GUARANTEE AGREEMENT




 




HF FINANCIAL CORP.




 




Dated as of July 11, 2002




 





























 




TABLE OF

CONTENTS




 




	

  ARTICLE I DEFINITIONS AND INTERPRETATION


  
	

   


  
	

  SECTION 1.1


  	

  Definitions

  and Interpretation


  
	

   


  	

   


  
	

  ARTICLE II POWERS, DUTIES

  AND RIGHTS OF THE GUARANTEE TRUSTEE


  
	

   


  
	

  SECTION

  2.1


  	

  Powers

  and Duties of the Guarantee Trustee


  
	

   


  	

   


  
	

  SECTION

  2.2


  	

  Certain

  Rights of the Guarantee Trustee


  
	

   


  	

   


  
	

  SECTION

  2.3


  	

  Not

  Responsible for Recitals or Issuance of Guarantee


  
	

   


  	

   


  
	

  SECTION 2.4


  	

  Events of

  Default; Waiver


  
	

   


  	

   


  
	

  SECTION 2.5


  	

  Events of

  Default; Notice


  
	

   


  	

   


  
	

  ARTICLE III THE

  GUARANTEE TRUSTEE


  
	

   


  
	

  SECTION

  3.1


  	

  The

  Guarantee Trustee; Eligibility


  
	

   


  	

   


  
	

  SECTION

  3.2


  	

  Appointment,

  Removal and Resignation of the Guarantee Trustee


  
	

   


  	

   


  
	

  ARTICLE IV GUARANTEE


  
	

   


  
	

  SECTION 4.1


  	

  Guarantee


  
	

   


  	

   


  
	

  SECTION 4.2


  	

  Waiver of Notice and Demand


  
	

   


  	

   


  
	

  SECTION 4.3


  	

  Obligations Not

  Affected


  
	

   


  	

   


  
	

  SECTION 4.4


  	

  Rights of Holders


  
	

   


  	

   


  
	

  SECTION 4.5


  	

  Guarantee of Payment


  
	

   


  	

   


  
	

  SECTION 4.6


  	

  Subrogation


  
	

   


  	

   


  
	

  SECTION 4.7


  	

  Independent

  Obligations


  
	

   


  	

   


  
	

  SECTION 4.8


  	

  Enforcement


  
	

   


  	

   


  
	

  ARTICLE V LIMITATION OF TRANSACTIONS;

  SUBORDINATION


  
	

   


  
	

  SECTION 5.1


  	

  Limitation of

  Transactions


  
	

   


  	

   


  
	

  SECTION 5.2


  	

  Ranking


  





 




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  ARTICLE VI

  TERMINATION


  
	

   


  
	

  SECTION 6.1


  	

  Termination


  
	

   


  	

   


  
	

  ARTICLE VII

  INDEMNIFICATION


  
	

   


  
	

  SECTION 7.1


  	

  Exculpation


  
	

   


  	

   


  
	

  SECTION 7.2


  	

  Indemnification


  
	

   


  	

   


  
	

  SECTION

  7.3


  	

  Compensation;

  Reimbursement of Expenses


  
	

   


  	

   


  
	

  ARTICLE VIII

  MISCELLANEOUS


  
	

   


  
	

  SECTION 8.1


  	

  Successors and

  Assigns


  
	

   


  	

   


  
	

  SECTION 8.2


  	

  Amendments


  
	

   


  	

   


  
	

  SECTION 8.3


  	

  Notices


  
	

   


  	

   


  
	

  SECTION 8.4


  	

  Benefit


  
	

   


  	

   


  
	

  SECTION 8.5


  	

  Governing Law


  
	

   


  	

   


  
	

  SECTION 8.6


  	

  Counterparts


  





 




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GUARANTEE AGREEMENT




 




This GUARANTEE AGREEMENT (the “Guarantee”), dated as

of July 11, 2002, is executed and delivered by HF Financial Corp., a savings

and loan holding company incorporated in Delaware (the “Guarantor”), and

Wilmington Trust Company, a Delaware banking corporation, as trustee (the

“Guarantee Trustee”), for the benefit of the Holders (as defined herein) from

time to time of the Capital Securities (as defined herein) of HF Financial

Capital Trust II, a Delaware statutory business trust (the “Issuer”).




 




WHEREAS, pursuant to an Amended and Restated

Declaration of Trust (the “Declaration”), dated as of July 11, 2002, among the

trustees named therein of the Issuer, HF Financial Corp., as sponsor, and the

Holders from time to time of undivided beneficial interests in the assets of

the Issuer, the Issuer is issuing on the date hereof securities, having an aggregate

liquidation amount of up to $5,000,000, designated the Floating Rate MMCapSSM

(the “Capital Securities”); and




 




WHEREAS, as incentive for the Holders to purchase the

Capital Securities, the Guarantor desires irrevocably and unconditionally to

agree, to the extent set forth in this Guarantee, to pay to the Holders of

Capital Securities the Guarantee Payments (as defined herein) and to make

certain other payments on the terms and conditions set forth herein.




 




NOW, THEREFORE, in consideration of the purchase by

each Holder of the Capital Securities, which purchase the Guarantor hereby

agrees shall benefit the Guarantor, the Guarantor executes and delivers this

Guarantee for the benefit of the Holders.




 




ARTICLE I




 




DEFINITIONS AND INTERPRETATION




 




SECTION 1.1                          Definitions and

Interpretation.




 




In this Guarantee, unless the context otherwise

requires:




 




(a)                                  capitalized

terms used in this Guarantee but not defined in the preamble above have the

respective meanings assigned to them in this Section 1.1;




 




(b)                                 a

term defined anywhere in this Guarantee has the same meaning throughout;




 




(c)                                  all

references to “the Guarantee” or “this Guarantee” are to this Guarantee as

modified, supplemented or amended from time to time;




 




(d)                                 all

references in this Guarantee to Articles and Sections are to Articles and

Sections of this Guarantee, unless otherwise specified;




 





























 




(e)                                  terms

defined in the Declaration as at the date of execution of this Guarantee have

the same meanings when used in this Guarantee, unless otherwise defined in this

Guarantee or unless the context otherwise requires; and




 




(f)                                    a

reference to the singular includes the plural and vice versa.




 




“Beneficiaries” means any Person to whom the Issuer is

or hereafter becomes indebted or liable.




 




“Corporate Trust Office” means the office of the

Guarantee Trustee at which the corporate trust business of the Guarantee

Trustee shall, at any particular time, be principally administered, which

office at the date of execution of this Guarantee is located at Rodney Square

North, 1100 North Market Street, Wilmington, Delaware 19890-0001.




 




“Covered Person” means any Holder of Capital

Securities.




 




“Debentures” means the junior subordinated debentures

of HF Financial Corp., designated the Floating Rate Junior Subordinated Debt

Securities due 2032, held by the Institutional Trustee (as defined in the

Declaration) of the Issuer.




 




“Event of Default” has the meaning set forth in

Section 2.4.




 




“Guarantee Payments” means the following payments or

distributions, without duplication, with respect to the Capital Securities, to

the extent not paid or made by the Issuer: (i) any accrued and unpaid

Distributions (as defined in the Declaration) which are required to be paid on

such Capital Securities to the extent the Issuer has funds available in the

Property Account (as defined in the Declaration) therefor at such time, (ii)

the Redemption Price (as defined in the Indenture) to the extent the Issuer has

funds available in the Property Account therefor at such time, with respect to

any Capital Securities called for redemption by the Issuer, (iii) the Special

Redemption Price (as defined in the Indenture) to the extent the Issuer has

funds available in the Property Account therefor at such time, with respect to

Capital Securities called for redemption upon the occurrence of a Special Event

(as defined in the Indenture), and (iv) upon a voluntary or involuntary

liquidation, dissolution, winding-up or termination of the Issuer (other than

in connection with the distribution of Debentures to the Holders of the Capital

Securities in exchange therefor as provided in the Declaration), the lesser of

(a) the aggregate of the liquidation amount and all accrued and unpaid

Distributions on the Capital Securities to the date of payment, to the extent

the Issuer has funds available in the Property Account therefor at such time,

and (b) the amount of assets of the Issuer remaining available for distribution

to Holders in liquidation of the Issuer after satisfaction of liabilities to

creditors of the Issuer as required by applicable law (in either case, the

“Liquidation Distribution”).




 




“Guarantee Trustee” means Wilmington Trust Company,

until a Successor Guarantee Trustee has been appointed and has accepted such

appointment pursuant to the terms of this Guarantee and thereafter means each

such Successor Guarantee Trustee.




 




“Holder” means any holder, as registered on the books

and records of the Issuer, of any Capital Securities; provided, however,

that, in determining whether the holders of the




 




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requisite percentage of Capital Securities have given any request,

notice, consent or waiver hereunder, “Holder” shall not include the Guarantor

or any Affiliate of the Guarantor.




 




“Indemnified Person” means the Guarantee Trustee

(including in its individual capacity), any Affiliate of the Guarantee Trustee,

or any officers, directors, shareholders, members, partners, employees,

representatives, nominees, custodians or agents of the Guarantee Trustee.




 




“Indenture” means the Indenture, dated as of July 11,

2002, between the Guarantor and Wilmington Trust Company, not in its individual

capacity but solely as trustee, and any indenture supplemental thereto pursuant

to which the Debentures are to be issued to the Institutional Trustee of the

Issuer.




 




“Liquidation Distribution” has the meaning set forth

in the definition of “Guarantee Payments” herein.




 




“Majority in liquidation amount of the Capital

Securities” means Holder(s) of outstanding Capital Securities, voting together

as a class, but separately from the holders of Common Securities, of more than

50% of the aggregate liquidation amount (including the stated amount that would

be paid on redemption, liquidation or otherwise, plus accrued and unpaid

Distributions to, but excluding, the date upon which the voting percentages are

determined) of all Capital Securities then outstanding.




 




“Obligations” means any costs, expenses or liabilities

(but not including liabilities related to taxes) of the Issuer, other than

obligations of the Issuer to pay to holders of any Trust Securities the amounts

due such holders pursuant to the terms of the Trust Securities.




 




“Officer’s Certificate” means, with respect to any

Person, a certificate signed by one Authorized Officer of such Person.  Any Officer’s Certificate delivered with

respect to compliance with a condition or covenant provided for in this

Guarantee shall include:




 




(a)                                  a

statement that each officer signing the Officer’s Certificate has read the

covenant or condition and the definitions relating thereto;




 




(b)                                 a

brief statement of the nature and scope of the examination or investigation

undertaken by each officer in rendering the Officer’s Certificate;




 




(c)                                  a

statement that each such officer has made such examination or investigation as,

in such officer’s opinion, is necessary to enable such officer to express an

informed opinion as to whether or not such covenant or condition has been

complied with; and




 




(d)                                 a

statement as to whether, in the opinion of each such officer, such condition or

covenant has been complied with.




 




“Person” means a legal person, including any

individual, corporation, estate, partnership, joint venture, association, joint

stock company, limited liability company, trust, unincorporated association, or

government or any agency or political subdivision thereof, or any other entity

of whatever nature.




 




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“Responsible Officer” means, with respect to the

Guarantee Trustee, any officer within the Corporate Trust Office of the Guarantee

Trustee with direct responsibility for the administration of any matters

relating to this Guarantee, including any vice president, any assistant vice

president, any secretary, any assistant secretary, the treasurer, any assistant

treasurer, any trust officer or other officer of the Corporate Trust Office of

the Guarantee Trustee customarily performing functions similar to those

performed by any of the above designated officers and also means, with respect

to a particular corporate trust matter, any other officer to whom such matter

is referred because of that officer’s knowledge of and familiarity with the

particular subject.




 




“Successor Guarantee Trustee” means a successor

Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under

Section 3.1.




 




“Trust Securities” means the Common Securities and the

Capital Securities.




 




ARTICLE II




 




POWERS, DUTIES AND RIGHTS OF THE

GUARANTEE TRUSTEE




 




SECTION 2.1                          Powers and Duties of the

Guarantee Trustee.




 




(a)                                  This

Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders

of the Capital Securities, and the Guarantee Trustee shall not transfer this

Guarantee to any Person except a Holder of Capital Securities exercising his or

her rights pursuant to Section 4.4 (b) or to a Successor Guarantee Trustee on

acceptance by such Successor Guarantee Trustee of its appointment to act as

Successor Guarantee Trustee.  The right,

title and interest of the Guarantee Trustee shall automatically vest in any

Successor Guarantee Trustee, and such vesting and cessation of title shall be

effective whether or not conveyancing documents have been executed and

delivered pursuant to the appointment of such Successor Guarantee Trustee.




 




(b)                                 If

an Event of Default actually known to a Responsible Officer of the Guarantee

Trustee has occurred and is continuing, the Guarantee Trustee shall enforce

this Guarantee for the benefit of the Holders of the Capital Securities.




 




(c)                                  The

Guarantee Trustee, before the occurrence of any Event of Default and after the

curing or waiving of all Events of Default that may have occurred, shall

undertake to perform only such duties as are specifically set forth in this

Guarantee, and no implied covenants shall be read into this Guarantee against

the Guarantee Trustee.  In case an Event

of Default has occurred (that has not been cured or waived pursuant to Section

2.4(b)) and is actually known to a Responsible Officer of the Guarantee

Trustee, the Guarantee Trustee shall exercise such of the rights and powers

vested in it by this Guarantee, and use the same degree of care and skill in

its exercise thereof, as a prudent person would exercise or use under the

circumstances in the conduct of his or her own affairs.




 




(d)                                 No

provision of this Guarantee shall be construed to relieve the Guarantee Trustee

from liability for its own negligent action, its own negligent failure to act,

or its own willful misconduct, except that:




 




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(i)                                     prior

to the occurrence of any Event of Default and after the curing or waiving of

all Events of Default that may have occurred:




 




(A)                              the

duties and obligations of the Guarantee Trustee shall be determined solely by

the express provisions of this Guarantee, and the Guarantee Trustee shall not

be liable except for the performance of such duties and obligations as are

specifically set forth in this Guarantee, and no implied covenants or

obligations shall be read into this Guarantee against the Guarantee Trustee;

and




 




(B)                                in

the absence of bad faith on the part of the Guarantee Trustee, the Guarantee

Trustee may conclusively rely, as to the truth of the statements and the

correctness of the opinions expressed therein, upon any certificates or

opinions furnished to the Guarantee Trustee and conforming to the requirements

of this Guarantee; but in the case of any such certificates or opinions

furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty

to examine the same to determine whether or not on their face they conform to

the requirements of this Guarantee;




 




(ii)                                  the

Guarantee Trustee shall not be liable for any error of judgment made in good

faith by a Responsible Officer of the Guarantee Trustee, unless it shall be

proved that such Responsible Officer of the Guarantee Trustee or the Guarantee

Trustee was negligent in ascertaining the pertinent facts upon which such

judgment was made;




 




(iii)                               the

Guarantee Trustee shall not be liable with respect to any action taken or

omitted to be taken by it in good faith in accordance with the written direction

of the Holders of not less than a Majority in liquidation amount of the Capital

Securities relating to the time, method and place of conducting any proceeding

for any remedy available to the Guarantee Trustee, or exercising any trust or

power conferred upon the Guarantee Trustee under this Guarantee; and




 




(iv)                              no

provision of this Guarantee shall require the Guarantee Trustee to expend or

risk its own funds or otherwise incur personal financial liability in the

performance of any of its duties or in the exercise of any of its rights or

powers, if the Guarantee Trustee shall have reasonable grounds for believing

that the repayment of such funds is not reasonably assured to it under the

terms of this Guarantee, or security and indemnity, reasonably satisfactory to

the Guarantee Trustee, against such risk or liability is not reasonably assured

to it.




 




SECTION 2.2                          Certain Rights of the

Guarantee Trustee.




 




(a)                                  Subject

to the provisions of Section 2.1:




 




(i)                                     The

Guarantee Trustee may conclusively rely, and shall be fully protected in acting

or refraining from acting upon, any resolution, certificate, statement,

instrument, opinion, report, notice, request, direction, consent, order, bond,

debenture, note, other evidence of indebtedness or other paper or document




 




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believed by it to be genuine

and to have been signed, sent or presented by the proper party or parties.




 




(ii)                                  Any

direction or act of the Guarantor contemplated by this Guarantee shall be

sufficiently evidenced by an Officer’s Certificate.




 




(iii)                               Whenever,

in the administration of this Guarantee, the Guarantee Trustee shall deem it

desirable that a matter be proved or established before taking, suffering or

omitting any action hereunder, the Guarantee Trustee (unless other evidence is

herein specifically prescribed) may, in the absence of bad faith on its part,

request and conclusively rely upon an Officer’s Certificate of the Guarantor

which, upon receipt of such request, shall be promptly delivered by the

Guarantor.




 




(iv)                              The

Guarantee Trustee shall have no duty to see to any recording, filing or

registration of any instrument or other writing (or any rerecording, refiling

or reregistration thereof).




 




(v)                                 The

Guarantee Trustee may consult with counsel of its selection, and the advice or

opinion of such counsel with respect to legal matters shall be full and

complete authorization and protection in respect of any action taken, suffered

or omitted by it hereunder in good faith and in accordance with such advice or

opinion.  Such counsel may be counsel to

the Guarantor or any of its Affiliates and may include any of its

employees.  The Guarantee Trustee shall

have the right at any time to seek instructions concerning the administration

of this Guarantee from any court of competent jurisdiction.




 




(vi)                              The

Guarantee Trustee shall be under no obligation to exercise any of the rights or

powers vested in it by this Guarantee at the request or direction of any

Holder, unless such Holder shall have provided to the Guarantee Trustee such

security and indemnity, reasonably satisfactory to the Guarantee Trustee,

against the costs, expenses (including attorneys’ fees and expenses and the

expenses of the Guarantee Trustee’s agents, nominees or custodians) and

liabilities that might be incurred by it in complying with such request or

direction, including such reasonable advances as may be requested by the

Guarantee Trustee; provided, however, that nothing contained in

this Section 2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon

the occurrence of an Event of Default, of its obligation to exercise the rights

and powers vested in it by this Guarantee.




 




(vii)                           The

Guarantee Trustee shall not be bound to make any investigation into the facts

or matters stated in any resolution, certificate, statement, instrument,

opinion, report, notice, request, direction, consent, order, bond, debenture,

note, other evidence of indebtedness or other paper or document, but the

Guarantee Trustee, in its discretion, may make such further inquiry or

investigation into such facts or matters as it may see fit.




 




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(viii)                        The

Guarantee Trustee may execute any of the trusts or powers hereunder or perform

any duties hereunder either directly or by or through agents, nominees,

custodians or attorneys, and the Guarantee Trustee shall not be responsible for

any misconduct or negligence on the part of any agent or attorney appointed

with due care by it hereunder.




 




(ix)                                Any

action taken by the Guarantee Trustee or its agents hereunder shall bind the

Holders of the Capital Securities, and the signature of the Guarantee Trustee

or its agents alone shall be sufficient and effective to perform any such

action.  No third party shall be

required to inquire as to the authority of the Guarantee Trustee to so act or

as to its compliance with any of the terms and provisions of this Guarantee,

both of which shall be conclusively evidenced by the Guarantee Trustee’s or its

agent’s taking such action.




 




(x)                                   Whenever

in the administration of this Guarantee the Guarantee Trustee shall deem it

desirable to receive instructions with respect to enforcing any remedy or right

or taking any other action hereunder, the Guarantee Trustee (A) may request

instructions from the Holders of a Majority in liquidation amount of the

Capital Securities, (B) may refrain from enforcing such remedy or right or

taking such other action until such instructions are received and (C) shall be

protected in conclusively relying on or acting in accordance with such

instructions.




 




(xi)                                The

Guarantee Trustee shall not be liable for any action taken, suffered, or

omitted to be taken by it in good faith and reasonably believed by it to be

authorized or within the discretion or rights or powers conferred upon it by

this Guarantee.




 




(b)                                 No

provision of this Guarantee shall be deemed to impose any duty or obligation on

the Guarantee Trustee to perform any act or acts or exercise any right, power,

duty or obligation conferred or imposed on it, in any jurisdiction in which it

shall be illegal or in which the Guarantee Trustee shall be unqualified or

incompetent in accordance with applicable law to perform any such act or acts

or to exercise any such right, power, duty or obligation.  No permissive power or authority available

to the Guarantee Trustee shall be construed to be a duty.




 




SECTION 2.3                          Not Responsible for

Recitals or Issuance of Guarantee.




 




The recitals contained in this Guarantee shall be

taken as the statements of the Guarantor, and the Guarantee Trustee does not

assume any responsibility for their correctness.  The Guarantee Trustee makes no representation as to the validity

or sufficiency of this Guarantee.




 




SECTION 2.4                          Events of Default; Waiver.




 




(a)                                  An

Event of Default under this Guarantee will occur upon the failure of the

Guarantor to perform any of its payment or other obligations hereunder.




 




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(b)                                 The

Holders of a Majority in liquidation amount of the Capital Securities may,

voting or consenting as a class, on behalf of the Holders of all of the Capital

Securities, waive any past Event of Default and its consequences.  Upon such waiver, any such Event of Default

shall cease to exist, and shall be deemed to have been cured, for every purpose

of this Guarantee, but no such waiver shall extend to any subsequent or other

default or Event of Default or impair any right consequent thereon.




 




SECTION 2.5                          Events of Default; Notice.




 




(a)                                  The

Guarantee Trustee shall, within 90 days after the occurrence of an Event of

Default, transmit by mail, first class postage prepaid, to the Holders of the

Capital Securities, notices of all Events of Default actually known to a

Responsible Officer of the Guarantee Trustee, unless such defaults have been

cured before the giving of such notice, provided, however, that

the Guarantee Trustee shall be protected in withholding such notice if and so

long as a Responsible Officer of the Guarantee Trustee in good faith determines

that the withholding of such notice is in the interests of the Holders of the

Capital Securities.




 




(b)                                 The

Guarantee Trustee shall not be charged with knowledge of any Event of Default

unless the Guarantee Trustee shall have received written notice thereof from

the Guarantor or a Holder of the Capital Securities, or a Responsible Officer

of the Guarantee Trustee charged with the administration of this Guarantee

shall have actual knowledge thereof.




 




ARTICLE III




 




THE GUARANTEE TRUSTEE




 




SECTION 3.1                          The Guarantee Trustee;

Eligibility.




 




(a)                                  There

shall at all times be a Guarantee Trustee which shall:




 




(i)                                     not

be an Affiliate of the Guarantor; and




 




(ii)                                  be

a corporation organized and doing business under the laws of the United States

of America or any State or Territory thereof or of the District of Columbia, or

Person authorized under such laws to exercise corporate trust powers, having a

combined capital and surplus of at least 50 million U.S. dollars ($50,000,000),

and subject to supervision or examination by Federal, State, Territorial or

District of Columbia authority.  If such

corporation publishes reports of condition at least annually, pursuant to law

or to the requirements of the supervising or examining authority referred to

above, then, for the purposes of this Section 3.1(a)(ii), the combined capital

and surplus of such corporation shall be deemed to be its combined capital and

surplus as set forth in its most recent report of condition so published.




 




(b)                                 If

at any time the Guarantee Trustee shall cease to be eligible to so act under

Section 3.1(a), the Guarantee Trustee shall immediately resign in the manner

and with the effect set forth in Section 3.2(c).




 




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(c)                                  If

the Guarantee Trustee has or shall acquire any “conflicting interest” within

the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee

shall either eliminate such interest or resign to the extent and in the manner

provided by, and subject to, this Guarantee.




 




SECTION 3.2                          Appointment,

Removal and Resignation of the Guarantee Trustee.




 




(a)                                  Subject

to Section 3.2(b), the Guarantee Trustee may be appointed or removed without

cause at any time by the Guarantor except during an Event of Default.




 




(b)                                 The

Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until

a Successor Guarantee Trustee has been appointed and has accepted such

appointment by written instrument executed by such Successor Guarantee Trustee

and delivered to the Guarantor.




 




(c)                                  The

Guarantee Trustee appointed to office shall hold office until a Successor

Guarantee Trustee shall have been appointed or until its removal or

resignation.  The Guarantee Trustee may

resign from office (without need for prior or subsequent accounting) by an

instrument in writing executed by the Guarantee Trustee and delivered to the

Guarantor, which resignation shall not take effect until a Successor Guarantee

Trustee has been appointed and has accepted such appointment by an instrument

in writing executed by such Successor Guarantee Trustee and delivered to the

Guarantor and the resigning Guarantee Trustee.




 




(d)                                 If

no Successor Guarantee Trustee shall have been appointed and accepted

appointment as provided in this Section 3.2 within 60 days after delivery of an

instrument of removal or resignation, the Guarantee Trustee resigning or being

removed may petition any court of competent jurisdiction for appointment of a

Successor Guarantee Trustee.  Such court

may thereupon, after prescribing such notice, if any, as it may deem proper,

appoint a Successor Guarantee Trustee.




 




(e)                                  No

Guarantee Trustee shall be liable for the acts or omissions to act of any

Successor Guarantee Trustee.




 




(f)                                    Upon

termination of this Guarantee or removal or resignation of the Guarantee

Trustee pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee

Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3

accrued to the date of such termination, removal or resignation.




 




ARTICLE IV




 




GUARANTEE




 




SECTION 4.1                          Guarantee.




 




(a)                                  The

Guarantor irrevocably and unconditionally agrees to pay in full to the Holders

the Guarantee Payments (without duplication of amounts theretofore paid by the

Issuer), as and when due, regardless of any defense (except as defense of

payment by the Issuer), right of set-off or counterclaim that the Issuer may

have or assert.  The Guarantor’s

obligation to make a 




 




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Guarantee Payment may be satisfied by direct payment of the required

amounts by the Guarantor to the Holders or by causing the Issuer to pay such

amounts to the Holders.




 




(b)                                 The

Guarantor hereby also agrees to assume any and all Obligations of the Issuer

and in the event any such Obligation is not so assumed, subject to the terms

and conditions hereof, the Guarantor hereby irrevocably and unconditionally

guarantees to each Beneficiary the full payment, when and as due, of any and

all Obligations to such Beneficiaries. 

This Guarantee is intended to be for the Beneficiaries who have received

notice hereof.




 




SECTION 4.2                          Waiver

of Notice and Demand.




 




The Guarantor hereby waives notice of acceptance of

this Guarantee and of any liability to which it applies or may apply,

presentment, demand for payment, any right to require a proceeding first

against the Issuer or any other Person before proceeding against the Guarantor,

protest, notice of nonpayment, notice of dishonor, notice of redemption and all

other notices and demands.




 




SECTION 4.3                          Obligations Not Affected.




 




The obligations, covenants, agreements and duties of

the Guarantor under this Guarantee shall in no way be affected or impaired by

reason of the happening from time to time of any of the following:




 




(a)                                  the

release or waiver, by operation of law or otherwise, of the performance or

observance by the Issuer of any express or implied agreement, covenant, term or

condition relating to the Capital Securities to be performed or observed by the

Issuer;




 




(b)                                 the

extension of time for the payment by the Issuer of all or any portion of the

Distributions, Redemption Price, Special Redemption Price, Liquidation

Distribution or any other sums payable under the terms of the Capital

Securities or the extension of time for the performance of any other obligation

under, arising out of, or in connection with, the Capital Securities (other

than an extension of time for the payment of the Distributions, Redemption

Price, Special Redemption Price, Liquidation Distribution or other sums payable

that results from the extension of any interest payment period on the

Debentures or any extension of the maturity date of the Debentures permitted by

the Indenture);




 




(c)                                  any

failure, omission, delay or lack of diligence on the part of the Holders to

enforce, assert or exercise any right, privilege, power or remedy conferred on

the Holders pursuant to the terms of the Capital Securities, or any action on

the part of the Issuer granting indulgence or extension of any kind;




 




(d)                                 the

voluntary or involuntary liquidation, dissolution, sale of any collateral,

receivership, insolvency, bankruptcy, assignment for the benefit of creditors,

reorganization, arrangement, composition or readjustment of debt of, or other

similar proceedings affecting, the Issuer or any of the assets of the Issuer;




 




(e)                                  any

invalidity of, or defect or deficiency in, the Capital Securities;




 




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(f)                                    the

settlement or compromise of any obligation guaranteed hereby or hereby

incurred; or




 




(g)                                 any

other circumstance whatsoever that might otherwise constitute a legal or

equitable discharge or defense of a guarantor, it being the intent of this

Section 4.3 that the obligations of the Guarantor hereunder shall be absolute

and unconditional under any and all circumstances.




 




There shall be no obligation of the Holders to give

notice to, or obtain consent of, the Guarantor with respect to the happening of

any of the foregoing.




 




SECTION 4.4                          Rights of Holders.




 




(a)                                  The

Holders of a Majority in liquidation amount of the Capital Securities have the

right to direct the time, method and place of conducting any proceeding for any

remedy available to the Guarantee Trustee in respect of this Guarantee or to

direct the exercise of any trust or power conferred upon the Guarantee Trustee

under this Guarantee; provided, however, that (subject to

Sections 2.1 and 2.2) the Guarantee Trustee shall have the right to decline to

follow any such direction if the Guarantee Trustee shall determine that the

actions so directed would be unjustly prejudicial to the Holders not taking

part in such direction or if the Guarantee Trustee being advised by counsel

determines that the action or proceeding so directed may not lawfully be taken

or if the Guarantee Trustee in good faith by its board of directors or

trustees, executive committee or a trust committee of directors or trustees

and/or Responsible Officers shall determine that the action or proceeding so

directed would involve the Guarantee Trustee in personal liability.




 




(b)                                 Any

Holder of Capital Securities may institute a legal proceeding directly against

the Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee,

without first instituting a legal proceeding against the Issuer, the Guarantee

Trustee or any other Person.  The

Guarantor waives any right or remedy to require that any such action be brought

first against the Issuer, the Guarantee Trustee or any other Person before so

proceeding directly against the Guarantor.




 




SECTION 4.5                          Guarantee of Payment.




 




This Guarantee creates a guarantee of payment and not

of collection.




 




SECTION 4.6                          Subrogation.




 




The Guarantor shall be subrogated to all (if any)

rights of the Holders of Capital Securities against the Issuer in respect of

any amounts paid to such Holders by the Guarantor under this Guarantee; provided,

however, that the Guarantor shall not (except to the extent required by

applicable provisions of law) be entitled to enforce or exercise any right that

it may acquire by way of subrogation or any indemnity, reimbursement or other

agreement, in all cases as a result of payment under this Guarantee, if, after

giving effect to any such payment, any amounts are due and unpaid under this

Guarantee.  If any amount shall be paid

to the Guarantor in violation of the preceding sentence, the Guarantor agrees

to hold such amount in trust for the Holders and to pay over such amount to the

Holders.




 




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SECTION 4.7                          Independent Obligations.




 




The Guarantor acknowledges that its obligations

hereunder are independent of the obligations of the Issuer with respect to the

Capital Securities and that the Guarantor shall be liable as principal and as

debtor hereunder to make Guarantee Payments pursuant to the terms of this

Guarantee notwithstanding the occurrence of any event referred to in

subsections (a) through (g), inclusive, of Section 4.3 hereof.




 




SECTION 4.8                          Enforcement.




 




A Beneficiary may enforce the Obligations of the

Guarantor contained in Section 4.1(b) directly against the Guarantor, and the

Guarantor waives any right or remedy to require that any action be brought

against the Issuer or any other person or entity before proceeding against the

Guarantor.




 




The Guarantor shall be subrogated to all rights (if

any) of any Beneficiary against the Issuer in respect of any amounts paid to

the Beneficiaries by the Guarantor under this Guarantee; provided, however,

that the Guarantor shall not (except to the extent required by applicable

provisions of law) be entitled to enforce or exercise any rights that it may

acquire by way of subrogation or any indemnity, reimbursement or other

agreement, in all cases as a result of payment under this Guarantee, if, after

giving effect to such payment, any amounts are due and unpaid under this

Guarantee.




 




ARTICLE V




 




LIMITATION OF TRANSACTIONS;

SUBORDINATION




 




SECTION 5.1                          Limitation of Transactions.




 




So long as any Capital Securities remain outstanding,

if (a) there shall have occurred and be continuing an Event of Default or (b)

the Guarantor shall have selected an Extension Period as provided in the

Declaration and such period, or any extension thereof, shall have commenced and

be continuing, then the Guarantor may not (x) declare or pay any dividends or

distributions on, or redeem, purchase, acquire, or make a liquidation payment

with respect to, any of the Guarantor’s capital stock or (y) make any payment

of principal of or interest or premium, if any, on or repay, repurchase or

redeem any debt securities of the Guarantor that rank pari passu in all respects

with or junior in interest to the Debentures (other than (i) payments under

this Guarantee, (ii) repurchases, redemptions or other acquisitions of shares

of capital stock of the Guarantor (A) in connection with any employment

contract, benefit plan or other similar arrangement with or for the benefit of

one or more employees, officers, directors, or consultants, (B) in connection

with a dividend reinvestment or stockholder stock purchase plan or (C) in

connection with the issuance of capital stock of the Guarantor (or securities

convertible into or exercisable for such capital stock), as consideration in an

acquisition transaction entered into prior to the occurrence of the Event of

Default or the applicable Extension Period, (iii) as a result of any exchange

or conversion of any class or series of the Guarantor’s capital stock (or any

capital stock of a subsidiary of the Guarantor) for any class or series of the

Guarantor’s capital stock or of any class or series of the Guarantor’s




 




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indebtedness for any class or series of the Guarantor’s capital stock,

(iv) the purchase of fractional interests in shares of the Guarantor’s capital

stock pursuant to the conversion or exchange provisions of such capital stock

or the security being converted or exchanged, (v) any declaration of a dividend

in connection with any stockholder’s rights plan, or the issuance of rights,

stock or other property under any stockholder’s rights plan, or the redemption

or repurchase of rights pursuant thereto, or (vi) any dividend in the form of

stock, warrants, options or other rights where the dividend stock or the stock

issuable upon exercise of such warrants, options or other rights is the same

stock as that on which the dividend is being paid or ranks pari passu with or junior to

such stock).




 




SECTION 5.2                          Ranking.




 




This Guarantee will constitute an unsecured obligation

of the Guarantor and will rank subordinate and junior in right of payment to

all present and future Senior Indebtedness (as defined in the Indenture) of the

Guarantor.  By their acceptance thereof,

each Holder of Capital Securities agrees to the foregoing provisions of this

Guarantee and the other terms set forth herein.




 




The right of the Guarantor to participate in any

distribution of assets of any of its subsidiaries upon any such subsidiary’s

liquidation or reorganization or otherwise is subject to the prior claims of

creditors of that subsidiary, except to the extent the Guarantor may itself be

recognized as a creditor of that subsidiary. 

Accordingly, the Guarantor’s obligations under this Guarantee will be

effectively subordinated to all existing and future liabilities of the

Guarantor’s subsidiaries, and claimants should look only to the assets of the

Guarantor for payments thereunder. This Guarantee does not limit the incurrence

or issuance of other secured or unsecured debt of the Guarantor, including

Senior Indebtedness of the Guarantor, under any indenture or agreement that the

Guarantor may enter into in the future or otherwise.




 




ARTICLE VI




 




TERMINATION




 




SECTION 6.1                          Termination.




 




This Guarantee shall terminate as to the Capital

Securities (i) upon full payment of the Redemption Price or the Special

Redemption Price, as the case may be, of all Capital Securities then

outstanding, (ii) upon the distribution of all of the Debentures to the Holders

of all of the Capital Securities or (iii) upon full payment of the amounts

payable in accordance with the Declaration upon dissolution of the Issuer.  This Guarantee will continue to be effective

or will be reinstated, as the case may be, if at any time any Holder of Capital

Securities must restore payment of any sums paid under the Capital Securities

or under this Guarantee.




 




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ARTICLE VII




 




INDEMNIFICATION




 




SECTION 7.1                          Exculpation.




 




(a)                                  No

Indemnified Person shall be liable, responsible or accountable in damages or

otherwise to the Guarantor or any Covered Person for any loss, damage or claim

incurred by reason of any act or omission of such Indemnified Person in good

faith in accordance with this Guarantee and in a manner that such Indemnified

Person reasonably believed to be within the scope of the authority conferred on

such Indemnified Person by this Guarantee or by law, except that an Indemnified

Person shall be liable for any such loss, damage or claim incurred by reason of

such Indemnified Person’s negligence or willful misconduct with respect to such

acts or omissions.




 




(b)                                 An

Indemnified Person shall be fully protected in relying in good faith upon the

records of the Issuer or the Guarantor and upon such information, opinions,

reports or statements presented to the Issuer or the Guarantor by any Person as

to matters the Indemnified Person reasonably believes are within such other

Person’s professional or expert competence and who, if selected by such

Indemnified Person, has been selected with reasonable care by such Indemnified

Person, including information, opinions, reports or statements as to the value

and amount of the assets, liabilities, profits, losses, or any other facts

pertinent to the existence and amount of assets from which Distributions to

Holders of Capital Securities might properly be paid.




 




SECTION 7.2                          Indemnification.




 




(a)                                  The

Guarantor agrees to indemnify each Indemnified Person for, and to hold each

Indemnified Person harmless against, any and all loss, liability, damage, claim

or expense incurred without negligence or willful misconduct on the part of the

Indemnified Person, arising out of or in connection with the acceptance or

administration of the trust or trusts hereunder, including but not limited to

the costs and expenses (including reasonable legal fees and expenses) of the

Indemnified Person defending itself against, or investigating, any claim or

liability in connection with the exercise or performance of any of the

Indemnified Person’s powers or duties hereunder.  The obligation to indemnify as set forth in this Section 7.2

shall survive the resignation or removal of the Guarantee Trustee and the

termination of this Guarantee.




 




(b)                                 Promptly

after receipt by an Indemnified Person under this Section 7.2 of notice of

the commencement of any action, such Indemnified Person will, if a claim in

respect thereof is to be made against the Guarantor under this

Section 7.2, notify the Guarantor in writing of the commencement thereof;

but the failure so to notify the Guarantor (i) will not relieve the

Guarantor from liability under paragraph (a) above unless and to the extent

that the Guarantor did not otherwise learn of such action and such failure

results in the forfeiture by the Guarantor of substantial rights and defenses

and (ii) will not, in any event, relieve the Guarantor from any

obligations to any Indemnified Person other than the indemnification obligation

provided in paragraph (a) above.  The

Guarantor shall be entitled to appoint counsel of the




 




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Guarantor’s choice at the Guarantor’s expense to represent the

Indemnified Person in any action for which indemnification is sought (in which

case the Guarantor shall not thereafter be responsible for the fees and

expenses of any separate counsel retained by the Indemnified Person or Persons

except as set forth below); provided, however, that such counsel

shall be satisfactory to the Indemnified Person.  Notwithstanding the Guarantor’s election to appoint counsel to

represent the Indemnified Person in any action, the Indemnified Person shall

have the right to employ separate counsel (including local counsel), and the

Guarantor shall bear the reasonable fees, costs and expenses of such separate

counsel, if (i) the use of counsel chosen by the Guarantor to represent

the Indemnified Person would present such counsel with a conflict of interest,

(ii) the actual or potential defendants in, or targets of, any such action

include both the Indemnified Person and the Guarantor and the Indemnified

Person shall have reasonably concluded that there may be legal defenses

available to it and/or other Indemnified Persons which are different from or

additional to those available to the Guarantor, (iii) the Guarantor shall

not have employed counsel satisfactory to the Indemnified Person to represent

the Indemnified Person within a reasonable time after notice of the institution

of such action or (iv) the Guarantor shall authorize the Indemnified

Person to employ separate counsel at the expense of the Guarantor.  The Guarantor will not, without the prior

written consent of the Indemnified Persons, settle or compromise or consent to

the entry of any judgment with respect to any pending or threatened claim,

action, suit or proceeding in respect of which indemnification or contribution

may be sought hereunder (whether or not the Indemnified Persons are actual or

potential parties to such claim or action) unless such settlement, compromise

or consent includes an unconditional release of each Indemnified Person from

all liability arising out of such claim, action, suit or proceeding.




 




SECTION 7.3                          Compensation;

Reimbursement of Expenses.




 




The Guarantor agrees:




 




(a)                                  to

pay to the Guarantee Trustee from time to time such compensation for all services

rendered by it hereunder as the parties shall agree to from time to time (which

compensation shall not be limited by any provision of law in regard to the

compensation of a trustee of an express trust); and




 




(b)                                 except

as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon

request for all reasonable expenses, disbursements and advances incurred or

made by it in accordance with any provision of this Guarantee (including the

reasonable compensation and the expenses and disbursements of its agents and

counsel), except any such expense, disbursement or advance as may be

attributable to its negligence or willful misconduct.




 




The provisions of this Section 7.3 shall survive the

resignation or removal of the Guarantee Trustee and the termination of this

Guarantee.




 




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ARTICLE VIII




 




MISCELLANEOUS




 




SECTION 8.1                          Successors and Assigns.




 




All guarantees and agreements contained in this

Guarantee shall bind the successors, assigns, receivers, trustees and

representatives of the Guarantor and shall inure to the benefit of the Holders

of the Capital Securities then outstanding. 

Except in connection with any merger or consolidation of the Guarantor

with or into another entity or any sale, transfer or lease of the Guarantor’s

assets to another entity, in each case to the extent permitted under the

Indenture, the Guarantor may not assign its rights or delegate its obligations

under this Guarantee without the prior approval of the Holders of not less than

a Majority in liquidation amount of the Capital Securities.




 




SECTION 8.2                          Amendments.




 




Except with respect to any changes that do not

adversely affect the rights of Holders of the Capital Securities in any

material respect (in which case no consent of Holders will be required), this

Guarantee may be amended only with the prior approval of the Holders of not

less than a Majority in liquidation amount of the Capital Securities.  The provisions of the Declaration with

respect to amendments thereof shall apply equally with respect to amendments of

the Guarantee.




 




SECTION 8.3                          Notices.




 




All notices provided for in this Guarantee shall be in

writing, duly signed by the party giving such notice, and shall be delivered,

telecopied or mailed by first class mail, as follows:




 




(a)                                  If

given to the Guarantee Trustee, at the Guarantee Trustee’s mailing address set

forth below (or such other address as the Guarantee Trustee may give notice of

to the Holders of the Capital Securities):




 




Wilmington

Trust Company


Rodney Square North


1100 North Market Street


Wilmington, Delaware 19890-0001


Attention: Corporate Trust Administration


Telecopy: 302-651-8882


Telephone:  302-651-1000






(b)                                 If

given to the Guarantor, at the Guarantor’s mailing address set forth below (or

such other address as the Guarantor may give notice of to the Holders of the

Capital Securities and to the Guarantee Trustee):




 




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HF

Financial Corp.


225 South Main Avenue


Sioux Falls, South Dakota  57104


Attention: Curtis L. Hage


Telecopy: (605) 333-7621


Telephone: (605) 333-7558




 




(c)                                  If

given to any Holder of the Capital Securities, at the address set forth on the

books and records of the Issuer.




 




All such notices shall be deemed to have been given

when received in person, telecopied with receipt confirmed, or mailed by first

class mail, postage prepaid, except that if a notice or other document is

refused delivery or cannot be delivered because of a changed address of which

no notice was given, such notice or other document shall be deemed to have been

delivered on the date of such refusal or inability to deliver.




 




SECTION 8.4                          Benefit.




 




This Guarantee is solely for the benefit of the

Holders of the Capital Securities and, subject to Section 2.1(a), is not

separately transferable from the Capital Securities.




 




SECTION 8.5                          Governing Law.




 




THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN

ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT

OF LAWS PRINCIPLES THEREOF.




 




SECTION 8.6                          Counterparts.




 




This Guarantee may contain more than one counterpart

of the signature page and this Guarantee may be executed by the affixing of the

signature of the Guarantor and the Guarantee Trustee to any of such counterpart

signature pages.  All of such

counterpart signature pages shall be read as though one, and they shall have

the same force and effect as though all of the signers had signed a single

signature page.




 




17





























 




THIS GUARANTEE is executed as of the day and year

first above written.




 




	

   


  	

  HF Financial Corp.,


  
	

   


  	

   


  	

  as Guarantor


  
	

   


  	

   


  
	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

  Curtis L. Hage


  
	

   


  	

   


  	

  Chairman, President and


  Chief Executive Officer


  
	

   


  	

   


  	

   


  
	

   


  	

   


  
	

   


  	

  WILMINGTON TRUST COMPANY,


  
	

   


  	

   


  	

  as Guarantee Trustee


  
	

   


  	

   


  
	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

  Name:


  
	

   


  	

   


  	

  Title:


  
				





 




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