|   | a. | Senior      Loan Note dated March 30, 2007; |
|--------|----|---------------------------------------------|

|   | b. | Subordinate      Loan Note dated March 30, 2007; |
|--------|----|--------------------------------------------------|

|   | c. | Construction      and Term Loan Agreement dated March 30,2007. |
|--------|----|----------------------------------------------------------------|

| Debtor:                 | Otter      Tail Ag Enterprises, LLC, a Minnesota limited liability company, as Debtor      in Possession in its Chapter 11 case in the United States Bankruptcy      Court, District of Minnesota (the “Debtor’s Chapter 11      Case”).  |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Lender:                 | MMCDC      New Markets Fund II, LLC, a Delaware limited liability      company.                                                                                                                                                                             |
| Credit      Facilities: | The      existing NMF Loan Agreements will be reaffirmed in all respects except as      otherwise set forth below in regards to payment of default      interest.                                                                                           |
| Closing      Date:      | A      date not later than 10 Business Days following the entry of a confirmation      order (the “Confirmation      Order”) confirming the Debtor’s plan of reorganization (the “Plan”).                                     |
| Maturity      Dates:    | The      maturity dates under the existing NMF Loan Agreements remain      unchanged.                                                                                                                                                                            |

----

| Interest:                                                                         | The      accrual rates of interest under the existing NMF Loan Agreements remain      unchanged.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Amortization:                                                                     | The      amortizations under the existing NMF Loan Agreements remain      unchanged.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Security:                                                                         | The      mortgages and financing statements previously filed of record to secure      the NMF Loan Agreements remain in effect and retain their prepetition      status in terms of validity and priority as encumbrances against Debtor’s      property. Nothing in the Plan shall be deemed to supersede or terminate      the Amended and Restated Intercreditor Agreement amongst the Senior and      subordinate lenders dated June 4, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Accrued      Default Interest:   Debt      Service Reserve Account | All      default interest provided by the NMF Loan Agreements will be deferred      until the present maturity dates in the NMF Loan      Agreements.  Provided that the Debtor does not default in the      performance of its obligations under the Loan Documents, NMF will waive      such interest on the maturity dates in the NMF Agreements. The      Debtor will establish at Confirmation and thereafter maintain a segregated      deposit account, identified as the NMF Debt Reserve Account, which shall      at all times have a balance equal to at least six months of interest due      on the NMF Loans. The Debtor shall at least monthly provide NMF with      evidence of compliance.  The deferred default interest shall      become immediately due and payable upon failure to maintain the required      minimum balance.  The Debtor and lending institution at which      the deposit account is located will execute a Deposit Account Control      Agreement in favor of NMF.  |
| Plan      of Reorganization:                                                      | The      Debtor shall file the Plan, which must be acceptable to AgStar and NMF      (collectively the “Prepetition Lenders”),      on or before February 28, 2010 (the “PlanDate”). At      a minimum, the Plan shall not be deemed acceptable to the Prepetition      Lenders unless:  ·      The      Plan provides for and treats the Prepetition Lenders as  fully      secured creditors;·      The      Plan provides for the financing set forth in this Term Sheet;·      The      Confirmation Order and the Plan provide that the assets of Debtor will be      free from any and all subordinate mortgages, liens, and encumbrances,      including any lessor’s interests, except as may be accepted by the      Prepetition Lenders.                                                                                                                                         |

----

| Conditions      Precedent To Closing:             | Entry      of the Confirmation Order confirming the Plan which is satisfactory to the      Prepetition Lenders on or before May 1, 2010; Payment      to NMF of all accrued regular interest in the estimated amount of $495,073      (amount as of January 4, 2010); NMF’s      receipt of subscription letters, acceptable to NMF (collectively, the      “Subscription      Letters”), (a) in an amount not less than $6,000,000.00 on or      before January 15, 2010; and (b) in an aggregate amount not less than      $12,000,000.00 on or before the Plan Date       Confirmation      of equity contributions pursuant to the Subscription Letters to the      reorganized Debtor of at least $12,000,000;       Delivery      of a risk management plan reasonably acceptable to NMF including a      designated risk management officer;       Compliance      with all conditions precedent required by AgStar including payment of all      interest and default charges due;       If      not expressly provided in the Confirmation Order, execution of an      agreement with U.S. Bank, as Indenture Trustee (the “Trustee”), and Otter      Tail County (the “County”) regarding the      resolution of the outstanding bond debt and the release of all liens,      security interests or lessor interests in any of the assets of the Debtor;      and       Compliance      with all conditions precedent set forth in the Loan    Documents. |
|---------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Sale      of Ethanol Facility:                                                                                | If      no Plan acceptable to the Prepetition Lenders is filed by the Plan Date,      the Debtor shall file, within ten (10) Business Days thereafter, a motion      to sell the Debtor’s assets, including the ethanol production facility,      free and clear of interests, liens, encumbrances and claims pursuant to      Bankruptcy Code § 363(b) and (f).  Such motion must be      accompanied by sales procedures acceptable to NMF, including that any such      sale shall close not later than May 1, 2010.  Within      ten (10) Business Days of filing such motion, the Debtor shall engage a      financial advisor (the “Financial Advisor”) reasonably acceptable to the      Prepetition Lenders to manage the sale of the ethanol      facility.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

| Expenses: | The      Debtor shall reimburse NMF for all reasonable costs and expenses,      including legal fees, consultant fees, appraisal fees, financial advisor      fees, and other similar fees, costs and expenses in connection with the      negotiation, documentation, execution, syndication and delivery of the      Loans and the Debtor’s Chapter 11Case. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| DEBTOR:                                    |
|--------------------------------------------|
|                                       |
| OTTER      TAIL AG ENTERPRISES, LLC        |
| a      Minnesota limited liability company |
|                                       |
| By                                    | /s/ Anthony J Hicks |
|                                       | Name:      Anthony J Hicks |
|                                       | Title:  Chief      Executive Officer |

| This      Term Sheet is accepted this 3rd day |
|-----------------------------------------------|
| of      February 2010 by:                     |
|                                          |
| MMCDC      NEW MARKETS FUND II, LLC           |
|                                          |
|                                | /s/ ArlenKangas |

| By:  | Arlen Kangas |
|-----------|--------------|
| Its:      | President    |

----