Exhibit
10.3


 





 


PROMISSORY NOTE


 


	
  Principal

  $4,000,000.00

  	
   

  	
  Loan Date

  10-01-2010

  	
   

  	
  Maturity

  10-01-2011

  	
   

  	
  Loan No

  2187612

  	
   

  	
  Call /
  Coll

  9B / 34

  	
   

  	
  Account

  	
   

  	
  Officer

  TTH

  	
   

  	
  Initials

  
	
  References in the boxes above are for Lender’s use only and do not
  limit the applicability of this document to any particular loan or item.

  Any item above containing “***” has been omitted due to text length
  limitations.

  



 


	
  Borrower:

  	
   

  	
  HF FINANCIAL CORP.

  P.O. Box 5000

  Sioux Falls, SD 57404

  	
   

  	
  Lender:

  	
   

  	
  UNITED BANKERS’ BANK

  1650 West 82nd Street

  Suite 1500

  Bloomington, MN 55431

  (952) 881 5800

  



 




	
  Principal Amount: $4,000,000.00

  	
   

  	
  Date of
  Note: October 1, 2010

  






 


PROMISE TO PAY. 
HF FINANCIAL CORP. (“Borrower”) promises to pay to UNITED BANKERS’ BANK
(“Lender”), or order, in lawful money of the United States of America, the principal
amount of Four Million & 00/100 Dollars ($4,000,000.00) or so much as may
be outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance.


 


PAYMENT. 
Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on October 1, 2011. In addition, Borrower
will pay regular quarterly payments of all accrued unpaid interest due as of
each payment date, beginning January 1, 2011, with all subsequent interest
payments to be due on the same day of each quarter after that. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
late charges; then to any accrued unpaid interest; then to principal; and then
to any unpaid collection costs. Borrower will pay Lender at Lender’s address
shown above or at such other place as Lender may designate in writing.


 


VARIABLE INTEREST RATE.  The interest rate on this
Note is subject to change from time to time based on changes in an index which
is the Lender’s Base or Reference Rate (United Bankers’ Bank Base Rate “UBBR”)
(the “Index”). Lender will tell Borrower the current Index rate upon Borrower’s
request. The interest rate change will not occur more often than each day.
Borrower understands that Lender may make loans based on other rates as well. The Index currently is 3.250% per annum. Interest on the unpaid principal
balance of this Note will  be calculated as described in the “INTEREST
CALCULATION METHOD” paragraph using a rate equal to the Index, adjusted if
necessary for any minimum and maximum rate limitations described below,
resulting in an initial rate of 4.750% per annum based on a year of 360 days.
NOTICE: Under no circumstances will the interest rate on this Note be less than
4.750% per annum or more than the maximum rate allowed by applicable law.


 


INTEREST CALCULATION METHOD.  Interest on this Note is computed on a
365/360 basis; that is, by applying the ratio of the interest rate over a year
of 360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. All interest
payable under this Note is computed using this method.


 


PREPAYMENT.  Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower
of Borrower’s obligation to continue to make payments of accrued unpaid
interest. Rather, early payments will reduce the principal balance due.
Borrower agrees not to send Lender payments marked “paid in full”, “without
recourse”, or similar language. If Borrower sends such a payment, Lender may
accept it without losing any of Lender’s rights under this Note, and Borrower
will remain obligated to pay any further amount owed to Lender. All written
communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes “payment in full”
of the amount owed or that is tendered with other conditions or limitations or
as full satisfaction of a disputed amount must be mailed or delivered to:
UNITED BANKERS’ BANK, 1650 West 82nd Street, Suite 1500, Bloomington, MN
55431.


 


LATE CHARGE.  If a payment is 10 days or more late,
Borrower will be charged 5.000% of the
regularly scheduled payment or $7.28, whichever is greater.


 


INTEREST AFTER DEFAULT.  Upon default, including
failure to pay upon final maturity, the interest rate on this Note shall be increased
by adding an additional 4.000 percentage point margin (“Default Rate Margin”).
The Default Rate Margin shall also apply to each succeeding interest rate
change that would have applied had there been no default. However, in no event
will the interest rate exceed the maximum interest rate limitations under
applicable law.


 


DEFAULT.  Each of the
following shall constitute an event of default (“Event of Default”) under this
Note: 


 


Payment Default.  Borrower fails to make any payment when due
under this Note.


 


Other Defaults.  Borrower
fails to  comply with or
to perform any other term, obligation, covenant or condition contained in this Note
or in any of the related documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement between
Lender and Borrower.


 


False Statements.  Any warranty, representation or statement
made or furnished to Lender by Borrower or on Borrower’s behalf under this Note
or the related documents is false or misleading in any material respect, either
now or at the time made or furnished or becomes false or misleading at any time
thereafter.


 


Insolvency.  The dissolution or termination of Borrower’s
existence as a going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower’s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.


 


Creditor or Forfeiture
Proceedings.  Commencement of
foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This includes a
garnishment of any of Borrower’s accounts, including deposit accounts,
with Lender. However, this Event of Default shall not apply if there is a good
faith dispute by Borrower as to the validity or reasonableness of the claim
which is the basis of the creditor or forfeiture proceeding and if Borrower
gives Lender written notice of the creditor or forfeiture proceeding and
deposits with Lender monies or a surety bond for the creditor or forfeiture
proceeding, in an amount determined by Lender, in its sole discretion, as being
an adequate reserve or bond for the dispute.


 


Events Affecting Guarantor.  Any of the preceding events occurs with respect to any
guarantor, endorser, surety, or accommodation party of any of the indebtedness
or any guarantor, endorser, surety, or accommodation party dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
guaranty of the indebtedness evidenced by this Note.


 


Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.


 


Adverse Change.  A material adverse change
occurs in Borrower’s financial condition, or Lender believes the prospect of
payment or performance of this Note is impaired.


 


Insecurity.  Lender in good faith believes itself
insecure.


 


Cure Provisions.  If any default, other than a default in
payment is curable and if Borrower has not been given a notice of a breach of
the same provision of this Note within the preceding twelve (12) months, it may
be cured if Borrower, after Lender sends written notice to Borrower demanding
cure of such default: (1) cures the default within fifteen (15) days; or (2) if
the cure requires more than fifteen (15) days, immediately initiates steps
which Lender deems in Lender’s sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.


 


LENDER’S RIGHTS. 
Upon default, Lender may declare
the entire unpaid principal balance under this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.


 


ATTORNEYS’ FEES; EXPENSES.  Lender
may hire or pay someone else to help collect this Note if Borrower does
not pay. Borrower will pay Lender that amount. This includes, subject to any
limits under applicable law, Lender’s reasonable attorneys’ fees and Lender’s legal expenses,
whether or not there is a lawsuit, including reasonable attorneys’ fees,
expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), and appeals. If not prohibited by applicable
law, Borrower also will pay any court costs, in addition to all other sums
provided by law.


 


JURY WAIVER.  Lender and Borrower hereby waive
the right to any jury trial in any action, proceeding, or counterclaim brought
by either Lender or Borrower against the other.


 

















 


GOVERNING LAW. 
This Note will be governed by federal law applicable to Lender and, to
the extent not preempted by federal law, the laws of the State of Minnesota without regard to its conflicts of law
provisions. This Note has been accepted by Lender in the State of Minnesota.


 


DISHONORED ITEM FEE. 
Borrower will pay a fee to Lender of $29.00
if Borrower makes a payment on Borrower’s loan and the check or preauthorized
charge with which Borrower pays is later dishonored.


 


RIGHT OF SETOFF. 
To the extent permitted by applicable law,
Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts
Borrower holds jointly with someone else and all accounts Borrower may open in
the future. However, this does not include any IRA or Keogh accounts, or any
trust accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any
and all such accounts, and, at Lender’s option, to administratively freeze all
such accounts to allow Lender to protect Lender’s charge and setoff rights
provided in this paragraph.


 


COLLATERAL.  Borrower acknowledges this Note is secured by all collateral held in
possession by United Bankers’ Bank, including the collateral described in the Commercial Pledge Agreement
dated September 30, 2009.


 


LINE  OF
CREDIT.  This
Note evidences a revolving line of credit. Advances under this Note, as well as
directions for payment from Borrower’s accounts, may be requested orally or in
writing by Borrower or by an authorized person. Lender may, but need not,
require that all oral requests be confirmed in writing. Borrower agrees to be
liable for all sums either: (A) advanced in accordance with the
instructions of an authorized person or (B) credited to any of Borrower’s
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender’s internal
records, including daily computer print-outs. Lender will have no obligation to
advance funds under this Note if: (A) Borrower or any guarantor is in
default under the terms of this Note or any agreement that Borrower or any
guarantor has with Lender, including any agreement made in connection with the
signing of this Note; (B) Borrower or any guarantor ceases doing business
or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to
limit, modify or revoke such guarantor’s guarantee of this Note or any other
loan with Lender; (D) Borrower has applied funds provided pursuant to this
Note for purposes other than those authorized by Lender; or (E) Lender in
good faith believes itself insecure.


 


PRIOR NOTE.  This
is a renewal but not a satisfaction of Note No. 2187612.


 


SUCCESSOR INTERESTS.  The
terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs,
personal representatives, successors and assigns, and shall inure to the
benefit of Lender and its successors and assigns.


 


GENERAL PROVISIONS.  If any part of this Note cannot be
enforced, this fact will not affect the rest of the Note. Lender may delay or
forgo enforcing any of its rights or remedies under this Note without
losing them. In addition, Lender shall have all the rights and remedies
provided in the related documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender’s
rights and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to
make expenditures or to take action to perform an obligation of Borrower shall
not affect Lender’s right to declare a default and to exercise its rights and
remedies. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive presentment, demand for payment, and
notice of dishonor. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from
liability. All such parties agree that Lender may renew or extend (repeatedly
and for any length of time) this loan or release any party or guarantor or
collateral; or impair, fail to realize upon or perfect Lender’s security
interest in the collateral; and take any other action deemed necessary by
Lender without the consent of or notice to anyone. All such parties also agree
that Lender may modify this loan without the consent of or notice to anyone
other than the party with whom the modification is made. The obligations under
this Note are joint and several.


 


SECTION DISCLOSURE.  To the extent not preempted by federal law,
this loan is made under Minnesota Statutes, Section 334.01.


 


PRIOR TO SIGNING THIS NOTE, BORROWER READ AND
UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE
INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.


 


BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF
THIS PROMISSORY NOTE. 


 


BORROWER:


 


 


	
  HF FINANCIAL CORP.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Darrel L. Posegate

  	
   

  
	
   

  	
  Darrel L. Posegate, Executive Vice President of

  HF FINANCIAL CORP.

  	
   

  



 


 


2

















 


Addendum to Promissory Note
dated 10/1/10 and


 


Commercial Pledge Agreement
dated 9/30/09 between


 


HF Financial Corp and United
Bankers’ Bank


 


Notwithstanding any provision to the contrary contained in this
Promissory Note dated 10/1/10 and Commercial Pledge Agreement dated 9/30/09 or
any Related Documents unless and until there shall have occurred an Event of
Default which shall not have been cured pursuant to the Cure Provisions, their
shall be no restrictions on the ability of the Borrower or Bank to declare and
pay dividends to their respective shareholder(s).


 


                                                                                                                                                     


 




	
  United Bankers’ Bank

  	
   

  	
  HF Financial Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Todd Holzwarth

  	
   

  	
  By: 

  	
  /s/ Darrel Posegate

  
	
   

  	
  Todd Holzwarth, VP

  	
   

  	
   

  	
  Darrel Posegate, EVP