Document:

10.77 - FNBO Amendment

SEVENTH AMENDMENT OF
CONSTRUCTION LOAN AGREEMENT

THIS SEVENTH AMENDMENT OF CONSTRUCTION LOAN AGREEMENT ("Amendment") is made this  25th day of January, 2013 between FIRST NATIONAL BANK OF OMAHA, a national banking association as a Bank and as the Administrative Agent and Collateral Agent for the Banks (in such capacities, "Bank"), the other Banks a party to the Loan Agreement referenced below and HIGHWATER ETHANOL, LLC, a Minnesota limited liability company ("Borrower"). This Amendment amends that certain Construction Loan Agreement dated April 24, 2008 between Bank, Banks and Borrower ("Loan Agreement").

WHEREAS, pursuant to the Loan Agreement and the other Loan Documents, the Banks extended the Construction Loan, Revolving Loan and other financial accommodations and extensions of credit described in the Loan Agreement to Borrower, all as more fully described in the Loan Agreement;

WHEREAS, pursuant to that certain First Amendment of Construction Loan Agreement dated August 11, 2009, the Loan Termination Date applicable to the Revolving Promissory Note was extended to February 28, 2010, the interest rate applicable to the Revolving Loan was modified and the Loan Agreement was otherwise amended as provided for therein;

WHEREAS, pursuant to that certain Second Amendment of Construction Loan Agreement dated February 26, 2010, the Loan Termination Date of the Revolving Promissory Notes was extended to February 26, 2011 and the Loan Agreement was otherwise amended as provided for therein;

WHEREAS, pursuant to that certain Third Amendment of Construction Loan Agreement dated January 31, 2011, a portion of the Long Term Revolving Loan was converted to a debt service reserve, the repayment provisions applicable to the Variable Rate Loan were modified, the financial covenants were modified, the minimum interest rate applicable to the Variable Rate Loan was modified and the Loan Agreement was otherwise amended as provided for therein;

WHEREAS, pursuant to that certain Fourth Amendment of Construction Loan Agreement dated February 26, 2011, the Loan Termination Date applicable to the Revolving Loan was extended to August 28, 2011, the Commitments of the Banks with a Revolving Loan Commitment was modified and the Loan Agreement was otherwise amended as provided for therein;

WHEREAS, pursuant to that certain Fifth Amendment of Construction Loan Agreement dated August 26th, 2011, the Loan Termination Date of the Revolving Loan was extended to April 1, 2012, the Revolving Loan Commitments of the Banks were re-allocated and the Loan Agreement was otherwise amended as provided for therein;

WHEREAS, pursuant to that certain Sixth Amendment of Construction Loan Agreement dated April 1, 2012, the Loan Termination Date of the Revolving Loan was extended to April 1, 2013, the interest rate applicable to the Revolving Loan was modified and the Loan Agreement was otherwise modified as provided for therein;

WHEREAS, the Borrower has requested and under the terms of this Amendment the Banks have agreed, to modify the minimum Net Worth and Fixed Charge Coverage Ratio, waive the Borrower's violation of the minimum Net Worth and Fixed Charge Coverage Ratio for the reporting period ending October 31, 2012 and to otherwise amend the Loan Agreement as provided for in this Amendment; and

WHEREAS, the parties hereto agree to amend the Loan Agreement as provided for in this Amendment.

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the parties agree to amend the Loan Agreement as follows:

1.Capitalized terms used herein shall have the meaning given to such terms in the Loan Agreement, unless specifically defined herein.

2.Section 6.2.1 of the Loan Agreement is hereby deleted in its entirety and the following is inserted in lieu thereof:

6.2.1    BORROWER shall maintain a FIXED CHARGE COVERAGE RATIO,
measured on a rolling four quarters trailing basis at the end of each of BORROWER's fiscal quarters of no less than 0.65: 1.0 at the end of BORROWER's fiscal quarter ending January 31, 2013, 0.65 : 1.0 at the end of BORROWER's fiscal quarter ending April 30, 2013, 0.80: 1.0 at the end of BORROWER's fiscal quarter ending July 31, 2013, 0.80: 1.0 at the end of BORROWER's fiscal quarter ending October 31, 2013, 1.05 : 1.0 at the end of BORROWER's fiscal quarter ending January 31, 2014, 1.05 : 1.0 at the end of BORROWER's fiscal quarter ending April 30, 2014, and 1.10: 1.0 at the end of BORROWER's fiscal quarter ending July 31, 2014 and at the end of each fiscal quarter thereafter.

3.The first sentence of Section 6.2.2 of the Loan Agreement is hereby amended by deleting the reference to $44,775,000.00 as the minimum NET WORTH and inserting in lieu thereof $41,250,000.00. In addition, the second sentence of Section 6.2.2 of the Loan Agreement is hereby amended by deleting the reference to "measured annually" and inserting in lieu thereof "measured quarterly".

4.Borrower acknowledges that Borrower has violated the Fixed Charge Coverage Ratio and the minimum Net Worth financial covenants provided for in Sections 6.2.1 and 6.2.2 respectively of the Loan Agreement when tested on October 31, 2012. Banks hereby waive Borrower's failure to comply with the Fixed Charge Coverage Ratio and minimum Net Worth requirements required in the Loan Agreement solely for the period ending on October 31, 2012. From and after such period, Borrower shall be obligated to comply with the Fixed Charge Coverage Ratio and minimum Net Worth financial covenants contained in the Loan Agreement, as modified in this Amendment. The foregoing waivers are strictly limited to the occurrences and time period set forth above. Such waivers shall not obligate Banks to make any future waivers with respect to the terms and conditions of the Loan Agreement and the other Loan Documents, unless specifically agreed to by the Required Banks in writing. In addition, nothing contained herein shall be deemed to obligate Banks to waive any future Events of Default with respect to matters not connected with the Fixed Charge Coverage Ratio or minimum Net Worth.

5.In consideration of the modifications and waivers provided for in this Amendment, Borrower agrees to pay the Administrative Agent a fee equal to $5,000.00, with such fee due and payable on the execution and delivery of this Amendment. In addition, the Borrower agrees that the Administrative Agent will order an appraisal of the Project and Borrower will pay for such appraisal.

6.Except as modified and amended herein, all other terms, provisions, conditions and obligations imposed under the terms of the Loan Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and affirmed by Borrower. To the extent necessary, the provisions of the Loan Agreement and the other Loan Documents are hereby amended 

to be consistent with the terms of this Amendment. The modifications and amendments contained in this Amendment will become effective on the date of this Amendment except as otherwise specifically provided for above.

7.    Borrower certifies and reaffirms by its execution hereof that the representations and warranties set forth in the Loan Agreement and the other Loan Documents are true as of this date, and that no Event of Default under the Loan Agreement or any other Loan Document, and no event which, with the giving of notices or passage of time or both, would become such an Event of Default, has occurred as of execution hereof.

8.    This Amendment may be executed simultaneously in several counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument.

9.    Borrower will comply with all terms and conditions of this Amendment and any other documents executed pursuant hereto and will, when requested by Bank execute and deliver such further documents and instruments necessary to consummate the transactions contemplated hereby and shall take such other actions as may be reasonably required or appropriate to evidence or carry out the intent and purposes of this Amendment or to show the ability to carry out the intent and purposes of this Amendment.

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment on the date first written above.

	
		
	 
	HIGHWATER ETHANOL, LLC

	 
	 

	 
	By: /s/ Brian Kletscher

	 
	Brian Kletscher, Chief Executive Officer/General Manager

	 
	 

	 
	FIRST NATIONAL BANK OF OMAHA, in its capacity as a

	 
	BANK, ADMINISTRATIVE AGENT and COLLATERAL

	 
	AGENT

	 
	 

	 
	By: /s/ Fallon Savage

	 
	Fallon Savage, Vice PresidentSouthern Connecticut Bancorp, Inc. 8-K

Exhibit 10.1

EMPLOYMENT AGREEMENT

 

 

This Agreement is made and entered into
effective as of the first day of January, 2013 by and between SOUTHERN CONNECTICUT BANCORP, INC. (“Bancorp”) and its
subsidiary, THE BANK OF SOUTHERN CONNECTICUT (“the Bank”), having its principal place of business in New Haven, Connecticut
(hereinafter referred to as the “Employer”) and Sunil Pallan, residing in Salem, Connecticut (hereinafter referred
to as the “Employee”).

 

W I T N E S S E T H

WHEREAS, the Employee is experienced in
the operation and management of a bank; and

WHEREAS, the Employer desires to secure
the services of the Employee on the terms herein set forth; and

WHEREAS, the Employee is willing to enter
into this Agreement on said terms;

NOW, THEREFORE, in consideration of the
promises and the mutual covenants herein contained, the parties hereto, intending to be legally bound, do hereby mutually covenant
and agree as follows:

 

1. Employment: The Employee agrees
that, so long as he shall be employed by the Employer, the Employee shall perform all duties assigned or delegated to him under
the By-laws of the Employer and/or from time to time by the independent Board of Directors of the Employer consistent with his
position as President of Bancorp and the Bank and Senior Loan Officer of the Bank. The Employee shall be responsible for and perform
all acts and services customarily associated with such position, devoting his full time, best efforts and attention to the advancement
of the interests and business of the Employer. The Employee shall not be engaged in or concerned with any other duties or pursuits
which are competitive or inconsistent with the interests and business of the Employer. 

    	 

    	 

    

2. Term of Employment: The Term
of Employment shall commence on January 1, 2013 and end on December 31, 2013. Notwithstanding the foregoing, the Term of Employment
shall end if sooner terminated as provided in Section 5.

 

3. Duties of Employment: The Employee
agrees that, so long as he shall be employed by the Employer, the Employee shall perform all duties assigned or delegated to him
under the By-laws of the Employer and/or from time to time by the independent Board of Directors of the Employer consistent with
his position as President of Bancorp and the Bank and Senior Loan Officer of the Bank. The Employee shall be responsible for and
perform all acts and services customarily associated with such position, devoting his full time, best efforts and attention to
the advancement of the interests and business of the Employer. The Employee shall not be engaged in or concerned with any other
duties or pursuits which are competitive or inconsistent with the interests and business of the Employer. 

 

4. Compensation: During the Term
of Employment, the Employer shall pay to the Employee as compensation for the services to be rendered by him hereunder the following:

 

(a) The Employer shall pay to the Employee
a base salary at the annual rate of ONE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($175,000.00). Such
compensation shall be payable in accordance with normal payroll practices of the Employer.

    	 

    	 

    

(b) In addition to the base salary set
forth in (a) above, the Employee shall be entitled to salary increases and other such merit bonuses reflecting job performance
achievements, and/or such other form(s) of merit compensation, as the independent Board of Directors of the Employer may in its
discretion determine at the end of each calendar year(s) during the Term of Employment. The independent Board of Directors may
establish one or more individual or corporate goals for each year, the achievement of which may be made a condition to the payment
of any additional compensation to the Employee. Such goals shall be communicated to the Employee and shall be stated to be a condition
to the payment of such additional compensation to the Employee.

 

(c) At the end of each month during the
Term of Employment, the Employer shall reimburse the Employee for reasonable business related travel and entertainment expenses,
bank related education, other ordinary business expenses and convention expenses incurred by Employee in the course of performing
his duties for the Employer hereunder. Such reimbursement will be made within 30 days after submission of appropriate documentation.

 

(d) The Employer shall provide group life
insurance, comprehensive health insurance and Major Medical coverage for the Employee comparable to such coverage provided for
officers of the Employer generally. The Employee shall be eligible to participate in any profit sharing plan or Section 401(k)
plan of the Employer in accordance with the terms thereof.

 

5. Termination of Employment.

(a) The Employer shall have the right to
terminate this Agreement upon the occurrence of any one of the following events:

    	 

    	 

    

		(1)	The Employee’s conviction of a felony or any other crime involving the Employee’s morals or honesty.

 

		(2)	Dereliction in the performance of the Employee’s duties hereunder.

 

		(3)	Failure of the Employee to adhere to the policies set forth by the Board of Directors of the Employer.

 

		(4)	Failure of the Employee to qualify for a bond.

 

		(5)	Death, total disability, or drug abuse or alcoholism, which prevents the Employee from performing his functions under this
Agreement.

 

		(6)	Material non-compliance with the objectives and goals of the position as mutually agreed upon between the Employer and Employee.

 

(b) Should the Employer enter into
a “Business Combination” during the Term of Employment, the Employer or entity remaining after the
“Business Combination” occurs shall pay the Employee a lump sum payment in an amount equal to the total of the
Employee’s then current base annual salary in the event that: (i) the Employee separates from service with the Employer
(or its successor) as a result of his not having been offered the same position with the remaining entity at the
Employee’s then current base annual salary (but only if the Employee had first given the Employer (or its successor)
written notice of his intent to terminate employment for this reason and a reasonable opportunity to remedy the situation);
(ii) the Employee determines in his sole discretion that the position offered with the successor is inconsistent with his
current position, including any diminution in title, authority, duties or responsibilities or the Employee's office
is relocated to a location more than twenty-five (25) miles from its location as of the date of this Agreement, he can then
terminate his employment as a result thereof (but only if the Employee had first given the Employer (or its successor)
written notice of his intent to terminate employment for this reason and a reasonable opportunity to remedy the situation);
or (iii) the Employee is terminated, other than a termination under subparagraph 5 (a), within two years following a
“Business Combination.” Any such payment will be made no later than twenty days following such termination of
employment. In either event, such payment shall be in addition to any compensation otherwise due the Employee under any other
provision of this Agreement. As a condition of the closing or acquisition of stock resulting in a “Business
Combination,” the entity remaining shall agree in writing to honor and comply with this paragraph 5(b). A
“Business Combination” for purposes of this Agreement shall be defined as the sale by the Employer of all or
substantially all of its assets, the acquisition of fifty-one (51%) of the Employer’s outstanding voting stock, or the
merger of the Employer with another corporation as a result of which the Employer is not the surviving entity. 

 

(c) Notwithstanding anything to the contrary,
Bancorp, Bank and Employee agree that any payments to Employee pursuant to this Agreement which would constitute a “golden
parachute payment” pursuant to 12 C.F.R. Part 359 or the Supervisory Guidance contained in Financial Institution Letter FIL
1066, if made at the time when the Bank is subject to any of the conditions outlined in 12 C.F.R. §359.1(f)(1)(ii)(A)-(E)
shall not be made without obtaining all necessary approvals and, if required, may be suspended, prevented or subject to claw back
in whole or in part when warranted to ensure that payments contrary to the intent of 12 U.S.C. §1828(k) and 12 C.F.R. §359.4(b)(3)
are not made. In this regard, Bancorp and the Bank shall have the right to demand from Employee the return of , and the Employee
shall return, any golden parachute payment should Bancorp or the Bank later become aware or receive information that the Employee
has committed, is substantially responsible for, or has violated, the respective acts or omissions, conditions, or offenses prohibited
under 12 C.F.R. §359.4(a)(4).

    	 

    	 

    
 

6. Vacation. During the Term of
Employment, the Employee shall be entitled each year to a vacation of at least three (3) weeks, and during such time his compensation
shall be paid in full. The period of vacation selected each year shall be with approval of the Employer. Vacation time which is
not taken by the Employee in any year may not be accumulated or carried over from year to year. The Employee shall be entitled
to be paid for any accrued vacation time after termination of the Employee’s employment hereunder for the year of the Employee’s
termination. Normal bank holidays, seminars or convention attendance, teaching at banking schools or speaking engagements shall
not be considered as part of the Employee’s vacation period. The Employee shall comply with any banking regulations relating
to the scheduling of vacation time.

 

7. Incentive Stock Options. No incentive
stock options (“ISO’s”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, to
purchase common stock in Southern Connecticut Bancorp, Inc. under the stock option plan adopted for employees of the Employer have
been promised the Employee. Any further grant of stock options shall be in the sole and absolute discretion of the Board of Directors
of the Employer based upon criteria to be established by the Board of Directors.

 

8. Notices. All notices under this
Agreement shall be in writing and shall be deemed effective when delivered in person to the Employee or to the Secretary of the
Employer and the Chairman of the Compensation Committee, or if mailed, postage prepaid, registered or certified mail, addressed,
in the case of the Employee, to his last known address as carried on the personnel records of the Employer, and, in the case of
the Employer, to the corporate headquarters, attention of the Secretary and to the Chairman of the Compensation Committee at his
place of business, or to such other address as the party to be notified may specify by notice to the other party.

 

9. Successors and Assigns. The rights
and obligations of the Employer under this Agreement shall inure to the benefit of and shall be binding (except as to the positions
and duties of the Employee) upon the successors and assigns of the Employer, including, without limitation, any corporation, individual
or other person or entity which may acquire all or substantially all of the assets and business of Employer or with or into which
the Employer may be consolidated or merged or any surviving corporation in any merger involving the Employer.

 

10. Arbitration. Any dispute which
may arise between the parties hereto shall be submitted to binding arbitration in New Haven, Connecticut, in accordance with the
Employment Rules of the American Arbitration Association provided that any such dispute shall first be submitted to the Employer’s
Board of Directors in an effort to resolve such dispute without resort to arbitration. A single arbitrator shall decide each dispute.
In any dispute which is submitted to arbitration, the arbitration costs and attorney’s fees of the prevailing party shall
be paid by the other party.

    	 

    	 

    
 

11. Severability. If any of the
terms or conditions of this Agreement shall be declared void or unenforceable by any court or administrative body or competent
jurisdiction, such term of condition shall be deemed severable from the remainder of this Agreement, and the other terms and conditions
of this Agreement shall continue to be valid and enforceable.

 

12. Construction. This Agreement
shall be construed under the laws of the State of Connecticut. Words of the masculine gender mean and include correlative words
of the feminine gender. Section headings are for convenience only and shall be considered a part of the terms and provisions of
the Agreement.

 

13.Section 409A Compliance.
Notwithstanding anything in this Agreement to the contrary, it is the intention of the parties that this Agreement comply with
Section 409A of the Internal Revenue Code and any regulations and other guidance issued thereunder, and this Agreement and the
payment of any benefits hereunder shall be operated and administered accordingly. Specifically, but not by limitation, the Employee
agrees that if, at the time of termination of employment, the Employer is considered to be publicly traded and he is considered
to be a specified employee, as defined in Section 409A (and as determined as of December 31 preceding his termination of employment,
unless his termination of employment occurs prior to April 30, in which case the determination shall be made as of the second
preceding December 31), then some or all of such payments to be made hereunder as a result of his termination of employment shall
be deferred for no more than six (6) months and one day following such termination of employment, if and to the extent the delay
in such payment is necessary in order to comply with the requirements of Section 409A of the Code. Upon expiration of such six
(6) month and one day period (or, if earlier, his death), any payments so withheld hereunder from the Employee hereunder shall
be distributed to the Employee. For purposes of clarity, and not by way of modification, any payments to be made to the Employee
under Section 5(b) of this Agreement are intended to satisfy the conditions for the “severance exception” and/or the
“short-term deferral rule” under the final Treasury regulations interpreting Section 409A of the Internal Revenue
Code.

 

14.Section
280G Compliance. Notwithstanding any other provision of this Agreement, if any of the payments provided for in
this Agreement, together with any other payments which the Employee has the right to receive from the Employer or any corporation
which is a member of an “affiliated group” (as defined in Section 1504(a) of the Internal Revenue Code without regard
to Section 1504(b) of the Code) of which the Employer is a member, would constitute an “excess parachute payment” (as
defined in Section 280G(b)(2) of the Code), payments pursuant to this Agreement shall be reduced to the extent necessary to ensure
that no portion of such payments will be subject to the excise tax imposed by Section 4999 of the Code.

 

    	 

    	 

    
 

IN WITNESS WHEREOF, Employer has caused this
Agreement to be executed by a duly authorized officer and Employee has hereunto set his hand, effective as of the date first written
above. 

	 	 	EMPLOYER:	 
	 	 	 	 
	 	 	SOUTHERN CONNECTICUT BANCORP, INC. 
THE BANK OF SOUTHERN CONNECTICUT, INC.	 
	 	 	 	 
	 	 	 	 
	 	 	By:	
/s/ Alfred J. Ranieri, Jr.	 
	 	 		ALFRED J. RANIERI, JR.	 
	 	 		Chairman,
    Compensation Committee	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	EMPLOYEE:	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	/s/ Sunil Pallan	 
	 	 	SUNIL PALLAN

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