EXHIBIT 10.1


 


HOME
FEDERAL BANK


 


RESTATED
EMPLOYMENT AGREEMENT


 


THIS RESTATED EMPLOYMENT AGREEMENT (“Agreement”)
is made and entered into as of this 31st day of December, 2008,
contemporaneously with the Restated Change-in-Control Agreement, by and between
HOME FEDERAL BANK, a South Dakota corporation (hereinafter referred to as the “Bank”),
P. O. Box 5000, Sioux Falls, South Dakota 57117-5000 and Curtis L. Hage (the “Employee”).


 


RECITALS


 


	
  A.

  	
  The Employee is currently serving as Chairman and Chief Executive
  Officer.

  
	
   

  	
   

  
	
  B.

  	
  The Board of Directors of the Bank recognizes the important service
  that the Employee provides and will continue to provide for the Bank.

  
	
   

  	
   

  
	
  C.

  	
  The Board of Directors of the Bank has previously approved and
  authorized the execution of an Employment Agreement with the Employee.

  
	
   

  	
   

  
	
  D.

  	
  The Board of Directors of the Bank has previously approved and
  authorized the execution of a Change-in-Control Agreement with the Employee.

  
	
   

  	
   

  
	
  E.

  	
  South Dakota Codified Law Section 53-8-7 allows written agreements
  to be amended without additional consideration.

  
	
   

  	
   

  
	
  F.

  	
  The Board of Directors of the Bank and the Employee desire to make
  certain changes in the Employment Agreement and Change-in-Control Agreement.

  
	
   

  	
   

  
	
  G.

  	
  The changes to the Employment Agreement are contained in this
  Restated Employment Agreement (this “Agreement”).

  
	
   

  	
   

  
	
  H.

  	
  The Board of Directors of the Bank and of HF Financial Corp., the
  parent company of the Bank, have authorized the Chair of the HF Financial
  Corp. Personnel, Compensation and Benefits Committee to finalize and sign the
  Agreement with the Employee.

  



 


COVENANTS


 


NOW, THEREFORE, in consideration of the
foregoing and of the respective covenants and agreements of the parties herein
contained and further contained in the Restated Change-in-Control Agreement
between the parties executed contempor-aneously herewith, the parties agree as
follows:


 


1.             Term


 


This agreement shall commence on the date
set forth above and shall continue in effect through June 30, 2009, provided, however, that commencing on July 1, 2009 and on
each July 1 thereafter, the term of this agreement shall automatically be
extended for one additional year unless, no later than December 31 of the
previous year, the Bank or the Employee shall have given notice that this
Agreement shall not be extended. Except as otherwise provided in the Restated
Change-in-Control Agreement, the Employee’s Restated Change-in-Control
Agreement shall terminate when this Agreement terminates.


 

















 


2.             Employment


 


The Employee serves as Chairman and Chief
Executive Officer of the Bank and shall have all such authority, powers,
duties, and responsibilities as may be given to the Employee from time to time
by the Board of Directors. The Employee shall devote substantially all of the
Employee’s working time and efforts to the affairs of the Bank.


 


3.             Compensation


 


(a)           The Bank shall pay the Employee a base salary
at a rate of no less than THREE HUNDRED FIFTY-NINE THOUSAND SIX HUNDRED AND
00/100 ($359,600) per year during the term of this Agreement upon the same
frequency and on the same basis that that Bank normally makes salary payments
to other Employee personnel. Appropriate adjustments will be made to the
Employee’s base salary giving consideration to the value of the Employee’s
services and to comparable adjustments to salaries paid to other executive
employees of the Bank.


 


(b)           The Employee shall participate in the same
manner as other executives in the Bank’s executive incentive plans.


 


4.             Benefits


 


The Bank shall provide the Employee, in
addition to the base salary, all benefits made available to other officers of
the Bank as described in the Bank’s benefit plan(s) including, but not
limited to group term life insurance, group medical, dental and disability
coverage, paid Personal Time Off (PTO), and retirement.


 


5.             Termination


 


(a)           Termination for Cause.  The Bank shall have the
right to immediately discharge the Employee for Cause. Cause shall include:


 


(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 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
material rules, regulations or policies of the Bank;


 


(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.


 


Nothing
in this provision shall prevent the Bank from putting the Employee on a paid or
unpaid administrative leave during the pendency of criminal charges against the
Employee, during an investigation (internal or otherwise) into any suspected
misconduct or illegal conduct of the Employee, or for any other reason deemed
appropriate in the reasonable discretion of the Bank. Nothing in this provision
shall prohibit the Bank from reasonably disciplining the Employee for
wrongdoing or misconduct in a manner that does not result in termination.
Discipline or discharge under this section shall be preceded by a fair and 


 


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complete
investigation, including an opportunity for the Employee to provide information
which he deems relevant.


 


(b)           Termination  Without
Cause. The Employee’s
employment under this Agreement may be terminated without Cause at any time
upon sixty (60) days written notice to the Employee.


 


The
Employee may terminate this Agreement at any time upon sixty (60) days written
notice to the Chair of the HF Financial Corp. Personnel, Compensation and
Benefits Committee.


 


(c)           Absenteeism.  If the Employee is absent from work in
partial-day or full-day increments for any reason, including but not limited to
illness or injury, for a period of time or in a manner that materially affects
the functioning of the Bank or of the Employee’s direct or indirect reports,
the Bank may, in its reasonable discretion, terminate the Employee’s employment
with the Bank without prior notice; provided, however, that absence resulting
from approved/excused extended vacation, and/or leave of absence and/or
temporary relocation will not be considered grounds for termination. Nothing in
this absenteeism provision shall relieve the Bank from fulfilling any duties it
may have under the Americans with Disabilities Act, any applicable State Human
Rights Act, the Family and Medical Leave Act, or any other applicable law or
regulation nor shall it preclude the Employee from receiving benefits to which
the Employee may be entitled under any disability plan or agreement sponsored
by the Bank.


 


(d)           Death.  The Employee’s employment hereunder shall
terminate automatically upon the Employee’s death.


 


(e)           Severance  Terms.  Upon
termination of the Employee’s employment under this Section 5, the
Employee shall forfeit all rights to future compensation under Section 3;
provided, however, that if employment is terminated as a result of the Employee’s
death or disability as described in Section 5(e)(iii), compensation under Section 3(b) will
not be forfeited, and will be payable to the Employee’s Estate/heirs in
accordance with the terms of the Bank’s executive incentive plans. Except where
termination follows a change in control, as defined in the Employee’s Restated
Change-in-Control Agreement, and subject to the Employee’s signing and not
revoking a release of claims in a form reasonably acceptable to the Bank, and
further subject to compliance with Section 6 below (Agreement Not to
Compete), the Employee shall receive the following amounts, except to the
extent previously paid by the Bank to the Employee, as full payment, compromise
and settlement of all non-vested compensation, and as additional consideration
for the restrictive covenants contained in this Agreement:


 


(i)            In
the event the Employee’s employment
is terminated by the Bank for Cause, the Bank shall pay the Employee the
Employee’s full salary through the date of termination for Cause, at the rate
in effect at the time of notice of termination, and the Bank shall thereafter
have no further obligation to the Employee under this Agreement;


 


(ii)           In
the event the Employee’s employment is terminated by the Bank without Cause,
other than by reason of death or disability as described in Section 5(e)(iii),
the Employee shall be paid the Employee’s full salary through the date of
termination and in addition, shall be paid each month 


 


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on the first of the month for twelve months
one-twelfth of the total of:  (a) the
Employee’s monthly salary in effect at the time of termination times the number
of months remaining until expiration of this Agreement plus (b) an amount
equal to one year’s annual base salary. Provided, however, that, subject to the
provisions of subsection (vii) of this Section 5(e), the first
payment shall be made on the first day of the third month coincident with or
next following the Employee’s termination of employment and shall include all
monthly payments theretofore due under this Agreement;


 


(iii)          In the event the Employee’s
employment is terminated by the Bank because of disability (as defined by and
determined under the Bank’s Disability Plan), the Bank will pay the Employee
through the last day of the month in which the Employee is terminated plus on
the 90th day following the Employer’s termination of employment an amount equal
to three (3) month’s base salary;


 


(iv)          In the event of the Employee’s
death, the Bank shall pay the Employee’s spouse, beneficiary, or the Employee’s
estate, the Employee’s then current salary through the last day of the month in
which such death occurs;


 


(v)           In
the event the Employee’s employment is terminated by the Employee, and if the
Employee provides written notice as required in Section 5(b), the Bank
shall, subject to the provisions of subsection (vii) of this Section 5(e),
pay the Employee’s current salary through the month of termination and on the
60th day following the Employee’s termination of employment one additional
month’s salary. Failure to give such notice shall result in forfeiture of
accrued PTO and the Employee shall be paid only through the last day worked;


 


(vi)          In
the event the Employee’s employment is terminated because the Employee has
chosen not to extend the term of the Agreement pursuant to Section 1, the
Bank shall pay the Employee the Employee’s full salary during the period of
time that the Employee continues to work (but not beyond the end of the term),
at the rate then in effect, plus accrued PTO. 
However, the Bank may request the Employee to terminate employment
before the end of the term in which event the Bank shall pay the Employee the
Employee’s full salary through the end of the term of the Agreement, at the
rate then in effect, plus accrued PTO. In the event the Employee’s employment
is terminated because the Bank has chosen not to extend the term of the
Agreement pursuant to Section 1 the Bank shall pay the Employee the
Employee’s full salary through the end of the term of the Agreement, at the
rate then in effect, plus accrued PTO; and


 


(vii)         Notwithstanding the foregoing payment provisions, if the
Bank determines that any payments described above are subject to 409A(a)(2)(B)(i) of
the Internal Revenue Code of 1986, as amended (“Code”) (or a successor
provision), the payments described above shall be delayed until the earlier of
the Employee’s death or the first day of the month coincident with or next
following the sixth month anniversary of the Employee’s termination of
employment and shall include all payments theretofore due under this Agreement.  Provided, however, that no payments shall be
made and payments already made shall be returned to the Bank if the Employee
violates the non-compete provisions contained in Section 6.


 


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Compensation
following a change in control, as defined in the Employee’s Restated Change in
Control Agreement, shall be governed by the terms of that Agreement.


 


6.             Agreement Not to Compete


 


The Employee agrees that during the term
of the Employee’s employment hereunder and for a period of one (1) year
after termination of this Agreement by the Employee or by the Bank for any
reason, voluntarily or involuntarily, with or without Cause under Section 5(b),
the Employee will not:  either directly
or indirectly, on the Employee’s own behalf or as a partner, member, officer,
employee, consultant, stockholder (except by ownership of less than 1% of the
outstanding stock of a publicly held corporation, or the ownership does not
involve any managerial or operation responsibility), director or trustee of any
person, firm, or corporation or otherwise, engage in or assist others to engage
in any business, competing with the business carried on by the Bank, or solicit
business from any customers of the Bank, within the cities, towns, municipalities,
or counties where the Bank conducts business. “Bank” as used in this provision
shall include all branch operations and locations. If the Employee violates the
non-compete provisions of this Section 6 the Employee shall return to the
Bank any severance payments received after termination under Section 5(e) or
under Section 4(a)(iii) of the Employee’s Restated Change in Control
Agreement.


 


7.             Solicitation of Employees


 


The Employee
agrees that during the term of the Employee’s employment and for one (1) year
after the termination of such employment, the Employee will not induce or
attempt to induce any person who is an employee of the Bank to
leave the employ of the Bank and engage in any business which competes with the
Bank’s business.


 


8.             Confidential Information


 


The Employee acknowledges that as a
result of employment with the Bank, the Employee has access to and knowledge of
confidential, trade secret and proprietary information of the Bank. In exchange
for the consideration set forth herein and for the consideration set forth in
the Restated Change-in-Control Agreement contemporaneously executed, the
Employee agrees not to disclose to anyone inside or outside the Bank or use for
the Employee’s own benefit or the benefit of others, any of this information
without the express written consent of the Bank. The Employee acknowledges an
unauthorized disclosure or use of this information would be unfair and would
cause the Bank irreparable harm.


 


9.             Compensation Restrictions under CPP


 


Anything in this Agreement to the
contrary notwithstanding, because HF Financial Corp. is participating in the
capital purchase program (“CPP”) of the United States Treasury Department (“Treasury”)
established under the Emergency Economic Stabilization Act of 2008 (“EESA”),
compensation to the Employee shall be restricted as follows:


 


(a)           No Golden Parachute Payments. The Bank is
prohibiting any golden parachute payment to the Employee during any “CPP Covered Periods.” A “CPP Covered Period”
is any period during which (i) the Employee is a senior executive officer
and (ii) Treasury holds an equity or debt position acquired from the Bank
in the CPP.  “Golden parachute payment”
is used with same meaning as in Section 111(b)(2)(C) of EESA.  For purposes of this Section 9, “Bank”
includes any entities treated as a single employer with the Bank under 31
C.F.R. Section 30.1(b) (as in effect on the Closing Date of the CPP
purchase). The Bank shall 


 


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determine any reductions in
such a manner that to the extent possible, the provisions of Section 409A
of the Code are not violated.


 


(b)           Recovery
of Bonus and Incentive Compensation. Any bonus and incentive
compensation paid to the Employee during a CPP Covered Period and while the
Employee is a senior executive officer is subject to recovery or “clawback” by
the Bank if the payments were based on materially inaccurate financial
statements or any other materially inaccurate performance metric criteria.


 


(c)           Compensation
Program Amendments. Each of the Bank’s compensation, bonus, incentive
and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, “Benefit Plans”)
with respect to the Employee is hereby amended to the extent necessary to give
effect to provisions (a) and (b), including, but not limited to, this
Agreement, the Change in Control Agreement, the Long Term Incentive Plan, the
Short Term Incentive Plan, any individual incentive program, the Excess Pension
Plan and the Deferred Compensation Agreement.


 


In addition, the Bank is required to review
its Benefit Plans to ensure that they do not encourage senior executive
officers to take unnecessary and excessive risks that threaten the value of the
Bank. To the extent any such review requires revisions to any Benefit Plan with
respect to the Employee that the Bank does not have the authority to change
unilaterally, the Employee and the Bank agree to negotiate such changes
promptly and in good faith.


 


This Section 9 is intended to, and
will be interpreted, administered and construed to, comply with Section 111
of EESA (and, to the maximum extent consistent with the preceding, to permit
operation of the Benefit Plans in accordance with their terms before giving
effect to this Section 9 and without violating the provisions of Section 409A
of the Code).


 


10.          No
Assignments


 


This Agreement is personal to each of the
parties hereto, and neither party may assign or delegate any of its rights or
obligations hereunder without first obtaining the written consent of the other
party; provided, however, that the Bank will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Bank, by an
assumption agreement in form and substance satisfactory to the Employee in the
Employee’s reasonable discretion, 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 it if no such succession or assignment had taken place.
Failure of the Bank to obtain such an assumption agreement prior to the
effective date of any such succession or assignment shall be a breach of this
Agreement.


 


11.          Notice


 


For the purposes 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 personally delivered
or sent by certified mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the first page of this Agreement
(provided that all notices to the Bank shall be directed to the attention of
the Chair of the Personnel, Compensation and Benefits Committee of HF Financial
Corp with a copy to the Secretary of the Bank), or to such other address as
either party may have furnished to the other in writing in accordance herewith.
Notices shall be effective upon receipt.


 


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12.          Entire
Agreement/Waivers


 


This Agreement, the contemporaneously
executed Restated Change-in-Control Agreement, the Restated Deferred
Compensation Agreement, and the Letter Agreement dated November 19, 2008,
between the Employee and HF Financial in connection with the CPP addressed in Section 9
of this Agreement, as any of the same may be amended from time to time,
represent the entire agreement between the parties and supersede all previous
communications, representations, understandings, and agreements, either oral or
written, between the Bank and the Employee with respect to the employment of
the Employee by the Bank. No waiver of the terms of this Agreement shall be
binding upon either party unless in writing, signed by the party to be charged.
The waiver or failure of either party to enforce the terms of this Agreement in
one instance shall not constitute a waiver of that party’s rights under this
Agreement with respect to other violations.


 


13.          Severability


 


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


 


14.          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. This Agreement shall be interpreted in a manner consistent with
that intent. In that regard, the concept of “termination of employment” shall
be interpreted to mean “separation from service” within the meaning of Section 409A.


 


15.          Governing
Law


 


The laws of the United States to the
extent applicable and otherwise the laws of the State of South Dakota shall
govern this Agreement.


 


16.          Arbitration
and Remedies


 


(a)           Except as otherwise expressly provided in this Agreement, any dispute or
claim arising under or with respect to this Agreement, or the termination of
this Agreement, will be resolved by arbitration in the state of South Dakota in
accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association by a mutually agreeable
neutral arbitrator. The decision or award of the arbitrator shall be final and
binding upon the parties and may be entered as a judgment or order in any Court
of competent jurisdiction;


 


(b)           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 injunctive relief;


 


(c)           Employee acknowledges that compliance with Sections 6, 7, and 8 is
necessary to protect the business and good will of the Bank, and that a breach
of these sections would irreparably and continually damage the Bank for which
money damages may not be adequate. Consequently, the Employee agrees that the
Bank will be entitled to injunctive and other equitable relief from the courts
for 


 


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breach or threatened breach of these sections and the Employee agrees
that it will not be a defense to any request for such relief that the Bank has
an adequate remedy at law. For purposes of any such proceeding, the Bank and
the Employee submit to the non-exclusive jurisdiction of the courts of the state
of South Dakota, and of the United States located in the State of South Dakota,
and each agrees not to raise and waives any objection to or defense based on
the venue of any such court or forum
non-conveniens;


 


(d)           If a court of competent jurisdiction determines that any provision of
this Agreement is unreasonable in scope, time, or geography, it is hereby
authorized by the Employee and the Bank to enforce the same in such narrower
scope, shorter time or lesser geography as such court determines to be reasonable
and proper under all the circumstances. The restrictive covenants in Section 6
shall be deemed separate covenants for each and every state, county,
municipality, and town, and in the event the covenants for one or more of the
geographic territories is determined to be unenforceable, the remaining
covenants shall continue to be effective; and


 


(e)           The Bank will also have such other legal remedies as may be appropriate
under the circumstances including, but not limited to, recovery of damages
occasioned by a breach.


 


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


 


 


EMPLOYEE


 


 


	
  /s/ Curtis L. Hage

  	
   

  	
  /s/ Wm. G. Pederson

  
	
  Curtis L. Hage

  	
   

  	
  By:

  	
  Wm. G. Pederson

  
	
   

  	
   

  	
  Its:

  	
  Chair, HF Financial Corp.

  
	
   

  	
   

  	
   

  	
  Personnel, Compensation and

  
	
   

  	
   

  	
   

  	
  Benefits Committee

  



 


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