GUARANTEE AGREEMENT

 

HF FINANCIAL CORP.

 

Dated as of July 11, 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 July 11, 2002, is executed and delivered by HF Financial Corp., a savingsand loan holding company incorporated in Delaware (the “Guarantor”), andWilmington 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 II, a Delaware statutory business trust (the “Issuer”).

 

WHEREAS, pursuant to an Amended and RestatedDeclaration of Trust (the “Declaration”), dated as of July 11, 2002, among thetrustees named therein of the Issuer, HF Financial Corp., as sponsor, and theHolders from time to time of undivided beneficial interests in the assets ofthe Issuer, the Issuer is issuing on the date hereof securities, having an aggregateliquidation amount of up to $5,000,000, designated the Floating Rate MMCapSSM(the “Capital Securities”); and

 

WHEREAS, as incentive for the Holders to purchase theCapital Securities, the Guarantor desires irrevocably and unconditionally toagree, to the extent set forth in this Guarantee, to pay to the Holders ofCapital Securities the Guarantee Payments (as defined herein) and to makecertain other payments on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the purchase byeach Holder of the Capital Securities, which purchase the Guarantor herebyagrees shall benefit the Guarantor, the Guarantor executes and delivers thisGuarantee for the benefit of the Holders.

#  

# ARTICLE I

 

# DEFINITIONS AND INTERPRETATION

#  

## SECTION 1.1                          Definitions andInterpretation.

##  

In this Guarantee, unless the context otherwiserequires:

 

### (a)                                  capitalizedterms used in this Guarantee but not defined in the preamble above have therespective meanings assigned to them in this Section 1.1;

###  

### (b)                                 aterm defined anywhere in this Guarantee has the same meaning throughout;

###  

### (c)                                  allreferences to “the Guarantee” or “this Guarantee” are to this Guarantee asmodified, supplemented or amended from time to time;

###  

### (d)                                 allreferences in this Guarantee to Articles and Sections are to Articles andSections of this Guarantee, unless otherwise specified;

###  

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### (e)                                  termsdefined in the Declaration as at the date of execution of this Guarantee havethe same meanings when used in this Guarantee, unless otherwise defined in thisGuarantee or unless the context otherwise requires; and

###  

### (f)                                    areference to the singular includes the plural and vice versa.

###  

“Beneficiaries” means any Person to whom the Issuer isor 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 is located at Rodney SquareNorth, 1100 North Market Street, Wilmington, Delaware 19890-0001.

 

“Covered Person” means any Holder of CapitalSecurities.

 

“Debentures” means the junior subordinated debenturesof HF Financial Corp., designated the Floating Rate Junior Subordinated DebtSecurities due 2032, held by the Institutional Trustee (as defined in theDeclaration) of the Issuer.

 

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

 

“Guarantee Payments” means the following payments ordistributions, without duplication, with respect to the Capital Securities, tothe extent not paid or made by the Issuer: (i) any accrued and unpaidDistributions (as defined in the Declaration) which are required to be paid onsuch Capital Securities to the extent the Issuer has funds available in theProperty Account (as defined in the Declaration) therefor at such time, (ii)the Redemption Price (as defined in the Indenture) to the extent the Issuer hasfunds available in the Property Account therefor at such time, with respect toany Capital Securities called for redemption by the Issuer, (iii) the SpecialRedemption Price (as defined in the Indenture) to the extent the Issuer hasfunds available in the Property Account therefor at such time, with respect toCapital Securities called for redemption upon the occurrence of a Special Event(as defined in the Indenture), and (iv) upon a voluntary or involuntaryliquidation, dissolution, winding-up or termination of the Issuer (other thanin connection with the distribution of Debentures to the Holders of the CapitalSecurities in exchange therefor as provided in the Declaration), the lesser of(a) the aggregate of the liquidation amount and all accrued and unpaidDistributions on the Capital Securities to the date of payment, to the extentthe Issuer has funds available in the Property Account therefor at such time,and (b) the amount of assets of the Issuer remaining available for distributionto Holders 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 and thereafter means eachsuch Successor Guarantee Trustee.

 

“Holder” means any holder, as registered on the booksand records of the Issuer, of any Capital Securities; provided, however,that, in determining whether the holders of the

 

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requisite percentage of Capital Securities have given any request,notice, consent or waiver hereunder, “Holder” shall not include the Guarantoror any Affiliate of the Guarantor.

 

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

 

“Indenture” means the Indenture, dated as of July 11,2002, between the Guarantor and Wilmington Trust Company, not in its individualcapacity but solely as trustee, and any indenture supplemental thereto pursuantto which the Debentures are to be issued to the Institutional Trustee of theIssuer.

 

“Liquidation Distribution” has the meaning set forthin the definition of “Guarantee Payments” herein.

 

“Majority in liquidation amount of the CapitalSecurities” means Holder(s) of outstanding Capital Securities, voting togetheras a class, but separately from the holders of Common Securities, of more than50% of the aggregate liquidation amount (including the stated amount that wouldbe paid on redemption, liquidation or otherwise, plus accrued and unpaidDistributions to, but excluding, the date upon which the voting percentages aredetermined) of all Capital Securities then outstanding.

 

“Obligations” means any costs, expenses or liabilities(but not including liabilities related to taxes) of the Issuer, other thanobligations of the Issuer to pay to holders of any Trust Securities the amountsdue such holders pursuant to the terms of the Trust Securities.

 

“Officer’s Certificate” means, with respect to anyPerson, a certificate signed by one Authorized Officer of such Person.  Any Officer’s Certificate delivered withrespect to compliance with a condition or covenant provided for in thisGuarantee shall include:

 

### (a)                                  astatement that each officer signing the Officer’s Certificate has read thecovenant or condition and the definitions relating thereto;

###  

### (b)                                 abrief statement of the nature and scope of the examination or investigationundertaken by each officer in rendering the Officer’s Certificate;

###  

### (c)                                  astatement that each such officer has made such examination or investigation as,in such officer’s opinion, is necessary to enable such officer to express aninformed opinion as to whether or not such covenant or condition has beencomplied with; and

###  

### (d)                                 astatement as to whether, in the opinion of each such officer, such condition orcovenant has been 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.

 

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“Responsible Officer” means, with respect to theGuarantee Trustee, any officer within the Corporate Trust Office of the GuaranteeTrustee with direct responsibility for the administration of any mattersrelating to this Guarantee, including any vice president, any assistant vicepresident, any secretary, any assistant secretary, the treasurer, any assistanttreasurer, any trust officer or other officer of the Corporate Trust Office ofthe Guarantee Trustee customarily performing functions similar to thoseperformed by any of the above designated officers and also means, with respectto a particular corporate trust matter, any other officer to whom such matteris referred because of that officer’s knowledge of and familiarity with theparticular subject.

 

“Successor Guarantee Trustee” means a successorGuarantee Trustee possessing the qualifications to act as Guarantee Trustee underSection 3.1.

 

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

 

# ARTICLE II

#  

# POWERS, DUTIES AND RIGHTS OF THEGUARANTEE TRUSTEE

#  

## SECTION 2.1                          Powers and Duties of theGuarantee Trustee.

##  

### (a)                                  ThisGuarantee shall be held by the Guarantee Trustee for the benefit of the Holdersof the Capital Securities, and the Guarantee Trustee shall not transfer thisGuarantee to any Person except a Holder of Capital Securities exercising his orher rights pursuant to Section 4.4 (b) or to a Successor Guarantee Trustee onacceptance by such Successor Guarantee Trustee of its appointment to act asSuccessor Guarantee Trustee.  The right,title and interest of the Guarantee Trustee shall automatically vest in anySuccessor Guarantee Trustee, and such vesting and cessation of title shall beeffective whether or not conveyancing documents have been executed anddelivered pursuant to the appointment of such Successor Guarantee Trustee.

###  

### (b)                                 Ifan Event of Default actually known to a Responsible Officer of the GuaranteeTrustee has occurred and is continuing, the Guarantee Trustee shall enforcethis Guarantee for the benefit of the Holders of the Capital Securities.

###  

### (c)                                  TheGuarantee Trustee, before the occurrence of any Event of Default and after thecuring or waiving of all Events of Default that may have occurred, shallundertake to perform only such duties as are specifically set forth in thisGuarantee, and no implied covenants shall be read into this Guarantee againstthe Guarantee Trustee.  In case an Eventof Default has occurred (that has not been cured or waived pursuant to Section2.4(b)) and is actually known to a Responsible Officer of the GuaranteeTrustee, the Guarantee Trustee shall exercise such of the rights and powersvested in it by this Guarantee, and use the same degree of care and skill inits exercise thereof, as a prudent person would exercise or use under thecircumstances in the conduct of his or her own affairs.

###  

### (d)                                 Noprovision of this Guarantee shall be construed to relieve the Guarantee Trusteefrom liability for its own negligent action, its own negligent failure to act,or its own willful misconduct, 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 written directionof the Holders of not less than a Majority in liquidation amount of the CapitalSecurities relating to the time, method and place of conducting any proceedingfor any remedy available to the Guarantee Trustee, or exercising any trust orpower 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)                                  Subjectto the provisions of Section 2.1:

###  

#### (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 to be genuineand to have been signed, sent or presented by the proper party or parties.

####  

#### (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 theGuarantee Trustee, in its discretion, may make such further inquiry orinvestigation into such 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 theHolders of the Capital Securities, and the signature of the Guarantee Trusteeor its agents alone shall be sufficient and effective to perform any suchaction.  No third party shall berequired to inquire as to the authority of the Guarantee Trustee to so act oras to its compliance with any of the terms and provisions of this Guarantee,both of which shall be conclusively evidenced by the Guarantee Trustee’s or itsagent’s taking such action.

####  

#### (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 theCapital Securities, (B) may refrain from enforcing such remedy or right ortaking such other action until such instructions are received and (C) shall beprotected in conclusively relying on or acting in accordance with suchinstructions.

####  

#### (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)                                 Noprovision of this Guarantee shall be deemed to impose any duty or obligation onthe Guarantee Trustee to perform any act or acts or exercise any right, power,duty or obligation conferred or imposed on it, in any jurisdiction in which itshall be illegal or in which the Guarantee Trustee shall be unqualified orincompetent in accordance with applicable law to perform any such act or actsor to exercise any such right, power, duty or obligation.  No permissive power or authority availableto the Guarantee Trustee shall be construed to be a duty.

###  

## SECTION 2.3                          Not Responsible forRecitals or Issuance of Guarantee.

##  

The recitals contained in this Guarantee shall betaken as the statements of the Guarantor, and the Guarantee Trustee does notassume any responsibility for their correctness.  The Guarantee Trustee makes no representation as to the validityor sufficiency of this Guarantee.

 

## SECTION 2.4                          Events of Default; 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.

###  

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### (b)                                 TheHolders of a Majority in liquidation amount of the Capital Securities may,voting or consenting as a class, on behalf of the Holders of all of the CapitalSecurities, waive any past Event of Default and its consequences.  Upon such waiver, any such Event of Defaultshall cease to exist, and shall be deemed to have been cured, for every purposeof this Guarantee, but no such waiver shall extend to any subsequent or otherdefault or Event of Default or impair any right consequent thereon.

###  

## SECTION 2.5                          Events of Default; 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

 

# THE GUARANTEE TRUSTEE

#  

## SECTION 3.1                          The Guarantee Trustee;Eligibility.

##  

### (a)                                  Thereshall at all times be a Guarantee Trustee which shall:

###  

#### (i)                                     notbe an Affiliate of the Guarantor; and

####  

#### (ii)                                  bea corporation organized and doing business under the laws of the United Statesof America or any State or Territory thereof or of the District of Columbia, orPerson authorized under such laws to exercise corporate trust powers, having acombined capital and surplus of at least 50 million U.S. dollars ($50,000,000),and subject to supervision or examination by Federal, State, Territorial orDistrict 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 forth in Section 3.2(c).

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### (c)                                  Ifthe Guarantee Trustee has or shall acquire any “conflicting interest” withinthe meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trusteeshall either eliminate such interest or resign to the extent and in the mannerprovided by, and subject to, this Guarantee.

###  

## SECTION 3.2                          Appointment,Removal and Resignation of the 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 mayresign from office (without need for prior or subsequent accounting) by aninstrument in writing executed by the Guarantee Trustee and delivered to theGuarantor, which resignation shall not take effect until a Successor GuaranteeTrustee has been appointed and has accepted such appointment by an instrumentin writing executed by such Successor Guarantee Trustee and delivered to theGuarantor and the resigning Guarantee 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 courtmay thereupon, after prescribing such notice, 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.

###  

# ARTICLE IV

 

# GUARANTEE

#  

## SECTION 4.1                          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’sobligation to make a 

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Guarantee Payment may be satisfied by direct payment of the requiredamounts by the Guarantor to the Holders or by causing the Issuer to pay suchamounts to the Holders.

 

### (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 Guarantee is intended to be for the Beneficiaries who have receivednotice hereof.

###  

## SECTION 4.2                          Waiverof Notice and Demand.

##  

The Guarantor hereby waives notice of acceptance ofthis Guarantee and of any liability to which it applies or may apply,presentment, demand for payment, any right to require a proceeding firstagainst the Issuer or any other Person before proceeding against the Guarantor,protest, notice of nonpayment, notice of dishonor, notice of redemption and allother notices and demands.

 

## SECTION 4.3                          Obligations Not Affected.

##  

The obligations, covenants, agreements and duties ofthe Guarantor under this Guarantee shall in no way be affected or impaired byreason of the happening from 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 the payment of the Distributions, RedemptionPrice, Special Redemption Price, Liquidation Distribution or other sums payablethat results from the extension of any interest payment period on theDebentures or any extension of the maturity date of the Debentures permitted bythe Indenture);

###  

### (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;

###  

### 10

### 

###  

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

###  

### (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.

###  

There shall be no obligation of the Holders to givenotice to, or obtain consent of, the Guarantor with respect to the happening ofany of the foregoing.

 

## SECTION 4.4                          Rights of Holders.

##  

### (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 Guarantee Trustee in good faith by its board of directors ortrustees, executive committee or a trust committee of directors or trusteesand/or Responsible Officers shall determine that the action or proceeding 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.  TheGuarantor waives any right or remedy to require that any such action be broughtfirst against the Issuer, the Guarantee Trustee or any other Person before soproceeding directly against the Guarantor.

###  

## SECTION 4.5                          Guarantee of Payment.

##  

This Guarantee creates a guarantee of payment and notof 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                          Independent Obligations.

##  

The Guarantor acknowledges that its obligationshereunder are independent of the obligations of the Issuer with respect to theCapital Securities and that the Guarantor shall be liable as principal and asdebtor hereunder to make Guarantee Payments pursuant to the terms of thisGuarantee notwithstanding the occurrence of any event referred to insubsections (a) through (g), inclusive, of Section 4.3 hereof.

 

## SECTION 4.8                          Enforcement.

##  

A Beneficiary may enforce the Obligations of theGuarantor contained in Section 4.1(b) directly against the Guarantor, and theGuarantor waives any right or remedy to require that any action be broughtagainst the Issuer or any other person or entity before proceeding against theGuarantor.

 

The Guarantor shall be subrogated to all rights (ifany) of any Beneficiary against the Issuer in respect of any amounts paid tothe Beneficiaries by the Guarantor under this Guarantee; provided, however,that the Guarantor shall not (except to the extent required by applicableprovisions of law) be entitled to enforce or exercise any rights that it mayacquire 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 such payment, any amounts are due and unpaid under thisGuarantee.

 

# ARTICLE V

#  

# LIMITATION OF TRANSACTIONS;SUBORDINATION

#  

## SECTION 5.1                          Limitation of Transactions.

##  

So long as any Capital Securities remain outstanding,if (a) there shall have occurred and be continuing an Event of Default or (b)the Guarantor shall have selected an Extension Period as provided in theDeclaration and such period, or any extension thereof, shall have commenced andbe continuing, then the Guarantor may not (x) declare or pay any dividends ordistributions on, or redeem, purchase, acquire, or make a liquidation paymentwith respect to, any of the Guarantor’s capital stock or (y) make any paymentof principal of or interest or premium, if any, on or repay, repurchase orredeem any debt securities of the Guarantor that rank *pari passu* in all respectswith or junior in interest to the Debentures (other than (i) payments underthis Guarantee, (ii) repurchases, redemptions or other acquisitions of sharesof capital stock of the Guarantor (A) in connection with any employmentcontract, benefit plan or other similar arrangement with or for the benefit ofone or more employees, officers, directors, or consultants, (B) in connectionwith a dividend reinvestment or stockholder stock purchase plan or (C) inconnection with the issuance of capital stock of the Guarantor (or securitiesconvertible into or exercisable for such capital stock), as consideration in anacquisition transaction entered into prior to the occurrence of the Event ofDefault or the applicable Extension Period, (iii) as a result of any exchangeor conversion of any class or series of the Guarantor’s capital stock (or anycapital stock of a subsidiary of the Guarantor) for any class or series of theGuarantor’s capital stock or of any class or series of the Guarantor’s

 

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indebtedness for any class or series of the Guarantor’s capital stock,(iv) the purchase of fractional interests in shares of the Guarantor’s capitalstock pursuant to the conversion or exchange provisions of such capital stockor the security being converted or exchanged, (v) any declaration of a dividendin connection with any stockholder’s rights plan, or the issuance of rights,stock or other property under any stockholder’s rights plan, or the redemptionor repurchase of rights pursuant thereto, or (vi) any dividend in the form ofstock, warrants, options or other rights where the dividend stock or the stockissuable upon exercise of such warrants, options or other rights is the samestock as that on which the dividend is being paid or ranks *pari passu* with or junior tosuch stock).

 

## SECTION 5.2                          Ranking.

##  

This Guarantee will constitute an unsecured obligationof the Guarantor and will rank subordinate and junior in right of payment toall present and future Senior Indebtedness (as defined in the Indenture) of theGuarantor.  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 Guarantor to participate in anydistribution of assets of any of its subsidiaries upon any such subsidiary’sliquidation or reorganization or otherwise is subject to the prior claims ofcreditors of that subsidiary, except to the extent the Guarantor may itself berecognized 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.

 

# ARTICLE VI

 

# TERMINATION

#  

## SECTION 6.1                          Termination.

##  

This Guarantee shall terminate as to the CapitalSecurities (i) upon full payment of the Redemption Price or the SpecialRedemption Price, as the case may be, of all Capital Securities thenoutstanding, (ii) upon the distribution of all of the Debentures to the Holdersof all of the Capital Securities or (iii) upon full payment of the amountspayable in accordance with the Declaration upon dissolution of the Issuer.  This Guarantee will continue to be effectiveor will be 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.

 

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# ARTICLE VII

#  

# INDEMNIFICATION

#  

## SECTION 7.1                          Exculpation.

##  

### (a)                                  NoIndemnified Person shall be liable, responsible or accountable in damages orotherwise to the Guarantor or any Covered Person for any loss, damage or claimincurred by reason of any act or omission of such Indemnified Person in goodfaith in accordance with this Guarantee and in a manner that such IndemnifiedPerson reasonably believed to be within the scope of the authority conferred onsuch Indemnified Person by this Guarantee or by law, except that an IndemnifiedPerson shall be liable for any such loss, damage or claim incurred by reason ofsuch Indemnified Person’s negligence or willful misconduct with respect to suchacts or omissions.

###  

### (b)                                 AnIndemnified Person shall be fully protected in relying in good faith upon therecords of the Issuer or the Guarantor and upon such information, opinions,reports or statements presented to the Issuer or the Guarantor by any Person asto matters the Indemnified Person reasonably believes are within such otherPerson’s professional or expert competence and who, if selected by suchIndemnified Person, has been selected with reasonable care by such IndemnifiedPerson, including information, opinions, reports or statements as to the valueand amount 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.

###  

## SECTION 7.2                          Indemnification.

##  

### (a)                                  TheGuarantor agrees to indemnify each Indemnified Person for, and to hold eachIndemnified Person harmless against, any and all loss, liability, damage, claimor expense incurred without negligence or willful misconduct on the part of theIndemnified Person, arising out of or in connection with the acceptance oradministration of the trust or trusts hereunder, including but not limited tothe costs and expenses (including reasonable legal fees and expenses) of theIndemnified Person defending itself against, or investigating, any claim orliability in connection with the exercise or performance of any of theIndemnified Person’s powers or duties hereunder.  The obligation to indemnify as set forth in this Section 7.2shall survive the resignation or removal of the Guarantee Trustee and thetermination of this Guarantee.

###  

### (b)                                 Promptlyafter receipt by an Indemnified Person under this Section 7.2 of notice ofthe commencement of any action, such Indemnified Person will, if a claim inrespect thereof is to be made against the Guarantor under thisSection 7.2, notify the Guarantor in writing of the commencement thereof;but the failure so to notify the Guarantor (i) will not relieve theGuarantor from liability under paragraph (a) above unless and to the extentthat the Guarantor did not otherwise learn of such action and such failureresults in the forfeiture by the Guarantor of substantial rights and defensesand (ii) will not, in any event, relieve the Guarantor from anyobligations to any Indemnified Person other than the indemnification obligationprovided in paragraph (a) above.  TheGuarantor shall be entitled to appoint counsel of the

###  

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Guarantor’s choice at the Guarantor’s expense to represent theIndemnified Person in any action for which indemnification is sought (in whichcase the Guarantor shall not thereafter be responsible for the fees andexpenses of any separate counsel retained by the Indemnified Person or Personsexcept as set forth below); provided, however, that such counselshall be satisfactory to the Indemnified Person.  Notwithstanding the Guarantor’s election to appoint counsel torepresent the Indemnified Person in any action, the Indemnified Person shallhave the right to employ separate counsel (including local counsel), and theGuarantor shall bear the reasonable fees, costs and expenses of such separatecounsel, if (i) the use of counsel chosen by the Guarantor to representthe Indemnified Person would present such counsel with a conflict 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 shallnot have employed counsel satisfactory to the Indemnified Person to representthe Indemnified Person within a reasonable time after notice of the institutionof such action or (iv) the Guarantor shall authorize the IndemnifiedPerson to employ separate counsel at the expense of the Guarantor.  The Guarantor will not, without the priorwritten consent of the Indemnified Persons, settle or compromise or consent tothe entry of any judgment with respect to any pending or threatened claim,action, suit or proceeding in respect of which indemnification or contributionmay be sought hereunder (whether or not the Indemnified Persons are actual orpotential parties to such claim or action) unless such settlement, compromiseor consent includes an unconditional release of each Indemnified Person fromall liability arising out of such claim, action, suit or proceeding.

###  

## SECTION 7.3                          Compensation;Reimbursement of Expenses.

##  

The Guarantor agrees:

 

### (a)                                  topay to the Guarantee Trustee from time to time such compensation for all servicesrendered by it hereunder as the parties shall agree to from time to time (whichcompensation shall not be limited by any provision of law in regard to thecompensation of a trustee of an express trust); and

###  

### (b)                                 exceptas otherwise expressly provided herein, to reimburse the Guarantee Trustee uponrequest for all reasonable expenses, disbursements and advances incurred ormade by it in accordance with any provision of this Guarantee (including thereasonable compensation and the expenses and disbursements of its agents andcounsel), except any such expense, disbursement or advance as may beattributable to its negligence or willful misconduct.

###  

The provisions of this Section 7.3 shall survive theresignation or removal of the Guarantee Trustee and the termination of thisGuarantee.

 

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# ARTICLE VIII

#  

# MISCELLANEOUS

#  

## SECTION 8.1                          Successors and Assigns.

##  

All guarantees and agreements contained in thisGuarantee shall bind the successors, assigns, receivers, trustees andrepresentatives of the Guarantor and shall inure to the benefit of the Holdersof the Capital Securities then outstanding. Except in connection with any merger or consolidation of the Guarantorwith or into another entity or any sale, transfer or lease of the Guarantor’sassets to another entity, in each case to the extent permitted under theIndenture, the Guarantor may not assign its rights or delegate its obligationsunder this Guarantee without the prior approval of the Holders of not less thana Majority in liquidation amount of the Capital Securities.

 

## SECTION 8.2                          Amendments.

##  

Except with respect to any changes that do notadversely affect the rights of Holders of the Capital Securities in anymaterial respect (in which case no consent of Holders will be required), thisGuarantee may be amended only with the prior approval of the Holders of notless than a Majority in liquidation amount of the Capital Securities.  The provisions of the Declaration withrespect to amendments thereof shall apply equally with respect to amendments ofthe Guarantee.

 

## SECTION 8.3                          Notices.

##  

All notices provided for in this Guarantee shall be inwriting, duly signed by the party giving such notice, and shall be delivered,telecopied or mailed by first class mail, as follows:

 

### (a)                                  Ifgiven to the Guarantee Trustee, at the Guarantee Trustee’s mailing address setforth below (or such other address as the Guarantee Trustee may give notice ofto the Holders of the Capital Securities):

###  

WilmingtonTrust CompanyRodney Square North1100 North Market StreetWilmington, Delaware 19890-0001Attention: Corporate Trust AdministrationTelecopy: 302-651-8882Telephone:  302-651-1000

### (b)                                 Ifgiven to the Guarantor, at the Guarantor’s mailing address set forth below (orsuch other address as the Guarantor may give notice of to the Holders of theCapital Securities and to the Guarantee Trustee):

###  

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HFFinancial Corp.225 South Main AvenueSioux Falls, South Dakota  57104Attention: Curtis L. HageTelecopy: (605) 333-7621Telephone: (605) 333-7558

 

### (c)                                  Ifgiven to any Holder of the Capital Securities, at the address set forth on thebooks and records of the 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.

 

## SECTION 8.4                          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 8.5                          Governing Law.

##  

THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED INACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTOF LAWS PRINCIPLES THEREOF.

 

## SECTION 8.6                          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 suchcounterpart signature pages shall be read as though one, and they shall havethe same force and effect as though all of the signers had signed a singlesignature page.

 

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THIS GUARANTEE is executed as of the day and yearfirst 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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