Document:

exv4w2

 

Exhibit 4.2

NORTHWEST IOWA RENEWABLE ENERGY, L.L.C.

SUBSCRIPTION AGREEMENT

Limited Liability Company Membership Units

$1,000 per Unit

Minimum Investment of 20 Units ($20,000)

1 Unit Increments Thereafter ($1,000)

     The undersigned subscriber, desiring to become a member of Northwest Iowa Renewable Energy,
L.L.C. (“Northwest Iowa Renewable Energy”), an Iowa limited liability company, with its principal
place of business at 221 Reed Street, P.O. Box 366, Akron, Iowa 51001, hereby subscribes for the
purchase of the membership units of Northwest Iowa Renewable Energy (“Units”), and agrees to pay
the related purchase price, identified below.

A. SUBSCRIBER INFORMATION. Please print your individual or entity name, address and telephone
numbers. Joint subscribers should provide both names. If we accept your subscription, the
units will be titled in the name of the subscriber as it appears below. Your name, address and
telephone numbers will be recorded exactly as printed below.

	 	 	 	 	 
	1.

	 	Subscriber’s Printed Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	2.

	 	Subscriber’s Address:	 	 
	 
	 	 	 	 
	 

	 	Street	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	City, State, Zip Code	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	County	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	3.

	 	Home Telephone Number	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	4.

	 	Business Telephone Number	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	5.

	 	Mobile Telephone Number	 	 
	 

	 	 	 	 

B. NUMBER OF UNITS PURCHASED. You must purchase at least 20 Units. The minimum purchase by a
single investor is 20 Units ($20,000) and increments of 1 Unit thereafter. The maximum number of
units to be sold in the offering is 50,900. Indicate the number of units purchased in the box
below.

           units

C. PURCHASE PRICE. Indicate the dollar amount of your investment (minimum investment is
$20,000).

	 	 	 	 	 	 	 	 	 
	1. Total Purchase Price

	 	=	 	2. Ten Percent (10%) 1st
	 	+	 	3. Ninety Percent (90%) 2nd
	 

	 	 	 	Installment
	 	 	 	Installment
	($1,000 per unit
multiplied by
number
of units in part B
above)

	 	 	 	(10% of the Total Purchase Price)
	 	 	 	(90% of the Total
Purchase Price)
	 	 	 	 	 	 	 	 	 
	 	 	=	 	 	 	+	 	 
	 

	 	 	 	 
	 	 	 	 

D. GENERAL INSTRUCTIONS FOR SUBSCRIBERS:

     You should read the Prospectus dated ___, 2006 (the “Prospectus”) in its entirety
including exhibits for a complete explanation of an investment in Northwest Iowa Renewable Energy.
Read the instructions below on how to complete a subscription for our units.

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INSTRUCTIONS IF YOU ARE SUBSCRIBING PRIOR TO NORTHWEST IOWA RENEWABLE ENERGY’S RELEASE OF
FUNDS FROM ESCROW: If you are subscribing prior to Northwest Iowa Renewable Energy’s release of
funds from escrow, you must follow Steps 1 through 5 below:

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 7 and the Member Signature Page to our Operating Agreement attached
to this Subscription Agreement as Exhibit A.

     2. Immediately provide your personal (or business) check for the first installment of ten
percent (10%) of your investment amount made payable to “Security National Bank, Escrow Agent for
Northwest Iowa Renewable Energy, L.L.C.” 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 8 of this Subscription Agreement
evidencing your commitment to pay the remaining ninety percent (90%) due for the Units subscribed
and grant Northwest Iowa Renewable Energy a security interest in your units.

     4. Deliver each of the original executed documents referenced in Items 1 and 3 of these
Instructions, together with your personal or business check described in Item 2 of these
Instructions to either of the following:

	 	 	 
	Northwest Iowa Renewable Energy, L.L.C.

	 	First National Bank
	Attn: John Lucken, Chairman

	 	For Credit To Account:
	221 Reed Street

	 	Security National Bank, Escrow Agent for
	P.O. Box 366

	 	Northwest Iowa Renewable Energy, L.L.C.
	Akron, IA 51001

	 	251 Reed Street
	 

	 	Akron, IA 51001

     5. Within 20 days of written notice from Northwest Iowa Renewable Energy 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 “Security
National Bank, Escrow Agent for Northwest Iowa Renewable Energy, L.L.C.” 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. Deliver this check to the same address set forth above in Instruction
4 within twenty (20) days of the date of Northwest Iowa Renewable Energy’s written notice. If you
fail to pay the second installment pursuant to the Promissory Note and Security Agreement,
Northwest Iowa Renewable Energy 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 Northwest Iowa Renewable Energy’s escrow account at Security
National Bank, Sioux City, Iowa. The funds will be released to Northwest Iowa Renewable Energy or
returned to you in accordance with the escrow arrangements described in the Prospectus. Northwest
Iowa Renewable Energy may, in its sole discretion, reject or accept any part or all of your
subscription. If Northwest Iowa Renewable Energy rejects your subscription, your Subscription
Agreement and investment will be returned to you within 30 days of such rejection, plus nominal
interest, minus escrow fees. Northwest Iowa Renewable Energy 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 NORTHWEST IOWA RENEWABLE ENERGY’S RELEASE OF
FUNDS FROM ESCROW: If you are subscribing after Northwest Iowa Renewable Energy’s release of funds
from escrow, you must follow Steps 1 through 3 below:

     1. Complete all information required in this Subscription Agreement, and date and sign the
Subscription Agreement on page 7 and the Member Signature Page to our Operating 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 “Northwest Iowa Renewable Energy,
L.L.C.”.

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

2

 

Northwest Iowa Renewable Energy, L.L.C.

P.O. Box 366

Akron, Iowa 51001

     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. Northwest Iowa Renewable
Energy may, in its sole discretion, reject or accept any part or all of your subscription. If
Northwest Iowa Renewable Energy rejects your subscription, your Subscription Agreement and
investment will be returned to you promptly, plus nominal interest, minus escrow fees. Northwest
Renewable Energy 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 directors at (712) 568-3211.

F. Additional Subscriber Information. The 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:
	 	 
	 

	 	 

3

 

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

	 	 	 	 	 
	a.

	 	b.
	 	c.
	 

	 	 
	 	 

	 	5.	 	Suitability Standards. You cannot invest in Northwest Iowa Renewable Energy
unless you meet one of the following suitability tests (a or b) 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.

	 	a. o 	 	I (We) have annual income from whatever source of at least
$65,000 and a net worth of at least $65,000, 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.

	 	 	 	I (We) certify that I (we) satisfy one of the suitability requirements set forth as
(a) and (b) above.

	 	 	 
	 

	 	 
	Signature of Individual Subscriber

	 	Signature of Joint Subscriber
	 

	 	(if applicable)

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
Northwest Iowa Renewable Energy that he, she or it:

	 	 	 	 	 
	
 

	 	
 

	 	a. has received a copy of Northwest Iowa Renewable
Energy’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. has been informed that the units of Northwest Iowa
Renewable Energy are offered and sold in reliance upon
a federal securities registration; state registrations
in Iowa and South Dakota; 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. has been informed that the securities purchased
pursuant to this Subscription Agreement have not been
registered under the securities laws of any state
other than Iowa and South Dakota and that Northwest
Iowa Renewable Energy is relying in part upon the
representations of the undersigned Subscriber
contained herein;
	 
	 	 	 	 
	
 

	 	
 

	 	d. has been informed that the securities subscribed for
have not been approved or disapproved by the SEC, or
the Iowa and South Dakota 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
Northwest Iowa Renewable Energy’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;
	 
	 	 	 	 
	
 

	 	
 

	 	h. has received a copy of the Northwest Iowa Renewable
Energy Operating Agreement, dated April 14, 2006, and
understands that upon closing the escrow by Northwest
Iowa Renewable Energy, the subscriber and the
membership units will be bound by the provisions of
the Operating Agreement which contains, among other
things, provisions that restrict the transfer of
membership units;

4

 

	 	 	 	 	 
	
 

	 	
 

	 	i. understands that the units are subject to substantial
restrictions on transfer under certain tax and
securities laws along with restrictions in the
Northwest Iowa Renewable Energy Operating 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 Operating 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
and is capable of bearing the economic risk of this
investment, including the possible total loss of the
investment;
	 
	 	 	 	 
	
 

	 	
 

	 	k. understands that Northwest Iowa Renewable Energy will
place a restrictive legend on any certificate
representing any unit containing substantially the
following language as the same may be amended by the
Directors of Northwest Iowa Renewable Energy in their
sole discretion:

THE TRANSFERABILITY OF THE MEMBERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED. SUCH UNITS MAY NOT BE SOLD,
ASSIGNED, OR TRANSFERRED, AND NO ASSIGNEE, VENDEE, TRANSFEREE
OR ENDORSEE THEREOF WILL 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, APPLICABLE FEDERAL
AND STATE LAW AND THE TERMS AND CONDITIONS SET FORTH IN THE
OPERATING AGREEMENT OF THE COMPANY, AS AMENDED FROM TIME TO
TIME.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
OFFERED FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
UNDER APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAWS.

	 	 	 	 	 
	
 

	 	
 

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

	 	
 

	 	m. may not transfer or assign this Subscription
Agreement, or any of the subscriber’s interest herein
without the prior written consent of Northwest Iowa
Renewable Energy;
	 
	 	 	 	 
	
 

	 	
 

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

	 	
 

	 	o. 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);
	 
	 	 	 	 
	
 

	 	
 

	 	p. understands that execution of the attached Promissory
Note and Security Agreement will allow Northwest Iowa
Renewable Energy 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
	 
	 	 	 	 
	
 

	 	
 

	 	q. acknowledges that Northwest Iowa Renewable Energy may
retain possession of certificates representing
subscriber’s units to perfect its security interest in
those units.

5

 

By executing this Subscription Agreement below, the Subscriber agrees to be bound by all of the
terms, provisions, warranties, representations and conditions contained in this Subscription
Agreement.

Signature of Subscriber/Joint Subscriber:

Date:                                                            

	 	 	 
	Sign below if subscribing as an Individual or  as joint tenants:

	 	Sign below if subscribing as
a trust or other business entity:
	 
	 	 
	 
	 	 
	 	 	 
	   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 NORTHWEST IOWA RENEWABLE ENERGY, L.L.C.:

Northwest Iowa Renewable Energy, L.L.C. hereby accepts the subscription for the above Units.

Dated this                      day of                                         , 200
         .

Northwest Iowa Renewable Energy, L.L.C.

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:
	 	 	 	 
	 

	 	 	 	 

6

 

PROMISSORY NOTE AND SECURITY AGREEMENT

Date of Subscription Agreement: ______, 200___.

$1,000 per Unit

Minimum Investment of 20 Units ($20,000); 1 Unit Increments Thereafter ($1,000 each)

________________ Number of Units Subscribed

________________ Total Purchase Price ($1,000 per unit multiplied by number of units subscribed)

(_______________) Less Initial Payment (10% of Principal Amount)

________________
Principal Balance

     FOR VALUE RECEIVED, the undersigned obligor (the “Obligor”) hereby promises to pay to the
order of Northwest Iowa Renewable Energy, L.L.C., a Iowa limited liability company (“Northwest Iowa
Renewable Energy” or the “Company”), at its principal office located at P.O. Box 366, 221 Reed
Street, Akron, IA 51001, or at such other place as required by Northwest Iowa Renewable Energy, the
Principal Balance set forth above, in one lump sum to be paid without interest within 20 days
following the call of the Northwest Iowa Renewable Energy Board of Directors, 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, including the 10% installment payment due upon subscription, may be
forfeited at the discretion of Northwest Iowa Renewable Energy.

     The undersigned agrees to pay to Northwest Iowa Renewable Energy 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 Iowa.

     The provisions of this Promissory Note and Security Agreement shall inure to the benefit of
Northwest Iowa Renewable Energy and its successors and assigns. In the event that the undersigned
defaults on this on the obligations provided in this Promissory Note and Security Agreement,
Northwest Iowa Renewable Energy or its assigns have the right to: (i) terminate Obligor’s interests
in Northwest Iowa Renewable Energy, including redeeming Obligor’s Membership Units and retaining as
liquidated damages all sums paid to date; (ii) pursue collection of the remaining balance due
through legal proceedings, with Obligor paying all costs to collect such balance, including
reasonable attorneys’ fees; (iii) offer for sale the Obligor’s Membership Units; and (iv) pursue
any other remedy available to Northwest Iowa Renewable Energy under law.

     The undersigned grants to Northwest Iowa Renewable Energy its successors and assigns (“Secured
Party”), a purchase money security interest in all of the undersigned’s Membership Units of
Northwest Iowa Renewable Energy 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.

     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.

[Remainder of Page Intentionally Left Blank]

7

 

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:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

8

 

EXHIBIT “A”

MEMBER SIGNATURE PAGE

ADDENDA

TO THE

OPERATING AGREEMENT OF

NORTHWEST IOWA RENEWABLE ENERGY, L.L.C.

     The undersigned does hereby represent and warrant that the undersigned, as a condition to
becoming a Member in Northwest Iowa Renewable Energy, LLC, has received a copy of the Operating
Agreement, dated April 14, 2006, and, if applicable, all amendments and modifications thereto, and
does hereby agree that the undersigned, along with the other parties to the Operating Agreement,
shall be subject to and comply with all terms and conditions of said Operating Agreement in all
respects as if the undersigned had executed said Operating Agreement on the original date thereof
and that the undersigned is and shall be bound by all of the provisions of said Operating Agreement
from and after the date of execution hereof.

	 	 	 
	Individuals:

	 	Entities:
	 
	 	 
	 
	 	 
	 

	 	 
	   Name of Individual Member (Please Print)

	 	   Name of Entity (Please Print)
	 
	 	 
	 
	 	 
	 

	 	 
	   Signature of Individual Member

	 	   Print Name and Title of Officer
	 
	 	 
	 
	 	 
	 

	 	 
	   Name of Joint Individual Member (Please Print)

	 	   Signature of Officer
	 
	 	 
	 
	 	 
	 
	 	 
	   Signature of Joint Individual Member
	 	 

Agreed and
accepted on behalf of the Company and its Members:

NORTHWEST IOWA RENEWABLE ENERGY, L.L.C.

	 	 	 	 
	By:
	 	 	 
	 

	 	 	 
	 
	 	 	 
	Its:exv4w3

 

EXHIBIT 4.3

ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (this “Agreement”) is made this                      day of November, 2006, by and
between Northwest Iowa Renewable Energy, LLC, an Iowa limited liability company, with its principal
offices in Akron, Iowa, (“NIRE”), Security National Bank, Sioux City, Iowa, as escrow agent (the
“Escrow Agent”) and 1st National Bank of Akron, Iowa (“First National Bank”).

RECITALS

     WHEREAS, NIRE intends to offer at least 38,100 of its Membership Units (the “Units”), with a
required minimum investment of twenty (20) Units per investor at the price of $1,000 per Unit in an
offering in the States of Iowa and South Dakota, and possibly other states, made pursuant to a
federal registration under the provisions of the Securities Act of 1933, as amended (the
“Offering”);

     WHEREAS, NIRE will allow investors in the Offering (the “Subscribers”) to deliver the purchase
price of the subscribed Units in ten percent (10%) and ninety percent (90%) installments; and

     WHEREAS, NIRE desires to comply with the requirements of the Securities Act of 1933, the Iowa
Securities Act and the various federal and state regulatory statutes and regulations, and desires
to protect the Subscribers 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: Escrow Agent hereby agrees to act as escrow 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 NIRE shall not become the property of

1

 

NIRE or be subject to the debts of NIRE 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.

4. ESCROW FEES: NIRE hereby agrees to pay to the Escrow Agent an annualized fee of 0.1%
from the monthly fund yield, which fees shall be paid exclusively from the interest on the Escrow
Account and not from principal.

5. DEPOSIT OF PROCEEDS: All proceeds from sales of Units in the Offering shall be
delivered by NIRE to First National Bank within forty-eight hours of the receipt thereof from
investors, endorsed (if appropriate) to the order of the Escrow Agent, together with an appropriate
written statement setting forth the name, address and social security number/taxpayer
identification number of each person or entity purchasing Units, the number of Units purchased, and
the amount paid by each such purchaser. First National Bank shall deposit all funds into an account
established by Escrow Agent at First National Bank. Any such proceeds deposited with First
National Bank in the form of uncollected checks shall be promptly presented by First National Bank
for collection through customary banking and clearing house facilities. The funds in the account
maintained at First National Bank shall be swept daily into the Escrow Account which will be
established pursuant to paragraph 2 herein. As the proceeds of each sale are deposited with the
Escrow Agent, NIRE 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.”

6. INVESTMENT OF ESCROW FUNDS: 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 the Goldman Sachs Financial Square Government Fund (CUSIP #38141W273) (the “Fund).

Any interest received by Escrow Agent with respect to the Escrow Funds shall be paid pursuant to
the terms of this Agreement.

7. TERMINATION OF ESCROW: This Agreement and the Escrow created hereunder shall be
terminated as provided in paragraph 8 hereof or as of the date in calendar year 2008 (the
“Termination Date”) one year and one day following the date in calendar year 2007 upon which the
Securities and Exchange Commission authorizes the Offering (the “Offering’s Effective Date”),
provided; however, that if prior to Termination Date, NIRE has sold membership units equal to the
minimum offering amount and NIRE has advised the purchasers of those membership units to remit to
the Escrow Agent the balance of the purchase price, then the Escrow may continue beyond the
Termination Date until all Funds have been paid and the conditions for releasing the Funds have
been satisfied. In no event shall this date be later than three (3) months following the
Termination Date. NIRE shall notify Escrow Agent of the Offering’s Effective Date within thirty
(30) days of the receipt of notice of the Offering’s Effective Date from the Securities and
Exchange Commission.

2

 

8. 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 NIRE.

     B. The Escrow Agent shall give NIRE prompt written notice when the Deposited Funds equal
$3,810,000 (exclusive of interest). Following receipt of such notice, NIRE 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 NIRE written notice acknowledging the receipt of
the Deposited Funds every seven days. The Escrow Agent shall give NIRE prompt written notice when
the Deposited Funds total $38,100,000 (exclusive of interest).

     C. At the time (and in the event) that: (a) the Deposited Funds shall, during the term of this
Agreement, equal $38,100,000 in subscription proceeds (exclusive of interest) (the “Minimum Escrow
Deposit”); (b) the Escrow Agent shall have received written confirmation from NIRE that NIRE has
obtained a written debt financing commitment for debt financing ranging from a minimum of
$33,788,750 to a maximum of $46,588,750; (c) NIRE has affirmatively elected in writing to terminate
this Agreement; and (d) the Escrow Agent shall have provided NIRE an affidavit that NIRE may file
with the Iowa and South Dakota Securities Bureaus stating that the foregoing requirements (a), (b)
and (c) of this subsection 8C have been satisfied, then this Agreement shall terminate, and the
Escrow Agent shall promptly disburse the funds on deposit, including interest, to NIRE to be used
in accordance with the provisions set out in the Prospectus. NIRE will deliver a copy of the
Prospectus to the Escrow Agent upon execution of this Agreement. The Escrow Agent will have no
responsibility to examine the Prospectus with regard to the Escrow Account or otherwise, nor shall
Escrow Agent have any duty to ensure that Company complies with the Prospectus. 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 the Deposited Funds do not equal or exceed the Minimum Escrow Deposit on or
before the Termination Date or if NIRE has not received a written debt financing commitment as
described herein on or before the Termination Date, the Escrow Agent shall return to each of the
purchasers of the Units in the Offering, as promptly as possible 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) each purchaser’s
portion of the total interest earned on the Escrow Account as of the Termination Date, (c) reduced
by the transaction fees provided in paragraph 10 hereof. 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 NIRE or its

3

 

agents or
creditors; and the respective purchases of the Units made and entered into in the Offering shall
thereupon be deemed, ipso 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 5) shall be released from such reservation, except that Escrow Agent shall be required to
prepare and issue a single IRS Form 1099 to each investor in the event that funds are returned to
investors.

9. LIABILITY OF ESCROW AGENT AND FIRST NATIONAL BANK: In performing any duties under the
Escrow Agreement, neither the Escrow Agent nor First National Bank shall be liable to NIRE, any
subscriber/purchaser or any Party for damages, losses, or expenses, except for gross negligence or
willful misconduct on the part of the Escrow Agent or First National Bank. Neither the Escrow
Agent nor First National Bank shall incur any such liability for (I) any act or failure to act made
or omitted in good faith, or (II) any action taken or omitted in reliance upon any instrument,
including any written statement or affidavit provided for in this Agreement that the Escrow Agent
shall in good faith believe to be genuine, nor will the Escrow Agent be liable or responsible for
forgeries, fraud, impersonations, or determining the scope of any representative’s authority. In
addition, the Escrow Agent and First National Bank may consult with legal counsel in connection
with First National Bank and the Escrow Agent’s duties under this Agreement and shall be fully
protected in any action taken, suffered, or permitted by it in good faith in accordance with the
advice of counsel. The Escrow Agent and First National Bank are not responsible for determining
and verifying the authority of any person acting or purporting to act on behalf of any party to
this Agreement.

10. FEES AND EXPENSES: In the event the Deposited Funds do not equal or exceed the Minimum
Escrow Deposit before the Termination Date or NIRE does not receive a written debt financing
commitment as described herein before the Termination Date, the Escrow Agent shall be entitled to a
fee of $10 per purchaser, which fees shall be paid from the interest on the Escrow Account only and
not from principal. In the event the Escrow Agent renders any service not provided for in this
Agreement, or if NIRE requests a substantial modification of its terms, or if any controversy
arises, or if the Escrow Agent is made a party to, or intervenes in, any litigation pertaining to
this escrow or its subject matter, the Escrow Agent shall be reasonably compensated for such
extraordinary services and reimbursed for all costs, attorney’s fees, including allocated costs of
in-house counsel, and expenses occasioned by such default, delay, controversy or litigation and the
Escrow Agent shall have the right to retain all documents and/or other things of value at any time
held by the Escrow Agent in this escrow until such compensation, fees, costs and expenses are paid.
NIRE promises to pay these sums upon demand. Unless otherwise provided, NIRE will pay all of the
Escrow Agent’s usual charges and the Escrow Agent may deduct such sums from the interest on the
Escrow Account only and not from principal deposited to the Escrow Account.

11. CONTROVERSIES: If any controversy arises between the Parties to this Agreement, or
with any other Party, concerning the subject matter of this Agreement, its terms or conditions, the

4

 

Escrow Agent will not be required to determine the controversy or to take any action regarding it.
The Escrow Agent may hold all documents and funds and may wait for settlement of any such
controversy by final appropriate legal proceedings or other means as, in the Escrow Agent’s
discretion, the Escrow Agent may require, despite what may be set forth elsewhere in
this Agreement. In such event, the Escrow Agent will not be liable for interest or damage.
Furthermore, the Escrow Agent may at its option file an action of interpleader requiring the
Parties to answer and litigate any claims and rights among themselves. The Escrow Agent is
authorized to deposit with the clerk of the court all documents and funds held in escrow, except
all costs, expenses, charges and reasonable attorney fees incurred by the Escrow Agent due to the
interpleader action and which NIRE agrees to pay. Upon initiating such action, the Escrow Agent
shall be fully released and discharged of and from all obligations and liability imposed by the
terms of this Agreement.

12. INDEMNIFICATION OF ESCROW AGENT: NIRE and its successors and assigns agree jointly and
severally to indemnify and hold the Escrow Agent harmless against any and all losses, claims,
damages, liabilities, and expenses, including reasonable costs of investigation, counsel fees,
including allocated costs of in-house counsel and disbursements that may be imposed on the Escrow
Agent or incurred by the Escrow Agent in connection with the performance of its duties under this
Agreement, including but not limited to any litigation arising from this Agreement or involving its
subject matter. The Escrow Agent shall have a first lien on the property and papers held under
this Agreement for such compensation and expenses.

13. RESIGNATION OF ESCROW AGENT: The Escrow Agent may resign at any time upon giving at
least (30) days written notice to NIRE provided, however, that no such resignation shall become
effective until the appointment of a successor escrow agent which shall be accomplished as follows:
NIRE shall use its best efforts to obtain a successor escrow agent within thirty (30) days after
receiving such notice. If NIRE fails to agree upon a successor escrow agent within such time, the
Escrow Agent shall have the right to appoint a successor escrow agent authorized to do business in
the state of Iowa. The successor escrow agent shall execute and deliver an instrument accepting
such appointment and it shall without further acts, be vested with all the estates, properties,
rights, powers, and duties of the predecessor escrow agent as if originally named as escrow agent.
The Escrow Agent shall thereupon be discharged from any further duties and liability under this
Agreement.

14. AUTOMATIC SUCCESSION: Any company into which the Escrow Agent may be merged or with
which it may be consolidated, or any company to whom the Escrow Agent may transfer a substantial
amount of its global escrow business, shall be the Successor to the Agent without the execution or
filing of any paper or any further act on the part of any of the Parties, anything herein to the
contrary notwithstanding.

15. MISCELLANEOUS:

     (a) GOVERNING LAWS: This Agreement is to be construed and interpreted according to
Iowa law.

5

 

     (b) COUNTERPART: 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. The exchange of copies of this Agreement and of signature pages by facsimile
transmission shall constitute effective execution and delivery of this Agreement as to the parties
and may be used in lieu of the original Agreement for all purposes. Signatures of the parties
transmitted by facsimile shall be deemed to be their original signatures for all purposes.

     (c) NOTICES: All instructions, notices and demands herein provided for 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 promptly
obtained after completion of transmission; (c) on the next day on which such deliveries are made in
Akron, Iowa, 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:

	 	 	 
	If to NIRE:

	 	If to Escrow Agent:
	 
	 	 
	Northwest Iowa Renewable Energy, LLC

	 	Security National Bank
	Attn: John Lucken, Chairman

	 	Attn: Joe Twidwell
	221 Reed St.

	 	601 Pierce St.
	P.O. Box 366

	 	P.O. Box 147
	Akron, Iowa 51001

	 	Sioux City, Iowa 51102
	Fax: (712) 568-3211

	 	Fax: (712) 277-6713
	 
	 	 
	with a required copy to:

	 	If to First National Bank
	 
	 	 
	Brown, Winick, Graves, Gross, Baskerville & Schoenebaum, P.L.C.

	 	First National Bank of Akron
	Attn: Sean Moore

	 	Attn: Kevin Eekhoff
	666 Grand Avenue, Suite 2000

	 	251 Reed Street
	Des Moines, IA 50309

	 	Akron, IA 51001
	Fax: (515) 323-8550

	 	Fax: (712) 568-2113

     (d) 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
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

6

 

of the breach of any other provision, term, covenant, representation or warranty of this Agreement.

     (e) 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.

     (f) NON-ENDORSEMENT: NIRE represents and agrees that it has not made nor will it in
the future make any representation that states or implies that the Escrow Agent has endorsed,
recommended or guaranteed the purchase, value, or repayment of the Securities offered for sale by
NIRE. NIRE further agrees that it will insert in any prospectus, offering circular, advertisement,
subscription agreement or other document made available to prospective purchasers of the Securities
the following statement in bold face type: “Security National Bank is acting only as an escrow
agent in connection with the Offering described herein, and has not endorsed, recommended or
guaranteed the purchase, value or repayment of such Securities,” and will furnish to the Escrow
Agent a copy of each such prospectus, offering circular, advertisement, subscription agreement or
other document at least 5 business days prior to its distribution to prospective Subscribers.

The undersigned acknowledges that the Security National Bank is acting only as an escrow agent in
connection with the offering of the Securities described herein, and has not endorsed, recommended
or guaranteed the purchase, value or repayment of such Securities.

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

	 	 	 	 	 	 	 	 	 	 	 
	NIRE:	 	 	 	ESCROW AGENT:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	NORTHWEST IOWA RENEWABLE ENERGY, LLC	 	 	 	SECURITY NATIONAL BANK	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	John Lucken, Chairman	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	FIRST NATIONAL BANK:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	FIRST NATIONAL BANK OF AKRON	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Its:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

7

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