EXHIBIT 10.8

 

HF FINANCIAL CORP.

EXCESS PENSION PLAN FOR EXECUTIVES
(as amended and restated effective January 1, 2009)

 

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TABLE OF CONTENTS

 

 

 

PAGE

INTRODUCTION

1

 

 

ARTICLE I DEFINITIONS

2

Section 1.1

“Active Participant”

2

Section 1.2

“Administrator”

2

Section 1.3

“Adjustment”

2

Section 1.4

“Base Compensation”

2

Section 1.5

“Beneficiary”

2

Section 1.6

“Board”

2

Section 1.7

“Change in Control”

2

Section 1.8

“Code”

3

Section 1.9

“Company”

3

Section 1.10

“Company Credit”

3

Section 1.11

“Effective Date”

3

Section 1.12

“Employment”

3

Section 1.13

“Entry Date”

3

Section 1.14

“ERISA”

4

Section 1.15

“Executive”

4

Section 1.16

“Fiscal Year”

4

Section 1.17

“Fiscal Year Incentive”

4

Section 1.18

“Inactive Participant”

4

Section 1.19

“Individual Account”

4

Section 1.20

“Investment Fund(s)”

4

Section 1.21

“Participant”

4

Section 1.22

“Plan”

4

Section 1.23

“Plan Year”

4

Section 1.24

“Termination of Employment”

4

Section 1.25

“Trust”

4

Section 1.26

“Trust Agreement”

5

Section 1.27

“Trustee”

5

Section 1.28

“Valuation Date”

5

 

 

 

ARTICLE II PLAN ELIGIBILITY AND PARTICIPATION

5

Section 2.1

Eligibility

5

Section 2.2

Participation

5

Section 2.3

Limited Participation

5

 

 

 

ARTICLE III CONTRIBUTION CREDITS

5

Section 3.1

Company Credits: Defined Benefit Formula

5

Section 3.2

Company Credits: Excess Compensation

6

Section 3.3

Company Credits: Discretionary Contributions

6

Section 3.4

Salary Deferral Election.

6

 

 

 

ARTICLE IV INDIVIDUAL ACCOUNTS

7

Section 4.1

Individual Accounts

7

 

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TABLE OF CONTENTS

(continued)

 

 

 

PAGE

Section 4.2

Credit of Investment Fund Adjustment

7

Section 4.3

Designation of Investment Funds

8

Section 4.4

Equitable and Alternative Procedures

9

 

 

 

ARTICLE V BENEFITS

9

Section 5.1

Entitlement to Benefits

9

Section 5.2

Death Benefit

10

Section 5.3

Change in Control

10

Section 5.4

Unforeseen Emergencies

10

 

 

 

ARTICLE VI PAYMENT OF BENEFITS

10

Section 6.1

Payment of Benefits.

10

Section 6.2

Time of Payment

11

Section 6.3

Form of Benefit Payment

11

Section 6.4

Death Benefit

11

 

 

 

ARTICLE VII THE TRUST

11

Section 7.1

Establishment of Trust

11

Section 7.2

Payments by Trustee

12

 

 

 

ARTICLE VIII PLAN ADMINISTRATION

12

Section 8.1

Authority of Administrator

12

Section 8.2

Delegation

12

Section 8.3

Records and Rules

12

Section 8.4

Claims Procedure.

13

Section 8.5

Legal Incompetence

15

Section 8.6

Correction of Errors

15

 

 

 

ARTICLE IX PLAN AMENDMENT, TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS

15

Section 9.1

Amendment of Plan

15

Section 9.2

Termination of Plan or Discontinuance of Contribution Credits

15

Section 9.3

Distribution upon Complete Termination and Administration Following
Discontinuance of All Contribution Credits

15

 

 

 

ARTICLE X MISCELLANEOUS PROVISIONS

16

Section 10.1

Employment and Other Rights

16

Section 10.2

Nonalienation of Benefits

16

Section 10.3

Withholding and Deductions

17

Section 10.4

Construction

17

Section 10.5

Controlling Law

17

Section 10.6

Effect of Invalidity of Provision

17

Section 10.7

Inurement

17

Section 10.8

Nature of Participant and Beneficiary Rights

17

 

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TABLE OF CONTENTS

(continued)

 

 

 

PAGE

Section 10.9

Regulatory and Other Guidance

17

Section 10.10

Discretion of Administrator

18

Section 10.11

Liability

18

Section 10.12

Section 409A of the Code

18

 

 

 

ARTICLE XI EXECUTION OF THE PLAN

18

Section 11.1

Execution of the Plan

18

 

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INTRODUCTION

 

Effective July 1, 1999, HF Financial Corp. (“Company”) established the HF
Financial Corp. Excess Benefit Plan for Executives (“Plan”) as set forth herein.
The purpose of the Plan is to provide additional incentive and retirement
security through deferred compensation for the benefit of certain executive
employees of the Company.

 

It is intended that the Plan constitute an unfunded plan of deferred
compensation for a select group of management or highly compensated employees of
the Company such that it is exempt from the provisions of Parts 2, 3 and 4 of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), as
provided under Sections 201(2), 301(a)(3) and 401(a)(1) thereof.

 

The Plan was amended and restated effective January 1, 2005 and further amended
and restated effective January 1, 2009, to comply with the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended.

 

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ARTICLE I
DEFINITIONS

 

As used herein, the following words and phrases shall have the meaning indicated
unless otherwise defined or required by the context:

 

Section 1.1     “Active Participant” shall mean, with respect to any Plan Year,
a Participant who is not an Inactive Participant.

 

Section 1.2     “Administrator” shall mean the Company.

 

Section 1.3     “Adjustment” shall mean an amount equal to the net increase or
decrease in the fair market value of an Investment Fund during a Plan Year or
other period, exclusive of the effect of any contribution or credit for such
year or other period. Such increases and decreases shall include such items as
realized or unrealized investment gains or losses, investment income, and may
include expenses of administering the Investment Funds, the Trust and the Plan.

 

Section 1.4     “Base Compensation” shall mean the base salary paid and earned
by a Participant with respect to services performed as an employee of the
Company or one of its affiliates and paid during a calendar year, irrespective
of compensation reduction made by reason of the Participant’s participation in
any employee benefit plan maintained by the Company under Code Section 401(k),
125 or 132(f) or under any nonqualified retirement plan maintained by the
Company.

 

Section 1.5     “Beneficiary” shall mean the recipient or recipients last
designated by the Participant in writing, on forms provided by the
Administrator, who shall receive any benefit payable under the Plan upon the
death of such Participant. If no such designation of Beneficiary has been
received by the Administrator prior to the date of death of the Participant or
in the event all such designated Beneficiaries shall fail to survive the
Participant, any such benefit shall be payable in a lump sum to the estate of
the Participant which shall be deemed to be his Beneficiary hereunder.

 

Section 1.6     “Board” shall mean the Board of Directors of the Company.

 

Section 1.7     “Change in Control” shall be deemed to have occurred if:

 

(i)        any one person or more than one person acting as a group acquires
ownership of stock of the corporation that, together with the stock held by such
person or group, constitutes more than 50 percent of the total fair market value
or total voting power of the stock of such corporation. However, if any one
person or more than one person acting as a group, is considered to own more than
50 percent of the total fair market value or total voting power of the stock of
a corporation, the acquisition of additional stock by the same person or persons
is not considered to cause a change in

 

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the ownership of the corporation or to cause a change in the effective control
of the corporation.

 

(ii)       any one person, or more than one person acting as a group acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock of the
corporation possessing 35 percent or more of the total voting power of the stock
of such corporation; or

 

(iii)      any one person, or more than one person acting as a group acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets from the corporation that
have a total gross fair market value equal to or more than 40 percent of the
total gross fair market value of all of the assets of the corporation
immediately prior to such acquisition or acquisitions; or

 

(iv)     A majority of the members of the Company’s Board of Directors is
replaced during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the members of the Company’s Board prior to the
date of the appointment or election.

 

(v)      This definition shall be interpreted in a manner consistent with
Section 409A of the Code.

 

Section 1.8     “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.

 

Section 1.9     “Company” shall mean HF Financial Corp., a Delaware corporation
with principal offices located at Sioux Falls, South Dakota, its successors and
assigns.

 

Section 1.10   “Company Credit” shall mean any amount of Company contribution
credit made under Section 3.1 or 3.2.

 

Section 1.11   “Effective Date” shall mean the effective date of the restated
Plan, which shall be January 1, 2009.

 

Section 1.12   “Employment” shall mean the employment relationship as a common
law employee of the Company.

 

Section 1.13   “Entry Date” shall mean the first day of the Plan Year or first
day of the calendar year in which Executive first meets the Eligibility
requirements of Section 2.1.  Provided, however, that the Entry Date for a newly
eligible Executive who makes an election under Section 3.4(b) shall be the date
that the election becomes effective.

 

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Section 1.14   “ERISA” shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.

 

Section 1.15   “Executive” shall mean any common law employee of the Company who
is a President or Senior or Executive Vice President of the Company or one of
its subsidiaries or any other senior manager selected for participation in the
Plan.

 

Section 1.16   “Fiscal Year” shall mean the Company’s fiscal year, which is
currently a 52 or 53-week period generally including the period from each
July through the next June.

 

Section 1.17   “Fiscal Year Incentive” shall mean cash incentive awards and
bonuses based on the financial performance of the Company or one of its
affiliates during one or more Fiscal Years earned by a Participant with respect
to services performed as an employee of the Company or one of its affiliates and
otherwise scheduled to be paid within two and one-half (2½) months after a
Fiscal Year, irrespective of compensation reduction made by reason of the
Participant’s participation in any employee benefit plan maintained by the
Company under Code Section 401(k), 125, or 132(f) or under any nonqualified
retirement plan maintained by the Company.

 

Section 1.18   “Inactive Participant” shall mean a Participant who has a balance
remaining in his Individual Account and who either (i) has incurred a
Termination of Employment, or (ii) is a limited Participant under Section 2.3.

 

Section 1.19   “Individual Account” shall mean the total amount standing to the
credit of a Participant under the Plan.

 

Section 1.20   “Investment Fund(s)” shall mean the investment fund(s) designated
from time to time for the deemed investment of an Individual Account under
Article IV.

 

Section 1.21   “Participant” shall mean an Executive who has become a
Participant as provided under Article II.

 

Section 1.22   “Plan” shall mean the HF Financial Corp. Excess Pension Plan for
Executives as contained herein and as amended from time to time.

 

Section 1.23   “Plan Year” shall mean the twelve (12) month period commencing
July 1 and ending June 30.

 

Section 1.24   “Termination of Employment” means the Executive’s separation from
service within the meaning of Section 409A of the Code for any reason
whatsoever, voluntary or involuntary, other than by reason of an approved leave
of absence, to the extent set forth in Section 409A of the Code.

 

Section 1.25   “Trust” shall mean the trust, if any, associated with this Plan
and all of its assets that are held by the Trustee thereunder.

 

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Section 1.26   “Trust Agreement” shall mean the agreement, if any, entered into
between the Company and the Trustee pursuant to Article VII and called the Rabbi
Trust Under the Excess Pension Plan for Executives Sponsored by HF Financial
Corp. and Deferred Compensation Agreements Entered Into by Home Federal Bank.

 

Section 1.27   “Trustee” shall mean the party or parties designated as such
under the Trust Agreement.

 

Section 1.28   “Valuation Date” shall mean the last day of each Plan Year (the
“Annual Valuation Date”), the last day of each calendar quarter, and such other
date or dates during a Plan Year selected by the Administrator.

 

ARTICLE II
PLAN ELIGIBILITY AND PARTICIPATION

 

Section 2.1     Eligibility. Executives of the Company or an affiliated
organization selected by the Board shall be eligible to participate in the Plan.
An Executive shall remain eligible to participate in the Plan with respect to
each Plan Year following his/her initial year of selection by the Board, unless
removed as an eligible Executive with respect to a Plan Year (or Plan Years) by
action of the Board in its sole discretion.

 

Section 2.2     Participation. An Executive shall become a Participant on the
Entry Date next following his/her satisfaction of the Eligibility requirements
under Section 2.1.

 

Section 2.3     Limited Participation. A Participant who without a Termination
of Employment ceases having contribution credits made to his/her Individual
Account by reason of his/her removal from eligibility to participate in the Plan
by the Board) shall become a limited Participant hereunder until such time as
such credits resume or s/he incurs a Termination of Employment. The Individual
Account of a limited Participant shall continue to share in Adjustment credits
under Article IV.

 

ARTICLE III
CONTRIBUTION CREDITS

 

Section 3.1     Company Credits: Defined Benefit Formula. A Participant’s
Individual Account shall be credited with the difference between the annual
benefit accrual credited to such Participant under the HF Financial Corp.
Pension Plan (the “Pension Plan”) under its current cash balance formula and the
amount that would have been credited to such Participant under the benefit
formula in effect prior to July 1, 1999. However, if Participant is in the
“Transition Group” as defined in the Pension Plan and accrues a benefit equal to
the greater of the benefits under the pre-and post-July 1, 1999 formulas under
the Pension Plan, the actual accrual for any Plan Year under the Pension Plan
shall offset and reduce the amount of any contribution to be made under this
Plan for the same Plan Year. Only Participants who hold the title of President
or Executive or Senior Vice President of the Company or an affiliated
organization as of June 30, 1999 and who were employed on July 1, 1999 are
eligible for any contribution credit under this Section 3.1.

 

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Section 3.2     Company Credits: Excess Compensation. The Company shall annually
allocate to each Participant’s Individual Account under this Plan the amount of
annual benefit accrual that did not accrue to the Participant under the Pension
Plan for the Plan Year by reason of the limits imposed under Sections 401(a)(17)
and 415 of the Code. The amount credited to such Participant’s individual
account shall be the current lump sum cash value of the annual benefit accrual
for the relevant Plan Year when converted according to the actuarial assumptions
set forth in the Pension Plan.

 

Section 3.3     Company Credits: Discretionary Contributions. The Company may,
but is not required, to allocate to any Participant’s Individual Account under
the Plan any amount for the Plan Year. The amount of the allocation shall be the
amount determined by the Board in its sole discretion. Such amount is not
required to be uniform among the Participants, and the Company is permitted to
make such Company allocations for some Participants and not for other
Participants. Such Company allocations can be expressed as a fixed dollar
amount; a percentage of compensation, Base Salary, or Fiscal Year Incentives; or
as a matching contribution based on the deferrals made by the Participant.

 

Section 3.4     Salary Deferral Election.

 

(a)       General Rules. Except to the extent provided otherwise in subsection
(c) below with respect to Fiscal Year Incentives, if a Participant is eligible
to participate in this Plan for a Plan Year, the Participant may elect to defer
payment up to 100% of his or her Base Salary to be earned for services to be
performed during a calendar year by timely filing an executed deferral
agreement. To be effective, a deferral agreement must be filed with the Company
before the first day of the calendar year in which the Participant will be paid
for any of the Compensation that is to be deferred; and the deferral agreement
shall remain in effect for that calendar year.

 

(b)      Newly Eligible Participants. To the extent permissible under
Section 409A of the Code, an Executive who first becomes eligible to participate
in the Plan may make a deferral election with respect to Base Salary and Fiscal
Year Incentives within 30 days after the date the Executive becomes eligible to
participate in the Plan. Such election shall apply with respect to Base Salary
to be paid after the date of the election and to a Fiscal Year Incentive accrued
during and after the Plan Year in which the initial election is made, determined
by multiplying the Fiscal Year Incentive by a fraction, the numerator of which
is the number of days remaining in the performance period after the election and
the denominator of which is the total number of days in the performance period.
The election shall become irrevocable as of the date that it is made.

 

(c)       Fiscal Year Incentives. This subsection (c) is effective as of
January 1, 2009. A Participant’s deferral agreement may include an

 

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election to defer payment of up to 100% of a Fiscal Year Incentive, by filing an
executed deferral agreement with the Company before the first day of the Fiscal
Year in which the Participant will begin to earn the Fiscal Year Incentive. The
deferral agreement shall remain in effect with respect to that Fiscal Year
Incentive only until the Fiscal Year Incentive is earned, forfeited or the
performance period expires without the Fiscal Year Incentive having been earned.
Separate elections may be made with respect to each Fiscal Year Incentive for
which the Participant is eligible. Provided, however, that for Fiscal Year
Incentives earned during the fiscal year ending June 30, 2009, a Participant may
also make a deferral election on or before December 31, 2008, but only to the
extent that the Fiscal Year Incentive also meets the definition of
performance-based compensation otherwise permitted to be deferred pursuant to an
election made six months before the end of the performance period under
Section 409A of the Code.

 

ARTICLE IV
INDIVIDUAL ACCOUNTS

 

Section 4.1     Individual Accounts. The Administrator shall establish and
maintain an Individual Account in the name of each Participant, to which the
Administrator shall make the credits set forth in Article III and in the
following Sections of this Article IV. The Individual Accounts of Inactive
Participants shall be maintained in the same manner as those of Active
Participants.

 

Section 4.2     Credit of Investment Fund Adjustment. As of each Valuation Date,
the Administrator shall determine the Adjustment of each Investment Fund for the
period elapsed since the preceding Valuation Date by adding together all income
received and accrued, realized and unrealized profits, and deducting therefrom
all taxes, charges or expenses and any realized or unrealized losses which may
have been sustained. Such Adjustment shall be credited as of the Valuation Date
to the Individual Account of each Participant (including any Inactive
Participant) for whom a balance is maintained with reference to such Investment
Fund for his Individual Account. The Adjustment shall be allocated to the
Individual Account of each such Participant in the same proportion that (i) the
value of the Participant’s Individual Account as of the preceding Valuation Date
(or current Valuation Date in the case of the Participant’s first Valuation
Date) with reference to such Investment Fund, increased by Company contributions
credited since such Valuation Date and decreased by any distributions occurring
since such prior Valuation Date, bears to (ii) the total value of all Individual
Account balances as of such prior Valuation Date with reference to such
Investment Fund, increased by Company contributions credited and decreased by
all such distributions. Distributions made pursuant to Article V and Article VI
shall not share in the credit of Adjustment under this Section.

 

Any of the foregoing to the contrary notwithstanding, if and to the extent that
shares and/or other assets are specifically allocated to an Individual Account,
all

 

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dividends and capital gain distributions with regard to such shares and other
assets, and any other income, gains and/or losses attributable thereto, shall be
directly allocated to such Individual Account.

 

Section 4.3     Designation of Investment Funds. In its sole discretion, the
Administrator may from time to time designate multiple Investment Funds among
which a Participant may choose in accordance with this Section. Such Investment
Funds shall be designated without necessity of amendment to this Plan or the
Trust and shall have the investment objectives prescribed by the Administrator.
In like manner, the Administrator may add or delete a designated Investment Fund
at any time. Any such addition or deletion of a designated Investment Fund shall
be communicated to all Participants.

 

(a)       Participant Elections as to Deemed Investment. To the extent that the
Administrator designates multiple Investment Funds for purposes of the Plan,
each Participant shall be allowed to choose the Investment Fund(s) in which
his/her Individual Account shall be deemed to be invested (“deemed Investment
Fund(s)”), in accordance with this Section.

 

(b)      Initial Investment Election. A Participant’s choice of deemed
Investment Fund(s) shall be the sole responsibility of the Participant. At the
time an Executive becomes a Participant s/he may make an election of deemed
Investment Fund(s) which will apply to his/her Individual Account in its
entirety. Such election and the elections described in paragraphs (c) and
(d) below shall be made in such increments as are prescribed by the
Administrator.

 

(c)       Revised Elections Regarding Investment: In General. A Participant may
elect to change his/her election of deemed Investment Funds. Except as otherwise
specifically provided in this Section, such changes may not be made more
frequently than may be determined by the Administrator in its discretion from
time to time and communicated to Participants, nor effective as of dates other
than may be established by the Administrator for such purpose. Such changes
shall be limited to deemed investment directions involving the Investment
Fund(s) described or referred to in this Section which are available to
Participants on and after the effective date of such revised election. A
Participant’s election to change his or her election of deemed Investment Funds
must be made at least thirty (30) days prior to its effective date, or within
such shorter notice period as the Administrator may permit in its sole
discretion. Any such revised election shall direct the deemed investment of the
entire existing Individual Account balance of the electing Participant as of the
effective date of such election, except to the extent the Administrator may
permit otherwise in accordance

 

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with paragraph (d) below. Any such elections shall conform with the restrictions
under federal securities laws against insider trading.

 

(d)      Revised Elections Regarding Deemed Investment of Existing Individual
Account Balances. If and to the extent the Administrator determines to so permit
from time to time, a Participant may elect to redirect the deemed investment of
his or her existing Individual Account balance independently of any deemed
investment election with respect to future credits to his Individual Account.
Any such election shall be made through such procedures as the Administrator may
establish from time to time for such purpose. Any such election must be made at
least thirty (30) days prior to its effective date, or within such shorter
notice period as the Administrator may permit in its sole discretion. Any such
election must direct the deemed investment of the Participant’s entire existing
Individual Account balance determined as of the effective date of such election.

 

(e)       Default Provision. In the event a Participant fails to properly direct
or redirect the deemed investment of his or her Individual Account in accordance
with the foregoing, the Participant’s directions shall be implemented to the
extent consistent with the foregoing and the remainder of his or her Individual
Account or future credits, as applicable, shall be deemed fully invested in such
default fund as may be established from time to time by the Administrator in its
sole discretion.

 

Section 4.4     Equitable and Alternative Procedures. The Administrator shall
establish regular procedures for the purpose of making the credits, allocations,
valuations and adjustments to Individual Accounts provided for in this
Article IV. Should the Administrator determine that the strict application of
its procedures will not result in an equitable result among the Individual
Accounts, it may modify its procedures for the purpose of achieving an equitable
result in accordance with the principles of the Plan and the provisions of this
Article.

 

In addition to the foregoing and not by way of limitation, the Administrator may
adopt such alternative methods of determining and crediting Adjustment under
Section 4.2 as may be appropriate to the characteristics (whether
administrative, investment or otherwise) of any or all of the deemed Investment
Funds.

 

ARTICLE V
BENEFITS

 

Section 5.1     Entitlement to Benefits. Except as otherwise provided below, a
Participant shall be entitled to payment of a benefit equal to the value of
his/her entire vested Individual Account at such time as s/he elects under
Section 6.2. A Participant shall at all times be 100% vested in the portion of
his/her Individual Account attributable

 

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to salary deferral contributions pursuant to Section 3.3 hereof. With respect to
contributions made by the Company pursuant to Sections 3.1, 3.2 or 3.3, a
Participant shall be vested upon completion of five years of vesting service as
determined under the Pension Plan, with a Participant being credited with years
of service earned prior to the establishment of this Plan.

 

Section 5.2     Death Benefit. In the event of the Termination of Employment of
a Participant (or limited Participant under Section 2.3) by reason of his/her
death, his/her Beneficiary thereupon shall be entitled to a benefit equal to the
remaining value of his/her entire Individual Account.

 

Section 5.3     Change in Control. In the event of a Change in Control, each
Participant thereupon shall become 100% vested in his/her Account and shall be
entitled to payment of a benefit equal to the value of his/her entire Individual
Account.

 

Section 5.4     Unforeseen Emergencies. Notwithstanding any other provision of
the Plan, in the event a Participant suffers an Unforeseeable Emergency within
the contemplation of this Section, such Participant may apply to the
Administrator for a distribution of any vested portion of his/her Individual
Account prior to the time it would otherwise be payable under the Plan.

 

For purposes of this Section 5.4, an Unforeseen Emergency shall mean the
Executive’s severe financial hardship resulting from an unforeseeable emergency
such as (1) an illness or accident of the Executive or the Executive’s spouse or
dependent, (2) the loss of the Executive’s property because of casualty, or
(3) other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Executive, as determined by the
Administrator. The determination of whether a Participant has a qualifying
Unforeseen Emergency and the amount which qualifies for distribution, if any,
shall be made by the Administrator in its sole discretion. The Administrator’s
determination shall be final, binding and conclusive. The Administrator may
require evidence of the purpose and amount of the need, and may establish such
application or other procedures as it deems appropriate. If the Executive
receives a distribution on account of an Unforeseen Emergency or on account of
any other hardship, the Executive’s Salary Deferral Election shall be
terminated. The Executive’s salary deferral election cannot again be filed until
the beginning of the calendar year following the year in which the cessation of
deferrals occur and only if the Executive files a subsequent signed salary
deferral election form with the Company before the beginning of that calendar
year.

 

ARTICLE VI
PAYMENT OF BENEFITS

 

Section 6.1     Payment of Benefits.

 

(a)       Valuation of Benefit. The determination as to the value of an
Individual Account with respect to any benefit hereunder to which a Participant
or Beneficiary shall have become entitled under Article II

 

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shall be made as of the Valuation Date coincident with or next preceding its
date of distribution. The Administrator shall maintain such accounting as shall
be necessary to accommodate the independent elections of time and form of
benefit payment under this Article.

 

(b)      General Conditions.

 

(i)      Any payment made in accordance with the provisions of the Plan to a
Participant or Beneficiary, or to his/her legal representative, shall, to the
extent of the method of computation as well as the amount thereof, constitute
full satisfaction of claims hereunder against the Trustee, the Administrator and
the Company, any of whom may require such Participant, Beneficiary or legal
representative, as a condition precedent to such payment, to execute a receipt
and release therefor.

 

(ii)     Participants and Beneficiaries shall only be entitled to receive
payment of the vested portion of an Individual Account. Vesting shall be
determined in accordance with Section 5.1 hereof and under the vesting terms and
provisions of the Pension Plan, which terms and provisions are incorporated
herein by reference.

 

Section 6.2     Time of Payment. Benefits under the Plan shall be paid on the
first day of the month following the sixth month anniversary of the Executive’s
Termination of Employment. Any of the foregoing to the contrary notwithstanding,
benefits payable by reason of a Change in Control under Section 5.3 shall be
paid on the thirtieth (30) day following the Change in Control.

 

Section 6.3     Form of Benefit Payment. Benefits under the Plan shall be paid
to the Participant in a single lump sum payment.

 

Section 6.4     Death Benefit. In the event a Participant’s benefit becomes
payable by reason of his death under Section 5.3, it shall be paid to his
Beneficiary in cash in a single lump sum on the sixtieth (60) day following the
Participant’s death.

 

ARTICLE VII
THE TRUST

 

Section 7.1     Establishment of Trust. In its sole discretion, the Company may
establish the Trust as a source of funds to assist it in the meeting of its
liabilities under the Plan. The Trust shall be intended to be a “grantor trust,”
of which the Company is the grantor, within the meaning of subpart E, part I,
Subchapter I, Chapter 1, subtitle A of the Code. The principal of the Trust, and
any earnings thereon, shall be held separate and apart from other funds of the
Company and shall be used exclusively for the uses and purposes of Participants
and Beneficiaries and general creditors of the

 

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Company. Participants and Beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust. Any rights created
under the Plan and the Trust shall be mere unsecured contractual rights of
Participants and Beneficiaries against the Company. Any assets held by the Trust
will be subject to the claims of the Company’s general creditors under federal
and state law in the event of “insolvency” as defined under the Trust Agreement.
It is intended that the Plan and Trust not create taxable income to any
Participant or Beneficiary prior to the actual payment of benefits hereunder.

 

Section 7.2       Payments by Trustee. The Trustee shall pay the benefit
attributable to the Individual Account of each Participant at such time and in
such manner as provided under Articles V and VI, at the direction of the
Administrator and in accordance with the terms of the Trust Agreement; provided,
however, payments by the Trustee shall be made only to the extent of amounts
which are deposited to the Trust and Adjustments with respect thereto. Payments
by the Trustee hereunder shall apply to satisfy the obligation of the Company to
pay benefits under the Plan.

 

ARTICLE VIII
PLAN ADMINISTRATION

 

Section 8.1       Authority of Administrator. The Administrator shall
administer, construe and interpret the Plan, in its sole discretion. The
construction and interpretation of any provision of the Plan by the
Administrator shall be final and binding upon all persons. The authority of the
Administrator shall specifically include, but not be limited to the
determination of the following, in accordance with the Plan:

 

(a)                    The amount of contribution credits allocable to any one
or all of the Individual Accounts;

 

(b)                   The time and manner of Individual Account payment;

 

(c)                    The forfeiture of a portion of an Individual Account;

 

(d)                   The Adjustment credits allocable to an Individual Account;
and

 

(e)                    The resolution of any issue regarding the entitlement of
any individual to the payment of any benefit under the Plan.

 

Section 8.2       Delegation. The Administrator and/or the Board may, in their
sole discretion, delegate any of their duties under the Plan to an officer or
employee (or committee thereof) of the Company, who shall serve in such capacity
at their pleasure; provided, however, any delegation hereunder shall be limited
such that an individual may not exercise any discretionary authority which may
affect his interest as a Participant.

 

Section 8.3       Records and Rules. The Administrator shall keep written
records sufficient to reflect the identity of Participants and Individual
Account balances. It shall

 

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adopt such rules as it shall deem reasonable and appropriate to the
administration of the Plan.

 

Section 8.4       Claims Procedure.

 

(a)                    Initial Claim for Benefits. The following shall apply
with respect to claims of the Executive for benefits. The Company shall give
notice to the Executive within 90 days of the Executive’s written application
for benefits of the Executive’s eligibility or noneligibility for benefits under
the Agreement. If the Company determines that the Executive is not eligible for
benefits or full benefits, the notice shall set forth (i) the specific reasons
for such denial, (ii) a specific reference to the provision of the Agreement on
which the denial is based, (iii) a description of any additional information or
material necessary for the Executive to perfect the claim, and a description of
why it is needed, and (iv) an explanation of the Agreement’s claims review
procedure and other appropriate information as to the steps to be taken if the
Executive wishes to have the claim reviewed. If the Company determines that
there are special circumstances requiring additional time to make a decision,
the Company shall give notice to the Executive of the special circumstances and
the date by which a decision is expected to be made, and may extend the time for
up to an additional 90-day period.

 

(b)                   Appeal of Claim Denial. If the Executive is determined by
the Company under subsection (a) above to be not eligible for benefits, or if
the Executive believes that the Executive is entitled to greater or different
benefits, the Executive shall have the opportunity to have the claim reviewed by
filing a petition for review within 60 days after the Executive has been given
the notice issued by the Company. The petition shall be filed with the Company.
A petition shall state the specific reasons the Executive believes that the
Executive is entitled to benefits or greater or different benefits. Within 60
days after the petition has been filed, the Company shall afford the Executive
an opportunity to present the Executive’s position to the Company, in writing,
and the Executive shall have the right to review pertinent documents. The
Company shall give notice to the Executive of its decision in writing within
said 60-day period, stating specifically the basis of the decision written in a
manner calculated to be understood by the Executive and the specific provisions
of the Agreement on which the decision is based. If because of special
circumstances, the 60-day period is not sufficient, the decision may be deferred
for up to another 60-day period at the election of the Company but notice of
this deferral shall be given to the Executive.

 

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(c)                    Deadline to File Claim. To be considered timely under the
claims procedures, a claim must be filed under subsection (a) above within one
year after the claimant knew or reasonably should have known of the principal
facts upon which the claim is based. Knowledge of all facts that the Executive
knew or reasonably should have known shall be imputed to the claimant for the
purpose of applying this deadline.

 

(d)                   Exhaustion of Administrative Remedies. The exhaustion of
the claims procedures is mandatory for resolving every claim and dispute arising
under this Plan. As to such claims and disputes: (i) No claimant shall be
permitted to commence any legal action to recover benefits or to enforce or
clarify rights under the Agreement under Section 502 or Section 510 of ERISA or
under any other provision of law, whether or not statutory, until the claims
procedures have been exhausted in their entirety; and (ii) In any such legal
action all explicit and all implicit determinations by the Company and Company
officials (including, but not limited to, determinations as to whether the
claim, or a request for a review of a denied claim, was timely filed) shall be
afforded the maximum deference permitted by law.

 

(e)                    Deadline to File Legal Action. No legal action to recover
benefits or to enforce or clarify rights under the Plan under Section 502 or
Section 510 of ERISA or under any other provision of law, whether or not
statutory, may be brought by any claimant on any matter pertaining to this Plan
unless the legal action is commenced in the proper forum before the earlier of:
(i) 30 months after the claimant knew or reasonably should have known of the
principal facts on which the claim is based, or (ii) six months after the
claimant has exhausted the claims procedure under this Plan. Knowledge of all
facts that the Executive knew or reasonably should have known shall be imputed
to every claimant who is or claims to be a beneficiary of the Executive or
otherwise claims to derive an entitlement by reference to the Executive for the
purpose of applying the previously specified periods.

 

(f)                      Company Discretion; Court Review. The Company and all
persons determining or reviewing claims have full discretion to determine
benefit claims under the Plan. Any interpretation, determination or other action
of such persons shall be subject to review only if it is arbitrary or capricious
or otherwise an abuse of discretion. Any review of a final decision or action of
the persons reviewing a claim shall be based only on such evidence presented to
or considered by such persons at the time they made the decision that is the
subject of review.

 

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Section 8.5       Legal Incompetence. If any Participant or Beneficiary is a
minor, or is in the judgment of the Administrator otherwise legally incapable of
personally receiving and giving a valid receipt for any payment due him or her
hereunder, the Administrator may, unless and until a claim shall have been made
by a guardian or conservator of such person duly appointed by a court of
competent jurisdiction, direct the Trustee that payment be made to such person’s
spouse, child, parent, brother or sister, or other person deemed by the
Administrator to be a proper person to receive such payment. Any payment so made
shall be a complete discharge of any liability under the Plan for such payment.

 

Section 8.6       Correction of Errors. If any change in records or error
results in any Participant or Beneficiary receiving from the Plan more or less
than he would have been entitled to receive had the records been correct or had
the error not been made, the Administrator, upon discovery of such error, shall
correct the error by adjusting, as far as is practicable, the payments in such a
manner that the benefits to which such person was correctly entitled shall be
paid.

 

ARTICLE IX
PLAN AMENDMENT, TERMINATION AND
DISCONTINUANCE OF CONTRIBUTIONS

 

Section 9.1       Amendment of Plan. The Board shall have the right at any time
to modify, alter or amend the Plan in whole or in part; provided, however, that
no amendment shall have the effect of causing or permitting any part of the
Trust to be used for or diverted to purposes other than for the exclusive
benefit of Participants and Beneficiaries and general creditors of the Company
and no amendment shall have the effect of revesting in the Company any portion
of the Trust, except as may be otherwise provided under the terms of the Trust
Agreement. Similarly, no amendment shall have the effect of reducing a
Participant’s benefit accrued to the date of the amendment or the nonforfeitable
percentage thereof under Article V.

 

No amendment shall operate to increase the duties and responsibilities of the
Trustee except by written instrument duly executed by and between the Employer
and the Trustee.

 

Section 9.2       Termination of Plan or Discontinuance of Contribution Credits.
Although the Company expects the Plan to be continued indefinitely, it reserves
the right to terminate the Plan at any time by action of the Board at its sole
discretion. In similar fashion, it may discontinue some or all contribution
credits from time to time as it shall deem appropriate and necessary, but such
suspension of contribution credits shall not be considered to be a termination
of the Plan. In the event of termination of the Plan or a discontinuance of
contribution credits, the Company shall notify the Trustee and all Participants
in writing of such action.

 

Section 9.3       Distribution upon Complete Termination and Administration
Following Discontinuance of All Contribution Credits. Upon termination of the
Plan, benefits equal to the current value of all Individual Accounts shall
become fully vested.

 

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To the extent consistent with Section 409A of the Code, distribution shall be
payable in a lump sum on the day following the one year anniversary of the
Plan’s termination. The Administrator shall cause a valuation of the deemed
Investment Funds to be made as of the date such assets are reduced to cash, at
which time the balances of Individual Accounts shall be brought up to date in
accordance with Article IV. Upon completion of such accounting and receipt from
the Administrator of directions as to the form of distributions, the Trustee
shall distribute the assets of the Trust to the Participants or Beneficiaries,
as the case may be, in accordance with such directions and the provisions of
Article VI; provided, however, such distributions shall not exceed the total
value of all benefits payable under this Section 9.3; provided further, however,
to the extent such assets shall exceed such benefits, that excess shall be
returned by the Trustee to the Company. If and to the extent such assets shall
be less than the total value of such benefits, the balance shall be paid
directly by the Company to the Participants or Beneficiaries.

 

In the event of a discontinuance of all contribution credits, the Trust and Plan
shall continue to be held and administered in accordance with their terms until
such time as the Plan shall be terminated.

 

ARTICLE X
MISCELLANEOUS PROVISIONS

 

Section 10.1     Employment and Other Rights. No provision of the Plan shall be
deemed to abridge or limit any managerial right of the Company, or to give any
employee or Participant the right to be retained in Employment, or to interfere
with the right of the Company to discharge any such employee or Participant at
any time with or without cause regardless of the effect which such discharge may
have on such Participant. By the act of participation in the Plan, each
Participant, as well as the Participant’s heirs, assigns and Beneficiary, shall
be deemed conclusively to have agreed to and accepted the terms and conditions
of the Plan. The Plan does not create any rights of any Participant, Executive
or Beneficiary or any obligations on the part of the Company other than those
set forth herein. The benefits payable under the Plan shall be independent of,
and in addition to, any other agreements that may exist from time to time
concerning any other compensation or benefits payable by the Company; provided,
however, all amounts paid or payable to a Participant (or Beneficiary) under the
Plan shall be excluded for purposes of calculating the benefit or other
entitlement of any person under any other employee benefit or compensation plan,
program, practice or policy maintained by the Company.

 

Section 10.2     Nonalienation of Benefits. Except as otherwise provided by law,
no benefit, payment or distribution under the Plan shall be subject either to
the claim of any creditor of a Participant or Beneficiary, or to attachment,
garnishment, levy, execution or other legal or equitable process, by any
creditor of such person, and no such person shall have any right to alienate,
commute, anticipate or assign (either at law or equity) all or any portion of
any benefit, payment or distribution under the Plan. The Plan shall not in any
manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder.

 

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In the event that any Participant’s or Beneficiary’s benefits are garnished or
attached by order of any court, the Company may elect to bring an action for a
declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid by the Plan. During the pendency of
said action, any benefits that become payable may be paid into the court as they
become payable, to be distributed by the court to the recipient as it deems
proper at the close of said action.

 

Section 10.3     Withholding and Deductions. All payments made by the Company
and/or Trustee under the Plan to any Participant or Beneficiary shall be subject
to applicable withholding and to such other deductions as shall at the time of
such payment be required under any income tax or other law, whether of the
United States or any other jurisdiction, and, in the case of payments to a
Beneficiary, the delivery to the Administrator and/or Trustee of all necessary
waivers, qualifications and other documentation. Determinations by the
Administrator and/or Trustee as to withholding with respect thereto shall be
binding on the Participant and any Beneficiary(ies).

 

Section 10.4     Construction. In the construction of the Plan, the masculine
shall include the feminine and the singular the plural in all cases where such
meanings would be appropriate.

 

Section 10.5     Controlling Law. The law of the State of South Dakota shall be
the controlling state law in all matters relating to the Plan and shall apply to
the extent that it is not preempted by the laws of the United States of America.

 

Section 10.6     Effect of Invalidity of Provision. If any provision of the Plan
is held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provision had not been included.

 

Section 10.7     Inurement. The Plan shall be binding upon and inure to the
benefit of the Company and its successors and assigns and the Participant and
any Beneficiary, their successors, heirs, executors, administrators and
beneficiaries.

 

Section 10.8     Nature of Participant and Beneficiary Rights. The Plan and
Trust shall at all times constitute an unsecured promise of the Company to pay
benefits under the Plan as they come due. The right of a Participant or
Beneficiary to receive benefits hereunder shall be solely an unsecured claim
against the general assets of the Company. Pursuant to the terms of the Trust
Agreement, a Participant or Beneficiary shall have no claim against or rights in
any specific assets of the Company and all assets of the Trust shall be deemed
general assets of the Company.

 

Section 10.9     Regulatory and Other Guidance. Notwithstanding any other
provision of the Plan, to the extent the Secretary of Treasury and/or Labor
issues Regulations or other guidance with respect to the operation of plans such
as the Plan, and such Regulations or other guidance afford discretion to the
Company not specifically addressed herein, then such discretion shall be deemed
to be implicit in the provisions of the Plan and the Plan may be construed and
operated accordingly.

 

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Section 10.10   Discretion of Administrator. The Administrator shall have the
sole and absolute discretion to take or forego such actions as may be necessary
or appropriate for the administration of the Plan, including such actions as are
described in Article VIII hereof. The exercise of such discretion shall not be
subject to question or review by any person, unless such exercise was arbitrary
and capricious on the part of the Administrator.

 

Section 10.11   Liability. No member of the Board or any committee thereof shall
be liable for any act or action, whether of commission or omission, taken by any
other member, or by any officer, agent or employee of the Company or of any such
body, nor, except in circumstances involving his/her bad faith, for anything
done or omitted to be done by himself/herself.

 

Section 10.12   Section 409A of the Code. This Plan shall be construed to avoid
the excise tax and penalties described in Section 409A of the Code. This Plan
shall be interpreted in a manner consistent with that intent.

 

ARTICLE XI
EXECUTION OF THE PLAN

 

Section 11.1     Execution of the Plan. This document may be executed in any
number of counterparts and each fully executed counterpart shall be deemed an
original.

 

IN WITNESS WHEREOF, the Company has caused this Plan to be signed by its duly
authorized officer and adopted this 31st day of December, 2008, effective as of
January 1, 2009.

 

 

HF FINANCIAL CORP.

 

 

 

 

 

By:

/s/ Curtis L. Hage

 

 

 

 

 

Title:

Chairman, President & CEO

 

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