Document:

EXHIBIT 10.4

 

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 Darrel L. Posegate (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 President 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 HF Financial Corp. Personnel, Compensation and Benefits Committee has
authorized the Chairman and Chief Executive Officer of the Bank 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 

 

2

 

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 the Employee deems
relevant.

 

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 

 

3

 

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 

 

4

 

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 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 two 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

 

5

 

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 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)                          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;

 

(viii)                       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;

 

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

 

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

 

(xi)                                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), (viii), (ix),
and (x) 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.

 

6

 

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.                                       Certain Reduction of
Payments by the Bank.  Anything in
this Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Bank to or for the benefit of the
Employee (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise) (a “Payment”) would be nondeductible
(in whole or part) by the Bank for Federal income tax purposes because of Section 280G
of the Code, then the aggregate present value of amounts payable or
distributable to or for the benefit of the Employee pursuant to this Agreement
(such amounts payable or distributable pursuant to this Agreement are
hereinafter referred to as “Agreement Payments”) shall be reduced to the
Reduced Amount.  The “Reduced Amount”
shall be an amount, not less than zero, expressed in present value, which
maximizes the aggregate present value of Agreement Payments without causing any
Payment to be nondeductible by the Bank because of Section 280G of the
Code.  For purposes of this Section 5,
present value shall be determined in accordance with Section 280G(d)(4) of
the Code, or its successor.  The Bank
shall determine the reductions in such a manner that to the extent possible,
the provisions of Section 409A of the Code are not violated.

 

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 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

 

7

 

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, and the Excess Pension Plan.

 

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 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

 

8

 

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:

	
   

  	
  Darrel
  L. Posegate

  
	
   

  	
  225
  S. Main Avenue

  
	
   

  	
  Sioux
  Falls, SD 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 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.

 

9

 

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.

 

10

 

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

 

	
   

  	
  HOME FEDERAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Curtis L. Hage

  
	
   

  	
  By: Curtis L. Hage

  
	
   

  	
  Its: Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Darrel L. Posegate

  
	
   

  	
  Darrel L. Posegate

  

 

11EXHIBIT 10.5

 

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 David A. Brown (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 Senior Vice President/Community Banking 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 HF Financial Corp. Personnel, Compensation and Benefits Committee has
authorized the Chairman and Chief Executive Officer of the Bank 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 

 

2

 

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 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 the Employee deems
relevant.

 

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:

 

3

 

(i)                                           the assignment to the Employee of any duties
inconsistent in any respect with the 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 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.

 

4

 

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 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 1.5 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 

 

5

 

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 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)                                 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;

 

(viii)                              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;

 

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

 

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

 

(xi)                                      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), (viii), (ix),
and (x) 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

 

6

 

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.

 

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.                                       Certain
Reduction of Payments by the Bank.  Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Bank to or for the benefit of the Employee (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise) (a “Payment”) would be nondeductible (in whole or part) by the
Bank for Federal income tax purposes because of Section 280G of the Code,
then the aggregate present value of amounts payable or distributable to or for
the benefit of the Employee pursuant to this Agreement (such amounts payable or
distributable pursuant to this Agreement are hereinafter referred to as
“Agreement Payments”) shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be an amount, not
less than zero, expressed in present value, which maximizes the aggregate
present value of Agreement Payments without causing any Payment to be
nondeductible by the Bank because of Section 280G of the Code.  For purposes of this Section 5, present
value shall be determined in accordance with Section 280G(d)(4) of
the Code, or its successor.  The Bank
shall determine the reductions in such a manner that to the extent possible,
the provisions of Section 409A of the Code are not violated.

 

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 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

 

7

 

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, and the Excess Pension
Plan.

 

                                                                                                                                                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 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.

 

8

 

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:

David A. Brown

225 South Main Avenue

Sioux Falls, SD 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
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

 

9

 

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.

 

10

 

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

 

	
   

  	
  HOME FEDERAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Curtis L. Hage

  
	
   

  	
  By:
  Curtis L. Hage

  
	
   

  	
  Its:
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  David A. Brown

  
	
   

  	
  David
  A. Brown

  

 

11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}]]