EXHIBIT 10.3


 


HOME FEDERAL BANK


 


RESTATED CHANGE-IN-CONTROL
AGREEMENT


 


This Restated
Change-in-Control Agreement (this “Agreement”) is entered into as of this 31st
day of December, 2008, 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 a Change-in-Control 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 previously approved and authorized the execution of a
Change-in-Control Agreement with the Employee; and


 


WHEREAS, the parties desire
to make changes to such Agreement to better conform to Section 409A of the
Internal Revenue Code (the “Code”) and for other reasons; and


 


WHEREAS, Section 53-8-7
of the South Dakota Codified Laws permits parties to a written contract to
alter the contract in writing without further consideration; and


 


WHEREAS, the Board of
Directors of the Bank and of HF Financial Corp., the parent company of the
Bank, have approved the execution of this restated Agreement with the Employee
and have authorized the Chair of the HF Financial Corp. Personnel, Compensation
and Benefits Committee to finalize and sign the Agreement 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 either party gives a notice of nonextension with respect to the Employee’s
Restated Employment 


 

















 


Agreement, this Agreement shall terminate when the Restated Employment
Agreement terminates, except that if such notice of nonextension is given by
the Bank at a time when the Bank is actively negotiating a transaction with a
third party that may result in a Change-in-Control or at a time when
shareholders of the Holding Company are being solicited to vote for directors
who would not be Continuing Directors as defined in Section 2 below and
the election of such directors would effect a Change-in-Control or at a time
when shareholders of the Holding Company are being solicited to tender their
shares in an offering that if successful would result in a Change-in-Control,
this Agreement shall not terminate until nine months following the termination
of the Restated Employment Agreement.


 


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 


 


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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 July 2, 2007;
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 during the term of this Agreement, the Employee shall be
entitled to the benefits provided in Section 4(a) hereof upon
termination of the Employee’s employment within 24 months following the month
in which a Change-in-Control occurs unless such termination is: (i) because
of the Employee’s death or Disability (as defined below); (ii) by the Bank
for Cause (as defined below); or (iii) by the Employee other than for Good
Reason (as defined below):


 


a.             Cause.
Termination by the Bank of the 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 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 the
Employee’s Restated Employment Agreement; and (viii) willful and material
misconduct.


 


Termination for Cause shall
be preceded by a fair and complete investigation, including an opportunity for
the Employee to provide information he deems relevant, and by a vote by the
Bank’s Board of Directors that there is Cause under this Agreement to terminate
the Employee.


 


b.             Good
Reason. The 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 the
Employee’s position (including status, offices, titles, and reporting 


 


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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 the
Employee;


 


(ii)             a
reduction by the Bank in the 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 the 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 8
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 Disability as defined below. 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.             Disability.
Disability shall mean incapacity due to physical or mental illness as
determined by the Bank’s disability plan.


 


d.             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 9 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.


 


e.             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 


 


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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 that occurs during
the term of this Agreement, and upon the Employee’s termination of employment
within 24 months following the month in which the Change-in-Control occurred,
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, 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 Section 6
of the Employee’s Restated 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
Section;


 


(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
and during the period of time that the Employee is eligible for and properly
elects continued coverage under the Bank’s health and dental plans, the Bank
will continue to subsidize that coverage as if the Employee remained an active
employee of the Bank but for no more than 36 months following the Date of
Termination and only with respect to the level of health and dental insurance
coverage in which the Employee was enrolled immediately prior to the Notice of
Termination (e.g., single or family).  If
the Employee’s continuation coverage terminates for reasons other than
nonpayment of the Employee’s share of the cost of the coverage or fraud before
the Employee has received 36 months of coverage, then the Bank shall reimburse
the Employee for replacement health and dental coverage during the remainder of
the 36 months following the Date of Termination, but only with respect to the
level of health and dental insurance coverage in which the Employee was
enrolled immediately prior to the Notice of Termination (e.g., single or
family), and only in an amount up to the difference between the then COBRA
premium charged by the Bank (or its successor) to


 


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COBRA continuees and the amount that active employees are required to
pay for their coverage.  Such
reimbursement may be made directly to the provider of the Employee’s health and
dental coverage or as a reimbursement to the Employee upon the presentation of
evidence of the cost and continuation of such coverage.  Provided, however, that 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 continue to pay
the premiums on the Executive Disability Policy then covering the Employee, as
well as the premiums on the life insurance policy into which the Employee is
permitted to convert the Employee’s group term coverage from the Bank, but only
during the time and to the extent that the Employee continues such coverage
under policies.


 


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


 


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


 


(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 to be reimbursed no later than 12
months following the date the expenses were incurred;


 


(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)              a
lump sum payment equal to $5,000 in lieu of reimbursement for financial
planning and tax preparation expenses;


 


(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 and vesting of
similar awards under any successor equity incentive plan.


 


The payments provided for in
Section 4(a) (i), (iii), (iv), (ix), (x), (xi) and (xii) above shall
be made on the 60th day following the date the Employee separated from service
as defined in Section 409A of the Code and regulations and guidance issued
thereunder. The payments provided for in Section 4(a)(v), if paid as
reimbursements, shall be made within 30 days of a request for reimbursement but
only if the request is made within 60 days of the date that the premium payment
is due. 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 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 be
paid in a lump sum on that date.


 


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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. Such reimbursement must be requested no later than two months after
the conclusion of the successful litigation and shall be paid within two months
after the request for reimbursement.


 


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 4(a)(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 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 the 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 the Employee which are attributable to the Employee’s
willful misconduct or negligence. Such payment shall be made by the close of
the Employee’s taxable year that follows the taxable year of the Employee in
which the excise taxes under Section 4999 of the Code were remitted to the
Internal Revenue Service.


 


b.             If
requested by the 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 the 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 the 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 14, 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


 


7

















 


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.             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 7, “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 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 Employment 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 7 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 7 and without violating the
provisions of Section 409A of the Code).


 


8.             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


 


8

















 


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 terminate employment within
24 months following the Change-in-Control and to receive 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.


 


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.


 


9.             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 9 by giving
15 days’ prior notice to the other party hereto.


 


10.           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.


 


11.           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.


 


12.           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.


 


13.           Arbitration. Any disputes
under this Agreement will be resolved by arbitration, in the state of South
Dakota, in accordance with the National Rules for the Resolution of 


 


9

















 


Employment Dispute 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. 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.


 


14.           Employment
Agreement. Reference is hereby made to that certain
Agreement, dated contemporaneously with this Restated Change-in-Control
Agreement, by and between the Bank and the Employee. All terms and conditions
of the Employee’s Restated Employment Agreement, including the non-compete
provisions in Section 6, shall continue in force and effect (until
termination of the Restated Employment Agreement in accordance with its terms),
including following a Change-in-Control, except as expressly modified by this
Section, except that when the Employee is terminated following a
Change-in-Control, the severance provisions in the Employee’s Restated
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
Restated Employment Agreement shall serve as consideration for each agreement
contemporaneously executed, to the extent such consideration is required.


 


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


 


16.           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.


 


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


 


18.           Amendments. No amendments
or additions to this Agreement shall be binding unless stipulated in writing
and signed by the party to be changed, except as herein otherwise provided.


 


19.           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.


 


20.           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.


 


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


 


 


	
   

  	
  /s/
  Wm. G. Pederson

  
	
   

  	
  By:
  Wm. G. Pederson

  
	
   

  	
  Its:
  

  	
  Chairman,
  HF Financial Corp.

  
	
   

  	
   

  	
  Personnel,
  Compensation and

  
	
   

  	
   

  	
  Benefits
  Committee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Curtis L. Hage

  
	
   

  	
  Curtis
  L. Hage

  



 


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