and Employee shall sign a Confession of Judgment for return of such
payments in the event of a breach in a form acceptable to Company.  Employee
acknowledges that any violation of this non-solicitation provision shall entitle
Company to appropriate injunctive relief and to any damages which it may sustain
due to the improper solicitation/competition, and is not limited by the amount
of the Separation Payment.

 

5.             Confidential Information Acquired During Employment.  Employee
agrees that he will continue to treat, as private and privileged, any
information, data, figures, projections, estimates, marketing plans, customer
lists, lists of contract workers, tax records, personnel records, accounting
procedures, formulas, contracts, business partners, alliances, ventures and all
other confidential information belonging to the Company or any of its
affiliates.  Employee agrees that he will not release any such information to
any person, firm, corporation or other entity at any time, except as may be
required by law, or as agreed to in writing by the Company.  If the Employee
violates the non-disclosure provisions of this Section 5, the Employee shall
forfeit his right to any paid or unpaid Separation Payment and COBRA subsidy and
shall return to Home Federal any Separation Payment and COBRA subsidy received
in accordance with this Agreement, and Employee shall sign a Confession of
Judgment for return of such payments in the event of a breach in a form
acceptable to Company.  Employee acknowledges that any violation of this
provision shall entitle Company to appropriate injunctive relief and to any
damages which it may sustain as a result, and is not limited by the amount of
the Separation Payment.

 

6.             Confidentiality; Non-Disparagement.  Employee represents and
agrees that he will keep the terms and facts of this Agreement completely
confidential, and that he will not disclose any information concerning this
Agreement to anyone, except for his counsel, tax accountant, spouse or except as
may be required by law or agreed to in writing by the Company.  Employee shall
not make any disparaging remarks of any sort or otherwise communicate any
disparaging comments about the Company or any of the other released entities or
persons to any third party at any time following his execution of this
Agreement.  Nothing in this provision, however, shall prevent or prohibit
Employee from testifying in any legal proceeding, including at a deposition,
hearing or trial, from cooperating in good faith in any governmental
investigation or action, or from making any report required by law, subject to
Section 8 herein.

 

7.             Separation From Employment.  The parties have mutually agreed
that Employee’s last day of employment will be January 13, 2012 (the “Separation
Date”).  Employee shall have the right to sign the Agreement after the
Separation Date (but no later than twenty-one (21) days after the Separation
Date).  The parties agree that any changes in this Agreement made prior to
signing whether material or not do not restart the 21-day period for
consideration.  The

 

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Company advises Employee that he consult with legal counsel before signing this
Agreement.  After employee’s separation from employment, if employee fails to
sign this Separation Agreement, or if Employee rescinds the Agreement during the
rescission period, Employee will continue to be subject to any applicable
pre-existing confidentiality covenants, non-solicitation covenants and/or
non-competition covenants, which shall remain in full force and effect. 
Notwithstanding Section 1 above, Employee’s final paycheck including wages
through the Separation Date will be issued on the next regularly scheduled
payroll date.

 

Employee will receive, under separate cover, information regarding the process
of continuing his health insurance by making a federal COBRA continuation
election, and he may elect to continue such benefits in accordance with COBRA
requirements following the Separation Date.  If following the Separation Date
Employee elects to and does continue participation in the Company-sponsored
group medical and dental plans under COBRA, the Company shall subsidize premiums
for such coverage on the terms and conditions set forth in the following
paragraph.

 

Except as otherwise set forth in this paragraph, the Company shall be obligated
to subsidize the premiums for medical and dental coverage until the earlier of
July 31, 2012 or the date on which Employee is no longer eligible for COBRA
coverage, at the level of coverage that Employee had as of the Separation Date
and as if Employee remained employed by the Company.  Employee shall remain
responsible for payment of Employee’s share of the premium and is hereby
obligated to pay his share of the COBRA premium by the first day of each month
for which such coverage is in force, or by the date on which he elects coverage,
whichever is later.  The Company’s obligation to subsidize a portion of the
COBRA premiums shall terminate if Employee fails to pay Employee’s share of the
COBRA premium in the manner previously specified, and such obligation shall not
thereafter be reinstated.  If Employee reduces the level of coverage under the
plan (e.g., from family to single), the Company will subsidize premiums only for
reduced coverage for the remainder of the time period set forth above and will
not increase the subsidy if Employee later increases the level of coverage under
the plan.  The Company will continue to subsidize the COBRA continuation
coverage as set forth in this Section 7 only so long as Employee is otherwise
entitled to COBRA coverage for a particular benefit (e.g., with respect to major
medical coverage, the subsidy shall cease at such time as Employee acquires
other group health coverage without preexisting conditions limitations that
affect him).  Employee shall promptly notify the Company if Employee becomes
eligible for any other group coverage or if Employee otherwise becomes
ineligible for COBRA coverage.  After the time that the Company ceases to
subsidize the COBRA coverage, Employee may choose to continue such coverage as
permitted under COBRA at Employee’s own expense for the remaining months (if
any) of the applicable COBRA continuation period.  The parties agree that the
group medical and dental insurance premium subsidy contemplated by this
Agreement is not intended to and does not create a retiree health plan covering
any other employees.

 

8.             Cooperation.  At the request of the Company, Employee will
cooperate with the Company in any claims, regulatory matters, or lawsuits where
Employee has knowledge of the facts.  Employee further agrees that he will not
voluntarily aid, assist, or cooperate with anyone who has claims against the
Company or with their attorneys or agents in any claims or lawsuits which such
person may bring.  However, nothing in this Agreement prevents Employee from
testifying at an administrative hearing, arbitration, deposition or in court in
response to a lawful

 

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and properly served subpoena, nor does it preclude Employee from filing an
administrative charge of discrimination or cooperating with government agencies
in connection with a charge (though he may not recover damages if he does file
such a charge or if he has filed such a charge as noted in Section 2 above).

 

9.             No Wrongdoing.  Employee and the Company agree and acknowledge
that the consideration exchanged herein does not constitute, and shall not be
construed as, an admission of liability or wrongdoing on the part of Employee,
the Company or any person, and shall not be admissible in any proceeding as
evidence of liability or wrongdoing by anyone.

 

10.           Rescission.  Employee understands that he may nullify and rescind
this Agreement at any time within seven (7) days from the date of signature
below by indicating his desire to do so in writing and delivering that writing
to the Company c/o Kevin Sanchez, 225 South Main Avenue, P.O. Box 5000, Sioux
Falls, SD, 57117-5000, by hand or by certified mail.  Employee further
understands that if he rescinds this Agreement, the Company will not be bound by
the terms of this Agreement, and Employee will have no right to receive or
retain any financial benefits contemplated by this Agreement except as otherwise
explicitly provided, and Employee will remain bound by any pre-existing
confidentiality covenants, non-solicitation covenants and/or non-competition
covenants, which shall remain in full force and effect.

 

11.           Return of Company Property.  Employee warrants and represents that
he has returned all property in his possession or control belonging either to
the Company or any affiliate of the Company, including, without limitation,
security keys, passes, credit cards, phone cards, laptop computer, computer
manuals, PDA, Company’s customer and prospect lists (printed and electronic
copies), keys, documents, business equipment, computer software, disks and
media, policy and procedure manuals and any other documents or materials
pertaining to any matter Employee worked on for the Company.

 

12.           2002 Stock Option and Incentive Plan.  Employee and the Company
are parties to various Stock Option and Incentive Plan Agreements.  Employee’s
vested stock interests which are exercisable as of the Separation Date may be
exercised by Employee in accordance with the Stock Agreements and HF Financial
Corp.’s 2002 Stock Option and Incentive Plan (as it is referenced in the Stock
Agreements).

 

13.           South Dakota Law and Merger.  The terms of this Agreement shall be
governed by the laws of the State of South Dakota, and shall be construed and
enforced thereunder.  This Agreement supersedes and replaces all prior oral and
written agreements (including the Restated Employment Agreement, dated
December 31, 2008, and the Restated Change-in-Control Agreement, dated
December 31, 2008), understandings, and representations between Employee and the
Company or their respective representatives (with the exception of the Stock
Agreements referenced in Section 12 of this Agreement).  Employee understands
and agrees that all claims which he has or may have against the Company and any
of its affiliates are fully released and discharged by this Agreement.  The only
claim which Employee may hereafter assert against the Company or any of the
other released entities or individuals is limited to an alleged breach of this
Agreement.

 

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14.           Invalidity.  If any one or more of the terms of this Agreement are
deemed to be invalid or unenforceable by a court of law, the validity,
enforceability, and legality of the remaining provisions of this Agreement will
not in any way be affected or impaired thereby.  If any invalidity shall be
caused by the length of any period of time, the size of any area, or the scope
of activities set forth in any provision hereof, such period of time, such area,
such scope or all of such factors, shall be considered to be reduced to a
period, area or scope which would cure such invalidity.

 

15.           Employee Understands the Terms of this Agreement.  Other than
stated herein, Employee warrants that (a) no promise or inducement has been
offered for this Agreement; (b) this Agreement is executed without reliance upon
any statement or representation of the Company or its representatives concerning
the nature and extent of any claims or liability therefor, if any; (c) Employee
is legally competent to execute this Agreement and accepts full responsibility
therefor; (d) the Company has advised Employee to consult with an attorney, and
Employee has had a sufficient opportunity to consult with an attorney; (e) the
Company has allowed Employee twenty-one (21) days within which to consider this
proposed Agreement; and (f) Employee fully understands this Agreement and has
been advised by counsel of the consequences of signing this Agreement.  The
parties acknowledge and agree that if Employee has not signed this proposed
Agreement within the twenty-one (21) day period referenced in subsection (e) of
this Section 15, then the offer of this Agreement shall expire by its own terms
and be of no further force or effect without any further action required on the
part of the Company.

 

 

 

DAVID A. BROWN

 

 

 

 

Dated:

January 13, 2012

/s/ David A. Brown

 

 

 

 

 

 

 

Dated:

January 13, 2012

HOME FEDERAL BANK

 

 

 

 

 

By:

/s/ Stephen M. Bianchi

 

 

 

Its:

President and Chief Executive Officer

 

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