Document:

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 until
the Deposited Funds are released by the Commissioner of the Minnesota
Department of Commerce.

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 $63,320,000
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 shall have provided to the Commissioner of the Minnesota
Department of Commerce documentation that the foregoing conditions have been
met; and (vii) in each state in which consent is
required, the state securities commissioners have consented to release of the
funds on deposit, provided, however, that none of the Deposited Funds,
regardless of the state of residence of the investor contributing such funds,
shall be released until the Commissioner of the Minnesota Department of
Commerce has authorized the release of the Deposited Funds, 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.  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 

 3
 

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.

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 

 4
 

intended as full consideration
for the Escrow Agent’s services as contemplated by this Agreement; provided,
however, that in the event the Escrow Agent renders any material service
not contemplated in this Agreement or there is any assignment of interest in
the subject matter of this Agreement, or any material modification hereof; or
if any material controversy arises hereunder, or the Escrow Agent is made a
party to any litigation pertaining to this Agreement, or the subject matter
hereof, then the Escrow Agent shall be reasonably compensated for such
extraordinary services and reimbursed for all costs and expenses, including
reasonable attorney’s fees, occasioned by any delay, controversy, litigation or
event, and the same shall be recoverable from 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 

 5
 

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 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.

 6
 

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:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Authorized by:

  	
   

  
	
   

  	
   

  
	
  Minnesota
  Department of Commerce

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Chet Jorgenson

  	
   

  
	
  Commissioner

  	
   

  	
   

  
									

 

 7
 

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.

 8Exhibit 10.17

3033 Campus Drive North, Suite 175,
Minneapolis, Minnesota  55441

Telephone: 763-551-1001

Facsimile: 763-551-2499

April 26, 2006

Mr. Brian Kletscher

Chairman Highwater Ethanol

30427 County Highway 10

Vesta, MN  56292

Subject:  Environmental Permitting Proposal for the Highwater Ethanol Plant at
Lamberton, MN

Dear Mr. Kletscher:

Thank you for the
opportunity to present the attached proposal for environmental review and
permitting services for the Highwater Ethanol Project near Lamberton, Minnesota.  Earth Tech staff is sensitive to the concerns
of energy producers and agribusiness in Minnesota through our environmental
work with dairy, swine, and poultry operations and commodity handling and
processing facilities.  Most importantly,
our staff has extensive experience preparing environmental review and
permitting documentation for ethanol facilities.

Earth Tech has
extensive experience with agency staff and rules to facilitate effective
permitting and priority service from state regulators.  The project team’s understanding of the
Minnesota regulatory system will provide Highwater Ethanol with a clearer basis
for decision-making and better project results. 
We bring:

·                                          Extensive
Minnesota, Midwestern, and agribusiness and power experience.

·                                          Staff
with up to 30 years of experience in permitting and environmental review with
the Minnesota Pollution Control Agency (MPCA), Environmental Quality Board
(EQB), and federal and local regulatory agencies, with many projects
specifically relating to ethanol and power projects.

·                                          Earth
Tech understands what to expect from regulators.  Earth Tech staff received the highest score
of all competing environmental consultants in a recent competency test on air
permitting regulations prepared by the MPCA.

This proposal
provides an outline of work tasks, approximate timelines, and estimates of the
level of effort required for each task.

In addition,
please find enclosed two signed copies of our Consulting Agreement and Notice
to Proceed.  Please sign and return one
copy to my attention and keep the second for your records.

[Earth Tech Logo]

In
closing, we would again like to express our appreciation for the opportunity to
present this proposal for environmental permitting services in support of your
ethanol project.  If you have any
questions, or require further clarification, please feel free to contact me at
(763) 551-2461 or Mike.Valentine@earthtech.com at your convenience.

	
  Very truly yours,

  
	
   

  
	
  Earth Tech, Inc.

  
	
   

  
	
  /s/ J. Michael
  Valentine

  	
   

  
	
   

  
	
  J. Michael
  Valentine

  
	
  Vice President

  
	
   

  
	
  Enclosure

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