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                                                                     Exhibit 4.2

                            AMENDED ESCROW AGREEMENT

         THIS AMENDED ESCROW AGREEMENT (this "Agreement") is made this      day
of 2003, by and between Granite Falls Community Ethanol Plant, LLC, a Minnesota
limited liability company ("GFCEP") and Granite Falls Bank as escrow agent (the
"Escrow Agent").

                              W I T N E S S E T H:

         WHEREAS, GFCEP proposes to offer a minimum 18,000 and a maximum of
30,000 of its Membership Units (the "Units") at a price of $1,000 per Unit, in
minimum blocks of five (5) Units in an offering in the State of Minnesota and
possibly other states, made pursuant to a registration under the provisions of
the Securities Act of 1933, as amended (the "Offering");

         WHEREAS, GFCEP has filed a registration statement to register the Units
with the Securities and Exchange Commission, the State of Minnesota and
possibly other states;

         WHEREAS, GFCEP will allow investors in the Offering to deliver the
purchase price of the subscribed Units in installments; and

         WHEREAS, GFCEP desires to comply with the requirements of the
Securities Act of 1933 and of the various state regulatory statutes and
regulations, and desires to protect the investors in the Offering by providing,
under the terms and conditions herein set forth, for the return to subscribers
of the money which they may pay on account of purchases of Units in the Offering
if the Minimum Escrow Deposit (hereinafter defined) is not deposited with the
Escrow Agent.

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:

         1. ACCEPTANCE OF APPOINTMENT. Granite Falls Bank hereby agrees to act
as escrow and impoundment agent under this Agreement. The Escrow Agent shall
have no duty to enforce any provision hereof requiring performance by any other
party hereunder.

         2. ESTABLISHMENT OF ESCROW ACCOUNT. An escrow account (the "Escrow
Account") is hereby established with the Escrow Agent for the benefit of the
investors in the Offering. Except as specifically provided in this Agreement,
the Escrow Account shall be created and maintained subject to the customary
rules and regulations of the Escrow Agent pertaining to such accounts.

         3. OWNERSHIP OF ESCROW ACCOUNT. Until such time as the funds deposited
in the Escrow Account (the "Deposited Funds") shall equal the Minimum Escrow
Deposit (as hereinafter defined), all funds deposited in the Escrow Account by
GFCEP shall not become the property of GFCEP or be subject to the debts of GFCEP
or any other person but shall be held by the Escrow Agent solely for the benefit
of the investors who have purchased Units in the Offering.



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         4. DEPOSIT OF PROCEEDS. All proceeds from sales of Units in the
Offering shall be delivered by GFCEP to the Escrow Agent, within two business
days of the receipt thereof from investors, endorsed (if appropriate) to the
order of the Escrow Agent, together with an appropriate written statement
setting forth name, address and social security number of each person purchasing
Units, the date of purchase, the number of Units purchased and the amount paid
by each such purchaser. Any such proceeds deposited with the Escrow Agent in the
form of uncollected checks shall be promptly presented by the Escrow Agent for
collection through customary banking and clearing house facilities. As the
proceeds of each sale are deposited with the Escrow Agent, GFCEP shall reserve
the number of Units confirmed to the purchaser thereof in connection with such
sale. All such deposited proceeds are referred to herein as the "Escrow Funds."

         5. INVESTMENT OF ESCROW ACCOUNT. The Escrow Funds shall be credited by
Escrow Agent and recorded in the Escrow Account. The Escrow Agent shall be
permitted, and is hereby authorized to deposit, transfer, hold and invest all
funds received under this Agreement, including principal and interest, in an
institutional money market account. Any interest received by Escrow Agent with
respect to the Escrow Funds shall be paid to GFCEP on the termination of the
escrow only in accordance with Section 7C below.

         6. TERMINATION OF ESCROW. This Agreement and the Escrow created hereby
shall be terminated on the earlier of (the "Termination Date"):

         A. Satisfaction of the Escrow terms and the release of Escrow Funds to
GFCEP as provided in paragraph 7C below;

         B. The date that GFCEP advises the Escrow Agent and the Commissioner of
Commerce of the State of Minnesota (the "Commissioner") in writing that GFCEP
elects to abandon the Offering;

         C. June 30, 2003 if by such date (the "Funding Date") the Escrow Funds
do not equal at least the Minimum Escrow Deposit; provided, however, that GFCEP
may extend the Funding Date on two occasions of up to 90 days each by giving the
Escrow Agent written notice of the extension prior to any other termination of
the Escrow;

         D. July 31, 2003 if by such date (the "Commitment Date"), GFCEP has not
advised the Escrow Agent in writing that GFCEP has received its requisite
written debt financing commitment; provided, however, that the Commitment Date
will automatically extend by 90 days for each timely extension of the Funding
Date; or

         E. January 31, 2004 (the "Final Termination Date").

         Despite the foregoing or Section 7 below, the Escrow Agent shall not
return any Escrow Funds to purchashers of the Units until the Escrow Agent or
GFCEP notifies the Commissioner in writing of the planned return of Escrow
Funds.

         7. DISPOSITION OF ESCROW FUNDS. The Escrow Agent shall have the
following duties and obligations under this Agreement:

         A. The Escrow Agent shall send a written notice acknowledging the
receipt of the Deposited Funds every seven days to GFCEP. The Escrow Agent shall
give GFCEP prompt written notice when the Deposited Funds total $500,000, $1.0
million and $1.5 million.

         B. The Escrow Agent shall also give GFCEP prompt written notice when
the Deposited Funds equal $1,800,000. Following receipt of such notice, GFCEP
will advise the purchasers of Units to remit to the Escrow Agent the balance of
the purchase price within twenty (20) days. Thereafter, Escrow Agent shall give
GFCEP prompt written notice when the Deposited Funds total $5.0 million, $10.0
million, $15.0 million, and $18.0 million.

         C. At the time (and in the event) that: (a) the Deposited Funds shall,
during the term of this Agreement, equal $18.0 million in subscription proceeds
(exclusive of interest) (the "Minimum Escrow Deposit"), (b) the Escrow Agent
shall have received written confirmation from GFCEP that


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 GFCEP has obtained a written debt financing commitment from one or more lenders
for an amount which, when added to the amount that GFCEP certifies in writing
will be the net offering proceeds from the Offering upon disbursement of the
Escrow Funds, will yield at least $54,775,000 and (c) GFCEP has affirmatively
elected, in writing, to terminate this Agreement and, after providing a copy of
the written debt financing commitment to the Commissioner, the Escrow Agent has
obtained the express written authorization of the Commissioner, then this
Agreement shall terminate, and the Escrow Agent shall promptly disburse the
funds on deposit, including interest, to GFCEP to be used in accordance with the
provisions set out in the Registration Statement (as may be amended) which will
be used in Offering the Units. GFCEP will deliver a copy of the Registration
Statement to the Escrow Agent upon execution of this Agreement. The Escrow Agent
will have no responsibility to examine the Registration Statement with regard to
the Escrow Account or otherwise. Upon the making of such disbursement, the
Escrow Agent shall be completely discharged and released of any and all further
responsibilities hereunder.

         D. In the event (1) the Deposited Funds do not equal or exceed the
Minimum Escrow Deposit on or before the relevant Funding Date, (2) GFCEP does
not advise the Escrow Agent in writing regarding the debt financing commitment
on or before the relevant Commitment Date, (3) GFCEP abandons the Offering in
accordance with paragraph 6B or (4) Escrow Funds are still being held by Escrow
Agent on the Final Termination Date, the Escrow Agent shall return to each of
the purchasers of the Units in the Offering, as promptly as possible (but, as
required by the Commissioner, not later than 30 days) after such Termination
Date and on the basis of its records pertaining to the Escrow Account: (a) the
sum which each purchaser initially paid in on account of purchases of the Units
in the Offering and (b) subject to paragraph 10 hereof, each purchaser's portion
of the total interest earned on the Escrow Account as of the Termination Date.
Computation of any purchaser's share of the net interest earned will be a
weighted average based on the proportion of such purchaser's deposit in the
Escrow Account from the Offering to all such purchasers' deposits held by the
Escrow Agent and upon the length of time in days such deposit was held in the
Escrow Account as compared to all such deposits. All computations with respect
to each purchaser's allocable share of net interest shall be made by the Escrow
Agent, which determinations shall be final and conclusive. Any amount paid or
payable to a purchaser pursuant to this paragraph shall be deemed to be the
property of such purchaser, free and clear of any and all claims of GFCEP or its
agents or creditors; and the respective purchases of the Units made and entered
into in the Offering shall thereupon be deemed, in facto, to be cancelled
without any further liability of the purchasers or any of them to pay for the
Units purchased. At such time as the Escrow Agent shall have made all the
payments called for in this paragraph, the Escrow Agent shall be completely
discharged and released of any and all further responsibilities hereunder, and
the Units reserved (as provided in paragraph 4) shall be released from such
reservation.

         8. AGREEMENT WITH ESCROW AGENT. To induce Escrow Agent to act
hereunder, it is agreed by GFCEP that:

         A. The sole duty of the Escrow Agent, other than as herein specified,
shall be to receive the Escrow Funds and hold them subject to release, in
accordance herewith, and the Escrow Agent shall be under no duty to determine
whether GFCEP is complying with requirements of this Agreement in tendering to
the Escrow Agent said proceeds of the sale of said Units. The Escrow Agent may
conclusively rely upon and shall be protected in acting upon any statement,
certificate, notice, request, consent, order or other document believed by it to
be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall have no duty or liability to verify any such statement,
certificate, notice, request, consent, order or other document, and its sole
responsibility shall be to act only as expressly set forth in this Agreement.
The Escrow Agent shall be under no obligation to institute or defend any action,
suit or proceeding in connection with this Agreement unless first indemnified to
its satisfaction. The Escrow Agent may consult counsel


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in respect of any question arising under this Agreement and the Escrow Agent
shall not be liable for any action taken or omitted in good faith upon advice of
such counsel.

         B. GFCEP hereby indemnifies and holds harmless the Escrow Agent from
and against any and all loss, liability, cost, damage and expense, including,
without limitation, reasonable counsel fees, which the Escrow Agent may suffer
or incur by reason of any action, claim or proceeding brought against the Escrow
Agent arising out of or relating in any way to this Agreement or any transaction
to which this Agreement relates unless such action, claim or proceeding is the
result of the gross negligence or willful misconduct of the Escrow Agent.

         9. RESIGNATION AND REMOVAL OF ESCROW AGENT SUCCESSORS. The Escrow Agent
may resign upon thirty (30) days advance written notice to GFCEP. If a successor
Escrow Agent is not appointed within the 30-day period following such notice,
Escrow Agent may petition any court of competent jurisdiction to name a
successor Escrow Agent. Any commercial banking institution or trust company with
which Escrow Agent may merge or consolidate, and any commercial banking
institution or trust company to which Escrow Agent transfers all or
substantially all of its corporate trust business shall be the successor Escrow
Agent without further act.

         10. FEES AND EXPENSES OF ESCROW AGENT. In the event the Escrow Agent
disburses funds to GFCEP pursuant to Section 7C above, the Escrow Agent shall be
entitled to deduct from the funds so disbursed a fee of Twenty Dollars ($20.00)
per purchaser, which fees shall be paid from interest on the escrow account only
and not from principal. This fee and the continued deposit of said escrow in the
institutional money market account as set forth in paragraph 5 herein is
intended as full consideration for the Escrow Agent's services as contemplated
by this Agreement; PROVIDED, HOWEVER, that in the event the Escrow Agent renders
any material service not contemplated in this Agreement or there is any
assignment of interest in the subject matter of this Agreement, or any material
modification hereof; or if any material controversy arises hereunder, or the
Escrow Agent is made a party to any litigation pertaining to this Agreement, or
the subject matter hereof, then the Escrow Agent shall be reasonably compensated
for such extraordinary services and reimbursed for all costs and expenses,
including reasonable attorney's fees, occasioned by any delay, controversy,
litigation or event, and the same shall be recoverable from GFCEP, but not from
the escrow account.

         11. CONCERNING THE COMMISSIONER. The parties further agree as follows:

         A. CONSENT OF COMMISSIONER TO RELEASE FUNDS. No funds shall be released
to GFCEP hereunder except upon the express written authorization of the
Commissioner. If the Commissioner finds that any conditions of this Agreement
have not been satisfied, or that any provisions of the Minnesota Securities Laws
or regulations have not been complied with, then the Commissioner may withhold
such authorization for release of funds by the Escrow Agent to GFCEP and may
direct the Escrow Agent to return the funds to the subscribers. In making a
determination hereunder, the Commissioner may require from GFCEP a statement of
all expenses and/or all amounts paid into the escrow, certified by an
independent certified public accountant or an officer of GFCEP and any further
financial or other information as the Commissioner may deem appropriate or
helpful in making such determination.

         B. INSPECTION OF RECORDS. The Commissioner may, at any time, inspect
the records of the Escrow Agent, insofar as they relate to this Escrow
Agreement, for the purpose of determining compliance with and conformance to the
provisions of this Escrow Agreement.

         C. ISSUANCE OF CERTIFICATES. Until the terms of this Agreement have
been met and the funds hereunder released to GFCEP, GFCEP may not issue any
certificates or other evidences of securities, except subscription agreements.

         12. NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (a) on the date of service if served personally on the party to whom
notice is to be given, (b) on the day of transmission if sent by facsimile
transmission to the facsimile number given below, and telephonic confirmation of
receipt is obtained promptly after completion of transmission, (c) on the next
day on which such deliveries are made in Granite Falls, Minnesota, when delivery
is to Federal Express or similar overnight courier or the Express Mail service
maintained by the United States Postal Service, or (d) on the fifth day after
mailing, if mailed to the party to whom notice is to be given, by first class
mail, registered or certified, postage prepaid, and properly addressed, return
receipt requested, to the party as follows:


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          If to Escrow Agent:

               Granite Falls Bank
               2801 West Jefferson Street
               Granite Falls, Minnesota 56241
               Fax:  (320) 773-2696

          If to GFCEP:

               Granite Falls Community Ethanol Plant, LLC
               Attn: Paul Enstad, Chairman
               2448-540th Street, Suite 1
               Granite Falls, Minnesota 56241
               Fax:  (320) 561-0720

          with a required copy to:

               Messerli & Kramer P.A.
               150 South Fifth Street, Suite 1800
               Minneapolis, Minnesota 55402
               Attention:  Jeffrey C. Robbins, Esq.
               Fax:  (612) 672-3777


         13. GOVERNING LAW. This Agreement shall be construed, performed, and
enforced in accordance with, and governed by, the internal laws of the State of
Minnesota, without giving effect to the principles of conflict of laws thereof.

         14. SUCCESSORS AND ASSIGNS. Except as otherwise provided in this
Agreement, no party hereto shall assign this Agreement or any rights or
obligations hereunder without the prior written consent to the other parties
hereto and any such attempted assignment without such prior written consent
shall be void and of no force and effect. This Agreement shall inure to the
benefit of and shall be binding upon the successors and permitted assigns of the
parties hereto.

         15. SEVERABILITY. In the event that any part of this Agreement is
declared by any court or other judicial or administrative body to be null, void,
or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in full
force and effect.

         16. FURTHER ASSURANCES. Each of the parties shall execute such
documents and other papers and take such further actions, as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.

         17. AMENDMENTS. This Agreement may be amended or modified, and any of
the terms, covenants, representations, warranties, or conditions hereof may be
waived, only by a written

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instrument executed by the parties hereto, or in the case of a waiver, by the
party waiving compliance. Any waiver by any party of any condition, or of the
breach of any provision, term, covenant, representation, or warranty contained
in the Agreement, in any one or more instances, shall not be deemed to be nor
construed as further or continuing waiver of any such conditions, or of the
breach of any other provision, term, covenant, representation, or warranty of
this Agreement.

         18. ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the parties hereto with respect to the escrow contemplated hereby and
supersedes and replaces all prior and contemporaneous agreements and
understandings, oral or written, with regard to such escrow.

         19. SECTION HEADINGS. The section headings in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.

         20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have hereunto affixed their
signatures as of the day and year first written above.


GFCEP:

GRANITE FALLS COMMUNITY ETHANOL PLANT, LLC

By
    --------------------------------
    Paul Enstad, Chairman


ESCROW AGENT:

GRANITE FALLS BANK


By
    --------------------------------
    Steve Lindholm, President






Accepted for filing:


---------------------------------------
Minnesota Commissioner of Commerce





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