Exhibit
4.2


HIGHWATER
ETHANOL, LLC


SUBSCRIPTION AGREEMENT


Limited Liability Company Membership Units


$10,000 per
Unit


Minimum Investment of 1 Unit
($10,000)

1 Unit Increments Thereafter ($10,000)


The undersigned subscriber (“Subscriber”), desiring to
become a member Highwater Ethanol, LLC (“Highwater Ethanol”), a Minnesota
limited liability company, with its principal place of business at 205 S. Main
Street, PO Box 96, Lamberton, Minnesota 56152 hereby subscribes for the
purchase of membership units of Highwater Ethanol, and agrees to pay the
related purchase price, identified below.


A.            SUBSCRIBER
INFORMATION.   Please print your individual or entity name and address.  If we accept your subscription, the units
will be titled in the name of the subscriber as it appears below.  Joint subscribers should provide both
names.  Your name and address will be
recorded exactly as printed below. 
Please provide your home, business and/or mobile telephone number.  If desired, please also provide your e-mail
address.


 


	
   

  	
  1.

  	
   

  	
  Subscriber’s Printed Name

  	
   

  	
   

  
	
   

  	
  2.

  	
   

  	
  Title, if applicable

  	
   

  	
   

  
	
   

  	
  3.

  	
   

  	
  Subscriber’s Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Street

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  City, State, Zip
  Code

  	
   

  	
   

  
	
   

  	
  4.

  	
   

  	
  E-mail Address

  	
   

  	
   

  
	
   

  	
  5.

  	
   

  	
  Home Telephone Number

  	
   

  	
   

  
	
   

  	
  6.

  	
   

  	
  Business Telephone Number

  	
   

  	
   

  
	
   

  	
  7.

  	
   

  	
  Mobile Telephone Number

  	
   

  	
   

  



 


B.            NUMBER OF UNITS PURCHASED. You must purchase at least
1 unit.  The minimum number of units to
be sold is 4,500 and the maximum number of units to be sold in the offering is
6,000.


	
  

  	
   

  	
     

  Unit(s)

  	
     

  	
   

  



 


C.                                     PURCHASE PRICE.  Indicate the dollar amount of your investment
(minimum investment is $10,000).




	
  1. Total Purchase Price

  ($10,000 per unit multiplied by number of units)

  	
   

  	
  =

  	
   

  	
  2. 1st Installment

  (10% of Total Purchase Price)

  	
   

  	
  +

  	
   

  	
  3. 2nd Installment

  (90% of Total Purchase Price)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  =

  	
   

  	
   

  	
   

  	
  +

  	
   

  	
   

  






 


D.            GENERAL
INSTRUCTIONS FOR SUBSCRIBERS:


You
should read the Prospectus dated [DATE OF EFFECTIVENESS] (the “Prospectus”)
in its entirety including the exhibits for a complete explanation of an
investment in Highwater Ethanol.


INSTRUCTIONS IF YOU ARE
SUBSCRIBING PRIOR TO THE
COMPANY’S RELEASE OF FUNDS FROM ESCROW:  If you are subscribing prior to the Company’s
release of funds from escrow, you must follow the instructions contained in
paragraphs 1 through 5 below:


1.             Complete
all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 6 and the Member Signature Page to our Member
Control Agreement attached to this Subscription Agreement as Exhibit A.



 1
 






 



2.             Immediately
provide a personal (or business) check for the first installment of ten percent
(10%) of your investment amount.  The
check should be made payable to “Minnwest Bank, Redwood
Falls, MN, escrow agent for Highwater Ethanol, LLC.”  You will determine this amount in box C.2 on
page 1 of this Subscription Agreement.


3.            Execute the Promissory Note and
Security Agreement on page 7 of this Subscription Agreement evidencing your
commitment to pay the remaining ninety percent (90%) due for the units.  The Promissory Note and Security Agreement is
attached to this Subscription Agreement and grants Highwater Ethanol, LLC a
security interest in your units.


4.             Deliver the original executed
documents referenced in paragraphs 1 and 3 of these instructions, together with
a personal or business check as described in Paragraph 2 of these instructions
to:


Highwater Ethanol, LLC

205 S. Main Street, PO Box 96

Lamberton, Minnesota 56152


5.            Within 20 days of written notice
from Highwater Ethanol that your subscription has been accepted, you must remit
an additional personal (or business) check for the second installment of ninety
percent (90%) of your investment amount made payable to “Minnwest
Bank, Redwood Falls, MN, escrow agent for Highwater Ethanol, LLC” in
satisfaction of the Promissory Note and Security Agreement.  You will determine this amount in box C.3 on
page 1 of this Subscription Agreement. 
You must deliver this check to the same address set forth above in
paragraph 4 within twenty (20) days of the date of Highwater Ethanol’s written
notice. If you fail to pay the second installment pursuant to the Promissory
Note and Security Agreement, Highwater Ethanol shall be entitled to retain your
first installment and to seek other damages, as provided in the Promissory Note
and Security Agreement.  This means that
if you are unable to pay the 90% balance of your investment amount within 20
days of our notice, you may have to forfeit the 10% cash deposit.


Your funds will be placed in Highwater Ethanol’s
escrow account at Minnwest Bank, Redwood Falls, MN.  The funds will be released to Highwater
Ethanol or returned to you in accordance with the escrow arrangements described
in the Prospectus.  Highwater Ethanol
may, in its sole discretion, reject or accept any part or all of your
subscription.  If Highwater Ethanol
rejects your subscription, your Subscription Agreement and investment will be
promptly returned to you, plus nominal interest, minus escrow fees.  Highwater Ethanol may not consider the
acceptance or rejection of your subscription until a future date near the end
of this offering.


INSTRUCTIONS IF YOU ARE
SUBSCRIBING AFTER THE
COMPANY’S RELEASE OF FUNDS FROM ESCROW:  If you are subscribing after the Company’s release
of funds from escrow, you must follow the instructions contained in paragraphs
1 through 3 below:


1.             Complete
all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 6 and the Member Signature Page to our Member
Control Agreement attached to this Subscription Agreement as Exhibit A.


2.             Immediately
provide your personal (or business) check for the entire amount of your
investment (as determined in box C.1 on page 1) made payable to “Highwater Ethanol, LLC.”


3.             Deliver the original executed
documents referenced in paragraph 1 of these instructions, together with your
personal or business check as described in paragraph 2 to:


Highwater Ethanol, LLC

205 S. Main Street, PO Box 96

Lamberton, Minnesota 56152


If you are subscribing
after we have released funds from escrow and we accept your investment, your
funds will be immediately at-risk as described in the Prospectus.  Highwater
Ethanol may, in its sole discretion, reject or accept any part or all of your
subscription.  If Highwater Ethanol
rejects your subscription, your Subscription Agreement and investment will be
returned to you promptly, plus nominal interest, minus escrow fees.  Highwater Ethanol may not consider the
acceptance or rejection of your subscription until a future date near the end
of this offering.


You may direct your questions to any of our governors
listed below or to Highwater Ethanol at (507) 752-6160.



 2
 






 



 




	
  NAME

  	
   

  	
   

  	
   

  	
   

  	
  POSITION

  	
   

  	
   

  	
  PHONE NUMBER

  
	
  Brian D. Kletscher

  	
   

  	
  President
  and Governor

  	
   

  	
  507-762-3376

  
	
  John Michael Schueller

  	
   

  	
  Vice
  President and Governor

  	
   

  	
  507-342-5621

  
	
  Jason Ray Fink

  	
   

  	
  Treasurer
  and Governor

  	
   

  	
  507-637-4355

  
	
  Timothy James Van Der Wal

  	
   

  	
  Secretary and
  Governor

  	
   

  	
  507-342-5187

  






 


E.             Additional
Subscriber Information.  Subscriber,
named above, certifies the following under penalties of perjury:


1.                                       Form of Ownership.  Check the appropriate box (one only) to
indicate form of ownership. If the subscriber is a Custodian, Corporation,
Partnership or Trust, please provide the additional information requested.


o                                    Individual


o                                    Joint Tenants with
Right of Survivorship (Both signatures must appear on page 6.)


o                                    Corporation,
Limited Liability Company or Partnership (Corporate Resolutions, Operating
Agreement or Partnership Agreement must be enclosed.)


o                                    Trust


     Trustee’s
Name: _________________________________________


     Trust Date:
_____________________________________________


o            Other: Provide detailed information in the space
immediately below.


_________________________________________________________


_________________________________________________________


2.                                       Subscriber’s Taxpayer Information.  Check the appropriate box if you are a
non-resident alien, a U.S. Citizen residing outside the United States, and/or
subject to backup withholding.  All
individual subscribers should provide their Social Security Numbers.  Trusts should provide the trust’s taxpayer
identification number.  Custodians should
provide the minor’s Social Security Number. 
Other entities should provide the entity’s taxpayer identification
number.


o                                    Check box if you
are a non-resident alien


o                                    Check box if you
are a U.S. citizen residing outside of the United States


o                                    Check this box if
you are subject to backup withholding


	
     

  	
   

  	
  Subscriber’s Social Security No.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
     

  	
   

  	
  Joint Subscriber’s Social Security No.

  	
   

  	
     

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
     

  	
   

  	
  Taxpayer Identification No.

  	
   

  	
   

  



 


3.                                       Member Report Address.  If you would like duplicate copies of member
reports sent to an address that is different than the address identified in
section A, please complete this section.


	
     

  	
   

  	
  Address:

  	
   

  	
     

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


4.                                       State of Residence.


	
     

  	
  State of Principal Residence:   

  	
     

  	 

	
   

  	
   

  	
     

  
	
     

  	
  State where driver’s license is issued:   

  	
     

  	 

	
   

  	
   

  	
     

  
	
     

  	
  State where resident income taxes are filed:   

  	
     

  	 

	
   

  	
   

  	
   

  
	
     

  	
  State(s) in which you have maintained your principal
  residence during the past three years:

  



 


	
  

  	
   

  	
  

  a.

  	
   

  	
  

  b.

  	
   

  	
  

  c.

  



 


5.                                       Suitability Standards and Confidential Investor
Information.  You cannot
invest in Highwater Ethanol unless you meet one of the following suitability
tests (a or b or the heightened standards for Iowa and Kansas investors set
forth in c and d) set forth below. 
Please review the suitability tests and check the box next to the
following suitability test that you meet. 
For husbands and wives purchasing jointly, the tests below will be
applied on a joint basis.



 3
 






 



 


a.  o                   I (We) have
annual income from whatever source of at least $45,000 and a net worth
of at least $45,000, exclusive of home, furnishings and automobiles; or


b.  o                  I (We) have a net
worth of at least $150,000, exclusive of home, furnishings and automobiles.


c.  o                    I
(We) reside in Iowa and I (We) have a net worth
of $60,000 (exclusive of home, auto and furnishings) and annual income of
$60,000 or, in the alternative, a net worth of $150,000 (exclusive of home,
auto and furnishings); or


d.  o                   I
(We) reside in Kansas and I (We) have a net worth
of $60,000 (exclusive of home, auto and furnishings) and annual income of
$60,000 or, in the alternative, a net worth of $225,000 (exclusive of home,
auto and furnishings).


If you reside in Minnesota please
complete the following request for additional information:


                


	
  I.

  	
  Employment Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Name and Address
  of Employer:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Nature of
  Employer’s Business:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Dates of
  Employment:

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


	
  

  	
  D.

  	
  Current Position or Title and Responsibilities:

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


	
  

  	
  E.

  	
  Age:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
  Educational Background

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


	
  SCHOOL

  	
   

  	
  MAJOR

  	
   

  	
  DEGREE(S)

  	
   

  	
  YRS. ATTENDED

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  III.

  	
   

  	
  Do you have such knowledge and experience in
  financial and business matters that you are capable of evaluating the merits
  and risks of an investment in the Company?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o   Yes               o   No

  
	
  IV.

  	
   

  	
  Do you understand the nature of
  an investment in the Company and the risks associated with such an
  investment?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  Do you understand that there is
  no guarantee of any financial return on this investment and that you run the
  risk of losing your entire investment?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  Do you understand that this
  investment provides limited liquidity since the Units are not freely
  transferable and the Members have limited rights to withdraw capital from or
  to withdraw as Members of the Company?

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  



 



 4
 






 



 


	
  VII.

  	
  Do you have adequate means of
  providing for your current needs and personal contingencies in view of the
  fact that this investment provides limited liquidity?

  
	
   

  	
   

  	
   

  
	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
  VIII.

  	
  If the investor is not a natural
  person:

  
	
   

  	
   

  	
   

  
	
   

  	
  A

  	
  Was the investing entity formed for the purpose of
  investing in the Company?

  
	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Did the
  shareholders, partners, members, or grantors of the investing entity, as the
  case may be, contribute additional capital to such entity for the purpose of
  purchasing Units?

  
	
   

  	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Does the
  undersigned’s investment in the Company, together with its interests in all
  other corporations, partnerships, trusts or associations represent more than
  ten percent of the undersigned’s total assets?

  
	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
  IX.

  	
  Have you ever invested in
  securities?

  
	
   

  	
   

  	
   

  
	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
  X.

  	
  Have you ever invested in
  investment partnerships, venture capital funds, or other non-marketable or
  restricted securities?

  
	
   

  	
   

  	
   

  
	
   

  	
  £   Yes               £   No

  
	
   

  	
   

  	
   

  
	
  XI.

  	
  Indicate the frequency of your
  investments in non-marketable securities:

  
	
   

  	
   

  	
   

  
	
   

  	
  £   Often               £   Occasional               £   Seldom

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


Financial Information


	
  

  	
   

  	
  Net worth (exclusive of home, home furnishings and
  automobiles): 

  	
   

  	
   

  	
   

  	
  Cash and cash equivalents and liquid securities
  (includes stocks, bonds, government obligations, etc., at fair market value):
  

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o  Under
  $50,000

  o  $50,000 -
  $250,000

  o  $250,000
  - $500,000

  o  $500,000
  - $1,000,000

  o  Over
  $1,000,000

  	
   

  	
   

  	
   

  	
  o  Under
  $50,000

  o  $50,000 -
  $74,999

  o  $75,000 -
  $99,999

  o  Over
  $100,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Investments in closely-held companies, personal
  business and/or real estate: 

  	
   

  	
   

  	
   

  	
  Equity in all real estate, net of mortgages: 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o  Under
  $25,000

  o  $25,000 -
  $49,999

  o  $50,000 -
  $74,999

  o  Over
  $75,000

  	
   

  	
   

  	
   

  	
  o  Under
  $50,000

  o  50,000 -
  $74,999

  o  $75,000 -
  $99,999

  o  Over
  $100,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Other investments: 

  	
   

  	
   

  	
   

  	
  Annual gross income: 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o  Under
  $25,000 

  o  $25,000 -
  $49,999

  	
   

  	
   

  	
   

  	
  2003

  o  Under
  $100,000

  



 



 5
 






 



 


	
  

  	
   

  	
  o  $50,000
  - $74,999

  o  Over
  $75,000

  	
   

  	
   

  	
   

  	
  o  Over
  $100,000 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2004 

  o  Under
  $100,000

  o  Over
  $100,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  2005

  o  Under
  $100,000

  o  Over
  $100,000

  



 


6.                                       Subscriber’s Representations and Warranties.  You must read and certify your
representations and warranties by placing your initials where indicated and by
signing and dating this Subscription Agreement. 
Joint subscribers are also required to initial and sign as indicated.


(Initial here)
(Joint initials) By signing below the subscriber represents and warrants to
Highwater Ethanol that he, she or it:


	
  

  	
   

  	
   

  	
   

  	
  a.    has received a copy of
  Highwater Ethanol’s Prospectus dated [DATE OF EFFECTIVENESS] and the exhibits
  thereto or has received notice that this sale has been made pursuant to a
  registration statement in which a final prospectus would have been required
  to have been delivered in the absence of Rule 172;

  
	
   

  	
   

  	
   

  	
   

  	
  b.    understands that the units
  of Highwater Ethanol are offered and sold in reliance upon a federal
  securities registration; state registrations in Florida, Georgia, Illinois,
  Iowa, Kansas, Louisiana, Minnesota, Missouri, South Dakota, and Wisconsin;
  and exemptions from securities registrations in various other states, and
  understands that the units to be issued pursuant to this subscription
  agreement can only be sold to a person meeting requirements of suitability;

  
	
   

  	
   

  	
   

  	
   

  	
  c.    understands that the
  securities purchased pursuant to this Subscription Agreement have not been
  registered under the securities laws of any state other than Florida,
  Georgia, Illinois, Iowa, Kansas, Louisiana, Minnesota, Missouri, South
  Dakota, and Wisconsin and that Highwater Ethanol is relying in part upon the
  representations of the undersigned Subscriber contained herein;

  
	
   

  	
   

  	
   

  	
   

  	
  d.    understands that the
  securities subscribed for have not been approved or disapproved by the SEC,
  or the Florida, Georgia, Illinois, Iowa, Kansas, Louisiana, Minnesota,
  Missouri, South Dakota, and Wisconsin Securities Departments or any other
  regulatory authority, nor has any regulatory authority passed upon the
  accuracy or adequacy of the Prospectus;

  
	
   

  	
   

  	
   

  	
   

  	
  e.    intends to acquire the
  units for his/her/its own account without a view to public distribution or
  resale and that he/she/it has no contract, undertaking, agreement or
  arrangement to sell or otherwise transfer or dispose of any units or any
  portion thereof to any other person;

  
	
   

  	
   

  	
   

  	
   

  	
  f.    understands that there is
  no present market for Highwater Ethanol’s membership units, that the
  membership units will not trade on an exchange or automatic quotation system,
  that no such market is expected to develop in the future and that there are
  significant restrictions on the transferability of the membership units;

  
	
   

  	
   

  	
   

  	
   

  	
  g.    has been encouraged to
  seek the advice of his legal counsel and accountants or other financial
  advisers with respect to investor-specific tax and/or other considerations
  relating to the purchase and ownership of units
  [Minnesota subscribers should NOT initial this subsection];

  
	
   

  	
   

  	
   

  	
   

  	
  h.    has received a copy of the
  Highwater Ethanol Member Control Agreement, dated May 4, 2006, and
  understands that upon closing the escrow by Highwater Ethanol, the subscriber
  and the membership units will be bound by the provisions of the Member
  Control Agreement which contains, among other things, provisions that
  restrict the transfer of membership units;

  
	
   

  	
   

  	
   

  	
   

  	
  i.    understands that the units
  are subject to substantial restrictions on transfer under certain tax and
  securities laws along with restrictions in the Highwater Ethanol Member
  Control Agreement, and agrees that if the membership units or any part
  thereof are sold or distributed in the future, the subscriber shall sell or
  distribute them pursuant to the terms of the Member Control Agreement, and
  the requirements of the Securities Act of 1933, as amended, and applicable
  tax and securities laws;

  
	
   

  	
   

  	
   

  	
   

  	
  j.    meets the suitability test
  marked in Item E.5 above;

  
	
   

  	
   

  	
   

  	
   

  	
  k.    is capable of bearing the
  economic risk of this investment, including the possible total loss of the
  investment [Minnesota subscribers should NOT initial
  this subsection];

  



 



 6
 






 



 


	
  

  	
   

  	
   

  	
   

  	
  l.    understands that Highwater
  Ethanol will place a restrictive legend on any certificate representing any
  unit containing substantially the following language as the same may be
  amended by the Governors of Highwater Ethanol in their sole discretion:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  THE
  TRANSFERABILITY OF THE COMPANY UNITS REPRESENTED BY THIS DOCUMENT IS
  RESTRICTED.  SUCH UNITS MAY NOT BE
  SOLD, ASSIGNED, OR TRANSFERRED, NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE, OR
  ENDORSEE THEREOF BE RECOGNIZED AS HAVING ACQUIRED ANY SUCH UNITS FOR ANY
  PURPOSES, UNLESS AND TO THE EXTENT SUCH SALE, TRANSFER, HYPOTHECATION, OR
  ASSIGNMENT IS PERMITTED BY, AND IS COMPLETED IN STRICT ACCORDANCE WITH, THE
  TERMS AND CONDITIONS SET FORTH IN THE MEMBER CONTROL AGREEMENT AND AGREED TO
  BY EACH MEMBER.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  THE UNITS
  REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, OFFERED FOR SALE, OR
  TRANSFERRED IN ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE SECURITIES ACT
  OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAWS.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  m.    understands that, to
  enforce the above legend, Highwater Ethanol may place a stop transfer order
  with its registrar and stock transfer agent (if any) covering all
  certificates representing any of the membership units;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  n.    may not transfer or assign
  this Subscription Agreement, or any of the subscriber’s interest herein
  without the prior written consent of Highwater Ethanol;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  o.    has written his, her, or
  its correct taxpayer identification number under Item E.2 on this
  Subscription Agreement;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  p.    is not subject to back up withholding
  either because he, she or it has not been notified by the Internal Revenue
  Service (“IRS”) that he, she or it is subject to backup withholding as a
  result of a failure to report all interest or dividends, or the IRS has
  notified him, her or it that he is no longer subject to backup withholding
  (Note this clause (p) should be crossed out if the backup withholding box in
  Item E.2 is checked);

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  q.    understands that execution
  of the attached Promissory Note and Security Agreement will allow Highwater
  Ethanol or its assigns to pursue the obligor for payment of the amount due
  thereon by any legal means, including, but not limited to, acquisition of a
  judgment against the obligor in the event that the subscriber defaults on
  that Promissory Note and Security Agreement; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  r.    acknowledges that
  Highwater Ethanol may retain possession of certificates representing
  subscriber’s units to perfect its security interest in those units.

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 



 7
 






 



Signature of Subscriber/Joint Subscriber:


	
  Date:_____________________________________________

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Individuals:

  	
   

  	
  Entities:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Individual Subscriber (Please Print)

  	
   

  	
  Name of Entity (Please Print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Individual

  	
   

  	
  Print Name and Title of Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Joint Individual Subscriber (Please Print)

  	
   

  	
  Signature of Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Joint Individual Subscriber

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



ACCEPTANCE OF SUBSCRIPTION
BY HIGHWATER ETHANOL, LLC:


Highwater
Ethanol, LLC hereby accepts Subscriber’s subscription for ___________ units.


Dated this             day of                                             ,
200       .


HIGHWATER ETHANOL, LLC


By:
                                                                                                         


Its:
                                                                                                         



 8
 






 



 


PROMISSORY
NOTE AND SECURITY AGREEMENT


Date of Subscription
Agreement: ___________________________________, 200__.


$10,000 per
Unit


Minimum Investment of 1 Unit
($10,000); Units Sold in 1 Unit Increments Thereafter ($10,000 each)


 


	
  

  	
   

  	
  Number of Units Subscribed

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Purchase Price ($10,000 per unit multiplied by
  number of units subscribed)

  
	
   

  	
   

  	
   

  
	
  (                   )

  	
   

  	
  Less Initial Payment (10% of Principal Amount)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Principal Balance

  



 


FOR VALUE RECEIVED, the undersigned hereby promises to
pay to the order of Highwater Ethanol, LLC, a Minnesota limited liability
company (“Highwater Ethanol”), at its principal office located at 205 S. Main
Street, PO Box 96, Lamberton, Minnesota 56152, or at such other place as required by Highwater
Ethanol, the Principal Balance set forth above in one lump sum to be paid
without interest within 20 days following the call of the Highwater Ethanol
Board of Governors, as described in the Subscription Agreement.  In the event the undersigned fails to timely
make any payment owed, the entire balance of any amounts due under this full
recourse Promissory Note and Security Agreement shall be immediately due and
payable in full with interest at the rate of 12% per annum from the due date
and any amounts previously paid in relation to the obligation evidenced by this
Promissory Note and Security Agreement may be forfeited at the discretion of
Highwater Ethanol.


The undersigned agrees to pay to Highwater Ethanol on
demand, all costs and expenses incurred to collect any indebtedness evidenced
by this Promissory Note and Security Agreement, including, without limitation,
reasonable attorneys’ fees.  This
Promissory Note and Security Agreement may not be modified orally and shall in
all respects be governed by, construed, and enforced in accordance with the
laws of the State of Minnesota.


The provisions of this Promissory Note and Security
Agreement shall inure to the benefit of Highwater Ethanol and its successors
and assigns, which expressly reserves the right to pursue the undersigned for
payment of the amount due thereon by any legal means in the event that the
undersigned defaults on obligations provided in this Promissory Note and
Security Agreement.


The undersigned waives presentment, demand for
payment, notice of dishonor, notice of protest, and all other notices or
demands in connection with the delivery, acceptance, performance or default of
this Promissory Note and Security Agreement.


The undersigned grants to Highwater Ethanol, and its
successors and assigns (“Secured Party”), a purchase money security interest in
all of the undersigned’s membership units of Highwater Ethanol now owned or
hereafter acquired. This security interest is granted as non-exclusive
collateral to secure payment and performance on the obligation owed Secured
Party from the undersigned evidenced by this Promissory Note and Security
Agreement. The undersigned further authorizes Secured Party to retain
possession of certificates representing such membership units and to take any
other actions necessary to perfect the security interest granted herein.


	
  Dated:

  	
          

  	
  , 200__.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OBLIGOR/DEBTOR: :

  	
   

  	
   

  	
  JOINT OBLIGOR/DEBTOR

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Printed or Typed Name of Obligor

  	
   

  	
  Printed or Typed Name of Joint Obligor

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  (Signature)

  	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Officer Title if Obligor is an Entity

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address of Obligor

  	
   

  	
   

  	
   

  



 



 9














 


 


Exhibit A


MEMBER
SIGNATURE PAGE


ADDENDUM TO THE

AMENDED AND RESTATED MEMBER CONTROL AGREEMENT

OF HIGHWATER ETHANOL, LLC


The undersigned does hereby warrant, represent,
covenant and agree that:  (i) the
undersigned, as a condition to becoming a Member in Highwater Ethanol, LLC, has
received a copy of the Amended and Restated Member Control Agreement dated                     ,
and, if applicable, all amendments and modifications thereto; (ii) the
undersigned shall be subject to and comply with all terms and conditions of
such Member Control Agreement in all respects, as if the undersigned had
executed said Member Control Agreement on the original date thereof; and (iii)
the undersigned is and shall be bound by all of the provisions of said Member
Control Agreement from and after the date of execution of this Addendum.


	
  Individuals:

  	
   

  	
  Entities:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Individual Member (Please Print)

  	
   

  	
  Name of Entity (Please Print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Individual

  	
   

  	
  Print Name and Title of Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Joint Individual Member (Please Print)

  	
   

  	
  Signature of Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Joint Individual Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed to and accepted on behalf of the

  	
   

  	
   

  
	
  Company and its Members:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HIGHWATER ETHANOL, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its: