Document:

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:Exhibit
4.3

ESCROW AGREEMENT

THIS ESCROW
AGREEMENT (this “Agreement”)
is made this      day of                    ,
200  , by and between Highwater Ethanol, LLC a Minnesota limited
liability company (“Highwater Ethanol”) and Minnwest Bank of Redwood Falls,
Minnesota as escrow agent (the “Escrow Agent”).

W I T N E S
S E T H:

WHEREAS, Highwater Ethanol proposes to offer a minimum
of 4,500 and a maximum of 6,000 of its Membership Units (the “Units”) at a
price of $10,000 per Unit, in minimum blocks of one (1) Unit in an offering
registered with the Securities and Exchange Commission and in the states of
Florida, Georgia, Illinois, Iowa, Kansas, Louisiana, Minnesota, Missouri, South
Dakota, Wisconsin and possibly offered in other states pursuant to state securities
registration exemptions and under the provisions of the Securities Act of 1933,
as amended (the “Offering”);

WHEREAS, Highwater Ethanol will file a registration
statement to register the Units with the Securities and Exchange Commission,
the states of Florida, Georgia, Illinois, Iowa, Kansas, Louisiana, Minnesota,
Missouri, South Dakota, Wisconsin, and possibly other states;

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

WHEREAS, Highwater Ethanol desires to comply with the
requirements of federal and state securities laws 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.  Minnwest Bank of Redwood Falls, Minnesota
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
Highwater Ethanol shall not become the property of Highwater Ethanol or be
subject to the debts of Highwater Ethanol or any other person but shall be

 1
 

 

held by the Escrow Agent solely
for the benefit of the investors who have purchased Units in the Offering.

4.             Deposit of Proceeds.  All proceeds from sales of Units in the
Offering shall be delivered by Highwater Ethanol to the Escrow Agent, 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 name, address and social security number of
each person purchasing Units, 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, Highwater Ethanol 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 the 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 those investments
directed, in writing by Highwater Ethanol. 
The Escrow Agent is hereby authorized to invest Escrow Funds in the Federated
Treasury Obligations Money Market Mutual Fund for temporary investment
without written direction.  Any interest
received by the Escrow Agent with respect to the Escrow Funds shall be paid to
Highwater Ethanol, or the investors, as indicated elsewhere in this Agreement.

6.             Termination of Escrow.  This
Agreement and the Escrow created hereunder shall be terminated as provided in
paragraph 7 hereof or as of the date in calendar year 2007 (the “Termination
Date”), which is one year and one day following the date in calendar year 2006
upon which the Securities and Exchange Commission authorizes the Offering (the “Offering’s
Effective Date”).  Highwater Ethanol
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.

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 Highwater Ethanol.

B.            The
Escrow Agent shall give Highwater Ethanol prompt written notice when the
Deposited Funds equal $4,500,000 (exclusive of interest).  Following receipt of such notice, Highwater
Ethanol 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 Highwater
Ethanol written notice acknowledging the receipt of the Deposited Funds every
seven days.  The Escrow Agent shall give
Highwater Ethanol prompt written notice when the Deposited Funds total
$45,000,000 (exclusive of interest).

 2
 

 

C.            At
the time (and in the event) that: (i) the Deposited Funds shall, during the
term of this Agreement, equal $45,000,000 
in subscription proceeds (exclusive of interest) (the “Minimum Escrow
Deposit”);  (ii) the Escrow Agent
shall have received written confirmation from Highwater Ethanol that Highwater
Ethanol has obtained a written debt financing commitment for debt financing
ranging from a minimum
of $$48,320,000 to a
maximum of $63,320, depending on the amount necessary to fully
capitalize the project;  (iii) Highwater Ethanol has affirmatively
elected in writing to terminate this Agreement; (iv) Highwater Ethanol has
signed a definitive design build agreement with Fagen, Inc.; (v) Highwater
Ethanol has been issued the environmental permits necessary to construct the
ethanol plant (vi) the Escrow Agent
shall have provided to each state securities department in which Highwater
Ethanol has registered its securities for sale, as communicated to the Escrow
Agent by Highwater Ethanol, an affidavit stating that the foregoing requirements
(i), (ii), (iii), (iv) and (v) of this subsection 7C have been satisfied; and (vii) in each state in which consent is required, the state
securities commissioners have consented to release of the funds on deposit,
then this Agreement shall terminate, and the Escrow Agent shall promptly
disburse the funds on deposit, including interest, to Highwater Ethanol to be
used in accordance with the provisions set out in Highwater Ethanol’s
registration statement.  Highwater
Ethanol will deliver a copy of its 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 and the registration statement
shall contain a provision to such effect. 
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 Highwater Ethanol 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:  (i) the sum which each purchaser initially
paid in on account of purchases of the Units in the Offering and (ii) each
purchaser’s portion of the total interest earned on the Escrow Account as of
the Termination Date, (iii) 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 Highwater Ethanol or its
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.

 3
 

 

8.             Agreement with Escrow Agent.  To induce Escrow Agent to act hereunder, it
is agreed by Highwater Ethanol 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
Highwater Ethanol is complying with the 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 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.            Highwater
Ethanol 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 Highwater Ethanol.  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.  Highwater Ethanol agrees to pay the Escrow
Agent the fees specified in the Escrow Agent’s fee schedule attached hereto as
Exhibit A, in the manner set forth therein, unless otherwise agreed to by the
parties in writing.  The parties further
agree that Highwater Ethanol shall be solely responsible for the payment of
such fees and the Escrow Agent shall not seek payment of the fees from
investors or apply any principal deposited by investors in the escrow account
or interest on the escrow account against such fees.  The fee agreed upon  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

 4
 

 

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
Highwater Ethanol, but not from the escrow account.

11.           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 Lamberton, 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:

	
  

  	
  If to Escrow Agent:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Minnwest Bank of
  Redwood Falls, Minnesota

  	
   

  	
   

  
	
   

  	
  1275 East Bridge, P.O. Box 439

  	
   

  	
   

  
	
   

  	
  Redwood Falls, MN 56283

  	
   

  	
   

  
	
   

  	
  Attn:

  	
   

  	
     

  	 

	
   

  	
  Fax: (507) 637-8377

  	
   

  	
   

  
	
   

  	
  Phone: (507) 637-5343

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to Highwater
  Ethanol:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Highwater Ethanol, LLC

  	
   

  	
   

  
	
   

  	
  205 S. Main Street, PO Box 96

  	
   

  	
   

  
	
   

  	
  Lamberton, Minnesota 56152

  	
   

  	
   

  
	
   

  	
  Attn: Brian Kletscher, Chairman of the Board and
  President

  	
   

  	
   

  
	
   

  	
  Fax: (507) 762-3376

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with a required
  copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Brown, Winick, Graves, Gross, Baskerville and
  Schoenebaum, P.L.C.

  	
   

  	
   

  
	
   

  	
  666 Grand Avenue, Suite 2000

  	
   

  	
   

  
	
   

  	
  Des Moines, IA 50309

  	
   

  	
   

  
	
   

  	
  Attention: Harold N. Schneebeck

  	
   

  	
   

  
	
   

  	
  Fax: (515) 323-8509

  	
   

  	
   

  
							

 

12.           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.

13.           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

 5
 

 

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.

14.           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.

15.           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.

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

17.           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.

18.           Section Headings. 
The section headings in this Agreement are for reference purposes only
and shall not affect the meaning or interpretation of this Agreement.

19.           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.

	
  HIGHWATER ETHANOL:

  	
   

  	
   

  	
  ESCROW AGENT

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HIGHWATER
  ETHANOL, LLC

  	
   

  	
   

  	
  MINNWEST BANK OF REDWOOD FALLS, MINNESOTA

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
     

  
	
  Brian Kletscher,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chairman of the
  Board and President

  	
   

  	
   

  	
  Printed Name:

  	
     

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  	
   

  
											

 

 6

 

 

Exhibit
A

Minnwest
Bank of Redwood Falls, Minnesota

Escrow Agent Fee Schedule

Escrow Agreement

Highwater Ethanol, LLC

	
  Administration

  	
  $

  	
     

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Transaction Fees

  	
   

  	
   

  	
   

  
	
  Subscriber

  	
  $

  	
     

  	
   

  
	
  Disbursement/Each

  	
  $

  	
     

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1099 Filing

  	
  $

  	
     

  	
   

  
	
  Subscriber/Filing

  	
  $

  	
     

  	
   

  

 

All out of pocket
costs and expenses, including postage, supplies, long distance telephone
charges, wires and reasonable attorney’s fees will be in addition hereto.

We reserve the
right to revise fees, including establishing new minimums, as necessitated by
changing economic conditions.

All fees are
charged in arrears and are quoted on an annualized basis; however we reserve
the right to bill in advance, or on a more frequent basis.

 

 7

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