Exhibit 10.3

HOME FEDERAL BANK

CHANGE-IN-CONTROL AGREEMENT

This Change-in-Control Agreement (the “Agreement”) is entered into as of this
2nd day of July, 2007, by and between Home Federal Bank, a federally chartered
savings bank and Curtis L. Hage (the “Employee”).  As used herein, the term “the
Bank” shall mean Home Federal Bank, or if the context requires, its successor.

WHEREAS, the Employee is currently serving as Chairman and Chief Executive
Officer of the Bank; and

WHEREAS, the Bank is a wholly-owned subsidiary of HF Financial Corp., (the
Holding Company”), and the Holding Company offers its common stock for sale to
the public and is subject to supervision by the Securities and Exchange
Commission (“SEC”); and

WHEREAS, both the Bank and the Holding Company are subject to supervision by the
Office of Thrift Supervision (the “OTS”); and

WHEREAS, the Board of Directors of the Bank recognizes that, as is the case with
publicly held corporations generally, the possibility of a change-in-control of
the Holding Company may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of key management personnel to the detriment of the Bank, the
Holding Company and its stockholders; and

WHEREAS, the Board of Directors of the Bank believes it is in the best interests
of the Bank to enter into this Agreement with the Employee in order to assure
continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to his assigned duties
without distraction in the face of potentially disruptive circumstances arising
from the possibility of a change-in-control of the Holding Company, although no
such change is now known of; and

WHEREAS, the Board of Directors of the Bank has approved and authorized the
execution of this Agreement with the Employee to take effect as stated in
Section 1 hereof.

NOW,THEREFORE, in consideration of the foregoing and of the respective covenants
and agreements of the parties herein contained, it is agreed as follows:

1.                                       Term of Agreement.  This Agreement will
commence on the date hereof and shall continue  while the Employee is employed
with the Bank; provided, however, that if the Employee gives Notice of
Non-extension of Employee’s Employment Agreement, this Agreement shall terminate
when the Employment Agreement terminates.

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2.                                       Change-in-Control.  No benefits shall
be payable hereunder unless there shall have been a Change-in-Control, as set
forth below, and the Employee’s employment is terminated as described in this
Agreement.  For purposes of this Agreement, a “Change-in-Control” shall mean:

a.                                       a change-in-control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), whether or not the Holding Company is then subject to such
reporting requirement; or

b.                                      the public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Holding Company or any
“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
that such person has become the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Holding Company (i) representing 20% or more, but not more than 50%, of the
combined voting power of the Holding Company’s then outstanding securities
unless the transaction resulting in such ownership has been approved in advance
by the Continuing Directors (as hereinafter defined); or (ii) representing more
than 50% of the combined voting power of the Holding Company’s then outstanding
securities (regardless of any approval by the Continuing Directors); provided,
however, that notwithstanding the foregoing, no Change-in-Control shall be
deemed to have occurred for purposes of this Agreement by reason of the
ownership of 20% or more of the total voting capital stock of the Holding
Company then issued and outstanding by the Holding Company, any subsidiary of
the Holding Company or any employee benefit plan of the Holding Company or of
any subsidiary of the Holding Company or any entity holding shares of the Common
Stock organized, appointed or established for, or pursuant to the terms of, any
such plan (any such person or entity described in this clause is referred to
herein as a “Company Entity”); or

c.                                       any acquisition of control as defined
in 12 Code of Federal Regulations Section 574.4, or any successor regulation, of
the Holding Company which would require the filing of an application for
acquisition of control or notice of Change-in-Control in a manner which is set
forth in 12 CFR Section 574.3, or any successor regulation; or

d.                                      the Continuing Directors (as hereinafter
defined), cease to constitute a majority of the Holding Company’s Board of
Directors; or

e.                                       the shareholders of the Holding Company
approve (i) any consolidation or merger of the Holding Company in which the
Holding Company is not the continuing or surviving Holding Company or pursuant
to which shares of Holding Company stock would be converted into cash,
securities or other property, other than a merger of the Holding Company in
which shareholders immediately prior to the merger have the same proportionate
ownership of stock of the surviving Holding Company immediately after the
merger; (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of

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the Holding Company; or (iii) any plan of liquidation or dissolution of the
Holding Company.

For purposes of this definition, “Continuing Director” shall mean any person who
is a member of the Board of Directors of the Holding Company, while such person
is a member of the Board of Directors, who is not an Acquiring Person (as
defined below) or an Affiliate or Associate (as defined below) of an Acquiring
Person, or a representative of an Acquiring Person or of any such Affiliate or
Associate, and who (i) was a member of the Board of Directors on the date of
this Agreement as first written above; or (ii) subsequently becomes a member of
the Board of Directors, if such person’s initial nomination for election or
initial election to the Board of Directors is recommended or approved by a
majority of the Continuing Directors.  For purposes of this definition,
“Acquiring Person” shall mean any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) who or which, together with all Affiliates
and Associates of such person, is the “beneficial owner” (as defined in Rule
13d-3 promulgated under the Exchange Act) directly or indirectly, of securities
of the Holding Company representing 20% or more of the combined voting power of
the Holding Company’s then outstanding securities, but shall not include the
Investors or any Holding Company Entity; and “Affiliate” and “Associate” shall
have their respective meanings ascribed to such terms in Rule 12b-2 promulgated
under the Exchange Act.

3.                                       Termination Following a
Change-in-Control.  If a Change-in-Control shall have occurred, Employee shall
be entitled to the benefits provided in Section 4(a) hereof upon termination of
Employee’s employment during the term of this Agreement unless such termination
is:  (i) because of Employee’s death; (ii) by the Bank for Cause (as defined
below); or (iii) by Employee other than for Good Reason (as defined below):

a.                                       Cause.  Termination by the Bank of
Employee’s employment for “Cause” shall mean termination upon (i) material
violation of a law or regulation which:  (a) governs the Employee’s conduct as
an officer of the Bank; or (b) in the reasonable opinion of the Bank affects the
Employee’s fitness  to serve in his/her position; (ii)  substantial neglect of
the Employee’s duties; (iii) action or inaction, which materially and adversely
impacts the Bank’s safety, soundness, security, assets, customers or employees;
(iv) dishonesty of a material nature; (v) failure to comply with Bank material
rules, regulations or policies; (vi) engaging in personal conduct which, when
considering the Employee’s position with the Bank, would materially detract from
its business reputation in the community served; (vii) material breach of any
material covenant or condition of this Agreement; and (viii) willful and
material misconduct.

Termination for Cause shall be preceded by a fair and complete investigation,
including an opportunity for Employee to provide information he deems relevant.

b.                                      Good Reason.  Employee’s termination of
employment for “Good Reason” shall mean termination by the Employee upon the
occurrence, without his express written consent, within 24 months following a
Change-in-Control of any one or more of the following:

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(i)                                     the assignment to the Employee of any
duties inconsistent in any respect with Employee’s position (including status,
offices, titles, and reporting requirements), authorities, duties, or other
responsibilities as in effect immediately prior to the Change-in-Control or any
other action of the Bank which results in a diminishment in such position,
authority, duties, or responsibilities, other than an insubstantial and
inadvertent action which is remedied by the Bank promptly after receipt of
notice thereof given by Employee;

(ii)                                  a reduction by the Bank in Employee’s base
salary as in effect on the date hereof or as the same shall be increased from
time-to-time;

(iii)                               the failure by the Bank to (a) continue in
effect any material compensation or benefit plan, program, policy or practice in
which Employee was participating at the time of the Change-in-Control, or (b)
provide the Employee with compensation and benefits at least equal (in terms of
benefit levels and/or reward opportunities) to those provided for under each
employee benefit plan, program, policy and practice as in effect immediately
prior to the Change-in-Control (or as in effect following the Change-in-Control,
if greater);

(iv)                              the failure of the Bank to obtain a
satisfactory agreement from any successor to the Bank to assume and agree to
perform this Agreement, as contemplated in Section 7 hereof; and

(v)                                 any purported termination by the Bank of the
Employee’s employment that is not effected pursuant to a Notice of Termination
(as defined below);

The Bank’s right to terminate Employee’s employment pursuant to this Subsection
shall not be affected by the Employee’s incapacity due to physical or mental
illness.  The Employee’s continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.  Employee’s termination of employment for Good Reason as defined in
this Subsection 3(b) shall constitute termination for Good Reason for all
purposes of this Agreement, notwithstanding that the Employee may also thereby
be deemed to have “retired” under any applicable retirement programs of the
Bank.

c.                                       Notice of Termination.  Any purported
termination of the Employee’s employment by the Bank or by the Employee (other
than by reason of the Employee’s death) within 24 months following the month in
which a Change-in-Control occurs, shall be communicated by Notice of Termination
to the other party hereto in accordance with Section 8 hereof.  No purported
termination of the Employee’s employment by the Bank shall be effective if it is
not pursuant to a Notice of Termination.  Failure by the Employee to provide
Notice of Termination shall not limit any of the Employee’s rights under this
Agreement except to the extent the Bank can demonstrate that it suffered actual
damages by reason of such failure.  For purposes of this Agreement, a “Notice of
Termination” shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and the Date of Termination
(as defined below) and shall set forth in reasonable detail the facts and

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circumstances claimed to provide a basis for termination of the Employee’s
employment under the provision so indicated.

d.                                      Date of Termination.  “Date of
Termination” shall mean the date specified in the Notice of Termination (except
in the case of the Employee’s death, in which case Date of Termination shall be
the date of death); provided, however, that if the Employee’s employment is
terminated by the Bank, the date specified in the Notice of Termination shall be
at least 30 days from the date the Notice of Termination is given to the
Employee and if the Employee terminates his employment for Good Reason, the date
specified in the Notice of Termination shall not be more than 60 days from the
date the Notice of Termination is given to the Bank.

4.                                       Compensation Upon Termination. 
Following a Change-in-Control and upon termination of employment during the term
of this Agreement, the Employee shall be entitled to the following benefits:

a.                                       If employment by the Bank is terminated
(A) by the Bank for any reason other than Cause, or (B) by the Employee for Good
Reason, the Employee shall be entitled to the benefits, to be funded from the
general assets of the Bank, provided below:

(i)                                     the Bank shall pay the Employee his full
annual base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given;

(ii)                                  the Bank shall pay the Employee in
accordance with the terms of the Short-Term Incentive Plan, any incentive
payment Employee has a right to receive on the last day of the fiscal year prior
to Employee’s Date of Termination.

(iii)                               the Bank shall pay as severance pay to the
Employee, on the 30th day following the Date of Termination, a lump sum
severance payment equal to 2.99 times the sum of (A) the Employee’s annual base
salary in effect at the time Notice of Termination is given or immediately prior
to the date of the Change-in-Control, whichever is greater, and (B) the amount
determined as follows: (1)  the amount that the Employee had accrued during the
plan year under the Short-Term Incentive Plan as of the first of the month
following the month in which the Change in Control occurred, annualized by
dividing the amount accrued by the number of months from the start of the plan
year to the first of the month following the month in which the Change in
Control occurred multiplied by twelve; plus, (2)  the amount of each of the
Short-Term Incentive Awards, if any, awarded to the Employee in the three years
immediately prior to the Change in Control divided by four; provided, however,
that payments under this subparagraph will be conditioned upon compliance with
paragraph 6 of Employee’s Employment Agreement – Agreement Not to Compete – and
payments made under this subparagraph must be returned to the Bank if the
Employee violates the non-compete provisions contained in that non-compete
paragraph;

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(iv)                              the Bank shall pay the Employee the amount
that has accrued to the Employee under the Long-Term Incentive Plan as of the
first day of the month following the Date of Termination;

(v)                                 (A)  for a 36-month period after the Date of
Termination, the Bank will arrange to provide the Employee with health and
dental insurance substantially similar in design and cost to the Employee as the
health and dental coverage available to the Employee immediately prior to the
Notice of Termination; but all health and dental benefits receivable by the
Employee pursuant to this Subsection (v)(A) shall be discontinued if the
Employee obtains full-time employment providing comparable health and dental
benefits to Employee provided in accordance with this Subsection (v)(A) during
the 36-month period following the Date of Termination; and

(B)  for an 18-month period after the Date of Termination, the Bank will arrange
to provide the Employee with life, disability and other welfare benefits
(“Welfare Benefits”) substantially similar in design and cost to the Employee
immediately prior to the Notice of Termination; but all such Welfare Benefits
receivable by the Employee pursuant to this Subsection (v)(B) shall be
discontinued if the Employee obtains full-time employment providing comparable
Welfare Benefits to Employee provided in accordance with this Subsection (v)(B)
during the 18-month period following the Date of Termination.

(vi)                              payment in accordance with the HF Financial
Corp. Excess Plan for Executives;

(vii)                           payment in accordance with the Deferred
Compensation Agreement;

(viii)                        the Bank shall pay for individual out-placement
counseling services for the Employee in an amount that shall not exceed $10,000
for a period of time not extending beyond the end of the second calendar year
following the calendar year of the Employee’s Date of Termination;

(ix)                                a lump sum payment equal to 18-months of
membership dues to the country club(s) that the Employee is a member of upon his
Date of Termination;

(x)                                   financial planning and tax preparation
expenses, not to exceed $5,000 from the Date of Termination payable for 18
months following the Date of Termination;

(xi)                                a lump sum payment equal to the value of any
other fringe benefits or perquisites provided to the Employee immediately prior
to his Date of Termination; and

(xii)                             in accordance with the HF Financial Corp. 1991
and 2002 Stock Option and Incentive Plan, the vesting of awards and lapsing of
restrictions as set forth in the HF Financial Corp. 1991 and 2002 Stock Option
and Incentive Plan.

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The payments provided for in Section 4(a) (i), (ii), (iii), (iv), (ix), and (xi)
above shall be made on the 30th day following the Date of Termination; provided,
however, that if the amounts of such payments cannot be finally determined on or
before such day, the Bank shall pay to the Employee on such day an estimate as
determined in good faith by the Bank of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest from the date
of such estimated payment at the rate provided in Section 1274(b)(2)(B) of the
Internal Revenue Code of 1986, as amended (the “Code”)) on the 45th day after
the Date of Termination.  Notwithstanding the above, if the Bank determines that
any of the payments in Section 4(a) are subject to 409A(a)(2)(B)(i) of the Code
(or a successor provision), then any such payments shall be delayed until the
first day following the sixth month anniversary of the Employee’s Date of
Termination.

In the event that the amount of the estimated payment exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Bank to the Employee payable no later than 30 days after demand by the Bank
(together with interest from the date of such estimated payment at the rate
provided in Section 1274(b)(2)(B) of the Code). 

b.                                      The Bank shall also pay to the Employee
any reasonable legal fees and reasonable expenses incurred by the Employee (i)
as a result of successful litigation against the Bank for nonpayment of any
benefit hereunder, or (ii) in connection with any dispute with any Federal,
state, or local governmental agency with respect to benefits claimed under this
Agreement.  If the Employee utilizes arbitration to resolve any such dispute,
the Bank will pay any reasonable legal fees and reasonable expenses incurred by
the Employee in connection therewith.

c.                                       The Employee shall not be required to
mitigate the amount of any payment provided for in this Section 4 by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in this Section 4 be reduced by any compensation earned by the Employee as the
result of employment by another employer after the Date of Termination, or
otherwise, except as set forth in Section 4a(v) hereof.

5.                                       Tax Gross Up.

a.                                       Notwithstanding any provision contained
in this Agreement to the contrary, if any amount or benefit to be paid or
provided under Section 4(a) would be an “Excess Parachute Payment,” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”), or any successor provision thereto, but for the application of this
sentence, then the Bank shall make a Tax Gross Up Payment to or on behalf of the
Employee.  For purposes of this Agreement, “Tax Gross Up Payment”  shall mean a
payment to or on behalf of Employee which shall be sufficient to pay, in full,
(a) any excise tax imposed under Section 4999 of the Code on any amount or
benefit to be paid or provided under Section 4(a); and (b) any federal, state
and local income tax, any social security and other employment tax, and any
additional excise tax under Section 4999 of the Code on the amount of the excise
tax

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payment described in subclause (a) of this Section 5, and the aggregate amount
of additional tax payments described in this clause (b); but, (c) excluding any
interest or penalties assessed by the Internal Revenue Service on Employee which
are attributable to Employee’s willful misconduct or negligence. 

b.                                      If requested by Employee or the Bank,
the determination of whether any Tax Gross Up Payment is required pursuant to
the preceding paragraph will be made by an independent accounting firm that is a
“Big-4 Accounting Firm” (or other accounting firm mutually acceptable to
Employee and the Bank) not then-engaged as the Bank’s independent public
auditor, at the expense of the Bank, and the determination such independent
accounting firm will be final and binding on all parties. In making its
determination, the independent accountant will allocate a reasonable portion of
the payments described in Section 4(a)to the value of any personal services
rendered by Employee following the Change in Control and the value of any
non-competition agreement or similar agreements to the extent that such items
reduce the amount of the parachute payment.

6.                                       No Exclusivity Rights.  Nothing in this
Agreement shall prevent or limit the Employee’s continuing or future
participation in any benefit, bonus, incentive, retirement or other plan or
program provided by the Bank and for which the Employee may qualify, nor, except
as provided in Section 13, shall anything herein limit or reduce such rights as
the Employee may have under any other agreement with, or plan, program, policy
or practice of the Bank.  Amounts which are vested benefits or which the
Employee is otherwise entitled to receive under any agreement with, or plan,
program, policy or practice of the Bank (including, without limitation, the cash
out of unused vacation days upon termination of employment) shall be payable in
accordance with such agreement, plan, program, policy or practice, except as
explicitly modified by this Agreement.

7.                                       Successors.

a.                                       The Bank will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or assets of the Bank or of any
division or subsidiary thereof employing the Employee to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Bank would be required to perform if no such succession had taken place. 
Failure of the Bank to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Bank in the same amount and
on the same terms as he would be entitled hereunder if his employment were
terminated for Good Reason following a Change-in-Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination and Notice of
Termination shall be deemed to have been given on such date.

b.                                      This Agreement shall inure to the
benefit of and be enforceable by the Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees.  If the Employee should die

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while any amount would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there is no such designee, to his estate or, if no estate, in
accordance with applicable law.

8.                                       Notice.  For the purpose of this
Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, postage prepaid, addressed to the
other party as follows:

If to the Bank, to:

Home Federal Bank

Attention: Corporate Secretary

225 South Main Avenue

Sioux Falls, SD  57104

If to Employee, to:

Curtis L. Hage

225 S. Main Avenue

Sioux Falls, South Dakota 57104

or to the home address which is maintained on file with the Bank.

Either party to this Agreement may change its address for purposes of this
Section 8 by giving 15 days’ prior notice to the other party hereto.

9.                                       Miscellaneous.  No provision of this
Agreement may be modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by the Employee and such officer
as may be specifically designated by the Board to sign on behalf of the Bank. 
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of South Dakota.

10.                                 Validity.  The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.

11.                                 Counterparts.  This Agreement may be
executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.

12.                                 Arbitration.  Any disputes under this
Agreement will be resolved by arbitration, in the state of South Dakota, by a
mutually-agreeable neutral arbitrator, pursuant to the rules of the American
Arbitration Association.  The decision of the arbitrator shall be final and
binding on the parties.  All information and documentation submitted by the
parties or received from any other source, together with all transcripts of the
hearing(s) or other proceedings, and the arbitrator’s findings, shall be treated
by the arbitrator and the parties as Confidential Information and the
participants agree not to disclose or turn over any such information or
documentation to a third party without

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the prior written consent of the parties, or pursuant to a lawful subpoena or
court order, or an order to obtain a injunctive relief;

13.                                 Employment Agreement. Reference is hereby
made to that certain Agreement, dated contemporaneously with this Agreement, by
and between the Bank and the Employee.  The termination of Employee’s Employment
Agreement by the Bank or its successor, as defined in Section 7 shall have no
effect on the term of this Agreement.  However, the termination of the
Employment Agreement by the Employee shall result in termination of this
Agreement at the same time the Employment Agreement terminates.  All terms and
conditions of Employee’s Employment Agreement, including the non-compete
provisions in paragraph 6, shall continue in force and effect (until termination
of the Employment Agreement in accordance with its terms), including following a
Change-in-Control, except as expressly modified by this Section, except that
when Employee is terminated following a Change-in-Control, the severance
provisions in Employee’s Employment Agreement shall not apply and payments to
the Employee shall be governed by this Agreement.  The mutual promises in this
Agreement and in the Employment Agreement shall serve as consideration for each
agreement contemporaneously executed.

14.                                 Effective Date.  This Agreement shall become
effective as of the date first set forth above.

15.                                 Employment.                           This
Agreement does not constitute a contract of employment or impose on the Bank any
obligation to retain the Employee as an employee, to continue his current
employment status, or to change any employment policies of the Bank.

16.                                 Section 409A of the Code.  It is the intent
of the parties that this Agreement be construed to avoid the excise tax and
penalties described in Section 409A of the Code.  The parties acknowledge that
the Agreement may require amendment to comply with the requirements of Section
409A of the Code.

17.                                 Amendments.  No amendments or additions to
this Agreement shall be binding unless stipulated in writing and signed by both
parties, except as herein otherwise provided.

18.                                 Severability.  The provisions of this
Agreement shall be deemed severable and the invalidity or unenforceability of
any provision shall not affect the validity or unenforceability of the other
provisions hereof.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

By:

Wm. G. Pederson

 

Its:

Chairman, HF Financial Corp.

 

 

Personnel, Compensation and

 

 

Benefits Committee

 

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

 

 

Curtis L. Hage

 

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