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**GUARANTEEAGREEMENT**

 

 

**HFFINANCIAL CORP.**

 

 

**Datedas of November 28, 2001**

 

 

 

 
| **ARTICLE I  DEFINITIONS AND INTERPRETATION**                  |                                                      |
|----------------------------------------------------------------|-----------------------------------------------------------|
|                                                           |                                                      |   |
| Section 1.01                                                   | Definitions and Interpretation                            |   |
|                                                           |                                                      |   |
| **ARTICLE II  POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE** |                                                      |
|                                                           |                                                      |   |
| Section 2.01                                                   | Powers and Duties of the Guarantee Trustee                |   |
|                                                           |                                                      |   |
| Section 2.02                                                   | Certain Rights of Guarantee Trustee                       |   |
|                                                           |                                                      |   |
| Section 2.03                                                   | Not Responsible for Recitals or Issuance of Guarantee     |   |
|                                                           |                                                      |   |
| Section 2.04                                                   | Events of Default; Waiver                                 |   |
|                                                           |                                                      |   |
| Section 2.05                                                   | Events of Default; Notice                                 |   |
|                                                           |                                                      |   |
| **ARTICLE III  GUARANTEE TRUSTEE**                             |                                                      |
|                                                           |                                                      |   |
| Section 3.01                                                   | Guarantee Trustee; Eligibility                            |   |
|                                                           |                                                      |   |
| Section 3.02                                                   | Appointment, Removal and Resignation of Guarantee Trustee |   |
|                                                           |                                                      |   |
| **ARTICLE IV  GUARANTEE**                                      |                                                      |
|                                                           |                                                      |   |
| Section 4.01                                                   | Guarantee                                                 |   |
|                                                           |                                                      |   |
| Section 4.02                                                   | Waiver of Notice and Demand                               |   |
|                                                           |                                                      |   |
| Section 4.03                                                   | Obligations Not Affected                                  |   |
|                                                           |                                                      |   |
| Section 4.04                                                   | Rights of Holders                                         |   |
|                                                           |                                                      |   |
| Section 4.05                                                   | Guarantee of Payment                                      |   |
|                                                           |                                                      |   |
| Section 4.06                                                   | Subrogation                                               |   |
|                                                           |                                                      |   |
| Section 4.07                                                   | Independent Obligations                                   |   |
|                                                           |                                                      |   |
| Section 4.08                                                   | Enforcement                                               |   |
|                                                           |                                                      |   |
| **ARTICLE V  LIMITATION OF TRANSACTIONS; SUBORDINATION**       |                                                      |
|                                                           |                                                      |   |
| Section 5.01                                                   | Limitation of Transactions                                |   |
|                                                           |                                                      |   |
| Section 5.02                                                   | Ranking                                                   |   |
|                                                           |                                                      |   |
| **ARTICLE VI  TERMINATION**                                    |                                                      |
|                                                           |                                                      |   |
| Section 6.0 1                                                  | Termination                                               |   |

 

 

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|                             |                                    |   |
|----------------------------------|-----------------------------------------|--------|
| **ARTICLE VII  INDEMNIFICATION** |                                    |
|                             |                                    |   |
| Section 7.01                     | Exculpation                             |   |
|                             |                                    |   |
| Section 7.02                     | Indemnification                         |   |
|                             |                                    |   |
| Section 7.03                     | Compensation; Reimbursement of Expenses |   |
|                             |                                    |   |
| **ARTICLE VIII  MISCELLANEOUS**  |                                    |
|                             |                                    |   |
| Section 8.0 1                    | Successors and Assigns                  |   |
|                             |                                    |   |
| Section 8.02                     | Amendments                              |   |
|                             |                                    |   |
| Section 8.03                     | Notices                                 |   |
|                             |                                    |   |
| Section 8.04                     | Benefit                                 |   |
|                             |                                    |   |
| Section 8.05                     | Governing Law                           |   |
|                             |                                    |   |
| Section 8.06                     | Counterparts                            |   |
|                             |                                    |   |

 

 

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**GUARANTEE AGREEMENT**

 

This GUARANTEE AGREEMENT(the “Guarantee”), dated as of November 28, 2001, is executed and delivered byHF Financial Corp., a savings and loan holding company incorporated in Delaware(the “Guarantor”), and Wilmington Trust Company, a Delaware bankingcorporation, as trustee (the “Guarantee Trustee”), for the benefit of the Holders (asdefined herein) from time to time of the Capital Securities (as defined herein)of HF Financial Capital Trust I, a Delaware statutory business trust (the“Issuer”).

WHEREAS, pursuant to anAmended and Restated Declaration of Trust (the “Declaration”), dated as ofNovember 28, 2001, among the trustees named therein of the Issuer, HF FinancialCorp., as sponsor, and the Holders from time to time of undivided beneficialinterests in the assets of the Issuer, the Issuer is issuing on the date hereofsecurities, having an aggregate liquidation amount of up to $10,000,000designated the Floating Rate MMCapSSM (the “Capital Securities”);

 

WHEREAS, as incentive forthe Holders to purchase the Capital Securities, the Guarantor desires irrevocablyand unconditionally to agree, to the extent set forth in this Guarantee, to payto the Holders of Capital Securities the Guarantee Payments (as defined herein)and to make certain other payments on the terms and conditions set forthherein; and

NOW, THEREFORE, inconsideration of the purchase by each Holder of the Capital Securities, whichpurchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantorexecutes and delivers this Guarantee for the benefit of the Holders.

**ARTICLE IDEFINITIONS AND INTERPRETATION**

Section 1 .01 Definitions and Interpretation.

In this Guarantee, unlessthe context otherwise requires:

(a)           capitalized terms used in this Guarantee but not definedin the preamble above have the respective meanings assigned to them in thisSection 1.1;

(b)           a term defined anywhere inthis Guarantee has the same meaning throughout;

(c)           all references to “theGuarantee” or “this Guarantee” are to this Guarantee as modified, supplementedor amended from time to time;

(d)           all references in thisGuarantee to Articles and Sections are to Articles and Sections of thisGuarantee, unless otherwise specified;

(e)           terms defined in theDeclaration as at the date of execution of this Guarantee have the samemeanings when used in this Guarantee, unless otherwise defined in thisGuarantee or unless the context otherwise requires; and

(f)            a reference to the singularincludes the plural and vice versa.

 

 

 

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“Beneficiaries” means any Person to whom the Issueris or hereafter becomes indebted or liable.

“Corporate Trust Office” means the office of theGuarantee Trustee at which the corporate trust business of the GuaranteeTrustee shall, at any particular time, be principally administered, whichoffice at the date of execution of this Guarantee Agreement is located atRodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001.

“Covered Person” means any Holder of Capital Securities.

“Debentures” means the junior subordinateddebentures of HF Financial Corp., designated the Floating Rate JuniorSubordinated Debt Securities due 2031, held by the Institutional Trustee (asdefined in the Declaration) of the Issuer.

“Event of Default” has the meaning set forth in Section 2.4.

“Guarantee Payments” meansthe following payments or distributions, without duplication, with respect tothe Capital Securities, to the extent not paid or made by the Issuer: (i) anyaccrued and unpaid Distributions (as defined in theDeclaration) which are required to be paid on such CapitalSecurities to the extent the Issuer shall have funds available in the PropertyAccount (as defined in the Declaration) therefor at such time, (ii) theRedemption Price (as defined in the Indenture) to the extent the Issuerhas funds available in the Property Account therefor at such time, withrespect to any Capital Securities called for redemption by the Issuer, (iii)the Special Redemption Price (as defined in the Indenture) to the extent theIssuer has funds available in the Property Account therefor at such time, withrespect to Capital Securities called for redemption upon the occurrence of aSpecial Event (as defined in the Indenture), and (iv) upon a voluntary orinvoluntary liquidation, dissolution, winding-up or termination of the Issuer(other than in connection with the distribution of Debentures to the Holders ofthe Capital Securities in exchange therefor as provided in the Declaration),the lesser of (a) the aggregate of the liquidation amount and all accrued andunpaid Distributions on the Capital Securities to the date of payment, to theextent the Issuer shall have funds available in the Property Account therefor atsuch time, and (b) the amount of assets of the Issuer remaining available for distribution toHolders in liquidation of the Issuer after satisfaction of liabilities tocreditors 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 suchappointment pursuant to the terms of this Guarantee andthereafter means each such Successor Guarantee Trustee.

“Holder” means any holder, as registered on thebooks and records of the Issuer, of any Capital Securities; provided,however, that, in determining whether the holders of the requisitepercentage of Capital Securities have given any request, notice, consent orwaiver hereunder, “Holder” shall not include the Guarantor or any Affiliate ofthe Guarantor.

“Indemnified Person” means the Guarantee Trustee,any Affiliate of the Guarantee Trustee (including in its individual capacity),or any officers, directors, shareholders, members, partners, employees,representatives, nominees, custodians or agents of the Guarantee Trustee.

 

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“Indenture” means the Indenture dated as of November28, 2001, between the Guarantor and Wilmington Trust Company, not in itsindividual capacity but solely as trustee, and any indenturesupplemental thereto pursuant to which the Debentures are to be issued to the InstitutionalTrustee of the Issuer.

“LiquidationDistribution” has the meaning set forth in the definition of “GuaranteePayments” herein.

“Majority in liquidationamount of the Capital Securities” means Holder(s) of outstanding CapitalSecurities, voting together as a class, but separately from the holders ofCommon Securities, of more than 50% of the aggregate liquidation amount(including the stated amount that would be paid on redemption, liquidation orotherwise, plus accrued and unpaid Distributions to, but excluding, the dateupon which the voting percentages are determined) of all Capital Securitiesthen outstanding.

“Obligations” means anycosts, expenses or liabilities (but not including liabilities related to taxes)of the Issuer, other than obligations of the Issuer to pay to holders of anyTrust Securities the amounts due such holders pursuant to the terms of theTrust Securities.

“Officer’s Certificate” means, with respect to anyPerson, a certificate signed by one Authorized Officer of such Person. AnyOfficer’s Certificate delivered with respect to compliance with a condition orcovenant provided for in this Guarantee shall include:

(a)           a statement that eachofficer signing the Officer’s Certificate has read the covenant or conditionand the definitions relating thereto;

(b)           a brief statement of thenature and scope of the examination or investigation undertaken by each officerin rendering the Officer’s Certificate;

(c)           a statement that each suchofficer has made such examination or investigation as, in such officer’sopinion, is necessary to enable such officer to express an informed opinion asto 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 hasbeen complied with.

“Person” means a legal person, including anyindividual, corporation, estate, partnership, joint venture, association, jointstock company, limited liability company, trust, unincorporated association, orgovernment or any agency or political subdivision thereof, or any other entityof whatever nature.

“Responsible Officer” means, with respect to theGuarantee Trustee, any officer within the Corporate Trust Office of theGuarantee Trustee with direct responsibility for the administration of anymatters relating to this Guarantee, including any Vice President, AssistantVice President, Secretary, Assistant Secretary or any other officer of theGuarantee Trustee customarily performing functions similar to those performedby any of the above designated officers and also, with respect to a particularcorporate trust matter, any other officer to whom such matter is referredbecause of that officer’s knowledge of and familiarity with the particularsubject.

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“Successor GuaranteeTrustee” means a successor Guarantee Trustee possessing the qualifications toact as Guarantee Trustee under Section 3.1.

“Trust Securities” means the Common Securities and the CapitalSecurities.

**ARTICLEIIPOWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE**

 

Section 2.01          Powersand Duties of the Guarantee Trustee.

(a)           This Guarantee shall be heldby the Guarantee Trustee for the benefit of the Holders of the CapitalSecurities, and the Guarantee Trustee shall not transfer this Guarantee to anyPerson except a Holder of Capital Securities exercising his or her rightspursuant to Section 4.4(b) or to a Successor Guarantee Trustee on acceptance bysuch Successor Guarantee Trustee of its appointment to act as SuccessorGuarantee Trustee. The right, title and interest of the Guarantee Trustee shallautomatically vest in any Successor Guarantee Trustee, and such vesting andcessation of title shall be effective whether or not conveyancing documentshave been executed and delivered pursuant to the appointment of such SuccessorGuarantee Trustee.

(b)           If an Event of Defaultactually known to a Responsible Officer of the Guarantee Trustee has occurredand is continuing, the Guarantee Trustee shall enforce this Guarantee for thebenefit of the Holders of the Capital Securities.

(c)           The Guarantee Trustee,before the occurrence of any Event of Default and after curing all Events ofDefault that may have occurred, shall undertake to perform only such duties asare specifically set forth in this Guarantee, and no implied covenants shall beread into this Guarantee against the Guarantee Trustee. In case an Event ofDefault has occurred (that has not been cured or waived pursuant to Section2.4) 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 itby this Guarantee, and use the same degree of care and skill in its exercisethereof, as a prudent person would exercise or use under the circumstances inthe conduct of his or her own affairs.

(d)           No provision of thisGuarantee shall be construed to relieve the Guarantee Trustee from liabilityfor its own negligent action, its own negligent failure to act, or its ownwillful misconduct, except that:

(i)            prior to the occurrence ofany Event of Default and after the curing or waiving of all such Events ofDefault that may have occurred:

(A)          the duties and obligations of the Guarantee Trustee shallbe determined solely by the express provisions of this Guarantee, and theGuarantee Trustee shall not be liable except for the performance of such dutiesand obligations as are specifically set forth in this Guarantee, and no impliedcovenants or obligations shall be read into this Guarantee against theGuarantee Trustee; and

 

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(B)          in the absence of bad faithon the part of the Guarantee Trustee, the Guarantee Trustee may conclusivelyrely, as to the truth of the statements and the correctness of the opinionsexpressed therein, upon any certificates or opinions furnished to the GuaranteeTrustee and conforming to the requirements of this Guarantee; but in the caseof any such certificates or opinions furnished to the Guarantee Trustee, theGuarantee Trustee shall be under a duty to examine the same to determinewhether or not on their face they conform to the requirements of thisGuarantee;

(ii)           the Guarantee Trustee shall not be liable for any error ofjudgment made in good faith by a Responsible Officer of the Guarantee Trustee,unless it shall be proved that such Responsible Officer of the GuaranteeTrustee or the Guarantee Trustee was negligent in ascertaining the pertinentfacts upon which such judgment was made;

(iii)          the Guarantee Trustee shall not be liable with respect toany action taken or omitted to be taken by it in good faith in accordance withthe written direction of the Holders of not less than a Majority in liquidationamount of the Capital Securities relating to the time, method and place ofconducting any proceeding for any remedy available to the Guarantee Trustee, orexercising any trust or power conferred upon the Guarantee Trustee under thisGuarantee; and

(iv)          no provision of thisGuarantee shall require the Guarantee Trustee to expend or risk its own fundsor otherwise incur personal financial liability in the performance of any ofits duties or in the exercise of any of its rights or powers, if the GuaranteeTrustee shall have reasonable grounds for believing that the repayment of suchfunds is not reasonably assured to it under the terms of this Guarantee, orsecurity and indemnity, reasonably satisfactory to the Guarantee Trustee,against such risk or liability is not reasonably assured to it.

Section2.02 Certain Rights of Guarantee Trustee.

(a)                                  Subject to theprovisions of Section 2.1:

(i)            The Guarantee Trustee mayconclusively rely, and shall be fully protected in acting or refraining fromacting 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 believed by it to begenuine and to have been signed, sent or presented by the proper party orparties.

(ii)           Any direction or act of the Guarantorcontemplated by this Guarantee shall be sufficiently evidenced by an Officer’sCertificate.

 

 

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(iii)          Whenever, in the administration of this Guarantee, theGuarantee Trustee shall deem it desirable that a matter be proved orestablished before taking, suffering or omitting any action hereunder, theGuarantee Trustee (unless other evidence is herein specifically prescribed)may, in the absence of bad faith on its part, request and conclusively relyupon an Officer’s Certificate of the Guarantor which, upon receipt of suchrequest, shall be promptly delivered by the Guarantor.

(iv)          The Guarantee Trustee shall have no duty to see to anyrecording, filing or registration of any instrument or other writing (or anyrerecording, refiling or registration thereof).

(v)           The Guarantee Trustee mayconsult with counsel of its selection, and the advice or opinion of suchcounsel with respect to legal matters shall be full and complete authorizationand protection in respect of any action taken, suffered or omitted by ithereunder in good faith and in accordance with such advice or opinion. Suchcounsel may be counsel to the Guarantor or any of its Affiliates and mayinclude any of its employees. The Guarantee Trustee shall have the right at anytime to seek instructions concerning the administration of this Guarantee fromany court of competent jurisdiction.

(vi)          The Guarantee Trustee shall be under no obligation toexercise any of the rights or powers vested in it by this Guarantee at therequest or direction of any Holder, unless such Holder shall have provided tothe Guarantee Trustee such security and indemnity, reasonably satisfactory tothe Guarantee Trustee, against the costs, expenses (including attorneys’ feesand expenses and the expenses of the Guarantee Trustee’s agents, nominees orcustodians) and liabilities that might be incurred by it in complying with suchrequest or direction, including such reasonable advances as may be requested bythe Guarantee Trustee; provided, however, that nothing contained in thisSection 2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon theoccurrence of an Event of Default, of its obligation to exercise the rights andpowers vested in it by this Guarantee.

(vii) The Guarantee Trusteeshall not be bound to make any investigation into the facts or matters statedin any resolution, certificate, statement, instrument, opinion, report, notice,request, direction, consent, order, bond, debenture, note, other evidence ofindebtedness or other paper or document, but the Guarantee Trustee, in itsdiscretion, may make such further inquiry or investigation into such facts ormatters as it may see fit.

(viii) The Guarantee Trusteemay execute any of the trusts or powers hereunder or perform any dutieshereunder either directly or by or through agents, nominees, custodians orattorneys, and the Guarantee Trustee shall not be responsible for anymisconduct or negligence on the part of any agent or attorney appointed withdue care by it hereunder.

 

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(ix)           Any action taken by the Guarantee Trustee or its agentshereunder shall bind the Holders of the Capital Securities, and the signatureof the Guarantee Trustee or its agents alone shall be sufficient and effectiveto perform any such action. No third party shall be required to inquire as tothe authority of the Guarantee Trustee to so act or as to its compliance withany of the terms and provisions of this Guarantee, both of which shall beconclusively evidenced by the Guarantee Trustee’s or its agent’s taking suchaction.

(x)            Whenever in the administration of this Guarantee theGuarantee Trustee shall deem it desirable to receive instructions with respectto enforcing any remedy or right or taking any other action hereunder, theGuarantee Trustee (A) may request instructions from the Holders of a Majorityin liquidation amount of the Capital Securities, (B) may refrain from enforcingsuch remedy or right or taking such other action until such instructions arereceived and (C) shall be protected in conclusively relying on or acting inaccordance with such instructions.

(xi)           The Guarantee Trustee shall not be liable for any actiontaken, suffered, or omitted to be taken by it in good faith and reasonablybelieved by it to be authorized or within the discretion or rights or powersconferred upon it by this Guarantee.

(xii)         No provision of this Guarantee shall be deemed to impose anyduty or obligation on the Guarantee Trustee to perform any act or acts orexercise any right, power, duty or obligation conferred or imposed on it, inany jurisdiction in which it shall be illegal or in which the Guarantee Trusteeshall be unqualified or incompetent in accordance with applicable law toperform any such act or acts or to exercise any such right, power, duty orobligation. No permissive power or authority available to the Guarantee Trusteeshall be construed to be a duty.

Section 2.03 NotResponsible for Recitals or Issuance of Guarantee.

The recitals contained inthis Guarantee shall be taken as the statements of the Guarantor, and theGuarantee Trustee does not assume any responsibility for their correctness. TheGuarantee Trustee makes no representation as to the validity or sufficiency ofthis Guarantee.

Section 2.04 Events ofDefault; Waiver.

(a)           AnEvent of Default under this Guarantee will occur upon the failure of theGuarantor to perform any of its payment or other obligations hereunder.

(b)          TheHolders of a Majority in liquidation amount of Capital Securities may, votingor consenting as a class, on behalf of the Holders of all of the CapitalSecurities, waive any past Event of Default and its consequences. Upon suchwaiver, any such Event of Default shall cease to exist, and shall be deemed tohave been cured, for every purpose of this Guarantee, but no such waiver shallextend to any subsequent or other default or Event of Default or impair anyright consequent thereon.

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Section 2.05 Events ofDefault: Notice.

(a)           TheGuarantee Trustee shall, within 90 days after the occurrence of an Event ofDefault, transmit by mail, first class postage prepaid, to the Holders of theCapital Securities, notices of all Events of Default actually known to aResponsible Officer of the Guarantee Trustee, unless such defaults have beencured before the giving of such notice, provided, however, thatthe Guarantee Trustee shall be protected in withholding such notice if and solong as a Responsible Officer of the Guarantee Trustee in good faith determinesthat the withholding of such notice is in the interests of the Holders of theCapital Securities.

(b)          TheGuarantee Trustee shall not be charged with knowledge of any Event of Defaultunless the Guarantee Trustee shall have received written notice thereof fromthe Guarantor or a Holder of the Capital Securities, or a Responsible Officerof the Guarantee Trustee charged with the administration of this Guaranteeshall have actual knowledge thereof.

**ARTICLE III GUARANTEE TRUSTEE**

Section 3.01 GuaranteeTrustee; Eligibility

(a)           Thereshall 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 thelaws of the United States of America or any State or Territory thereof or ofthe District of Columbia, or Person authorized under such laws to exercisecorporate trust powers, having a combined capital and surplus of at least 50million U.S. dollars ($50,000,000), and subject to supervision or examinationby Federal, State, Territorial or District of Columbia authority. If suchcorporation publishes reports of condition at least annually, pursuant to lawor to the requirements of the supervising or examining authority referred toabove, then, for the purposes of this Section 3.1(a)(ii), the combined capitaland surplus of such corporation shall be deemed to be its combined capital andsurplus as set forth in its most recent report of condition so published.

(b)           Ifat any time the Guarantee Trustee shall cease to be eligible to so act underSection 3.1(a), the Guarantee Trustee shall immediately resign in the mannerand with the effect set out in Section 3.2(c).

(c)           Ifthe Guarantee Trustee has or shall acquire any “conflicting interest” withinthe meaning of Section 3.10(b) of the Trust Indenture Act, the GuaranteeTrustee shall either eliminate such interest or resign to the extent and in themanner provided by, and subject to this Guarantee.

 

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Section 3.02 Appointment,Removal and Resignation of Guarantee Trustee.

(a)           Subjectto Section 3.2(b), the Guarantee Trustee may be appointed or removed withoutcause at any time by the Guarantor except during an Event of Default.

(b)          TheGuarantee Trustee shall not be removed in accordance with Section 3.2(a) untila Successor Guarantee Trustee has been appointed and has accepted suchappointment by written instrument executed by such Successor Guarantee Trusteeand delivered to the Guarantor.

(c)           TheGuarantee Trustee appointed to office shall hold office until a SuccessorGuarantee Trustee shall have been appointed or until its removal orresignation. The Guarantee Trustee may resign from office (without need forprior or subsequent accounting) by an instrument in writing executed by theGuarantee Trustee and delivered to the Guarantor, which resignation shall nottake effect until a Successor Guarantee Trustee has been appointed and hasaccepted such appointment by an instrument in writing executed by suchSuccessor Guarantee Trustee and delivered to the Guarantor and the resigningGuarantee Trustee.

(d)           Ifno Successor Guarantee Trustee shall have been appointed and acceptedappointment as provided in this Section 3.2 within 60 days after delivery of aninstrument of removal or resignation, the Guarantee Trustee resigning or beingremoved may petition any court of competent jurisdiction for appointment of aSuccessor Guarantee Trustee. Such court may thereupon, after prescribing suchnotice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

(e)           NoGuarantee Trustee shall be liable for the acts or omissions to act of anySuccessor Guarantee Trustee.

(f)            Upontermination of this Guarantee or removal or resignation of the GuaranteeTrustee pursuant to this Section 3.2, the Guarantor shall pay to the GuaranteeTrustee all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3accrued to the date of such termination, removal or resignation.

**ARTICLEIVGUARANTEE**

Section 4.01 Guarantee.

(a)           TheGuarantor irrevocably and unconditionally agrees to pay in full to the Holdersthe Guarantee Payments (without duplication of amounts theretofore paid by theIssuer), as and when due, regardless of any defense (except as defense ofpayment by the Issuer), right of set-off or counterclaim that the Issuer mayhave or assert. The Guarantor’s obligation to make a Guarantee Payment may besatisfied by direct payment of the required amounts by the Guarantor to theHolders or by causing the Issuer to pay such amounts to the Holders.

 

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(b)           TheGuarantor hereby also agrees to assume any and all Obligations of the Issuerand in the event any such Obligation is not so assumed, subject to the termsand conditions hereof, the Guarantor hereby irrevocably and unconditionallyguarantees to each Beneficiary the full payment, when and as due, of any andall obligations to such Beneficiaries. This Agreement is intended to be for theBeneficiaries who have received notice hereof.

Section 4.02 Waiver ofNotice and Demand.

                TheGuarantor hereby waives notice of acceptance of this Guarantee and of anyliability to which it applies or may apply, presentment, demand for payment,any right to require a proceeding first against the Issuer or any other Personbefore proceeding against the Guarantor, protest, notice of nonpayment, noticeof dishonor, notice of redemption and all other notices and demands.

Section 4.03 ObligationsNot Affected.

                Theobligations, covenants, agreements and duties of the Guarantor under thisGuarantee shall in no way be affected or impaired by reason of the happeningfrom time to time of any of the following:

(a)           therelease or waiver, by operation of law or otherwise, of the performance orobservance by the Issuer of any express or implied agreement, covenant, term orcondition relating to the Capital Securities to be performed or observed by theIssuer;

(b)          theextension of time for the payment by the Issuer of all or any portion of theDistributions, Redemption Price, Special Redemption Price, LiquidationDistribution or any other sums payable under the terms of the CapitalSecurities or the extension of time for the performance of any other obligationunder, arising out of, or in connection with, the Capital Securities (otherthan an extension of time for payment of Distributions, Redemption Price,Special Redemption Price, Liquidation Distribution or other sum payable thatresults from the extension of any interest payment period on the Debentures orany extension of the maturity date of the Debentures permitted by theIndenture);

(c)           anyfailure, omission, delay or lack of diligence on the part of the Holders toenforce, assert or exercise any right, privilege, power or remedy conferred onthe Holders pursuant to the terms of the Capital Securities, or any action onthe part of the Issuer granting indulgence or extension of any kind;

(d)          thevoluntary 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 othersimilar proceedings affecting, the Issuer or any of the assets of the Issuer;

(e)           anyinvalidity of, or defect or deficiency in, the Capital Securities;

(f)           thesettlement or compromise of any obligation guaranteed hereby or herebyincurred; or

 

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(g)           anyother circumstance whatsoever that might otherwise constitute a legal orequitable discharge or defense of a guarantor, it being the intent of thisSection 4.3 that the obligations of the Guarantor hereunder shall be absoluteand unconditional under any and all circumstances.

                Thereshall 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 4.04 Rights ofHolders.

(a)           TheHolders of a Majority in liquidation amount of the Capital Securities have theright to direct the time, method and place of conducting any proceeding for anyremedy available to the Guarantee Trustee in respect of this Guarantee or todirect the exercise of any trust or power conferred upon the Guarantee Trusteeunder this Guarantee; provided, however, that (subject toSections 2.1 and 2.2) the Guarantee Trustee shall have the right to decline tofollow any such direction if the Guarantee Trustee shall determine that theactions so directed would be unjustly prejudicial to the Holders not takingpart in such direction or if the Guarantee Trustee being advised by counseldetermines that the action or proceeding so directed may not lawfully be takenor if the Guarantor Trustee in good faith by its board of directors ortrustees, executive committees or a trust committee of directors or trusteesand/or Responsible Officers shall determine that the action or proceedings sodirected would involve the Guarantee Trustee in personal liability.

(b)          AnyHolder of Capital Securities may institute a legal proceeding directly againstthe Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee,without first instituting a legal proceeding against the Issuer, the GuaranteeTrustee or any other Person. The Guarantor waives any right or remedy torequire that any such action be brought first against the Issuer, the GuaranteeTrustee or any other Person before so proceeding directly against theGuarantor.

Section 4.05 Guarantee ofPayment.

This Guarantee creates aguarantee of payment and not of collection.

Section 4.06 Subrogation.

                TheGuarantor shall be subrogated to all (if any) rights of the Holders of CapitalSecurities against the Issuer in respect of any amounts paid to such Holders bythe Guarantor under this Guarantee; provided*,*however*,* that the Guarantor shall not (except to the extentrequired by applicable provisions of law) be entitled to enforce or exerciseany right that it may acquire by way of subrogation or any indemnity,reimbursement or other agreement, in all cases as a result of payment underthis Guarantee, if, after giving effect to any such payment, any amounts aredue and unpaid under this Guarantee. If any amount shall be paid to theGuarantor in violation of the preceding sentence, the Guarantor agrees to holdsuch amount in trust for the Holders and to pay over such amount to theHolders.

 

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Section 4.07 IndependentObligations.

                TheGuarantor acknowledges that its obligations hereunder are independent of theobligations of the Issuer with respect to the Capital Securities and that theGuarantor shall be liable as principal and as debtor hereunder to makeGuarantee Payments pursuant to the terms of this Guarantee notwithstanding theoccurrence of any event referred to in subsections (a) through (g), inclusive,of Section 4.3 hereof.

Section 4.08 Enforcement.

                ABeneficiary may enforce the obligations of the Guarantor contained in Section4.1(b) directly against the Guarantor, and the Guarantor waives any right orremedy to require that any action be brought against the Issuer or any otherperson or entity before proceeding against the Guarantor.

                TheGuarantor shall be subrogated to all rights (if any) of any Beneficiary againstthe Issuer in respect of any amounts paid to the Beneficiaries by the Guarantorunder this Guarantee; provided, however, that the Guarantor shallnot (except to the extent required by applicable provisions of law) be entitledto enforce or exercise any rights that it may acquire by way of subrogation orany indemnity, reimbursement or other agreement, in all cases as a result ofpayment under this Guarantee, if, after giving effect to such payment, anyamounts are due and unpaid under this Guarantee.

**ARTICLE VLIMITATION OF TRANSACTIONS; SUBORDINATION**

Section 5.01 Limitationof Transactions.

                Solong as any Capital Securities remain outstanding, if (a) there shall haveoccurred and be continuing an Event of Default or (b) the Guarantor shall haveselected an Extension Period as provided in the Declaration and such period, orany extension thereof, shall have commenced and be continuing, then theGuarantor may not (x) declare or pay any dividends or distributions on, orredeem, purchase, acquire, or make a liquidation payment with respect to, anyof the Guarantor’s capital stock or (y) make any payment of principal of orinterest or premium, if any, on or repay, repurchase or redeem any debtsecurities of the Guarantor that rank *paripassu*in all respects with or junior in interest to the Debentures(other than (i) payments under this Guarantee, (ii) repurchases, redemptions orother acquisitions of shares of capital stock of the Guarantor (A) inconnection with any employment contract, benefit plan or other similararrangement with or for the benefit of one or more employees, officers,directors, or consultants, (B) in connection with a dividend reinvestment orstockholder stock purchase plan or (C) in connection with the issuance ofcapital stock of the Guarantor (or securities convertible into or exercisablefor such capital stock), as consideration in an acquisition transaction enteredinto prior to occurrence of the Event of Default or the applicable ExtensionPeriod, (iii) as a result of any exchange of conversion of any class or seriesof the Guarantor’s capital stock (or any capital stock of a subsidiary of theGuarantor) for any class or series of the Guarantor’s capital stock or of anyclass or series of the Guarantor’s indebtedness for any class or series of theGuarantor’s capital stock, (iv) the purchase of fractional interests in sharesof the Guarantor’s capital stock pursuant to the conversion or exchangeprovisions of such capital stock or the security being converted or exchanged,(v) any declaration of a dividend in connection with any stockholder’s rightsplan, or the issuance of rights, stock or other property under anystockholder’s rights plan, or the redemption or repurchase of rights pursuantthereto, or (vi) any dividend in the form of stock, warrants, options or otherrights where the dividend stock or the stock issuable upon exercise of suchwarrants, options or other rights is the same stock as that on which thedividend is being paid or ranks *pari passu*withor junior to such stock).

 

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Section 5.02 Ranking.

This Guarantee willconstitute an unsecured obligation of the Guarantor and will rank subordinateand 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 thisGuarantee and the other terms set forth herein.

The right of the Guarantorto participate in any distribution of assets of any of its subsidiaries uponany such subsidiary’s liquidation or reorganization or otherwise is subject tothe prior claims of creditors of that subsidiary, except to the extent theGuarantor may itself be recognized as a creditor of that subsidiary.Accordingly, the Guarantor’s obligations under this Guarantee will beeffectively subordinated to all existing and future liabilities of theGuarantor’s subsidiaries, and claimants should look only to the assets of theGuarantor for payments thereunder. This Guarantee does not limit the incurrenceor issuance of other secured or unsecured debt of the Guarantor, includingSenior Indebtedness of the Guarantor, under any indenture or agreement that theGuarantor may enter into in the future or otherwise.

**ARTICLEVITERMINATION**

Section 6.01 Termination.

This Guarantee shallterminate as to the Capital Securities (i) upon full payment of the RedemptionPrice or the Special Redemption Price, as the case may be, of all CapitalSecurities then outstanding, (ii) upon the distribution of all of theDebentures to the Holders of all of the Capital Securities or (iii) upon fullpayment of the amounts payable in accordance with the Declaration upondissolution of the Issuer. This Guarantee will continue to be effective or willbe reinstated, as the case may be, if at any time any Holder of CapitalSecurities must restore payment of any sums paid under the Capital Securitiesor under this Guarantee.

**ARTICLE VIIINDEMNIFICATION**

Section 7.01 Exculpation.

(a)           No Indemnified Person shallbe liable, responsible or accountable in damages or otherwise to theGuarantor or any Covered Person for any loss, damage or claim incurredby reason of any act or omission performed or omitted by such IndemnifiedPerson in good faith in accordance with this Guarantee and in a manner thatsuch Indemnified Person reasonably believed to be within the scope of theauthority conferred on such Indemnified Person by this Guarantee or by law,except that an Indemnified Person shall be liable for any such loss, damage orclaim incurred by reason of such Indemnified Person’s negligence or willfulmisconduct with respect to such acts or omissions.

 

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(b)           An Indemnified Person shallbe fully protected in relying in good faith upon the records of the Issuer orthe Guarantor and upon such information, opinions, reports or statementspresented to the Issuer or the Guarantor by any Person as to matters theIndemnified Person reasonably believes are within such other Person’sprofessional or expert competence and who, if selected by such IndemnifiedPerson, has been selected with reasonable care by such Indemnified Person,including information, opinions, reports or statements as to the value andamount of the assets, liabilities, profits, losses, or any other factspertinent to the existence and amount of assets from which Distributions toHolders of Capital Securities might properly be paid.

Section7.02 Indemnification.

(a)           The Guarantor agrees toindemnify each Indemnified Person for, and to hold each Indemnified Personharmless against, any and all loss, liability, damage, claim or expenseincurred without negligence or willful misconduct on the part of theIndemnified Person, arising out of or in connection with the acceptance or administrationof the trust or trusts hereunder, including but not limited to the costs andexpenses (including reasonable legal fees and expenses) of the IndemnifiedPerson defending itself against, or investigating, any claim or liability inconnection with the exercise or performance of any of the Indemnified Person’spowers or duties hereunder. The obligation to indemnify as set forth in thisSection 7.2 shall survive the resignation or removal of the Guarantee Trusteeand the termination of this Guarantee.

(b)           Promptly after receipt by anIndemnified Person under this Section 7.2 of notice of the commencement of anyaction, such Indemnified Person will, if a claim in respect thereof is to bemade against the Guarantor under this Section 7.2, notify the Guarantor inwriting of the commencement thereof; but the failure so to notify the Guarantor(i) will not relieve the Guarantor from liability under paragraph (a) aboveunless and to the extent that the Guarantor did not otherwise learn of suchaction and such failure results in the forfeiture by the Guarantor ofsubstantial rights and defenses and (ii) will not, in any event, relieve theGuarantor from any obligations to any Indemnified Person other than theindemnification obligation provided in paragraph (a) above. The Guarantor shallbe entitled to appoint counsel of the Guarantor’s choice at the Guarantor’sexpense to represent the Indemnified Person in any action for whichindemnification is sought (in which case the Guarantor shall not thereafter beresponsible for the fees and expenses of any separate counselretained by the Indemnified Person or Persons except as set forthbelow); provided, however, that such counsel shall besatisfactory to the Indemnified Person. Notwithstanding the Guarantor’selection to appoint counsel to represent the Guarantor in an action, theIndemnified Person shall have the right to employ separate counsel (includinglocal counsel), and the Guarantor shall bear the reasonable fees, costs andexpenses of such separate counsel if (i) the use of counsel chosen by theGuarantor to represent the Indemnified Person would present such counsel with aconflict of interest, (ii) the actual or potential defendants in, or targets of, any such actioninclude both the Indemnified Person and the Guarantor and the IndemnifiedPerson shall have reasonably concluded that there may be legal defensesavailable to it and/or other Indemnified Persons which are different from oradditional to those available to the Guarantor, (iii) the Guarantor shall nothave employed counsel satisfactory to the Indemnified Person to represent theIndemnified Person within a reasonable time after notice of the institution ofsuch action or (iv) the Guarantor shall authorize the Indemnified Person toemploy separate counsel at the expense of the Guarantor. The Guarantor willnot, without the prior written consent of the Indemnified Persons, settle orcompromise or consent to the entry of any judgment with respect to any pendingor threatened claim, action, suit or proceeding in respect of whichindemnification or contribution may be sought hereunder (whether or not theIndemnified Persons are actual or potential parties to such claim or action)unless such settlement, compromise or consent includes an unconditional releaseof each Indemnified Person from all liability arising out of such claim,action, suit or proceeding.

 

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Section 7.03 Compensation; Reimbursement of Expenses

The Guarantor agrees:

(a)           to pay to the GuaranteeTrustee from time to time such compensation for all services rendered by ithereunder as the parties shall agree to from time to time (which compensationshall not be limited by any provision of law in regard to the compensation of atrustee of an express trust); and

(b)           except as otherwiseexpressly provided herein, to reimburse the Guarantee Trustee upon request forall reasonable expenses, disbursements and advances incurred or made by it inaccordance with any provision of this Guarantee (including the reasonablecompensation and the expenses and disbursements of its agents and counsel),except any such expense, disbursement or advance as may be attributable to itsnegligence or willful misconduct.

The provisions of thisSection 7.3 shall survive the resignation or removal of the Guarantee Trusteeand the termination of this Guarantee.

**ARTICLE VIIIMISCELLANEOUS**

Section 8.01 Successors and Assigns.

All guarantees andagreements contained in this Guarantee shall bind the successors, assigns,receivers, trustees and representatives of the Guarantor and shall inure to thebenefit of the Holders of the Capital Securities then outstanding. Except inconnection with any merger or consolidation of the Guarantor with or intoanother entity or any sale, transfer or lease of the Guarantor’s assets toanother entity, in each case, to the extent permitted under the Indenture, theGuarantor may not assign its rights or delegate its obligations under thisGuarantee without the prior approval of the Holders of not less than a Majorityin liquidation amount of the Capital Securities.

 

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Section 8.02 Amendments.

Except with respect to anychanges that do not adversely affect the rights of Holders of the CapitalSecurities in any material respect (in which case no consent of Holders will berequired), this Guarantee may be amended only with the prior approval of theHolders of not less than a Majority in liquidation amount of the CapitalSecurities. The provisions of the Declaration with respect to amendmentsthereof shall apply equally with respect to amendments of the Guarantee.

Section 8.03 Notices.

All notices provided for inthis Guarantee shall be in writing, duly signed by the party giving suchnotice, and shall be delivered, telecopied or mailed by first class mail, asfollows:

(a)           If given to the GuaranteeTrustee, at the Guarantee Trustee’s mailing address set forth below (or suchother address as the Guarantee Trustee may give notice of to the Holders of theCapital Securities):

Wilmington Trust CompanyRodney Square North1100 North Market StreetWilmington, Delaware 19890-000 1Attention: Corporate Trust AdministrationTelecopy: 302-65 l-8882Telephone: 302-65 1- 1000

 

(b)           If given to the Guarantor,at the Guarantor’s mailing address set forth below (or such other address asthe Guarantor may give notice of to the Holders of the Capital Securities andto the Guarantee Trustee):

HF Financial Corp. 225 SouthMain AvenueSioux Falls, South Dakota 57104Attention: Curtis L. HageTelecopy: 605-333-7621Telephone: 605-333-7556

 

(c)            If given to any Holder ofthe Capital Securities, at the address set forth on the books and records ofthe Issuer.

All such notices shall be deemed to have been givenwhen received in person, telecopied with receipt confirmed, or mailed by firstclass mail, postage prepaid except that if a notice or other document isrefused delivery or cannot be delivered because of a changed address of whichno notice was given, such notice or other document shall be deemed to have beendelivered on the date of such refusal or inability to deliver.

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Section 8.04 Benefit.

This Guarantee is solely for the benefit of theHolders of the Capital Securities and, subject to Section 2.1(a), is notseparately transferable from the Capital Securities.

Section 8.05 Governing Law.

THIS GUARANTEE SHALL BEGOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEWYORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

Section8.06 Counterparts.

This Guarantee may contain more than one counterpartof the signature page and this Guarantee may be executed by the affixing of thesignature of the Guarantor and the Guarantee Trustee to any of such counterpartsignature pages. All of such counterpart signature pages shall be read asthough one, and they shall have the same force and effect as though all of thesigners had signed a single signature page.

 

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**THIS GUARA****NTEE isexecuted as of the day and year first above written.**
|   | **HF FINANCIAL CORP.,**       |
|--------|-------------------------------|
|   | **as Guarantor**              |
|   |                          |
|   |                          |
|   | **By:**                       | **/s/****Curtis L. Hage** |
|   |                          | **Name:** | **Curtis L. Hage** |
|   |                          | **Title:** | **Chairman, President and Chief Executive Officer** |
|   |                          |   |
|   |                          |   |
|   | **WILMINGTON TRUST COMPANY,** |
|   | **as Gu****arantee  Trustee** |
|   |                          |
|   |                          |
|   | **By:**                       |   |
|   |                          | **Name:** | **Anita Dallago** |
|   |                          | **Title:** | **Financial Services Officer** |

 

**Guarantee**

 

 

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**THISGUARA****NTEE is executed as of the day and year first above written.**

 
|   | **HF FINANCIAL CORP.,**       |
|--------|-------------------------------|
|   | **as Guarantor**              |
|   |                          |   |
|   |                          |   |
|   | **By:**                       |   |
|   |                          | **Name:** | **Curtis L. Hage** |
|   |                          | **Title:** | **Chairman, President and Chief Executive Officer** |
|   |                          |   |   |
|   |                          |   |   |
|   | **WILMINGTON TRUST COMPANY,** |
|   | **as Gu****arantee  Trustee** |
|   |                          |
|   |                          |
|   | **By:**                       | ** /s/  Anita Dallago** |
|   |                          | **Name:** | **Anita Dallago** |
|   |                          | **Title:** | **Financial Services Officer** |

** **

** **

**Guarantee**

** **

 

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