Document:

Exhibit 10.2

 

Amendment to the Loan

Agreement

 

 

Between

 

UniCredit
Corporate Banking S.p.A.

As
Lending Party

 

and

 

KEMET
Corporation

As
Beneficiary

 

 

Relating to

 

 

Kemet Loan Agreement

 

 

CERTIFIED
PRIVATE AGREEMENT

 

BETWEEN:

 

(1)           UNICREDIT CORPORATE BANKING
S.P.A.,  with registered office and
headquarters  in Verona (Italy), at Via
Garibaldi no. 1, fully paid-up share capital: Euro 6,604,173,696.00
(six billion six hundred and four million one hundred seventy-three thousand
six hundred ninety-six/00), tax code, VAT number, and number of registration in
the Verona Companies Register: 03656170960, ABI code 3226.8, enrolled in the
Register of Banks and a member of the UniCredit Bank Group, which is enrolled
in the Register of Bank Groups under no. 31351 (hereinafter also referred to as
“UniCredit”, “Lending
Party” or “Agent Bank”),
represented by Mr. SABATINO SERGIO, born in Salerno (SA), on 30
October 1968, domiciled for the purposes of his office in Casalecchio di
Reno (BO), Via Isonzo n. 65, “Quadro Direttivo” of IV level and Corporate
Manager, authorised to act for the purposes of this agreement by virtue of the
powers granted to him through a special power of attorney issued by the
President of the board of directors of UniCredit Banca d’Impresa S.p.A., Mr. Mario
Fertonani, born in Mantova, on 3 September 1933, received by the Public
Notary of Verona, Mr. Marco Cicogna, on 2 January 2003, directory
number 87071/7486, registered in Verona on 7 January 2003 at number 37;

AND

 

(2)           KEMET
CORPORATION,  with registered office in
Simpsonville, 2835 Kemet Way, South Carolina, USA, Federal Tax Identification no. 57-0923789 (hereinafter referred
to as “Beneficiary” or “Kemet”),
represented by Mr. MARCO UBERTI, born in Bologna, on 8th June 1953,
in its capacity as special attorney, domiciled for the purposes of his office
at such company, authorised to act for the purposes of this agreement by virtue
of the powers granted to him through a power of attorney authenticated by the
Public Notary of the State of Florida, United States of America,
Mr. Frances Bruderer, on April 23, 2009, and by virtue of the
unanimous written consent in lieu of a special meeting of the board of
directors of the aforementioned company dated 17 October 2008;

 

(UniCredit and Kemet are
hereinafter collectively referred to also as the “Parties”)

 

WHEREAS

 

(A)          On 29th September 2008, the
Beneficiary and UniCredit executed a loan agreement by certified private
agreement, with the parties’ signatures being authenticated by Notary Public
Carlo Vico (directory no. 110199/29958), registered in Bologna, on 7th October 2008, under No. 11054, Series 1T,
for a maximum aggregate amount equal to Euro 60,000,000.00 (sixty million/00)
(hereinafter referred to as the “Loan”),
subsequently amended by the
Parties by way of a deed executed on 3rd April 2009, with the parties’ signatures
being authenticated by Notary Public Carlo Vico (directory no. 111725/30817),
duly registered, (hereinafter referred to as the “First Amendment to the Loan Agreement”) and by way of a
deed executed on 30th April 2009,
with the parties’ signatures being authenticated by Notary Public Federico
Tonelli, (directory no. 32053/18654), registered in Bologna on 7 May 2009
at number 4705 (annotation with the mortgage registry of Bologna dated 3 September 2009
at the following articles 12321 and 12322) which was amended by the Parties by
way of a deed executed on 1st June 2009,
with the parties’ signatures being authenticated by Notary Public Giovanni De
Pasquale, (directory no. 181922/13945), duly registered (hereinafter referred
to 

 

2

 

as
the “Second Amendment to the Loan Agreement”)
(the loan agreement, as amended by the Parties from time to time, is
hereinafter referred to as the “Loan Agreement”);

 

(B)           In order to guarantee the fulfilment of the obligations under the Loan
Agreement, by way of a deed executed on 29th September 2008 by and between Unicredit,
as secured creditor, and Arcotronics Industries S.r.l., as mortgagor, with the
parties’ signatures being authenticated by Notary Carlo Vico (directory No. 110205/29959),
duly registered, a first ranking mortgage registered on 1 October 2008 at
the articles 11314 and a second ranking mortgage (among other securities)
registered on 1 October 2008 at the articles 11315 were raised in favour
of the Lending Party over real estate located in Vergato, Sasso Marconi, and
Monghidoro (hereinafter referred to as the “Mortgages”);

 

(C)          The Parties acknowledge that the conditions precedent
to the effectiveness of the Second Amendment to the Loan Agreement have been
fulfilled within the time frames provided for therein and, as a consequence,
the Second Amendment to the Loan Agreement is fully valid and effective;

 

(D)          The Parties intend to amend the Loan Agreement in
accordance with the terms and subject to the conditions set forth here below.

 

Now, therefore, the Parties hereby agree as
follows:

 

1.            Interpretation

 

In this Amendment Deed:

 

1.1           For the purposes of this
agreement, all capitalised terms that are not otherwise defined in other
sections of this agreement shall have the meanings ascribed to them in the Loan
Agreement.

 

1.2           The recitals and the annexes form an
integral and substantial part of this agreement, shall be deemed as valid and
effective covenants, and shall therefore be fully binding upon the Parties,
their successors and/or assignees.

 

1.3           The headings of the articles and of the annexes to this
agreement have been included for convenience only, and shall not be taken into
consideration for the purpose of interpreting the relevant articles and annexes.

 

2.            Additions and amendments to the Loan Agreement

 

The Parties hereby agree to amend the Loan Agreement
as follows:

 

A.            The Parties hereby agree to replace article 7 (Ordinary Repayment) with the following
article:

 

“7. ORDINARY REPAYMENT

 

The Beneficiary hereby undertakes to fully repay each
Facility by principal instalments with a pre-amortisation period from the
Disbursement Date to the last day of the month in which the Loan is disbursed.

 

The first amortisation instalment shall be included in the
period between the day following the last day of the month in which the Loan is
disbursed and 1st April 2009.

 

The remaining amortisation instalments relating to each
principal amount of the Loan not yet disbursed shall fall due on the following
dates:

 

3

 

	
  Date

  	
   

  	
  Amount
  of the Loan to be repaid

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  01.10.2009

  	
   

  	
  Euro

  	
   1,000,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01.04.2010

  	
   

  	
  Euro

  	
   7,705,597.70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01.10.2010

  	
   

  	
  Euro

  	
   7,919,690.83

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  28.02.2011

  	
   

  	
  Euro

  	
   1,998,644.47

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01.04.2011

  	
   

  	
  Euro

  	
   6,641,170.16

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01.10.2011

  	
   

  	
  Euro

  	
   1,870,290.53

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01.04.2012

  	
   

  	
  Euro

  	
   2,107,315.56

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01.10.2012

  	
   

  	
  Euro

  	
   2,353,517.94

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01.04.2013

  	
   

  	
  Euro

  	
   22,605,179.80

  	
   

  

 

B.            The Parties hereby agree to
supplement Annex 14 (Obligations) to
the Loan Agreement with the following paragraphs:

 

“19.                          Not to amend the US Loan Agreement and
the US Loan without the prior written consent of the Agent Bank.  It is understood that any waiver required and/or
permitted in relation to the US Loan Agreement and/or the US Loan shall not be
considered in any way a waiver prohibited pursuant to this paragraph 19 of this
Annex and shall therefore not fall within the scope of application of the
prohibition set forth in this paragraph 19.

 

20.                                Without prejudice to the provisions
set forth in paragraph 8. of this Annex, to give prior notice to the Agent Bank
of the execution of any new loan agreement regulating a new financial
indebtedness incurred for the needs connected with the current business, as
provided for in the second part of paragraph 8. of this Annex.

 

21.                                Without limiting the Beneficiary’s
obligations pursuant to any other provisions set forth under this Loan
Agreement, not to carry out any actions which:

 

(a)                               May materially prejudice the
Beneficiary’s capacity to duly and timely fulfil all its payment obligations
vis-à-vis the Lending Party pursuant to the Loan Agreement; and

 

(b)                               May result in a Significant
Event.

 

C.            The Parties hereby agree to
supplement Annex 16 (Significant Events)
to the Loan Agreement with the following paragraphs:

 

16.                               Failure to deliver to the Agent
Bank, by, and no later than, the 7th (seventh) Business
Day immediately after 1st October 2009, a
legal opinion drafted, in accordance with a text reasonably satisfactory to the
Agent Bank, by a primary law firm operating in the United States of America,
chosen by the Beneficiary, which attests, in favour and in the interest of the
Lending Party, the power and capacity to execute and perfect the fees and costs
letter and the amendment deed both executed on 1st October 2009 (the “Amendment
Deed”).

 

17.                               Failure to deliver to the Agent
Bank, by, and no later than, the 7th (seventh) Business
Day immediately after 1st October 2009,
documents reasonably satisfactory to the Agent Bank 

 

4

 

evidencing that, also pursuant to the US Loan Agreement, the
relevant test period of the financial covenants is analogous to the Test Period
as defined in this Loan Agreement as amended by means of the Amendment Deed
executed on 1st October 2009.

 

18.                               Failure of the Beneficiary to pay
the amounts provided under the fees and costs letter executed on 1st October 2009.”

 

D.            The Parties hereby agree to replace the definition of “Test
Period” set forth in paragraph D (Definitions) of
Annex 14-bis (Financial Covenants) to the Loan
Agreement with the following definition:

 

““Test Period”
shall mean, in relation to any Test Date:

 

(i)     with reference to the financial covenants set forth in paragraphs A.
(Minimum Consolidated EBITDA) and C. (Capital Expenditure), the period
consisting of four consecutive quarters, the last of which ends on such Test
Date, it being understood that, (i) with sole regard to the Test Date falling
on 30th September 2009, Test Period
shall mean the two quarters between 31st March 2009 and 30th September 2009, and (ii) with sole regard
to the Test Date falling on 31st December 2009, Test Period
shall mean the three quarters between 31st March 2009 and 31st December 2009; and

 

(ii)   with reference to the financial covenant set forth in paragraph B.
(Consolidated Fixed Charge Coverage Ratio) above, the period consisting of four
consecutive quarters, the last of which ends on such Test Date, it being understood
that, (i) with sole regard to the Test Date falling on 30th September 2009, Test Period shall mean
the quarter between 30th June 2009 and 30th September 2009, (ii) with sole regard
to the Test Date falling on 31st December 2009, Test Period
shall mean the two quarters between 30th June 2009 and 31st December 2009, and (iii) with sole regard
to the Test Date falling on 31st March 2010, Test Period
shall mean the three quarters between 30th June 2009 and 31st March 2010.”

 

3.            Effectiveness

 

3.1           The Parties agree that (i) the provisions of the
Loan Agreement not amended by means of this agreement shall continue to be in
force as agreed in the Loan Agreement; (ii) the amendments made to the
Loan Agreement through the execution of this agreement are accessory, and not
material, amendments to the terms and conditions of the Loan Agreement,
therefore shall not result in (and shall not be construed in any way as
resulting in) the objective novation (novazione oggettiva)
of any of the obligations arising under the Loan Agreement and, consequently,
shall not result in any way (and shall not be construed in any way as resulting
in) the expiry and/or termination of any of the aforesaid obligations; (iii) the
securities created pursuant to the Financial Documents are deemed fully valid
and effective securities of the obligations arising under the Loan Agreement as
amended by means of this agreement; and (iv) the amendments made to the
Loan Agreement through the execution of this deed shall be deemed included in
the Loan Agreement with effectiveness from 30th September 2009.

 

3.2           Without limiting the foregoing, in the event that the
amendments to the Loan Agreement set forth in this agreement are deemed by any
competent court to constitute an objective novation (novazione oggettiva) of any of the obligations arising under
the Loan Agreement,
the Parties, also pursuant to, and for the purposes of, article 1232 of the
Italian Civil Code, agree that all the securities created pursuant to the
Financial Documents are deemed to be kept in force as security of the
obligations arising under the Loan Agreement as amended by means of this
agreement.

 

5

 

4.             Representations and Warranties by
the Beneficiary

 

4.1           By
executing this amendment deed (the “Amendment Deed”)
the Beneficiary confirms, reiterates, and renews the Representations and
Warranties set forth in Annex 13 to the Loan Agreement (other than those set
forth under point 1. of Annex 13) as if they were issued hereunder, with
reference to the factual and legal condition of the Beneficiary on the date
hereof.

 

5.             Mortgages

 

5.1           Within
10  (ten) days from the date of execution of this Amendment
Deed, the Parties shall ensure, also pursuant to and for the purposes of
article 1381 of the Italian civil code, that any formalities that may be useful
and/or necessary in relation to the Mortgages following the execution of this
agreement be duly fulfilled at the relevant register offices, at the care and
expense of the Beneficiary.

 

5.2           UniCredit hereby consents
that the formalities described above shall be carried out.

 

6.             Miscellanea

 

6.1           With regard to any matters
which are not expressly regulated in this agreement, the Parties hereby
expressly declare that the provisions of the Loan Agreement shall apply mutatis mutandis.

 

6.2           Except for that which is
expressly provided for hereunder, no other and further amendments and/or
additions to the Loan Agreement and/or to the Financial Documents have been
agreed upon by the Parties.

 

6.3           This agreement shall be
subject to registration, without the relevant registration tax being applied,
as the Loan Agreement is subject to the substitute tax, pursuant to articles 15
et seq. of Presidential Decree
no. 601 of 29th September 1973.

 

6.4           The Beneficiary hereby
represents that it shall bear all fees, costs and expenses, including attorney’s
fees and notary’s fees, relating to, or otherwise connected with, the execution
of this Amendment Deed.

 

6.5           This Amendment Deed is governed by, and shall be interpreted
in accordance with, the Italian laws. 
Any dispute which might arise in relation to the interpretation,
effectiveness, validity, conclusion, performance or termination of this
agreement shall be submitted to the exclusive jurisdiction of the Court of
Verona, subject to the Agent Bank’s right to sue the Beneficiary before any
other court.

 

6.6           The fees and costs letter executed together with this
Amendment Deed shall be considered a “Financial Document” pursuant to the Loan
Agreement.

 

Bologna, Piazza dei Martiri
n. 1, October 1, 2009.

 

6

 

	
  The Lending Party:

  	
   

  	
  The Beneficiary:

  
	
   

  	
   

  	
   

  
	
  UniCredit Corporate
  Banking S.p.A.

  	
   

  	
  KEMET Corporation

  
	
   

  	
   

  	
   

  
	
  /s/ Sergio Sabatino

  	
   

  	
  /s/ Marco Uberti

  

 

7EXHIBIT
10.1

 

UNITED BANKERS’ BANK

LOAN AGREEMENT

 

THIS LOAN AGREEMENT is
made this 30th day of September, 2009, by and between United Bankers’ Bank (“UBB”), a Minnesota State Chartered Banking Corporation with
offices at 1650 West 82nd Street, Suite 1500, Bloomington, MN   55431 (“Lender”) and HF
Financial Corp. a Delaware Corporation with offices at 225 South Main Avenue,
Sioux Falls, SD  57104 (“Borrower”).

 

WHEREAS, Borrower is a
registered bank holding company owning 100% of the outstanding shares of stock
of Home Federal Bank, a federal savings bank located at 225 South Main  Avenue, Sioux Falls, SD  57104(“Bank”); and,

 

WHEREAS, Borrower has
requested a Loan from Lender in an aggregate amount of Advances not exceeding
Six Million Dollars and no 100/Dollars ($6,000,000.00) (“Loan”),
and Lender is willing to provide such Loan, subject to the terms and conditions
hereof;

 

NOW THEREFORE, in
consideration of the premises and the mutual undertakings herein contained, the
parties agree as follows:

 

ARTICLE 1

REPRESENTATIONS AND WARRANTIES

 

As part of the
consideration for this Agreement, and as part of the inducement to Lender to
enter into and perform the terms of this Agreement, Borrower and Guarantors
hereby jointly and severally make the following representations and warranties
which shall be continuing warranties and representations (except warranties and
representations which, by their terms are limited to a specific date), through
out the term of this Agreement and any renewals or amendments thereof.

 

1.01         Bank Stock - the total authorized shares of Bank consist of
_1,510,000_ shares of capital stock, par value $_0.01_ each, of which all
_1,510,000__ shares are issued and outstanding, and there are no stock options
or other written or oral commitments outstanding pursuant to which Bank is or
could be obligated to issue additional shares of such stock.

 

1.02         Savings and Loan Holding Company - Borrower is a duly and validly
registered savings and loan holding company pursuant to Section 10 of the
Home Owners Loan Act of 1933 (the “HOLA”), as amended.

 

1.03         DIF Insurance - Bank is an insured bank under the provisions of
Chapter 16 of Title 12 of the United States Code relating to the Federal
Deposit Insurance Corporation, and no act or default on the part of the Bank
has occurred which might materially and adversely affect the status of the Bank
as an insured Bank under said Chapter 16.

 

1.04         Financial Statements (Bank) - The Thrift Financial Report (Reports)
previously delivered to Lender are true, correct and complete in all material
respects and there has been no material, adverse change in the financial
condition of Bank from or after the date of the Reports.

 

1

 

1.05         Financial Statements (Borrower) - The financial statements of Borrower
previously delivered to Lender were prepared in accordance with generally
accepted accounting principles, are true, correct, and complete in all material
respects, and there has been no material, adverse change in the financial condition
of Borrower from or after the date of such financial statements.

 

1.06         Litigation  - No material legal or administrative action of any
nature, no unsatisfied judgments, and no pending litigation, have been
commenced, instituted, or obtained against Borrower or Bank, and, as of the
date of this Agreement, no threats or intimations thereof have been received by
Borrower, or Bank.

 

1.07         Transaction is Legal and Authorized - This Agreement, the Note and all other
documents delivered therewith have been duly authorized, executed, and
delivered and are the legal, valid and binding obligations of Borrower,
enforceable in accordance with their terms except as limited by laws generally
affecting the enforcement of creditors’ rights.

 

ARTICLE 2

LOANS

 

Lender hereby agrees to
renew the Loan to Borrower in an aggregate amount not exceeding the amount
referred to above in the preamble of this Agreement.  Concurrently with the execution of this
Agreement, Borrower has executed and delivered to Lender a note (together with
any renewal or replacement notes referred to as the “Note”) evidencing the
Loan(s).

 

2.01         Repayment  – See Note.

 

2.02         Renewal – See Note.

 

2.03         Interest  – See
Note.

 

ARTICLE 3

SECURITY

 

At such time as this
Agreement is executed, Borrower shall deliver (or cause to be delivered) to
Lender a security agreement conveying a first security interest to Lender in
all of the shares of stock of Bank now owned 
(or hereafter acquired) by Borrower and certificates evidencing such
shares of stock pledged hereunder together with stock powers.  Borrower further agrees to deliver
certificates for shares of Bank and Borrower acquired hereafter (with stock
powers), and they agree to execute all financing statements and other documents
required by Lender from time to time to perfect such security interests.

 

ARTICLE 4

AFFIRMATIVE COVENANTS

 

As long as any unpaid
balance of the Loans shall be outstanding, Borrower covenants and agrees that
it will:

 

4.01         Financial Reports - Deliver to Lender (unless waived by
Lender in writing):

 

(a)           Within thirty (30) days after the end of
each quarterly period of each fiscal year, Thrift Financial Report (including
all schedules) for the period from the beginning of the fiscal year to the end
of such quarterly period in reasonable detail and certified as correct by
appropriate authorized financial officers of Bank.

 

2

 

(b)           Upon request, within ninety (90) days
after the end of each fiscal year end, the Borrower’s H(b)11 Report provided to
the Office of Thrift Supervision.

 

(c)           Within sixty (60) days following the end
of each quarterly period of each fiscal year, the Bank’s Consolidated Maturity
Report “CMR” provided to the Office of Thrift Supervision along with the IRR
Exposure Report Executive Summary.

 

(d)           If specifically requested by Lender,
within ten (20) days after the end of each monthly period, a daily statement of
condition and income for Bank as of the last banking day for such monthly
period.

 

(e)           Within ninety (90) days following the end
of the Borrower’s fiscal year-end, Borrower will provide Lender a complete copy
of the annual Independent Auditor’s Report prepared by an external audit firm
hired by the Borrower’s Board of Directors.

 

4.02         Accounting Procedure - Permit Lender or its representative at
any reasonable time to visit and inspect the properties of Borrower and Bank,
to examine Borrower’s and Bank’s books, accounts, and records and make
memoranda and copies or extracts thereof, 
to obtain analytical reports, as available from regulatory and
industrial sources, and to discuss at any time the affairs, finances, and
accounts of Borrower and Bank with officers and employees of Borrower and Bank;
provided any professional fees incurred by Lender for such inspection, examination,
shall be paid by Borrower.

 

4.03         Enforcement Actions - Deliver to Lender immediately upon
receipt thereof, any state or federal banking agency letters regarding any
concern with the financial condition of Borrower or Bank, Letter(s) of
Understanding, Memoranda, Cease and Desist Orders and any Bank or Borrower
responses thereto.

 

4.04         Blanket Bond Coverage - That at all times Bank shall maintain
insurance coverage equivalent to Bankers Blanket Standard Number 24.  Upon receipt of cancellation notice of
Bankers Blanket Bond by Insurer, Borrower will immediately provide written
notification to Lender of such notice to cancel.

 

4.05         Guaranties: 
Borrower and Bank - Borrower shall not and shall not permit Bank to
guarantee, endorse, assume or otherwise become directly or contingently liable
in connection with any obligation, for any other person, corporation, bank or
business entity except in the ordinary course of business as presently
conducted.

 

4.06         Sale of Assets - Borrower shall not and Borrower shall not permit
Bank to sell, lease, transfer or otherwise dispose of all or a substantial part
of its assets (whether in one transaction or in a series of transactions).

 

4.07         Corporate
Structure -Borrower shall not and Borrower shall not permit
Bank to consolidate with or merge into any other bank (in a transaction
material to Bank) or permit any other bank to merge into it, acquire all or a
substantial part of the assets of any other bank (in a transaction material to
Bank) or assume any of the obligations, debts or liabilities of any other bank
(in a transaction material to Bank). Borrower shall not permit Bank to
recapitalize, reorganize or reclassify any of its stock or issue any additional
shares of stock, capital notes, debentures or any option or warrant or other
agreement to acquire any of its stock, capital notes or debentures.

 

3

 

4.8           Capital Requirement - At all times the sum of Bank’s Equity
Capital (Tier 1 Capital as defined by regulatory agencies) shall maintain a
“well capitalized” status for regulatory purposes.

 

4.9           Classified Asset Ratio - Borrower shall not at any time, permit
the sum of Bank’s Weighted Classified Assets to exceed 25% of Bank’s Capital
and Reserve Accounts (Tier 1 and Tier 2 Capital as defined by regulatory
agencies).  For purposes of this
calculation, the Weighted Classified Assets shall be determined by applying the
following percentages to the amounts of the following types of Classified Assets:

 

	
  Substandard
  Assets:

  	
   

  	
  20

  	
  %

  
	
  Doubtful
  Assets:

  	
   

  	
  50

  	
  %

  
	
  Loss
  Assets:

  	
   

  	
  100

  	
  %

  

 

4.10         Loan Loss Reserve to Total Loans - Borrower shall not permit Bank to have
a Loan Loss Reserve less than that accepted by regulatory authorities as being
adequate.

 

4.11         ALLL & Individual Summaries: - Upon request, Borrower will deliver to
Lender a watch and problem loan report and an allowance for loan and lease
losses adequacy report of Bank within 30 days of the end of each calendar
quarter.  Borrower will deliver to Lender
written individual problem loan summaries within 30 days of Lender’s
request.  Borrow agrees to permit Lender
to perform onsite reviews of loan files of Borrower or Bank at Lender’s
discretion.

 

4.12         Advance limitation (Bank) — The outstanding balance of the loan
will at no time exceed 10% of the Net Tangible Equity Capital of Home Federal
Bank.  Net Tangible Equity Capital is
defined as total equity capital less any intangible assets, measured at the end
of each calendar quarter, beginning 12/31/09.

 

4.13         Financial Tests (Bank) — Borrower will cause Home Federal Bank
to satisfy the following financial tests as of the dates listed:

 

a)     The sum of Nonperforming Assets plus
Other Real Estate Owned divided by the sum of Total Loans plus Other Real
Estate Owned will not exceed 2.50% measured as of December 31, 2009 and
each calendar quarter thereafter. 
Nonperforming Assets are defined as all loans past due 90 days or more
plus any loans less than 90 days past due that are on nonaccrual.  Other Real Estate Owned is defined as all
real estate owned by Borrower or Home Federal Bank other than real estate held
for use as present of future bank premises.

b)    The sum of Nonperforming Assets plus
Other Real Estate Owned divided by the sum of Net Tangible Equity Capital plus
the Allowance for Loan and Lease Losses will not exceed 20% measured as of December 31,
2009 and each calendar quarter thereafter.

c)     The return on average assets must exceed
0.60 at December 31, 2009.  Return
on Average Assets is defined as Net Income After Taxes divided by Average Assets
during the year according to the December 31, 2009 Thrift Financial Report
of Home Federal Bank.

 

4.14         Borrower will notify Lender of any formal enforcement action,
proceedings, suits, or initiatives against Borrower or Home Federal Bank from
any regulatory agency within 30 days of receiving the notice of same.

 

4.15         Borrower will deliver to Lender a copy of its 2009 federal tax
returns within 45 days after filing date.

 

4

 

ARTICLE 5

DEFAULT

 

Notwithstanding
that the Note delivered to Lender hereunder is a note, if a petition should be
filed by or against Bank or Borrower under the United States Bankruptcy Code or
state or federal banking law, the outstanding principal balance of the Note
together with accrued interest thereon and any other costs and expenses payable
by Borrower therewith shall forthwith become automatically due and payable
without presentment, demand, protest, or notice of any kind, all of which in
this Agreement are expressly waived, and Borrower shall thereupon forthwith pay
in full or make provision for payment in full of such Note, and the holders
thereof shall be entitled to exercise all rights and avail themselves of all
remedies in order to effect such payment in full.

 

ARTICLE 6

CHANGE IN CONTROL

 

Borrower will give
Lender 30 days advance notice of any anticipated change in controlling
ownership as defined in Regulation Y of the Board of Governors, in which event,
Lender has the sole right to demand payment of Borrower’s total indebtedness
plus all accrued and unpaid interest.

 

ARTICLE 7

MISCELLANEOUS

 

7.01         Notice  - Any notice to be given herein to any party shall be
served by registered or certified mail addressed to such party at its address
stated above and shall be deemed served when deposited in any United States
Post Office.

 

7.02         No Waiver - Every right and remedy of Lender provided in this
Agreement shall be cumulative of every other right or remedy of Lender whether
conferred by law, contract, or otherwise and may be enforced concurrently; no
waiver by Lender of the performance of any obligation of Borrower or Bank shall
be construed as a waiver of any other default, then, theretofore or thereafter
existing.

 

7.03         Successors and Assigns - This Agreement and all of the
covenants and conditions herein contained shall be for the benefit of and shall
apply to and bind the parties hereto and their respective successors and
assigns; provided Borrower and Bank shall not be permitted to assign their
duties, obligations, or any other interest hereunder without the prior written
consent of Lender.  The parties
acknowledge and agree that Lender may assign all or part of its interest in the
Loans, and Borrower and Bank specifically consent to the release and delivery
of any information or documents delivered to Lender hereunder to any such
assignee or any subsequent assignee.

 

7.04         Severability - Any invalidity or unenforceability of any provision
or application of this Agreement shall not affect other lawful provisions and
application thereof, and to this end the provisions of this Agreement are
declared to be severable.

 

7.05         Applicable Law - This Agreement, the Note and all the other
documents referred to herein shall be governed by the laws of the State of
Minnesota.

 

7.06         Entire Agreement - This Agreement contains the entire
agreement of the parties on the matters contained herein.  No other agreement, statement, or promise
made by any other party or by any employee, officer or agent of any party that
is not in writing and signed by all parties to this agreement shall be binding.

 

5

 

7.07         Acknowledgment  - All parties to this Agreement acknowledge by
signature below that they have read, understand and agree to all terms and
provisions contained herein.

 

* * * *

 

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

 

	
  LENDER:

  	
   

  	
   BORROWER:

  
	
  UNITED
  BANKERS’ BANK

  	
   

  	
   HF
  FINANCIAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Todd Holzwarth

  	
   

  	
  By:

  	
  /s/ Darrel L. Posegate

  
	
   

  	
   Todd
  Holzwarth, VP

  	
   

  	
   

  	
   Darrel
  Posegate, EVP

  

 

6

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