Exhibit
10.16


 


HF
FINANCIAL CORP.


2002
STOCK OPTION AND INCENTIVE PLAN


 


STOCK
OPTION AGREEMENT


 


HF Financial Corp., a
Delaware corporation (the “Company”), hereby grants to «Name», (the “Optionee”), an option (the “Option”) to purchase a
total of «Number» shares of Common Stock
(the “Shares”), at the price determined as provided herein, and in all respects
subject to the terms, definitions and provisions of the 2002 Stock Option and
Incentive Plan (the “Plan”) adopted by the Company, which is incorporated herein
by reference. Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings herein.


 


1.             Nature of the
Option. This Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Internal Code.


 


2.             Exercise Price.
The exercise price for each share of Common Stock is the price at which shares
subject to this Option may be purchased upon exercise of the Option. The
Exercise Price under this Agreement shall be the Market Value (as that term is
defined in the Plan) on the date of Grant, «GrantDate»,
that being «GrantPrice» («Grant»).


 


3.             Exercise of Option.
This Option shall be exercisable during its term in accordance with the
provisions of Section 7 of the Plan as follows:


 


(i)            Right to Exercise.


 


(a)           Subject to subsections
3(i)(b), (c), (d) and (e) below, this Option shall be exercisable cumulatively,
to the extent of thirty-three and one-third percent (33 1/3%) of the Shares
subject to the Option, commencing on June 30, «Vdate1»,
and an additional thirty-three and one-third percent (33 1/3%) of the Shares
subject to the Option each consecutive June 30 as more completely described in
Exhibit A.


 


(b)           This Option may not be
exercised for a fraction of a share.


 


(c)           In
the event of Optionee’s death, disability or other termination of employment,
the exercisability of the Option is governed by Sections 7, 8 and 9 below,
subject to the limitations contained in subsections 3(i)(d) and (e).


 


(d)           In no event may this
Option be exercised after the date of expiration of the term of this Option as
set forth in Section 11 below.


 


(e)           To the extent that the
aggregate fair market value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by you
during any calendar year (under all plans of the Company) exceeds $100,000,
such options shall be treated as Non-Qualified Stock Options. For purposes of
the preceding sentence, (i) Options shall be taken into account in the order in
which they were granted and (ii) the fair market value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.


 


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(ii)  Method
of Exercise. This Option shall be exercisable by written notice which shall
state the election to exercise the Option, the number of Shares in respect of
which the Option is being exercised, and such other representations and
agreements as to the holder’s investment intent with respect to such shares of
Common Stock as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the exercise price. Until
certificates for the Shares are issued to the Optionee, such Optionee shall not
have any rights as a Shareholder of the Company.


 


No Shares will be issued
pursuant to the exercise of an Option unless such issuance and such exercise
shall comply with all relevant provisions of law and the requirements of any
stock exchange upon which the Shares may then be listed. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.


 


4.             Optionee’s
Representations. In the event the Shares purchasable pursuant to the
exercise of this Option have not been registered under the Securities Act of
1933, as amended, at the time this Option is exercised, Optionee shall,
concurrently with the exercise of all or any portion of this Option, deliver to
the Company an Investment Representation Statement in the form attached hereto
as Exhibit B. The Company shall not be required to deliver any shares upon
exercise of this Option prior to (i) the admission of such shares to listing on
any stock exchange on which the shares of Common Stock may then be listed, and
(ii) the completion of such registration as the Committee shall determine to be
necessary or advisable.


 


5.             Method of Payment.
Payment of the exercise price shall be by (i) cash; (ii) check, bank draft or
money order; or (iii) if authorized by the Board of Directors’ Stock Option
Committee (the “Committee”), by delivery of (A) Common Stock of the Company
(valued at the fair market value thereof on the date of exercise) or (B) a
combination of cash and Common Stock. The Committee may, in order to prevent
any possible violation of law, require the Exercise Price to be paid in cash.


 


6.             Restrictions on
Exercise. This Option may not be exercised if the issuance of such Shares
upon such exercise or the method of payment of consideration for such shares
would constitute a violation of any applicable federal or state securities or
other law or regulation, including any rule under Part 207 of Title 12 of the
Code of Federal Regulations (“Regulation G”) as promulgated by the Federal
Reserve Board. As a condition to the exercise of this Option, the Company may
require Optionee to make any representation and warranty to the Company as may
be required by any applicable law or regulation.


 


7.             Termination of
Status as an Employee. In the event of termination, Optionee may, but only
within three months after the date of such termination (but in no event later
than the date of expiration of the term of this Option as set forth in Section
11 below), exercise this Option to the extent that Optionee was entitled to
exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise this Option at the date of such termination (as in the
event of Optionee’s termination of employment for cause), or if Optionee does
not exercise this Option within the time specified herein, the Option shall
terminate.


 


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8.             Disability of
Optionee. Notwithstanding the provisions of Section 7 above, in the event
of termination of Optionee’s status as an employee as a result of Optionee’s
partial or total disability, Optionee may, but only within three months from
the date of termination of employment (but in no event later than the date of
expiration of the term of this Option as set forth in Section 11 below),
exercise his Option to the extent Optionee was entitled to exercise it at the
date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not
exercise such Option (which Optionee was entitled to exercise) within the time
specified herein, the Option shall terminate.


 


9.             Death of Optionee.
In the event of the death of Optionee:


 


(i)            during the term of
this Option and while an employee of the Company and having been in continuous
employment (as determined by the Board in its sole discretion) since the date
of grant of the Option, the Option may be exercised in full at any time within
one (1) year following the date of death (but in no event later than the date
of expiration of the term of this Option as set forth in Section 11 below), by
Optionee’s estate or by a person who acquired the right to exercise the Option
by bequest or inheritance; or


 


(ii)           within three months
after termination, the Option may be exercised, at any time within twelve (12)
months following the date of death (but in no event later than the date of
expiration of the term of this Option as set forth in Section 11 below), by
Optionee’s estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.


 


(iii)          the Committee may, in
its discretion, elect to pay to the person to whom such Option is transferred
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order the amount by which the Market Value per share on the
date of exercise shall exceed the Exercise Price, multiplied by the number of
shares which can be properly purchased under the Option.


 


10.           Non-Transferability
of Option. This Option may not be transferred in any manner otherwise than
by will or by the laws of descent or distribution and may be exercised during
the lifetime of Optionee only by Optionee. The terms of this Option shall be
binding upon the Optionee and his or her personal representatives, heirs, successors
and assigns.


 


11.           Term of Option. This
Option may not be exercised after «OptionTerm»,
and may be exercised only in accordance with the Plan and the terms of this
Option.


 


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12.           Early Disposition of
Stock. Optionee understands that if he or she disposes of any Shares
received under this Option within two (2) years after the date of this
Agreement or within one (1) year after such Shares were transferred to
Optionee, then Optionee may be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an amount
generally measured by the difference between the price paid for the Shares and
the lower of the fair market value of the Shares at the date of the exercise or
the fair market value of the Shares at the date of disposition. The amount of
such ordinary income may be measured differently if Optionee is an officer,
director or 10% shareholder of the Company, or if the Shares were subject to a
substantial risk of forfeiture at the time they were transferred to Optionee. Optionee
hereby agrees to notify the Company in writing within 30 days after the date of
any such disposition of the number of the Shares sold, the sales price and the
date of the sale. Optionee understands that if he or she disposes of such
Shares at any time after the expiration of both the two-year and the one-year
holding periods, any gain on such sale will be taxed as long-term capital gain.


 


13.           Effect of Merger
Combination or Consolidation. In the event of a merger, combination or
consolidation, this Option is subject to the agreement governing such
transaction in accordance with Section 13 of the Plan.


 


14.           Plan Interpretation.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
and interpretations of the Board of Directors and, where applicable, the Plan
Committee, upon questions arising under the Plan.


 


15.           Withholding Taxes.
As a condition to the issuance of Shares of Common Stock of the Company under
this Option, the Optionee authorizes the Company to withhold in accordance with
applicable law from any regular cash compensation payable to Optionee any taxes
required to be withheld by the Company under federal or state law as a result
of his exercise of this Option.


 


16.           Notices. Any
notice to the Company hereunder shall be delivered or mailed to the Secretary
of HF Financial Corp., 225 South Main Avenue, Sioux Falls, South Dakota 57104. Any
notice to the Optionee shall be mailed or personally delivered to the address
listed below, unless the Company receives notice of an address change.


 


	
  DATE OF GRANT:  «GrantDate»

  	
   

  
	
   

  	
   

  
	
   

  	
  HF FINANCIAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Darrel L. Posegate

  
	
   

  	
   

  	
  Executive Vice
  President & CFO

  



 


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OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION 3 HEREOF IS EARNED ONLY
BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
COMPANY’S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL
CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY
THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY’S
RIGHT TO TERMINATE HIS EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE.


 


Optionee acknowledges
receipt of a copy of the Plan and certain information related thereto and
represents that Optionee is familiar with the terms and provisions thereof, and
hereby accepts this Option subject to all of the terms and provisions thereof. Optionee
has reviewed the Plan and this Option in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the Plan. Optionee further agrees to notify
the Company upon any change in the residence address indicated below.


 


	
  DATE OF GRANT:  «GrantDate»

  	
   

  
	
   

  	
   

  
	
   

  	
  Optionee:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  «Name»

  
	
   

  	
  «Title»

  
	
   

  	
   

  
	
   

  	
  Residence Address:

  
	
   

  	
   

  
	
   

  	
  «Street»

  	
   

  
	
   

  	
  «CitySTZIP»

  	
   

  



 


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EXHIBIT A


 


EMPLOYEE
OPTION AND VESTING DATA


 


Name of Employee:     «Name»


 


Date of Commencement of
Employment:     «EmploymentDate»


 


Number of Shares Subject
to Option:     «Number»


 


Date of Grant:     «GrantDate»


 


INCENTIVE
STOCK OPTION VESTING SCHEDULE


 


	
   

  	
   

  	
  NO. OF SHARES

  	
   

  	
  NO. OF SHARES

  	
   

  
	
  DATE

  	
   

  	
  VESTING

  	
   

  	
  EXERCISABLE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June 30, «Vdate1»

  	
   

  	
  «Vesting1Yr»

  	
   

  	
  «Vesting1»

  	
   

  
	
  June 30, «Vdate2»

  	
   

  	
  «Vesting2Yr»

  	
   

  	
  «Vesting2»

  	
   

  
	
  June 30, «Vdate3»

  	
   

  	
  «Vesting3Yr»

  	
   

  	
  «Vesting3»

  	
   

  



 


The above vesting
schedule assumes continuous employment. Your rights to exercise the unvested
portion of your option will cease upon termination of employment. Reference is
made to Sections 7, 8 and 9 of this Agreement and Section 7 and 14 of the 2002
Stock Option and Incentive Plan for your rights to exercise the vested portion
of your option in the event of termination of employment during lifetime or
upon death. The above vesting schedule is in all respects subject to the terms
of the Plan.


 


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EXHIBIT B


 


INVESTMENT
REPRESENTATION STATEMENT


 


	
  PURCHASER:

  	
  «Name»

  
	
   

  	
   

  
	
  ISSUER:

  	
  HF Financial Corp.

  
	
   

  	
   

  
	
  SECURITY:

  	
  COMMON STOCK

  
	
   

  	
   

  
	
  AMOUNT:

  	
  «Number»
  STOCKS

  
	
   

  	
   

  
	
  DATE OF GRANT:

  	
  «GrantDate»

  



 


In connection with the
purchase of the Common Stock (“Securities”) of HF FINANCIAL CORP. (the “Company”),
the undersigned represents to the Company the following:


 


(a)           I am aware of the
Company’s business affairs and financial condition, and have acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Securities. I am purchasing these Securities for my own
account for investment purposes only and not with a view to, or for the resale
in connection with, any “distribution” thereof for purposes of the Securities
Act of 1933, as amended (the “Securities Act”)


 


(b)           I understand that the
Securities have not been registered under the Securities Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of my investment intent as expressed herein. In this
connection, I understand that, in the view of the Securities and Exchange
Commission (the “SEC”), the statutory basis for such exemption may be
unavailable if my representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.


 


(c)           I further understand
that the Securities must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from registration is otherwise
available. Moreover, I understand that the Company is under no obligation to
register the Securities. In addition, I understand that the certificate
evidencing the Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel for the Company.


 


(d)           I am familiar with the
provisions of Rule 701 and Rule 144, each promulgated under the Securities Act,
which, in substance, permit limited public resale of “restricted securities”
acquired, directly or indirectly, from the issuer thereof, in a non-public 


 


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offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of issuance of the Securities, such
issuance will be exempt from registration under the Securities Act. In the
event the Company later becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter
the securities exempt under Rule 701 may be resold, subject to the satisfaction
of certain of the conditions specified by Rule 144, including among other
things:  (1) the sale being made through
a broker in an unsolicited “broker’s transaction” or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, and the amount of securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), if applicable. Notwithstanding this paragraph (d), I acknowledge and
agree to the restrictions set forth in paragraph (e) hereof.


 


In the event that the
Company does not qualify under Rule 701 at the time of issuance of the
Securities, then the Securities may be resold in certain limited circumstances
subject to the provisions of Rule 144, which requires among other things:  (1) the availability of certain public information
about the Company, (2) the resale occurring not less than two years after the
party has purchased, and made full payment for, within the meaning of Rule 144,
the securities to be sold; and, in the case of an affiliate, or of a non-affiliate
who has held the securities less than three years, (3) the sale being made
through a broker in an unsolicited “broker’s transaction” or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934) and the amount of securities being sold during any three
month period not exceeding the specified limitations stated therein, if
applicable.


 


(e)           I further understand
that in the event all of the applicable requirements of Rule 144 or Rule 701
are not satisfied, registration under the Securities Act, compliance with
Regulation A, or some other registration exemption will be required; and that,
notwithstanding the fact that Rule 144 and Rule 701 are not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 or Rule 701 will have a substantial burden of proof
in establishing that an exemption from registration is available for such offers
or sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.


 


	
   

  	
  DATE OF GRANT: «GrantDate»

  
	
   

  	
   

  
	
   

  	
  Signature of Purchaser:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  «Name»

  
	
   

  	
  «Title»

  



 


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