Document:

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                                                                    EXHIBIT 10.7

                                 LOAN AGREEMENT

     This Loan Agreement dated as of July 11, 2001, is by and between Northern
Lights Ethanol, LLC, a South Dakota limited liability company (the "Borrower"),
and U.S. Bank National Association, a national banking association (the
"Lender").

                                    ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

     Section 1.1 DEFINED TERMS. As used in this Agreement the following terms
shall have the following respective meanings:

     "ACCESS AND RAIL AGREEMENT": The Borrower's right to ingress and egress
     over and across the roads and railroad spur lines identified in the Access
     and Rail Agreement dated April 18, 2001, described in Exhibit A attached
     hereto and incorporated herein by reference.

     "AFFILIATE": Any Person, directly or indirectly, controlling, controlled
     by, or under common control with, such person. For purposes of this
     definition, "control" (including "controlled by" and "under common control
     with") shall mean the power, directly or indirectly, to direct or cause the
     direction of the management and policies of such Person whether through the
     ownership of voting securities, by contract or otherwise.

     "BUSINESS DAY": Any day (other than a Saturday, Sunday or legal holiday in
     the State of South Dakota) on which national banks are permitted to be open
     for business in Sioux Falls, South Dakota.

     "CLOSING DATE": The date on which the conditions set forth in Section 3.1
     have been satisfied and the Loan is closed.

     "COMPLETION DEADLINE": December 31, 2002, or such earlier date upon which
     the construction of the Project is completed or and the Project is to
     become operational, according to the certificate of the Inspecting
     Architect.

     "CONVERSION DATE": That date which will coincide with or follow the
     Completion Deadline, upon which the Loan converts from a short term
     construction loan to a long term loan, assuming the Loan qualifies for such
     conversion.

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     "DEFAULT": Any event which, with the giving of notice (whether such notice
     is required under Section 6.1, or under some other provision of this
     Agreement, or otherwise) or lapse of time, or both, would constitute an
     Event of Default.

     "DEFAULT RATE": As defined in the Note.

     "ERISA": The Employee Retirement Income Security Act of 1974, as amended.

     "ESCROW COMPANY": Homestead Escrow and Exchange Company which will act as
     the disbursing agent for Loan proceeds.

     "EVENT OF DEFAULT": Any event described in Section 6.1.

     "FINANCING STATEMENT": The Financing Statement(s) executed by the Borrower,
     as Debtor, in favor of the Lender, as Secured Party.

     "FIRST ADVANCE DATE": The date on which the conditions set forth in Section
     3.2 have been satisfied so as to permit the first advance of Loan proceeds
     for the payment of the expenses of construction of the Project.

     "GAAP": Generally accepted accounting principles set forth in the opinions
     and pronouncements of the Accounting Principles Board of the American
     Institute of Certified Public Accountants and statements and pronouncements
     of the Financial Accounting Standards Board or in such other statements by
     such other entity as may be approved by a significant segment of the
     accounting profession, which are applicable to the circumstances as of any
     date of determination.

     "GOVERNMENTAL REQUIREMENTS": All laws, statutes, codes, ordinances, and
     governmental rules, regulations and requirements applicable to the
     Borrower, the Lender and the Project.

     "INDEMNIFICATION AGREEMENT": The Environmental and ADA Indemnification
     Agreement dated of even date herewith, executed by the Borrower in favor of
     Lender.

     "INSPECTING ARCHITECT": The architectural, engineering or other consultant
     firm which will be retained by the Lender, at Borrower's cost, to conduct
     on-site inspections of the work-in-progress on the Project, and to issue
     periodic reports to the Lender as to the progress of construction and
     adherence to the Plans. The

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     Inspecting Architect at the time of this Agreement is BKBM Engineers of
     Minneapolis, Minnesota.

     "LAND": The land legally described on Exhibit A attached hereto and hereby
     made a part hereof.

     "LEASE": The Big Stone Power Plant Lease dated April 18, 2001, under the
     terms of which Borrower leases the Land from Big Stone-Grant Industrial
     Development and Transportation, L.L.C.

     "LIEN": With respect to any Person, any security interest, mortgage,
     pledge, lien, charge, encumbrance, title retention agreement or analogous
     instrument or device (including the interest of each lessor under any
     capitalized lease), in, of or on any assets or properties of such Person,
     now owned or hereafter acquired, whether arising by agreement or operation
     of law.

     "LOAN": As defined in Section 2.1.

     "LOAN DOCUMENTS": This Agreement, the Note, the Mortgage, the Security
     Agreement, the Indemnification Agreement, the Financing Statement and any
     other document collateral to or as security for the Loan.

     "LOAN FEES": As defined in Section 2.3.

     "MATURITY DATE": The date all amounts due under the Loan shall be paid to
     Lender, if not earlier paid or accelerated. The Maturity Date shall be
     determined under the terms of the Note, but shall not be later than the
     seventh (7th) anniversary of the Conversion Date.

     "MORTGAGE": The Mortgage, Security Agreement, Assignment of Leases and
     Rents and Fixture Financing Statement dated of even date herewith, executed
     by the Borrower in favor of the Lender.

     "NOTE": The Note dated of even date herewith, in the amount of the Loan,
     executed by the Borrower and payable to the order of the Lender.

     "OBLIGATIONS": The Borrower's obligations in respect of the due and
     punctual payment of principal and interest on the Note when and as due,
     whether by acceleration or otherwise and all fees, expenses, indemnities,
     reimbursements and

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     other obligations of the Borrower under this Agreement or any other Loan
     Document, in all cases whether now existing or hereafter arising or
     incurred.

     "OPERATING CONTRACTS": The access, construction, management and marketing
     contracts described on Exhibit B attached hereto and hereby made a part
     hereof.

     "PERMITTED ENCUMBRANCES": The liens, charges and encumbrances on title to
     the Project listed on Exhibit C attached hereto and hereby made a part
     hereof.

     "PERSON": Any natural person, corporation, cooperative, partnership,
     limited partnership, limited liability partnership, limited liability
     company, joint venture, firm, association, trust, unincorporated
     organization, government or governmental agency or political subdivision or
     any other entity, whether acting in an individual, fiduciary or other
     capacity.

     "PROJECT": The Land, the Improvements and all fixtures, equipment and
     personal property now or hereafter owned by the Borrower and located or to
     be located in or on, and used in connection with the management,
     maintenance or operation of, the Land and the Improvements.

     "REGULATORY CHANGE": Any change after the date of this Agreement in
     federal, state or foreign laws or regulations or the adoption or making
     after such date of any interpretations, directives or requests applying to
     a class of banks including the Lender under any federal, state or foreign
     laws or regulations (whether or not having the force of law) by any court
     or governmental or monetary authority charged with the interpretation or
     administration thereof.

     "SECURITY AGREEMENT": The Borrower's Security Agreement, dated even date
     herewith, executed by Borrower in favor of the Lender.

     "TENANT": Any Person using or occupying any part of the Project pursuant to
     a Lease.

     "TITLE COMPANY": Dakota Homestead Title Insurance Company which will issue
     the Title Policy, or act as agent for such issuer.

     "TITLE POLICY": A current ALTA form loan title insurance policy, dated as
     of the date of recording of the Mortgage, containing such endorsements and
     assurances as the Lender may require, and containing only those exceptions
     approved by the Lender.

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     Section 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be expressly
provided to the contrary herein, all accounting terms used herein shall be
interpreted and all accounting determinations hereunder shall be made in
accordance with GAAP.

     Section 1.3 OTHER DEFINITIONAL TERMS, TERMS OF CONSTRUCTION. The words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. References to Sections, Exhibits, Schedules and
like references are to Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise expressly provided. The words "include", "includes"
and "including" shall be deemed to be followed by the phrase "without
limitation". Unless the context in which used herein otherwise clearly requires,
"or" has the inclusive meaning represented by the phrase "and/or". All
incorporations by reference of covenants, terms, definitions or other provisions
from other agreements are incorporated into this Agreement as if such provisions
were fully set forth herein, and include all necessary definitions and related
provisions from such other agreements. All covenants, terms, definitions and
other provisions from other agreements incorporated into this Agreement by
reference shall survive any termination of such other agreements until the
obligations of the Borrower under this Agreement and the Note are irrevocably
paid in full.

     Section 1.4 CONSTRUCTION LOAN ADDENDUM. Terms defined in the Construction
Loan Addendum attached hereto supplement the foregoing definitions.

                                   ARTICLE II

                                TERMS OF LENDING

     Section 2.1 LOAN. Upon the terms and subject to the conditions hereof, the
Lender agrees to make a loan (the "Loan") to the Borrower in an amount not to
exceed $31,100,000.00 for construction of the Improvements, and working capital,
payment of interest on the Loan, purchase of inventory, and other purposes as
may be approved by the Lender.

     Section 2.2 THE NOTE; INTEREST AND REPAYMENT. The Loan shall be evidenced
by the Note. The Lender shall enter in its ledgers and records the Advances of
and payments made on the Loan, and the Lender is authorized by the Borrower to
enter on a schedule attached to the Note a record of such payments. The Note
shall accrue interest and shall be payable, together with interest thereon, and
may be prepaid, if at all, and is subject to mandatory prepayment, as provided
in the Note. If not sooner paid, the Note, together

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with all accrued and unpaid interest thereon, shall be due and payable in full
on the Maturity Date.

     Section 2.3 LOAN FEES. In consideration of the Lender's agreement to make
the Loan, the Borrower shall pay the Lender, at or prior to the closing of the
Loan, the following fees:

     2.3(a). CLOSING FEE. A closing fee in the sum of $100,000.00.

     2.3(b). SYNDICATION FEE. A syndication fee in the sum of $100,000.00.

     Section 2.4 CAPITAL ADEQUACY. In the event that any Regulatory Change
reduces or shall have the effect of reducing the rate of return on the Lender's
capital or the capital of its parent corporation (by an amount the Lender deems
material) as a consequence of the Loan to a level below that which the Lender or
its parent corporation could have achieved but for such Regulatory Change
(taking into account the Lender's policies and the policies of its parent
corporation with respect to capital adequacy), then the Borrower shall, within
five days after written notice and demand from the Lender, pay to the Lender
additional amounts sufficient to compensate the Lender or its parent corporation
for such reduction. Any determination by the Lender under this Section and any
certificate as to the amount of such reduction given to the Borrower by the
Lender shall be final, conclusive and binding for all purposes, absent error.

     Section 2.5 USE OF PROCEEDS. The proceeds of the Loan shall be used for
construction of the Improvements and other items set forth in Section 2.1.

                                   ARTICLE III

                              CONDITIONS PRECEDENT

     Section 3.1 CONDITIONS TO THE CLOSING OF THE LOAN. The obligation of the
Lender to close the Loan hereunder shall be subject to the prior or simultaneous
fulfillment of each of the following conditions:

     3.1(a) DOCUMENTS. The Lender shall have received the documents and other
     materials as set forth on Schedule 3.1(a) attached hereto and hereby made a
     part hereof.

     3.1(b) OTHER MATTERS. All organizational and legal proceedings relating to
     the Borrower and all instruments and agreements in connection with the
     transactions

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     contemplated by this Agreement shall be satisfactory in scope, form and
     substance to the Lender and its counsel, and the Lender shall have received
     all information and copies of all documents, including records of company
     proceedings, which it may reasonably have requested in connection
     therewith, such documents where appropriate to be certified by Borrower or
     governmental authorities.

     3.1(c) FEES AND EXPENSES. The Lender shall have received the Loan Fee and
     all other fees and amounts due and payable by the Borrower on or prior to
     the Closing Date, including the reasonable fees and expenses of counsel to
     the Lender payable pursuant to Section 7.2. Borrower shall pay all of the
     Lender's due diligence fees, including but not limited to the cost of the
     appraisal, the cost of the survey, the cost of the Phase I Environmental
     Site Assessment, all property and lien searches, title insurance fees and
     recording fees. On or prior to the Closing Date, Borrower shall deposit
     with Lender the sum of $25,000.00 for payment of these costs and fees. If
     the total of these reimbursable expenses is less than $25,000.00, the
     balance shall be refunded to the Borrower. If the total of these expenses
     is greater than $25,000.00, the Borrower shall reimburse the Lender for the
     overage within 20 days following receipt of request for reimbursement by
     the Lender.

     3.1(d) NO DEFAULT. All representations and warranties of the Borrower made
     in this Agreement shall remain true and correct and no Default or Event of
     Default shall exist.

     3.1(e) PARTICIPATION. Financial institutions shall have committed to
     purchase from Lender a portion of the Loan in the sum of at least
     $21,100,000.00, and have signed Participation Agreements and such other
     documentation containing such terms as are acceptable to Lender..

     Section 3.2 CONDITIONS TO EACH ADVANCE. The obligation of the Lender to
make the first and each subsequent advance of Loan proceeds hereunder shall be
subject to the prior or simultaneous fulfillment of each of the following
conditions:

     3.2(a) DOCUMENTS. The Lender shall have received the documents and other
     materials as set forth on Schedule 3.2(a) attached hereto and hereby made a
     part hereof, and that all such documents and other materials as are
     satisfactory to Lender in form and substance.

     3.2(b) COMPLIANCE WITH OTHER CONDITIONS. The Loan shall have closed, and
     the Borrower shall have complied with all of the terms and conditions of
     this Agreement (including the completion of any precondition to Loan
     closing under

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     Section 3.1 above, which Lender may have waived at the time of Loan
     closing), including the Construction Loan Addendum hereto, and the other
     Loan Documents.

     3.2(c) PERFECTION. The Mortgage and the Financing Statement, and any other
     Loan Document creating or evidencing a lien or security interest which
     Lender requires to be filed of record, shall have been appropriately filed
     to the satisfaction of the Lender and the priority and perfection of the
     Lien created thereby shall have been established to the satisfaction of the
     Lender. The Lender shall receive a first priority mortgage lien upon the
     Borrower's leasehold interest in the Land, the Improvements, the Access and
     Rail Agreement and the Borrower's personal property described in the
     Mortgage and Borrower's Security Agreement, subject only to the Permitted
     Encumbrances.

     3.2(d) NO DEFAULT. All representations and warranties of the Borrower made
     in this Agreement shall remain true and correct as of the date of the
     Advance as though made on and as of such date, except to the extent that
     such representations and warranties relate solely to an earlier date, and
     no Default or Event of Default shall exist.

     3.2(e) EQUITY. Borrower shall have paid $16,200,000.00 for the cost of
     construction of the Improvements from its Members' equity contributions.

     3.2(f) RECEIPT OF TAX INCREMENT FINANCING. Borrower shall have received a
     firm commitment, in a form and substance satisfactory to Lender, that not
     later than the Completion Date Borrower will receive from Grant County,
     South Dakota, at least $1,500,000.00 in Tax Increment Financing funds. Upon
     receipt of any or all of such funds, Borrower shall have paid such
     amount(s) to the Escrow Company to be disbursed by the Escrow Company for
     the cost of construction of the Improvements.

     3.2(g) DRAW REQUEST. Borrower has provided a Draw Request and otherwise
     complied with Section 3.3.

     3.2(h) No license or permit necessary for the construction of the Project
     shall have been revoked or the issuance thereof subjected to challenge
     before any court or other governmental authority having or asserting
     jurisdiction as to the Project.

     3.2(i) CERTIFICATION OF INSPECTING ARCHITECT. The Inspecting Architect
     shall have certified that the construction completed respecting the Draw
     Request has been

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     completed in conformity with the Plans, the construction schedule, and the
     total Project Costs as contained in the Sworn Construction Cost Statement.

     Section 3.3 DISBURSEMENT PROCEDURES.

     3.3(a) SUBMISSION OF DRAW REQUESTS. Whenever the Borrower desires a
     disbursement under the Loan, which shall be no more often than once a
     month, the Borrower shall submit to the Escrow Company a Draw Request, and
     simultaneously a copy thereof to the Lender and Inspecting Architect, duly
     executed on behalf of the Borrower setting forth the information requested
     on such form. Each Draw Request shall be delivered to the Lender at least
     five (5) Business Days before the date the disbursement is desired.

     3.3(b) AMOUNT OF DRAW REQUEST. Each Draw Request shall be limited to the
     amount provided for in the Disbursing Agreement.

     3.3(c) OTHER DOCUMENTS. At the time of submission of each Draw Request, the
     Borrower shall submit or cause to be submitted to the Lender the following:

          3.3(c)(i)   All documents required under the Disbursing Agreement.

          3.3(c)(ii) A written report from the Inspecting Architect as
          referenced in Section 3.2(i).

          3.3(c)(iii) Such other supporting evidence as may be requested by the
          Lender to substantiate all payments which are to be made out of the
          relevant Draw Request and/or to substantiate all payments then made
          with respect to the Project.

     3.3(d) MAKING THE DISBURSEMENTS. Upon satisfaction of all preconditions to
     payment under a Draw Request under this Agreement, the Disbursing
     Agreement, or any other Loan Document, the Lender shall disburse the
     appropriate amount of the Loan directly to the Escrow Company, except for
     items due to Lender under the terms of this Agreement, the Note, the
     Disbursing Agreement, or any other Loan Document. Borrower acknowledges
     that although Lender may disburse Loan proceeds to the Escrow Company, that
     no disbursement shall be made from the Escrow Company unless the terms of
     the Disbursing Agreement are satisfied as to each such term.

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     3.3(e) MISCELLANEOUS PROCEDURES. The Lender may establish additional
     procedures regarding disbursements as are reasonable to assure the proceeds
     of the Loan are paid only to those persons and entities entitled to the
     same, and that the liens securing the Obligations are in all cases first
     and paramount liens on the Property.

     Section 3.4 CONSTRUCTION LOAN ADDENDUM. Attached hereto and hereby made a
part hereof is a Construction Loan Addendum. If there is any conflict or
inconsistency between the terms and provisions of the Construction Loan Addendum
and any other terms and provisions of this Agreement, the terms and provisions
of the Construction Loan Addendum shall control.

     Section 3.5 DISBURSEMENTS OF BORROWER FUNDS. Borrower shall make
disbursements of its funds under Section 3.2(e), of Tax Increment Financing
funds pursuant to Section 3.2(f), and of other amounts Borrower disburses for
Completion of the Project through the Disbursing Agent under procedures which
shall insure that mechanics and materialmens liens are satisfied and that the
work is in compliance with the Plans, Sworn Construction Cost Statement and
construction schedule.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Lender:

     Section 4.1 ORGANIZATION, STANDING, ETC. The Borrower is a limited
liability company duly organized and validly existing and in good standing under
the laws of the jurisdiction of its organization and, if different, the
jurisdiction in which the Project is located, and has all requisite limited
liability company power and authority to own its properties and to carry on its
business as now conducted, to enter into this Agreement and the other Loan
Documents to which it is a party and to issue the Note and to perform its
obligations hereunder and thereunder. This Agreement, the Note and the other
Loan Documents to which it is a party have been duly authorized by all necessary
limited liability company action and when executed and delivered will be the
legal and binding obligations of the Borrower. The execution, delivery and
performance of this Agreement, the Note and the other Loan Documents to which it
is a party will not violate the Borrower's Articles of Organization, Operating
Agreement and Member Control Agreement or any law applicable to the Borrower,
and will not violate or cause a default under or permit acceleration of any
agreement to which Borrower is a party or by which it or the Project is bound.
Except for consents, approvals and exemptions previously obtained (copies of
which have been delivered to the Lender), no approval of or

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exemption by any Person is required in connection with the Borrower's execution,
delivery and performance of this Agreement, the Note and the other Loan
Documents to which it is a party. To the Borrower's knowledge, it is not in
default (beyond any applicable grace period) in the performance of any
agreement, order, writ, injunction, decree or demand to which it is a party or
by which it is bound.

     Section 4.2 LITIGATION. There are no actions, suits or proceedings pending
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower or the Project which, if determined adversely to the Borrower, would
have a material adverse effect on the condition of the Borrower or on the
ability of the Borrower to perform its obligations under the Loan Documents.
Neither the Borrower nor the Project is in violation of any Governmental
Requirement where such violation could reasonably be expected to impose a
material liability on the Borrower.

     Section 4.3 TAXES. The Borrower has filed all federal, state and local tax
returns required to be filed and has paid or made provision for the payment of
all taxes due and payable pursuant to such returns and pursuant to any
assessments made against it or any of its property (other than taxes, fees or
charges the amount or validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
accordance with GAAP have been provided on the books of the Borrower).

     Section 4.4 SUBSIDIARIES. The Borrower has no subsidiaries.

     Section 4.5 EMPLOYEE BENEFIT PLANS. Except as disclosed in writing to the
Lender: (a) the Borrower is not an employee benefit plan as defined in Section
3(1) of ERISA, whether or not subject to ERISA; (b) no assets of the Borrower
constitute assets of any such plan under ERISA regulations or rulings; (c) with
respect to any such plan that the Borrower sponsors, participates in or has
fiduciary duties with respect to, the Borrower has materially complied with all
federal and state laws, plan documents and funding requirements; (d) the
Borrower does not sponsor, participate in, or have fiduciary duties with respect
to any defined benefit pension plan subject to Title IV of ERISA or any
multi-employer pension plan as defined in Section 3(37)(A) of ERISA or any plan
providing medical or other welfare benefits to retirees or other former
employees (except as required by federal or state law); and (e) the Borrower is
not (and has not ever been) a member of a group of trades or businesses (whether
or not incorporated) that is treated as a single employer under Section 414 of
the Internal Revenue Code.

     Section 4.6 FEDERAL RESERVE REGULATIONS. The Borrower is not engaged
principally or as one of its important activities in the business of extending
credit for the

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purpose of purchasing or carrying margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System or any successor thereto).
The value of all margin stock owned by the Borrower does not constitute more
than 25% of the value of the assets of the Borrower.

     Section 4.7 CONSTRUCTION OF THE PROJECT. The Project will be constructed
strictly in accordance with the Plans, will be constructed entirely on the
Property, and will not encroach upon or overhang any easement or right-of-way on
property not constituting part of the Property, except for the rail spur line
which shall in part be located upon the rail line property owned by the State of
South Dakota, or other third party satisfactory to Lender. The Project, both
during construction and at the time of completion, and the contemplated use
thereof, will not violate any applicable zoning or use statute, ordinance,
building code, rule or regulation, or any covenant or agreement of record. The
Borrower agrees that it will furnish from time to time such satisfactory
evidence with respect thereto as may be required by the Lender.

     Section 4.8 TAXPAYER IDENTIFICATION NUMBER. The Borrower's Internal Revenue
Service Taxpayer Identification Number is 46-0460145, and the Borrower shall use
such number as its exclusive Internal Revenue Service Taxpayer Identification
Number until all of its Obligations under this Agreement are satisfied in full.
The Borrower will not change its name as incorporated, without the Lender's
prior written consent, which may be conditioned upon the Borrower's signing
amendments to UCC-1s or other documents as the Lender may require.

     Section 4.9 BORROWER NOT A TRANSMITTING UTILITY. The Borrower is not a
transmitting utility within the meaning of the UCC, and in particular will not
ship its inventory by pipeline.

     Section 4.10 PURCHASE OF CORN. Any purchase of corn or other inputs used or
consumed in the production of the Borrower's ethanol or other inventory shall be
free of any security or lien interest of any third party, and in particular
Borrower shall see to the termination of any security interest in any such farm
products or goods it may purchase.

                                    ARTICLE V

                                    COVENANTS

     Until the Note and all of the Borrower's other Obligations shall have been
paid and performed in full, unless the Lender shall otherwise consent in
writing:

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     Section 5.1 FINANCIAL STATEMENTS AND REPORTS. The Borrower will furnish to
the Lender:

     5.1(a) As soon as available and in any event within 120 days after the end
     of each fiscal year of the Borrower, financial statements consisting of at
     least statements of income, cash flow and changes in members' equity, a
     balance sheet as of the end of such year, and a statement of contingent
     liabilities as at the end of such year, setting forth in each case in
     comparative form corresponding figures from the previous annual audit,
     certified without qualification by an independent certified public
     accountant of recognized standing selected by the Borrower, as the case may
     be, and acceptable to the Lender.

     5.1(b) As soon as available and in any event within 30 days after the end
     of each fiscal quarter of the Borrower, unaudited financial statements and
     a financial covenant compliance certificate on a form provided by Lender
     for such quarter and for the period from the beginning of such fiscal year
     to the end of such quarter, substantially similar to the annual audited
     statements.

     5.1(c) As soon as available and in any event within 120 days after the
     deadline for filing the same, copies of the Borrower's federal income tax
     return (with all supporting schedules).

     5.1(d) Immediately upon any officer of the Borrower becoming aware of any
     Default or Event of Default, a notice describing the nature thereof and
     what action the Borrower proposes to take with respect thereto.

     5.1(e) From time to time, such other information regarding the business,
     operation and financial condition of the Borrower and the Project as the
     Lender may reasonably request.

     Section 5.2 BOOKS AND RECORDS. The Borrower will keep adequate and proper
records and books of account in which full and correct entries will be made of
its dealings, business and affairs, including its use and operation of the
Project.

     Section 5.3 INSPECTION. The Borrower will permit any Person designated by
the Lender upon reasonable notice to visit and inspect any of the properties
(including the Project), books and financial records of the Borrower, to examine
and to make copies of the books of accounts and other financial records of the
Borrower, and to discuss the affairs, finances and accounts of the Borrower with
its officers at such reasonable times and intervals as the Lender may designate.

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     Section 5.4 EXISTENCE. The Borrower will maintain its existence in good
standing under the laws of its jurisdiction of organization or formation, and,
if different, the jurisdiction where the Project is located, and its
qualification to transact business in each jurisdiction (including the
jurisdiction where the Project is located) where failure so to qualify would
permanently preclude the Borrower from enforcing its rights with respect to any
material asset or would expose the Borrower to any material liability.

     Section 5.5 NOTICE OF LITIGATION. The Borrower will give prompt written
notice to the Lender of the commencement of any action, suit or proceeding
affecting the Borrower.

     Section 5.6 EMPLOYEE BENEFIT PLANS. The Borrower shall neither take any
action, nor omit to take any action, if such action or omission would result in
any of the statements set forth in Section 4.5 (including any written
disclosures made by the Borrower to the Lender under Section 4.5) becoming
inaccurate or misleading at any time while the Note remains outstanding.

     Section 5.7 INSURANCE. The Borrower will maintain with financially sound
and reputable insurance companies such insurance as may be required by law and
such other insurance in such amounts and against such hazards as is customary in
the case of reputable companies engaged in the same or similar business and
similarly situated, including, without limitation, the insurance which the
Borrower is required to maintain pursuant to Section 1.4 of the Mortgage.

     Section 5.8 PAYMENT OF TAXES. The Borrower will file all tax returns and
reports which are required by law to be filed by it and will pay before they
become delinquent, all taxes, assessments and governmental charges and levies
imposed upon it or its property and all claims or demands of any kind (including
those of suppliers, mechanics, carriers, warehousemen, landlords and other like
Persons) which, if unpaid, might result in the creation of a Lien upon its
property. Notwithstanding the foregoing, Borrower shall not be in default
hereunder if a tax assessment or governmental charge or levy results in a Lien
upon Borrower's property so long as Borrower timely files and prosecutes any
proceeding whereby Borrower contests the imposition or amount of said tax,
assessment or governmental charge or levy.

     Section 5.9 MAINTENANCE OF PROPERTIES, COMPLIANCE. The Borrower will
maintain its properties in good condition, repair and working order, and
supplied with all necessary equipment, and make all necessary repairs, renewals,
replacements, betterments and improvements thereto, all as may be necessary so
that the business carried on in

<Page>

connection therewith may be properly and advantageously conducted at all times.
The Borrower will comply in all material respects with all Governmental
Regulations to which it may be subject.

     Section 5.10 MERGER. The Borrower will not merge or consolidate or enter
into any analogous reorganization or transaction with any Person or liquidate,
wind up or dissolve itself (or suffer any liquidation or dissolution).

     Section 5.11 SALE OF ASSETS. The Borrower will not sell, transfer, lease or
otherwise convey all or any substantial part of its assets except for sales and
leases of inventory in the ordinary course of business.

     Section 5.12 VOLUNTARY LIENS. The Borrower will not grant any Lien in its
properties, except with the prior written consent of the Lender.

     Section 5.13 MECHANIC'S LIENS. The Borrower shall cause all mechanic's or
similar Liens to be removed of record within 120 days of their attachment,
unless the Borrower shall initiate proceedings to remove the mechanic's Lien;
and in all events shall cause the mechanic's Lien to be removed of record within
30 days following the date of a final and non-appealable judicial determination
that the mechanic's Lien is enforceable.

     Section 5.14 TRANSACTIONS WITH RELATED PARTIES. Except for the Operating
Contracts described in Exhibit B, and except for any future contract for the
sale of DDGS or carbon dioxide with Broin Enterprises, Inc., d/b/a Dakota
Commodities and its Affiliates, the Borrower shall not enter into any
transactions with Affiliates.

     Section 5.15 NO ADDITIONAL INDEBTEDNESS. The Borrower shall not borrow from
any financial institution or other person any sum of money, or enter into any
capital leases, without the Lender's prior written consent. In the event that
the Lender consents to the Borrower obtaining additional indebtedness, the
Borrower shall not prepay said indebtedness without the Lender's prior written
consent.

     Section 5.16 DEPOSIT ACCOUNTS. In order to further secure the Borrower's
obligations hereunder, the Borrower will maintain its primary operating account
and all savings/investment accounts with the Lender.

     Section 5.17 ADDITIONAL COVENANTS. For additional covenants, see Schedule V
attached hereto and hereby made a part hereof.

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                                   ARTICLE VI

                         EVENTS OF DEFAULT AND REMEDIES

     Section 6.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default:

     6.1(a) The Borrower shall fail to make when due, and such failure to make
     payments shall continue for ten (10) calendar days after the date the
     Lender gives notice of such failure to the Borrower, any payment of
     principal of or interest on the Note or any other Obligations of the
     Borrower to the Lender pursuant to this Agreement or any of the other Loan
     Documents.

     6.1(b) Any representation or warranty made by or on behalf of the Borrower
     in this Agreement or any of the other Loan Documents or by or on behalf of
     the Borrower in any certificate, statement, report or document herewith or
     hereafter furnished to the Lender pursuant to this Agreement or any of the
     other Loan Documents shall prove to have been false or misleading in any
     material respect on the date as of which the facts set forth are stated or
     certified.

     6.1(c) The Borrower shall fail to comply with Sections 5.7, 5.10 or 5.11.

     6.1(d) The Borrower shall fail to comply with Section 5.1 and such failure
     to comply shall continue for ten (10) calendar days after the date the
     Lender gives notice of such failure to the Borrower.

     6.1(e) The Borrower shall fail to comply with any covenant contained in
     Schedule V hereto and such failure to comply shall continue for thirty (30)
     calendar days after the date of determination or measurement of said
     covenant.

     6.1(f) A sale, transfer, conveyance or encumbrance of the Project or any
     part thereof or of all or any part of the Borrower's interest therein in
     violation of Section 1.3 of the Mortgage shall occur.

     6.1(g) The Borrower shall fail to comply with any other agreement,
     covenant, condition, provision or term contained in this Agreement or any
     of the other Loan Documents (other than those hereinabove set forth in this
     Section 6.1) and such failure to comply shall continue for thirty (30)
     calendar days after the date the Lender gives notice of such failure to the
     Borrower.

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     6.1(h) The Borrower shall become insolvent or shall generally not pay its
     debts as they mature or shall apply for, shall consent to, or shall
     acquiesce in the appointment of a custodian, trustee or receiver of itself
     or for a substantial part of its property, or, in the absence of such
     application, consent or acquiescence, a custodian, trustee or receiver
     shall be appointed for the Borrower or for a substantial part of the
     property thereof and shall not be discharged within forty-five (45) days,
     or the Borrower shall make an assignment for the benefit of creditors.

     6.1(i) Any bankruptcy, reorganization, debt arrangement or other
     proceedings under any bankruptcy or insolvency law shall be instituted by
     or against the Borrower and, if instituted against the Borrower, shall have
     been consented to or acquiesced in by the Borrower, as the case may be, or
     shall remain undismissed for sixty (60) days, or an order for relief shall
     have been entered against the Borrower.

     6.1(j) Any dissolution or liquidation proceeding shall be instituted by or
     against the Borrower and, if instituted against the Borrower, shall be
     consented to or acquiesced in by the Borrower, as the case may be, or shall
     remain for sixty (60) days undismissed.

     6.1(k) A judgment or judgments for the payment of money in excess of the
     sum of $250,000.00 in the aggregate shall be rendered against the Borrower
     and either (i) the judgment creditor executes on such judgment or (ii) such
     judgment remains unpaid or undischarged for more than sixty (60) days from
     the date the judgment becomes final and non-appealable.

     6.1(l) The maturity of any material indebtedness of the Borrower (other
     than the Loan) shall be accelerated, or the Borrower shall fail to pay any
     such material indebtedness when due (after the lapse of any applicable
     grace period) or any event shall occur or condition shall exist and shall
     continue for more than the period of grace, if any, applicable thereto and
     shall have the effect of causing, or permitting the holder of any such
     indebtedness to cause, such material indebtedness to become due prior to
     its stated maturity or to realize upon any collateral given as security
     therefor. For purposes of this Section, indebtedness shall be deemed
     "material" if it exceeds $250,000.00 as to any item of indebtedness or in
     the aggregate for all items of indebtedness with respect to which any of
     the events described in this Section has occurred.

     6.1(m) Any execution or attachment shall be issued whereby any substantial
     part of the property of the Borrower shall be taken or attempted to be
     taken and the

<Page>

     same shall not have been vacated or stayed within thirty (30) days after
     the issuance thereof.

     6.1(n) The Lease and/or the Access and Rail Agreement shall be terminated
     or cancelled or the Borrower shall be in default thereunder beyond the
     applicable grace period, if any.

     6.1(o) The termination or assignment, other than to an Affiliate of the
     Agreement Between Owner and Design Builder dated November 2, 2000, with
     Broin and Associates, Inc., the Management Agreement dated November 2,
     2000, with Broin Management, LLC, the Ethanol Marketing and Services
     Agreement dated November 2, 2000, with Ethanol Products, LLC, and the
     Agreement (for sale of the DDGS), dated January 8, 2001, with Commodity
     Specialist Company, without the Lender's prior written consent.

     6.1(p) Be in material breach (beyond any commercially reasonable cure
     period) of any Operating Contract, or terminate any Operating Contract, or
     allow substitution or assignment of, or substantial change in control of,
     any other party to any Operating Contract, without Lender's prior written
     consent.

     6.1(q) The construction of the Project is abandoned or shall be
     unreasonably delayed or be discontinued for a period of fifteen (15)
     consecutive calendar days, in each instance for reasons other than acts of
     God, fire, storm, strikes, blackouts, labor difficulties, riots, inability
     to obtain materials, equipment or labor, governmental restrictions or any
     similar cause over which the Borrower is unable to exercise control.

     6.1(r) The Borrower at any time prior to the Completion of the Project,
     shall delay construction or suffer construction to be delayed for any
     period of time, for any reason whatsoever, so that the Completion of the
     Project cannot be accomplished, in the reasonable judgment of the
     Inspecting Architect, by the Completion Deadline.

     Section 6.2 REMEDIES. If (a) any Event of Default described in Sections 6.1
(h), (i) or (j) shall occur with respect to the Borrower, the Note and all other
obligations of the Borrower to the Lender under this Agreement and the other
Loan Documents shall automatically become immediately due and payable, or (b)
any other Event of Default shall occur and be continuing, then the Lender may
declare the Note and all other obligations of the Borrower to the Lender under
this Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the same shall immediately

<Page>

become due and payable, in each case without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived, anything in
this Agreement or in the Note or in any of the other Loan Documents to the
contrary notwithstanding. Upon the occurrence of any of the events described in
clauses (a) or (b) of the preceding sentence the Lender may exercise all rights
and remedies under this Agreement, the Note and any of the other Loan Documents
and under any applicable law. In addition, the Lender may cure the Event of
Default on behalf of the Borrower, and, in doing so, may enter upon the Project,
and may expend such sums as it may deem desirable, including attorneys' fees,
all of which shall be deemed to be advances hereunder and under the Note, even
though causing the Loan to exceed the face amount of the Note, shall bear
interest at the Default Rate and shall be payable by the Borrower on demand, and
shall be secured by the Mortgage and all other Loan Documents securing the Loan.

     Section 6.3 OFFSET. In addition to the remedies set forth in Section 6.2,
upon the occurrence of any Event of Default and thereafter while the same be
continuing, the Borrower hereby irrevocably authorizes the Lender to set off all
sums owing by the Borrower to the Lender against all deposits and credits of the
Borrower with, and any and all claims of the Borrower against, the Lender.

                                   ARTICLE VII

                                  MISCELLANEOUS

     Section 7.1 MODIFICATIONS. Notwithstanding any provisions to the contrary
herein, any term of this Agreement may be amended with the written consent of
the Borrower; PROVIDED that no amendment, modification or waiver of any
provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Lender, and then such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the purpose for
which given.

     Section 7.2 COSTS AND EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Borrower agrees to reimburse the Lender
upon demand for all reasonable out-of-pocket expenses paid or incurred by the
Lender (including filing and recording costs and fees and expenses of legal
counsel to the Lender) in connection with the negotiation, preparation,
approval, review, execution, delivery, amendment, modification, interpretation,
collection and enforcement of this Agreement, the Note and the other Loan
Documents. The obligations of the Borrower under this Section shall survive any
termination of this Agreement.

<Page>

     Section 7.3 WAIVERS, ETC. No failure on the part of the Lender or the
holder of the Note to exercise and no delay in exercising any power or right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right. The rights and remedies of the Lender
hereunder are cumulative and not exclusive of any right or remedy the Lender
otherwise has.

     Section 7.4 NOTICES. Except when telephonic notice is expressly authorized
by this Agreement, any notice or other communication to any party in connection
with this Agreement shall be in writing and shall be sent by manual delivery,
telegram, telex, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by telegram, telex or facsimile transmission, from
the first Business Day after the date of sending if sent by overnight courier,
or from four days after the date of mailing if mailed. Either party may change
its address for notices by a notice given not less than five (5) Business Days
prior to the effective date of the change.

     Section 7.5 SUCCESSORS AND ASSIGNS; DISPOSITION OF LOANS. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns, except that the
Borrower may not assign its rights or delegate its obligations hereunder without
the prior written consent of the Lender. The Lender may at any time sell,
assign, transfer, grant participations in, or otherwise dispose of any portion
of the Loan to banks or other financial institutions. The Lender may disclose
any information regarding the Borrower in the Lender's possession to any
prospective buyer or participant.

     SECTION 7.6 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY, CONSTRUCTION AND
ENFORCEABILITY OF THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF SOUTH DAKOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS OR
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS. WHENEVER POSSIBLE, EACH PROVISION OF THIS
AGREEMENT AND ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY
OR RELATING HERETO, SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND
VALID UNDER SUCH APPLICABLE LAW, BUT, IF ANY PROVISION OF THIS AGREEMENT OR ANY
OTHER

<Page>

STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO
SHALL BE HELD TO BE PROHIBITED OR INVALID UNDER SUCH APPLICABLE LAW, SUCH
PROVISION SHALL BE INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR
INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE
REMAINING PROVISIONS OF THIS AGREEMENT OR ANY OTHER STATEMENT, INSTRUMENT OR
TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO.

     SECTION 7.7 CONSENT TO JURISDICTION. AT THE OPTION OF THE LENDER, THIS
AGREEMENT AND THE NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR SOUTH DAKOTA
CIRCUIT COURT SITTING IN GRANT COUNTY OR MINNEHAHA COUNTY; AND THE BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURTS AND WAIVES ANY
ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

     SECTION 7.8 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE AND ANY OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

     Section 7.9 CAPTIONS. The captions or headings herein and any table of
contents hereto are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.

     Section 7.10 NUMBER; GENDER. The singular of all terms used herein shall
include the plural and the plural shall include the singular, and the use of any
gender herein shall include all other genders, where the context so requires or
permits.

     Section 7.11 ENTIRE AGREEMENT. This Agreement and the other Loan Documents
embody the entire agreement and understanding between the Borrower and the
Lender

<Page>

with respect to the subject matter hereof and thereof. This Agreement supersedes
all prior agreements and understandings relating to the subject matter hereof.

     Section 7.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.

     Section 7.13 PARTICIPATION. Notwithstanding any other provision of this
Agreement, the Borrower understands that the Lender may enter into participation
agreements with other lenders whereby the Lender will allocate a certain
percentage of the Loan to them. The Borrower specifically permits and authorizes
the Lender to exchange financial information about the Borrower with actual or
potential participants. The borrower acknowledges that for the convenience of
all parties. This Agreement is being entered into with the Lender only and that
its obligations under this Agreement are undertaken for the benefit of, and as
an inducement to, each of the Participating Lenders as well as the Lender, and
the Borrower hereby grants to each of the Participating Lenders to the extent of
its participation in the Loan, the right to set off deposit accounts maintained
by the Borrower with such Bank. The Borrower understands that the terms of such
participation agreements with any of the participants will limit the Lender's
rights to amend, waive or modify the terms and conditions of this Agreement
without the express written consent of all or a designated percentage of such
participants. Every requirement that the Borrower pay the expenses of the
Lender, including costs of the Lender's attorneys, service tax thereon, and
expense reimbursement for such attorneys, shall also be deemed to include such
reasonable costs and expenses of each such participant.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

NORTHERN LIGHTS                           U.S. BANK NATIONAL
     ETHANOL, LLC                                ASSOCIATION

By:  /s/ Delton Strasser                  By:  /s/ Carl D. Wynja
    -----------------------------------       ----------------------------------
       Print Name: Delton Strasser              Print Name: Carl D. Wynja
       Title: Chairman of the Board             Title: Senior Vice President

       Borrower's Address:                Lender's Address:
       Post Office Box 225                U.S. Bank National Association
       Milbank, South Dakota 57252        141 North Main Avenue
       Phone:      (605) 432-5676         Post Office Box 5308

<Page>

       Fax:        (605) 432-6951         Sioux Falls, South Dakota 57117
                                          Phone:   (605) 339-8619
                                          Fax:     (605) 333-3825

<Page>

                           CONSTRUCTION LOAN ADDENDUM

     Section 1. DEFINITIONS. The following definitions are hereby added to
Article I of the Loan Agreement (the "Loan Agreement") to which this
Construction Loan Addendum (this "Addendum") is attached:

     "ADVANCE": An advance of Loan proceeds by the Lender pursuant to this
Agreement.

     "ASSIGNMENT OF CONSTRUCTION CONTRACT": The Assignment of Construction
Contract dated of even date herewith, by and between the Borrower, the Lender
and the General Contractor.

     "ASSIGNMENT OF PLANS AND ARCHITECTURAL AGREEMENTS": The Assignment of Plans
executed by the Borrower in favor of the Lender, and consented to by the Project
Architect.

     "COMPLETION": The Improvements are completed in accordance with the Plans
and paid for in full; such completion has been approved by the Inspecting
Architect; a certificate of substantial completion for the Improvements has been
signed by the Borrower and the General Contractor and delivered to the Lender,
and no punch-list items remain to be completed; an unconditional certificate of
occupancy for all of the Improvements has been issued by the appropriate
governmental authority, if required by applicable law; the Borrower has
delivered to the Lender copies of all licenses and permits needed to operate the
Project; Lender has received copies of all warranties from suppliers covering
materials, equipment and appliances included within the Project and evidence
that all insurance required hereby is in full force and effect; and no Default
of Default exists hereunder.

     "COMPLETION DEADLINE": December 31, 2002.

     "CONTRACTOR": Any Person who has a contract or subcontract under which
payment may be required for any work done, material supplied or services
furnished in connection with acquiring, constructing, financing, equipping
and/or developing the Project. A Contractor includes anyone eligible to file a
lien pursuant to SDCL ch 44-9.

     "DISBURSING AGREEMENT": The separate disbursing agreement of even date
herewith between the Borrower, the Lender and the Escrow Company, including any
amendments and supplements thereto.

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     "DRAW REQUEST": A written request by the Borrower for an Advance.

     "GENERAL CONTRACTOR": Broin and Associates, Inc., and Affiliate of the
Borrower.

     "IMPROVEMENTS": The buildings and improvements to be placed or constructed
upon the Land.

     "PLANS": The final working plans for the construction of the Improvements,
including drawings, specifications, details and manuals, as approved by the
Lender prior to the Closing Date.

     "PROJECT ARCHITECT": The architect selected by the General Contractor to
design the buildings that are part of the Improvements.

     "RESERVES": The reserves for payment of construction period interest,
contingencies and change orders, as set forth on the Sworn Project Cost
Statement.

     "SWORN PROJECT COST STATEMENT": An itemized, certified statement of actual
and estimated costs of the Project, signed and sworn to by the Borrower and the
General Contractor as the same may be amended or supplemented with the approval
of the Lender from time to time.

     The term" Loan Documents", as used in the Loan Agreement, shall include, in
addition to the documents described in the definition of Loan Documents
contained in Article I of the Loan Agreement, the Assignment of Construction
Contract, the Assignment of Plans and the Disbursing Agreement.

     Section 2. ADVANCES.

     (a) GENERAL. The Lender agrees to lend the Borrower, and the Borrower
agrees to borrow from the Lender, the proceeds of the Loan, from time to time
until the Completion Deadline, for the purpose of developing the Project and
constructing the Improvements. All sums advanced by the Lender shall constitute
Advances under this Agreement and shall be evidenced by the Note and secured by
the Mortgage. No Advance shall constitute a waiver of any Default or Event of
Default or any condition precedent to the obligation of the Lender to make any
further Advance. If the total amount of the Loan exceeds the amount needed to
fully pay all project costs approved by the Lender, the Lender shall not be
required to advance the excess. The Borrower shall keep the Lender advised of
the name of each Contractor and of the type of work, material or services and
the dollar amount covered by each of their respective contracts with the

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Borrower. If requested by the Lender, the Borrower shall also furnish to the
Lender a copy of each contract with each of the Contractors. THE BORROWER MAY
COMMENCE CONSTRUCTION WORK ON, OR ACCEPT DELIVERY OF MATERIALS FOR, THE
IMPROVEMENTS PRIOR TO THE RECORDING OF THE MORTGAGE.

     (b) PROCEDURE FOR ADVANCES. The Loan proceeds shall be advanced by the
Lender in accordance with the terms and conditions set forth in this Section 2,
and in accordance with the Disbursing Agreement. All monies advanced by the
Lender to the Escrow Company shall constitute Advances under this Agreement, and
shall bear interest from the date of advance to the Escrow Company, whether such
Advances are fully disbursed by the Escrow Company or are withheld in full or in
part.

     (c) ADVANCES BY LENDER TO ITSELF OR OTHERS. The Lender may, at the Lender's
option, advance to itself or to others all sums due or to become due to the
Lender or to others under any of the Loan Documents, whether or not an Advance
is requested by the Borrower.

     (d) INSPECTIONS. The Lender, the Escrow Company, the Inspecting Architect,
the Lender's consultants and their representatives shall have access to the
Project at all reasonable times to conduct such inspections thereof as they deem
necessary or desirable for the protection of the Lender's interests. All costs
of the Inspecting Architect and any other consultants deemed necessary or
desirable by the Lender to make periodic inspections of the Project and to
review all Draw Requests and change orders shall be paid by the Borrower.
Neither the Borrower nor any third party shall have the right to use or rely
upon the reports of the Inspecting Architect or any other reports generated by
the Lender or its consultants for any purpose whatsoever. By advancing funds
after any inspection of the Project, the Lender shall not be deemed to waive any
Default or Event of Default, waive any right to require construction defects to
be corrected, or acknowledge that all construction conforms with the Plans.

     (e) LENDER NOT RESPONSIBLE FOR PROJECT. The Lender assumes no liability or
responsibility for the sufficiency of the Loan proceeds to complete the Project,
to service any interest or other payment due under the terms of the Loan under
Section 2(c) above, for protection of the Project, for the satisfactory
Completion of the Project, for the Plans, for the compliance of the Plans and
the Project with Governmental Requirements, for inspection during construction,
for the adequacy of Reserves, for the adequacy or accuracy of the Sworn Project
Cost Statement, for any representations made by the Borrower, or for any acts on
the part of the Borrower or its Contractors to be performed in

<Page>

the construction of the Project. The Borrower assumes sole responsibility for
all of the foregoing.

     (f) LOAN IN BALANCE. Borrower acknowledges that Borrower is responsible for
all cost overruns on the Project. The Lender shall not be obligated to make any
Advance unless and until the Borrower has provided the Lender with evidence that
the Borrower has paid sufficient costs of the Project so that all remaining
unpaid costs of the Project, including the Reserves, do not exceed the amount of
the Loan proceeds not yet Advanced by the Lender. If the Lender or the Borrower
determines that the unAdvanced balance of Loan proceeds is insufficient to cover
any cost allocation set forth on the Sworn Project Cost Statement, including the
Reserves and interest during construction, or to complete the Project, it shall
notify the other party of such determination, and the Borrower shall, within ten
(10) Business Days after such notice, deposit with the Lender funds equal to the
amount of the deficiency. The Borrower hereby assigns and pledges to the Lender
all funds so deposited as additional security for the Obligations. The Borrower
may not reallocate items of cost or change the Sworn Project Cost Statement
without the consent of the Lender.

     Section 3. CONDITIONS PRECEDENT TO ADVANCES. The Lender shall not be
required to make any Advances until the conditions and requirements set forth
below have been satisfied, at the Borrower's sole cost and expense. The Lender
may, in its discretion, make Advances prior to satisfaction of any or all of the
conditions and requirements set forth below, all of which are for the sole
benefit of the Lender, without waiving its right to require such satisfaction
before any additional Advances are made.

     (a) CONDITIONS PRECEDENT TO INITIAL ADVANCE. The Lender shall not be
obligated to make the initial Advance until the conditions precedent set forth
in Article III of the Loan Agreement have been satisfied and the Lender has
received all of the following in form and substance acceptable to the Lender:

     (i)    The Plans.

     (ii) Soil reports on the Land, showing that the soil will adequately
     support the Improvements when constructed in accordance with the Plans.

     (iii) The General Contractor's construction contract and a schedule listing
     all subcontracts relating to the construction of the Project.

     (iv) The Sworn Project Cost Statement, and a disbursement schedule showing
     the anticipated time and amount of disbursements hereunder.

<Page>

     (v) Copies of all building permits required to complete the construction of
     the Improvements, or evidence satisfactory to the Lender that such permits
     will be obtained.

     (vi) A letter addressed to the Lender from an appropriate municipal officer
     regarding zoning and building code compliance.

     (vii) Letters from the appropriate municipalities or utility companies
     certifying as to the availability, capacity and adequacy of water, sanitary
     sewer, storm sewer, gas, electricity, telephone and other utilities and
     services necessary to construct and operate the Project.

     (viii) The Assignment of Construction Contract and the Assignment of Plans
     and the Disbursing Agreement, each duly executed by the parties thereto.

     (ix) The Borrower has expended toward the cost of construction equity funds
     contributed by its Members in an amount not less than $16,200,000.00.

     (x) The parties acknowledge that work on the Improvements commenced prior
     to closing, and that all preconditions to any subsequent Advances hereunder
     apply to the initial Advance hereunder.

     (b)    CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of the Lender
to make each Advance (including the initial Advance) is subject to the following
conditions precedent:

     (i) No Default or Event of Default shall have occurred and be continuing or
     will exist upon the making of such Advance.

     (ii) All representations and warranties of the Borrower made in the Loan
     Agreement shall remain true and correct as of the date of the Advance as
     though made on and as of such date, except to the extent that such
     representations and warranties relate solely to an earlier date and no
     Default or Event of Default shall exist.

     (iii) All requirements and conditions for an Advance under Section 2 of
     this Addendum shall have been complied with and satisfied.

<Page>

     (iv) There shall not have occurred any change, which in the sole judgment
     of the Lender is materially adverse, in the condition (financial or
     otherwise) or operations of the Borrower or in the Project or the prospects
     for the timely and satisfactory completion of the construction of the
     Improvements and operation of the Project.

     Section 4. WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENTS. In
addition to the warranties, representations, covenants and agreements of the
Borrower contained in the Loan Agreement, the Borrower hereby warrants,
represents, covenants and agrees to and with the Lender as follows:

     (a) BOUNDARY LINES, GOVERNMENTAL REQUIREMENTS AND RESTRICTIONS. The
exterior lines of the Improvements are, and at all times will be, within the
boundary lines of the Land and any required set back lines, and the Borrower has
examined and is familiar with all applicable covenants, conditions, restrictions
and reservations, and with all applicable Governmental Requirements affecting
the Project, and the Project will conform to and comply with all of the
foregoing.

     (b)    LOAN IN BALANCE. The amount of the Loan proceeds not yet advanced by
the Lender equals or exceeds the total of all remaining unpaid costs of the
Project, including the Reserves.

     (c) COMMENCING AND COMPLETING CONSTRUCTION. Regardless of whether or not
there are sufficient Loan proceeds or sufficient funds disbursed under the
Disbursing Agreement, the Borrower shall expeditiously complete and fully pay
for the development and construction of the Project in a good and workmanlike
manner and in accordance with the contracts, subcontracts and Plans submitted to
and approved by the Lender, and in compliance with all applicable Governmental
Requirements, and any applicable covenants, conditions, restrictions and
reservations, so that Completion occurs on or before the Completion Deadline.
The Borrower shall correct or cause to be corrected (a) any defect in the
Improvements, (b) any departure in the construction of the Improvements from the
Plans or Governmental Requirements, and (c) any encroachment by any part of the
Improvements or any other structure located on the Loan on any building line,
easement, property line or restricted area. The Borrower shall cause the bearing
capacity of the soil on the Loan to be made sufficient to support the
Improvements, and sufficient local utilities to be made available to the Project
and installed at costs (if any) set out in the Sworn Project Cost Statement, on
or before the Completion Deadline.

     (d)    CHANGING COSTS, SCOPE OR TIMING OF WORK. The Borrower shall deliver
to the Lender revised, sworn statements of estimated costs of the Project,
showing changes

<Page>

in or variations from the original Sworn Project Cost Statement, as soon as such
changes are known to the Borrower. The Borrower shall furnish the Lender with
copies of all changes or modifications in the Plans, contracts or subcontracts
for the construction of the Improvements, prior to incorporation of any such
change or modification into the Improvements, whether or not the Lender's
consent to such change or modification is required. The Borrower shall not make
or consent to any change or modification in such Plans, contracts or
subcontracts, and no work shall be performed with respect to any such change or
modification, without the prior written consent of Lender, if such change or
modification would in any material way alter the design or structure of the
Improvements, or increase or decrease the cost of the construction of the
Improvements by $250,000.00 or more for any single change or modification, or if
the aggregate amount of all changes and modifications exceeds $1,000,000.00.

     (e) PAYING COSTS OF PROJECT AND LOAN. The Borrower shall pay and discharge,
when due, all taxes, assessments and other governmental charges upon the
Project, as well as all claims for labor and materials which, if unpaid, might
become a lien or charge upon the Project; provided, however, that the Borrower
shall have the right to contest the amount, validity and/or applicability of any
of the foregoing in strict accordance with the terms of the Mortgage. The
Borrower shall also pay all costs and expenses of the Lender, the Lender's
consultants and the Borrower in connection with the Project, the preparation and
review of the Loan Documents and the making, closing, administration, repayment
and/or transfer of the Loan, including but not limited to the fees of the
Lender's attorneys, fees of the Inspecting Architect, title insurance costs,
disbursement expenses, and all other costs and expenses payable to third parties
incurred by the Lender or the Borrower in connection with the Loan. Such costs
and expenses shall be paid by the Borrower whether or not the Loan is fully
advanced or disbursed.

     (f) USING LOAN PROCEEDS. The Borrower shall use the Loan proceeds solely to
pay, or to reimburse the Borrower for paying, costs and expenses shown on the
Sworn Project Cost Statement approved by the Lender and incurred by the Borrower
in connection with the acquisition, development and construction of the Project.
The Borrower shall take all steps necessary to assure such use of Loan proceeds
by its Contractors.

     (g) KEEPING RECORDS. The Borrower shall maintain accurate and complete
books, accounts and records pertaining to the Project in a manner reasonably
acceptable to the Lender and to the Escrow Company. The Borrower will permit
representatives of the Lender, the Inspecting Architect and the Escrow Company
to have free access to and to inspect and copy all books, records and contracts
of the Borrower.

<Page>

     (h) PROVIDING EVIDENCE OF COMPLETION. Upon Completion, and prior to the
final Advance of Loan proceeds to pay for hard costs of construction of the
Project, and as a condition of the same, the Borrower shall furnish the Lender
with all items required to evidence Completion, including an unconditional
occupancy certificate if required by applicable law to occupy the Project; a
zoning endorsement (Form 3.1 or equivalent) to the Title Policy; a final,
certified Project "as-built" survey (3 copies) if requested by Lender; the
evidence of insurance required by Section 1.4 of the Mortgage; and photographs
of the completed Improvements.

     Section 5. EVENTS OF DEFAULT. In addition to the Events of Default set
forth in Article VI of the Loan Agreement, the following events shall constitute
an Event of Default under the Loan Agreement:

     (a) ABANDONMENT OF OR DELAY IN CONSTRUCTION. Work on the Project shall be
substantially abandoned, or shall, by reason of the Borrower's fault, be
unreasonably delayed or discontinued for a period of thirty (30) days, or shall
be delayed for any reason whatsoever to the extent that Completion of the
Project cannot, in the reasonable judgment of the Lender, be accomplished prior
to the Completion Deadline.

     (b) LOAN IMBALANCE NOT REMEDIED. The Lender determines that the remaining
undisbursed Loan proceeds are insufficient to fully pay all of the then unpaid
costs of the Project and estimated expenses of completion, and the Borrower (i)
fails to deposit with the Lender, within ten (10) Business Days after demand,
sufficient funds to permit the Lender to pay said excess costs as the same
become payable or (ii) does not pay said excess costs directly and deliver to
the Lender unconditional mechanics' lien waivers therefor (or paid receipts for
nonlienable items), at the Lender's option.

     Section 6. REMEDIES. If an Event of Default shall occur under the Loan
Agreement, then in addition to the rights and remedies set forth in the Loan
Agreement and the other Loan Documents, the Lender shall be entitled, at the
option of the Lender, to exercise any or all of the following rights and
remedies:

     (a)    MAKE OR REFRAIN FROM MAKING FURTHER ADVANCES. The Lender may make
one(1) or more further Advances, without liability to make any subsequent
Advances.

     (b)    SUSPEND ADVANCES. The Lender may suspend or terminate its obligation
to make Advances, and if it does so, shall promptly notify Borrower.

     (c)    COMPLETION OF IMPROVEMENTS BY THE LENDER. In addition, in case of
the occurrence of any Event of Default caused by, or which results in, the
Borrower's failure,

<Page>

for any reason, to continue with the construction of the Project as required by
the Loan Agreement and this Addendum, the Lender may (but shall not be obligated
to) take over and complete the construction of the Project in accordance with
the Plans, with such changes therein as the Lender may, in its discretion, deem
appropriate, all at the risk, cost and expense of the Borrower. The Lender may
assume or reject any contracts entered into by the Borrower in connection with
the Project, may enter into additional or different contracts, and may pay,
compromise and settle all claims in connection with the Project. All costs and
expenses, including attorneys' fees, incurred by the Lender in completing or
attempting to complete the Project (whether aggregating more, or less, than the
face amount of the Note), shall be deemed Advances made by the Lender to the
Borrower hereunder, and the Borrower shall be liable to the Lender, on demand,
for the repayment of such sums, together with interest on such sums from the
date of their expenditure at the Default Rate. The Lender may, in its
discretion, at any time abandon work on the Project, after having commenced such
work, and may recommence such work at any time. Nothing in this Section 6(c)
shall impose any obligation on the Lender either to complete or not to complete
the Project. For the purpose of carrying out the provisions of this Section
6(c), the Borrower irrevocably appoints the Lender its attorney-in-fact, with
full power of substitution, to execute and deliver all such documents, to pay
and receive such funds, and to take such action as may be necessary, in the
judgment of the Lender, to complete the Project. This power of attorney is
coupled with an interest and is irrevocable.

     IN WITNESS WHEREOF, the parties hereto have caused this Construction Loan
Addendum to be executed the same date as execution of the Loan Agreement.

NORTHERN LIGHTS                           U.S. BANK NATIONAL
     ETHANOL, LLC                               ASSOCIATION

By:  /s/ Delton Strasser                  By:   /s/ Carl D. Wynja
    -----------------------------------        ---------------------------------
     Print Name: Delton Strasser                Print Name: Carl D. Wynja
     Title: Chairman of the Board               Title: Senior Vice President

     Borrower's Address                         Lender's Address
     Post Office Box 225                        U.S. Bank National Association
     Milbank, South Dakota 57252                141 North Main Avenue
     Phone:   (605) 432-5676                    Post Office Box 5308
     Fax:     (605) 432-6951                    Sioux Falls, South Dakota 57117
                                                Phone:   (605) 339-8619
                                                Fax:     (605) 3333825

<Page>

                                    EXHIBIT A

                           (Legal Description of Land)

     The Borrower holds a leasehold interest in the following described Land
under the terms and conditions of the Big Stone Power Plant Lease dated April
18, 2001:

     Parcel B in the Southeast Quarter (SE 1/4) of Section Eleven (11), Township
One Hundred Twenty-One (121) North, Range Forty-Seven (47) West of the Fifth
Principal Meridian, Grant County, South Dakota, according to the recorded plat
thereof; and a non-exclusive easement over, upon and across that portion of the
Access Road located in said Southeast Quarter (SE 1/4), as depicted on Exhibit
A-I attached hereto, for driveway and ingress and egress purposes.

     Parcel A in the Southwest Quarter (SW 1/4) of Section Twelve (12), Township
One Hundred Twenty-One (121) North, Range Forty-Seven (47) West of the Fifth
Principal Meridian, Grant County, South Dakota, according to the recorded plat
thereof; a non-exclusive easement over, upon and across that portion of the
Access Road located in said Southwest Quarter (SW 1/4), as depicted on Exhibit
A-I attached, for driveway and ingress and egress purposes; and a portion of
Easement No. 1 for the Northern Lights Railroad Spur area located in said
Southwest Quarter (SW 1/4), as depicted on Exhibit A-2 attached, for rail
ingress and egress purposes.

A portion of Easement No. 1 for the Northern Lights Railroad Spur Line area
located in the Northwest Quarter (NW 1/4) of Section Thirteen (13), Township
One-Hundred Twenty-One (121) North, Range Forty-Seven (47) West of the Fifth
(5th) P.M., Grant County, South Dakota, as depicted on Exhibit A-2 attached for
rail ingress and egress; an exclusive easement over, upon and across that
portion of Easement No. 2 for the Northern Lights Maintenance Road Area located
in said Northwest Quarter (NW 1/4), as depicted on Exhibit A-2 attached, for
driveway and ingress and egress purposes; and a non-exclusive easement for rail
access to the Big Stone Plant Co-Owners' Railroad Spur line located in the North
One-Half (N 1/2) of Section Thirteen (13), as depicted on Exhibit A-3 attached,
for rail ingress and egress purposes.

A non-exclusive easement for rail ingress and egress purposes over, upon and
across the Big Stone Plant Co-Owners' Railroad Spur line, as depicted on Exhibit
A-3 attached, which Railroad Spur line is located on the following described
parcels:

Southeast Quarter of the Southwest Quarter (SE 1/4 SW 1/4), except Burlington
Northern Santa Fe railroad right-of-way; and the West Half of the Southeast
Quarter (W 1/2 SE

<Page>

1/4) lying northerly of the present right-of-way of Chicago, Milwaukee, St. Paul
and Pacific Railway Company; and that part of Outlot 47 (which is also described
as the Northeast Quarter of the Southeast Quarter (NE 1/4 SE 1/4), except Outlot
Forty-Eight (48)), and including the abandoned right-of-way of the Chicago,
Milwaukee, St. Paul and Pacific Railroad Company, all in Section Eighteen (18),
Township One-Hundred Twenty-One (121) North, Range Forty-Six (46) West of the
Fifth (5th) P.M., Grant County, South Dakota, according to plat thereof on file
and of record in the office of the Register of Deeds of said county and state.

South Half of Northwest Quarter (S 1/2 NW 1/4); and the North Half of the
Southwest Quarter (N 1/2 SW 1/4), except railroad right-of-way; and except Hay's
Outlot located in the Northwest Quarter of the Southwest Quarter (NW 1/4 SW 1/4)
and the Southwest Quarter of the Northwest Quarter (SW 1/4 NW 1/4); and except a
metes and bounds tract of land described as follows: Commencing at the southwest
corner of the Northwest Quarter of the Southwest Quarter (NW 1/4 SW 1/4), thence
North Forty-Five (45) rods, thence East Sixteen (16) rods, thence South
Forty-Five (45) rods, thence West Sixteen (16) rods to the place of beginning
(now known as Lots 1, 2 and 3, Replat of Lot C in the Northwest Quarter of the
Southwest Quarter (NW 1/4 SW 1/4) of 18-121-46), according to the plat thereof
on file and of record in the office of the Register of Deeds of said county and
state.

North Half of the Northwest Quarter (N 1/2 NW 1/4), except township road deeded
at Deed Record 58, page 561, in Section Eighteen (18), Township One-Hundred
Twenty-One (121) North, Range Forty-Six (46) West of the Fifth (5th) P.M., Grant
County, South Dakota.

West One-Thousand Six-Hundred and Thirteen (1,613) feet of that part of the
Northeast Quarter (NE 1/4) lying South of the highway known as the Yellowstone
Trail, passing in an easterly direction through said quarter section, except
that part deeded for cemetery purposes to St. Charles Catholic Church, but
including the abandoned railroad right-of-way of the Chicago, Milwaukee, St.
Paul and Pacific Railway Co., all in Section Eighteen (18), Township One-Hundred
Twenty-One (121) North, Range Forty-Six (46) West of the Fifth (5th) P.M., Grant
County, South Dakota, according to the plat thereof on file and of record in the
office of the Register of Deeds of said county and state.

Northeast Quarter (NE 1/4) lying North of the highway known as the Yellowstone
Trail, except the Cheese Company Outlot, in Section Eighteen (18), Township
One-Hundred Twenty-One (121) North, Range Forty-Six (46) West of the Fifth (5th)
P.M., Grant County, South Dakota, according to the plat thereof on file and of
record in the office of the Register of Deeds of said county and state.

<Page>

               [EXHIBIT A-1 THROUGH A-3 PLAT MAPS NOT REPRODUCED]

<Page>

                                    EXHIBIT B

                              (Operating Contracts)

     Contract for Future Services, dated October 12, 2000, with Broin and
     Associates, Inc.

     Agreement Between Owner and Design Builder, dated November 2, 2000, with
     Broin and Associates, Inc.

     Management Agreement, dated November 2, 2000, with Broin Management, LLC.

     Ethanol Marketing and Services Agreement, dated November 2, 2000, with
     Ethanol Products, LLC.

     Agreement (for sale of DDGS), dated January 8, 2001, with Commodity
     Specialist Company.

     Temporary Utility Easement, dated April 18, 2001, by and between Otter Tail
     Corporation, f/k/a Otter Tail Power company; Montana-Dakota Utilities Co.,
     a division of MDU Resources Group, Inc., f/k/a Montana-Dakota Utilities
     Co.; Northwestern Public Service, a division of NorthWestern Corporation,
     f/k/a Northwester Public Service Company; and Northern Lights Ethanol, LLC.

     Temporary Laydown/Construction Easement Agreement, dated April 18, 2001, by
     and between Otter Tail Corporation, f/k/a Otter Tail Power Company;
     Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc.,
     f/k/a Montana-Dakota Utilities Co.; Northwestern Public Service, a division
     of NorthWestern Corporation, f/k/a Northwester Public Service Company; and
     Northern Lights Ethanol, LLC.

     Steam Sale Agreement, dated April 18, 2001, by and between Otter Tail
     Corporation, f/k/a Otter Tail Power Company; Montana-Dakota Utilities Co.,
     a division of MDU Resources Group, Inc., f/k/a Montana-Dakota Utilities
     Co.; Northwestern Public Service, a division of NorthWestern Corporation,
     f/k/a Northwestern Public Service Company; and Northern Lights Ethanol,
     LLC.

     The water, utility and fuel oil contracts, by and between Otter Tail
     Corporation, f/k/a Otter Tail Power Company; Montana-Dakota Utilities Co.,
     a division of MDU Resources Group, Inc., f/k/a Montana-Dakota Utilities
     Co.; Northwestern

<Page>

     Public Service, a division of NorthWestern Corporation, f/k/a Northwester
     Public Service Company; and Northern Lights Ethanol, LLC.

     Access and Rail Agreement, dated April 18, 2001, by and between Otter Tail
     Corporation, f/k/a Otter Tail Power Company; Montana-Dakota Utilities Co.,
     a division of MDU Resources Group, Inc., f/k/a Montana-Dakota Utilities
     Co.; Northwestern Public Service, a division of NorthWestern Corporation,
     f/k/a Northwestern Public Service Company; and Northern Lights Ethanol,
     LLC.

<Page>

                                   SCHEDULE C

                            (Permitted Encumbrances)

     1. An easement for the purpose of granting the right to have a Pollution
Control Project located on the subject property and to have ingress and egress
on and over such lands, as set forth in Easement Agreement between
Montana-Dakota Utilities, Northwestern Public Service Company, and Otter Tail
Power Company and Grant County, South Dakota, dated February 1, 1974, and
recorded in Miscellaneous Record 159, page 169, on 2/6/74 as Document Number
149365.

     2. A non-exclusive easement for the purpose of granting the right to have
transmission lines located on the subject property and to have ingress to and
egress from said lines, as set forth in Easement Agreement between
Montana-Dakota Utilities, Northwestern Public Service Company, and Otter Tail
Power Company and Cooperative Power Association, dated July 1, 1976, and
recorded in Miscellaneous Record 161, page 845, on 8/6/76 as Document Number
154178.

     3. Any rights claimed as set forth in Bill of Sale and Assignment of
Easements between Otter Tail Power Company and Cooperative Power Association,
dated July 1, 1976, and recorded in Miscellaneous Record 161, page 855, on
8/6/76 as Document Number 154179.

                                   Initials on behalf of Borrower:
                                                                  ------------

<Page>

                                 SCHEDULE 3.1(a)

     This Agreement, the Note, the Mortgage, the Security Agreement, the
Indemnification Agreement, the Financing Statement and Assignments of Operating
Contracts, except for the water, electric and fuel oil contracts which will be
provided prior to the First Advance Date, each duly executed by the Borrower
(and in the case of the Assignments of Operating Contracts by the Contracting
Parties) and dated the Closing Date.

     The Indemnification Agreement executed by the Borrower and dated the
Closing Date.

     The opinion of counsel to the Borrower covering such matters as the Lender
may request.

     An appraisal of the Project, addressed to the Lender, prepared in
conformance with the Lender's real estate appraisal and evaluation policy, and
signed by an appraiser acceptable to the Lender.

     A survey prepared by a registered land surveyor licensed in the state where
the Land is located and complying with Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys (Urban) (1992), including items 1, 2, 3, 4, 6, 7a,
7b, 8, 9, 10, 11 and 13 of Table A thereof and such other information as the
Lender may reasonably request, and certified in a manner acceptable to the
Lender.

     A written environmental assessment addressed to the Lender, conducted by an
environmental engineer or consultant acceptable to the Lender, setting forth the
results of an investigation of the Project, containing an analysis and
evaluation of any and all environmental risks associated with the Project, and
concluding that there is no significant risk of any hazardous materials
contamination of any portion of the Project.

     An Environmental Risk Assessment Questionnaire, in form and substance
acceptable to the Lender, addressed to the Lender and completed and executed by
Borrower.

     A financial forecast of the Borrower as of a date not more than six months
prior to the Closing Date.

     A true, correct and complete copy of each Lease of the Project or any part
thereof.

<Page>

     A Lessor consent to assignment of lease executed by Big Stone-Grant
Industrial Development and Transportation, L.L.C.

     Insurance policies or certificates thereof in form satisfactory to the
Lender, satisfying the requirements of Section 1.4 of the Mortgage.

     A flood check satisfactory to the Lender and satisfying the requirements of
42 U.S.C. Section 4104b and any rules and regulations promulgated pursuant
thereto.

     A Uniform Land Use Confirmation Form in form and substance satisfactory to
the Lender.

     True, correct and complete copies of the Operating Contracts, except for
the water, electric and fuel oil contracts which will be provided prior to the
First Advance Date.

     Such other documents as the Lender may reasonably require to assure
compliance with the requirements of this Agreement.

     A copy of the resolutions of the Borrower's Board of Managers authorizing
the execution, delivery and performance of the Loan Documents, and containing an
incumbency certificate showing the names and titles, and bearing the signatures
of, the officers of such party authorized to execute the Loan Documents,
certified as of the Closing Date by the Secretary or an Assistant Secretary of
the Borrower.

     A Sworn Construction Cost Statement executed by the Borrower.

     A copy of the Articles of Organization of the Borrower with all amendments
thereto, certified by the appropriate governmental official of the jurisdiction
of its formation as of a date not more than 15 days prior to the Closing Date.

     A certificate of good standing for the Borrower in the jurisdiction of its
formation, and, if different than the jurisdiction of its formation, the
jurisdiction in which the Project is located, certified by the appropriate
governmental officials as of a date not more than 45 days prior to the Closing
Date.

     Copies of the Operating Agreement and Member Control Agreement of the
Borrower, certified as of the Closing Date by the Secretary or an Assistant
Secretary of the Borrower.

<Page>

     A copy of the Plans, as certified by the Borrower and General Contractor.

     Assignment of the Construction Contract and Plans.

     A Certificate of Authority executed by such person or persons authorized by
the Borrower's organizational documents and/or agreements to do so, certifying
the incumbency and signatures of the managers or other persons authorized to
execute the Loan Documents, and authorizing the execution of the Loan Documents
and performance in accordance with their terms.

     A recently certified copy of the Borrower's operating agreement, and any
amendments, if applicable.

A recently certified copy of the Borrower's Articles of Organization and any
amendments, if applicable.

     A certificate of good standing from the office of the South Dakota
Secretary of State on the Borrower.

     A copy of all governmental permits as may be required to construct and
operate the Project.

                                      Initials on behalf of Borrower: /s/ D.L.S.

<Page>

                                 SCHEDULE 3.2(a)

     The assignments of Operating Contracts for the water, electric and fuel oil
contracts.

     True, correct and complete copies of the water, electric and fuel oil
contracts.

     The Title Policy, or a suitably marked up title insurance commitment issued
by Title Company unconditionally agreeing to issue the Title Policy upon
recordation of the Mortgage.

     UCC chattel lien searches from the Register of Deeds in Grant County, South
Dakota, and from the office of the Secretary of State of South Dakota.

                                      Initials on behalf of Borrower: /s/ D.L.S.

<Page>

                                   SCHEDULE V

                              ADDITIONAL COVENANTS

     Until the Note and all of the other Obligations shall have been paid and
performed in full, unless the Lender shall otherwise consent in writing:

     CAPITAL EXPENDITURES. The Borrower will not make any expenditures for fixed
or capital assets in an amount exceeding $500,000.00 in any calendar year.
Significant plant expansions will be negotiated by the parties outside of this
Covenant.

     DIVIDENDS. The Borrower will not make any distributions to its Members in
excess of 70% of its net income. Distributions up to 80% of net income will be
allowed by Lender upon the Borrower obtaining and maintaining Working Capital of
at least $3,000,000.00.

     INVESTMENTS. The Borrower will not make any loans, advances or extensions
of credit to any other Person (except for trade and customer accounts receivable
for inventory sold or services rendered in the ordinary course of business and
payable in accordance with customary trade terms) or purchase or acquire any
stock or other debt or equity securities of or any interest in any other Person
or any integral part of any business or the assets comprising such business or
part thereof, except for:

     (a) Investments in readily marketable direct obligations issued or
     unconditionally guaranteed by the United States government or any agency
     thereof and supported by the full faith and credit of the United States.

     (b) Certificates of deposit or bankers' acceptances issued by any
     commercial bank organized under the laws of the United States or any State
     thereof which has (i) combined capital and surplus of at least
     $100,000,000, and (ii) a credit rating with respect to its unsecured
     indebtedness from a nationally recognized rating service that is
     satisfactory to the Lender.

     (c) Commercial paper given the highest rating by a nationally recognized
     rating service.

     (d) Repurchase agreements relating to securities of the kind described in
     clause (a) above.

<Page>

     (e) Other readily marketable investments in debt securities which are
     reasonably acceptable to the Lender.

     (f) Travel advances to officers and employees in the ordinary course of
     business.

Any investments under clauses (a), (b), (c) or (d) above must mature within one
year of the acquisition thereof by the Borrower.

     INDEBTEDNESS. The Borrower will not borrow any money or issue any bonds,
debentures or other debt securities or otherwise become obligated on any
interest-bearing indebtedness except for the Loan under this Agreement.

     LIENS. The Borrower will not create, incur, assume or suffer to exist any
Lien, or enter into any arrangement for the acquisition of any property through
conditional sale, lease-purchase or other title retention agreements except:

     (a) Liens granted to the Lender.

     (b) Liens existing on the date of this Agreement and heretofore disclosed
     in writing by the Borrower to the Lender.

     (c) Deposits or pledges to secure payment of workers' compensation,
     unemployment insurance, old age pensions or other social security
     obligations arising in the ordinary course of business of the Borrower.

     (d) Liens for taxes, fees, assessments and governmental charges not
     delinquent.

     (e) Liens of carriers, warehousemen, mechanics and materialmen, and other
     like Liens arising in the ordinary course of business, for sums not due,
     and except as provided in Section 5.13.

     (f) Liens incurred or deposits or pledges made or given in connection with,
     or to secure payment of, indemnity, performance or other similar bonds.

     (g) Except for the Permitted Encumbrances, encumbrances in the nature of
     zoning restrictions, easements and rights or restrictions of record on the
     use of land and landlord's Liens under leases on the premises rented, which
     do not materially

<Page>

     detract from the value of such property or impair the use thereof in the
     business of the Borrower.

     CONTINGENT OBLIGATIONS. The Borrower will not guarantee or otherwise become
liable on the indebtedness of any other Person.

     TANGIBLE NET WORTH. The Borrower will not permit its Tangible Net Worth
(the excess of its assets, excluding intangible assets, over its liabilities) to
be less than $16,000,000.00, as of December 31, 2002, with said amount to be
increased and evaluated at the end of each year thereafter in an amount equal to
Net Operating Income after distributions to Members.

     WORKING CAPITAL. The Borrower will not permit its Working Capital (the
excess of its current assets over its current liabilities) to be less than
$1,500,000.00 as of December 31, 2002, and to June 30, 2003. The Borrower will
not permit its Working Capital (the excess of its current assets over its
current liabilities) to be less than $2,000,000.00 as of June 30, 2003, and at
any time thereafter.

     FIXED CHARGE COVERAGE RATIO. The Borrower will not permit the Fixed Charge
Coverage Ratio, as of the last day of any fiscal quarter for the four
consecutive fiscal quarters ending on that date, commencing with the quarter
ending December 31, 2002, to be less than 1.20 to 1.

     CASH FLOW RECAPTURE. The Borrower shall prepay a portion of the principal
of the Loan by May 1 of each year commencing May 1, 2003, in an amount equal to
15% of Excess Cash Flow, but not to exceed 20% of the outstanding principal
balance of the Loan. Any prepayments made under the requirements of this
provision shall not be subject to any prepayment penalty contained in the Note.

     For purposes hereof, the following definitions have the following meanings:

     "EBITDA": For any period of determination, the net income of the Borrower
before deductions for income taxes, interest expense, depreciation and
amortization, all as determined in accordance with GAAP.

     "EXCESS CASH FLOW": For any period of determination with respect to the
Borrower, EBITDA less (i) expenditures for fixed and capital assets not
financed, (ii) all required principal payments with respect to Total Liabilities
(including but not limited to

<Page>

all payments with respect to capitalized lease obligations of the Borrower), and
(iii) interest expenses.

     "FIXED CHARGE COVERAGE RATIO": For any period of determination with respect
to the Borrower, the ratio of

            (a) EBITDA minus the sum of (i) any dividends or other distributions
            and (ii) expenditures for fixed and capital assets not financed,

            to

            (b) all required principal payments with respect to Total
            Liabilities (including but not limited to all payments with respect
            to capitalized lease obligations of the Borrower), plus interest
            expenses

in each case determined for said period in accordance with GAAP.

     "NET OPERATING INCOME": The excess of Project Operating Income over
Operating Expenses during any period of time. "Project Operating Income" shall
mean all gross receipts, income, payments and consideration resulting from the
operation, leasing and occupancy of the Project, when actually received by the
Borrower including but not limited to rentals and other fees and charges payable
by anyone pursuant to a Lease (including reimbursements, if any, for Operating
Expenses); late charges; interest on delinquent rents; interest on security and
other deposits (to the extent that the same is not required by law to be paid to
tenants); and vending machine income, but excluding proceeds of casualty
insurance and of condemnation and proceeds of any sale or refinancing of all or
any portion of the Project or any interest therein. "Operating Expenses" shall
mean all normal and reasonable expenses of owning, operating, leasing, managing,
maintaining and occupying the Project, when actually paid by the Borrower,
INCLUDING BUT NOT LIMITED TO (a) all payments to, for the benefit of or required
in connection with personnel employed to manage, operate and maintain the
Project, including but not limited to wages, salaries, uniform allowances,
medical and/or life insurance, pension and other employee benefit payments,
workers' compensation insurance payments, unemployment insurance payments, and
FICA and other payroll taxes; (b) all utility charges, including but not limited
to electric, gas, oil, water, sanitary sewer, storm sewer, and trash and rubbish
removal charges; (c) all costs of heating, lighting, ventilating and air
conditioning the Project; (d) all premiums for hazard, casualty, rent loss and
liability insurance carried upon the Project; (e) ad valorem real estate and
personal property taxes, installments of special assessments and sales tax

<Page>

payments; (f) all Project building, grounds, driveway and parking area
maintenance and repair expense, including the cost of supplies, tools and
equipment therefor; (g) all costs of janitorial services, tools, equipment and
supplies; (h) management fees (which, if a manager has not been engaged to
manage the Project, shall be assumed to be 3 1/2% of the Project Operating
Income); (i) all landscaping, lawn, shrub and tree trimming, fertilizing and
care expenses; (j) all equipment lease payments; (k) all snow and ice removal
expenses; (l) all advertising and promotion expenses; (m) all costs of grounds
keeping and cleaning services and supplies; (n) all security expenses; (o) all
costs of printing, stationery and office supplies; (p) attorneys' fees and
accountants' fees incurred in the ordinary course of operation of the Project,
and (q) reserves, if any, required by the terms of the Loan Documents for
replacements, capital expenditures, leasing commissions, tenant improvements and
other items; (r) interest and/or late charges upon the Loan; (s) depreciation of
the Project; (t) fees of consultants; (u) costs in connection with or in
contemplation of sale or refinancing, such as costs of appraisals, environmental
or engineering studies, etc.; but excluding payments of principal upon the Loan
and other Indebtedness; capital improvements and expenditures; distributions to
partners or shareholders in or members of the Borrower; and income or franchise
taxes. In calculating Operating Expenses for any given month, Operating Expenses
shall include one-twelfth of any annual expenditure, such as taxes and
insurance. The Borrower shall not artificially accelerate or delay collection of
Project Operating Income or payment of Operating Expenses for the purpose of
increasing Net Operating Income.

     "TOTAL LIABILITIES": At the time of any determination, the amount of all
items of Indebtedness of the Borrower that would constitute "liabilities" for
balance sheet purposes in accordance with GAAP.

     "DILIGENT CONSTRUCTION": Diligently proceed with construction of the
Project according to the Plans and in accordance with all applicable laws and
ordinances, and complete the Project by the Completion Deadline.

     "USE OF LOAN PROCEEDS": Use of the proceeds of each of the disbursements
under the Loan solely for the purposes set forth in this Agreement.

     Use its best efforts to require the General Contractor and each
Subcontractor to comply with all rules, regulations, ordinances and laws bearing
on its conduct of work on the Project.

     By "re-incorporation", "merger" or otherwise change the Borrower's state of
incorporation to a state other than South Dakota.

<Page>

     Borrower shall not engage in any line of business materially different from
that presently engaged in by the Borrower.

                                     Initials on behalf of Borrower:  /s/ D.L.S.<Page>

                                                                    EXHIBIT 10.8

                                      NOTE

$31,100,000.00                                             Milbank, South Dakota
                                                                   July 11, 2001

     FOR VALUE RECEIVED, Northern Lights Ethanol, LLC, a South Dakota limited
liability company ("Borrower"), hereby promises to pay to the order of U.S. Bank
National Association, a national banking association ("Lender", which term shall
include any future holder hereof), at or at such other place as Lender may from
time to time designate in writing, in lawful money of the United States of
America, the principal sum of Thirty-One Million One Hundred Thousand and no/100
Dollars ($31,100,000.00) (the "Loan") or so much thereof as may be advanced
hereunder and to pay interest on the outstanding principal balance hereof from
time to time at the rate set forth herein. The Loan shall initially be known as
the "Construction Loan" and in the event the Construction Loan converts to long
term financing, will be known as the "Term Loan" as of the Conversion Date, as
defined in the Loan Agreement. This Note is given pursuant to that Loan
Agreement between Lender and Borrower dated the same date as this Note.

     CONSTRUCTION LOAN. Borrower will pay the Construction Loan in accordance
with the following terms and conditions:

     1. The Construction Loan shall bear interest from the date of each Advance,
     as defined in the Loan Agreement, at an annual rate equal to one percent
     (1%) plus the prime rate announced by Lender (the "Index"). The interest
     rate shall be adjusted each time the index changes. Lender will strive to
     inform Borrower of each change in the Index, but each adjustment in the
     Index is effective whether or not Lender informs Borrower of such change.
     Payments of all interest accrued hereunder shall be made June 1, September
     1, December 1, and March 1 of each year unless such day is not a Business
     Day as defined in the Loan Agreement (in which case the Business Day which
     immediately follows such day shall apply) in which any amount Advanced
     under the Construction Loan is outstanding (the "Quarterly Payment Date").
     Interest only payments shall be due beginning the first Quarterly Payment
     Date following the First Advance Date, as defined in the Loan Agreement,
     and on each Quarterly Payment Date thereafter.

     2. In the event the Construction Loan qualifies for conversion to the Term
     Loan under the terms of the Loan Agreement, the outstanding principal
     balance of the Construction Loan and all accrued interest thereon shall be
     converted to the Term Loan on the Conversion Date, as defined in the Loan
     Agreement, which shall not be later than December 31, 2002.

<Page>

     3. All accrued interest owed on the Construction Loan shall be paid in full
     on the Conversion Date. In the event the Loan has not been accelerated
     under the terms of the Loan Agreement prior to the Conversion Date, and the
     Loan does not qualify for conversion to the Term Loan under the terms of
     the Loan Agreement, the Maturity Date of the Loan shall be the Conversion
     Date.

     TERM LOAN. In the event the Loan qualifies for conversion from the
Construction Loan to the Term Loan under the terms of the Loan Agreement,
Borrower will pay the Term Loan in accordance with the following terms and
conditions. Borrower acknowledges that any fixed interest rate will increase
according to the term of the Term Loan (the period between the Conversion Date
and the Maturity Date). In no event will the Maturity Date be later than the
seventh (7th) anniversary of the Conversion Date.

     1. Borrower shall have two interest rate options for the Term Loan. The
     first option shall be the same variable rate as provided for the
     Construction Loan. If the variable rate option is chosen, the interest rate
     shall continue to be adjusted each time that the Index changes. The second
     option is a fixed interest rate which will be negotiated by the parties
     prior to the Conversion Date. If the parties negotiate and agree to a fixed
     interest rate, such agreement shall be evidenced by Lender and Borrower
     executing an amendment to this Note setting forth the fixed interest rate
     agreed upon by the parties. If such an amendment to this Note is not
     executed prior to the Conversion Date, the variable rate option shall apply
     to the Term Loan from and after the Conversion Date. Borrower further
     acknowledges that Lender may be required to obtain the consent of all
     participants in the Loan and that Lender may be unable to agree to a fixed
     interest rate without the prior consent of all banks participating in the
     Loan.

     2. The Term Loan shall be amortized over a period of one hundred twenty
     (120) months commencing on the Conversion Date..

     3. If the variable interest rate option applies to the Term Loan, Borrower
     shall make equal quarterly installments of principal and interest
     commencing on the first Quarterly Payment Date following the Conversion
     Date, and continuing on the first day of each Quarterly Payment Date
     thereafter. As of January 1, 2004, and each January 1 thereafter, the
     quarterly installment of principal and interest shall be adjusted so as to
     amortize the then remaining outstanding principal balance over the
     remaining life of the Term Loan.

<Page>

     4. If a fixed rate option applies to the Term Loan, Borrower shall make
     equal quarterly installments of principal and interest commencing on the
     first Quarterly Payment Date following the Conversion Date, and continuing
     on the first day of each Quarterly Payment Date thereafter.

     5. The outstanding principal balance and all interest due thereon shall be
     paid in all events on the Maturity Date.

     TERMS APPLICABLE TO CONSTRUCTION LOAN AND TERM LOAN. The remaining terms of
this Note apply to the Construction Loan and the Term Loan, if the Loan converts
to a Term Loan:

     INTEREST COMPUTATION. Interest shall be calculated on a 365/360 simple
basis; that is, by applying the ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding.

     COORDINATION WITH LOAN AGREEMENT. This Note is the Note referred to in the
Loan Agreement, and is subject to the additional terms and conditions set forth
in the Loan Agreement and the Loan Documents referred to therein. This Note is
secured by a Mortgage, Security Agreement, Assignment of Leases and Rents and
Fixture Financing Statement of even date herewith on real property located in
Grant County, South Dakota, therein described, as well as other collateral
described in the Loan Agreement and the other Loan Documents. Capitalized terms
not defined herein shall have the meaning given such terms in the Loan
Agreement.

     LATE PAYMENT; GRACE PERIOD. If a payment due hereunder is not made within
five days after the date when due, Borrower shall pay to Lender a late payment
charge of Five Hundred Dollars ($500.00) to compensate Lender for a portion of
the cost related to handling the overdue payment. After an Event of Default, as
defined in the Loan Agreement, then the entire principal sum evidenced by this
Note, together with all accrued and unpaid interest, shall, at the option of the
holder hereof, bear interest at the rate per annum (the "Default Rate") equal to
3% in excess of the rate of interest per annum which would otherwise be payable
hereunder, and become immediately due and payable without further notice (except
as provided in the Loan Agreement), demand or presentment for payment, and
without any relief whatever from any valuation or appraisement laws. Failure to
exercise any option provided herein shall not constitute a waiver of the right
to exercise the same in the event of any subsequent default. Borrower agrees
that if, and as often as, this Note is given to an attorney for collection or to
defend

<Page>

or enforce any of Lender's rights hereunder, Borrower will pay to the Lender
Lender's reasonable attorneys' fees together with all court costs, service tax
and other expenses paid by Lender, whether or not any action or proceeding is
commenced by the Lender.

     CERTAIN BORROWER WAIVERS. Borrower waives presentment, protest and demand,
notice of protest, demand and of dishonor and nonpayment of this Note and any
lack of diligence or delays in collection or enforcement of this Note. Borrower
agrees that this Note, or any payment hereunder, may be extended from time to
time, and Borrower consents to the release of any party liable for the
obligation evidenced by this Note, the release of any of the security for this
Note, the acceptance of any other security therefor, or any other indulgence or
forbearance whatsoever, all without notice to any party and without affecting
the liability of Borrower.

     PREPAYMENT; VARIABLE RATE. So long as a variable interest rate is
applicable to this Loan, Borrower may prepay this Note in whole or in part at
any time, and if in part from time to time, during the entire term of this Note,
without penalty or premium. No prepayment shall suspend any required payments of
either principal or interest on this Note or reduce the amount of any scheduled
payment.

     PREPAYMENT; FIXED RATE. If a fixed interest rate is applicable to this
Loan, there shall be no prepayments of this Note, provided that Lender may
consider requests for its consent with respect to prepayment of this Note,
without incurring an obligation to do so, and Borrower acknowledges that in the
event that such consent is granted, Borrower shall be required to pay Lender,
upon prepayment of all or part of the principal amount before final maturity, a
Prepayment Fee equal to the maximum of (a) zero, or (b) that amount, calculated
on any prepayment date, which is derived by subtracting: (1) the principal
amount of the Note or portion of the Note to be prepaid from (2) the Net Present
Value of the Note or portion of the Note to be prepaid on such date of
prepayment.

     "NET PRESENT VALUE" shall mean the amount which is derived by summing the
present values of each prospective payment of principal and interest which,
without such full or partial prepayment, could otherwise have been received by
Lender over the shorter of the remaining contractual life of the Note or next
repricing date if Lender had instead initially invested the Note proceeds at the
Initial Money Market Rate. The individual discount rate used to present value
each prospective payment of interest and/or principal shall be the Money Market
Rate at Prepayment for the maturity matching that of each specific payment of
principal and/or interest.

<Page>

"INITIAL MONEY MARKET RATE" shall mean the rate per annum, determined solely by
Lender, on the Conversion Date, or the most recent re-pricing date occurring
thereafter, or as mutually agreed upon by Borrower and Lender, as the rate at
which Lender would be able to borrow funds in Money Markets for the amount of
this Note and with an interest payment frequency and principal repayment
schedule equal to this Note and for a term as may be arranged and agreed upon by
Borrower and Lender. Such a rate shall include FDIC insurance, reserve
requirements and other explicit or implicit costs levied by any regulatory
agency. Borrower acknowledges that the Lender is under no obligation to actually
purchase and/or match funds for the Initial Money Market Rate of this Note.

     "MONEY MARKET RATE AT PREPAYMENT" shall mean that zero-coupon rate,
calculated on the date of prepayment, and determined solely by Lender, as the
rate in which Lender would be able to borrow funds in Money Markets for the
prepayment amount matching the maturity of a specific prospective Note payment
or repricing date. Such a rate shall include FDIC insurance, reserve
requirements and other explicit or implicit costs levied by any regulatory
agency. A separate Money Market Rate at Prepayment will be calculated for each
prospective interest and/or principal payment date.

     "MONEY MARKETS" shall mean one or more wholesale funding mechanisms
available to Lender, including negotiable certificates of deposit, eurodollar
deposits, bank notes, fed funds, interest rate swaps, or others.

     In calculating the amount of such a prepayment fee, Lender is hereby
authorized by Borrower to make such assumptions regarding the source of funding,
redeployment of funds and other related matters, as the Lender may deem
appropriate. If Borrower fails to pay any Prepayment Fee when due, the amount of
such Prepayment Fee shall thereafter bear interest until paid at the Default
Rate specified in this Note (computed on the basis of a 360-day year, actual
days elapsed). Any prepayment of principal shall be accompanied by a payment of
interest accrued to date thereon; and said prepayment shall be applied to the
principal installments in the inverse order of their maturities. Any prepayment
shall be in an amount equal to the lessor of $100,000.00 or the remaining entire
principal balance of the Loan.

     MANDATORY PREPAYMENTS. In the event the Construction Loan converts to the
Term Loan, the Borrower shall make mandatory prepayments of the principal amount
of the Loan as mandated by the Borrower's excess cash flow from time-to-time, as
provided for in Schedule V of the Loan Agreement.

<Page>

     MODIFICATIONS; TIME OF ESSENCE. No modification or waiver by the Lender of
any of the terms of this Note shall be valid or binding on the Lender unless
such modification or waiver is in writing and signed by the Lender. Without
limited the generality of the preceding sentence, no delay, omission or
forbearance by the Lender in exercising or enforcing any of its rights and
remedies under this Note shall constitute a waiver of such rights or remedies.
The Lender's rights and remedies under this Note are cumulative with and in
addition to all other legal equitable rights and remedies which the Lender may
have in connection with the Loan. The headings to sections of this Note are for
convenient reference only and shall not be used in interpreting this Note. No
indebtedness evidenced by this Note shall be offset by all or part of any claim,
cause of action, or cross-claim of any kind whether liquidated or unliquidated,
which Borrower now has or may hereafter acquire to allege to have acquired
against the Lender.

     THIS NOTE SHALL BE CONSTRUED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF
SOUTH DAKOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS OR PRINCIPLES THEREOF,
BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL
BANKS. WHENEVER POSSIBLE, EACH PROVISION OF THIS NOTE AND ANY OTHER STATEMENT,
INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO, SHALL BE
INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER SUCH APPLICABLE
LAW, BUT, IF ANY PROVISION OF THIS NOTE OR ANY OTHER STATEMENT, INSTRUMENT OR
TRANSACTION CONTEMPLATED HEREBY OR RELATING HERETO SHALL BE HELD TO BE
PROHIBITED OR INVALID UNDER SUCH APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE ONLY TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
NOTE OR ANY OTHER STATEMENT, INSTRUMENT OR TRANSACTION CONTEMPLATED HEREBY OR
RELATING HERETO.

     AT THE OPTION OF LENDER, THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR
SOUTH DAKOTA CIRCUIT COURT SITTING IN GRANT OR MINNEHAHA COUNTY, SOUTH DAKOTA;
AND BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES
ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT BORROWER
COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
NOTE, LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE

<Page>

TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

     Borrower and Lender each irrevocably waives any and all right to trial by
jury in any legal proceeding arising out of or relating to this Note or any of
the Loan Documents (as defined in the Loan Agreement) or the transactions
contemplated hereby or thereby.

                                           NORTHERN LIGHTS ETHANOL, LLC

                                           By:  /s/ Delton Strasser
                                               -----------------------------
                                                 Print Name: Delton Strasser
                                                 Its: Chairman of the Board

<Page>

See "Prepared by and Recording Information" on last page hereof

                          MORTGAGE, SECURITY AGREEMENT,
                         ASSIGNMENT OF LEASES AND RENTS
                         AND FIXTURE FINANCING STATEMENT
                             (CONSTRUCTION MORTGAGE)

     This Mortgage, Security Agreement, Assignment of Leases and Rents and
Fixture Financing Statement (this "Mortgage") is made as of July 11, 2001, by
Northern Lights Ethanol, LLC, a South Dakota limited liability company
("Borrower"), having its principal offices at Milbank, South Dakota, in favor of
U.S. Bank National Association, a national banking association ("Lender"),
having its principal offices at 141 North Main Avenue, Sioux Falls, South
Dakota.

                                R E C I T A L S:

     A. Lender has lent, or conditionally agreed to lend, to Borrower the
principal sum of Thirty-One Million One Hundred Thousand and no/100 Dollars
($31,100,000.00) (the "Loan"), to be repaid with interest thereon, as evidenced
by Borrower's Note (the "Note", which term shall include any amendment,
modification, supplement, extension, renewal, replacement or restatement
thereof), which Loan is the subject of a Loan Agreement between Borrower and
Lender (the "Loan Agreement", which term shall include any amendment,
modification, supplement, extension, renewal, replacement or restatement
thereof). The Note, the Loan Agreement and any other Loan Document (as defined
in the Loan Agreement) are each dated the same date as this Mortgage, are hereby
incorporated by reference, and, together with this Mortgage, as any of the same
may be amended, modified, supplemented, extended, renewed, replaced or restated,
are sometimes collectively referred to as the "Loan Documents".

     B. The obligations secured by this Mortgage (the "Obligations") are as
follows:

     (i) the principal amount of $31,100,000.00 or so much thereof as may be
     advanced by Lender under the Note and pursuant to the Loan Agreement; plus

     (ii) interest on the amount advanced and unrepaid, at the interest rate or
     rates provided in the Note; plus

<Page>

     (iii) all other amounts payable by Borrower and all other agreements of
     Borrower under the Loan Documents as the same now exist or may hereafter be
     amended.

     (iv) all of Borrower's other obligations of performance under the Loan
     Agreement and the other Loan Documents.

     C. The Obligations shall mature on or before December 31, 2009 (the
"Maturity Date").

     D. The maximum principal indebtedness secured hereby is Thirty-One Million
One Hundred Thousand and no/100 Dollars ($31,100,000.00), plus amounts which may
be advanced by Lender in protection of the Mortgaged Property or this Mortgage.

     E. Borrower holds a leasehold interest in land described in Exhibit A under
the terms and conditions of a Big Stone Plant Property Lease with Big
Stone-Grant Development and Transportation, L.L.C., dated April 18, 2001 (the
"Big Stone Plant Property Lease"), which Lease has been filed for record in the
Office of the Register of Deeds, Grant County, South Dakota, on September 14,
2001, and recorded in Book 223 of Misc. on page 704, as Document Number 199861.

     F. Borrower holds ingress and egress easements rights on certain land and
railroad spur lines identified in Exhibit A under the terms and conditions of an
access and rail agreement dated April 18, 2001, granted by Otter Tail
Corporation, f/k/a Otter Tail Power Company; Montana-Dakota Utilities Co., a
division of MDU Resources Group, Inc., f/k/a Montana-Dakota Utilities Co.; and
Northwestern Public Service, a division of NorthWestern Corporation, f/k/a
Northwestern Public Service Company (collectively the "Big Stone Plant
Co-Owners") (the "Access and Rail Agreement").

     NOW, THEREFORE, Borrower, in consideration of Lender making the Loan, and
to secure the Loan and payment and performance of the Obligations, hereby
grants, bargains, sells, conveys and mortgages to Lender, its successors and
assigns, forever, with power of sale, and grants to Lender, its successors and
assigns, a security interest in, the following, all of which is called the
"Mortgaged Property":

                            A. LAND AND IMPROVEMENTS

Borrower's leasehold interest in and to the land described in the Big Stone
Plant Property Lease and the Borrower's easement rights and other rights in and
to the land described in

<Page>

the Access and Rail Agreement and all hereditaments, easements and appurtenances
thereto, whether now existing or hereafter acquired by Borrower (collectively
the "Land"), and all improvements and structures thereon, whether presently or
in the future placed or located thereon (the "Improvements"); and

                        B. FIXTURES AND PERSONAL PROPERTY

     All fixtures (the "Fixtures"), and all machinery, equipment and personal
property (collectively the "Personal Property") now or hereafter located on, in
or under the Land and the Improvements, or usable in connection with the Land or
the Improvements, and which are owned by Borrower or in which Borrower has an
interest, including any construction and building materials stored on and to be
included in the Improvements, plus any repairs, replacements and betterments to
any of the foregoing and the proceeds and products thereof; and

                               C. LEASES AND RENTS

     All rights of Borrower with respect to tenants or occupants now or
hereafter occupying any part of the Land or the Improvements, if any, including
all leases and licenses and rights in connection therewith, whether oral or
written (collectively the "Leases"), and all rents, income, both from services
and occupation, royalties, revenues and payments, including prepayments and
security deposits (collectively the "Rents"), which are now or hereafter due or
to be paid in connection with the Land, the Improvements, the Fixtures or the
Personal Property; and

                             D. GENERAL INTANGIBLES

     All general intangibles of Borrower which relate to any of the Land, the
Improvements, the Fixtures, the Personal Property, the Leases or the Rents,
including proceeds of insurance and condemnation or conveyance of the Land and
the Improvements, accounts, trade names, contract rights, accounts receivable
and bank accounts; and

                     E. AFTER ACQUIRED PROPERTY AND PROCEEDS

     All after acquired property similar to the property herein described and
conveyed which may be subsequently acquired by Borrower and used in connection
with the Land, the Improvements, the Fixtures, the Personal Property and other
property; and all cash and non-cash proceeds and products of all of the
foregoing property.

<Page>

     TO HAVE AND TO HOLD the same, and all estate therein, together with all the
rights, privileges and appurtenances thereunto belonging, to the use and benefit
of Lender, its successors and assigns, forever.

     PROVIDED NEVERTHELESS, should Borrower pay and perform all the Obligations,
then these presents will be of no further force and effect, and this Mortgage
shall be satisfied by Lender, at the expense of Borrower.

     This Mortgage also constitutes a security agreement within the meaning of
the Uniform Commercial Code as in effect in the State of South Dakota (the
"UCC"), with respect to all property described herein as to which a security
interest may be granted and/or perfected pursuant to the UCC, and is intended to
afford Lender, to the fullest extent allowed by law, the rights and remedies of
a secured party under the UCC.

     BORROWER FURTHER agrees as follows:

                                    ARTICLE I

                                   AGREEMENTS

     Section 1.1 PERFORMANCE OF OBLIGATIONS; INCORPORATION BY REFERENCE.
Borrower shall pay and perform the Obligations. Time is of the essence hereof.
All of the covenants, obligations, agreements, warranties and representations of
Borrower contained in the Loan Agreement and the other Loan Documents and all of
the terms and provisions thereof, are hereby incorporated herein and made a part
hereof by reference as if fully set forth herein.

     Section 1.2 FURTHER ASSURANCES. If Lender requests, Borrower shall sign and
deliver and cause to be recorded as Lender shall direct any further mortgages,
instruments of further assurance, certificates and other documents as Lender
reasonably may consider necessary or desirable in order to perfect, continue and
preserve the Obligations and Lender's rights, title, estate, liens and interests
under the Loan Documents. Borrower further agrees to pay to Lender, upon demand,
all costs and expenses incurred by Lender in connection with the preparation,
execution, recording, filing and refining of any such documents, including
attorneys' fees and title insurance costs.

     Section 1.3 SALE, TRANSFER, ENCUMBRANCE. If Borrower sells, conveys,
transfers or otherwise disposes of, or encumbers, any part of its interest in
the Mortgaged Property,

<Page>

whether voluntarily, involuntarily or by operation of law, without the prior
written consent of Lender, Lender shall have the option to declare the
Obligations immediately due and payable without notice. Included within the
foregoing actions requiring prior written consent of Lender are: (a) sale by
deed or contract for deed; (b) mortgaging or granting a lien on the Mortgaged
Property; and (c) a transfer which changes the persons in control of Borrower or
which transfers more than 25% of the beneficial interest in Borrower, except for
transfers to Affiliates as defined in the Loan Agreement; and (d) Borrower's
entry into a Lease. Borrower shall give notice of any proposed action to Lender
at least thirty (30) days prior to taking such action. Borrower shall pay all
costs and expenses incurred by Lender in evaluating any such action. Lender may
condition such consent upon modification of the Loan Documents or payment of
fees. No such action shall relieve Borrower from liability for the Obligations.
The consent by Lender to any action shall not constitute a waiver of the
necessity of such consent to any subsequent action.

     Section 1.4 INSURANCE. Borrower shall obtain, maintain and keep in full
force and effect (and upon request of Lender shall furnish to Lender copies of)
policies of insurance as described in, and meeting the requirements set forth
in, Exhibit B attached hereto, and upon request of Lender shall furnish to
Lender proof of payment of all premiums for such insurance. At least ten (10)
days prior to the termination of any such coverage, Borrower shall provide
Lender with evidence satisfactory to Lender that such coverage will be renewed
or replaced upon termination with insurance that complies with the provisions of
this Section. Borrower, at its sole cost and expense, from time to time when
Lender shall so request, will provide Lender with evidence, in a form acceptable
to Lender, of the full insurable replacement cost of the Mortgaged Property. All
property (including boiler and machinery) and liability insurance policies
maintained by Borrower pursuant to this Section shall (i) include effective
waivers by the insurer of all claims for insurance premiums against Lender, and
(ii) provide that any losses shall be payable notwithstanding (a) any act of
negligence by Borrower or Lender, (b) any foreclosure or other proceedings or
notice of foreclosure sale relating to the Mortgaged Property, or (c) any
release from liability or waiver of subrogation rights granted by the insured.
All insurance policies maintained by Borrower pursuant to the foregoing
provisions shall respond on a primary basis relative to any other insurance
carried by Lender in the event of loss. Insurance terms not otherwise defined
herein shall be interpreted consistent with insurance industry usage.

     Section 1.5 TAXES, LIENS AND CLAIMS, UTILITIES. Except as otherwise
provided in the Loan Agreement, Borrower, at least give (5) days before any
penalty attaches thereto, shall pay and discharge, or cause to be paid and
discharged, all taxes, assessments and

<Page>

governmental charges and levies (collectively "Impositions") imposed upon or
against the Mortgaged Property or the Rents, or upon or against the Obligations,
or upon or against the interest of Lender in the Mortgaged Property or the
Obligations, except Impositions measured by the income of Lender. Borrower shall
provide evidence of such payment at Lender's request. Except as otherwise
provided in the Loan Agreement, Borrower shall keep the Mortgaged Property free
and clear of all liens, encumbrances, easements, covenants, conditions,
restrictions and reservations (collectively "Liens") except those listed on
Exhibit A attached hereto (the "Permitted Encumbrances"). Borrower shall pay or
cause to be paid when due all charges or fees for utilities and services
supplied to the Mortgaged Property. Notwithstanding anything to the contrary
contained in this Section, Borrower shall not be required to pay or discharge
any Imposition or Lien so long as Borrower shall in good faith, and after giving
notice to Lender, contest the same by appropriate legal proceedings. If Borrower
contests any Imposition or Lien against the Mortgaged Property, Borrower shall
provide such security to Lender as Lender shall reasonably require against loss
or impairment of Borrower's ownership of or Lender's lien on the Mortgaged
Property and shall in any event pay such Imposition or Lien before loss or
impairment occurs.

     Section 1.6 ESCROW PAYMENTS. If requested by Lender, Borrower shall deposit
with Lender monthly on the same date as payments are due under the Note the
amount reasonably estimated by Lender to be necessary to enable Lender to pay,
at least five (5) days before they become due, all Impositions against the
Mortgaged Property and the premiums upon all insurance required hereby to be
maintained with respect to the Mortgaged Property. All funds so deposited shall
secure the Obligations. Such deposits shall be held by Lender, or its nominee,
in a non-interest bearing account and may be commingled with other funds. Such
deposits shall be used to pay such Impositions and insurance premiums when due.
Any excess sums so deposited shall be retained by Lender and shall be applied to
pay said items in the future, unless the Obligations have been paid and
performed in full, in which case all excess sums so paid shall be refunded to
Borrower. Upon the occurrence of an Event of Default, Lender may apply any funds
in said account against the Obligations in such order as Lender may determine.

     Section 1.7 MAINTENANCE AND REPAIR, COMPLIANCE WITH LAWS. Borrower shall
cause the Mortgaged Property to be operated, maintained and repaired in safe and
good repair, working order and condition, reasonable wear and tear excepted;
shall not commit or permit waste thereof; except as provided in any Loan
Document, shall not remove, demolish or substantially alter the design or
structural character of any Improvements without the prior written consent of
Lender; shall complete or cause to be completed forthwith any Improvements which
are now or may hereafter be under construction upon

<Page>

the Land; shall comply or cause compliance with all laws, statutes, ordinances
and codes, and governmental rules, regulations and requirements, applicable to
the Mortgaged Property or the manner of using or operating the same, and with
any covenants, conditions, restrictions and reservations affecting the title to
the Mortgaged Property, and with the terms of all insurance policies relating to
the Mortgaged Property; and shall obtain and maintain in full force and effect
all consents, permits and licenses necessary for the use and operation of the
Mortgaged Property.

     Section 1.8 LEASES UNDER WHICH BORROWER IS LANDLORD.

     (a) Borrower shall not enter into, modify, amend, cancel or terminate any
Leases without Lender's prior written consent, and shall furnish to Lender, upon
execution, a complete and fully executed copy of each of the Leases.

     (b) Borrower shall, at its cost and expense, perform each obligation to be
performed by Borrower under each of the Leases; not borrow against, pledge or
further assign any rents or other payments due thereunder; not permit the
prepayment of any rents or other payments due for more than thirty (30) days in
advance; and not permit any Tenant to assign its Lease or sublet the premises
covered by its Lease, unless required to do so by the terms thereof and then
only if such assignment does not work to relieve the Tenant of any liability for
performance of its obligations thereunder.

     (c) If any Tenant shall default under its Lease, Borrower shall, in the
ordinary course of business, exercise sound business judgment with respect to
such default, but may discount, compromise, forgive or waive claims or discharge
the Tenant from its obligations under the Lease or terminate or accept a
surrender of the Lease.

     (d) If Borrower fails to perform any obligations of Borrower under any
Leases or if Lender becomes aware of or is notified by any Tenant of a failure
on the part of Borrower to so perform, Lender may, but shall not be obligated
to, without waiving or releasing Borrower from any obligation in this Agreement
or any of the other Loan Documents, remedy such failure, and Borrower agrees to
repay upon demand all sums incurred by Lender in remedying any such failure,
together with interest thereon from the date incurred at the Default Rate (as
defined in the Note).

     (e) For purposes of this Section, the defined terms shall have the meanings
provided in this Mortgage, including the following defined terms:

<Page>

     (i) "LEASE": Any lease or other document or agreement, written or oral,
     permitting any Person, other than Borrower, to use or occupy any part of
     the Mortgaged Property.

     (ii) "TENANT": Any Person, other than Borrower, using or occupying any part
     of the Mortgaged Property pursuant to a Lease.

     (f) Nothing in this Section 1.8 constitutes consent by Lender to Borrower
entering into any Lease, and it is acknowledged that Borrower's entry into a
Lease without the Lender's prior written consent is a violation of Section 3.1
of this Agreement.

     Section 1.9 INDEMNITY. Borrower shall indemnify Lender and its directors,
officers, agents and employees (collectively the "Indemnified Parties") against,
and hold the Indemnified Parties harmless from, all losses, damages, suits,
claims, judgments, penalties, fines, liabilities, costs and expenses by reason
of, or on account of, or in connection with the construction, reconstruction or
alteration of the Mortgaged Property, or any accident, injury, death or damage
to any person or property occurring in, on or about the Mortgaged Property or
any street, drive, sidewalk, curb or passageway adjacent thereto. The indemnity
contained in this Section shall include costs of defense of any such claim
asserted against an Indemnified Party, including attorneys' fees. The indemnity
contained in this Section shall survive payment and performance of the
Obligations and satisfaction and release of this Mortgage and any foreclosure
thereof or acquisition of title by deed in lieu of foreclosure.

     Section 1.10 BIG STONE PROPERTY LEASE; ACCESS RAIL AGREEMENT

     (a) Borrower shall not modify, amend, cancel or terminate the Big Stone
Plant Property Lease or the Access Rail Agreement without the Lender's prior
written consent.

     (b) Borrower shall, at its cost and expense, timely perform each obligation
to be performed by Borrower under the Big Stone Plant Property Lease and the
Access and Rail Agreement.

     (c) If Borrower fails to timely perform any obligations of Borrower under
the Big Stone Plant Property Lease, the Access and Rail Agreement or if Lender
becomes aware of or is notified by Big Stone-Grant Industrial Development and
Transportation, L.L.C., the Big Stone Plant Co-Owners or any other party or a
failure on the part of Borrower to so perform, Lender may, but shall not be
obligated to, without waiving or releasing Borrower from any obligation in this
Agreement or any of the other Loan

<Page>

Documents, remedy such failure, and Borrower agrees to repay upon demand all
sums incurred by Lender in remedying any such failure, together with interest
thereon from the date incurred at the Default Rate (as defined in the Note).

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties:

     Section 2.1 OWNERSHIP, LIENS, COMPLIANCE WITH LAWS. Borrower owns the
Mortgaged Property free from all Liens, except the Permitted Encumbrances. All
applicable zoning, environmental, land use, subdivision, building, fire, safety
and health laws, statutes, ordinances, codes, rules, regulations and
requirements affecting the Mortgaged Property permit the current use and
occupancy thereof, and Borrower has obtained all consents, permits and licenses
required for such use. Borrower has examined and is familiar with all applicable
covenants, conditions, restrictions and reservations, and with all applicable
laws, statutes, ordinances, codes and governmental rules, regulations and
requirements affecting the Mortgaged Property, and the Mortgaged Property
complies with all of the foregoing.

     Section 2.2 USE. The Mortgaged Property is not homestead property nor is it
agricultural property or in agricultural use.

     Section 2.3 UTILITIES, SERVICES. The Mortgaged Property is serviced by all
necessary public utilities, and all such utilities are operational and have
sufficient capacity.

     Section 2.4 ACCESS AGREEMENT. The Access and Rail Agreement is in full
force and effect, and has not been amended, modified, terminated or cancelled,
and there is no default by Borrower thereunder, nor any statement of facts or
circumstances which, with the giving of notice or the lapse of time or both,
would constitute a default by Borrower thereunder or entitle the Big Stone Plant
Co-Owners to terminate the Access and Rail Agreement; nor has Borrower received
or given any notice of default or termination.

     Section 2.5 BIG STONE PLANT PROPERTY LEASE. The Lease is in full force and
effect, and has not been amended, modified, terminated or cancelled, and there
is no default by Borrower thereunder, nor any statement of facts or
circumstances which, with the giving of notice or the lapse of time or both,
would constitute a default by Borrower thereunder

<Page>

or entitle Big Stone-Grant Industrial Development and Transportation, L.L.C. to
terminate the Big Stone Plant Property Lease, nor has Borrower received or given
any notice of default or termination. Borrower has provided Lender a true and
correct copy of the Big Stone Property Lease and the Access Rail Agreement.

                                   ARTICLE III

                             CASUALTY; CONDEMNATION

     Section 3.1 CASUALTY, REPAIR PROOF OF LOSS. If any portion of the Mortgaged
Property shall be damaged or destroyed by any cause (a "Casualty"), Borrower
shall:

          (a) give immediate notice to the Lender; and

          (b) promptly commence and diligently pursue to completion (in
          accordance with plans and specifications approved by Lender) the
          restoration, repair and rebuilding of the Mortgaged Property as nearly
          as possible to its value, condition and character immediately prior to
          the Casualty; and

     (c) if the Casualty is covered by insurance, immediately make proof of loss
     and collect all insurance proceeds, all such proceeds to be payable to
     Lender or as Lender shall direct. If an Event of Default shall be in
     existence, or if Borrower shall fail to provide notice to Lender of filing
     proof of loss, or if Borrower shall not be diligently proceeding, in
     Lender's reasonable opinion, to collect such insurance proceeds, then
     Lender may, but is not obligated to, make proof of loss, and is authorized,
     but is not obligated, to settle any claim with respect thereto, and to
     collect the proceeds thereof. Borrower shall not accept any settlement of
     an insurance claim, the result of which shall be a payment which is
     $100,000.00 or more less than the full amount of the claim, without the
     prior written consent of Lender.

     Section 3.2 USE OF INSURANCE PROCEEDS. Lender shall make the net insurance
proceeds received by it (after reimbursement of Lender's out-of pocket costs of
collecting and disbursing the same) available to Borrower to pay the cost of
restoration, repair and rebuilding of the Mortgaged Property, subject to the
following conditions:

     (a)   There shall be no Event of Default in existence at the time of any
     disbursement of the insurance proceeds.

<Page>

     (b) Lender shall have determined, in its reasonable discretion, that the
     cost of restoration, repair and rebuilding is and will be equal to or less
     than the amount of insurance proceeds and other funds deposited by Borrower
     with Lender.

     (c) Lender shall have determined, in its reasonable discretion, that the
     restoration, repair and rebuilding can be completed in accordance with
     plans and specifications approved by Lender (such approval not to be
     unreasonably withheld), in accordance with codes and ordinances and in
     accordance with the terms, and within the time requirements in order to
     prevent termination, of the Big Stone Plant Property Lease, the Access and
     Rail Agreement or any other Lease, and in any event not less than six (6)
     months prior to the Maturity Date.

     (d) All funds shall be disbursed, at Lender's option, in accordance with
     Lender's customary disbursement procedures for construction loans.

     (e) The Casualty shall have occurred more than twelve (12) months prior to
     the Maturity Date.

If any of these conditions shall not be satisfied, then Lender shall have the
right to use the insurance proceeds to prepay the Loan in accordance with the
Note. If any insurance proceeds shall remain after completion of the
restoration, repair and rebuilding of the Mortgaged Property, they shall be
disbursed to Borrower, or at the Lender's discretion, used to prepay the Loan in
accordance with the Note.

     Section 3.3 CONDEMNATION. If any portion of the Mortgaged Property shall be
taken, condemned or acquired pursuant to exercise of the power of eminent domain
or threat thereof (a "Condemnation"), Borrower shall:

     (a) give immediate notice thereof to Lender, and send a copy of each
     document received by Borrower in connection with the Condemnation to Lender
     promptly after receipt; and

     (b) diligently pursue any negotiation and prosecute any proceeding in
     connection with the Condemnation at Borrower's expense. If an Event of
     Default shall be in existence, or if Borrower, in Lender's reasonable
     opinion, shall not be diligently negotiating or prosecuting the claim,
     Lender is authorized, but not required, to negotiate and prosecute the
     claim and appear at any hearing for itself and on behalf of Borrower and to
     compromise or settle all compensation for the

<Page>

     Condemnation. Lender shall not be liable to Borrower for any failure by
     Lender to collect or to exercise diligence in collecting any such
     compensation. Borrower shall not compromise or settle any claim resulting
     from the Condemnation if such settlement shall result in payment of One
     Hundred Thousand and No/100 Dollars ($100,000.00) or more less than
     Lender's reasonable estimate of the damages therefrom. All awards shall be
     paid to Lender.

     Section 3.4 USE OF CONDEMNATION PROCEEDS. Lender shall make the net
proceeds of any Condemnation received by it (after reimbursement of Lender's
out-of-pocket costs of collecting and disbursing the same) available to Borrower
for restoration, repair and rebuilding of the Mortgaged Property, subject to the
following conditions:

     (a) There shall be no Event of Default in existence at the time of any
     disbursement of the condemnation proceeds.

     (b) Lender shall have determined, in its reasonable discretion, that the
     cost of restoration, repair and rebuilding is and will be equal to or less
     than the amount of condemnation proceeds and other funds deposited by
     Borrower with Lender.

     (c) Lender shall have determined, in its reasonable discretion, that the
     restoration, repair and rebuilding can be completed in accordance with
     plans and specifications approved by Lender (such approval not to be
     unreasonably withheld), in accordance with codes and ordinances and in
     accordance with the terms, and within the time requirements in order to
     prevent termination, of the Big Stone Plant Property Lease, the Access and
     Rail Agreement or any other Lease, and in any event not less than six (6)
     months prior to the Maturity Date.

     (d) All funds shall be disbursed, at Lender's option, in accordance with
     Lender's customary disbursement procedures for construction loans.

     (e) The Condemnation shall have occurred more than twelve (12) months prior
     to the Maturity Date.

If any of these conditions shall not be satisfied, then Lender shall have the
right to use the condemnation proceeds to prepay the Loan in accordance with the
Note. If any condemnation proceeds shall remain after completion of the
restoration, repair and rebuilding of the Mortgaged Property, they shall be
disbursed to Borrower, or at Lender's discretion, used to prepay the Loan in
accordance with the Note.

<Page>

                                   ARTICLE IV

                              DEFAULTS AND REMEDIES

     Section 4.1 EVENTS OF DEFAULT. An Event of Default, as defined in the Loan
Agreement, shall constitute an Event of Default hereunder.

     Section 4.2 REMEDIES. Upon the occurrence of an Event of Default described
in the Loan Agreement, and upon the expiration of the applicable cure period
stated therein, if any, all of the Obligations shall be accelerated and become
immediately due and payable without notice or declaration to Borrower. The
Obligations shall be due and payable without presentment, demand or further
notice of any kind. Lender shall have the right to proceed to protect and
enforce its rights by one or more of the following remedies:

            (a) LENDER SHALL HAVE THE RIGHT TO BRING SUIT either for damages,
     for specific performance of any agreement contained in any Loan Document,
     for the foreclosure of this Mortgage, or for the enforcement of any other
     appropriate legal or equitable remedy.

     (b) LENDER SHALL HAVE THE RIGHT TO SELL THE MORTGAGED PROPERTY AT PUBLIC
     AUCTION AND CONVEY THE SAME TO THE PURCHASER IN FEE SIMPLE, as provided by
     law, Borrower to remain liable for any deficiency. Said sale may be as one
     tract or otherwise, at the sole option of Lender. In the event of any sale
     of the Mortgaged Property pursuant to any judgment or decree of any court
     or at public auction or otherwise in connection with the enforcement of any
     of the terms of this Mortgage, Lender, its successors or assigns, may
     become the purchaser, and for the purpose of making settlement for or
     payment of the purchase price, shall be entitled to deliver over and use
     the Note and any claims for interest accrued and unpaid thereon, together
     with all other sums, with interest, advanced or secured hereby and unpaid
     hereunder, in order that there may be credited as paid on the purchase
     price the total amount of the Obligations then due, including principal and
     interest on the Note and all other sums, with interest, advanced or secured
     hereby and unpaid hereunder or under any of the other Loan Documents.

     (c) LENDER SHALL HAVE THE RIGHT TO OBTAIN THE APPOINTMENT OF A RECEIVER at
     any time after the occurrence of an Event of Default. Lender may apply for
     the appointment of a receiver to the circuit court for the county where the
     Mortgaged Property or any part thereof is located, by an

<Page>

     action separate from any foreclosure of this Mortgage pursuant to SDCL
     Chap. 21-21, or as a part of the foreclosure action under SDCL Chap. 21-47
     or SDCL Chap. 21-48 (it being agreed that the existence of a foreclosure
     pursuant to SDCL Chapter 21-47 or SDCL Chap. 21-48 is not a prerequisite to
     any action for a receiver hereunder). Lender shall be entitled to the
     appointment of a receiver without regard to waste, adequacy of the security
     or solvency of Borrower. The receiver, who shall be an experienced property
     manager, shall collect (until the Obligations are fully paid and satisfied
     and, in the case of a foreclosure sale, during the entire redemption
     period) the Rents, and shall manage the Mortgaged Property, execute Leases
     within or beyond the period of the receivership if approved by the court
     and apply all rents, profits and other income collected by him in the
     following order:

           (i)   to the payment of all reasonable fees of the receiver, if any,
           approved by the court;

           (ii)  to the repayment of tenant security deposits, with interest
           thereon;

           (iii) to the payment when due of delinquent or current real estate
           taxes or special assessments with respect to the Mortgaged Property,
           or the periodic escrow for the payment of the same;

           (iv)  to the payment when due of premiums for insurance of the type
           required by this Mortgage, or the periodic escrow for the payment of
           the same;

           (v)   to the payment of all expenses for normal maintenance of the
           Mortgaged Property; and

           (vi) the balance to Lender (a) if received prior to the commencement
           of a foreclosure, to be applied to the Obligations, in such order as
           Lender may elect and (b) if received after the commencement of a
           foreclosure, to be applied to the amount required to be paid to
           effect a reinstatement prior to foreclosure sale, or, after a
           foreclosure sale to any deficiency and thereafter to the amount
           required to be paid to effect a redemption, with any excess to be
           paid to Borrower. Provided, that if this Mortgage is not reinstated
           nor the Mortgaged Property redeemed as provided by applicable law,
           the entire amount paid to Lender pursuant hereto shall be the
           property of Lender

<Page>

           together with all or any part of the Mortgaged Property acquired
           through foreclosure.

     Lender shall have the right, at any time and without limitation, to advance
     money to the receiver to pay any part or all of the items which the
     receiver should otherwise pay if cash were available from the Mortgaged
     Property and sums so advanced, with interest at the Default Rate set forth
     in the Note, shall be secured hereby, or if advanced during the period of
     redemption shall be part of the sum required to be paid to redeem from the
     sale.

     (d) LENDER SHALL HAVE THE RIGHT TO COLLECT THE RENTS from the Mortgaged
     Property and apply the same in the manner hereinbefore provided with
     respect to a receiver. For that purpose, Lender may enter and take
     possession of the Mortgaged Property and manage and operate the same and
     take any action which, in Lender's judgment, is necessary or proper to
     collect the Rents and to conserve the value of the Mortgaged Property.
     Lender may also take possession of, and for these purposes use, any and all
     of the Personal Property. The expense (including any receiver's fees,
     attorneys' fees, costs and agent's compensation) incurred pursuant to the
     powers herein contained shall be secured by this Mortgage. Lender shall not
     be liable to account to Borrower for any action taken pursuant hereto other
     than to account for any Rents actually received by Lender. Enforcement
     hereof shall not cause Lender to be deemed a mortgagee in possession unless
     Lender elects in writing to be a mortgagee IN possession.

     (e) LENDER SHALL HAVE THE RIGHT TO ENTER AND TAKE POSSESSION of the
     Mortgaged Property and manage and operate the same in conformity with all
     applicable laws and take any action which, in Lender's judgment, is
     necessary or proper to conserve the value of the Mortgaged Property.

     (f) LENDER SHALL HAVE ALL OF THE RIGHTS AND REMEDIES PROVIDED IN THE
     UNIFORM COMMERCIAL CODE including the right to proceed under the Uniform
     Commercial Code provisions governing default as to any Personal Property
     separately from the real estate included within the Mortgaged Property, or
     to proceed as to all of the Mortgaged Property in accordance with its
     rights and remedies in respect of said real estate. If Lender should elect
     to proceed separately as to such Personal Property, Borrower agrees to make
     such Personal Property available to Lender at a place or places acceptable
     to Lender, and if any notification of intended disposition of any of such
     Personal Property is required by law, such notification shall be deemed
     reasonably and

<Page>

     properly given if given at least ten (10) days before such disposition in
     the manner hereinafter provided.

     (g) LENDER SHALL HAVE THE RIGHT TO FILE PROOF OF CLAIM and other documents
     as may be necessary or advisable in order to have its claims allowed in any
     receivership, insolvency, bankruptcy, reorganization, arrangement,
     adjustment, composition or other judicial proceedings affecting Borrower,
     its creditors or its property, for the entire amount due and payable by
     Borrower in respect of the Obligations at the date of the institution of
     such proceedings, and for any additional amounts which may become due and
     payable by Borrower after such date.

Each remedy herein specifically given shall be in addition to every other right
now or hereafter given or existing at law or in equity, and each and every right
may be exercised from time to time and as often and in such order as may be
deemed expedient by Lender and the exercise or the beginning of the exercise of
one right shall not be deemed a waiver of the right to exercise at the same time
or thereafter any other right. Lender shall have all rights and remedies
available under the law in effect now and/or at the time such rights and
remedies are sought to be enforced, whether or not they are available under the
law in effect on the date hereof.

     Section 4.3 EXPENSES OF EXERCISING RIGHTS, POWERS AND REMEDIES. The
reasonable expenses (including any receiver's fees, attorneys' fees, appraisers'
fees, environmental engineers' and/or consultants' fees, costs incurred for
documentary and expert evidence, stenographers' charges, publication costs,
costs (which may be estimated as to items to be expended after entry of the
decree of foreclosure) of procuring all abstracts of title, continuations of
abstracts of title, title searches and examinations, title insurance policies
and commitments and extensions therefor, Torrens duplicate certificates of
title, UCC and chattel lien searches, and similar data and assurances with
respect to title as Lender may deem reasonably necessary either to prosecute any
foreclosure action or to evidence to bidders at any sale which may be had
pursuant to any foreclosure decree the true condition of the title to or the
value of the Mortgaged Property, and agent's compensation) incurred by Lender
after the occurrence of any Event of Default and/or in pursuing the rights,
powers and remedies contained in this Mortgage shall be immediately due and
payable by Borrower, with interest thereon from the date incurred at the Default
Rate set forth in the Note, and shall be added to the indebtedness secured by
this Mortgage.

<Page>

     Section 4.4 RESTORATION OF POSITION. In case Lender shall have proceeded to
enforce any right under this Mortgage by foreclosure, sale, entry or otherwise,
and such proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely, then, and in every such case, Borrower and
Lender shall be restored to their former positions and rights hereunder with
respect to the Mortgaged Property subject to the lien hereof.

     Section 4.5 MARSHALING. Borrower, for itself and on behalf of all persons,
parties and entities which may claim under Borrower, hereby waives all
requirements of law relating to the marshalling of assets, if any, which would
be applicable in connection with the enforcement by Lender of its remedies for
an Event of Default hereunder, absent this waiver. Lender shall not be required
to sell or realize upon any portion of the Mortgaged Property before selling or
realizing upon any other portion thereof.

     Section 4.6 WAIVERS. No waiver of any provision hereof shall be implied
from the conduct of the parties. Any such waiver must be in writing and must be
signed by the party against which such waiver is sought to be enforced. The
waiver or release of any breach of the provisions set forth herein to be kept
and performed shall not be a waiver or release of any preceding or subsequent
breach of the same or any other provision. No receipt of partial payment after
acceleration of any of the Obligations shall waive the acceleration. No payment
by Borrower or receipt by Lender of a lesser amount than the full amount secured
hereby shall be deemed to be other than on account of the sums due and payable
hereunder, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed an accord and satisfaction, and
Lender may accept any check or payment without prejudice to Lender's right to
recover the balance of such sums or to pursue any other remedy provided in this
Mortgage. The consent by Lender to any matter or event requiring such consent
shall not constitute a waiver of the necessity for such consent to any
subsequent matter or event.

     Section 4.7 LENDER'S RIGHT TO CURE DEFAULTS. If Borrower shall fail to
comply with any of the terms of the Loan Documents with respect to the procuring
of insurance, the payment of taxes, assessments and other charges, the keeping
of the Mortgaged Property in repair, or any other term contained herein or in
any of the other Loan Documents, Lender may make advances to perform the same
without releasing Borrower from any of the Obligations. Borrower agrees to repay
upon demand all sums so advanced and all sums expended by Lender in connection
with such performance, including without limitation attorneys' fees, with
interest at the Default Rate set forth in the Note from the dates such advances
are made, and all sums so advanced and/or expenses incurred, with interest,
shall be secured hereby, but no such advance and/or incurring of expense by

<Page>

Lender, shall be deemed to relieve Borrower from any default hereunder or under
any of the other Loan Documents, or to release Borrower from any of the
Obligations.

     Section 4.8 SUITS AND PROCEEDINGS. Lender shall have the power and
authority, upon prior notice to Borrower, to institute and maintain any suits
and proceedings as Lender may deem advisable to (i) prevent any impairment of
the Mortgaged Property by any act which may be unlawful or by any violation of
this Mortgage, (ii) preserve or protect its interest in the Mortgaged Property,
or (iii) restrain the enforcement of or compliance with any legislation or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid, if, in the sole opinion of Lender, the enforcement of or compliance
with such enactment, rule or order might impair the security hereunder or be
prejudicial to Lender's interest.

                                    ARTICLE V

                                  MISCELLANEOUS

     Section 5.1 BINDING EFFECT, SURVIVAL; NUMBER; GENDER. This Mortgage shall
be binding on and inure to the benefit of the parties hereto, and their
respective heirs, legal representatives, successors and assigns. All agreements,
representations and warranties contained herein or otherwise heretofore made by
Borrower to Lender shall survive the execution, delivery and foreclosure hereof.
The singular of all terms used herein shall include the plural, the plural shall
include the singular, and the use of any gender herein shall include all other
genders, where the context so requires or permits.

     Section 5.2 SEVERABILITY. The unenforceability or invalidity of any
provision of this Mortgage as to any person or circumstance shall not render
that provision unenforceable or invalid as to any other person or circumstance.

     Section 5.3 NOTICES. Any notice or other communication to any party in
connection with this Mortgage shall be in writing and shall be sent by manual
delivery, telegram, telex, facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at the address specified
below, or at such other address as such party shall have specified to the other
party hereto in writing. All periods of notice shall be measured from the date
of delivery thereof if manually delivered, from the date of sending thereof if
sent by telegram, telex or facsimile transmission, from the first Business Day
(as defined in the Loan Agreement) after the date of sending if sent by
overnight courier, or from four days after the date of mailing if mailed.
Notices shall be

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given to or made upon the respective parties hereto at their respective
addresses set forth below:

     If to Borrower:   Northern Lights Ethanol, LLC
                       Post Office Box 225
                       Milbank, South Dakota 57252
                       Attention: Chairman of the Board
                       Telecopy No.: (605) 432-6951

     If to Lender:     U.S. Bank National Association
                       141 North Main Avenue
                       Post Office Box 5308
                       Sioux Falls, South Dakota 57117
                       Attention: Carl D. Wynja
                       Telecopy No.: (605) 333-3825

Either party may change its address for notices by a notice given not less than
five (5) Business Days prior to the effective date of the change.

     Section 5.4 APPLICABLE LAW. This Mortgage and the other Loan Documents
shall be construed and enforceable in accordance with, and be governed by, the
laws of the State of South Dakota, without giving effect to conflict of laws or
principles thereof, but giving effect to federal laws of the United States
applicable to national banks. Whenever possible, each provision of this Mortgage
and any other statement, instrument or transaction contemplated hereby or
relating hereto, shall be interpreted in such manner as to be effective and
valid under such applicable law, but, if any provision of this Mortgage or any
other statement, instrument or transaction contemplated hereby or relating
hereto shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Mortgage or any other statement, instrument or
transaction contemplated hereby or relating hereto.

     Section 5.5 WAIVER OF JURY TRIAL. Borrower and Lender each irrevocably
waives any and all right to trial by jury in any legal proceeding arising out of
or relating to this Mortgage or any of the other Loan Documents or the
transactions contemplated hereby or thereby.

<Page>

     Section 5.6 EFFECT. This Mortgage is in addition and not in substitution
for any other guarantees, covenants, obligations or other rights now or
hereafter held by Lender from any other person or entity in connection with the
Obligations.

     Section 5.7 ASSIGNABILITY. Lender shall have the right to assign this
Mortgage, in whole or in part, or sell participation interests herein, to any
person obtaining an interest in the Obligations.

     Section 5.8 HEADINGS. Headings of the Sections of this Mortgage are
inserted for convenience only and shall not be deemed to constitute a part
hereof.

     Section 5.9 FIXTURE FILING. This instrument shall be deemed to be a Fixture
Filing within the meaning of the South Dakota Uniform Commercial Code, and for
such purpose, the following information is given:

     (a)   Name and address of Debtor:

                Northern Lights Ethanol, LLC
                Post Office Box 225
                Milbank, South Dakota 57252

                Federal Tax I.D. No.: 46-0460145

     (b)   Name and address of Secured Party:

                U.S. Bank National Association
                141 North Main Avenue
                Post Office Box 5308
                Sioux Falls, South Dakota 57117

     (c)   Description of the types (or items) of property covered: by this
     Fixture Filing: See granting clause on pages 2 and 3 hereof.

     (d) Description of real estate to which the collateral is attached or upon
     which it is or will be located: See Exhibit A hereto.

<Page>

     Section 5.10 CONSTRUCTION MORTGAGE. This Mortgage is a Construction
Mortgage within the meaning of SDCL Section 547A-9-334(h), and secures an
obligation incurred for the construction of improvements on land, including
acquisition cost of the land.

Some of the above-described collateral is or is to become fixtures upon the
above-described real estate, and this Fixture Filing is to be filed for record
in the public real estate records.

     IN WITNESS WHEREOF, Borrower has executed this Mortgage as of the date
first written above.

                                            NORTHERN LIGHTS ETHANOL, LLC

                                        By:  /s/  Delton Strasser
                                            ----------------------------
                                            Name:  Delton Strasser
                                            Title: Chairman of the Board

STATE OF SOUTH DAKOTA )
                    : SS
COUNTY OF MINNEHAHA   )

     On this the 11th day of July, 2001, before me the undersigned officer,
personally appeared Delton Strasser, who acknowledged himself to be the Chairman
of the Board of Northern Lights Ethanol, LLC, a limited liability company, and
that he, as such Chairman of the Board, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the limited liability company by himself Chairman of the Board.

     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                            /s/ Rosalie Kinonen
                                           --------------------------------
                                           Notary Public - South Dakota

My Commission Expires: 7-20-04

<Page>

Document Prepared By:
Jim Wiederrich
Woods, Fuller, Shultz & Smith P.C.
300 South Phillips Avenue, Suite 300
Sioux Falls, SD 57104-6392
Telephone: (605) 336-3890

After recording return to:
Carl D. Wynja, Senior Vice President
Commercial and Business Banking
US Bank
141 North Main
Sioux Falls, SD 57104

<Page>

                                    EXHIBIT A

                      LEGAL DESCRIPTION (Granting Clause A)

     The Borrower holds a leasehold interest in the following described Land
under the terms and conditions of the Big Stone Power Plant Lease dated April
18, 2001:

     Parcel A in the Southwest Quarter (SW 1/4) of Section Twelve (12), Township
One Hundred Twenty-One (121) North, Range Forty-Seven (47) West of the Fifth
Principal Meridian, Grant County, South Dakota, according to the recorded plat
thereof.

     Parcel B in the Southeast Quarter (SE 1/4) of Section Eleven (11), Township
One Hundred Twenty-One (121) North, Range Forty-Seven (47) West of the Fifth
Principal Meridian, Grant County, South Dakota, according to the recorded plat
thereof.

     The Borrower holds an ingress and egress easement rights on certain land
and railroad spur lines identified in the Access and Rail Agreement dated April
18, 2001, granted by Otter Tail Corporation, f/k/a Otter Tail Power Company;
Montana-Dakota Utilities Co., a division of MDU Resources Group, Inc., f/k/a
Montana-Dakota Utilities Co.; Northwestern Public Service, a division of
NorthWestern Corporation, f/k/a Northwestern Public Service Company and Northern
Lights Ethanol, LLC:

     The Southeast Quarter (SE 1/4) of Section Eleven (11), Township One Hundred
Twenty-One North (121), Range Forth-Seven (47), West of the Fifth Principal
Meridian, Grant County, South Dakota;

     The Southwest Quarter (SW 1/4) of Section Twelve (12), Township One Hundred
Twenty-One North (121), Range Forty-Seven (47) West of the Fifth Principal
Meridian, Grant County, South Dakota;

     The Northeast Quarter (NE 1/4) and the Northwest Quarter (NW 1/4) of
Section Thirteen (13), Township One Hundred Twenty-One (121) North, Range
Forty-Seven (47) West of the Fifth Principal Meridian, Grant County, South
Dakota; and

     The Northwest Quarter (NW 1/4), the Northeast Quarter (NE 1/4) and that
portion of the Southeast Quarter (SE 1/4) lying North of the Burlington Northern
Sante Fe Main line Railroad Right of Way in Section Eighteen (18), Township One
Hundred Twenty-One (121) North, Range Forty-Six (46) West of the Fifth Principal
Meridian, Grant County, South Dakota.

<Page>

                                    EXHIBIT B

                            (Insurance Requirements)

I.   PROPERTY INSURANCE

     As to Improvements while under construction:

     An ORIGINAL (or evidence acceptable to Lender of) Builder's Risk
     "All-Risk", Completed Value (Non-Reporting) Form POLICY naming Borrower as
     an insured, and covering the interests of all contractors (of all tiers) in
     the Project, reflecting coverage of 100% of the insurable replacement cost,
     and written by a carrier approved by Lender with a current A.M. Best
     Company rating of at least A:VII (which is authorized to do business in the
     State of South Dakota), that includes:

     Lender's Loss Payable Endorsement naming U.S. Bank National Association as
     Mortgagee 30-day notice to Lender in the event of cancellation or
     non-renewal by either party or material adverse change Replacement Cost
     Measure of Recovery Coverage for Foundations, Off-site (Unscheduled and
     Temporary Locations), Transit, Testing, Flood, Earthquake, Collapse, and
     Boiler and Machinery/Mechanical and Electrical Breakdown, in such amounts
     as Lender and Borrower mutually agree is appropriate Coverage for indirect
     loss exposures (customarily referred to as "soft cost" exposures),
     "Contingent Liability from Operation of Building Laws" coverage,
     "Demolition Costs" coverage, "Increased Cost of Construction" coverage,
     with such additional limits for such coverages as Lender may reasonably
     require Policy to permit partial occupancy No insurer subrogation action or
     recovery against any party whose interests are covered under the policy
     Deductible not to exceed $25,000 Coverage to become effective upon the date
     that concrete is first poured, or the start of any shipment of materials,
     machinery or equipment to the site, whichever is earlier, and to remain in
     effect until replaced by the permanent All Risk Property Insurance
     described below, or until such other time as may be mutually agreed upon by
     Lender and Borrower

<Page>

     As to completed Improvements:

     An ORIGINAL (or evidence acceptable to Lender of) Special Form (or
     so-called All Risk) Hazard Insurance POLICY naming Borrower as an insured,
     reflecting coverage of 100% of the replacement cost, and written by a
     carrier approved by Lender with a current A.M. Best Company rating of at
     least A:VII (which is authorized to do business in the State of South
     Dakota), that includes:

           --    Lender's Loss Payable Endorsement naming U.S. Bank National
                 Association as Mortgagee
           --    30-day notice to Lender in the event of cancellation or
                 non-renewal by either party or material adverse change
           --    Replacement Cost Measure or Recovery
           --    Stipulated Value/Agreed Amount Endorsement (No Coinsurance)
           --    Boiler and Machinery Coverage (including business income, extra
                 expense coverage)
           One (1) year's business interruption, leasehold interest and/or rent
           loss insurance in an amount acceptable to Lender
                 Extra expense coverage in an amount acceptable to Lender
           "Contingent Liability from Operation of Building Laws" coverage,
           "Demolition Costs" coverage, "Increased Cost of Construction"
           coverage, and "Increased Time to Rebuild" Coverage, with such
           additional limits for such coverages as Lender may reasonably require
                 Deductible not to exceed $25,000

II.  LIABILITY INSURANCE

     An ORIGINAL (or evidence acceptable to Lender of) Commercial General
     Liability Insurance POLICY (Insurance Services Offices policy form title)
     naming Borrower as an insured, providing coverage on an "occurrence" rather
     than a "claims made" basis, and written by a carrier approved by Lender
     with a current A.M. Best Company rating of at least A:VII (which is
     authorized to do business in the State of South Dakota), that includes:

           Combined general liability policy limit of at least $2,000,000.00
           each occurrence, applying to liability for Bodily Injury, Personal
           Injury and Property Damage, which combined limit may be satisfied by
           the limit afforded under the Commercial General Liability Policy, or
           by such Policy in combination with the limits afforded by an Umbrella
           or Excess Liability

<Page>

           Policy (or policies); provided, that the coverage afforded under any
           such Umbrella or Excess Liability Policy is at least as broad in all
           material respects as that afforded by the underlying Commercial
           General Liability Policy Coverage for Bodily Injury, Property Damage,
           Personal Injury, Contractual Liability, Independent Contractors and
           Products-Completed Operations Liability Automobile Liability
           insurance covering liability for Bodily Injury and Property Damage
           arising out of the ownership, use, maintenance or operation of all
           owned, nonowned and hired automobiles and other motor vehicles
           utilized by Borrower in connection with the Project, which coverage
           may be provided under a separate policy Deductible not to exceed
           $25,000 Additional Insured Endorsement naming U.S. Bank National
           Association and a Severability of Interest provision 30-day notice to
           Lender in the event of cancellation or non-renewal by either party or
           material adverse change

III. WORKER'S COMPENSATION

     An ORIGINAL CERTIFICATE of Worker's Compensation coverage in the statutory
     amount, naming Borrower as an insured, written by a carrier approved by
     Lender, at such time as Borrower has employees.

<Page>

                                    EXHIBIT C

                             PERMITTED ENCUMBRANCES

     1. An easement for the purpose of granting the right to have a Pollution
Control Project located on the subject property and to have ingress and egress
on and over such lands, as set forth in Easement Agreement between
Montana-Dakota Utilities, Northwestern Public Service Company, and Otter Tail
Power Company and Grant County, South Dakota, dated February 1, 1974, and
recorded in Miscellaneous Record 159, page 169, on 2/6/74 as Document Number
149365.

     2. A non-exclusive easement for the purpose of granting the right to have
transmission lines located on the subject property and to have ingress to and
egress from said lines, as set forth in Easement Agreement between
Montana-Dakota Utilities, Northwestern Public Service Company, and Otter Tail
Power Company and Cooperative Power Association, dated July 1, 1976, and
recorded in Miscellaneous Record 161, page 845, on 8/6/76 as Document Number
154178.

     3. Any rights claimed as set forth in Bill of Sale and Assignment of
Easements between Otter Tail Power Company and Cooperative Power Association,
dated July 1, 1976, and recorded in Miscellaneous Record 161, page 855, on
8/6/76 as Document Number 154179.

<Page>

                               SECURITY AGREEMENT

     This Security Agreement is entered into between NORTHERN LIGHTS ETHANOL,
LLC, a South Dakota limited liability company, as grantor and obligor (the
"Borrower"), and U.S. BANK NATIONAL ASSOCIATION (the "Secured Party"), and is
made effective this 11th date of July, 2001, and is executed and delivered by
Borrower to Secured Party pursuant to that Loan Agreement between Borrower and
Secured Party dated as of July 11, 2001 (the "Loan Agreement"):

     GRANT OF SECURITY INTEREST. To secure the Secured Obligations as defined
below, the Borrower grants the Secured Party a security interest in the
following described personal property (hereinafter the "Collateral"):

     All right, title and interest of Borrower in and to all of Borrower's
     assets and properties of all kinds and descriptions, wherever the same may
     now or hereafter be located, now existing and/or owned or hereafter arising
     and/or acquired or in which Borrower has or hereafter may acquire an
     interest (to the extent of such interest), including, without limitation,
     all of the following:

     All accounts (as defined in the UCC), now owned or hereafter created or
     acquired by Borrower including, without limitation, all of the following
     now owned or hereafter created or acquired by Borrower: (a) accounts
     receivable, contract rights, book debts, notes, drafts and other
     obligations or indebtedness owing to Borrower arising from the sale, lease
     or exchange of goods or other property and/or the performance of services;
     (b) Borrower's rights in, to and under all purchase orders for goods,
     services or other property; (c) Borrower's rights to any goods, services or
     other property represented by any of the foregoing (including returned or
     repossessed goods and unpaid sellers' rights of rescission, replevin,
     reclamation and rights to stoppage in transit); (d) monies due to or to
     become due to Borrower under all contracts for the sale, lease or exchange
     of goods or other property and/or the performance of services (whether or
     not yet earned by performance on the part of Borrower); (e) health-care
     insurance receivables; (f) insurance receivables for lost inventory and
     business interruption; and (g) proceeds of any of the foregoing and all
     collateral security and guaranties of any kind given by any person or
     entity with respect to any of the foregoing;

<Page>

     All inventory (as defined in the UCC), now owned or hereafter acquired by
     Borrower, wherever located, including, without limitation, products
     intended for sale, rent, lease or other disposition and other materials and
     supplies (including packaging and shipping materials) used or consumed, or
     held for use or consumption, in the sale thereof and goods which are
     returned to or repossessed by Borrower;

     All general intangibles (as defined in the UCC) now owned or hereafter
     acquired by Borrower, including, without limitation, all right, title and
     interest of Borrower in and to: (a) all agreements, leases (including
     purchase options with respect thereto), licenses and contracts (including
     all rights under the agreements pursuant to which Borrower acquired or
     hereafter acquires any subsidiary, division or operating entity and all
     documents, instruments, agreements and understandings relating thereto) to
     which Borrower is or may become a party; (b) all obligations or
     indebtedness owing to Borrower (other than accounts described above) from
     whatever source arising; (c) all tax refunds and rights to receive tax
     refunds; (d) all patents and patent applications, trademarks and trademark
     applications or registrations, copyrights and copyright applications or
     registrations, trade names, corporate names, company names, business names,
     fictitious business names, trade styles, service marks, logos and other
     business identifiers and other intellectual property; (e) all rights to
     refunds or indemnification (including, without limitation, all amounts
     refunded or paid to Borrower as a result of such amounts being deemed
     voidable transfers in any insolvency or bankruptcy proceeding),
     contribution and subrogation; (f) all causes of action, choses in action
     and judgments; and (g) all trade secrets, know how, corporate and other
     business records and other confidential information relating to the
     business of Borrower; the prices which Borrower obtains for its services or
     at which it sells merchandise; estimating and cost procedures; profit
     margins; policies and procedures pertaining to the sale of products and
     services; information concerning suppliers of Borrower; and information
     concerning the manner of operation, business plans, projections, and all
     other information of any kind or character, whether or not reduced in
     writing, with respect to the conduct by Borrower of its business not
     generally known by the public; (h) all payment intangibles; (i) all
     software; (j) all websites; (k) all partnership and limited liability
     partnership interests; and (l) all membership interests in limited
     liability companies;

<Page>

     All documents (as defined in the UCC) or other receipts covering,
     evidencing or representing goods now owned or hereafter acquired by
     Borrower;

     All instruments (as defined in the UCC) (including, but not limited to,
     promissory notes, drafts, bills of exchange and trade acceptances), chattel
     paper (as defined in the UCC) (whether tangible or electronic) and
     letter-of-credit rights (whether or not the letter of credit is evidenced
     by a writing), now owned or hereafter acquired by Borrower;

     All equipment (as defined in the UCC) now owned or hereafter acquired by
     Borrower including, without limitation, all machinery, apparatus,
     furniture, fixtures, tools, attachments, materials, storage and handling
     equipment, and all parts thereof and all additions and accessions thereto
     and replacements therefor;

     All of the following now owned or hereafter acquired by Borrower: plant
     fixtures, business or trade fixtures, other fixtures and storage office
     facilities, wherever located and all additions and accessions thereto and
     replacements therefor;

     All deposit accounts (as defined in the UCC) of Borrower maintained with
     any bank or financial institution;

     All monies, reserves and property of Borrower now or at any time or times
     hereafter in the possession or under the control of the Secured Party or
     any bailee of the Secured Party;

     All building and construction materials before and after incorporated into
     any improvement, including but not limited to, all other items not
     considered a part of the real property legally described as follows:

           Parcel A in the Southwest Quarter (SW 1/4) of Section Twelve (12),
           Township One Hundred Twenty-One (121) North, Range Forty-Seven (47)
           West of the Fifth Principal Meridian, Grant County, South Dakota,
           according to the recorded plat thereof.

           Parcel B in the Southeast Quarter (SE 1/4) of Section Eleven (11),
           Township One Hundred Twenty-One (121) North, Range Forty-Seven (47)

<Page>

           West of the Fifth Principal Meridian, Grant County, South Dakota,
           according to the recorded plat thereof.

     All contracts, plans, specifications, construction documents and records of
     any kind relating to the Borrower's properties;

     All books, records, blueprints, ledger cards, files, correspondence,
     computer programs, tapes, disks and related data processing software that
     at any time evidence or contain information relating to any of the property
     described above or are otherwise necessary or helpful in the collection
     thereof or realization thereon;

     All investment property (as defined in the UCC);

     All supporting obligations (as defined in the UCC); and

     All products and proceeds of, and all other profits, rentals or receipts,
     in whatever form, arising from the collection, sale, lease, exchange,
     assignment, licensing or other disposition of, or realization upon, any
     property described above or the proceeds thereof, including, without
     limitation, all claims of Borrower against third parties for loss of,
     damage to or destruction of, or for proceeds payable under, or unearned
     premiums with respect to, policies of insurance with respect to any
     property described above or business interruption, and any condemnation or
     requisition payments with respect to any property described above, and any
     condemnation or requisition payments with respect to any property described
     above, in each case whether now existing or hereafter arising.

The Collateral shall include (i) all substitutions and replacements for and
proceeds of any and all of the foregoing property, and in the case of all
tangible Collateral, all accessions, accessories, attachments, parts, equipment
and repairs now or hereafter attached or affixed to or used in connection with
any such goods and (ii) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods. All references to "UCC"
in this Security Agreement shall mean the Uniform Commercial Code as adopted in
South Dakota.

     OBLIGATIONS SECURED. This security interest secures the payment and
performance of (i) all of the Borrower's obligations under the Loan Agreement
and each Loan Document references therein, and (ii) each and every debt,
liability and obligation of

<Page>

every type and description which the Borrower may now or at any time owe to the
Secured Party, whether now existing or hereafter arising, direct or indirect,
due or to become due, absolute or contingent, primary or secondary, liquidated
or unliquidated, joint, several, or joint and several.

     This security interest also secures all extensions, renewals, modifications
and replacements of the above described obligations. Such obligations are
hereinafter collectively referred to as the "Secured Obligations".

     BORROWER'S REPRESENTATIONS AND WARRANTIES AND FURTHER AGREEMENTS. Borrower
warrants, represents and agrees that:

     1. If part of the Collateral now constitutes, or as and when acquired by
Borrower will constitute, inventory or equipment (as those terms are defined in
the uniform Commercial Code as adopted in South Dakota) such collateral is or
will be kept at the offices of Northern Lights Ethanol, LLC, which has a post
office address of Post Office 225, Milbank, South Dakota 57252 will not be
removed from such location or locations (except for transfers between Borrower's
locations in the ordinary course of business) unless, prior to any such removal,
Borrower has given written notice to the Secured Party of the location or
locations to which the Borrower desires to remove the same, and the Secured
Party has given its written consent to such removal. If any of the locations
where Borrower now or hereafter keeps the Collateral are leased by the Borrower,
the Borrower shall at Secured Party's request, obtain a Landlord's waiver in a
form satisfactory to Secured Party. All of the Borrower's inventory and
equipment shall, if so provided above, constitute Collateral, even if located at
a location not set forth above.

     2. Borrower is incorporated in the State of South Dakota. Borrower's
principal place of business has a post office address of Post Office Box 225,
Milbank, South Dakota 57252. Borrower will notify the Secured Party in writing
of any change in Borrower's location. The Borrower's Internal Revenue Service
Taxpayer Identification Number is 46-0460145, and the Borrower shall use such
number as its exclusive Internal Revenue Service Taxpayer Identification Number
until all of its Obligations under this Agreement are satisfied in full. The
Borrower will not change its name as incorporated, without the Secured Party's
prior written consent, which may be conditioned upon the Borrower signing
amendments to UCC-1s or other documents as the Secured Party may require.
Borrower is not engaged in and will not engage in farming or growing crops.

<Page>

     3. Borrower has or will acquire title to and will at all times keep the
Collateral free of all liens and encumbrances, except the security interest
created hereby and has full power and authority to execute this Security
Agreement, to perform Borrower's obligations hereunder and to subject the
Collateral to the security interest created hereby. Borrower will pay all fees,
assessments, charges or taxes arising with respect to the Collateral. There is
no encumbrance or security interest with respect to all or any part of the
Collateral. All costs of keeping the Collateral free of encumbrances and
security interests prohibited by this Agreement and of removing same if they
should arise shall be the obligation of the Borrower, and such obligation shall
be part of the Secured Obligations.

     4. Each right to payment and each instrument, document, chattel paper and
other agreement constituting or evidencing Collateral is (or will be when
arising or issued) a valid, genuine and legally enforceable obligation, subject
to no defense, set-off or counterclaim (other than those arising in the ordinary
course of business) of the account debtor or other obligor named therein or in
Borrower's records pertaining thereto as being obligated to pay such obligation.
Borrower will not agree to any material modification, amendment or cancellation
of any such obligation without Secured Party's prior written consent, and will
not subordinate any such right to payment to claims of other creditors of such
account debtor or other obligor.

     5. Borrower will at any time or times hereafter execute such financing
statements and other documents and instruments and perform such acts as the
Secured Party may from time to time request to establish, maintain, perfect and
enforce a valid security interest in the Collateral, and will pay all costs of
filing and recording. Borrower irrevocably authorizes the Secured Party at any
time and from time to time to file in any Uniform Commercial Code jurisdiction
any initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of the Borrower or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the Uniform Commercial Code of the State or
such jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the Uniform Commercial Code of the State for the sufficiency or filing office
acceptance of any financing statement or amendment, including (i) whether the
Borrower is an organization, the type of organization and any organization
identification number issued to the Borrower and, (ii) in the case of a
financing statement, filed as a fixture filing or indicating Collateral as
as-extracted collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. The Borrower agrees to furnish any
such information to the Secured Party promptly. In the event the Borrower owns
any right in a commercial tort claim (as

<Page>

defined by the UCC), Borrower shall so inform Secured Party and will sign any
additional documentation granting Secured Party a security interest therein as
Secured Party may require.

     6. Borrower will maintain business interruption insurance and keep all
tangible Collateral and all lands, plants, buildings and other property now or
hereafter owned or used in connection with its business in good condition,
normal depreciation excepted, and insured against loss or damage by fire
(including so-called extended coverage), theft, physical damage, and against
such other risks, including without limitation public liability, in such
amounts, with such insurers and upon such terms as Secured Party may reasonably
require. Borrower will include Secured Party as an additional insured and obtain
loss payable indorsements on applicable insurance policies in favor of Borrower
and Secured Party as their interests may appear and at Secured Party's request
will deposit the insurance policies with Secured Party. Borrower shall cause
each insurer to agree, by Policy indorsement or by issuance of a Certificate of
Insurance or by independent instrument furnished to Secured Party, that such
insurer will give 30 days' written notice to Secured Party before such policy
will be altered or canceled. Borrower irrevocably appoints Secured Party as
Borrower's attorney in fact to make claim for, to negotiate settlement of
claims, to receive payment for and to execute and endorse any documents, checks
or other instruments in payment for loss, theft, or damage under any insurance
policy covering the Collateral.

     7. Borrower will promptly notify Secured Party of any loss or material
damage to any Collateral or of any adverse change, known to Borrower, in the
prospect of payment of any sums due on or under any instrument, chattel paper,
account or general intangible constituting Collateral.

     8. Upon Secured Party's request (whether a Default as hereinafter defined,
has occurred) Borrower will promptly deliver to Secured Party any instrument,
document or chattel paper constituting Collateral.

     9. Upon Default by Borrower in performance of its obligation hereunder,
Secured Party shall have the authority, but shall not be obligated to: (i)
effect such insurance and necessary repairs and pay the premiums therefor and
the costs thereof; and (ii) pay and discharge any fees, assessments, charges,
taxes, liens and encumbrances on the Collateral. All sums so advanced or paid by
the Secured Party shall be payable by Borrower on demand with interest at the
highest rate then charged on the Secured Obligations (but not exceeding the
maximum rate allowed by law) and shall be a part of the Secured Obligations.

<Page>

     10. Borrower will not sell, lease or otherwise dispose of the Collateral
other than in the ordinary course of its business at prices constituting the
then fair market value thereof.

     11. The Secured Party shall have the authority (whether or not a Default
has occurred) but shall not be obligated to: (a) notify any or all account
debtors and obligors on instruments constituting Collateral of the existence of
the Secured Party's security interest and if a Default has occurred to pay or
remit all sums due or to become due directly to the Secured Party or its
nominee; (b) place on any chattel paper received as proceeds or otherwise
constituting Collateral, a notation or legend showing the Secured Party's
security interest; (c) if a Default has occurred, in the name of the Borrower or
otherwise, to demand, collect, receive and receipt for, compound, compromise,
settle, prosecute and discontinue any suits or proceedings in respect of any or
all of the Collateral; (d) if a Default has occurred, take any action which the
Secured Party may deem necessary or desirable in order to realize on the
Collateral, including, without limitation, the power to perform any contract, to
indorse in the name of Borrower any checks, drafts, notes or other instruments
or documents received in payment of or on account of the Collateral; (e) to
place upon Borrower's books and records relating to the accounts and general
intangibles covered by the security interest granted hereby a notation or legend
stating that such account or general intangible is subject to a security
interest held by the Secured Party; and (f) after any Default, to enter upon and
into and take possession of all or such part(s) of the properties of Borrower,
including lands, plants, buildings, machinery, equipment and other property as
may be necessary or appropriate in the judgment of the Secured Party to permit
or enable the Secured Party to manufacture, produce, process, store or sell or
complete the manufacture, production, processing, storing or sale of all or any
part of the Collateral, as the Secured Party may elect, and to use and operate
said properties for said purposes and for such length of time as the Secured
Party may deem necessary or appropriate for said purposes without the payment of
any compensation to Borrower thereof.

     12. Borrower will, if a Default has occurred and upon receipt of request
from Secured Party, notify all account debtors and other obligors of the
existence of the Secured Party's security interest and direct such account
debtors and other obligors to pay or remit all sums due or to become due
directly to the Secured Party or its nominee. Borrower will hold all of the
proceeds of any collections and all returned and repossessed goods thereafter
received by Borrower in trust for the Secured Party, and will not commingle the
same with any other funds or property of the Borrower, and will deliver the same
forthwith to the Secured Party at its request.

<Page>

     13. Borrower will keep accurate books, records and accounts with respect to
the Collateral, and with respect to the general business of Borrower, and will
make the same available to the Secured Party at its request for examination and
inspection; and will make and render to the Secured Party such reports,
accountings and statements as the Secured Party from time to time may request
with respect to the Collateral; and will permit any authorized representative of
the Secured Party to examine and inspect during normal business hours, any and
all premises where the Collateral is or may be kept or located.

     14. The occurrence of any of the events identified as a "Default" or "Event
of Default" under the Loan Agreement will constitute a Default hereunder.

     15. Whenever a Default shall exist, the Secured Party may, at its option
and without demand or notice, except to the extent notice is required under the
Loan Agreement, declare all or any part of the Secured Obligations immediately
due and payable, and the Secured Party may exercise, in addition to the rights
and remedies granted hereby, all rights and remedies of a secured party under
the Uniform Commercial Code or any other applicable law. The Secured Party shall
be entitled to recover its attorneys' fees, service tax thereon, and all costs
incurred by such attorneys, to the extent permitted by law.

     16. Borrower agrees, in the event of Default, to make the Collateral
available to the Secured Party at a place or places to be designated by the
Secured Party, which is reasonably convenient to both parties, and to pay all
costs of the Secured Party, including reasonable attorneys' fees, service tax
thereon, and all costs incurred by such attorneys, in the collection of any of
the Secured Obligations and the enforcement of any of the Secured Party's
rights. If any notification of intended disposition of any of the Collateral is
required by law, such notification shall be deemed properly given if mailed a
reasonable time before such disposition, postage prepaid, addressed to the
Borrower at the address shown above. Secured Party's duty of care with respect
to Collateral in its possession shall be deemed fulfilled if Secured Party
exercises reasonable care in physically safekeeping such Collateral or, in the
case of Collateral in the custody or possession of a bailee or other third
person, exercises reasonable care in the selection of the bailee or other third
person, and Secured Party need not otherwise preserve, protect, insure or care
for any Collateral. Secured Party shall not be obligated to preserve any rights
Borrower may have against prior parties, to realize on the Collateral at all or
in any particular manner or order, or to apply any cash proceeds of Collateral
in any particular order of application. No delay or failure by the Secured Party
in the exercise of any right or remedy shall constitute a waiver thereof, and no
single or partial exercise by the

<Page>

Secured Party of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.

     17.   This Agreement is governed by the laws of the State of South Dakota
without regard to its conflict of law provisions.

     Dated this 11th day of July, 2001.

                                           BORROWER:

                                           NORTHERN LIGHTS ETHANOL, LLC

                                           By:  /s/ Delton Strasser
                                               ---------------------------------
                                            Its: Chairman of the Board

STATE OF SOUTH DAKOTA )
                    : SS
COUNTY OF GRANT       )

     On this the 11th day of July, 2001, before me personally appeared Delton
Strasser, known to me to be the Chairman of the Board of Northern Lights
Ethanol, LLC, a limited liability company, and the he that he, as such Chairman
of the Board, being authorized so to do, executed the foregoing instrument, for
the purposes therein contained, by signing the name of the limited liability
company by himself as Chairman of the Board.

     IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                                /s/ Rosalie Kinonen
                                               ---------------------------------
                                               Notary Public - South Dakota

My Commission Expires: 7-20-04

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