**Exhibit10.1**

 

GUARANTEE AGREEMENT

 

HF FINANCIAL CORP.

 

Dated as of December 19,2002

 

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**TABLE OFCONTENTS**

 
| 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 asof December 19, 2002, is executed and delivered by HF Financial Corp., asavings 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) fromtime to time of the Capital Securities (as defined herein) of HF FinancialCapital Trust III, a Delaware statutory trust (the “Issuer”).

 

WHEREAS, pursuant to an Amended and RestatedDeclaration of Trust (the “Declaration”), dated as of December 19, 2002, amongthe trustees named therein of the Issuer, HF Financial Corp., as sponsor, andthe Holders from time to time of undivided beneficial interests in the assetsof the Issuer, the Issuer is issuing on the date hereof securities, having anaggregate liquidation amount of up to $5,000,000, designated the Floating RateMMCapSSM (the “CapitalSecurities”); and

 

WHEREAS,as incentive for the Holders to purchase the Capital Securities, the Guarantordesires irrevocably andunconditionally to agree, to the extent set forth in this Guarantee, to pay tothe Holders of Capital Securities the Guarantee Payments (as defined herein)and to make certain other payments on the terms and conditions set forthherein.

 

NOW, THEREFORE, in consideration of the purchase byeach Holder of the Capital Securities, which purchase the Guarantor hereby agrees shallbenefit the Guarantor, the Guarantor executes and delivers this Guarantee forthe benefit of the Holders.

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1   Definitions andInterpretation.

 

Inthis Guarantee,unless the contextotherwise requires:

 

(a)           capitalized terms used in thisGuarantee but not defined in the preamble above have the respective meaningsassigned to them in this Section 1.1;

 

(b)           a term defined anywhere in thisGuarantee has the same meaning throughout;

 

(c)           all references to “the Guarantee” or“this Guarantee” are to this Guarantee as modified, supplemented or amendedfrom time to time;

 

(d)           all references in this Guarantee toArticles and Sections are to Articles and Sections of this Guarantee, unlessotherwise specified;

 

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(e)           terms defined in the Declaration asof the date of execution of this Guarantee have the same meanings when used inthis Guarantee, unless otherwise defined in this Guarantee or unless thecontext otherwise requires; and

 

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

 

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

 

“CorporateTrust Office” means the office of the Guarantee Trustee at which the corporatetrust business of the Guarantee Trustee shall, at any particular time, beprincipally administered, which office at the date of execution of thisGuarantee is located at Rodney Square North, 1100 North Market Street,Wilmington, Delaware 19890-0001.

 

“CoveredPerson” means any Holder of Capital Securities.

 

“Debentures”means the junior subordinated debentures of HF Financial Corp., designated theFloating Rate Junior Subordinated Debt Securities due 2033 held by theInstitutional Trustee (as defined in the Declaration) of the Issuer.

 

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

 

“GuaranteePayments” means the following payments or distributions, without duplication,with respect to the Capital Securities, to the extent not paid or made by theIssuer: (i) any accrued and unpaid Distributions (as defined in theDeclaration) which are required to be paid on such Capital Securities to theextent the Issuer has funds available in the Property Account (as defined inthe Declaration) therefor at such time, (ii) the Redemption Price (as definedin the Indenture) to the extent the Issuer has funds available in the PropertyAccount therefor at such time, with respect to any Capital Securities calledfor redemption by the Issuer, (iii) the Special Redemption Price (as defined inthe Indenture) to the extent the Issuer has funds available in the PropertyAccount therefor at such time, with respect to Capital Securities called forredemption upon the occurrence of a Special Event (as defined in the Indenture),and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-upor termination of the Issuer (other than in connection with the distribution ofDebentures to the Holders of the Capital Securities in exchange therefor asprovided in the Declaration), the lesser of (a) the aggregate of theliquidation amount and all accrued and unpaid Distributions on the CapitalSecurities to the date of payment, to the extent the Issuer has funds availablein the Property Account therefor at such time, and (b) the amount of assets ofthe Issuer remaining available for distribution to Holders in liquidation ofthe Issuer after satisfaction of liabilities to creditors of the Issuer asrequired by applicable law (in either case, the “Liquidation Distribution”).

 

“GuaranteeTrustee” means Wilmington Trust Company, until a Successor Guarantee Trusteehas been appointed and has accepted such appointment pursuant to the terms ofthis Guarantee and thereafter means each such Successor Guarantee Trustee.

 

“Holder”means any holder, as registered on the books and records of the Issuer, of anyCapital Securities; provided, however, that, in determiningwhether the holders of the

 

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requisite percentage of Capital Securitieshave given any request, notice, consent or waiver hereunder, “Holder” shall notinclude the Guarantor or any Affiliate of the Guarantor.

 

“IndemnifiedPerson” means the Guarantee Trustee (including in its individual capacity), anyAffiliate of the Guarantee Trustee, or any officers, directors, shareholders,members, partners, employees, representatives, nominees, custodians or agentsof the Guarantee Trustee.

 

“Indenture”means the Indenture, dated as of December 19, 2002, between the Guarantor andWilmington Trust Company, not in its individual capacity but solely as trustee,and any indenture supplemental thereto pursuant to which the Debentures are tobe issued to the Institutional Trustee of the Issuer.

 

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

 

“Majority inliquidation amount of the Capital Securities” means Holder(s) of outstandingCapital Securities, voting together as a class, but separately from the holdersof Common 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 any costs, expenses or liabilities (but not including liabilities relatedto taxes) of the Issuer, other than obligations of the Issuer to pay to holdersof any Trust Securities the amounts due such holders pursuant to the terms ofthe Trust Securities.

 

“Officer’sCertificate” means, with respect to any Person, a certificate signed by oneAuthorized 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 each officer signingthe Officer’s Certificate has read the covenant or condition and thedefinitions relating thereto;

 

(b)           a brief statement of the nature and scopeof the examination or investigation undertaken by each officer in rendering theOfficer’s Certificate;

 

(c)           a statement that each such officerhas made such examination or investigation as, in such officer’s opinion, isnecessary to enable such officer to express an informed opinion as to whetheror not such covenant or condition has been complied with; and

 

(d)           a statement as to whether, in theopinion of each such officer, such condition or covenant has been compliedwith.

 

“Person”means a legal person, including any individual, corporation, estate,partnership, joint venture, association, joint stock company, limited liabilitycompany, trust, unincorporated association, or government or any agency orpolitical subdivision thereof, or any other entity of whatever nature.

 

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“ResponsibleOfficer” means, with respect to the Guarantee Trustee, any officer within theCorporate Trust Office of the Guarantee Trustee with direct responsibility forthe administration of any matters relating to this Guarantee, including anyvice president, any assistant vice president, any secretary, any assistantsecretary, the treasurer, any assistant treasurer, any trust officer or otherofficer of the Corporate Trust Office of the Guarantee Trustee customarilyperforming functions similar to those performed by any of the above designatedofficers and also means, with respect to a particular corporate trust matter,any other officer to whom such matter is referred because of that officer’sknowledge of and familiarity with the particular subject.

 

“SuccessorGuarantee Trustee” means a successor Guarantee Trustee possessing thequalifications to act as Guarantee Trustee under Section 3.1.

 

“TrustSecurities” means the Common Securities and the Capital Securities.

 

ARTICLE II

 

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

SECTION 2.1   Powers and Duties ofthe Guarantee Trustee.

 

(a)           This Guarantee shall be held by theGuarantee Trustee for the benefit of the Holders of the Capital Securities, andthe Guarantee Trustee shall not transfer this Guarantee to any Person except aHolder of Capital Securities exercising his or her rights pursuant to Section4.4 (b) or to a Successor Guarantee Trustee on acceptance by such SuccessorGuarantee Trustee of its appointment to act as Successor GuaranteeTrustee.  The right, title and interestof the Guarantee Trustee shall automatically vest in any Successor GuaranteeTrustee, and such vesting and cessation of title shall be effective whether ornot conveyancing documents have been executed and delivered pursuant to theappointment of such Successor Guarantee Trustee.

 

(b)           If an Event of Default actually knownto a Responsible Officer of the Guarantee Trustee has occurred and iscontinuing, the Guarantee Trustee shall enforce this Guarantee for the benefitof the Holders of the Capital Securities.

 

(c)           The Guarantee Trustee, before theoccurrence of any Event of Default and after the curing or waiving of allEvents of Default that may have occurred, shall undertake to perform only suchduties as are specifically set forth in this Guarantee, and no impliedcovenants 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 actuallyknown to a Responsible Officer of the Guarantee Trustee, the Guarantee Trusteeshall 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 prudentperson would exercise or use under the circumstances in the conduct of his orher own affairs.

 

(d)           No provision of this Guarantee shallbe construed to relieve the Guarantee Trustee from liability for its ownnegligent action, its own negligent failure to act, or its own willfulmisconduct, except that:

 

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(i)            priorto the occurrence of any Event of Default and after the curing or waiving ofall Events of Default that may have occurred:

 

(A)          theduties and obligations of the Guarantee Trustee shall be determined solely bythe express provisions of this Guarantee, and the Guarantee Trustee shall notbe liable except for the performance of such duties and obligations as arespecifically set forth in this Guarantee, and no implied covenants orobligations shall be read into this Guarantee against the Guarantee Trustee;and

 

(B)           inthe absence of bad faith on the part of the Guarantee Trustee, the GuaranteeTrustee may conclusively rely, as to the truth of the statements and thecorrectness of the opinions expressed therein, upon any certificates oropinions furnished to the Guarantee Trustee and conforming to the requirementsof this Guarantee; but in the case of any such certificates or opinionsfurnished to the Guarantee Trustee, the Guarantee Trustee shall be under a dutyto examine the same to determine whether or not on their face they conform tothe requirements of this Guarantee;

 

(ii)           theGuarantee Trustee shall not be liable for any error of judgment made in goodfaith by a Responsible Officer of the Guarantee Trustee, unless it shall beproved that such Responsible Officer of the Guarantee Trustee or the GuaranteeTrustee was negligent in ascertaining the pertinent facts upon which suchjudgment was made;

 

(iii)          theGuarantee Trustee shall not be liable with respect to any action taken oromitted to be taken by it in good faith in accordance with the writtendirection of the Holders of not less than a Majority in liquidation amount ofthe Capital Securities relating to the time, method and place of conducting anyproceeding for any remedy available to the Guarantee Trustee, or exercising anytrust or power conferred upon the Guarantee Trustee under this Guarantee; and

 

(iv)          noprovision of this Guarantee shall require the Guarantee Trustee to expend orrisk its own funds or otherwise incur personal financial liability in theperformance of any of its duties or in the exercise of any of its rights orpowers, if the Guarantee Trustee shall have reasonable grounds for believingthat the repayment of such funds is not reasonably assured to it under theterms of this Guarantee, or security and indemnity, reasonably satisfactory tothe Guarantee Trustee, against such risk or liability is not reasonably assuredto it.

 

SECTION 2.2   Certain Rights of theGuarantee Trustee.

 

(a)           Subject to the provisions of Section2.1:

 

(i)            TheGuarantee Trustee may conclusively rely, and shall be fully protected in actingor 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 tobe genuine and to have been signed, sent or presented by the proper party orparties.

 

(ii)           Anydirection or act of the Guarantor contemplated by this Guarantee shall besufficiently evidenced by an Officer’s Certificate.

 

(iii)          Whenever,in the administration of this Guarantee, the Guarantee Trustee shall deem itdesirable that a matter be proved or established before taking, suffering oromitting any action hereunder, the Guarantee Trustee (unless other evidence isherein specifically prescribed) may, in the absence of bad faith on its part,request and conclusively rely upon an Officer’s Certificate of the Guarantorwhich, upon receipt of such request, shall be promptly delivered by theGuarantor.

 

(iv)          TheGuarantee Trustee shall have no duty to see to any recording, filing orregistration of any instrument or other writing (or any rerecording, refilingor reregistration thereof).

 

(v)           TheGuarantee Trustee may consult with counsel of its selection, and the advice oropinion of such counsel with respect to legal matters shall be full andcomplete authorization and protection in respect of any action taken, sufferedor omitted by it hereunder in good faith and in accordance with such advice oropinion.  Such counsel may be counsel tothe Guarantor or any of its Affiliates and may include any of itsemployees.  The Guarantee Trustee shallhave the right at any time to seek instructions concerning the administrationof this Guarantee from any court of competent jurisdiction.

 

(vi)          TheGuarantee Trustee shall be under no obligation to exercise any of the rights orpowers vested in it by this Guarantee at the request or direction of anyHolder, unless such Holder shall have provided to the Guarantee Trustee suchsecurity and indemnity, reasonably satisfactory to the Guarantee Trustee,against the costs, expenses (including attorneys’ fees and expenses and theexpenses of the Guarantee Trustee’s agents, nominees or custodians) andliabilities that might be incurred by it in complying with such request ordirection, including such reasonable advances as may be requested by theGuarantee Trustee; provided, however, that nothing contained inthis Section 2.2(a)(vi) shall be taken to relieve the Guarantee Trustee, uponthe occurrence of an Event of Default, of its obligation to exercise the rightsand powers vested in it by this Guarantee.

 

(vii)         TheGuarantee Trustee shall not be bound to make any investigation into the factsor 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 GuaranteeTrustee, in its discretion, may make such further inquiry or investigation intosuch facts or matters as it may see fit.

 

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(viii)        TheGuarantee Trustee may execute any of the trusts or powers hereunder or performany duties hereunder either directly or by or through agents, nominees,custodians or attorneys, and the Guarantee Trustee shall not be responsible forany misconduct or negligence on the part of any agent or attorney appointedwith due care by it hereunder.

 

(ix)           Anyaction taken by the Guarantee Trustee or its agents hereunder shall bind the Holdersof the Capital Securities, and the signature of the Guarantee Trustee or itsagents alone shall be sufficient and effective to perform any such action.  No third party shall be required to inquireas to the authority of the Guarantee Trustee to so act or as to its compliancewith any 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)            Wheneverin the administration of this Guarantee the Guarantee Trustee shall deem itdesirable to receive instructions with respect to enforcing any remedy or rightor taking any other action hereunder, the Guarantee Trustee (A) may requestinstructions from the Holders of a Majority in liquidation amount of the CapitalSecurities, (B) may refrain from enforcing such remedy or right or taking suchother action until such instructions are received and (C) shall be protected inconclusively relying on or acting in accordance with such instructions.

 

(xi)           TheGuarantee Trustee shall not be liable for any action taken, suffered, oromitted to be taken by it in good faith and reasonably believed by it to beauthorized or within the discretion or rights or powers conferred upon it bythis Guarantee.

 

(b)           No provision of this Guarantee shallbe deemed to impose any duty or obligation on the Guarantee Trustee to performany act or acts or exercise any right, power, duty or obligation conferred orimposed on it, in any jurisdiction in which it shall be illegal or in which theGuarantee Trustee shall be unqualified or incompetent in accordance withapplicable law to perform any such act or acts or to exercise any such right,power, duty or obligation.  Nopermissive power or authority available to the Guarantee Trustee shall be construedto be a duty.

 

SECTION 2.3   NotResponsible for Recitals or Issuance of Guarantee.

 

The recitalscontained in this Guarantee shall be taken as the statements of the Guarantor,and the Guarantee Trustee does not assume any responsibility for theircorrectness.  The Guarantee Trusteemakes no representation as to the validity or sufficiency of this Guarantee.

 

SECTION 2.4   Events of Default;Waiver.

 

(a)           An Event of Default under thisGuarantee will occur upon the failure of the Guarantor to perform any of itspayment or other obligations hereunder.

 

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(b)           The Holders of a Majority inliquidation amount of the Capital Securities may, voting or consenting as aclass, on behalf of the Holders of all of the Capital Securities, waive anypast Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, andshall be deemed to have been cured, for every purpose of this Guarantee, but nosuch waiver shall extend to any subsequent or other default or Event of Defaultor impair any right consequent thereon.

 

SECTION 2.5   Events of Default;Notice.

 

(a)           The Guarantee Trustee shall, within90 days after the occurrence of an Event of Default, transmit by mail, first classpostage prepaid, to the Holders of the Capital Securities, notices of allEvents of Default actually known to a Responsible Officer of the GuaranteeTrustee, unless such defaults have been cured before the giving of such notice,provided, however, that the Guarantee Trustee shall be protectedin withholding such notice if and so long as a Responsible Officer of theGuarantee Trustee in good faith determines that the withholding of such noticeis in the interests of the Holders of the Capital Securities.

 

(b)           The Guarantee Trustee shall not becharged with knowledge of any Event of Default unless the Guarantee Trusteeshall have received written notice thereof from the Guarantor or a Holder ofthe Capital Securities, or a Responsible Officer of the Guarantee Trusteecharged with the administration of this Guarantee shall have actual knowledgethereof.

 

ARTICLE III

 

THE GUARANTEE TRUSTEE

 

SECTION 3.1   TheGuarantee Trustee; Eligibility.

 

(a)           There shall at all times be aGuarantee Trustee which shall:

 

(i)            notbe an Affiliate of the Guarantor; and

 

(ii)           bea corporation or national association 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 such corporation or national associationpublishes reports of condition at least annually, pursuant to law or to therequirements of the supervising or examining authority referred to above, then,for the purposes of this Section 3.1(a)(ii), the combined capital and surplusof such corporation or national association shall be deemed to be its combinedcapital and surplus as set forth in its most recent report of condition sopublished.

 

(b)           If at any time the Guarantee Trusteeshall cease to be eligible to so act under Section 3.1(a), the GuaranteeTrustee shall immediately resign in the manner and with the effect set forth inSection 3.2(c).

 

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(c)           If the Guarantee Trustee has or shallacquire any “conflicting interest” within the meaning of Section 310(b) of theTrust Indenture Act, the Guarantee Trustee shall either eliminate such interestor resign to the extent and in the manner provided by, and subject to, thisGuarantee.

 

SECTION 3.2   Appointment, Removaland Resignation of the Guarantee Trustee.

 

(a)           Subject to Section 3.2(b), theGuarantee Trustee may be appointed or removed without cause at any time by theGuarantor except during an Event of Default.

 

(b)           The Guarantee Trustee shall not beremoved in accordance with Section 3.2(a) until a Successor Guarantee Trusteehas been appointed and has accepted such appointment by written instrumentexecuted by such Successor Guarantee Trustee and delivered to the Guarantor.

 

(c)           The Guarantee Trustee appointed to officeshall hold office until a Successor Guarantee Trustee shall have been appointedor until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior orsubsequent accounting) by an instrument in writing executed by the GuaranteeTrustee and delivered to the Guarantor, which resignation shall not take effectuntil a Successor Guarantee Trustee has been appointed and has accepted suchappointment by an instrument in writing executed by such Successor GuaranteeTrustee and delivered to the Guarantor and the resigning Guarantee Trustee.

 

(d)           If no Successor Guarantee Trusteeshall have been appointed and accepted appointment as provided in this Section3.2 within 60 days after delivery of an instrument of removal or resignation,the Guarantee Trustee resigning or being removed may petition any court ofcompetent jurisdiction for appointment of a Successor Guarantee Trustee.  Such court may thereupon, after prescribingsuch notice, if any, as it may deem proper, appoint a Successor GuaranteeTrustee.

 

(e)           No Guarantee Trustee shall be liablefor the acts or omissions to act of any Successor Guarantee Trustee.

 

(f)            Upon termination of this Guaranteeor removal or resignation of the Guarantee Trustee pursuant to this Section3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to theGuarantee Trustee under Sections 7.2 and 7.3 accrued to the date of suchtermination, removal or resignation.

 

ARTICLE IV

 

GUARANTEE

 

SECTION 4.1   Guarantee.

 

(a)           The Guarantor irrevocably andunconditionally agrees to pay in full to the Holders the Guarantee Payments(without duplication of amounts theretofore paid by the Issuer), as and whendue, 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 besatisfied by direct payment of the required amounts by the Guarantor to the Holdersor by causing the Issuer to pay such amounts to the Holders.

 

(b)           The Guarantor hereby also agrees toassume any and all Obligations of the Issuer and in the event any suchObligation is not so assumed, subject to the terms and conditions hereof, theGuarantor hereby irrevocably and unconditionally guarantees to each Beneficiarythe full payment, when and as due, of any and all Obligations to suchBeneficiaries.  This Guarantee isintended to be for the Beneficiaries who have received notice hereof.

 

SECTION 4.2   Waiver of Notice andDemand.

 

The Guarantorhereby waives notice of acceptance of this Guarantee and of any liability towhich it applies or may apply, presentment, demand for payment, any right torequire a proceeding first against the Issuer or any other Person beforeproceeding against the Guarantor, protest, notice of nonpayment, notice ofdishonor, notice of redemption and all other notices and demands.

 

SECTION 4.3   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)           the release or waiver, by operationof law or otherwise, of the performance or observance by the Issuer of anyexpress or implied agreement, covenant, term or condition relating to theCapital Securities to be performed or observed by the Issuer;

 

(b)           the extension of time for the paymentby the Issuer of all or any portion of the Distributions, Redemption Price,Special Redemption Price, Liquidation Distribution or any other sums payableunder the terms of the Capital Securities or the extension of time for theperformance of any other obligation under, arising out of, or in connectionwith, the Capital Securities (other than an extension of time for the paymentof the Distributions, Redemption Price, Special Redemption Price, LiquidationDistribution or other sums payable that results from the extension of anyinterest payment period on the Debentures or any extension of the maturity dateof the Debentures permitted by the Indenture);

 

(c)           any failure, omission, delay or lackof diligence on the part of the Holders to enforce, assert or exercise anyright, privilege, power or remedy conferred on the Holders pursuant to theterms of the Capital Securities, or any action on the part of the Issuergranting indulgence or extension of any kind;

 

(d)           the voluntary or involuntaryliquidation, dissolution, sale of any collateral, receivership, insolvency,bankruptcy, assignment for the benefit of creditors, reorganization,arrangement, composition or readjustment of debt of, or other similarproceedings affecting, the Issuer or any of the assets of the Issuer;

 

(e)           any invalidity of, or defect ordeficiency in, the Capital Securities;

 

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(f)            the settlement or compromise of anyobligation guaranteed hereby or hereby incurred; or

 

(g)           any other circumstance whatsoeverthat might otherwise constitute a legal or equitable discharge or defense of aguarantor, it being the intent of this Section 4.3 that the obligations of theGuarantor hereunder shall be absolute and unconditional under any and allcircumstances.

 

There shallbe no obligation of the Holders to give notice to, or obtain consent of, theGuarantor with respect to the happening of any of the foregoing.

 

SECTION 4.4   Rights of Holders.

 

(a)           The Holders of a Majority inliquidation amount of the Capital Securities have the right to direct the time,method and place of conducting any proceeding for any remedy available to theGuarantee Trustee in respect of this Guarantee or to direct the exercise of anytrust or power conferred upon the Guarantee Trustee under this Guarantee; provided,however, that (subject to Sections 2.1 and 2.2) the Guarantee Trusteeshall have the right to decline to follow any such direction if the GuaranteeTrustee shall determine that the actions so directed would be unjustlyprejudicial to the Holders not taking part in such direction or if theGuarantee Trustee being advised by legal counsel determines that the action orproceeding so directed may not lawfully be taken or if the Guarantee Trustee ingood faith by its board of directors or trustees, executive committee or atrust committee of directors or trustees and/or Responsible Officers shalldetermine that the action or proceeding so directed would involve the GuaranteeTrustee in personal liability.

 

(b)           Any Holder of Capital Securities mayinstitute a legal proceeding directly against the Guarantor to enforce theGuarantee Trustee’s rights under this Guarantee, without first instituting alegal proceeding against the Issuer, the Guarantee Trustee or any otherPerson.  The Guarantor waives any rightor remedy to require that any such action be brought first against the Issuer,the Guarantee Trustee or any other Person before so proceeding directly againstthe Guarantor.

 

SECTION 4.5   Guarantee of Payment.

 

ThisGuarantee 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 ofany amounts paid to such Holders by the Guarantor under this Guarantee; provided,however, that the Guarantor shall not (except to the extent required byapplicable provisions of law) be entitled to enforce or exercise any right thatit may acquire by way of subrogation or any indemnity, reimbursement or otheragreement, in all cases as a result of payment under this Guarantee, if, aftergiving effect to any such payment, any amounts are due and unpaid under thisGuarantee.  If any amount shall be paidto the Guarantor in violation of the preceding sentence, the Guarantor agreesto hold such amount in trust for the Holders and to pay over such amount to theHolders.

 

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SECTION 4.7   IndependentObligations.

 

The Guarantoracknowledges that its obligations hereunder are independent of the obligationsof the Issuer with respect to the Capital Securities and that the Guarantorshall be liable as principal and as debtor hereunder to make Guarantee Paymentspursuant to the terms of this Guarantee notwithstanding the occurrence of anyevent referred to in subsections (a) through (g), inclusive, of Section 4.3hereof.

 

SECTION 4.8   Enforcement.

 

A Beneficiarymay enforce the Obligations of the Guarantor contained in Section 4.1(b)directly against the Guarantor, and the Guarantor waives any right or remedy torequire that any action be brought against the Issuer or any other person orentity before proceeding against the Guarantor.

 

The Guarantorshall be subrogated to all rights (if any) of any Beneficiary against theIssuer 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 V

 

LIMITATION OF TRANSACTIONS; SUBORDINATION

 

SECTION 5.1   Limitationof Transactions.

 

So long asany Capital Securities remain outstanding, if (a) there shall have occurred andbe continuing an Event of Default or (b) the Guarantor shall have selected anExtension Period as provided in the Declaration and such period, or anyextension thereof, shall have commenced and be continuing, then the Guarantormay not (x) declare or pay any dividends or distributions on, or redeem,purchase, acquire, or make a liquidation payment with respect to, any of theGuarantor’s capital stock or (y) make any payment of principal of or interestor premium, if any, on or repay, repurchase or redeem any debt securities ofthe Guarantor that rank *pari passu* in all respects with or juniorin interest to the Debentures (other than (i) payments under this Guarantee,(ii) repurchases, redemptions or other acquisitions of shares of capital stockof the Guarantor (A) in connection with any employment contract, benefit planor other similar arrangement with or for the benefit of one or more employees,officers, directors, or consultants, (B) in connection with a dividendreinvestment or stockholder stock purchase plan or (C) in connection with theissuance of capital stock of the Guarantor (or securities convertible into orexercisable for such capital stock), as consideration in an acquisitiontransaction entered into prior to the occurrence of the Event of Default or theapplicable Extension Period, (iii) as a result of any exchange or conversion ofany class or series of the Guarantor’s capital stock (or any capital stock of asubsidiary of the Guarantor) for any class or series of the Guarantor’s capitalstock or of any class or series of the Guarantor’s

 

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indebtedness for any class or series ofthe Guarantor’s capital stock, (iv) the purchase of fractional interests inshares of 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* with or junior to such stock).

 

SECTION 5.2   Ranking.

 

ThisGuarantee will constitute an unsecured obligation of the Guarantor and willrank subordinate and junior in right of payment to all present and futureSenior Indebtedness (as defined in the Indenture) of the Guarantor.  By their acceptance thereof, each Holder ofCapital Securities agrees to the foregoing provisions of this Guarantee and theother terms set forth herein.

 

The right ofthe Guarantor to participate in any distribution of assets of any of itssubsidiaries upon any such subsidiary’s liquidation or reorganization orotherwise is subject to the prior claims of creditors of that subsidiary,except to the extent the Guarantor may itself be recognized as a creditor ofthat subsidiary.  Accordingly, theGuarantor’s obligations under this Guarantee will be effectively subordinatedto all existing and future liabilities of the Guarantor’s subsidiaries, andclaimants should look only to the assets of the Guarantor for paymentsthereunder. This Guarantee does not limit the incurrence or issuance of othersecured or unsecured debt of the Guarantor, including Senior Indebtedness ofthe Guarantor, under any indenture or agreement that the Guarantor may enterinto in the future or otherwise.

 

ARTICLE VI

 

TERMINATION

 

SECTION 6.1   Termination.

 

ThisGuarantee shall terminate as to the Capital Securities (i) upon fullpayment of the Redemption Price or the Special Redemption Price, as the casemay be, of all Capital Securities then outstanding, (ii) upon the distributionof 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 theDeclaration upon dissolution of the Issuer. This Guarantee will continue to be effective or will be reinstated, asthe case may be, if at any time any Holder of Capital Securities must restorepayment 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 beliable, responsible or accountable in damages or otherwise to the Guarantor orany Covered Person for any loss, damage or claim incurred by reason of any actor omission of such Indemnified Person in good faith in accordance with thisGuarantee and in a manner that such Indemnified Person reasonably believed tobe within the scope of the authority conferred on such Indemnified Person bythis Guarantee or by law, except that an Indemnified Person shall be liable forany such loss, damage or claim incurred by reason of such Indemnified Person’snegligence or willful misconduct with respect to such acts or omissions.

 

(b)           An Indemnified Person shall be fullyprotected in relying in good faith upon the records of the Issuer or theGuarantor and upon such information, opinions, reports or statements presentedto the Issuer or the Guarantor by any Person as to matters the IndemnifiedPerson reasonably believes are within such other Person’s professional orexpert competence and who, if selected by such Indemnified Person, has beenselected with reasonable care by such Indemnified Person, includinginformation, opinions, reports or statements as to the value and amount of theassets, liabilities, profits, losses, or any other facts pertinent to theexistence and amount of assets from which Distributions to Holders of CapitalSecurities might properly be paid.

 

SECTION 7.2   Indemnification.

 

(a)           The Guarantor agrees to indemnifyeach Indemnified Person for, and to hold each Indemnified Person harmlessagainst, any and all loss, liability, damage, claim or expense incurred withoutnegligence or willful misconduct on the part of the Indemnified Person, arisingout of or in connection with the acceptance or administration of the trust ortrusts hereunder, including but not limited to the costs and expenses(including reasonable legal fees and expenses) of the Indemnified Persondefending itself against, or investigating, any claim or liability inconnection with the exercise or performance of any of the Indemnified Person’spowers or duties hereunder.  Theobligation to indemnify as set forth in this Section 7.2 shall survive theresignation or removal of the Guarantee Trustee and the termination of thisGuarantee.

 

(b)           Promptly after receipt by anIndemnified Person under this Section 7.2 of notice of the commencement ofany action, such Indemnified Person will, if a claim in respect thereof is tobe made against the Guarantor under this Section 7.2, notify the Guarantorin writing of the commencement thereof; but the failure so to notify theGuarantor (i) will not relieve the Guarantor from liability underparagraph (a) above unless and to the extent that the Guarantor did nototherwise learn of such action and such failure results in the forfeiture bythe Guarantor of substantial rights and defenses and (ii) will not, in anyevent, relieve the Guarantor from any obligations to any Indemnified Personother than the indemnification obligation provided in paragraph (a) above.  The Guarantor shall be entitled to appointcounsel of the

 

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Guarantor’s choice at theGuarantor’s expense 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 counsel retained by theIndemnified 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 toappoint counsel to represent the Indemnified Person in any 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, ortargets of, any such action include both the Indemnified Person and theGuarantor and the Indemnified Person shall have reasonably concluded that theremay be legal defenses available to it and/or other Indemnified Persons whichare different from or additional to those available to the Guarantor,(iii) the Guarantor shall not have employed counsel satisfactory to theIndemnified Person to represent the Indemnified Person within a reasonable timeafter notice of the institution of such action or (iv) the Guarantor shallauthorize the Indemnified Person to employ separate counsel at the expense ofthe Guarantor.  The Guarantor will not,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.

 

SECTION 7.3   Compensation;Reimbursement of Expenses.

 

The Guarantoragrees:

 

(a)           to pay to the Guarantee Trustee fromtime to time such compensation for all services rendered by it hereunder as theparties shall agree to from time to time (which compensation shall not belimited by any provision of law in regard to the compensation of a trustee ofan express trust); and

 

(b)           except as otherwise expresslyprovided herein, to reimburse the Guarantee Trustee upon request for allreasonable 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.

 

Theprovisions of this Section 7.3 shall survive the resignation or removal of theGuarantee Trustee and the termination of this Guarantee.

 

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ARTICLE VIII

 

MISCELLANEOUS

 

SECTION 8.1   Successorsand Assigns.

 

Allguarantees and agreements contained in this Guarantee shall bind thesuccessors, assigns, receivers, trustees and representatives of the Guarantorand shall inure to the benefit of the Holders of the Capital Securities then outstanding.  Except in connection with any merger orconsolidation 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 tothe extent permitted under the Indenture, the Guarantor may not assign itsrights or delegate its obligations under this Guarantee without the priorapproval of the Holders of not less than a Majority in liquidation amount ofthe Capital Securities.

 

SECTION 8.2   Amendments.

 

Except withrespect to any changes that do not adversely affect the rights of Holders ofthe Capital Securities in any material respect (in which case no consent ofHolders will be required), this Guarantee may be amended only with the priorapproval of the Holders of not less than a Majority in liquidation amount ofthe Capital Securities.  The provisionsof the Declaration with respect to amendments thereof shall apply equally withrespect to amendments of the Guarantee.

 

SECTION 8.3   Notices.

 

All noticesprovided for in this Guarantee shall be in writing, duly signed by the partygiving such notice, and shall be delivered, telecopied or mailed by first classmail, as follows:

 

(a)           If given to the Guarantee Trustee, atthe Guarantee Trustee’s mailing address set forth below (or such other addressas the Guarantee Trustee may give notice of to the Holders of the CapitalSecurities):

 

WilmingtonTrust CompanyRodney Square North1100 North Market StreetWilmington, Delaware 19890-0001Attention: CorporateTrust AdministratorTelecopy: 302-651-8882Telephone:  302-651-1000

 

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

 

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HF Financial Capital Trust IIIc/o HF Financial Corp.225 South Main AvenueSioux Falls, South Dakota 57104Attention: Curtis L. HageTelecopy: (605) 331-7621Telephone: (605) 333-7558

 

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

 

All suchnotices shall be deemed to have been given when received in person, telecopiedwith receipt confirmed, or mailed by first class mail, postage prepaid, exceptthat if a notice or other document is refused delivery or cannot be deliveredbecause of a changed address of which no notice was given, such notice or otherdocument shall be deemed to have been delivered on the date of such refusal orinability to deliver.

 

SECTION 8.4   Benefit.

 

ThisGuarantee is solely for the benefit of the Holders of the Capital Securitiesand, subject to Section 2.1(a), is not separately transferable from the CapitalSecurities.

 

SECTION 8.5   Governing Law.

 

THISGUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THESTATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

SECTION 8.6   Counterparts.

 

ThisGuarantee may contain more than one counterpart of the signature page and thisGuarantee may be executed by the affixing of the signature of the Guarantor andthe Guarantee Trustee to any of such counterpart signature pages.  All of such counterpart signature pagesshall be read as though one, and they shall have the same force and effect asthough all of the signers had signed a single signature page.

 

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THISGUARANTEE 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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