**Exhibit10.3**

 

 

**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 principalamount of Four Million & 00/100 Dollars ($4,000,000.00) or so much as maybe outstanding, together with interest on the unpaid outstanding principalbalance of each advance. Interest shall be calculated from the date of eachadvance until repayment of each advance.**

 

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

 

**VARIABLE INTEREST RATE. **The interest rate on thisNote is subject to change from time to time based on changes in an index whichis 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’srequest. 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 principalbalance of this Note will****be calculated as described in the “INTERESTCALCULATION METHOD” paragraph using a rate equal to the Index, adjusted ifnecessary 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 than4.750% per annum or more than the maximum rate allowed by applicable law.

 

**INTEREST CALCULATION METHOD.  Interest on this Note is computed on a365/360 basis; that is, by applying the ratio of the interest rate over a yearof 360 days, multiplied by the outstanding principal balance, multiplied by theactual number of days the principal balance is outstanding. All interestpayable under this Note is computed using this method.**

 

**PREPAYMENT. **Borrower may pay without penalty all or a portion of theamount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrowerof Borrower’s obligation to continue to make payments of accrued unpaidinterest. Rather, early payments will reduce the principal balance due.Borrower agrees not to send Lender payments marked “paid in full”, “withoutrecourse”, or similar language. If Borrower sends such a payment, Lender mayaccept it without losing any of Lender’s rights under this Note, and Borrowerwill remain obligated to pay any further amount owed to Lender. All writtencommunications concerning disputed amounts, including any check or otherpayment instrument that indicates that the payment constitutes “payment in full”of the amount owed or that is tendered with other conditions or limitations oras full satisfaction of a disputed amount must be mailed or delivered to:UNITED BANKERS’ BANK, 1650 West 82nd Street, Suite 1500, Bloomington, MN55431.

 

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

 

**INTEREST AFTER DEFAULT. **Upon default, includingfailure to pay upon final maturity, the interest rate on this Note shall be increasedby adding an additional 4.000 percentage point margin (“Default Rate Margin”).The Default Rate Margin shall also apply to each succeeding interest ratechange that would have applied had there been no default. However, in no eventwill the interest rate exceed the maximum interest rate limitations underapplicable law.

 

**DEFAULT. **Each of thefollowing shall constitute an event of default (“Event of Default”) under thisNote: 

 

**Payment Default.**  Borrower fails to make any payment when dueunder this Note.

 

**Other Defaults. **Borrowerfails to****comply with orto perform any other term, obligation, covenant or condition contained in this Noteor in any of the related documents or to comply with or to perform any term,obligation, covenant or condition contained in any other agreement betweenLender and Borrower.

 

**False Statements.**  Any warranty, representation or statementmade or furnished to Lender by Borrower or on Borrower’s behalf under this Noteor the related documents is false or misleading in any material respect, eithernow or at the time made or furnished or becomes false or misleading at any timethereafter.

 

**Insolvency.**  The dissolution or termination of Borrower’sexistence as a going business, the insolvency of Borrower, the appointment of areceiver for any part of Borrower’s property, any assignment for the benefit ofcreditors, any type of creditor workout, or the commencement of any proceedingunder any bankruptcy or insolvency laws by or against Borrower.

 

**Creditor or ForfeitureProceedings. **Commencement offoreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,repossession or any other method, by any creditor of Borrower or by anygovernmental agency against any collateral securing the loan. This includes agarnishment of any of Borrower’s accounts, including deposit accounts,with Lender. However, this Event of Default shall not apply if there is a goodfaith dispute by Borrower as to the validity or reasonableness of the claimwhich is the basis of the creditor or forfeiture proceeding and if Borrowergives Lender written notice of the creditor or forfeiture proceeding anddeposits with Lender monies or a surety bond for the creditor or forfeitureproceeding, in an amount determined by Lender, in its sole discretion, as beingan adequate reserve or bond for the dispute.

 

**Events****Affecting****Guarantor. **Any of the preceding events occurs with respect to anyguarantor, endorser, surety, or accommodation party of any of the indebtednessor any guarantor, endorser, surety, or accommodation party dies or becomesincompetent, or revokes or disputes the validity of, or liability under, anyguaranty 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 changeoccurs in Borrower’s financial condition, or Lender believes the prospect ofpayment or performance of this Note is impaired.

 

**Insecurity.**  Lender in good faith believes itselfinsecure.

 

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

 

**LENDER’S RIGHTS. **Upon default, Lender may declarethe entire unpaid principal balance under this Note and all accrued unpaid interestimmediately due, and then Borrower will pay that amount.

 

**ATTORNEYS’ FEES; EXPENSES. **Lendermay hire or pay someone else to help collect this Note if Borrower doesnot pay. Borrower will pay Lender that amount. This includes, subject to anylimits 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 anyautomatic stay or injunction), and appeals. If not prohibited by applicablelaw, Borrower also will pay any court costs, in addition to all other sumsprovided by law.

 

**JURY****WAIVER****.  Lender and Borrower hereby waivethe right to any jury trial in any action, proceeding, or counterclaim broughtby either Lender or Borrower against the other.**

 

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

 

**DISHONORED ITEM FEE. **Borrower will pay a fee to Lender of $29.00if Borrower makes a payment on Borrower’s loan and the check or preauthorizedcharge 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 accountsBorrower holds jointly with someone else and all accounts Borrower may open inthe future. However, this does not include any IRA or Keogh accounts, or anytrust accounts for which setoff would be prohibited by law. Borrower authorizesLender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against anyand all such accounts, and, at Lender’s option, to administratively freeze allsuch accounts to allow Lender to protect Lender’s charge and setoff rightsprovided in this paragraph.

 

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

 

**LINE******OFCREDIT. **ThisNote evidences a revolving line of credit. Advances under this Note, as well asdirections for payment from Borrower’s accounts, may be requested orally or inwriting by Borrower or by an authorized person. Lender may, but need not,require that all oral requests be confirmed in writing. Borrower agrees to beliable for all sums either: (A) advanced in accordance with theinstructions of an authorized person or (B) credited to any of Borrower’saccounts with Lender. The unpaid principal balance owing on this Note at anytime may be evidenced by endorsements on this Note or by Lender’s internalrecords, including daily computer print-outs. Lender will have no obligation toadvance funds under this Note if: (A) Borrower or any guarantor is indefault under the terms of this Note or any agreement that Borrower or anyguarantor has with Lender, including any agreement made in connection with thesigning of this Note; (B) Borrower or any guarantor ceases doing businessor is insolvent; (C) any guarantor seeks, claims or otherwise attempts tolimit, modify or revoke such guarantor’s guarantee of this Note or any otherloan with Lender; (D) Borrower has applied funds provided pursuant to thisNote for purposes other than those authorized by Lender; or (E) Lender ingood faith believes itself insecure.

 

**PRIOR****NOTE****.  **Thisis a renewal but not a satisfaction of Note No. 2187612.

 

**SUCCESSOR****INTERESTS. **Theterms of this Note shall be binding upon Borrower, and upon Borrower’s heirs,personal representatives, successors and assigns, and shall inure to thebenefit of Lender and its successors and assigns.

 

**GENERAL****PROVISIONS.** If any part of this Note cannot beenforced, this fact will not affect the rest of the Note. Lender may delay orforgo enforcing any of its rights or remedies under this Note withoutlosing them. In addition, Lender shall have all the rights and remediesprovided in the related documents or available at law, in equity, orotherwise. Except as may be prohibited by applicable law, all of Lender’srights and remedies shall be cumulative and may be exercised singularly orconcurrently. Election by Lender to pursue any remedy shall not exclude pursuitof any other remedy, and an election tomake expenditures or to take action to perform an obligation of Borrower shallnot affect Lender’s right to declare a default and to exercise its rights andremedies. Borrower and any other person who signs, guarantees or endorses thisNote, to the extent allowed by law, waive presentment, demand for payment, andnotice of dishonor. Upon any change in the terms of this Note, and unlessotherwise expressly stated in writing, no party who signs this Note, whether asmaker, guarantor, accommodation maker or endorser, shall be released fromliability. All such parties agree that Lender may renew or extend (repeatedlyand for any length of time) this loan or release any party or guarantor orcollateral; or impair, fail to realize upon or perfect Lender’s securityinterest in the collateral; and take any other action deemed necessary byLender without the consent of or notice to anyone. All such parties also agreethat Lender may modify this loan without the consent of or notice to anyoneother than the party with whom the modification is made. The obligations underthis 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 ANDUNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLEINTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.**

 

**BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OFTHIS PROMISSORY NOTE.**

** **

**BORROWER:**

 

 
| **HF FINANCIAL CORP.** | ** **                                                              |
|------------------------|-------------------------------------------------------------------------|
| ** **             | ** **                                                              | ** ** |
| **By:**                | **/s/ Darrel L. Posegate**                                              | ** ** |
| ** **             | **Darrel L. Posegate, Executive Vice President of  HF FINANCIAL CORP.** |   |

 

 

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Addendum to Promissory Notedated 10/1/10 and

 

Commercial Pledge Agreementdated 9/30/09 between

 

HF Financial Corp and UnitedBankers’ Bank

 

Notwithstanding any provision to the contrary contained in thisPromissory Note dated 10/1/10 and Commercial Pledge Agreement dated 9/30/09 orany Related Documents unless and until there shall have occurred an Event ofDefault which shall not have been cured pursuant to the Cure Provisions, theirshall be no restrictions on the ability of the Borrower or Bank to declare andpay 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 |

 

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