Exhibit
10.3


HOME
FEDERAL BANK


CHANGE-IN-CONTROL
AGREEMENT


This
Change-in-Control Agreement (the “Agreement”) is entered into as of this 2nd day of July, 2007, by
and between Home Federal Bank, a federally chartered savings bank and Curtis L.
Hage (the “Employee”).  As used herein,
the term “the Bank” shall mean Home Federal Bank, or if the context requires,
its successor.


WHEREAS,
the Employee is currently serving as Chairman and Chief Executive Officer of
the Bank; and


WHEREAS,
the Bank is a wholly-owned subsidiary of HF Financial Corp., (the Holding
Company”), and the Holding Company offers its common stock for sale to the
public and is subject to supervision by the Securities and Exchange Commission
(“SEC”); and


WHEREAS,
both the Bank and the Holding Company are subject to supervision by the Office
of Thrift Supervision (the “OTS”); and


WHEREAS,
the Board of Directors of the Bank recognizes that, as is the case with
publicly held corporations generally, the possibility of a change-in-control of
the Holding Company may exist and that such possibility, and the uncertainty
and questions which it may raise among management, may result in the departure
or distraction of key management personnel to the detriment of the Bank, the
Holding Company and its stockholders; and


WHEREAS,
the Board of Directors of the Bank believes it is in the best interests of the
Bank to enter into this Agreement with the Employee in order to assure
continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to his assigned duties
without distraction in the face of potentially disruptive circumstances arising
from the possibility of a change-in-control of the Holding Company, although no
such change is now known of; and


WHEREAS, the Board of
Directors of the Bank has approved and authorized the execution of this
Agreement with the Employee to take effect as stated in Section 1 hereof.


NOW,THEREFORE,
in consideration of the foregoing and of the respective covenants and agreements
of the parties herein contained, it is agreed as follows:


1.                                       Term of Agreement. 
This Agreement will commence on the date hereof and shall continue  while the Employee is employed with the Bank;
provided, however, that if the Employee gives Notice of Non-extension of
Employee’s Employment Agreement, this Agreement shall terminate when the
Employment Agreement terminates.











2.                                       Change-in-Control. 
No benefits shall be payable hereunder unless there shall have been a
Change-in-Control, as set forth below, and the Employee’s employment is
terminated as described in this Agreement. 
For purposes of this Agreement, a “Change-in-Control” shall mean:


a.                                       a change-in-control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), whether or not the Holding Company is then
subject to such reporting requirement; or


b.                                      the public announcement (which, for
purposes of this definition, shall include, without limitation, a report filed
pursuant to Section 13(d) of the Exchange Act) by the Holding Company or any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) that
such person has become the “beneficial owner” (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of securities of
the Holding Company (i) representing 20% or more, but not more than 50%, of the
combined voting power of the Holding Company’s then outstanding securities
unless the transaction resulting in such ownership has been approved in advance
by the Continuing Directors (as hereinafter defined); or (ii) representing
more than 50% of the combined voting power of the Holding Company’s then
outstanding securities (regardless of any approval by the Continuing
Directors); provided, however, that notwithstanding the foregoing, no
Change-in-Control shall be deemed to have occurred for purposes of this
Agreement by reason of the ownership of 20% or more of the total voting capital
stock of the Holding Company then issued and outstanding by the Holding
Company, any subsidiary of the Holding Company or any employee benefit plan of
the Holding Company or of any subsidiary of the Holding Company or any entity
holding shares of the Common Stock organized, appointed or established for, or
pursuant to the terms of, any such plan (any such person or entity described in
this clause is referred to herein as a “Company Entity”); or


c.                                       any acquisition of control as defined in
12 Code of Federal Regulations Section 574.4, or any successor regulation, of
the Holding Company which would require the filing of an application for
acquisition of control or notice of Change-in-Control in a manner which is set
forth in 12 CFR Section 574.3, or any successor regulation; or


d.                                      the Continuing Directors (as hereinafter
defined), cease to constitute a majority of the Holding Company’s Board of
Directors; or


e.                                       the shareholders of the Holding Company
approve (i) any consolidation or merger of the Holding Company in which the
Holding Company is not the continuing or surviving Holding Company or pursuant
to which shares of Holding Company stock would be converted into cash,
securities or other property, other than a merger of the Holding Company in which
shareholders immediately prior to the merger have the same proportionate
ownership of stock of the surviving Holding Company immediately after the
merger; (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of











the Holding Company; or
(iii) any plan of liquidation or dissolution of the Holding Company.


For
purposes of this definition, “Continuing Director” shall mean any person who is
a member of the Board of Directors of the Holding Company, while such person is
a member of the Board of Directors, who is not an Acquiring Person (as defined
below) or an Affiliate or Associate (as defined below) of an Acquiring Person,
or a representative of an Acquiring Person or of any such Affiliate or
Associate, and who (i) was a member of the Board of Directors on the date of
this Agreement as first written above; or (ii) subsequently becomes a member of
the Board of Directors, if such person’s initial nomination for election or
initial election to the Board of Directors is recommended or approved by a
majority of the Continuing Directors. 
For purposes of this definition, “Acquiring Person” shall mean any “person”
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who or
which, together with all Affiliates and Associates of such person, is the “beneficial
owner” (as defined in Rule 13d-3 promulgated under the Exchange Act) directly
or indirectly, of securities of the Holding Company representing 20% or more of
the combined voting power of the Holding Company’s then outstanding securities,
but shall not include the Investors or any Holding Company Entity; and “Affiliate”
and “Associate” shall have their respective meanings ascribed to such terms in
Rule 12b-2 promulgated under the Exchange Act.


3.                                       Termination
Following a Change-in-Control.  If a
Change-in-Control shall have occurred, Employee shall be entitled to the
benefits provided in Section 4(a) hereof upon termination of Employee’s
employment during the term of this Agreement unless such termination is:  (i) because of Employee’s death; (ii) by the
Bank for Cause (as defined below); or (iii) by Employee other than for Good
Reason (as defined below):


a.                                       Cause.  Termination by the Bank of Employee’s employment
for “Cause” shall mean termination upon (i) material violation of a law or
regulation which:  (a) governs the
Employee’s conduct as an officer of the Bank; or (b) in the reasonable opinion of the Bank affects the Employee’s
fitness  to serve in his/her position;
(ii)  substantial neglect of the
Employee’s duties; (iii) action or inaction, which materially and adversely
impacts the Bank’s safety, soundness, security, assets, customers or employees;
(iv) dishonesty of a material nature; (v) failure to comply with Bank material
rules, regulations or policies; (vi) engaging in personal conduct which, when
considering the Employee’s position with the Bank, would materially detract
from its business reputation in the community served; (vii) material breach of
any material covenant or condition of this Agreement; and (viii) willful and
material misconduct.


Termination for
Cause shall be preceded by a fair and complete investigation, including an
opportunity for Employee to provide information he deems relevant.


b.                                      Good
Reason.  Employee’s termination of
employment for “Good Reason” shall mean termination by the Employee upon the
occurrence, without his express written consent, within 24 months following a
Change-in-Control of any one or more of the following:











(i)                                     the assignment to the Employee of any
duties inconsistent in any respect with Employee’s position (including status,
offices, titles, and reporting requirements), authorities, duties, or other
responsibilities as in effect immediately prior to the Change-in-Control or any
other action of the Bank which results in a diminishment in such position,
authority, duties, or responsibilities, other than an insubstantial and
inadvertent action which is remedied by the Bank promptly after receipt of
notice thereof given by Employee;


(ii)                                  a reduction by the Bank in Employee’s
base salary as in effect on the date hereof or as the same shall be increased
from time-to-time;


(iii)                               the failure by the Bank to (a) continue
in effect any material compensation or benefit plan, program, policy or
practice in which Employee was participating at the time of the
Change-in-Control, or (b) provide the Employee with compensation and benefits
at least equal (in terms of benefit levels and/or reward opportunities) to
those provided for under each employee benefit plan, program, policy and
practice as in effect immediately prior to the Change-in-Control (or as in
effect following the Change-in-Control, if greater);


(iv)                              the failure of the Bank to obtain a
satisfactory agreement from any successor to the Bank to assume and agree to
perform this Agreement, as contemplated in Section 7 hereof; and


(v)                                 any purported termination by the Bank of
the Employee’s employment that is not effected pursuant to a Notice of
Termination (as defined below);


The
Bank’s right to terminate Employee’s employment pursuant to this Subsection
shall not be affected by the Employee’s incapacity due to physical or mental
illness.  The Employee’s continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder.  Employee’s termination of employment for Good
Reason as defined in this Subsection 3(b) shall constitute termination for Good
Reason for all purposes of this Agreement, notwithstanding that the Employee
may also thereby be deemed to have “retired” under any applicable retirement
programs of the Bank.


c.                                       Notice of Termination. 
Any purported termination of the Employee’s employment by the Bank or by
the Employee (other than by reason of the Employee’s death) within 24 months
following the month in which a Change-in-Control occurs, shall be communicated
by Notice of Termination to the other party hereto in accordance with Section 8
hereof.  No purported termination of the
Employee’s employment by the Bank shall be effective if it is not pursuant to a
Notice of Termination.  Failure by the
Employee to provide Notice of Termination shall not limit any of the Employee’s
rights under this Agreement except to the extent the Bank can demonstrate that
it suffered actual damages by reason of such failure.  For purposes of this Agreement, a “Notice of
Termination” shall mean a written notice which shall indicate the specific
termination provision in this Agreement relied upon and the Date of Termination
(as defined below) and shall set forth in reasonable detail the facts and











circumstances claimed to
provide a basis for termination of the Employee’s employment under the
provision so indicated.


d.                                      Date of Termination.  “Date
of Termination” shall mean the date specified in the Notice of Termination
(except in the case of the Employee’s death, in which case Date of Termination
shall be the date of death); provided, however, that if the Employee’s
employment is terminated by the Bank, the date specified in the Notice of
Termination shall be at least 30 days from the date the Notice of Termination
is given to the Employee and if the Employee terminates his employment for Good
Reason, the date specified in the Notice of Termination shall not be more than
60 days from the date the Notice of Termination is given to the Bank.


4.                                       Compensation Upon Termination. 
Following a Change-in-Control and upon termination of employment during
the term of this Agreement, the Employee shall be entitled to the following benefits:


a.                                       If employment by the Bank is terminated
(A) by the Bank for any reason other than Cause, or (B) by the Employee for
Good Reason, the Employee shall be entitled to the benefits, to be funded from
the general assets of the Bank, provided below:


(i)                                     the Bank shall pay the Employee his full
annual base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given;


(ii)                                  the Bank shall pay the Employee in
accordance with the terms of the Short-Term Incentive Plan, any incentive
payment Employee has a right to receive on the last day of the fiscal year
prior to Employee’s Date of Termination.


(iii)                               the Bank shall pay as severance pay to
the Employee, on the 30th day following the Date of Termination, a lump sum
severance payment equal to 2.99 times the sum of (A) the Employee’s annual base
salary in effect at the time Notice of Termination is given or immediately
prior to the date of the Change-in-Control, whichever is greater, and (B) the
amount determined as follows: (1)  the
amount that the Employee had accrued during the plan year under the Short-Term
Incentive Plan as of the first of the month following the month in which the
Change in Control occurred, annualized by dividing the amount accrued by the
number of months from the start of the plan year to the first of the month
following the month in which the Change in Control occurred multiplied by
twelve; plus, (2)  the amount of each of
the Short-Term Incentive Awards, if any, awarded to the Employee in the three
years immediately prior to the Change in Control divided by four; provided,
however, that payments under this subparagraph will be conditioned upon
compliance with paragraph 6 of Employee’s Employment Agreement – Agreement Not
to Compete – and payments made under this subparagraph must be returned to the
Bank if the Employee violates the non-compete provisions contained in that
non-compete paragraph; 











(iv)                              the Bank shall pay the Employee the
amount that has accrued to the Employee under the Long-Term Incentive Plan as
of the first day of the month following the Date of Termination;


(v)                                 (A) 
for a 36-month period after the Date of Termination, the Bank will
arrange to provide the Employee with health and dental insurance substantially
similar in design and cost to the Employee as the health and dental coverage
available to the Employee immediately prior to the Notice of Termination; but
all health and dental benefits receivable by the Employee pursuant to this
Subsection (v)(A) shall be discontinued if the Employee obtains full-time
employment providing comparable health and dental benefits to Employee provided
in accordance with this Subsection (v)(A) during the 36-month period following
the Date of Termination; and


(B)  for an 18-month period after the Date of
Termination, the Bank will arrange to provide the Employee with life,
disability and other welfare benefits (“Welfare Benefits”) substantially
similar in design and cost to the Employee immediately prior to the Notice of
Termination; but all such Welfare Benefits receivable by the Employee pursuant
to this Subsection (v)(B) shall be discontinued if the Employee obtains
full-time employment providing comparable Welfare Benefits to Employee provided
in accordance with this Subsection (v)(B) during the 18-month period following
the Date of Termination.


(vi)                              payment in accordance with the HF
Financial Corp. Excess Plan for Executives;


(vii)                           payment in accordance with the Deferred
Compensation Agreement;


(viii)                        the Bank shall pay for individual
out-placement counseling services for the Employee in an amount that shall not
exceed $10,000 for a period of time not extending beyond the end of the second
calendar year following the calendar year of the Employee’s Date of
Termination;


(ix)                                a lump sum payment equal to 18-months of
membership dues to the country club(s) that the Employee is a member of upon
his Date of Termination;


(x)                                   financial planning and tax preparation
expenses, not to exceed $5,000 from the Date of Termination payable for 18
months following the Date of Termination;


(xi)                                a lump sum payment equal to the value of
any other fringe benefits or perquisites provided to the Employee immediately
prior to his Date of Termination; and


(xii)                             in accordance with the HF Financial Corp.
1991 and 2002 Stock Option and Incentive Plan, the vesting of awards and
lapsing of restrictions as set forth in the HF Financial Corp. 1991 and 2002
Stock Option and Incentive Plan.











The
payments provided for in Section 4(a) (i), (ii), (iii), (iv), (ix), and (xi)
above shall be made on the 30th day following the Date of Termination;
provided, however, that if the amounts of such payments cannot be finally
determined on or before such day, the Bank shall pay to the Employee on such
day an estimate as determined in good faith by the Bank of the minimum amount
of such payments and shall pay the remainder of such payments (together with
interest from the date of such estimated payment at the rate provided in
Section 1274(b)(2)(B) of the Internal Revenue Code of 1986, as amended (the “Code”))
on the 45th day after the Date of Termination. 
Notwithstanding the above, if the Bank determines that any of the
payments in Section 4(a) are subject to 409A(a)(2)(B)(i) of the Code (or a
successor provision), then any such payments shall be delayed until the first
day following the sixth month anniversary of the Employee’s Date of
Termination. 


In
the event that the amount of the estimated payment exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Bank to the Employee payable no later than 30 days after demand by the Bank
(together with interest from the date of such estimated payment at the rate
provided in Section 1274(b)(2)(B) of the Code). 



b.                                      The Bank shall also pay to the Employee
any reasonable legal fees and reasonable expenses incurred by the Employee (i)
as a result of successful litigation against the Bank for nonpayment of any
benefit hereunder, or (ii) in connection with any dispute with any Federal,
state, or local governmental agency with respect to benefits claimed under this
Agreement.  If the Employee utilizes
arbitration to resolve any such dispute, the Bank will pay any reasonable legal
fees and reasonable expenses incurred by the Employee in connection therewith.


c.                                       The Employee shall not be required to
mitigate the amount of any payment provided for in this Section 4 by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in this Section 4 be reduced by any compensation earned by the Employee as the
result of employment by another employer after the Date of Termination, or
otherwise, except as set forth in Section 4a(v) hereof.


5.                                       Tax Gross Up.


a.                                       Notwithstanding any provision contained
in this Agreement to the contrary, if any amount or benefit to be paid or
provided under Section 4(a) would be an “Excess Parachute Payment,” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
or any successor provision thereto, but for the application of this sentence,
then the Bank shall make a Tax Gross Up Payment to or on behalf of the
Employee.  For purposes of this
Agreement, “Tax Gross Up Payment”  shall
mean a payment to or on behalf of Employee which shall be sufficient to pay, in
full, (a) any excise tax imposed under Section 4999 of the Code on any amount
or benefit to be paid or provided under Section 4(a); and (b) any federal,
state and local income tax, any social security and other employment tax, and
any additional excise tax under Section 4999 of the Code on the amount of the
excise tax











payment described in
subclause (a) of this Section 5, and the aggregate amount of additional tax
payments described in this clause (b); but, (c) excluding any interest or
penalties assessed by the Internal Revenue Service on Employee which are
attributable to Employee’s willful misconduct or negligence.  


b.                                      If requested by Employee or the Bank, the
determination of whether any Tax Gross Up Payment is required pursuant to the
preceding paragraph will be made by an independent accounting firm that is a “Big-4
Accounting Firm” (or other accounting firm mutually acceptable to Employee and
the Bank) not then-engaged as the Bank’s independent public auditor, at the
expense of the Bank, and the determination such independent accounting firm
will be final and binding on all parties. In making its determination, the
independent accountant will allocate a reasonable portion of the payments
described in Section 4(a)to the value of any personal services rendered by
Employee following the Change in Control and the value of any non-competition
agreement or similar agreements to the extent that such items reduce the amount
of the parachute payment.


6.                                       No
Exclusivity Rights.  Nothing in this
Agreement shall prevent or limit the Employee’s continuing or future
participation in any benefit, bonus, incentive, retirement or other plan or
program provided by the Bank and for which the Employee may qualify, nor,
except as provided in Section 13, shall anything herein limit or reduce such rights
as the Employee may have under any other agreement with, or plan, program,
policy or practice of the Bank.  Amounts
which are vested benefits or which the Employee is otherwise entitled to
receive under any agreement with, or plan, program, policy or practice of the
Bank (including, without limitation, the cash out of unused vacation days upon
termination of employment) shall be payable in accordance with such agreement,
plan, program, policy or practice, except as explicitly modified by this
Agreement.


7.                                       Successors.


a.                                       The Bank will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business and/or assets of the Bank or of any
division or subsidiary thereof employing the Employee to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Bank would be required to perform if no such succession had taken
place.  Failure of the Bank to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Employee to
compensation from the Bank in the same amount and on the same terms as he would
be entitled hereunder if his employment were terminated for Good Reason
following a Change-in-Control, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination and Notice of Termination shall be deemed to
have been given on such date.


b.                                      This Agreement shall inure to the benefit
of and be enforceable by the Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees.  If the Employee should die











while any amount would
still be payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to his devisee, legatee or other designee or, if there
is no such designee, to his estate or, if no estate, in accordance with
applicable law.


8.                                       Notice.  For the
purpose of this Agreement, notices and all other communications provided for in
the Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States registered mail, postage prepaid,
addressed to the other party as follows:


If to the Bank, to:


Home Federal Bank


Attention: Corporate Secretary


225 South Main Avenue


Sioux Falls,
SD  57104


If to Employee, to:


Curtis
L. Hage


225 S.
Main Avenue


Sioux Falls, South Dakota
57104


or
to the home address which is maintained on file with the Bank.


Either
party to this Agreement may change its address for purposes of this Section 8
by giving 15 days’ prior notice to the other party hereto.


9.                                       Miscellaneous. 
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and
signed by the Employee and such officer as may be specifically designated by
the Board to sign on behalf of the Bank. 
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of South Dakota.


10.                                 Validity.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.


11.                                 Counterparts. 
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.


12.                                 Arbitration. 
Any disputes under this Agreement will be resolved by arbitration, in
the state of South Dakota, by a mutually-agreeable neutral arbitrator, pursuant
to the rules of the American Arbitration Association.  The decision of the arbitrator shall be final
and binding on the parties.  All
information and documentation submitted by the parties or received from any
other source, together with all transcripts of the hearing(s) or other
proceedings, and the arbitrator’s findings, shall be treated by the arbitrator
and the parties as Confidential Information and the participants agree not to
disclose or turn over any such information or documentation to a third party
without











the prior written consent
of the parties, or pursuant to a lawful subpoena or court order, or an order to
obtain a injunctive relief;


13.                                 Employment Agreement. Reference is hereby made to that
certain Agreement, dated contemporaneously with this Agreement, by and between
the Bank and the Employee.  The
termination of Employee’s Employment Agreement by the Bank or its successor, as
defined in Section 7 shall have no effect on the term of this Agreement.  However, the termination of the Employment
Agreement by the Employee shall result in termination of this Agreement at the
same time the Employment Agreement terminates. 
All terms and conditions of Employee’s Employment Agreement, including
the non-compete provisions in paragraph 6, shall continue in force and effect
(until termination of the Employment Agreement in accordance with its terms),
including following a Change-in-Control, except as expressly modified by this
Section, except that when Employee is terminated following a Change-in-Control,
the severance provisions in Employee’s Employment Agreement shall not apply and
payments to the Employee shall be governed by this Agreement.  The mutual promises in this Agreement and in
the Employment Agreement shall serve as consideration for each agreement
contemporaneously executed.


14.                                 Effective Date. 
This Agreement shall become effective as of the date first set forth
above.


15.                                 Employment.                           This Agreement does not constitute a
contract of employment or impose on the Bank any obligation to retain the
Employee as an employee, to continue his current employment status, or to
change any employment policies of the Bank.


16.                                 Section 409A of the Code.  It
is the intent of the parties that this Agreement be construed to avoid the
excise tax and penalties described in Section 409A of the Code.  The parties acknowledge that the Agreement
may require amendment to comply with the requirements of Section 409A of the
Code.


17.                                 Amendments.  No amendments
or additions to this Agreement shall be binding unless stipulated in writing
and signed by both parties, except as herein otherwise provided.


18.                                 Severability. 
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
or unenforceability of the other provisions hereof.











IN WITNESS WHEREOF, the
parties have executed this Agreement as of the day and year first above
written.


	
  

  	
   

  	
   

  
	
  

  	
  By:

  	
  Wm. G. Pederson

  
	
   

  	
  Its:

  	
  Chairman, HF
  Financial Corp.

  
	
   

  	
   

  	
  Personnel,
  Compensation and

  
	
   

  	
   

  	
  Benefits
  Committee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Curtis L. Hage