10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

OR

	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to         

Commission file number: 001-33530

BIOFUEL ENERGY CORP.

(Exact name of registrant as specified in its charter)

Delaware			20-5952523
(State of incorporation)			(I.R.S. employer identification number)

1801 Broadway, Suite 1060 Denver, Colorado			80202
(Address of principal executive offices)			(Zip Code)

(303) 592-8110

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes          No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of ‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer			Accelerated filer			Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes          No  

Number of shares of common stock outstanding as of August 13, 2007: 14,542,104

PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

The accompanying interim consolidated financial statements of BioFuel Energy Corp. (the ‘‘Company’’) have been prepared in conformity with generally accepted accounting principles. The statements are unaudited but reflect all adjustments which, in the opinion of management, are necessary to fairly present the Company’s financial position and results of operations. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results for the full year. For further information, refer to the financial statements and notes presented in the Company’s registration statement on Form S-1.

1

BioFuel Energy Corp.
(a development stage company)
Consolidated balance sheets
(Unaudited)

			June 30, 2007						December 31, 2006
Assets
Current assets:
Cash and equivalents				$	88,613,728					$	27,238,517
Prepaid expenses					434,160						469,298
Total current assets					89,047,888						27,707,815
Property, plant and equipment:
Land					6,183,880						5,166,263
Construction in progress					165,657,828						77,644,044
Furniture and fixtures					268,978						87,381
					172,110,686						82,897,688
Accumulated depreciation					(28,619	)					(5,275	)
					172,082,067						82,892,413
Debt issuance costs, net					12,134,841						9,404,273
Deferred offering costs					—						1,469,638
Other assets					37,081						7,273
Total assets				$	273,301,877					$	121,481,412
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable				$	13,153,430					$	17,410,701
Construction contract retainage					7,331,628						—
Accrued legal fees					2,088,761						1,761,515
Other accrued expenses					654,923						646,186
Total current liabilities					23,228,742						19,818,402
Construction contract retainage					—						3,017,087
Long-term debt					55,000,000						—
Tax increment financing grant					6,050,770						—
Deferred compensation plan liabilities					29,358						—
Total liabilities					84,308,870						22,835,489
Minority interest					72,745,078						74,026,510
Commitments and contingencies (See Note 13)
Stockholders’ equity
Common stock, $0.01 par value; 100.0 million shares authorized and 5,042,104 shares outstanding at December 31, 2006 and 14,542,104 shares outstanding at June 30, 2007					145,421						50,421
Class B common stock, $0.01 par value; no shares authorized or outstanding at December 31, 2006; 50.0 million shares authorized and 17,957,896 shares outstanding at June 30, 2007					179,579						—
Additional paid-in capital					120,025,075						26,902,614
Deficit accumulated during development stage					(4,102,146	)					(2,333,622	)
Total stockholders’ equity					116,247,929						24,619,413
Total liabilities and stockholders’ equity				$	273,301,877					$	121,481,412

The accompanying notes are an integral part of these financial statements.

2

BioFuel Energy Corp.
(a development stage company)
Consolidated statement of loss
(Unaudited)

			For the Three Months Ended, June 30, 2007						For the Six Months Ended, June 30, 2007						From Inception on April 11, 2006 through June 30, 2006						From Inception on April 11, 2006 through June 30, 2007
General and administrative expenses:
Compensation expense				$	1,320,597					$	2,615,889					$	4,980,700					$	10,328,260
Other					704,133						1,309,301						104,295						2,759,548
Interest income					(200,026	)					(213,292	)					—						(224,604	)
Minority interest in loss of BioFuel Energy, LLC					(1,537,276	)					(3,270,731	)					(3,616,407	)					(10,088,415	)
Net loss					287,428						441,167						1,468,588						2,774,789
Beneficial conversion charge					1,327,357						1,327,357						—						1,327,357
Net loss to common shareholders				$	1,614,785					$	1,768,524					$	1,468,588					$	4,102,146
Loss per share – basic and diluted				$	0.24					$	0.30					$	0.29					$	0.76
Weighted average shares outstanding
Basic					6,816,829						5,934,369						5,042,104						5,404,212
Diluted					10,184,895						7,627,706						5,042,104						6,091,418

The accompanying notes are an integral part of these financial statements.

3

BioFuel Energy Corp.
(a development stage company)
Consolidated statement of stockholders’ equity

From Inception on April 11, 2006 through December 31, 2006
and for the six months ended June 30, 2007
(Unaudited)

			Common Stock						Class B Common Stock						Additional Paid-in Capital						Deficit Accumulated During Development Stage						Total Stockholders’ Equity
Balance at inception				$	—					$	—					$	—					$	—					$	—
Sale of common stock					50,421						—						26,902,614						—						26,953,035
Net loss					—						—						—						(2,333,622	)					(2,333,622	)
Balance at December 31, 2006					50,421						—						26,902,614						(2,333,622	)					24,619,413
Sale of common stock, net of expenses					95,000						—						93,075,501						—						93,170,501
Stock based compensation					—						—						33,455						—						33,455
Issuance of Class B common shares					—						179,579						(179,579	)					—						—
Issuance of LLC units to management					—						—						193,084						—						193,084
Beneficial conversion charge					—						—						—						(1,327,357	)					(1,327,357	)
Net loss					—						—						—						(441,167	)					(441,167	)
Balance at June 30, 2007				$	145,421					$	179,579					$	120,025,075					$	(4,102,146	)				$	116,247,929

The accompanying notes are an integral part of these financial statements.

4

BioFuel Energy Corp.
(a development stage company)
Consolidated Statement of Cash Flows
(Unaudited)

			For the Six Months Ended, June 30, 2007						From Inception on April 11, 2006 through June 30, 2006						From Inception on April 11, 2006 through June 30, 2007
Cash flows from operating activities
Net loss				$	(441,167	)				$	(1,468,588	)				$	(2,774,789	)
Adjustments to reconcile net loss to net cash used in operating activities:
Minority interest					(3,270,731	)					(3,616,407	)					(10,088,415	)
Share based compensation expense					888,481						4,759,586						6,983,096
Depreciation					23,344						—						28,619
Other					—						—						42,281
Changes in operating assets and liabilities, excluding the effects of acquisitions
Decrease (increase) in prepaid expenses					207,589						—						(261,709	)
Increase in accounts payable					224,304						115,440						372,848
Increase in accrued legal fees					179,582						—						186,422
Increase (decrease) in other accrued expenses					(429,436	)					72,582						(323,623	)
Increase in other assets and liabilities					(450	)					—						(7,723	)
Net cash used in operating activities					(2,618,484	)					(137,387	)					(5,842,993	)
Cash flows from investing activities
Capital expenditures					(89,171,332	)					(19,258,100	)					(147,824,682	)
Cash paid for acquisition, net of cash acquired					—						—						(1,500,000	)
Net cash used in investing activities					(89,171,332	)					(19,258,100	)					(149,324,682	)
Cash flows from financing activities
Proceeds from sale of common stock					95,891,250						6,498,188						122,844,285
Proceeds of minority members of BioFuel Energy, LLC					—						16,001,820						75,170,649
Proceeds from issuance of debt					55,000,000						—						55,000,000
Proceeds from tax increment financing grant					6,050,770						—						6,050,770
Deferred offering costs					(449,503	)					(190,719	)					(861,085	)
Debt issuance costs					(3,327,490	)					(164,849	)					(12,431,674	)
Payments to predecessor owners					—						—						(1,991,542	)
Net cash provided by financing activities					153,165,027						22,144,440						243,781,403
Net increase in cash and equivalents					61,375,211						2,748,953						88,613,728
Cash and equivalents, beginning of period					27,238,517						—						—
Cash and equivalents, end of period				$	88,613,728					$	2,748,953					$	88,613,728
Non-cash investing and financing activities:
Non-cash additions to property, plant and equipment				$	16,597,134					$	318,162					$	19,614,221
Non-cash additions to debt and deferred offering costs					901,700						119,611						2,569,203

The accompanying notes are an integral part of these financial statements.

5

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements

1.	Organization and Nature of Business

We are a development stage company whose goal is to become a leading ethanol producer in the United States. We are currently constructing two 115 million gallons per year (‘‘Mmgy’’) ethanol plants in the Midwestern corn belt. At each location, Cargill, Incorporated, (‘‘Cargill’’), with whom we have an extensive relationship, has a strong local presence and, directly or through affiliates, owns adjacent grain storage facilities. Four similar sites are being developed in anticipation of the possible construction of additional plants. All six sites were selected primarily based on access to favorably priced corn as well as availability of rail transportation and natural gas. While our initial focus has been on plant construction, we ultimately expect to grow, at least in part, through acquisitions.  We will continue to assess the trade-offs implicit in acquiring versus building plants as we consider whether and w hen to initiate building additional plants.

From inception, we have worked closely with Cargill, one of the world’s leading agribusiness companies. Cargill will handle corn procurement, marketing of ethanol and distillers grain and transportation logistics for our two initial plants under long-term contracts. In addition, they will lease us their adjacent grain storage and handling facilities.

The Wood River, Nebraska (‘‘Wood River’’) and Fairmont, Minnesota (‘‘Fairmont’’) plants are currently under construction and should be operational in the first quarter of 2008.  We had planned to begin construction of a third plant in Alta, Iowa in the second half of 2007.  However, plans to construct a third plant have been delayed for three to six months due to the sale of Delta-T, the design engineer on our two initial plants and increases in construction costs.  We will continue to evaluate the attractiveness of initiating construction of a third plant.  Sites in Gilman, Illinois, Atchison, Kansas and Litchfield, Illinois have been selected as the locations for possible additional plants.  Land has been optioned and permit filings have begun at each of these sites.

BioFuel Energy Corp. (the ‘‘Company’’) was incorporated as a Delaware corporation on April 11, 2006 to invest solely in BioFuel Energy, LLC (‘‘Energy LLC’’), a limited liability company organized on January 25, 2006 to build and operate a series of ethanol production facilities in the Midwestern United States. Prior to its initial public offering, the Company had purchased 28.9% of the Class A Units of Energy LLC. The Company’s headquarters are located in Denver, Colorado.

On June 19, 2007, the Company completed an initial public offering of 5,250,000 shares of our common stock and the private placement of 4,250,000 shares of our common stock to the Company’s three largest pre-existing shareholders at a gross per share price of $10.50 (the ‘‘initial public offering’’). The Company received approximately $93.2 million in net proceeds from this offering and private placement, after expenses. All net proceeds from the offering were transferred to Energy LLC as contributed capital subsequent to the offering. Immediately following the initial public offering, there were 14,542,104 shares of common stock issued and outstanding. The Company also had 17,957,896 shares of Class B common stock issued and outstanding. These shares are held by the historical equity investors of Energy LLC, who also hold 17,957,896 membership interests in Energy LLC that can be exchanged for newly issued shares of c ommon stock on a one-for-one basis. Holders of shares of Class B common stock have no economic rights but are entitled to one vote for each share held. The Class B common stock will be retired upon exchange of the related membership interests. Subsequent to the offerings, the Company owns 44.7% of the Energy LLC units.

Prior to the initial public offering, the Company had 1,000 shares of common stock issued and outstanding. In conjunction with the pricing of its initial public offering, the Company’s board of directors declared and effected a 5,042.104 to 1 stock split with respect to its outstanding common stock. The Company’s historical financial statements have been adjusted to reflect this split.

6

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

Financial Accounting Standards Board (‘‘FASB’’) Interpretation No. 46, as revised, Consolidation of Variable Interest Entities (‘‘FIN 46R’’), applies to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties (‘‘variable interest entities’’). Variable interest entities (‘‘VIE’’) are required to be consolidated by their primary beneficiaries. The Company has determined that Energy LLC is a VIE. Pursuant to FIN 46R the Company has assessed its investment in Energy LLC and has determined that it is the primary beneficiary. The Company therefore consolidated Energy LLC effective May 1, 2006.

The aggregate size of Energy LLC at December 31, 2006 and June 30, 2007 was approximately $121 million and $273 million, respectively, which are the carrying amounts of the consolidated assets recorded on the consolidated balance sheet of the Company that are collateral for Energy LLC’s obligations. The nature and purpose of Energy LLC is described below. The beneficial interests of Energy LLC are payable solely from the cash flows of the assets held by Energy LLC.

Since its inception, Energy LLC’s operations have primarily involved arranging financing for and initiating construction of its first two ethanol plants in Wood River and Fairmont and development work on additional ethanol plant sites. Energy LLC is considered development stage as it has not commenced production of ethanol, hired a full complement of personnel or generated revenues. Until ethanol production begins in early 2008, Energy LLC will remain dependent on external financing to execute its business plan.

The Company is also considered development stage as its only asset is its investment in Energy LLC.

2.	Summary of Significant Accounting Policies

The financial statements include the Company and Energy LLC and its subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts and disclosures in the accompanying notes. Actual results could differ from those estimates.

Cash and equivalents include highly liquid investments with an original maturity of three months or less.

Property, plant and equipment, which primarily consists of land and construction in progress, are recorded at cost. All costs related to purchasing and developing land or the engineering, design and construction of a plant are capitalized. Costs not directly related to a site or plants are expensed. At June 30, 2007 and December 31, 2006, accounts payable included approximately $12.3 million and $17.1 million, respectively, related to the Company’s construction activities. Depreciation expense from inception through December 31, 2006 and for the three months and six months ended June 30, 2007 relates to furniture and fixtures which are being depreciated over 3-10 years. Land improvements will be depreciated over 20-30 years. Construction in progress will be categorized as individual assets and depreciated over 5-25 years. The Company will begin depreciation of land improvements and its plant asset s once the plants become operational.

The Company capitalizes interest and the amortization of debt issuance costs during the period of construction as part of the cost of constructed assets. Interest and debt issuance costs capitalized for the three months and six months ended June 30, 2007, and the period from inception through June 30, 2007 totaled $2,102,000, $2,778,000, and $3,397,000, respectively.

The recoverability of the carrying value of long-lived assets is evaluated whenever circumstances indicate that value may not be fully recoverable. Recoverability is measured by comparing carrying

7

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

value of an asset with estimated undiscounted future cash flows. If carrying value exceeds such cash flows, an impairment charge is recognized equal to the amount by which carrying value exceeds fair market value. No impairment has occurred to date.

Asset retirement obligations are recognized when a contractual or legal obligation exists and a reasonable estimate of the amount can be made. As of December 31, 2006 and June 30, 2007, the Company had not incurred any significant asset retirement obligations associated with the Wood River or Fairmont plants.

Debt issuance costs represent costs incurred related to the Company’s senior and subordinated credit agreements. These costs are being amortized over the term of the related debt using the effective interest method.

Deferred offering costs represent costs incurred related to the Company’s planned initial public offering. These costs were charged against the proceeds of the initial public offering in June 2007.

Expenses associated with stock-based awards and other forms of equity compensation are recorded in accordance with Statement of Financial Accounting Standards (‘‘SFAS’’) 123(R), Share Based Payment (‘‘SFAS 123R’’). The expense associated with these awards is based on fair value at grant and recognized in the financial statements over the requisite service period, if any.

The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences of temporary differences between the financial statement carrying amounts and their respective tax bases. As the Company has incurred a loss since its inception and expects to continue to incur losses until its plants become operational, it will provide a valuation allowance against all deferred tax assets until it is assured that such assets will be realized.

The reported values of cash and equivalents, accounts payable and accrued expenses approximate fair value because of their short-term nature.

The accompanying unaudited consolidated financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary to present fairly the financial position and results of operations as of June 30, 2007 and for the three month and six month periods then ended. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the period from April 11, 2006 (inception) to December 31, 2006.

3.	Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (‘‘FASB’’) issued FIN No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement 109, (‘‘FIN 48’’). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements in accordance with SFAS No. 109, Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of FIN 48 are effective for the first fiscal year beginning after Decem ber 15, 2006. The adoption of FIN 48 did not have a material impact on the Company’s consolidated results of operations, cash flows or financial position.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (‘‘SFAS 157’’). SFAS 157 provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company does not currently expect SFAS 157 to have a material impact on its consolidated results of operations, cash flows or financial position.

8

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities – including an amendment of FAS 115 (‘‘SFAS 159’’). SFAS 159 allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item’s fair value in subsequent reporting periods must be recognized in current earnings. SFAS 159 also establishes presentation and disclosure requirements designed to draw comparison between entities that elect different measurement attributes for similar assets and liabilities. SFAS 159 is effective for the Company on January 1, 2008. The Company has not assessed the impact of SFAS 159 on our consolidated results of operations, cash flows or financial position.

4.	Earnings Per Share

Basic earnings per share are computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted earnings per share are calculated using the treasury method in accordance Statement of Financial Accounting Standards No. 128 (‘‘SFAS 128’’), Earnings per Share, and includes the effect of all dilutive securities, including stock options, restricted stock and Class B common shares.

5.	BioFuel Solutions, LLC

BioFuel Solutions, LLC, a Delaware limited liability company (‘‘Solutions’’), was the predecessor company to Energy LLC. Solutions became a wholly-owned subsidiary of Energy LLC on September 25, 2006 as a result of two transactions.

In August 2006, the Company acquired a 30% interest in Solutions for $1,500,000 and 100,000 Class A Units. The Company accounted for this acquisition at fair value. For the period from August 4, 2006 to September 25, 2006, the Company accounted for this investment under the equity method of accounting. The operating results of Solutions for this period were insignificant.

On September 25, 2006, certain founders of Energy LLC conveyed the remaining 70% interest in Solutions to Energy LLC in exchange for cash of $1,750,000 and 467,500 Class C and 180,833 Class D Units of Energy LLC. As founders and continuing members of executive management, the 70% contribution of Solutions by the individuals has been recorded at carryover basis and a distribution of equity for the cash received in accordance with Staff Accounting Bulletin Topic 5G, Transfers of Nonmonetary Assets by Promoters or Shareholders.

6.	Minority Interest

Minority interest consists of equity issued to members of Energy LLC. Under its original LLC agreement, Energy LLC was authorized to issue 9,357,500 Class A, 950,000 Class B, 425,000 Class M, 2,683,125 Class C and 894,375 Class D Units. Class M, C and D Units were considered ‘‘profits interests’’ for which no cash consideration was received upon issuance. In accordance with the LLC agreement, all classes of Energy LLC equity units were converted to one class of Energy LLC equity upon the Company’s initial public offering in June 2007. As provided in the LLC agreement, the exchange ratio of the various existing classes of equity for the single class of equity was based on the Company’s initial public offering price of $10.50 per share and the resulting implied valuation of the Company. Each newly issued unit of LLC equity (17,957,896 units) is exchangeable at the holder’s option into one share of Company common stock .

In May 2006, a private placement of 9,175,000 Class A Units in exchange for cash and commitments of $91,750,000 was completed. In June 2006, an additional 157,500 Class A Units were issued in exchange for cash and commitments of $1,575,000. In August 2006, 25,000 Class A Units

9

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

were issued by Energy LLC and 75,000 Class A Units were transferred by a founder in connection with the purchase of 30% of Solutions. With the exception of the 25,000 newly issued units in connection with the Solutions acquisition, all Class A Units were fully-paid for in cash.

In September 2006, 950,000 Class B Units were issued to Cargill, Inc. for $8,798,684 of cash plus an in-kind contribution of $701,316, representing actual expenses incurred by Cargill through that date related to the Wood River and Fairmont plants. Of this amount, $544,219 was recorded as land, $106,256 as debt issuance costs and $50,841 as general and administrative expense. Energy LLC may make distributions to members as determined by its Manager.

Prior to its initial public offering, the Company owned 28.9% of the Class A Units of Energy LLC. Subsequent to the offerings, the Company owns 44.7% of the Energy LLC units.

7.	Long-Term Debt

The following table summarizes long-term debt:

			June 30, 2007						December 31, 2006
Senior debt				$	5,000,000					$	—
Subordinated debt					50,000,000						—
					55,000,000						—
Less current portion					—						—
Total				$	55,000,000					$	—

In September 2006, Energy LLC, through its subsidiaries, entered into a $230,000,000 Senior Secured Credit Facility providing for the availability of $230.0 million of borrowings (‘‘Senior Debt’’) with BNP Paribas and a syndicate of lenders to finance construction of the Wood River and Fairmont plants. The Senior Debt consists of two construction loans, which together total $210.0 million of available borrowings and convert into term loans upon completion of the plants. No principal payments are required until the construction loans are converted to term loans. Thereafter, principal payments will be payable quarterly at a minimum annual rate of 6% of principal plus a percentage of available cash flow. These term loans mature in September 2014. Senior Debt also includes working capital loans of up to $20.0 million, a portion of which may be used as letters of credit. The working capital loans mature in September&nb sp;2010. Interest rates on Senior Debt will, at management’s option, be set at: i) a Base Rate, which is the higher of the federal funds rate plus 0.5% or BNP Paribas’ prime rate, in each case plus a margin of 2.0%; or ii) at LIBOR plus 3.0%. Interest is payable quarterly.

While we have commenced borrowing under our Senior Debt facility, additional borrowings remain subject to the satisfaction of a number of additional conditions precedent, including continuing compliance with debt covenants and provision of engineers’ reports satisfactory to the lenders. The Senior Debt is secured by a first lien on all rights, titles and interests in the Wood River and Fairmont plants and any accounts receivable or property associated with those plants. Senior Debt includes certain limitations on, among other things, the ability of the borrowing subsidiaries to incur additional debt, grant liens or encumbrances, declare or pay dividends or distributions, conduct asset sales or other dispositions, merge or consolidate, conduct transactions with affiliates and amend, modify or change the scope of the Wood River and Fairmont projects, the project agreements or the budgets relating to them. The Senior Debt contains customary events of default including failure to meet payment obligations, failure to complete construction of the Wood River and Fairmont plants by

10

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

June 30, 2009, failure to pay financial obligations, failure of Energy LLC or its principal contractors to remain solvent and failure to obtain or maintain required governmental approvals. No such events of default have occurred.

A quarterly commitment fee of 0.50% per annum on the unused portion of available Senior Debt is payable. Debt issuance fees and expenses of approximately $7.6 million ($6.9 million, net of accumulated amortization) have been incurred in connection with the Senior Debt at June 30, 2007. These costs have been deferred and are being amortized over the term of the Senior Debt.

In September 2006, Energy LLC entered into a subordinated debt agreement with certain Class A unitholders providing for up to $50.0 million of loans (‘‘Subordinated Debt’’) to be used for general corporate purposes including construction of the Wood River and Fairmont plants. The Subordinated Debt must be repaid by no later than March 2015. Interest on Subordinated Debt is payable quarterly in arrears at a 15.0% annual rate. The Subordinated Debt is secured by the equity of the subsidiaries of Energy LLC owning the Wood River and Fairmont plant sites and guaranteed by those subsidiaries on a subordinated basis. The Subordinated Debt may be prepaid at any time in whole or in part without penalty.

Debt issuance fees and expenses of approximately $5.4 million ($5.1 million, net of accumulated amortization) have been incurred in connection with the Subordinated Debt at June 30, 2007. Debt issuance costs associated with the Subordinated Debt are being deferred and amortized over the term of the agreement.

8.    Tax Increment Financing

In February 2007, the subsidiary of Energy LLC constructing the Wood River plant received a grant of $6.0 million from the proceeds of a tax increment revenue note issued by the City of Wood River, Nebraska. The grant was provided to fund improvements to property owned by the subsidiary. The City of Wood River will pay the principal and interest of the note from the incremental increase in the property taxes related to the improvements made to the property. The proceeds of the grant have been recorded as a tax increment financing grant and will be amortized over the term of the financing grant. Amortization will begin in 2008 when the plant becomes operational.

Energy LLC has guaranteed the principal and interest of the tax increment revenue note if, for any reason, the City of Wood River fails to make the required payments to the holder of the note.

9.	Stock-Based Compensation Plans and Payments

The following table summarizes the stock based compensation recorded by the Company:

			Three Months Ended, June 30, 2007						Six Months Ended, June 30, 2007						From Inception April 11, 2006 to June 30, 2006						From Inception April 11, 2006 to June 30, 2007
LLC units issued to management				$	267,076					$	855,026					$	4,759,586					$	6,949,641
Stock options					18,930						18,930						—						18,930
Restricted stock					14,525						14,525						—						14,525
Total				$	300,531					$	888,481					$	4,759,586					$	6,983,096

In May and June 2006, Energy LLC issued 425,000 Class M Units to its founders. These units vested upon issuance. Compensation expense of $1,062,750 was recorded in connection with the

11

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

issuance of these units. Between May and December 2006, a total of 2,103,118 Class C and 676,039 Class D Units were issued to Energy LLC’s founders and certain key employees. These units vested upon issuance and compensation expense of $5,031,865 was recorded. In February 2007, 85,000 Class C Units and 30,000 Class D Units were issued to certain key employees. These units vested upon issuance and compensation expense of $587,950 was recorded. In April 2007, all remaining Units (27,507 Class C Units and 7,503 Class D Units) were issued to certain employees. These units vested upon issuance and compensation expense of $267,076 was recorded. Other than for the units issued in April 2007, compensation expense was determined based on the estimated fair value of the Class M, C and D Units at the date of grant. Energy LLC considered the methodology outlined by the American Institute of Certified Public Accountants in its practice aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation. This methodology included:

	•	Estimating the fair value of Energy LLC at dates approximating the dates units were awarded by discounting estimated cash flows.

	•	Allocating Energy LLC’s fair value to its debt and equity holders through a series of call options on Energy LLC’s value.

	•	Determining the portion of Energy LLC’s value specifically attributed to the Class M, C and D Units.

	•	Discounting the cash flows for lack of marketability to reflect restrictions inherent on the sale of the Class M, C and D Units. The discount rates used for lack of marketability ranged from 32% to 19%.

As part of the valuation, the Black-Scholes option pricing model was used to estimate the value of the call options on Energy LLC’s value. The assumptions listed below were made in applying this option pricing model.

	•	The underlying security price for the options was assumed to be Energy LLC’s value as determined by discounting its cash flow.

	•	The exercise prices of the options were based on the amounts to which each equity class would be entitled if a liquidation event were to occur.

	•	The terms of the options were based on assumptions of various liquidation dates weighted on the likelihood of the assumed liquidation occurring and ranged from seven months to five years.

	•	Volatility was based on the volatilities of comparable companies and ranged from 60% to 53%.

	•	Risk-free rates were based on US Treasury Strips which corresponded with the assumed terms of the options and ranged from 5.0% to 4.5%.

Compensation expense for the 35,010 units issued in April 2007 was determined by applying a market risk factor to the Company’s initial offering price of $10.50 per share and multiplying this amount by the equivalent shares as would be received upon exchange.

In conjunction with the initial public offering and concurrent private placement, the LLC recorded a beneficial conversion charge of $4.6 million, which resulted in beneficial charge of approximately $1.3 million on a consolidated basis (based on the Company’s 28% ownership interest in the LLC prior to the public offering). The intrinsic value of the beneficial conversion charge was calculated as $11.9 million, however the charge recorded was limited to the amount of actual proceeds received with respect to certain equity units.

12

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

2007 Equity Incentive Compensation Plan

Immediately prior to the Company’s initial public offering, the Company adopted the 2007 Equity Incentive Compensation Plan (‘‘2007 Plan’’). The 2007 Plan provides for the grant of options intended to qualify as incentive stock options, non-qualified stock options, stock appreciation rights or restricted stock awards and any other equity-based or equity related awards. The 2007 Plan will be administered by the compensation committee of our Board of Directors. Subject to adjustment for changes in capitalization, the aggregate number of shares that may be delivered pursuant to awards under the 2007 Plan is 3,000,000 and the term is for ten years, expiring in June 2017.

Stock Options – Except as otherwise directed by the compensation committee, the exercise price for options cannot be less than the fair market value of our common stock on the grant date. The options will generally vest and become exercisable with respect to 30%, 30% and 40% of the shares of our common stock subject to such options on each of the first three anniversaries of the grant date. The Company granted 370,950 stock options under the 2007 Plan to certain of our employees and non-employee Directors in conjunction with the initial public offering, with a per-share exercise price equal to the initial public offering price. The determination of the fair value of the stock option awards, using the Black-Scholes model, incorporated the assumptions in the following table for stock options granted during the three month period ended June 30, 2007. The risk-free rate i s based on the U.S. Treasury yield curve in effect at the time of grant over the expected term. Expected volatility is calculated by considering, among other things, the expected volatilities of public companies engaged in the ethanol industry. The expected option term is calculated using the ‘‘simplified’’ method permitted by SAB 107.

Expected stock price volatility					58	%
Expected life (in years)					4.0
Risk-free interest rate					5.0	%
Expected dividend yield					0.0	%
Weighted average fair value				$	5.17

A summary of the status of outstanding stock options at June 30, 2007 and the changes during the year is as follows:

			Shares						Weighted Average Exercise Price						Weighted Average Remaining Life (years)						Unrecognized Remaining Compensation Expense
Options outstanding, January 1, 2007					—					$	—						—
Granted					370,950						10.50						4.0
Exercised					—						—						—
Forfeited					—						—						—
Options outstanding, June 30, 2007					370,950					$	10.50						4.0					$	1,900,400
Options exercisable, June 30 2007					—					$	10.50						4.0

Restricted Stock – The Company granted 100,810 shares of restricted stock under the 2007 Plan to certain of our employees and non-employee Directors in conjunction with the initial public offering. The restricted share awards granted to certain of our employees totaled 78,310 shares and will vest 25% per year on each of the first four anniversaries of the grant date. The restricted share awards granted to certain of our non-employee Directors totaled 22,500 shares and will vest 100% on the first anniversary of the grant date.

13

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

A summary of the status of restricted stock activity at June 30, 2007 and the changes during the year is as follows:

			Shares						Weighted Average Grant Date Fair Value per Award						Unrecognized Remaining Compensation Expense
Restricted stock outstanding, January 1, 2007					—					$	—
Granted					100,810						10.50
Vested					—						—
Cancelled or expired					—						—
Restricted stock outstanding, June 30, 2007					100,810					$	10.50					$	1,044,000
Restricted stock vested, June 30 2007					—					$	10.50

In accordance with SFAS 123(R), the Company recorded $33,500 of non-cash compensation expense during the three months ended June 30, 2007 relating to the grant of stock options and restricted stock. Compensation expense was determined based on the fair value of each award type at the grant date (the initial offering price of $10.50 per share) and recognized on a straight line basis over their respective vesting periods. The remaining unrecognized option and restricted stock expense will be recognized over the applicable vesting periods of 3 years and 4 years for the options and restricted stock, respectively. After considering the stock option and restricted stock awards issued at the consummation of the offering, the Company has 2,528,240 shares of common stock available for future grant under our 2007 Plan.

10.    Management Members and Affiliates Share Ownership

At the time of formation of the LLC, the founders agreed with certain of our principal stockholders as to the relative ownership interests in the Company of our management members and affiliates of Greenlight Capital, Inc. (‘‘Greenlight’’) and Third Point LLC (‘‘Third Point’’). Certain management members and affiliates of Greenlight and Third Point agreed to exchange LLC membership interests, shares of common stock or cash at a future date, referred to as the ‘‘true-up date’’, depending on the Company’s performance. This provision functions by providing management with additional value if the Company’s value improves and by reducing management’s interest in the Company if its value decreases, subject to a predetermined rate of return accruing to Greenlight and Third Point. In particular, if the value of the Company increases from the time of the initial public offering to t he ‘‘true-up date’’, the management members will be entitled to receive LLC membership interests, shares of common stock or cash from the affiliates of Greenlight and Third Point. On the other hand, if the value of the Company decreases from the time of the initial public offering to the ‘‘true-up date’’ or if a predetermined rate of return is not met, the affiliates of Greenlight and Third Point will be entitled to receive LLC membership interests or shares of common stock from the management members.

The ‘‘true-up date’’ will be the earlier of (1) the date on which the Greenlight and Third Point affiliates sell a number of shares of our common stock equal to or greater than the number of shares of common stock or Class B common stock received by them at the time of our initial public offering in respect of their original investment in Energy LLC, and (2) five years from the date of the initial public offering. On the ‘‘true-up date’’, the LLC’s value will be determined, based on the prices at which the Greenlight and Third Point affiliates sold shares of our common stock prior to that date, with any remaining shares (or LLC membership interests exchangeable for shares) held by them deemed to have been sold at the then-current trading price. If the number of LLC membership interests held by the management members at the time of this offering is greater than the number of

14

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

membership interests the management members would have been entitled to in connection with the ‘‘true-up’’ valuation, the management members will be obligated to deliver to the Greenlight and Third Point affiliates a portion of their LLC membership interests or an equivalent number of shares of common stock. Conversely, if the number of LLC membership interests the management members held at the time of this offering is less than the number of membership interests the management members would have been entitled to in connection with the ‘‘true-up’’ valuation, the Greenlight and Third Point affiliates will be obligated to deliver, at their option, to the management members a portion of their LLC membership interests or an equivalent amount of cash or shares of common stock. In no event will any management member be required to deliver, at their option, more than 50% of the membership interests in the LLC, or an equivalent number of shares of common stock, held o n the date of the initial public offering, provided that Mr. Edelman may be required to deliver up to 100% of his membership interests, or an equivalent amount of cash or number of shares of common stock.

No new shares will be issued as a result of the true-up. As a result there will be no impact on our shareholders, but rather a redistribution of shares among certain members of our management group and our two largest investors, Greenlight and Third Point.

11.    Income Taxes

The Company has no income tax provision (benefit) for the period from inception through December 31, 2006, and the three and six month periods ended, June 30, 2007. At June 30, 2007 and December 31, 2006, the Company has deferred tax assets of $958,100 and $855,000, respectively, related to the difference between the book and tax basis of its investment in Energy LLC and has provided valuation allowances for the full amount of these deferred tax assets since it has no history of generating taxable income.

The U.S. statutory federal income tax rate is reconciled to the Company’s effective income tax rate as follows:

			Three Months Ended, June 30, 2007						Six Months Ended, June 30, 2007						From Inception April 11, 2006 to June 30, 2006						From Inception April 11, 2006 to June 30, 2007
Statutory U.S. federal income tax rate					(34.0	%)					(34.0	%)					(34.0	%)					(34.0	%)
Expected state tax benefit, net					(3.6	%)					(3.6	%)					(3.6	%)					(3.6	%)
Valuation allowance					37.6	%					37.6	%					37.6	%					37.6	%
					0.0	%					0.0	%					0.0	%					0.0	%

12.    Employee Benefits Plans

401(k) Plan

Energy LLC sponsors a 401(k) profit sharing and savings plan for its employees. Employee participation in this plan is voluntary. Contributions to the plan by Energy LLC are at the discretion of its manager. Energy LLC contributed $60,800 to the plan in 2006. There were no contributions made to the plan during the six months ended June 30, 2006 and 2007.

15

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

Deferred Compensation Plan

The Company maintains a deferred compensation plan. The plan is available to executive officers of the Company and certain key managers of the Company as designated by the Board of Directors or its compensation committee. The plan allows participants to defer all or a portion of their salary and annual bonuses. The Company may make discretionary matching contributions of a percentage of the participant’s salary deferral and those assets are invested in instruments as directed by the participant. The deferred compensation plan does not have dollar limits on tax-deferred contributions. The assets of the deferred compensation plan are held in a ‘‘rabbi trust’’ and, therefore, may be available to satisfy the claims of the Company’s creditors in the event of bankruptcy or insolvency. Participants have the ability to direct the plan administrator to invest their salary and bonus deferrals into pre-approved mutual funds held by the t rust or other investments approved by the Board. In addition, each participant has the right to request that the plan administrator re-allocate the portfolio of investments in the participant’s individual account within the trust. However, the plan administrator is not required to honor such requests. Matching contributions will be made in cash and vest ratably over a three-year period. Assets of the trust are invested in over ten mutual funds that cover an investment spectrum ranging from equities to money market instruments. These mutual funds are publicly quoted and reported at market value. Approximately $27,600 of employee deferrals were contributed to the plan and $1,800 earned on these investment in the first six months of 2007 and have been recorded as Other assets and Deferred compensation liabilities on the consolidated balance sheet at June 30, 2007. There were no deferrals in 2006.

13.    Commitments and Contingencies

In September 2006, Energy LLC, through its subsidiaries, entered into two operating lease agreements with Cargill, a related party. Cargill’s grain handling and storage facilities, located adjacent to the Wood River and Fairmont plants, are being leased for 20 years from the date the plants become operational. Minimum annual payments under each lease are $800,000 so long as the associated corn supply agreements with Cargill remain in effect. Should the Company not maintain its corn supply agreements with Cargill, the minimum annual payments under each lease increase to $1,200,000. The leases contain escalation clauses which are based on the percentage change in the Midwest Consumer Price Index. The escalation clauses are considered to be contingent rent and, accordingly, are not included in minimum lease payments. The leases do not become effective until the plants become operational. Rent expense will be recognized on a straight line basis over the i nitial terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations and insolvency.

In October 2006, subsidiaries of Energy LLC entered into agreements to lease a total of 1,065 railroad cars. Pursuant to these lease agreements, beginning in 2008 these subsidiaries will pay approximately $8.7 million annually for ten years. Monthly rental charges escalate if modifications of the cars are required by governmental authorities or mileage exceeds 30,000 miles in any calendar year. Rent expense will be recognized on a straight line basis over the initial terms of the leases. Events of default under the leases include failure to fulfill monetary or non-monetary obligations and insolvency.

In October 2006, Energy LLC entered into a nineteen month lease for its corporate office in Denver.

16

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

Future minimum lease payments at June 30, 2007 are as follows:

			Operating Leases
2007				$	767,204
2008					10,119,816
2009					10,283,500
2010					10,283,500
2011					10,283,500
Thereafter					77,177,375
				$	118,914,895

Rent expense recorded during the three month and six month periods ended June 30, 2007 totaled $41,200 and $68,500, respectively. For the period from inception through December 31, 2006 rent expense totaled $36,000.

In December 2006, Energy LLC, through its subsidiaries constructing the Wood River and Fairmont plants, entered into agreements with electric utilities pursuant to which the electric utilities will build, own and operate substation and distribution facilities in order to supply electricity to the plants. For its Wood River plant, Energy LLC paid the utility $1.5 million for the cost of the substation and distribution facility. For its Fairmont plant, Energy LLC will pay a fixed facilities charge based on the cost of the substation and distribution facility estimated to be approximately $25,000 per month, over the 30-year term of the agreement. The agreement will be accounted for as a capital lease in the fourth quarter of 2007. The agreement also includes a $25,000 monthly minimum energy charge which is expected to begin in the fourth quarter of 2007.

Subsidiaries of Energy LLC have entered into engineering, procurement and construction (‘‘EPC’’) contracts with The Industrial Company (‘‘TIC’’) covering the construction of the Wood River and Fairmont plants. Pursuant to these EPC contracts, TIC will be paid a total of $263.8 million, subject to certain adjustments, for the turnkey construction of the two plants. Subsequent to the payment of certain advance payments, the subsidiaries of Energy LLC are permitted to withhold approximately 5% of progress payments billed by TIC as retainage payable at the completion of the plants. Such withholdings are reported as construction contract retainage in the consolidated balance sheets. At June 30, 2007 and December 31, 2006, construction in progress reflects $150.5 million and $72.0 million, respectively, related to the EPC contracts. For the plants to become operational, it is estim ated that as of June 30, 2007, a further $30.3 million in addition to the EPC contract amounts must be spent on plant infrastructure and other construction requirements. Additional expenditures may be necessary to cover changes that may arise during the construction and start-up of the two plants.

Pursuant to long-term agreements, Cargill will be the exclusive supplier of corn to the Wood River and Fairmont plants for twenty years after they become operational. The price per bushel of corn purchased under these agreements is based on a formula including cost plus an origination fee. The minimum annual origination fee payable to Cargill per plant under the agreements is $1.2 million. The agreements contain events of default that include failure to pay, willful misconduct, purchase of corn from another supplier, insolvency or the termination of the associated grain facility lease.

Cargill has agreed to market all ethanol and distillers grain produced at the Wood River and Fairmont plants for ten years from the date the plants become operational. Under the terms of the ethanol marketing agreements, the Wood River and Fairmont plants will generally participate in a marketing pool where all parties receive the same net price. That price will be the average delivered price per gallon received by the marketing pool less average transportation and storage charges and

17

BioFuel Energy Corp.
(a development stage company)

Notes to Consolidated Unaudited Financial Statements (continued)

less a 1% commission. In certain circumstances, the plants may elect not to participate in the marketing pool. Minimum annual commissions are payable to Cargill and represent 1% of Cargill’s average selling price for 82.5 million gallons of ethanol. Under the distillers grain marketing agreements, the Wood River and Fairmont plants will receive the market value at time of sale less a commission. Minimum annual commissions are payable to Cargill and range from $500,000 to $700,000 depending upon certain factors as specified in the agreement. The marketing agreements contain events of default that include failure to pay, willful misconduct and insolvency.

The Company is not currently a party to any material legal, administrative or regulatory proceedings that have arisen in the ordinary course of business or otherwise.

14.    Related Party Transaction

Energy LLC paid a fee of $550,000 to a founder who elected not to remain an employee for work performed in connection with its formation and initial financing. This fee is reported as a compensation expense in the consolidated statement of loss. In addition, an advisory agreement was entered into with this founder, pursuant to which the founder is paid $20,000 per month through February 2008.

In April 2007, Energy LLC entered into a contract with an affiliate of Bear Cub Energy, LLC, which we refer to as Bear Cub, to construct a natural gas line to serve our Fairmont plant. Our Chairman, Thomas J. Edelman, is the Chairman of, and through his and his family members’ ownership interests therein controls, Bear Cub. David J. Kornder, our Executive Vice President, serves on the Board of Bear Cub. The contract was awarded after a competitive bidding process. Neither Mr. Edelman nor Mr. Kornder participated in the process of evaluating bids or awarding the contract. The interests of Mr. Edelman and Mr. Kornder were fully disclosed to our Board, and the contract was approved by our Board without Mr. Edelman’s participation. The contract provides for the payment upon completion of the pipeline consisting of a cash payment of $130,000 and the issuance of a three-year promissory note for $1,265,000. The note bears inter est at a rate of 1.25% per month (15% per annum), which is the same rate being paid on our subordinated debt. The note may be prepaid at any time without penalty. The pipeline is expected to be completed in the fourth quarter of 2007.

15.    Subsequent Event

In July 2007, the underwriter of the Company’s recently completed initial public offering exercised their full over-allotment option, purchasing 787,500 additional shares of common stock. The shares were purchased at the $10.50 per share offering price, resulting in $7.7 million of additional proceeds to the Company. With these proceeds combined with the proceeds from the 5,250,000 shares sold to the public and 4,250,000 shares sold simultaneously to the Company’s three largest pre-existing shareholders, the Company retired $30.0 million of its subordinated debt with offering proceeds, leaving $20.0 million of subordinated debt outstanding.

18

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the unaudited consolidated financial statements and the accompanying notes included in this Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in or implied by any of the forward-looking statements as a result of various factors, including but not limited to those listed elsewhere in this Form 10-Q and those listed in other documents we have filed with the Securities and Exchange Commission.

Overview

We are a recently formed company whose ultimate goal is to become a leading ethanol producer in the United States. We are currently constructing two 115 Mmgy ethanol plants in the Midwestern corn belt. We had planned to begin construction of a third plant in Alta, Iowa in the second half of 2007.  However, plans to construct a third plant have been delayed for three to six months due to the sale of Delta-T, the design engineer on our two initial plants, and increases in construction costs.  We will continue to evaluate the attractiveness of initiating construction of a third plant. We hold sites in Gilman, Illinois, Atchison, Kansas and Litchfield, Illinois on which we can build additional plants. At each, land has been optioned and permit filings have begun. In addition, Cargill has a strong local presence and, directly or through affiliates, owns adjacent grain storage facilities at each of the locations.  All six sites, including the two on which we are building, were selected primarily based on access to favorably priced corn, the availability of rail transportation and natural gas and Cargill’s competitive position in the area. 

While our initial focus has been on plant construction, we ultimately expect to grow, at least in part, through acquisitions.  We will continue to assess the trade-offs implicit in acquiring versus building plants as we consider whether and when to initiate building additional plants.

We are a holding company with no operations of our own, and are the sole managing member of BioFuel Energy, LLC (the ‘‘LLC’’), which is itself a holding company and indirectly owns all of our operating assets. The financial statements contained elsewhere in this quarterly report primarily reflect certain start-up costs, fees and expenses incurred by the LLC, the initial costs incurred in connection with the preparation for, and commencement of, construction of our Wood River and Fairmont ethanol facilities and the equity contributions received by the LLC.

We have engineering, procurement and construction, or EPC, contracts with TIC for the construction of our Wood River and Fairmont ethanol plants pursuant to which the timely construction and performance of the two plants is guaranteed by TIC. Construction of both plants has begun, and as of June 30, 2007, we had invested approximately $96.3 million in the financing and construction of the Wood River plant and approximately $86.8 million in the financing and construction of the Fairmont plant. Spending on the actual construction of the Wood River and Fairmont plants (excluding related financing costs) is expected to total approximately $310 million. We currently anticipate that both plants will be completed and begin commercial operation during the first quarter of 2008 and will generate net cash inflows in 2008. If we encounter significant difficulties or delays in constructing our plants, our results of operations and financial conditio n could be materially harmed. Please see ‘‘Risk Factors’’ in our Registration Statement on Form S-1 for a description of certain facts that could cause our projects to be delayed. We may also be required to borrow additional funds to replace lost revenues in the event of such delay. Furthermore, if provisional acceptance of a facility does not occur by December 31, 2009, Cargill may terminate, or seek to renegotiate the terms of, its commercial agreements with us with respect to the relevant facility.

Total revenues

Our primary source of revenue will be the sale of ethanol. We will also receive revenue from the sale of distillers grain, which is a residual co-product of the processed corn and is sold as animal feed.

The selling prices we realize for our ethanol are largely determined by the market supply and demand for ethanol, which, in turn, is influenced by industry factors over which we have little if any control.

19

Ethanol prices are extremely volatile. In early 2005, ethanol prices decreased due to a perceived over-supply of ethanol. During the summer of 2006, ethanol prices rose due to increased gasoline prices and legislative changes, resulting in an average realized price for the first six months of 2006 that was $0.56 per gallon higher than for the comparable period of the prior year. From September 2006 through June 2007, however, ethanol prices have declined from the levels prevailing in the summer of 2006. The ethanol Bloomberg rack price rose from $1.18 per gallon at April 29, 2005 to a high of $3.98 per gallon at July 3, 2006 and has subsequently declined to $2.23 at June 29, 2007.

Cost of goods sold and gross profit

Our gross profit will be derived from our total revenues less our cost of goods sold. Our cost of goods sold will be affected primarily by the cost of corn and natural gas. Both corn and natural gas are subject to volatile market conditions as a result of weather, market demand, regulation and general economic conditions.

Corn will be our most significant raw material cost. In general, rising corn prices result in lower profit margins because ethanol producers are unable to pass along increased corn costs to customers. The price of corn is influenced by weather conditions and other factors affecting crop yields, farmer planting decisions and general economic, market and regulatory factors. These factors include government policies and subsidies with respect to agriculture and international trade, and global and local demand and supply. Historically, the spot price of corn tends to rise during the Spring planting season in May and June and tends to decrease during the Fall harvest in October and November. From November 18, 2005 to June 29, 2007, the spot price of corn has risen from $1.83 per bushel to $3.17 per bushel.

We will purchase natural gas to power steam generation in our ethanol production process and fuel for our dryers to dry our distillers grain. Natural gas will represent our second largest operating cost after corn, and natural gas prices are extremely volatile.

We will include corn procurement fees that we pay to Cargill in our cost of goods sold. Other cost of goods sold will primarily consist of our cost of chemicals, depreciation, manufacturing overhead and rail car lease expenses.

Spread between ethanol and corn prices

Our gross profit will depend principally on our ‘‘crush spread’’, which is the difference between the price of a gallon of ethanol and the price of the amount of corn required to produce a gallon of ethanol. Using our dry-mill technology, each bushel of corn produces approximately 2.7 gallons of fuel grade ethanol. Based on the price of a bushel of corn at June 29, 2007 of $3.17, the cost of corn per gallon of ethanol would be approximately $1.17 (.37 bushels per gallon x $3.17). As such, the ‘‘crush spread’’ would be $1.06 per gallon based on the June 29, 2007 ethanol price of $2.23 per gallon.

During the first half of 2006, the spread between ethanol and corn prices reached historically high levels, driven in large part by high oil prices and historically low corn prices resulting from continuing record corn yields and acreage, although the spread has since fallen back to $1.06 as of June 29, 2007. Any increase or decrease in the spread between ethanol and corn prices, whether as a result of changes in the price of ethanol or corn, will have an effect on our financial performance.

Selling, general and administrative expenses

Selling, general and administrative expenses will consist of salaries and benefits paid to our management and administrative employees, expenses relating to third-party services, insurance, travel, marketing and other expenses, including certain expenses associated with being a public company, such as costs associated with compliance with Section 404 of the Sarbanes-Oxley Act and listing and transfer agent fees.

Results of operations

The following discussion summarizes the significant factors affecting the consolidated operating results of the Company for the three and six month periods ended June 30, 2007. This discussion

20

should be read in conjunction with the unaudited consolidated financial statements and notes to the unaudited consolidated financial statements contained in Item 1 above, and the consolidated financial statements and related notes for the year ended December 31, 2006 included in the Company’s Registration Statement on Form S-1.

We are a new company with no material operating results to date.

BioFuel Solutions Delaware is considered our predecessor for accounting purposes. The aggregate revenues of our predecessor from its inception through December 31, 2005 were $1,043,707 earned for development services provided in connection with ethanol projects that were unrelated to our planned business. There were no revenues earned by our predecessor in 2006. Costs incurred from inception through December 31, 2005 related to expenses incurred in connection with the initial development of our Wood River and Fairmont facilities. Expenses incurred in 2006 were related primarily to the development of our Wood River and Fairmont facilities. We believe that the results of operations of our predecessor are not meaningful and should not be relied upon as an indication of our future performance.

The LLC, which has been consolidated for accounting purposes by BioFuel Energy Corp., has been arranging financing for and initiating construction of our first two ethanol plants as well as development work on our additional plant sites. From its inception through June 30, 2007, the Company incurred a net loss of $2,774,800 and a net loss distributable to common shareholders of $4,102,200. This loss was primarily due to general and administrative expenses of $13,087,800, of which $10,328,300 was compensation. Compensation expense includes a non-cash charge of $6,983,100 related to share-based payments awarded to our founders and certain key employees. These share-based payments include issuance of membership interests (considered profits interests under the LLC agreement and for tax purposes) which are required to be expensed under generally accepted accounting principles. Compensation expense also includes a $550,000 payment made to a founder, who has sinc e left the LLC, for work performed in connection with the formation of the LLC and initial financing. The expenses were partially offset by $224,600 of interest income primarily earned on the investment of the proceeds from the initial public offering and the concurrent private placement and the $10,088,400 reduction due to the minority interest’s portion (BioFuel Energy, LLC) of the loss. In determining the net loss distributable to common shareholders, the Company also recorded a non-cash beneficial conversion charge of $1,327,400 immediately prior to the public offering.

For the three months ended June 30, 2007, the Company incurred a net loss of $287,400 and a net loss distributable to common shareholders of $1,614,800. The loss was primarily due to general and administrative expenses of $2,024,700, of which $1,320,600 was compensation. Compensation expense includes a non-cash charge of $300,500 related to share-based payments awarded to certain officers and employees during the quarter. These share-based payments include issuance of membership interests (considered profits interests under the LLC agreement and for tax purposes) which are required to be expensed under generally accepted accounting principles. The expenses were partially offset by $200,000 of interest income earned on the investment of the proceeds from the initial public offering and the concurrent private placement and the $1,537,300 reduction due to the elimination of the minority interest in the loss. In determining the net loss distributable to co mmon shareholders, the Company also recorded a non-cash beneficial conversion charge of $1,327,400 immediately prior to the public offering.

For the six months ended June 30, 2007, the Company incurred a net loss of $441,200 and a net loss distributable to common shareholders of $1,768,500. The loss was primarily due to general and administrative expenses of $3,925,200, of which $2,615,900 was compensation. Compensation expense includes a non-cash charge of $888,500 related to share-based payments awarded to certain officers and employees during the two quarters. These share-based payments include issuance of membership interests (considered profits interests under the LLC agreement and for tax purposes) which are required to be expensed under generally accepted accounting principles. The expenses were partially offset by $213,300 of interest income primarily earned on the investment of the proceeds from the initial public offering and the concurrent private placement and the $3,270,700 reduction due to the elimination of the minority interest in the loss. In determining the net loss distri butable to common

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shareholders, the Company also recorded a non-cash beneficial conversion charge of $1,327,400 immediately prior to the public offering.

Liquidity and capital resources

Our cash flows from operating, investing and financing activities during the six month period ended June 30, 2007 and the period from inception through June 30, 2007 are summarized below:

			For the Six Months Ended, June 30, 2007						From Inception on April 11, 2006 through June 30, 2007
Cash provided by (used in):
Operating activities				$	(2,618,484	)				$	(5,842,993	)
Investing activities					(89,171,332	)					(149,324,682	)
Financing activities					153,165,027						243,781,403
Net increase (decrease) in cash and equivalents				$	61,375,211					$	88,613,728

Cash used in operating activities consisted primarily of compensation paid to our employees and expenses incurred by our corporate office. Expenditures incurred under investing activities related primarily to the construction of our Wood River and Fairmont ethanol plants. Cash provided by financing activities consisted of proceeds of equity investments made by our historical equity investors in 2006, proceeds from our initial public offering and concurrent private placement in 2007, and borrowings under our bank facility and subordinated debt in 2007, less equity and debt issuance costs and distributions to certain owners of our predecessor company. We expect to fund the completion of our Wood River and Fairmont plants with our available capital resources as summarized in the following table:

			June 30, 2007						December 31, 2006
Cash and equivalents				$	88,613,728					$	27,238,517
Available under bank facility					225,000,000						230,000,000
Available under subordinated loan agreement					—						50,000,000
Available from tax increment financing					—						6,050,770

Our principal sources of liquidity at June 30, 2007 consist of cash and equivalents and available borrowings under our bank facility. Our existing balance of cash and equivalents at December 31, 2006 consisted entirely of proceeds of equity investments made by our historical equity investors. Our balance of cash and equivalents at June 30, 2007 consisted of proceeds of subordinated debt borrowings and our initial public offering and concurrent private placement.

In July 2007, the underwriters of the Company’s initial public offering exercised their full over-allotment option, purchasing 787,500 additional shares of common stock. The shares were purchased at the $10.50 per share offering price, resulting in $7.7 million of additional proceeds to the Company. With these proceeds combined with the proceeds from the 5,250,000 shares sold to the public and 4,250,000 shares sold simultaneously to the Company’s three largest pre-existing shareholders, the Company retired $30.0 million of its subordinated debt, leaving $20.0 million of subordinated debt outstanding.

Our principal liquidity needs are expected to be the construction of our planned production facilities, debt service requirements of our indebtedness and general corporate purposes.

We believe that our cash and equivalents, including the retained net proceeds of our recent stock offering, when combined with funds available under our bank facility will be more than sufficient to meet our cash requirements for the next twelve months, including the costs to complete our Wood River and Fairmont plants.

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Ethanol plant construction

We currently have two ethanol plants under construction. We also have four additional sites in development for the possible construction of plants. We estimate that the total project costs, exclusive of corporate overhead and financing charges, to complete Wood River and Fairmont will be approximately $310 million.  At July 1, 2007, the estimated remaining costs to complete Wood River and Fairmont approximated $143 million. This is expected to be funded with borrowings under our existing bank facility. 

In connection with the formation of the Company, we secured a $50.0 million subordinated debt facility. Subsequently, we entered into a $230.0 million bank facility in connection with the construction of our Wood River and Fairmont facilities. The full $50.0 million of available subordinated debt had been drawn by May 2007 when we made our initial bank borrowing. In July 2007, we repaid $30.0 million of the subordinated debt with a portion of the proceeds of our initial public offering. If we do not proceed on construction of a third plant, we may elect to repay the final $20.0 million of our subordinated debt. We will need to secure additional financing in order to construct a third plant. There can be no assurance that such financing will be able to be obtained on acceptable terms.

We expect to complete the construction of our Wood River facility late in the first quarter of 2008. We have spent approximately $89.1 million on total project costs relating to the Wood River facility from May 1, 2006, to June 30, 2007. We expect to make additional capital expenditures in 2007 and 2008 of approximately $59.9 million in connection with the total project costs relating to our Wood River facility. We expect to complete the construction of our Fairmont facility late in the first quarter of 2008. We have spent approximately $78.3 million on total project costs relating to the Fairmont facility from June 1, 2006, to June 30, 2007. We expect to make additional capital expenditures in 2007 and 2008 of approximately $83.2 million in connection with the total project costs relating to our Fairmont facility. To date, we have used the net proceeds of equity investments by our historical equity investors, th e proceeds of our initial public offering and the concurrent private placement, and borrowings under our bank facility and subordinated debt agreement to finance the construction of the Wood River and Fairmont facilities. As of June 30, 2007, $5.0 million was outstanding under our bank facility and $50.0 million was outstanding under our subordinated loan agreement. We repaid $30.0 million of the subordinated debt in July 2007.

Tax and our tax benefit sharing agreement

We expect that, as a result of future exchanges of membership interests in the LLC for shares of common stock, the tax basis of the LLC’s assets attributable to our interest in the LLC will be increased. These increases in tax basis will result in a tax benefit to BioFuel that would not have been available but for the future exchanges of the LLC membership interests for shares of our common stock. These increases in tax basis would reduce the amount of tax that we would otherwise be required to pay in the future, although the IRS may challenge all or part of the tax basis increases, and a court could sustain such a challenge.

We have entered into a tax benefit sharing agreement with our historical LLC equity investors that will provide for a sharing of these tax benefits between the Company and the historical LLC equity investors. Under this agreement, BioFuel will make a payment to an exchanging LLC member of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize as a result of this increase in tax basis. BioFuel and its common stockholders will benefit from the remaining 15% of cash savings, if any, in income tax that is realized by BioFuel. For purposes of the tax benefit sharing agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in the tax basis of the tangible and intangible assets of the LLC as a result of the exchanges and had we not entered into the tax benefit sharing agreement. The term of the tax benefit sharing agreement commenced upon consummation of the initial public offering and will continue until all such tax benefits have been utilized or expired, unless a change of control occurs and we exercise our resulting right to terminate the tax benefit sharing agreement for an amount based on agreed payments remaining to be made under the agreement.

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Although we are not aware of any issue that would cause the IRS to challenge a tax basis increase, our historical LLC equity investors will not reimburse us for any payments previously made under the tax benefit sharing agreement. As a result, in certain circumstances we could make payments to our historical LLC equity investors under the tax benefit sharing agreement in excess of our cash tax savings. Our historical LLC equity investors will receive 85% of our cash tax savings, leaving us with 15% of the benefits of the tax savings. The actual amount and timing of any payments under the tax benefit sharing agreement will vary depending upon a number of factors, including the timing of exchanges, the extent to which such exchanges are taxable and the amount and timing of our income. We expect that, as a result of the size of the increases of the tangible and intangible assets of the LLC attributable to our interest in the LLC, during the expected term of the tax benefit sharing agreement, the payments that we may make to our historical LLC equity investors could be substantial.

Bank facility

In September 2006, certain of our subsidiaries entered into a $230 million bank facility with BNP Paribas and a syndicate of lenders to finance the construction of our Wood River and Fairmont plants. Neither BioFuel Energy Corp. nor the LLC is a party to the bank facility, although the equity interests and assets of our subsidiaries are pledged as collateral to secure the debt under the bank facility.

Our bank facility consists of $210.0 million of non-amortizing construction loans, which will convert into term loans amortizing in an amount equal to 6.0% of the outstanding principal amount thereof per annum and maturing in September 2014, if certain conditions precedent, including the completion of our Wood River and Fairmont plants, are satisfied prior to June 2009. The construction loans otherwise mature in June 2009. Once repaid, the construction loans may not be re-borrowed in whole or in part.

Our bank facility also includes working capital loans of up to $20.0 million, a portion of which may be available to us in the form of letters of credit. The working capital loans will be available to pay certain operating expenses of the Wood River and Fairmont plants, or alternative plants, as the case may be, with up to $5.0 million becoming available upon mechanical completion of a plant, up to $10.0 million becoming available upon provisional acceptance of a plant and the full $20.0 million becoming available upon conversion of the construction loans to term loans. The working capital loans will mature in September 2010 or, with consent from two-thirds of the lenders, in September 2011.

Although we have commenced borrowing under our bank facility, additional borrowings remain subject to the satisfaction of a number of additional conditions precedent, including continued compliance with debt covenants and provision of engineers’ reports satisfactory to the lenders. To the extent that we are not able to satisfy these requirements, we will not be able to make additional borrowings under the bank facility without obtaining a waiver or consent from the lenders.

The obligations under the bank facility are secured by first priority liens on all assets of the borrowers and a pledge of all of our equity interests in our subsidiaries. In addition, substantially all cash of the borrowers is required to be deposited into blocked collateral accounts subject to security interests to secure any outstanding obligations under the bank facility. Funds will be released from such accounts in accordance with the terms of the bank facility.

Interest rates on each of the loans under our bank facility will be, at our option, (a) a base rate equal to the higher of (i) the federal funds effective rate plus 0.5% and (ii) BNP Paribas’s prime rate, in each case, plus 2.0% or (b) a Eurodollar rate equal to LIBOR adjusted for reserve requirements plus 3.0%. Interest periods for loans based on a Eurodollar rate will be, at our option, one, three or six months, or, if available, nine or twelve months. Accrued interest is due quarterly in arrears for base rate loans, on the last date of each interest period for Eurodollar loans with interest periods of one or three months, and at three month intervals for Eurodollar loans with interest periods in excess of three months. Overdue amounts will bear additional interest at a default rate of 2.0%.

The bank facility includes certain limitations on, among other things, the ability of our subsidiaries to incur additional indebtedness, grant liens or encumbrances, declare or pay dividends or

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distributions, conduct asset sales or other dispositions, mergers or consolidations, conduct transactions with affiliates and amend, modify or change the scope of the projects, the project agreements or the budgets relating to the projects.

We are required to pay certain fees in connection with our bank facility, including a commitment fee equal to 0.50% per annum on the daily average unused portion of the construction loans and working capital loans and letter of credit fees.

Debt issuance fees and expenses of approximately $7.6 million ($6.9 million, net of accumulated amortization) have been incurred with the Senior Debt at June 30, 2007. These costs have been deferred and are being amortized over the term of the Senior Debt.

As of June 30, 2007, we had $5.0 million of outstanding borrowings under our bank facility.

Subordinated loan agreement

In September 2006, the LLC entered into a subordinated loan agreement with certain affiliates of Greenlight Capital, Inc. and Third Point LLC. The subordinated loan agreement provides for up to $50 million of non-amortizing loans, all of which must be used for general corporate purposes, working capital or the development, financing and construction of our Wood River and Fairmont Plants. The entire principal balance, if any, plus all accrued and unpaid interest will be due in March 2015.

The payments due under our subordinated loan agreement are secured by the subsidiary equity interests owned by the LLC and are fully and unconditionally guaranteed by all of the LLC’s subsidiaries. The guarantees are subordinated to the obligations of these subsidiaries under our bank facility.

Interest on outstanding borrowings under our subordinated loan agreement accrues at a rate of 15.0% per annum and is due on the last day of each calendar quarter. If an event of default occurs, interest will accrue at a rate of 17.0% per annum.

Debt issuance fees and expenses of approximately $5.4 million ($5.1 million, net of accumulated amortization) have been incurred in connection with the Subordinated Debt at June 30, 2007. Debt issuance costs associated with the Subordinated Debt are being deferred and amortized over the term of the agreement.

As of June 30, 2007, there was $50.0 million outstanding under our subordinated loan agreement. On July 10, 2007, we repaid $30.0 million of the outstanding borrowings under our subordinated loan agreement with a portion of the proceeds of our initial public offering and the concurrent private placement.

Tax increment financing

In February 2007, the subsidiary of the LLC constructing our Wood River plant received a grant of $6.0 million from the proceeds of a tax increment revenue note issued by the City of Wood River, Nebraska. The grant was provided to fund improvements to property owned by the subsidiary. The City of Wood River will pay the principal and interest of the note from the incremental increase in the property taxes related to the improvements made to the property. The proceeds of the grant have been recorded as a tax increment financing grant and will be amortized over the term of the financing grant. Amortization will begin in 2008 when the plant becomes operational.

The LLC has guaranteed the principal and interest of the tax increment revenue note if, for any reason, the City of Wood River fails to make the required payments to the holder of the note.

Off-balance sheet arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Contractual obligations

The following summarizes our significant contractual obligations with respect to our Wood River and Fairmont plants, in thousands, as of June 30, 2007. No obligations relating to any third plant under development are reflected in the table because we have not yet entered into definitive agreements with respect to such plant.

Type of obligation

(in thousands)			2007						2008						2009						2010						2011						Thereafter						Total
Construction contracts(1)				$	98,436					$	22,184					$	—					$	—											$	—					$	120,620
Construction contracts(2)					482						1,407						1,407						1,056						—						—						4,352
Operating leases(3)					767						10,120						10,284						10,284						10,284						77,177						118,916
Capital lease obilgation(4)					50						300						300						300						300						7,750						9,000
Minimum energy purchases(4)					50						300						300						300						300						7,750						9,000
Purchase obligations(5)					772						2,100						2,400						2,400						2,400						38,700						48,772
Loan commitment fees(6)					397						90						—						—						—						—						487
Minimum commissions(7)					—						—						—						—						—						—						—
Total contractual obligations				$	100,954					$	36,501					$	14,691					$	14,340					$	13,284					$	131,377					$	311,147

(1) We have entered into engineering, procurement and construction contracts covering the construction of our Wood River and Fairmont plants. The obligations reported are the remaining amounts payable under the existing contracts and include the retainage reported in our consolidated balance sheet. We are responsible for the construction of certain infrastructure outside the Wood River and Fairmont plants, such as water treatment facilities, a rail loop and rail connections, natural gas interconnect pipelines and grain elevator improvements.

(2) We have entered into construction contracts with Cornerstone Energy, Inc. and an affiliate of Bear Cub Energy for the construction of natural gas lateral pipelines at our Wood River and Fairmont plants, respectively. Construction on both projects is currently expected to be completed in the fourth quarter of 2007. The contract price for each pipeline is payable in installments over 36 months following completion of the pipelines, beginning in the fourth quarter of 2007. Either obligation may be repaid early without penalty.

(3) We have entered into agreements with Cargill to lease corn storage facilities adjacent to our Wood River and Fairmont plants. We expect to pay Cargill approximately $800,000 per year to lease each of these storage facilities provided the applicable corn supply agreement remains in effect. We have also entered into agreements to lease a total of 1,065 railroad cars. Pursuant to these lease agreements, beginning in 2008 we will pay approximately $8.7 million annually for ten years. Monthly rental charges escalate if modifications of the cars are required by governmental authorities or mileage exceeds 30,000 miles in any calendar year.

(4) We have entered into an agreement for electrical service for our Fairmont plant under which we will pay, beginning in the fourth quarter of 2007, a monthly facilities charge of approximately $25,000 and a minimum monthly electric service charge of $25,000 for the 30-year term of the agreement to cover the investment expected to be made by the utility in order to provide electrical service to the plant.

(5) We have corn supply agreements with Cargill for our Wood River and Fairmont plants under which we will pay Cargill minimum origination fees of $1.2 million annually for each plant.

(6) Under our bank facility we will pay a commitment fee of 0.50% per annum, payable quarterly, on the daily average unused portion of the facility. The obligations are based on estimated timing of funding under bank facilities for the remainder of 2007 and 2008.

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(7) We have marketing agreements with Cargill for the ethanol and distillers grain that will be produced by our Wood River and Fairmont plants. Pursuant to these agreements we are required to pay a minimum commission to the extent either plant fails to produce 82.5 million gallons of ethanol or 247,500 tons of distillers grain for the twelve-month period beginning with the start of commercial operations and each anniversary thereafter. If the number of gallons of ethanol actually produced by a plant is less than 82.5 Mmgy, the minimum commission will be the deficiency multiplied by the average selling price of our ethanol during such period, multiplied by 1%. If the number of tons of distillers grain produced is less than 247,500 tons, the minimum commission will be equal to the sum of the deficiency applicable to dry dist illers grain multiplied by $2.00 per ton and the deficiency applicable to wet distillers grain multiplied by $3.00 per ton. The deficiency volume applicable to dry and wet distillers grain will be determined based on the ratio of dry products to wet products produced at the relevant plant during the applicable year.

Summary of critical accounting policies

The consolidated financial statements of BioFuel Energy Corp. included in this Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States. Note 2 to these financial statements is a summary of our significant accounting policies, certain of which require the use of estimates and assumptions. Accounting estimates are an integral part of the preparation of financial statements and are based on judgments by management using its knowledge and experience about the past and current events and assumptions regarding future events, all of which we consider to be reasonable. These judgments and estimates reflect the effects of matters that are inherently uncertain and that affect the carrying value of our assets and liabilities, the disclosure of contingent liabilities and reported amounts of expenses during the reporting period.

The accounting estimates and assumptions discussed in this section are those that involve significant judgments and the most uncertainty. Changes in these estimates or assumptions could materially affect our financial position and results of operations and are therefore important to an understanding of our consolidated financial statements.

Recoverability of property, plant and equipment

We are in the process of making a significant investment in property, plant and equipment and will continue to make significant investments over the next several years. We are currently developing three ethanol production facilities. Two facilities are under construction, and we have acquired land options and are permitting the property on which up to four additional plants may be constructed. We evaluate the recoverability of property, plant and equipment whenever events or changes in circumstances indicate that the carrying value of our property, plant and equipment may not be recoverable.

Management must exercise judgment in assessing whether or not circumstances require a formal evaluation of the recoverability of our property, plant and equipment. If an impairment test is required, management must estimate future sales volume, prices, inflation and capital spending, among other factors. These estimates involve inherent uncertainties, and the measurement of the recoverability of the cost of our property, plant and equipment is dependent on the accuracy of the assumptions used in making the estimates and how these estimates compare to our future operating performance. Certain of the operating assumptions will be particularly sensitive to the development of the ethanol industry.

We have not recognized an impairment loss on any of our property, plant and equipment from our inception through June 30, 2007.

Share-based compensation

We account for the exchanges of equity instruments for employee services in accordance with Statement of Financial Accounting Standard No. 123 (revised 2004), Share-Based Payments (‘‘SFAS 123R’’). For the period from inception of the LLC to December 31, 2006, we issued

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425,000 Class M units, 2,103,118 Class C units and 676,039 Class D units to our founding members and key employees and recorded compensation expense of $6,094,600. During the first quarter of 2007, we issued 85,000 Class C Units and 30,000 Class D Units to two officers and recorded compensation expense of $588,000. During the second quarter of 2007, we issued 27,507 Class C Units and 7,503 Class D Units to certain officers and employees and recorded compensation expense of $267,100. An additional $33,400 of compensation expense related to stock options and restricted grants was recorded during the second quarter. Other than the Units issued in the second quarter of 2007 and the expenses associated with the stock options and restricted stock grants, compensation expense was determined based on the estimated fair value of the Class M, C and D Units at the date of grant. The non-contemporaneous valuation of the membership units required an estimation of the fair value of the company’s total invested capital at each date the membership units were awarded to management. These estimates of the fair value of the company’s total invested capital were made by discounting projected cash flows through December 2014. These cash flows were based on estimates made by management of future sales volume, prices, inflation and capital spending requirements. The rates used to discount the cash flows at each valuation date were based on a projected weighted average cost of capital. The projected weighted average cost of capital required estimates of the required rates of return on equity and debt and projections of our capital structure. Once the fair value of the total invested capital at each valuation date was determined, it was allocated among our debt and equity holders through a series of call options. The Black-Scholes option pricing model was used to value these call options. The key assumptions used in the Black-Scholes calculation were the expected time to a liquidity event, the implied volatilities of comparable companies and the risk-free rate of return during the expected term of the options.

The amount of compensation expense recorded as a result of the issuance of equity membership units to members of management involved a significant number of estimates. Due to the uncertainties inherent in these estimates, the accuracy of the amount of compensation expense recorded is dependent on the accuracy of the assumptions used in making the estimates and how these estimates compare to the company’s future operating performance and our ability to raise debt and additional equity. Certain of the operating assumptions will be particularly sensitive to the development of the ethanol industry and the attractiveness of ethanol companies to the capital markets.

Inflation

Due to our lack of operating history, inflation has not yet affected our operating results. However, construction costs, costs of goods sold, taxes, repairs, maintenance and insurance are all subject to inflationary pressures and could adversely affect our ability to construct our planned ethanol production facilities, our ability to maintain our facilities adequately once built and our business and results of operations.

Forward-looking statements

Certain information included in this report, other materials filed or to be filed by the Company with the Securities and Exchange Commission (‘‘SEC’’), as well as information included in oral statements or other written statements made or to be made by the Company contain or incorporate by reference certain statements (other than statements of historical or present fact) that constitute ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

All statements other than statements of historical fact are ‘‘forward-looking statements’’, including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as ‘‘may’’, ‘‘will’’, ‘‘should’’, ‘‘could’’, ‘‘would’’, ‘‘predicts’’, ‘‘potential’’, ‘‘continue’’, ‘‘expects’’, ‘‘anticipates’’, ‘‘fut ure’’, ‘‘intends’’, ‘‘plans’’, ‘‘believes’’, ‘‘estimates’’ and similar expressions, as well as statements in the future tense, identify forward-looking statements.

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These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business. Furthermore, industry forecasts are likely to be inaccurate, especially over long periods of time and in relatively new and rapidly developing industries such as ethanol.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings ‘‘Risk factors’’ and ‘‘Management’s discussion and analysis of financial condition and results of operations’’ in this Form 10-Q and in our Registration Statement on Form S-1.

Should one or more of the risks or uncertainties described above or elsewhere in this Form 10-Q or in the Registration Statement on Form S-1 occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. We specifically disclaim all responsibility to publicly update any information contained in a forward-looking statement or any forward-looking statement in its entirety and therefore disclaim any resulting liability for potentially related damages.

All forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement.

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ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We will be subject to significant risks relating to the prices of four commodities: corn and natural gas, our principal production inputs, and ethanol and distillers grain, our principal products. In recent years, ethanol prices have been primarily influenced by gasoline prices, the availability of other gasoline additives and federal, state and local laws and regulations. Distillers grain prices tend to be influenced by the prices of alternative animal feeds. However, in the short to intermediate term, logistical issues may have a significant impact on ethanol prices. In addition, the anticipated sharp increase in distillers grain production as new ethanol plants become operational could significantly depress its price.

Higher corn prices will tend to result in lower profit margins, as it is unlikely that such an increase in costs can be passed on to ethanol customers. The availability as well as the price of corn is subject to wide fluctuations due to weather, carry-over supplies from the previous year or years, current crop yields, government agriculture policies, international supply and demand and numerous other factors. We estimate that corn will represent approximately 63% of our operating costs. Over the period from May 1997 through May 2007, corn prices (based on the CBOT daily futures data) have ranged from a low of $1.83 per bushel in July 2000 to a high of $4.48 per bushel in February 2007, with prices averaging $2.44 per bushel during this period. As of June 29, 2007, the CBOT spot price of corn was $3.17 per bushel.

Higher natural gas prices will tend to reduce our profit margin, as it is unlikely that such an increase in costs can be passed on to ethanol customers. Natural gas prices and availability are affected by weather, overall economic conditions, oil prices and numerous other factors. We estimate that natural gas will represent approximately 15% of our operating costs. The price of natural gas over the period from May 1997 through May 2007, based on the NYMEX daily futures data, has ranged from a low of $1.66 per Mmbtu in February 1999 to a high of $15.36 per Mmbtu in December 2005, averaging $4.92 per Mmbtu during this period. As of June 29, 2007, the NYMEX spot price of natural gas was $6.36 per Mmbtu.

To reduce the risks implicit in price fluctuations of the four principal commodities we will use or sell and variations in interest rates, we plan to continuously monitor these markets and to hedge a portion of our exposure. Specifically, when we can reduce volatility through hedging on an attractive basis, we expect to do so. It is unlikely that we will enter into material commodity hedging until production at our plants begins or is imminent. Thereafter, we currently anticipate hedging between 40% and 80% of our commodity price exposure on a rolling 12 to 36 month basis. This range would include the effect of intermediate to longer-term purchase and sales contracts we may enter into, which act as de facto hedges. In hedging, we may buy or sell exchange-traded commodities futures or options, or enter into swaps or other hedging arrangements. In doing so, we may access Cargill’s risk management and futures advisory services and utilize its trading capabili ties. It should be recognized that while there is an active futures market for corn and natural gas, the futures market for ethanol is still in its infancy and we do not believe a futures market for distillers grain currently exists. Consequently, our hedging of ethanol and distillers grain may be limited by the market.

We believe that managing our commodity price exposure will reduce the volatility implicit in a commodity-based business. However, it will also tend to reduce our ability to benefit from favorable commodity price changes. Finally, hedging arrangements expose us to risk of financial loss if the counterparty defaults. Furthermore, if geographic basis differentials are not hedged, they could cause our hedging programs to be ineffective or less effective than anticipated.

We will be subject to interest rate risk in connection with our bank facility. Under the facility, our bank borrowings will bear interest at a floating rate based, at our option, on LIBOR or an alternate base rate. Pursuant to our bank facility, we are required to hedge no less than 50% of our interest rate risk until all obligations and commitments under the facility are paid and terminated. Borrowings under our subordinated loan agreement bear interest at a fixed annual rate of 15%. As of June 30, 2007, we had borrowed $5.0 million under our bank facility and $50.0 million under our subordinated loan agreement. Consequently, a hypothetical 100 basis points increase in interest rates under our bank facility would result in an increase of $50,000 on our annual interest expense.

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ITEM 4.	CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in the reports it files or furnishes to the SEC under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s principal executive officer and principal financial officer have evaluated the effectiveness of the Company’s ‘‘disclosure controls and procedures,’’ as such term is defined in Rule 13a-15(e) and 15d-15(c) of the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon the ir evaluation, they have concluded that the Company’s disclosure controls and procedures are effective.

In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the control system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events and the application of judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of these and other inherent limitations of control systems, there is only reasonable assurance that the Company’s controls will succeed in achieving their goals under all potential future conditions.

Internal Control over Financial Reporting

In addition, the Company is continuously seeking to improve the efficiency and effectiveness of its internal controls. This results in periodic refinements to internal control processes throughout the Company. However, there have been no significant changes in the Company’s internal controls over financial reporting or in other factors that could significantly affect these controls that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. During the second quarter, the Company implemented an integrated accounting and financial reporting system and hired a Controller.

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PART II.    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

None.

ITEM 1A.    RISK FACTORS

The Company is subject to various risks and uncertainties that could affect the Company’s business, future performance or financial condition. These risks include the following:

Risks relating to our business and industry

	•	We do not have an operating history and our business may not succeed.

	•	We may not be able to implement our strategy as planned or at all.

	•	We may encounter unanticipated difficulties in constructing our plants. We are dependent on TIC and its partner Delta-T, and delays, defaults or non-performance by TIC or Delta-T could adversely affect us.

	•	We may not be able to secure sites for future plants.

	•	We may not be able to obtain the approvals and permits that will be necessary in order to construct and operate our facilities as planned.

	•	We may be unable to secure construction services or supplies for our additional plants under development and evaluation on acceptable terms.

	•	We may be unable to reach definitive agreements relating to the construction of and/or the technology to be used in our proposed future plants.

	•	We may not be able to obtain the financing necessary to complete construction of our plants under development or to complete future acquisitions.

	•	Competition for qualified personnel in the ethanol industry is intense, and we may not be able to hire and retain qualified personnel to operate our ethanol plants.

	•	Delays and defects may cause our costs to increase to levels that would make our new facilities too expensive to construct or unprofitable.

	•	Excess production capacity in our industry resulting from new plants under construction or decreases in the demand for ethanol or distillers grain could adversely affect our business.

	•	Increased acceptance of ethanol as a fuel and construction of additional ethanol production plants could lead to shortages of availability and increases in the price of corn.

	•	We are dependent upon our officers for management and direction, and the loss of any of these persons could adversely affect our operations and results.

	•	We will be dependent on our commercial relationship with Cargill and will be subject to various risks associated with this relationship.

	•	Our operating results may suffer if Cargill does not perform its obligations under our contracts.

	•	Cargill may terminate the marketing and supply agreements relating to each of our Wood River and Fairmont plants if provisional acceptance of the plants does not occur by December 31, 2009.

	•	Cargill may terminate its arrangements with us in the event that certain parties acquire 30% or more of our common stock or the power to elect a majority of the Board.

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	•	If we do not meet certain quality and quantity standards under our marketing agreements with Cargill, our results of operations may be adversely affected.

	•	We will be subject to certain risks associated with Cargill’s ethanol marketing pool in which we will participate.

	•	We are subject to certain risks associated with our corn supply agreements with Cargill.

	•	Cargill has commercial relationships with other ethanol producers, including at least one of our competitors, and has announced plans to develop four 100 Mmgy ethanol plants in the Midwestern United States. Cargill may favor its own interests or those of its other business partners over ours.

	•	We may not be able to reach definitive agreements with Cargill with respect to our additional plants under development.

	•	New, more energy-efficient technologies for producing ethanol could displace corn-based ethanol and materially harm our results of operations and financial condition.

	•	We expect to incur a significant amount of indebtedness to construct our facilities, a substantial portion of which will be secured by our assets.

	•	Our substantial indebtedness could have important consequences by adversely affecting our financial position.

	•	We are subject to risks associated with our existing debt arrangements.

	•	Our future debt facilities will likely be secured by substantially all our assets.

	•	Our profit margins may be adversely affected by fluctuations in the selling price and production cost of gasoline.

	•	Any facility that we complete may not operate as planned. A disruption in our operations could result in a reduction of sales volume and could cause us to incur substantial losses.

	•	Our business will be highly dependent on commodity prices, which are subject to significant volatility and uncertainty, and on the availability of raw materials supplies, so our results of operations, financial condition and business outlook may fluctuate substantially.

	•	Our business will be highly sensitive to corn prices, and we generally cannot pass along increases in corn prices to our customers.

	•	The price spread between ethanol and corn can vary significantly.

	•	The market for natural gas is subject to market conditions that create uncertainty in the price and availability of the natural gas that we will use in our manufacturing process.

	•	Our results may be adversely affected by hedging transactions and other strategies.

	•	We may not be able to compete effectively.

	•	Growth in the sale and distribution of ethanol depends on changes to and expansion of related infrastructure which may not occur on a timely basis, if at all.

	•	Transportation delays, including as a result of disruptions to infrastructure, could adversely affect our operations.

	•	Disruptions in the supply of oil or natural gas could materially harm our business.

	•	Our business may be influenced by seasonal fluctuations.

	•	The price of distillers grain is affected by the price of other commodity products, such as soybeans, and decreases in the price of these commodities could decrease the price of distillers grain.

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	•	Our financial results may be adversely affected by potential future acquisitions or sales of our plants, which could divert the attention of key personnel, disrupt our business and dilute stockholder value.

	•	The domestic ethanol industry is highly dependent upon a myriad of federal and state legislation and regulation and any changes in legislation or regulation could adversely affect our results of operations and financial position.

	•	The elimination of, or any significant reduction in, the blenders’ credit could have a material impact on our results of operations and financial position.

	•	The elimination of or significant changes to the Freedom to Farm Act could reduce corn supplies.

	•	Ethanol can be imported into the United States duty-free from some countries, which may undermine the domestic ethanol industry.

	•	The effect of the Renewable Fuels Standard in the recent Energy Policy Act is uncertain.

	•	We may be adversely affected by environmental, health and safety laws, regulations and liabilities.

Risks relating to our organizational structure

	•	Our only material asset is our interest in BioFuel Energy, LLC, and we are accordingly dependent upon distributions from BioFuel Energy, LLC to pay dividends, taxes and other expenses.

	•	We will be required to pay our historical LLC equity investors for a portion of the benefits relating to any additional tax depreciation or amortization deductions we may claim as a result of tax basis step-ups we receive in connection with future exchanges of BioFuel Energy, LLC membership interests for shares of our common stock.

Risks relating to the ownership of our common stock

	•	The price of our common stock may be volatile.

	•	Our historical equity investors, including some of our officers and Directors, will exert significant influence over us. Their interests may not coincide with yours and they may make decisions with which you may disagree.

	•	We do not intend to pay dividends on our common stock.

	•	Provisions in our charter documents and our organizational structure may delay or prevent our acquisition by a third party or may reduce the value of your investment.

	•	Management and our auditors have identified material weaknesses in the design or operation of our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our financial statements in future periods.

	•	The requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.

A complete description of these risk factors appears in our Registration Statement on Form S-1 relating to our initial public offering. Those risk factors are hereby incorporated in Part II, Item 1A of this Form 10-Q. Should one or more of the risks or uncertainties described above or elsewhere in this Form 10-Q or in the Registration Statement on Form S-1 relating to the Company’s initial public offering occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

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ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In connection with our initial public offering, our Registration Statement on Form S-1 (Registration No. 333-139203) became effective on June 14, 2007. Pursuant to the Registration Statement, we registered 6,037,500 shares at a proposed maximum offering price per share of $10.50 for a total maximum aggregate offering price of $63,393,750. The initial public offering was completed on June 19, 2007. We sold an aggregate of 5,250,000 shares of common stock at $10.50 per share in our initial public offering. The underwriters for the offering were J.P. Morgan Securities Inc., Citigroup Global Markets Inc., A.G. Edwards & Sons, Inc., Bear, Stearns & Co. Inc., and Cowen and Company, LLC. We sold an additional 787,500 shares of common stock at $10.50 per share pursuant to the exercise of the underwriters’ over-allotment option on July 12, 2007.

Concurrently with the initial public offering, the Company also sold 4,250,000 shares of common stock to certain pre-existing stockholders in a private placement. Entities affiliated with Greenlight, Inc. (Greenlight Capital L.P., Greenlight Capital Qualified, L.P., Greenlight Capital Offshore, Ltd, and Greenlight Reinsurance, Ltd.), entities affiliated with Third Point funds (Third Point Partners LP, Third Point Partners Qualified LP, Third Point Offshore Fund Ltd. and Third Point Ultra Ltd.) and Thomas J. Edelman purchased 2,500,000, 1,250,000 and 500,000 shares of our common stock, respectively, at a price per share equal to the initial public offering price. The securities were issued in transactions exempt from registration under Section 4(2) of the Securities Act.

The Company received total proceeds from the public offering, including the exercise of the over-allotment option and the concurrent private placement of $103.6 million, after deduction of underwriting discounts and commissions of $4.4 million. Other expenses payable by the Company related to the initial public offering and the concurrent private placement were approximately $2.7 million.

We expect that the net proceeds will ultimately be used to fund the equity portion of the construction costs of a third plant. However, prior to the time funds are required for this plant, we may use them to repay subordinated debt or defer borrowings under our bank construction loans for the Wood River and Fairmont plants. We have used $30.0 million of the net proceeds to repay outstanding subordinated debt.

None of the foregoing payments were to our directors or officers, or their associates, or to our affiliates or persons owning ten percent or more of our common stock.

Immediately prior to the consummation of the offering and the concurrent private placement, the LLC amended and restated its limited liability company agreement to replace the various classes of its existing membership interests with a single class of membership interests. As part of the amendment and restatement of the limited liability company agreement, BioFuel Energy Corp. became the sole managing member of the LLC. Our historical LLC equity investors and BioFuel Energy Corp. exchanged their existing membership interests in the LLC for new membership interests in amounts determined in accordance with the old limited liability company agreement and based on the initial public offering price of our shares of common stock issued in the offering and the concurrent private placement. BioFuel Energy Corp. issued to each historical LLC equity investor shares of our Class B common stock, which will entitle each holder to a number of votes that is equal to the total number of shares of common stock issuable upon exchange of all of such holder’s membership interests in the LLC. For a detailed description of this recapitalization transaction, please refer to our Registration Statement on Form S-1 under ‘‘Organizational structure.’’

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

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ITEM 5.    OTHER INFORMATION

The Company announced that effective August 31, 2007, Eric D. Streisand, the Company’s Vice President – Corporate Development, would be leaving the Company to pursue other business opportunities. The Company and Mr. Streisand have entered into a consulting agreement to facilitate an orderly transition of his duties.

ITEM 6.    EXHIBITS

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this quarterly report on Form 10-Q.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			BIOFUEL ENERGY CORP.
Date August 14, 2007			/s/ David J. Kornder
			David J. Kornder
			Executive Vice President and Chief Financial Officer

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INDEX TO EXHIBITS

Exhibit Number						Exhibit
	10	.1				Second Amended and Restated Limited Liability Company Agreement of BioFuel Energy, LLC dated June 19, 2007.
	10	.2				Registration Rights Agreement between BioFuel Energy Corp. and the parties listed on the signature page thereto dated June 19, 2007.
	10	.3				Tax Benefit Sharing Agreement between BioFuel Energy Corp. and the parties listed on the signature page thereto dated June 19, 2007.
	10	.4				Stockholders Agreement between BioFuel Energy Corp. and Cargill Biofuel Investments, LLC dated June 19, 2007.
	10	.5				Separation, Consulting and Mutual Release Agreement between the Company and Eric D. Streisand dated August 9, 2007.
	31	.1				Certification of the Company’s Chief Executive Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
	31	.2				Certification of the Company’s Chief Financial Officer Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 7241).
	32	.1				Certification of the Company’s Chief Executive Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).
	32	.2				Certification of the Company’s Chief Financial Officer Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).

38

EX-10.1

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

BIOFUEL ENERGY, LLC

THE LLC INTERESTS REPRESENTED BY THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

CERTAIN OF THE LLC INTERESTS REPRESENTED BY THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT ARE SUBJECT TO CONDITIONS AND RESTRICTIONS ON TRANSFER SET FORTH HEREIN, AND THE LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH INTERESTS UNLESS AND UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO THE REQUESTED TRANSFER.

TABLE OF CONTENTS

			Page
ARTICLE I
Definitions and Usage
SECTION 1.01.	Definitions	1
SECTION 1.02.	Usage Generally; Interpretation	10
ARTICLE II
Organizational and Other Matters
SECTION 2.01.	Formation and Continuation of LLC; Effective Time	11
SECTION 2.02.	Limited Liability Company Agreement	11
SECTION 2.03.	Name	11
SECTION 2.04.	Purpose	11
SECTION 2.05.	Principal Office; Registered Office	12
SECTION 2.06.	Term	12
SECTION 2.07.	Foreign Qualification	12
SECTION 2.08.	Tax Classification of LLC	12
ARTICLE III
Management
SECTION 3.01.	Sole Manager	12
SECTION 3.02.	Authority of the Sole Manager	13
SECTION 3.03.	Authority of Members	13
SECTION 3.04.	Removal and Replacement of Manager	13
SECTION 3.05.	Reliance by Third Parties	13
SECTION 3.06.	Officers	13
ARTICLE IV
Distributions and Allocations
SECTION 4.01.	Distributions	14
SECTION 4.02.	Liquidation Distribution	18
SECTION 4.03.	Limitations on Distribution	18
SECTION 4.04.	Allocations	18
SECTION 4.05.	Special Allocations	19
SECTION 4.06.	Tax Withholding; Withholding Advances	20

i

ARTICLE V
Capital Contributions; Capital Accounts; Tax Matters
SECTION 5.01.	Capital Contributions	21
SECTION 5.02.	No Additional Capital Contributions	21
SECTION 5.03.	Capital Accounts	21
SECTION 5.04.	Negative Capital Accounts	22
SECTION 5.05.	Loans From Members	22
SECTION 5.06.	Preparation of Tax Returns	22
SECTION 5.07.	Tax Elections	22
SECTION 5.08.	Tax Matters Member	22
ARTICLE VI
Books, Records, Accounting and Reports
SECTION 6.01.	Records and Accounting	23
SECTION 6.02.	Fiscal Year	23
ARTICLE VII
LLC Units
SECTION 7.01.	Units	23
SECTION 7.02.	Register	23
SECTION 7.03.	Splits, Distributions and Reclassifications	23
SECTION 7.04.	Cancellation of Common Stock and Units	24
SECTION 7.05.	Incentive Plans	24
SECTION 7.06.	Offerings of Common Stock	24
SECTION 7.07.	Registered Members	24
SECTION 7.08.	Certification of Units	25
ARTICLE VIII
Transfer of LLC Interests
SECTION 8.01.	Restrictions on Transfer	26
SECTION 8.02.	Permitted Transfers	26
SECTION 8.03.	Permitted Exchanges	27
SECTION 8.04.	Further Restrictions	28
SECTION 8.05.	Transferee’s Rights	28
SECTION 8.06.	Transferor’s Rights and Obligations	29
SECTION 8.07.	Substituted Members	29
SECTION 8.08.	Additional Members	29
SECTION 8.09.	Attempted Transfer Void	29
SECTION 8.10.	Withdrawal	30
SECTION 8.11.	Required Amendments; Continuation	30
SECTION 8.12.	Resignation	30

ii

ARTICLE IX
Dissolution and Liquidation
SECTION 9.01.	Dissolution	30
SECTION 9.02.	Liquidation and Termination	31
SECTION 9.03.	Certificate of Cancellation	32
SECTION 9.04.	Reasonable Time for Winding Up	32
SECTION 9.05.	Return of Capital	32
ARTICLE X
Rights and Obligations of Members
SECTION 10.01.	Limitation of Liability	32
SECTION 10.02.	Exculpation	33
SECTION 10.03.	Lack of Authority	33
SECTION 10.04.	No Right of Partition	33
SECTION 10.05.	Indemnification	33
ARTICLE XI
General Provisions
SECTION 11.01.	Power of Attorney	34
SECTION 11.02.	Further Action	35
SECTION 11.03.	Amendments	35
SECTION 11.04.	Title to LLC Assets	35
SECTION 11.05.	Remedies	36
SECTION 11.06.	Successors and Assigns	36
SECTION 11.07.	Severability	36
SECTION 11.08.	Counterparts	36
SECTION 11.09.	Applicable Law	36
SECTION 11.10.	Addresses and Notices	36
SECTION 11.11.	Creditors; Third Party Beneficiaries	37
SECTION 11.12.	Waiver	37
SECTION 11.13.	Entire Agreement	37
SECTION 11.14.	Delivery by Facsimile	37
SECTION 11.15.	Waiver of Certain Rights	37
SECTION 11.16.	Survival	37

iii

THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) of BioFuel Energy, LLC (the “LLC” or the “Company”), is made as of June 19, 2007, among the Members (as defined below).

WHEREAS the LLC was formed by the filing of a Certificate of Formation with the Secretary of State of Delaware on January 25, 2006; and

WHEREAS the Members desire that this Agreement amend and restate in its entirety the First Amended and Restated Limited Liability Company Agreement of the Company, dated as of September 25, 2006 (the “Existing LLC Agreement”).

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I

Definitions and Usage

SECTION 1.01. Definitions. Capitalized terms used but not otherwise defined herein shall have the following meanings:

“Accounting Firm” has the meaning set forth in Section 4.01(d).

“Additional Credit Amount” has the meaning set forth in Section 4.01(f).

“Adjusted Capital Account Deficit” means with respect to any Capital Account as of the end of any Fiscal Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, a Member’s Capital Account balance shall be:

(i)  reduced for any items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6); and

(ii)  increased for any amount such Member is obligated to contribute or is treated as being obligated to contribute to the LLC pursuant to the penultimate sentences of Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.

“Admission Date” has the meaning set forth in Section 8.06.

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such particular Person, where “control”

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means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Amended Tax Amount” has the meaning set forth in Section 4.01(f).

“Assumed Tax Rate” means the highest effective marginal combined U.S. federal, state and local income tax rate for a Fiscal Year for an individual or corporate resident in New York, New York (taking into account (a) the nondeductibility of expenses subject to the limitation described in Section 67(a) of the Code and (b) the character (e.g., long-term or short-term capital gain or ordinary or tax-exempt income) of the applicable income). For the avoidance of doubt, the Assumed Tax Rate will be the same for all Members.

“Available Cash” means cash of the LLC which the Manager determines is available for distribution to the Members.

“Book Value” means, with respect to any LLC property, the LLC’s adjusted basis for federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g) (including the issuance of new Units).

“Business Day” means any day other than Saturday, Sunday and any day that is a legal holiday in New York, New York or a day on which banking institutions in New York, New York are authorized by law or other governmental action to close.

“Capital Account” has the meaning set forth in Section 5.03.

“Capital Contributions” means, with respect to any Member, any contribution, whether in cash or other property, made by such Member to the LLC pursuant to the terms of this Agreement.

“Cargill” means Cargill Biofuels Investments, LLC, a Delaware limited liability company, and any of its Affiliates, so long as such Affiliate is also an Affiliate of Cargill, Incorporated, a Delaware corporation.

“Certificate” means the LLC’s Certificate of Formation as filed with the Secretary of State of Delaware, as amended to the date hereof.

“Certificate of Incorporation” means the certificate of incorporation, as may be amended from time to time, of the Corporation.

“Class B Stock” means the Class B Common Stock, par value $0.01 per share, of the Corporation authorized and issued under Section 4.01(b) of the Certificate of Incorporation or any applicable successor provision.

3

“Code” means the United States Internal Revenue Code of 1986, as amended from time to time, or any successor statute.

“Common Stock” means the Common Stock, par value $0.01 per share, of the Corporation authorized and issued under Section 4.01(a) of the Certificate of Incorporation or any applicable successor provision.

“Corporation” means BioFuel Energy Corp., a Delaware corporation.

“Covered Person” has the meaning set forth in Section 10.01.

“Credit Amount” has the meaning set forth in Section 4.01(f).

“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del. L. Section 18-101, etseq., as it may be amended from time to time, and any successor to the Delaware Act.

“Disabling Event” means the Manager ceasing to be the managing member of the LLC.

“Distribution” means each distribution made by the LLC to a Member, whether in cash, property or securities of the LLC and whether by distribution, redemption, repurchase or otherwise.

“Edelman” means Thomas J. Edelman.

“Effective Time” has the meaning set forth in Section 2.01.

“Effective Time Units” means, with respect to any Member, the number of Units held by such Member as of the Effective Time (reflecting the conversion described in Section 2.01) as set forth on Schedule A.

“Escrow Agent” means JPMorgan Chase Bank, N.A. in its capacity as escrow agent under the Escrow Agreement.

“Escrow Agreement” means the escrow agreement dated the date hereof among the Management Members (other than Edelman), the other Members party thereto and the Escrow Agent.

“Escrowed Securities” has the meaning set forth in Section 4.01(b).

“Excess Amount” has the meaning set forth in Section 4.01(e).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Exchange Rate” has the meaning set forth in Section 8.03(a).

4

“Existing LLC Agreement” has the meaning set forth in the preamble to this Agreement.

“Fair Market Value” has the meaning set forth in Section 9.02(c).

“Family Members” has the meaning set forth in Section 8.02(a).

“Final Tax Amount” has the meaning set forth in Section 4.01(f).

“Fiscal Period” means any interim accounting period within a Fiscal Year established by the Manager and which is permitted or required by Section 706 of the Code.

“Fiscal Year” means the LLC’s annual accounting period established pursuant to Section 6.02.

“Greenlight” means, collectively, Greenlight Capital, L.P., Greenlight Capital Qualified, L.P., Greenlight Capital Offshore, Ltd. and Greenlight Reinsurance, Ltd.

“Greenlight/Third Point Sale” means a sale by Greenlight or Third Point of shares of Common Stock that occurs after the Effective Time and prior to the True-Up Date; provided, however, that a Greenlight/Third Point Sale shall only be deemed to occur:

(a) for Greenlight, with respect to sales by Greenlight of an aggregate number of shares of Common Stock not to exceed 9,353,500 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganizations and other similar transactions) shares, with any sales by Greenlight of shares of Common Stock in excess of such amount not being deemed to be Greenlight/Third Point Sales for any purpose of this Agreement; and

(b) for Third Point, with respect to sales by Third Point of an aggregate number of shares of Common Stock not to exceed 4,676,750 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganizations and other similar transactions) shares, with any sales by Third Point of shares of Common Stock in excess of such amount not being deemed to be Greenlight/Third Point Sales for any purpose of this Agreement.

For purposes of this definition, the word “sale” shall include any pledge, sale, contract to sell, or the grant of any option, right or warrant to purchase, or other disposition or transfer for value of, or the entry into any swap or other agreement that transfers, in whole or in part, the economic consequences of ownership of, shares of Common Stock.

“Greenlight/Third Point Specified A Unit Percentage” shall mean a percentage that is determined by adding together the respective Specified A Unit Percentages of Greenlight and Third Point.

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“Incapacity” means, with respect to any Person, the bankruptcy, dissolution, termination, entry of an order of incompetence, or the insanity, permanent disability or death of such Person.

“Incentive Plan” means any equity incentive or similar plan pursuant to which the Corporation may issue shares of its Common Stock from time to time.

“Indebtedness” means at a particular time, without duplication, (i) any indebtedness for borrowed money or issued in substitution for or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by any note, bond, debenture or other debt security, (iii) any indebtedness for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current liabilities incurred in the ordinary course of business which are not more than six months past due), (iv) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement obligations with respect to letters of credit), (v) any indebtedness guaranteed in any manner by a Person (including guarantees in the form of an agreement to repurchase or reimburse), (vi) any obligations under capitalized or synthetic leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, or with respect to which obligations a Person assures a creditor against loss, (vii) any indebtedness secured by a Lien on a Person’s assets and (viii) any fees, penalties or accrued and unpaid interest with respect to the foregoing.

“Indemnified Person” has the meaning set forth in Section 10.05(a).

“Individual Sale Company Valuation” shall be determined upon the occurrence of each Greenlight/Third Point Sale and shall be the product of (i) the price per share of Common Stock sold by Greenlight or Third Point in such Greenlight/Third Point Sale, (ii) 23,000,000 and (iii) the quotient obtained by dividing (A) the number of shares sold by Greenlight or Third Point in such Greenlight/Third Point Sale by (B) 14,030,250; provided, however, that:

(a) if on the True-Up Date Greenlight has sold less than an aggregate of 9,353,500 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganizations and other similar transactions) shares of Common Stock, then for purposes of calculating Individual Sale Company Valuations, Greenlight shall be deemed to have sold on the True-Up Date a number of shares of Common Stock equal to the excess of (i) 9,353,500 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganizations and other similar transactions) shares of Common Stock, over (ii) the aggregate number of shares of Common Stock actually sold by Greenlight prior to the True-Up Date, at a price per share equal to the Trading Price of the Common Stock as of the True-Up Date; and

(b) if on the True-Up Date Third Point has sold less than an aggregate of 4,676,750 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganizations and other similar transactions) shares of Common Stock, then for purposes of calculating Individual Sale Company Valuations, Third Point

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shall be deemed to have sold on the True-Up Date a number of shares of Common Stock equal to the excess of (i) 4,676,750 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganizations and other similar transactions) shares of Common Stock, over (ii) the aggregate number of shares of Common Stock actually sold by Third Point prior to the True-Up Date, at a price per share equal to the Trading Price of the Common Stock as of the True-Up Date.

“IPO” means the initial public offering of Common Stock, pursuant to a Registration Statement on Form S-1 (Registration No. 333-139203).

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or other) or preference, priority, right or other security interest or preferential arrangement of any kind or nature whatsoever (excluding preferred stock and equity-related preferences), including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease obligation, or any financing lease having substantially the same economic effect as any of the foregoing.

“Liquidation Assets” has the meaning set forth in Section 9.02(b).

“Liquidation FMV” has the meaning set forth in Section 9.02(b).

“Liquidator” has the meaning set forth in Section 9.02.

“LLC” or “Company” has the meaning set forth in the preamble to this Agreement.

“LLC Certificate” has the meaning set forth in Section 7.08.

“LLC Interest” means the membership interest of a Member in Net Income, Net Losses and Distributions.

“Losses” has the meaning set forth in Section 10.05(a).

“Management Member” means each Member designated as a Management Member in Schedule B hereto, as updated from time to time, and any Permitted Transferee thereof to whom Units are transferred in accordance with this Agreement.

“Manager” means the Corporation or any successor manager admitted to the LLC pursuant to this Agreement.

“Member” means any Person admitted to the LLC as a Member pursuant to the terms of this Agreement; but only so long as such Person is shown on the LLC’s books and records as the owner of one or more Units. The Persons listed on Schedule A hereto are all of the Members as of the Effective Time.

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“Minimum Gain” means Company minimum gain determined pursuant to Treasury Regulation Sections 1.704-2(b)(2) and 1.704-2(d).

“Net Income” and “Net Loss” means, for each Fiscal Year or Fiscal Period, the taxable income or loss of the LLC determined in accordance with Section 703(a) of the Code (for this purpose all items of income, gain, loss or deduction, required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss) and with the accounting method used by the LLC for federal income tax purposes with the following adjustments: (a) all items of income, gain, loss, or deduction allocated pursuant to Section 4.05 (relating to Special Allocations) shall not be taken into account in computing such taxable income or loss; (b) any income of the LLC that is exempt from federal income taxation and not otherwise taken into account in computing Net Income and Net Loss shall be added to such taxable income or loss; (c) if the Book Value of any asset differs from its adjusted tax basis for federal income tax purposes, any gain or loss resulting from a disposition of such asset shall be calculated with reference to such Book Value; (d) if the Book Value of any asset differs from its adjusted tax basis for federal income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset shall for purposes of determining Net Income and Net Loss be an amount which bears the same ratio to such Book Value as the federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the federal income tax depreciation, amortization or other cost recovery deduction is zero, the Manager may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Net Income and Net Loss); (e) any expenditures of the LLC that are described in Section 705(a)(2)(B) of the Code or are treated as described in Section 705(a)(2)(B) of the Code pursuant to Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing Net Income and Net Loss shall be treated as deductible items; and (f) in the event the Book Value of any LLC asset is adjusted in accordance with the definition of Book Value and Section 5.03, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss.

“Net Taxable Income” has the meaning set forth in Section 4.01(f).

“Nonrecourse Debt Minimum Gain” means the partnership nonrecourse debt minimum gain determined pursuant to Treasury Regulation Section 1.704-2(i).

“Notice of Disagreement” has the meaning set forth in Section 4.01(d).

“Officer” means any officer of the LLC appointed pursuant to Section 3.06.

“Permitted Transferee” has the meaning set forth in Section 8.02(a).

“Person” means an individual or a corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity.

“SEC” means the Securities and Exchange Commission.

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“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Shortfall Amount” has the meaning set forth in Section 4.01(e).

“Specified A Unit Percentage” means, with respect to Greenlight, 53.4331% and, with respect to Third Point, 26.7165%.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the LLC.

“Substituted Member” means any Person becoming a Member pursuant to Section 8.07.

“Tax Amount” has the meaning set forth in Section 4.01(f).

“Tax Benefit Sharing Agreement” means the Tax Benefit Sharing Agreement by and among the Corporation and the Members, dated as of June 19, 2007.

“Tax Distributions” has the meaning set forth in Section 4.01(f).

“Tax Matters Member” has the meaning set forth in Section 5.08.

“Third Point” means, collectively, Third Point Partners, L.P., Third Point Partners Qualified, L.P., Daniel S. Loeb, Lawrence J. Bernstein and Todd Q. Swanson.

“Trading Price” means the price per share of the Common Stock determined as follows:

(a) if traded on a securities exchange (including the Nasdaq Global Market), the Trading Price shall be deemed to be the average of the closing prices of the

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Common Stock on such exchange on the applicable date, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on such exchange as of 4:00 p.m., New York time, or, if on any day the Common Stock is not traded on an exchange, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated or any similar successor organization, in each such case averaged over a period of thirty (30) days consisting of the Business Day as of which the Trading Price is being determined and the twenty-nine (29) consecutive Business Days prior to such day; or

(b) if at any time the Common Stock is not traded on a securities exchange or quoted in the domestic over-the-counter market, the Trading Price shall be the fair value thereof, as determined by the Manager.

“Transfer” has the meaning set forth in Section 8.01.

“Treasury Regulations” means the income tax regulations promulgated under the Code as amended from time to time or any successor regulations.

“True-Up Certificate” has the meaning set forth in Section 4.01(d)

“True-Up Date” means the earlier of (i) the date on which both (x) Greenlight shall have sold an aggregate of 9,353,500 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganization and other similar events) or more shares of Common Stock after the Effective Time and (y) Third Point shall have sold an aggregate of 4,676,750 (as such number may be adjusted for stock splits, stock dividends, recapitalizations, reorganization and other similar events) or more shares of Common Stock after the Effective Time and (ii) the expiration of five years from the Effective Time. For purposes of this definition, the word “sold” shall include any pledge, sale, contract to sell, or the grant of any option, right or warrant to purchase, or other disposition or transfer for value of, or the entry into any swap or other agreement that transfers, in whole or in part, the economic consequences of ownership of, shares of Common Stock.

“True-Up Value” means a dollar amount equal to the aggregate Individual Sale Company Valuations.

“Trued-Up Units” means, for each Member, the number of Units that would have been issued to such Member under Section 4.1(a) of the First Amended and Restated Limited Liability Company Agreement of the LLC, as such agreement was in effect on June 19, 2007 (such agreement being the “A&R LLC Agreement”), assuming that:

(a) the IPO had occurred on the True-Up Date, rather than on June 19, 2007;

(b) the date of distribution for purposes of such Section 4.1(a) is the True-Up Date, rather than June 19, 2007, such that (i) the A/B Unit Preferred Return, (ii) the M

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Unit Preferred Return, and (iii) the preferred return referred to in Section 4.1(a)(vii) of the A&R LLC Agreement, shall each be deemed to accrue through the True-Up Date, rather than only through June 19, 2007;

(c) the valuation applied for purposes of such Section 4.1(a) was equal to the True-Up Value, rather than $241,500,000 (the value applied at the Effective Time);

(d) (i) each of the A Unit Percentages, B Unit Percentages, M Unit Percentages, A/B Unit Percentages, C Unit Percentages, the A/B/M Unit Percentages and C/D Unit Percentages (each as defined in the A&R LLC Agreement) are the same for each Member as they were on June 19, 2007, and (ii) no Transfers of Units had taken place from and after June 19, 2007; and

(e) no distributions have ever been made pursuant to Section 4.1(a) of the A&R LLC Agreement.

“Unit” means an LLC Interest of a Member in the LLC representing a fractional part of the LLC Interests of all Members and shall consist of only one class or group of Units; provided that any Units issued shall have rights, powers and duties set forth in this Agreement.

“Unit Percentage” means, with respect to any Member, a fraction (expressed as a percentage) established at the time of determination by dividing (i) the number of Units held by such Member at such time by (ii) the total number of Units held by all Members at such time.

“Withholding Advances” has the meaning set forth in Section 4.06(b).

SECTION 1.02. Usage Generally; Interpretation. Whenever the context may require, any pronoun includes the corresponding masculine, feminine and neuter forms. Words in the singular or the plural include the plural or the singular, as the case may be. The use of the word “or” is not exclusive. All references herein to the preamble, Articles, Sections, Subsections, paragraphs, Exhibits and Schedules shall be deemed to be references to the preamble, Articles, Sections, Subsections, paragraphs, Exhibits and Schedules of this Agreement unless the context otherwise requires. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise expressly provided herein, any statute or law defined or referred to herein means such statute or law as from time to time amended, modified or supplemented, including by succession of comparable successor statutes. Except to the extent a provision of this Agreement expressly incorporates federal income tax rules by reference to sections of the Code or Treasury Regulations or is expressly prohibited or ineffective under the Delaware Act, this Agreement shall govern, even when inconsistent with, or different from, the provisions of the Delaware Act or any other law or rule.

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ARTICLE II

Organizational and Other Matters

SECTION 2.01. Formation and Continuation of LLC; Effective Time. The LLC was formed on January 25, 2006, pursuant to the provisions of the Delaware Act, and the Members hereby agree to continue the Company as a limited liability company pursuant to the Delaware Act, upon the terms and subject to the conditions set forth in this Agreement. Upon consummation of the IPO, (a) this Agreement shall become effective (the “Effective Time”) immediately and without any further action on the part of any party hereto and (b) the terms, rights and obligations under the Existing LLC Agreement shall cease. Without limiting the generality of the foregoing, as of the Effective Time, and in accordance with the Existing LLC Agreement, the A Units, the B Units, the C Units, the D Units and the M Units under the Existing LLC Agreement shall be converted into the Units and as a result thereof shall cease to exist and be of no further value and the LLC Interests represented by the Units under this Agreement shall be the only equity interests in the LLC. An authorized officer or representative of the Company shall file and record any amendments and/or restatements to the Certificate and such other documents as may be required or appropriate under the laws of the State of Delaware and of any other jurisdiction in which the Company may conduct business. The LLC shall, upon request, provide any Member with copies of each such document as filed and recorded.

SECTION 2.02. Limited Liability Company Agreement. The Members agree that this Agreement serves the purpose of establishing the affairs of the LLC and the conduct of its business in accordance with the provisions of the Delaware Act. The Members hereby agree that during the term of the LLC set forth in Section 2.06 the rights and obligations of the Members with respect to the LLC will be determined in accordance with the terms and conditions of this Agreement and, except where the Delaware Act provides that such rights and obligations specified in the Delaware Act shall apply “unless otherwise provided in a limited liability company agreement” or words of similar effect and such rights and obligations are set forth in this Agreement, the Delaware Act; provided that notwithstanding the foregoing, Section 18-210 of the Delaware Act (entitled “Contractual Appraisal Rights”) shall not apply to or be incorporated into this Agreement.

SECTION 2.03. Name. The name of the LLC shall be “BioFuel Energy, LLC.” The Manager in its sole discretion may change the name of the LLC at any time and from time to time. Notification of any such change shall be given to all Members. The LLC’s business may be conducted under its name and/or any other name or names deemed advisable by the Manager.

SECTION 2.04. Purpose. The purpose and the business of the LLC shall be to engage in any lawful business for which a limited liability company may be organized under the Delaware Act. The LLC shall have any and all powers necessary or desirable to carry out the purposes and business of the LLC, to the extent that the same may be lawfully exercised by limited liability companies under the Delaware Act.

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SECTION 2.05.Principal Office; Registered Office. The principal office of the LLC shall be located at 1801 Broadway, Suite 1060, Denver, CO 80202, or at such other place as the Manager may from time to time designate, and all business and activities of the LLC shall be deemed to have occurred at its principal office. The LLC may maintain offices at such other place or places as the Manager deems advisable. The address of the registered office of the LLC in the State of Delaware shall be as set forth in the Certificate and the registered agent for service of process on the LLC in the State of Delaware at such registered office shall be Corporation Service Company.

SECTION 2.06. Term.The term of the LLC shall continue in existence until termination and dissolution thereof in accordance with the provisions of Article IX.

SECTION 2.07.Foreign Qualification. Prior to the LLC’s conducting business in any jurisdiction other than Delaware, the Manager shall cause the LLC to comply, to the extent procedures are available and those matters are reasonably within the control of the Officers, with all requirements necessary to qualify the LLC as a foreign limited liability company in that jurisdiction. At the request of the Manager or any Officer, each Member shall execute, acknowledge, swear to and deliver any or all certificates and other instruments conforming with this Agreement that are necessary or appropriate to qualify, continue and terminate the LLC as a foreign limited liability company in all such jurisdictions in which the LLC may conduct business.

SECTION 2.08. Tax Classification of LLC. The Members intend that the LLC shall be treated as a partnership for federal and state or local income tax purposes, and that each Member and the LLC shall file all tax returns and shall otherwise take all tax and financial reporting positions in a manner consistent with such treatment.

ARTICLE III

Management

SECTION 3.01. Sole Manager. The Members shall not manage and control the business and affairs of the LLC, except for situations in which the approval of the Members is required by this Agreement or by non-waivable provisions of applicable law. The Manager shall exclusively manage and control the LLC’s business, affairs and day-to-day operations and, in such capacity, shall be the “manager” of the LLC within the meaning of the Delaware Act.

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SECTION 3.02. Authority of the Sole Manager. Except for situations in which the approval of the Members is otherwise required by this Agreement, or by non-waivable provisions of applicable law, (i) the powers of the LLC shall be exercised by or under the sole, absolute and exclusive direction of the Manager, (ii) the Manager may make all decisions and take all actions for the LLC not otherwise provided for in this Agreement, and (iii) the Manager shall possess all powers necessary, convenient or appropriate to carry out the business of the LLC, including doing all things and taking all actions necessary to carry out the terms and provisions of this Agreement (and is hereby authorized and directed, on behalf of the LLC and in accordance with Section 18-404(c) of the Delaware Act, to do all such things and to take all such actions without any further act, vote, consent or approval of any Member or the Board, unless otherwise specifically required by this Agreement).

SECTION 3.03. Authority of Members. In all matters relating to or arising out of the conduct of the operation of the LLC, the decision of the Manager shall be the decision of the LLC. Except as required or permitted by applicable law, or expressly provided in the ultimate sentence of this Section 3.03 or by separate agreement with the LLC, no Member who is not also the Manager (and acting in such capacity) shall take any part in the management or control of the operation or business of the LLC in its capacity as a Member, nor shall any Member who is not also the Manager (and acting in such capacity) have any right, authority or power to act for or on behalf of or bind the LLC in his or its capacity as a Member in any respect or assume any obligation or responsibility of the LLC or of any other Member. Notwithstanding the foregoing, the LLC may employ one or more Officers from time to time, and such Officers, in their capacity as employees of the LLC, may take part in the control and management of the business of the LLC to the extent such authority and power to act for or on behalf of the LLC has been delegated to them by the Manager.

SECTION 3.04. Removal and Replacement of Manager. The Manager may not be removed or replaced at any time with or without the consent of the Manager.

SECTION 3.05. Reliance by Third Parties. Any Person dealing with the LLC, other than a Member, may rely on the authority of the Manager (or any Officer authorized by the Manager) in taking any action in the name of the LLC without inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement. Every agreement, instrument or document executed by the Manager (or any Officer authorized by the Manager) in the name of the LLC with respect to any business or property of the LLC shall be conclusive evidence in favor of any Person relying thereon or claiming thereunder that (i) at the time of the execution or delivery thereof, this Agreement was in full force and effect, (ii) such agreement, instrument or document was duly executed according to this Agreement and is binding upon the LLC and (iii) the Manager or such Officer was duly authorized and empowered to execute and deliver such agreement, instrument or document for and on behalf of the LLC.

SECTION 3.06. Officers. (a) Designation and Appointment. The officers of the Corporation shall automatically be designated and appointed as Officers of

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the LLC, with titles, duties and authority corresponding to the titles, duties and authority held by such Officers in their capacity as officers of the Corporation, and with no specific action required by the Manager in order to appoint such persons. In addition, the Manager may (but need not), from time to time, designate and appoint one or more persons as additional Officers of the LLC. No Officer need be a resident of the State of Delaware or a Member. Any additional Officers so designated shall have such authority and perform such duties as the Manager may, from time to time, delegate to them, and no Officer shall be deemed to be a Manager as a result of his or her status as an Officer. The Manager may assign titles to particular Officersand create officer positions in its discretion. Unless the Manager otherwise decides, if the title is one commonly used for officers of a business corporation, the assignment of such title shall constitute the delegation to such Officer of the authority and duties that are normally associated with that office, subject to any specific delegation of authority and duties made to such Officer by the Corporation or by the Manager pursuant to this Section 3.06(a). Each Officer shall hold office until such Officer’s successor shall be duly designated and shall qualify or until such Officer’s deathor until such Officer shall resign or shall have been removed in the manner hereinafter provided. Any number of offices may be held by the same individual. The salaries or other compensation, if any, of the Officers and agents of the LLC shall be fixed from time to time by the Corporation or the Manager, as applicable.

(b) Resignation/Removal. Any Officer (subject to any contract rights available to the LLC, if applicable) may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time be specified, at the time of its receipt by the Manager. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause, by the Manager in its discretion at any time; provided, however, that such removal shall be without prejudice to the contract rights, if any, of the individual so removed. Designation of an Officer shall not of itself create contract rights. Any vacancy occurring in any office of the LLC may be filled by the Manager.

ARTICLE IV

Distributions and Allocations

SECTION 4.01.Distributions.  (a) The Manager, in its discretion, may authorize distributions by the LLC to the Members (including in the event of an extraordinary dividend, refinancing, recapitalization, merger or other restructuring transaction), which distributions shall be made pro rata in accordance with the Members’ respective Unit Percentages.

(b) Upon the Effective Time, each Management Member (other than Edelman) shall deposit with the Escrow Agent one-half of the number of Effective Time Units issued to such Management Member in respect of the C Units and/or D Units held by such Management Member under the Existing LLC Agreement, together with an equal number of shares of Class B Stock (collectively, the “Escrowed Securities”). The Escrowed Securities shall be held by the Escrow Agent pursuant to the terms of the Escrow Agreement.

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(c) Greenlight and Third Point shall provide to the Manager within five Business Days after the True-Up Date a certificate setting forth (i) the date of each Greenlight/Third Point Sale, (ii) the price per share of Common Stock sold by Greenlight and/or Third Point in such Greenlight/Third Point Sale, (iii) the number of shares of Common Stock sold by Greenlight and/or Third Point in such Greenlight/Third Point Sale, (iv) the number of Units and number of shares of Common Stock held by each of Greenlight and Third Point as of the True-Up Date, if any (and the number of shares that are deemed to have been sold on the True-Up Date for purposes of this Section 4.01(c)), and (v) the Trading Price as of the True-Up Date.

(d) Within ten Business Days after the True-Up Date, Greenlight shall prepare, in consultation with the Manager, Third Point and the Management Members, and deliver to each of the Manager, Third Point and each Management Member a certificate (the “True-Up Certificate”) setting forth the True-Up Value and each Management Member’s Effective Time Units, Trued-Up Units and the related Excess Amount or Shortfall Amount, as applicable. The True-Up Certificate shall set forth computations and other information in reasonable detail sufficient to demonstrate the calculation of such amounts. Each of the Manager, Third Point and each Management Member shall assist Greenlight in the preparation of the True-Up Certificate as reasonably requested by Greenlight.

(i) The True-Up Certificate shall become final and binding upon the parties upon the tenth Business Day following the receipt by the Manager, Third Point and the Management Members of the True-Up Certificate, unless the Manager, Third Point or a Management Member gives written notice of its disagreement with the True-Up Certificate (a “Notice of Disagreement”) to Greenlight, with a copy to the Manager, prior to such date. Any Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted. If a Notice of Disagreement is received by Greenlight and the Manager in a timely manner, then the True-Up Certificate shall become final and binding upon the parties upon the earlier of (A) the date that the Manager, Greenlight, Third Point and the Management Members resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement or (B) the date any disputed matters are finally resolved in writing by the Accounting Firm.

(ii) During the ten Business-Day period following the delivery of a Notice of Disagreement, the Manager, Greenlight, Third Point and the Management Members shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement. At the end of such ten Business-Day period, Greenlight and the Manager shall submit to an independent accounting firm (the “Accounting Firm”) for arbitration any and all matters that remain in dispute and were included in the Notice of Disagreement. The Accounting Firm shall be such nationally recognized independent public accounting firm as shall be agreed upon by the Manager,

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Greenlight, Third Point and the Management Members in writing. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party or parties against which such determination is to be enforced.

(e) In the event that:

(i) a Management Member’s Effective Time Units are greater than such Management Member’s Trued-Up Units (the excess being the “Excess Amount”), then

(A) with respect to such Management Member (other than Edelman), a number of Units equal to the product of (A) the Greenlight/Third Point Specified A Unit Percentage and (B) the lesser of (x) the Excess Amount and (y) the number of such Management Member’s Escrowed Securities, shall be released and distributed in accordance with the Escrow Agreement to Greenlight and Third Point pro rata based on their respective Specified A Unit Percentages, and all of such Management Member’s Escrowed Securities that are not required to be distributed to Greenlight or Third Point shall be released and distributed to such Management Member in accordance with the Escrow Agreement; and

(B) with respect to Edelman, he shall either (x) distribute a number of Units equal to Edelman’s Excess Amount to Greenlight and Third Point pro rata based on their respective Specified A Unit Percentages, or (y) pay an amount in cash equal to the product of (i) Edelman’s Excess Amount, multiplied by (ii) the Trading Price as of the date of payment, to Greenlight and Third Point pro rata based on their respective Specified A Unit Percentages; and

(ii) a Management Member’s Effective Time Units are less than such Management Member’s Trued-Up Units (the shortfall being the “Shortfall Amount”), then both:

(A) Greenlight and Third Point shall deliver to such Management Member either (or any combination of):

(x) a number of Units equal to the product of (I) such Management Member’s Shortfall Amount, multiplied by (II) Greenlight’s or Third Point’s applicable Specified A Unit Percentage; or

(y)an amount in cash equal to the product of (I) such Management Member’s Shortfall Amount, multiplied by (II) the Trading Price as of the date of payment, multiplied by (III) Greenlight’s or Third Point’s applicable Specified A Unit Percentage; and

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(B) all of such Management Member’s Escrowed Securities shall be released and delivered to such Management Member in accordance with the Escrow Agreement; and

(iii) to the extent a Member is obligated to deliver, or cause to be delivered, Units pursuant to this Section 4.01(e), (I) such Member may deliver, or cause to be delivered, a number of shares of Common Stock equal to the number of Units required to be delivered in lieu of delivering such Units (or any combination of shares of Common Stock and Units) and (II) to the extent such Member does not deliver shares of Common Stock in accordance with clause (I) above (and does not deliver cash in lieu of Units, if permitted), shall also deliver with such Units a number of shares of Class B Stock equal to the number of Units required to be delivered.

(iv) In furtherance of the foregoing, promptly upon the True-Up Certificate becoming final and binding upon the parties, as provided in this Section 4.01, the Manager, in consultation with Greenlight and Third Point, shall prepare the release certificate contemplated by the Escrow Agreement and deliver such release certificate to the Escrow Agent.

(f) (i) In addition to the foregoing, if the Manager reasonably determines that the operations of the LLC for a Fiscal Year will give rise to net taxable income for any of the Members (“Net Taxable Income”), the Manager shall cause the LLC to distribute Available Cash for purposes of allowing each of the Members to fund their respective income tax liabilities attributable to the LLC (the “Tax Distributions”). The Tax Distributions payable to a Member with respect to any Fiscal Year shall be computed based upon the Manager’s estimate of the Net Taxable Income allocable to such Member for such Fiscal Year in accordance with this Article IV (taking into account the effect of Section 4.04(b)), multiplied by the Assumed Tax Rate (the “Tax Amount”). For purposes of computing the Tax Amount, the effect of any benefit to a Member under Section 743(b) of the Code will be ignored but any tax credits allocated to a Member for such Fiscal Year shall be taken into account.

(ii) Tax Distributions shall be calculated and paid no later than one day prior to each quarterly due date for the payment by corporations of estimated taxes under the Code in the following manner: (A) for the first quarterly period, 25% of the Tax Amount, (B) for the second quarterly period, 50% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year, (C) for the third quarterly period, 75% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year and (D) for the fourth quarterly period, 100% of the Tax Amount, less the prior Tax Distributions for the Fiscal Year. Following each Fiscal Year, and no later than one day prior to the due date for the payment by corporations of income taxes for such Fiscal Year, the Manager shall make an amended calculation of the Tax Amount for such Fiscal Year (the “Amended Tax Amount”), and shall cause the LLC to distribute a Tax Distribution, out of Available Cash, to the extent that the Amended Tax Amount so calculated exceeds the cumulative Tax Distributions previously made by the LLC in respect of such Fiscal Year. If the Amended Tax Amount is less than the cumulative Tax Distributions previously made by

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the LLC in respect of the relevant Fiscal Year, then the difference (the “Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made to the Members for subsequent Fiscal Years. Within 30 days following the date on which the LLC files a tax return on IRS Form 1065 (or any successor form), the Manager shall make a final calculation of the Tax Amount of such Fiscal Year (the “Final Tax Amount”) and shall cause the LLC to distribute a Tax Distribution, out of Available Cash, to the extent that the Final Tax Amount so calculated exceeds the Amended Tax Amount. If the Final Tax Amount is less than the Amended Tax Amount in respect of the relevant Fiscal Year, then the difference (“Additional Credit Amount”) shall be applied against, and shall reduce, the amount of Tax Distributions made to the Members for subsequent Fiscal Years. Any Credit Amount and Additional Credit Amount applied against future Tax Distributions shall be treated as an amount actually distributed pursuant to this Section for purposes of the computations herein. In the event that the Tax Distributions made to a Member for any Fiscal Year shall be less than the Final Tax Amount for such Member due to an insufficiency of Available Cash, then such Member shall receive additional Tax Distributions out of the first Available Cash in subsequent Fiscal Years to make up for such shortfall.

(iii) For the avoidance of doubt, any Tax Distributions distributed to a Member pursuant to this Section 4.01(f) shall not affect the amount of distributions that may be made to such Member pursuant to Section 4.01(a).

SECTION 4.02. Liquidation Distribution. Distributions made upon liquidation of the LLC shall be made as provided in Section 9.02.

SECTION 4.03. Limitations on Distribution. Notwithstanding any provision to the contrary contained in this Agreement, the Manager shall not authorize a distribution to any Member if such distribution would violate Section 18-607 of the Delaware Act or other applicable law.

SECTION 4.04. Allocations. (a) Net Income and Net Loss. Except as otherwise provided in this Agreement, Net Income and Net Loss (and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the LLC shall be allocated among the Members in a manner such that, after giving effect to the special allocations set forth in Section 4.05, the Capital Accounts of all Members, immediately after making such allocation, are, as nearly as possible, equal on a per Unit basis.

(b) Tax Allocations. For federal, state and local income tax purposes, items of income, gain, loss, deduction and credit shall be allocated to the Members in accordance with the allocations of the corresponding items for Capital Account purposes under Sections 4.01(a) and 4.05, except that tax items attributable to each asset with respect to which there is a difference between tax basis and Book Value will be allocated in accordance with Section 704(c) of the Code and the Regulations thereunder. Such allocations shall be made using any reasonable method specified in Regulation Section 1.704-3 as the Tax Matters Member determines reasonably and in good faith; provided that with respect to the assets contributed by Cargill the Tax Matters Member shall use either (i) the traditional method with curative allocations or (ii) the remedial method.

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SECTION 4.05. Special Allocations. (a) Minimum Gain Chargeback. Notwithstanding any other provision of Section 4.04, if there is a net decrease in Minimum Gain or Nonrecourse Debt Minimum Gain (determined in accordance with the principles of Regulation Sections 1.704-2(d) and 1.704-2(i)) during any Taxable Year, the Members shall be specially allocated items of Net Income for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Treasury Regulation Sections 1.704-2(f), 1.704-2(i)(4), 1.704-2(j)(2). This Section 4.05(a) is intended to comply with the minimum gain chargeback requirements in such Treasury Regulation Sections and shall be interpreted consistently therewith; including that no chargeback shall be required to the extent of the exceptions provided in Treasury Regulation Sections 1.704-2(f) and 1.704-2(i)(4).

(b) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Net Income shall be specially allocated to such Member in an amount and manner sufficient to eliminate the Adjusted Capital Account Deficit created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 4.05(b) shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in Section 4.01 and this Section 4.05 have been tentatively made as if this Section 4.05(b) were not in the Agreement. This Section 4.05(b) is intended to comply with the “qualified income offset” requirement in such Regulation Section and shall be interpreted consistently therewith.

(c) Nonrecourse Liabilities. For purposes of Treasury Regulation Section 1.752-3(a), any Member’s interests in LLC profits shall be in proportion with the respective Unit Percentage.

(d) Nonrecourse Deductions. Any Member nonrecourse deductions (as defined in Treasury Regulation Section 1.704-2(i)(1) and (2)) for any Fiscal Period shall be allocated to the Member who bears the economic risk of loss with respect to the liability to which such Member nonrecourse deductions are attributable in accordance with Regulation Section 1.704-2(i)(1). Nonrecourse Deductions (as such term is defined in Treasury Regulation Sections 1.704-2(b)(1) and 1.704-2(c)) of the LLC shall be allocated to the Members in proportion with the respective Unit Percentage.

(e) Section 754 Adjustment. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Sections 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining the Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis

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of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such regulation.

(f) Ordering Rules. Notwithstanding anything to the contrary in this Agreement, allocations for any Fiscal Year or other period of nonrecourse deductions or of items required to be allocated pursuant to the minimum gain chargeback requirements contained in Section 4.05 shall be made before any other allocations hereunder.

SECTION 4.06. Tax Withholding; Withholding Advances. (a) Tax Withholding. If requested by the Manager, each Member shall deliver to the LLC: (i) documentation in form reasonably satisfactory to the Manager that the applicable Member is not subject to withholding under the provisions of any federal, state, local, foreign or other law; and/or (ii) any other form or instrument reasonably requested by the Manager relating to any Member’s status under such law. In the event that a Member fails or is unable to deliver to the Manager the documentation described in subclause (i) of this clause (a), the Manager will withhold amounts from such Member in accordance with Section 4.06(b) (relating to Withholding Advances).

(b) Withholding Advances – General. To the extent the LLC is required by law to withhold or to make tax payments on behalf of or with respect to any Member (e.g., backup withholding) (“Withholding Advances”), the Manager may withhold such amounts and make such tax payments as so required; provided that, unless such withholding or payment is required by law or regulation to be made in a lesser amount of time, the Manager shall provide not less than ten (10) Business Days’ notice to the applicable Member prior to making such withholding or payment.

(c) Repayment of Withholding Advances. Any Withholding Advances made on behalf of a Member that are not satisfied by withholding from cash distributable to such Member, plus interest thereon at a rate equal to the prime rate announced by Citibank, N.A. as of the date of such Withholding Advances plus two percent (2%) per annum, shall (i) be paid by the Member on whose behalf such Withholding Advances were made on demand by the LLC or (ii) with the consent of the Manager in its sole discretion be repaid by reducing the amount of the current or next succeeding Distribution or Distributions which would otherwise have been made to such Member or, if such Distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Member. Whenever repayment of a Withholding Advance by a Member is made as described in clause (ii) above, for all other purposes of this Agreement such Member shall be treated as having received all the applicable Distributions unreduced by the amount of such Withholding Advance and interest thereon.

(d) Withholding Advances – Reimbursement of Liabilities. Each Member hereby agrees to reimburse the LLC for any liability with respect to Withholding Advances (including interest thereon) required or made on behalf of or with respect to such Member (including penalties imposed with respect thereto).

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ARTICLE V

Capital Contributions; Capital Accounts; Tax Matters

SECTION 5.01. Capital Contributions. The Members have made, on or prior to the date hereof, Capital Contributions and have acquired the number of Units pursuant to the conversion referred to in Section 2.01 as specified opposite their respective names on Schedule A, which shall be updated by the Manager from time to time as appropriate.

SECTION 5.02. No Additional Capital Contributions. No Member (x) shall be required to make additional Capital Contributions to the LLC without the prior written consent of such Member or (y) shall, except as otherwise provided in this Article, be permitted to make additional Capital Contributions to the LLC without the consent of the Manager.

SECTION 5.03. Capital Accounts. (a) The LLC shall maintain on its books and records a separate capital account for each Member according to the rules of Treasury Regulation Section 1.704-1(b) (each such account, a “Capital Account”). The amount in the Capital Account of any Member at any time shall be equal to the sum of:

(i) the amount of such Member’s Capital Contributions, plus

(ii) the amount of Net Income allocated to such Member pursuant to Section 4.01 or any items in the nature of income or gain which are specially allocated pursuant to Section 4.05; plus

(iii) the amount of any LLC liabilities that are assumed by such Member (other than liabilities that are secured by any LLC property distributed to such Member that the Member is considered to assume or take subject to Section 752 of the Code)

and the sum of subsections (i) through (iii) shall be reduced by the sum of:

(iv) the amount of Net Losses allocated to such Member pursuant to Section 4.01 or any items in the nature of expenses or losses which are specially allocated pursuant to Section 4.05; plus

(v) the amount of cash and the Book Value of property, if any, distributed to such Member by the LLC (net of liabilities secured by such distributed property that such Member is considered to assume or take subject to Section 752 of the Code); plus

(vi) the amount of any liabilities of such Member that are assumed by the LLC (other than liabilities that are secured by any property contributed by such Member to the LLC).

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(b) (i) The Manager shall adjust the Book Values and Capital Account balances as of the Effective Time in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(f)-(g) based upon the price of the Common Stock in the IPO and (ii) the Manager may adjust the Book Values and Capital Account balances in connection with any subsequent event described in Treasury Regulation Section 1.704-1(b)(2)(iv)(f); provided, however, that the Manager shall so adjust the Book Values and Capital Account balances if the aggregate amount of such an adjustment would be material.

(c) In the event that any Person is transferred Units of a Member in accordance with the provisions of Article VIII, such Person shall succeed to the Capital Account of the transferor Member to the extent the Capital Account relates to the transferred interest (or a portion thereof).

SECTION 5.04. Negative Capital Accounts. No Member shall be required to pay to any other Member or the LLC the amount of any deficit or negative balance that may exist from time to time in such Member’s Capital Account (including upon the dissolution of the LLC).

SECTION 5.05. Loans From Members. Loans by Members to the LLC shall not be considered Capital Contributions. If any Member shall loan funds to the LLC in excess of the amounts required hereunder to be contributed by such Member to the capital of the LLC, the making of such loans shall not result in any increase in the amount of the Capital Account of such Member. The amount of any such loans shall be a debt of the LLC to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made.

SECTION 5.06. Preparation of Tax Returns. The Manager shall cause the LLC to accurately prepare and timely file all tax returns required to be filed by the LLC and its Subsidiaries. In furtherance of the foregoing, the Company shall provide the Members with estimated Schedule K-1s by March 15 of each calendar year, which shall address the immediately preceding year.

SECTION 5.07. Tax Elections. The Manager shall cause the LLC and any Subsidiary that is a partnership for tax purposes to make an election pursuant to Section 754 of the Code (and any comparable elections under the applicable state and local tax laws) to adjust the tax basis of its assets in connection with transfers of Units, which elections shall be made on the tax returns of such entities for the taxable year that includes the Effective Time. Except as otherwise expressly provided herein, the Manager shall, in its sole discretion, determine whether to make or revoke any available election pursuant to the Code (or any state or local tax laws). Each Member will upon request supply any information reasonably necessary to give proper effect to any election.

SECTION 5.08. Tax Matters Member. The Manager is hereby designated the “Tax Matters Member” and is authorized and required to represent the LLC (at the LLC’s expense) in connection with all examinations of the LLC’s affairs by tax authorities, including resulting administrative and judicial proceedings, and to expend LLC funds for professional services reasonably incurred in connection therewith. Each

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Member agrees to cooperate with the LLC and the Tax Matters Member, and to do or refrain from doing any or all things reasonably requested by the LLC with respect to the conduct of such proceedings, including providing the Tax Matters Member with such information as the Tax Matters Member may reasonably request. The Tax Matters Member shall keep all Members fully informed of the progress of any examinations, audits or other proceedings. Each Member may, at its own expense, participate in any meetings with the relevant tax authorities.

ARTICLE VI

Books, Records, Accounting and Reports

SECTION 6.01. Records and Accounting. The LLC shall keep, or cause to be kept, appropriate books and records with respect to the LLC’s business, including all books and records necessary to provide any information, lists and copies of documents required to be provided pursuant to applicable laws. All matters concerning (i) the determination of the relative amount of allocations and distributions among the Members pursuant to Article IV and (ii) accounting procedures and determinations, and other determinations not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Manager, whose determination shall be final and conclusive as to all of the Members absent manifest clerical error.

SECTION 6.02. Fiscal Year. The fiscal year (the “Fiscal Year”) of the LLC for financial statement and federal income tax purposes shall be the same and shall, except as otherwise required in accordance with the Code, end on December 31.

ARTICLE VII

LLC Units

SECTION 7.01. Units. LLC Interests shall be represented by Units. The authorized Units which the LLC has authority to issue consist of 50,000,000 Units. The Units will consist of a single class. The Manager may establish other classes from time to time in accordance with such procedures and subject to such conditions and restrictions as the Manager shall determine from time to time. Except as expressly provided in this Agreement to the contrary, any reference to “Units” shall include any other classes that may be established in accordance with this Agreement. All Units of a particular class shall have identical rights in all respects as all other Units of such class, except in each case as otherwise specified in this Agreement.

SECTION 7.02. Register. The register of the LLC shall be the definitive record of ownership of each Unit and all relevant information with respect to each Member. Unless the Manager shall determine otherwise, Units shall be certificated as provided in Section 7.08 and recorded in the books and records of the LLC.

SECTION 7.03. Splits, Distributions and Reclassifications. The LLC shall not in any manner subdivide (by any Unit split, Unit distribution, reclassification,

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recapitalization or otherwise) or combine (by reverse Unit split, reclassification, recapitalization or otherwise) the outstanding Units unless an identical event is occurring with respect to the Common Stock. In the event of any such subdivision or combination of the Common Stock, the Units shall automatically be subdivided or combined concurrently with and in the same manner as the Common Stock. The register of the LLC shall be adjusted accordingly and on a timely basis.

SECTION 7.04. Cancellation of Common Stock and Units. At any time a share of Common Stock is redeemed, repurchased, acquired, cancelled or terminated by the Corporation, one Unit registered in the name of the Manager will hereby automatically be cancelled for no consideration by the LLC so that the number of Units held by the Corporation at all times equals the number of shares of Common Stock outstanding. The register of the LLC shall be adjusted accordingly and on a timely basis.

SECTION 7.05. Incentive Plans. At any time the Corporation issues a share of Common Stock pursuant to an Incentive Plan (whether pursuant to the exercise of a stock option or the grant of a restricted share award or otherwise), the following shall occur: (a) the Corporation shall be deemed to contribute to the capital of the LLC an amount of cash equal to the current per share market price of a share of Common Stock on the date such share is issued (or, if earlier, the date the related option is exercised) and the Capital Account of the Corporation shall be adjusted accordingly; (b) the LLC shall be deemed to purchase from the Corporation a share of Common Stock for an amount of cash equal to the amount of cash deemed contributed by the Corporation to the LLC in clause (a) above (and such share is deemed delivered to its owner under the Incentive Plan); (c) the net proceeds (including the amount of any payments made on a loan with respect to a stock purchase award) received by the Corporation with respect to such share, if any, shall be concurrently transferred and paid to the LLC (and such net proceeds so transferred shall not constitute a Capital Contribution); and (d) the LLC shall issue to the Corporation one Unit registered in the name of the Corporation. The LLC shall retain any net proceeds that are paid directly to the LLC.

SECTION 7.06. Offerings of Common Stock. At any time the Corporation issues a share of Common Stock other than pursuant to an Incentive Plan, the net proceeds received by the Corporation with respect to such share, if any, shall be concurrently transferred to the LLC and the LLC shall issue to the Corporation one Unit registered in the name of the Corporation.

SECTION 7.07. Registered Members. The LLC shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Delaware Act.

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SECTION 7.08. Certification of Units. Each Unit shall be represented by a certificate in the form attached hereto as Schedule C (an “LLC Certificate”) and shall be imprinted with a legend in substantially the following form, in addition to any applicable legends required under the Escrow Agreement:

“THE UNITS REPRESENTED BY THIS LLC CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS (“STATE ACTS”) AND MAY NOT BE SOLD, ASSIGNED, PLEDGED OR TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION UNDER THE ACT OR STATE ACTS OR AN EXEMPTION THEREFROM. THE TRANSFER OF THE UNITS REPRESENTED BY THIS LLC CERTIFICATE IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF JUNE 19, 2007, AS AMENDED AND MODIFIED FROM TIME TO TIME, GOVERNING THE ISSUER (THE “COMPANY”) AND BY AND AMONG CERTAIN INVESTORS. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

(a) Upon the conversion of each Member’s A Units, B Units, C Units, D Units and M Units referred to in Section 2.01, and upon each subsequent issuance of Units to any Member in accordance with the provisions of this Agreement, the LLC shall issue one or more LLC Certificates in the name of such Member. Each such LLC Certificate shall be denominated in terms of the number of Units evidenced by such LLC Certificate and shall be signed by the Manager on behalf of the LLC.

(b) The LLC shall issue a new LLC Certificate in place of any LLC Certificate previously issued if the holder of the Units represented by such LLC Certificate, as reflected on the books and records of the LLC:

(i) makes proof by affidavit, in form and substance satisfactory to the Manager, that such previously issued LLC Certificate has been lost, stolen or destroyed;

(ii) requests the issuance of a new LLC Certificate before the Manager has notice that such previously issued LLC Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;

(iii) if requested by the Manager, delivers to the LLC a bond, in form and substance satisfactory to the Manager, with such surety or sureties as the Manager may direct, to indemnify the LLC and the Manager against any claim that may be

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made on account of the alleged loss, destruction or theft of the previously issued LLC Certificate; and

(iv) satisfies any other reasonable requirements imposed by the Manager and any applicable requirements under the Escrow Agreement.

(c) Upon a Member’s Transfer of any or all of the Units represented by an LLC Certificate in compliance with Article VIII hereof, the transferee of such Units shall deliver such LLC Certificate to the Manager for cancellation, and the Manager shall thereupon issue a new LLC Certificate to such transferee for the Units being transferred and, if applicable, cause to be issued to such transferor a new LLC Certificate for that number of Units represented by the canceled LLC Certificate which are not being transferred.

ARTICLE VIII

Transfer of LLC Interests

SECTION 8.01. Restrictions on Transfer. No Member may sell, assign, pledge, transfer or otherwise dispose of all or any portion of such Member’s Units (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) (a “Transfer”), unless (i) the prior written consent of the Manager is obtained, which consent may be given or withheld, or made subject to such conditions (including the receipt of such legal opinions and other documents that the Manager may require) as are determined by the Manager, in each case in the Manager’s sole discretion (ii) such Transfer complies with the provisions of this Article VIII and the relevant provisions of any agreements to which the LLC and such Member are parties and (iii) such transfer is accompanied by the delivery of an endorsed LLC Certificate. In the event that a Member transfers any Units pursuant to this Section 8.01, in connection with such transfer it shall also transfer a pro rata portion of its (i) Capital Account and (ii) credits for Capital Contributions to such transferee.

SECTION 8.02. Permitted Transfers. (a) Notwithstanding anything to the contrary in this Agreement, (i) each Member who is an individual may transfer all or a portion of his Units without consideration to (A) a member of such Member’s immediate family, which shall include his spouse, siblings, children or grandchildren (“Family Members”) or (B) a trust (including any grantor retained annuity trust), corporation, partnership or limited liability company, all of the beneficial interests in which shall be held by such Member and/or one or more Family Members of such Member; provided, however, that during the period that any such trust, corporation, partnership or limited liability company holds any Units, no Person other than such Member or one or more Family Members of such Member may be or may become beneficiaries, stockholders, limited or general partners or members thereof, (ii) each Member that is an entity may transfer all or a portion of its Units to any of its Affiliates (it being understood, in furtherance of and not in limitation of the foregoing, that Greenlight and Third Point may transfer Units held by them to an entity in which both Greenlight and Third Point hold equity interests that is an Affiliate of either Greenlight or

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Third Point) and (iii) each Member that is a party to the Escrow Agreement may transfer all or a portion of its Units to any other party to the Escrow Agreement in connection with the true-up contemplated by Section 4.01(e) (the Persons referred to in the preceding clauses (i), (ii) and (iii) are each referred to hereinafter as a “Permitted Transferee”). A Permitted Transferee of Units pursuant to this Section 8.02 may transfer its Units pursuant to this Section 8.02 only to the transferor Member or to a Person that is a Permitted Transferee of such transferor Member (and in the case of a transfer by a Member who is an individual, only without consideration), provided, however, that all Permitted Transferees shall be subject to this Agreement and, if applicable, the Escrow Agreement and the Tax Benefit Sharing Agreement, in the same manner as the transferor. Transfers pursuant to this Section 8.02 shall not require the consent of the Manager.

SECTION 8.03. Permitted Exchanges. (a) Notwithstanding Section 8.01, each Member (other than the Corporation) shall be entitled to exchange, at any time and from time to time, any or all of such Member’s Units, on a one-for-one basis, for the same number of shares of Common Stock (the number of shares of Common Stock for which a Unit is entitled to be exchanged referred to herein as the “Exchange Rate”) by delivering a written notice to the Manager (and to the Corporation, if the Corporation is not the Manager) stating that such Member desires to exchange a number of Units specified in such notice into an equal number of shares of Common Stock, accompanied by instruments of transfer to the Corporation, duly executed by such Member or such Member’s duly authorized attorney, and transfer tax stamps or funds therefor, if required pursuant to this Article VIII, in respect of the Units to be exchanged, in each case delivered during normal business hours at the principal executive offices of the Manager (and the Corporation, if the Corporation is not the Manager). The Manager shall use commercially reasonable efforts to effect any such exchange within one Business Day of receiving the requisite notice, instruments of transfer and transfer tax stamps or funds therefor, if required, as set forth in the preceding sentence. Notwithstanding the foregoing, no holder of a Unit shall be entitled to exchange such Unit for a share of Common Stock if such exchange would be prohibited under applicable federal or state securities laws or regulations.

(b) Upon the date any such Units are surrendered for exchange pursuant to this Section 8.03, all rights of the holder of such Units as such holder shall cease.

(c) The Exchange Rate shall be adjusted accordingly if there is: (1) any subdivision (by any unit split, unit distribution, reclassification, recapitalization or otherwise) or combination (by reverse unit split, reclassification, recapitalization or otherwise) of the Units that is not accompanied by an identical subdivision or combination of the Common Stock; or (2) any subdivision (by any stock split, stock dividend, reclassification, recapitalization or otherwise) or combination (by reverse stock split, reclassification, recapitalization or otherwise) of the Common Stock that is not accompanied by an identical subdivision or combination of the Units. In the event of a reclassification or other similar transaction as a result of which the shares of Common Stock are converted into another security, then a Member shall be entitled to receive upon exchange the amount of such security that such Member would have received if such

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exchange had occurred immediately prior to the effective date of such reclassification or other similar transaction.

SECTION 8.04.  Further Restrictions. Notwithstanding any contrary provision in this Agreement, in no event may any Transfer of a Unit be made by any Member or transferee if:

(a) such Transfer is made to any Person who lacks the legal right, power or capacity to own such Unit;

(b) such Transfer would require the registration of such transferred Unit or of any class of Unit pursuant to any applicable United States federal or state securities laws (including, without limitation, the Securities Act or the Exchange Act) or other foreign securities laws or would constitute a nonexempt distribution pursuant to applicable state securities laws;

(c) such Transfer would cause any portion of the assets of the LLC to constitute assets of any employee benefit plan pursuant to the regulations issued by the U.S. Department of Labor at Section 2510.3-101 of Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations, or any successor regulations;

(d) such Transfer would cause any portion of the assets of the LLC to become “plan assets” of any benefit plan investor within the meaning of regulations issued by the U.S. Department of Labor at Section 2510.3-101 of Part 2510 of Chapter XXV, Title 29 of the Code of Federal Regulations, or any successor regulations, or to be regulated under the Employee Retirement Income Security Act of 1974, as amended from time to time; or

(e) to the extent requested by the Manager (except in the case of a Transfer contemplated by Section 4.01(e) or Section 8.02), the LLC does not receive such legal and/or tax opinions and written instruments (including copies of any instruments of Transfer and such transferee’s consent to be bound by this Agreement as a transferee) that are in a form satisfactory to the Manager, as determined in the Manager’s sole discretion.

SECTION 8.05. Transferee’s Rights. (a) A transfer of an LLC Interest permitted hereunder shall be effective as of the date of assignment and compliance with the conditions to such transfer and such transfer shall be shown on the books and records of the LLC. Net Income, Net Losses and other LLC items shall be allocated between the transferor and the transferee according to Section 706 of the Code. Distributions made before the effective date of such transfer shall be paid to the transferor, and Distributions made after such date shall be paid to the transferee.

(b) Unless and until a transferee becomes a Substituted Member pursuant to Section 8.07, the transferee shall not be entitled to any of the rights granted to a Member hereunder or under applicable law, other than the rights granted specifically to

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transferees pursuant to this Agreement and to have the other rights granted to transferees pursuant to the Delaware Act.

SECTION 8.06. Transferor’s Rights and Obligations. Any Member who shall transfer any Units or other interest in the LLC shall cease to be a Member with respect to such Units or other interest and shall no longer have any rights or privileges of a Member with respect to such Units or other interest except that unless and until the transferee is admitted as a Substituted Member in accordance with the provisions of Section 8.07 (the “Admission Date”), (i) such assigning Member shall retain all of the duties, liabilities and obligations of a Member with respect to such Units or other interest and (ii) the Manager may, in its sole discretion, reinstate all or any portion of the rights and privileges of such Member with respect to such Units or other interest for any period of time prior to the Admission Date.

SECTION 8.07. Substituted Members. In connection with the transfer of a Unit of a Member permitted under the terms of this Agreement, and the other agreements contemplated hereby and thereby, the transferee shall become a Substituted Member on the later of (i) the effective date of such transfer and (ii) the date on which the Manager approves such transferee as a Substituted Member, and such admission shall be shown on the books and records of the LLC and the Substituted Member signs a letter of acceptance, in form satisfactory to the Manager, of all the terms and conditions of this Agreement, including, if applicable, the Escrow Agreement and the Tax Benefit Sharing Agreement, and signs such other documents and instruments as may be necessary or appropriate to effect such Person’s admission as a Substituted Member.

SECTION 8.08. Additional Members. A Person may be admitted to the LLC as an additional Member only in connection with a transfer of Units permitted under this Article VIII and only upon such Person furnishing to the Company (a) a letter of acceptance, in form satisfactory to the Manager, of all the terms and conditions of this Agreement, and (b) such other documents or instruments as may be necessary or appropriate to effect such Person’s admission as a Member. A Person may be admitted to the LLC as an additional Member through the issuance of new Units or other securities of the LLC with the prior written consent of the Manager and only upon such Person furnishing to the Company (a) a letter of acceptance, in form satisfactory to the Manager, of all the terms and conditions of this Agreement, including, if applicable, the Tax Benefit Sharing Agreement, and (b) such other documents or instruments as may be necessary or appropriate to effect such Person’s admission as a Member. Any admission of an additional Member pursuant to this Agreement shall become effective on the date on which the Manager determines in its sole discretion that such conditions have been satisfied and when any such admission is shown on the books and records of the LLC.

SECTION 8.09. Attempted Transfer Void. Any attempted Transfer which violates the provisions of this Agreement shall be void and the purported buyer, transferee, pledgee, mortgagee or other recipient shall have no interest in or rights to LLC assets, profits, losses or distributions, and neither the Members nor the LLC shall be required to recognize any such interest or rights.

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SECTION 8.10. Withdrawal. No Member may, or may be required to, withdraw from the LLC, except upon a Transfer of such Member’s Units in accordance with the provisions of this Agreement or upon a permitted repurchase or redemption of such Member’s Units pursuant to the provisions of this Agreement or any other agreement to which the LLC and such Member are parties.

SECTION 8.11. Required Amendments; Continuation. If and to the extent any transferee is admitted as a Member pursuant to Section 8.07, this Agreement shall be amended to admit such transferee as a Member and to reflect the elimination of the transferor (or the reduction of such Member’s interest) and (if and to the extent then required by the Delaware Act) a certificate of amendment to the Certificate reflecting such admission and elimination (or reduction) shall be filed in accordance with the Act.

SECTION 8.12. Resignation. No Member shall have the right to resign or withdraw as a Member without the prior written consent of the Manager, which may be given or withheld in its sole discretion except to the extent that such resignation or withdrawal is effectuated in connection with a transfer, permitted under this Article VIII, by such Member of all Units held by it. Any Member that resigns without any required consent of the Manager in contravention of this Section 8.12 shall be liable to the LLC for all damages (including all lost profits and special, indirect and consequential damages) directly or indirectly caused by the resignation of such Member, and such Member shall be entitled to receive the fair value of his, her or its interest in the LLC as of the date of his, her or its resignation (or, if less, the fair value of his, her or its interest as of the date of the occurrence of a liquidation or other winding-up of the LLC), as conclusively determined by the Manager, only promptly following the occurrence of a liquidation or other winding-up of the LLC.

ARTICLE IX

Dissolution and Liquidation

SECTION 9.01. Dissolution. The LLC shall not be dissolved by the admission of additional Members or Substituted Members. The LLC shall dissolve, and its affairs shall be wound up, upon the first to occur of the following:

(a) the entry of a decree of judicial dissolution of the LLC under Section 35-5 of the Delaware Act or an administrative dissolution under Section 18-802 of the Delaware Act;

(b) any other event not inconsistent with any provision hereof causing a dissolution of the LLC under the Delaware Act; or

(c) the Incapacity or removal of the Manager or the occurrence of a Disabling Event with respect to the Manager; provided that the LLC will not be dissolved or required to be wound up in connection with any of the events specified in this Section 9.01 if: (i) at the time of the occurrence of such event there is at least one other Member who is hereby authorized to, and elects to,

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carry on the business of the LLC; or (ii) all remaining Members consent to or ratify the continuation of the business of the LLC and the appointment of another managing member of the LLC within 90 days following the occurrence of any such Incapacity or removal, which consent shall be deemed (and if requested each Member shall provide a written consent for ratification) to have been given for all Members if the holders of more than two-thirds of the Units then outstanding agree in writing to so continue the business of the LLC.

Except as otherwise set forth in this Article IX, the LLC is intended to have perpetual existence. A withdrawal by a Member shall not cause a dissolution of the LLC, and the LLC shall continue in existence subject to the terms and conditions of this Agreement.

SECTION 9.02. Liquidation and Termination. On dissolution of the LLC, the Manager, or any other Person or Persons designated by the Manager, shall act as liquidator (the “Liquidator”). The Liquidator shall proceed diligently to wind up the affairs of the LLC and make final distributions as provided herein and in the Delaware Act. The costs of liquidation shall be expenses of the LLC. Until final distribution, the Liquidator shall continue to operate the LLC properties with all of the power and authority of the Manager. The steps to be accomplished by the Liquidator are as follows:

(a) The Liquidator shall pay, satisfy or discharge from LLC funds all of the debts, liabilities and obligations of the LLC (including all expenses incurred in liquidation) or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash fund for contingent liabilities in such amount and for such term as the Liquidator may reasonably determine).

(b) In the event that the LLC holds assets other than cash at the time of its dissolution, then as promptly as practicable after dissolution, the Liquidator shall (i) determine the Fair Market Value (the “Liquidation FMV”) of such assets (the “Liquidation Assets”) in accordance with this Article IX, and (ii) deliver to each Member a statement setting forth the Liquidation FMV and the amounts and recipients of such Distributions.

(c) The “Fair Market Value” of any Liquidation Assets shall be conclusively determined by the Liquidator, and shall be determined with the consultation of an independent appraiser and with good faith and fair dealing.

(d) As soon as the Liquidation FMV and the proper amounts of Distributions have been determined in accordance with Sections 9.02(b) and (c) above, the Liquidator shall promptly distribute the LLC’s Liquidation Assets to the holders of Units in accordance with Sections 4.01(a) and 4.01(f). Any non-cash Liquidation Assets will first be written up or down to their Fair Market Value, thus creating Net Income or Net Loss (if any), which shall be allocated in accordance with Section 4.04. In making such distributions, the Liquidator shall allocate each type of Liquidation Assets (i.e., cash or cash equivalents, stock or securities, etc.) among the Members ratably based upon the aggregate amounts to be distributed with respect to the Units held by each such holder.

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The distribution of cash and/or property to a Member in accordance with the provisions of this Section 9.02 constitutes a complete return to the Member of its Capital Contributions and a complete distribution to the Member of its interest in the LLC and all the LLC’s property and constitutes a compromise to which all Members have consented within the meaning of the Delaware Act. To the extent that a Member returns funds to the LLC, it has no claim against any other Member for those funds.

SECTION 9.03. Certificate of Cancellation. On completion of the distribution of LLC assets as provided herein, the LLC is terminated (and the LLC shall not be terminated prior to such time), and the Manager (or such other Person or Persons as the Delaware Act may require or permit) shall file a certificate of cancellation with the Secretary of State of Delaware, cancel any other filings made pursuant to this Agreement that are or should be canceled and take such other actions as may be necessary to terminate the LLC. The LLC shall be deemed to continue in existence for all purposes of this Agreement until it is terminated pursuant to this Section 9.03.

SECTION 9.04. Reasonable Time for Winding Up. A reasonable time shall be allowed for the orderly winding up of the business and affairs of the LLC and the liquidation of its assets pursuant to Section 9.02 in order to minimize any losses otherwise attendant upon such winding up.

SECTION 9.05. Return of Capital. The Liquidator shall not be personally liable for the return of Capital Contributions or any portion thereof to the Members (it being understood that any such return shall be made solely from LLC assets).

ARTICLE X

Rights and Obligations of Members

SECTION 10.01. Limitation of Liability. Except as otherwise provided by applicable law, the debts, obligations and liabilities of the LLC, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the LLC, and no Member shall be obligated personally for any such debt, obligation or liability of the LLC solely by reason of being a Member or acting as a Member of the LLC; provided that a Member shall be required to return to the LLC any Distribution made to it in clear and manifest accounting or similar error. The immediately preceding sentence shall constitute a compromise to which all Members have consented within the meaning of the Delaware Act. Notwithstanding anything contained herein to the contrary, the failure of the LLC to observe any formalities or requirements relating to the exercise of its powers or management of its business and affairs under this Agreement or the Delaware Act shall not be grounds for imposing personal liability on the Members for liabilities of the LLC. Each Member’s and the Manager’s liability shall be limited as set forth in this Agreement, the Delaware Act and other applicable law. The Manager shall have no liability for taking or failing to take any action required to be taken by it under this Agreement to the extent the Manager or the Members have agreed that such action shall

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be taken or not be taken, as the case may be. To the fullest extent permitted under the Delaware Act, no Member, the Manager or any officer of the LLC (each, a “Covered Person”) shall be liable to the LLC or to any of the Members for any losses, claims, damages or liabilities arising (i) by reason of being or having been a Covered Person or (ii) from any act or omission performed or omitted by the Covered Person in connection with this Agreement or the LLC’s business or affairs (including any error in judgment in making any investment decisions), including losses due to the negligence of other agents of the LLC, except for any losses, claims, damages or liabilities primarily attributable to such Covered Person’s willful misconduct, recklessness, or gross negligence, as finally determined by a court of competent jurisdiction, or as otherwise required by law.

SECTION 10.02. Exculpation. (a) No Covered Person shall be liable, including under any legal or equitable theory of fiduciary duty or other theory of liability, to the Company or to any other Covered Person for any losses, claims, damages or liabilities incurred by reason of any act or omission performed or omitted by such Covered Person on behalf of the Company unless such act or omission was performed or omitted by such Covered Person in bad faith. Whenever in this Agreement a Covered Person is permitted or required to make decisions in good faith, the Covered Person shall act under such standard and shall not be subject to any other or different standard (including any legal or equitable standard of fiduciary or other duty) imposed by this Agreement or any relevant provisions of law or in equity or otherwise.

(b) A Covered Person shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such Person’s professional or expert competence.

SECTION 10.03. Lack of Authority. No Member in its capacity as such has the authority or power to act for or on behalf of the LLC in any manner, to do any act that would be (or could be construed as) binding on the LLC or to make any expenditures on behalf of the LLC, and the Members hereby consent to the exercise by the Manager of the powers conferred on it by law and this Agreement.

SECTION 10.04. No Right of Partition. No Member shall have the right to seek or obtain partition by court decree or operation of law of any LLC property, or the right to own or use particular or individual assets of the LLC.

SECTION 10.05. Indemnification. (a) The LLC hereby agrees to indemnify and hold harmless any Covered Person (each an “Indemnified Person”) to the fullest extent permitted under the Delaware Act, as the same now exists or may hereafter be amended, substituted or replaced (but, in the case of any such amendment, substitution or replacement only to the extent that such amendment, substitution or replacement permits the LLC to provide broader indemnification rights than the LLC is providing immediately prior to such amendment), against all expenses, liabilities and losses (including attorney fees, judgments, fines, excise taxes or penalties) (collectively “Losses”) reasonably incurred or suffered by such Person (or one or more of such Person’s Affiliates) by reason of the fact that such Person is or was a Member, Manager

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or Officer. The LLC may, as determined by the Manager, also indemnify and hold harmless any Indemnified Person to the fullest extent permitted under the Delaware Act who is or was serving as an employee or agent of the LLC or is or was serving at the request of the LLC as a managing member, officer, director, principal, member, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise (including any of the LLC’s Subsidiaries). Expenses, including attorney fees, incurred by any such Indemnified Person in defending a proceeding otherwise indemnifiable hereunder shall be paid by the LLC in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by the LLC. Notwithstanding the foregoing, no indemnification shall be provided by the LLC with respect to any Losses that resulted from action or inaction of such Indemnified Person that, in each case, constituted gross negligence, willful misconduct, a breach of the Indemnified Party’s fiduciary duty to the LLC or an act that was not in good faith, that involved a knowing violation of law or from which the Indemnified Person derived an improper personal benefit.

(b) The right to indemnification and the advancement of expenses conferred in this Section 10.05 shall not be exclusive of any other right which any Person may have or hereafter acquire under any statute, agreement, by-law or otherwise.

(c) The LLC may maintain insurance, at its expense, to protect any Indemnified Person against any expense, liability or loss described in Section 10.05(a) above whether or not the LLC would have the power to indemnify such Indemnified Person against such expense, liability or loss under the provisions of this Section 10.05.

(d) Notwithstanding anything contained herein to the contrary (including in this Section 10.05), any indemnity by the LLC relating to the matters covered in this Section 10.05 shall be provided out of and to the extent of LLC assets only and no Member (unless such Member otherwise agrees in writing or is found in a final decision by a court of competent jurisdiction to have personal liability on account thereof) shall have personal liability on account thereof or shall be required to make additional Capital Contributions to help satisfy such indemnity of the LLC.

(e) If this Section 10.05 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the LLC shall nevertheless indemnify and hold harmless each Indemnified Person pursuant to this Section 10.05 to the fullest extent permitted by any applicable portion of this Section 10.05 that shall not have been invalidated and to the fullest extent permitted by applicable law.

ARTICLE XI

General Provisions

SECTION 11.01. Power of Attorney. (a) Each Member hereby constitutes and appoints the Manager and the Liquidator, with full power of substitution,

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as his true and lawful agent and attorney-in-fact, with full power and authority in his or its name, place and stead, to execute, swear to, acknowledge, deliver, file and record in the appropriate public offices: (i) this Agreement, all certificates and other instruments and all amendments thereof which are in accordance with the terms of this Agreement and which the Manager deems appropriate or necessary to form, qualify, or continue the qualification of, the LLC as a limited liability company in the State of Delaware and in all other jurisdictions in which the LLC may conduct business or own property, (ii) all instruments which the Manager deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement which is in accordance with its terms, (iii) all conveyances and other instruments or documents which the Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the LLC pursuant to the terms of this Agreement, including a certificate of cancellation and (iv) all instruments relating to the admission, withdrawal or substitution of any Member pursuant to this Agreement.

(b) The foregoing power of attorney is irrevocable and coupled with an interest, and shall survive the death, disability, incapacity, dissolution, bankruptcy, insolvency or termination of any Member and the transfer of all or any portion of his or its LLC Interest and shall extend to such Member’s heirs, successors, assigns and personal representatives.

SECTION 11.02. Further Action. The parties shall execute and deliver all documents, instruments, and certificates, provide all information, and take or refrain from taking all such further actions as may be necessary or appropriate to achieve the purposes of this Agreement and effect the provisions hereof, as determined by the Manager.

SECTION 11.03. Amendments. This Agreement may not be amended except in writing and with the consent of the Manager, which may be withheld in its sole discretion; provided, however, that any amendment or modification that adversely affects the rights of one or more Members under this Agreement, in their capacity as such, in a manner that is materially different from the manner in which such amendment or modification affects the rights of other Members under this Agreement, in their capacity as such, shall require the consent of each such adversely affected Member; provided, further, however, that any amendment to Sections 4.01(b), (c), (d) or (e), 5.02, 8.03 and this 11.03, and any defined terms that are used in those sections, shall require the consent of each of Greenlight, Third Point and each Management Member.

SECTION 11.04. Title to LLC Assets. LLC assets shall be deemed to be owned by the LLC as an entity, and no Member, individually or collectively, shall have any ownership interest in such LLC assets or any portion thereof. Legal title to any or all LLC assets may be held in the name of the LLC, the Manager or one or more nominees, as the Manager may determine. The Manager hereby declares and warrants that any LLC assets for which legal title is held in its name or the name of any nominee shall be held in trust by the Manager or such nominee for the use and benefit of the LLC in accordance with the provisions of this Agreement. All LLC assets shall be recorded as the property of the LLC on its books and records, irrespective of the name in which legal title to any such LLC asset is held.

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SECTION 11.05. Remedies. Each Member shall have all rights and remedies set forth in this Agreement and all rights and remedies which such Person has been granted at any time under any other agreement or contract and all of the rights which such Person has under any law. Any Person having any rights under any provision of this Agreement or any other agreements contemplated hereby shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.

SECTION 11.06. Successors and Assigns. All covenants and agreements contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives and permitted assigns, whether so expressed or not.

SECTION 11.07. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

SECTION 11.08. Counterparts. This Agreement may be executed simultaneously in two or more separate counterparts, any one of which need not contain the signatures of more than one party, but each of which will be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.

SECTION 11.09. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

SECTION 11.10. Addresses and Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given or made when (a) delivered personally to the recipient, (b) telecopied to the recipient (with hard copy sent to the recipient by reputable overnight courier service (charges prepaid) that same day) if telecopied before 5:00 p.m. New York time on a Business Day, and otherwise on the next Business Day, or (c) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid). Such notices, demands and other communications shall be sent to the address for such recipient set forth on the signature

37

pages or Schedules hereto, and/or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Any notice to the Manager or the LLC shall be deemed given if received by the Manager at the principal office of the LLC, designated pursuant to Section 2.05.

SECTION 11.11. Creditors; Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the LLC or any of its Affiliates, and no creditor who makes a loan to the LLC or any of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the LLC in favor of such creditor) at any time as a result of making the loan any direct or indirect interest in Net Income, Net Losses, Distributions, capital or property other than as a secured creditor. Except to the extent contemplated by Section 10.05, there are no third party beneficiaries having rights under or with respect to this Agreement.

SECTION 11.12. Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.

SECTION 11.13. Entire Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

SECTION 11.14. Delivery by Facsimile. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall reexecute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

SECTION 11.15. Waiver of Certain Rights. Each Member irrevocably waives any right it may have to demand any Distributions or withdrawal of property from the LLC or to maintain any action for dissolution (except pursuant to Section 18-802 of the Delaware Act) of the LLC or for partition of the property of the LLC.

SECTION 11.16. Survival. Section 10.01 (Limitation of Liability) and Section 10.05 (Indemnification) shall survive and continue in full force in accordance with its terms notwithstanding any termination of this Agreement or the dissolution of the LLC.

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

BIOFUEL ENERGY, LLC,
	by	/s/ Scott H. Pearce
		Name: Scott H. Pearce
		Title: President and CEO

BIOFUEL ENERGY CORP.,
	by	/s/ Scott H. Pearce
		Name: Scott H. Pearce
		Title: President and CEO

Address for Notices:

BioFuel Energy Corp.
1801 Broadway, Suite 1060
Denver, CO 80202
Attention of Michael N. Stefanoudakis
Fax: (303) 592-8117

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

GREENLIGHT CAPITAL, L.P.,
	by	GREENLIGHT CAPITAL, LLC, its general partner,
		by	/s/ David Einhorn
			Name: David Einhorn
			Title: Senior Managing Member

GREENLIGHT CAPITAL QUALIFIED, L.P.,
	by	GREENLIGHT CAPITAL, LLC, its general partner,
		by	/s/ David Einhorn
			Name: David Einhorn
			Title: Senior Managing Member

Address for Notices:

c/o GREENLIGHT CAPITAL, INC.
140 East 45^th Street, 24^th Floor
New York, NY 10017
Attention of Chief Operating Officer

With a copy to:

Akin Gump Strauss Hauer & Feld LLP
1700 Pacific Avenue, Suite 4100
Dallas, TX 75201
Attention of Eliot D. Raffkind
Tel: (214) 969-4667

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

THIRD POINT PARTNERS L.P.,
	by	THIRD POINT ADVISORS L.L.C., its general partner,
		by	/s/ Justin Nadler
			Name: Justin Nadler
			Title: Authorized Signatory

THIRD POINT PARTNERS QUALIFIED, L.P.,
	by	THIRD POINT ADVISORS L.L.C., its general partner,
		by	/s/ Justin Nadler
			Name: Justin Nadler
			Title: Authorized Signatory
Address for Notices:
390 Park Avenue
18th Floor
New York, NY 10018
With a copy to:
Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, NY  10019 Attention of Holly K. Youngwood Tel: (212) 728-8512

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Daniel S. Loeb

Daniel S. Loeb

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Lawrence J. Bernstein

Lawrence J. Bernstein

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Todd Q. Swanson

Todd Q. Swanson

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Thomas J. Edelman

Thomas J. Edelman

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

WCIOSAQ CORP.,
by	/s/ Max W. Batzer
	Name: Max W. Batzer
	Title: Director

Address for Notices:

c/o Wynnefield Capital Inc.

Attn: Max W. Batzer

450 Seventh Ave., Suite 509

New York, NY 10123

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

Snyder Family Investments L.P.,
by	/s/ John C. Snyder
	By: Snyder Operating Company, LLC
	Its: General Partner
	By: John C. Snyder
	Its: President

Address for Notices:

201 Main Street, Suite 1450

Fort Worth, TX 76102-3108

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

NANCY AND JOHN SNYDER FOUNDATION,
by	/s/ John C. Snyder
	Name: John C. Snyder
	Title: President

Address for Notices:

201 Main Street, Suite 1450

Fort Worth, TX 76102-3108

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Barrie M. Damson

Barrie M. Damson

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Lance T. Shaner

Lance T. Shaner

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Elliot Jaffe

Elliot Jaffe

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Scott H. Pearce

Scott H. Pearce

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Daniel J. Simon

Daniel J. Simon

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Irik P. Sevin

Irik P. Sevin

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

BIOFUEL PARTNERS, LLC,
	by
		/s/ Thomas J. Edelman
		Name: Thomas J. Edelman
		Title:   Manager
Address for Notices:
667 Madison Ave
4th Floor
New York, NY 10021

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Eric D. Streisand

Eric D. Streisand

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ JonAlan C. Page

JonAlan C. Page

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

	ETHANOL BUSINESS GROUP, LLC,
	by	/s/ Robert L. Swain
		Name:	Robert L. Swain
		Title:	Member
Address for Notices:
3461 Frances Berkeley
Williamsburg, VA 23188

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Michael N. Stefanoudakis

Michael N. Stefanoudakis

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ William W. Huffman, Jr.

William W. Huffman, Jr.

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ David J. Kornder

David J. Kornder

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Timothy S. Morris

Timothy S. Morris

IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

CARGILL BIOFUELS INVESTMENTS, LLC,
	by	/s/ Dennis C. Inman
		Name: Dennis C. Inman Title: Director-Cargill Biofuels Investments

Address for Notices:

15407 McGinty Road West

Wayzata, MN 55391-2399

Attn: Ethanol Strategic

         Account Leader / MS 62

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Christine Eklund

Christine Eklund

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Robert Crockett

Robert Crockett

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Marc Smyth

Marc Smyth

IN WITNESS WHEREOF, the undersigned has executed or caused to be executed on his behalf this Second Amended and Restated Limited Liability Company Agreement as of the date first above written.

/s/ Timothy DeFoe

Timothy DeFoe

EX-10.2

                                                                    Exhibit 10.2


                          REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") dated as of June 19,
2007 is entered into by and between BioFuel Energy Corp., a Delaware corporation
(the "COMPANY") and the holders of shares of Common Stock (as defined below) and
Units (as defined below) party to this Agreement (collectively, the
"INVESTORS").

     A. Certain of the Investors are holders of shares of common stock of the
Company, par value $0.01 per share (the "COMMON STOCK");

     B. The Company and certain of the Investors are beneficial owners of units
(the "UNITS") of BioFuel Energy, LLC, a Delaware limited liability company ("BFE
LLC"). Each holder of a Unit (other than the Company) may exchange any or all of
such holder's Units on a one-for-one basis for the same number of shares of
Common Stock, subject to the provisions of the LLC Agreement (defined below);
and

     C. The Company desires to provide the Investors with registration rights
with respect to shares of Common Stock held by Investors and shares of Common
Stock underlying the Units held by Investors.

                                    AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:

                                    ARTICLE I
                              CERTAIN DEFINED TERMS

     SECTION 1.1 DEFINITIONS. For purposes of this Agreement:

     (a) "AFFILIATE" means, with respect to any Person, (i) any other Person of
which securities or other ownership interests representing more than fifty
percent (50%) of the voting interests are, at the time such determination is
being made, owned, Controlled or held, directly or indirectly, by such Person or
(ii) any other Person which, at the time such determination is being made, is
Controlling, Controlled by or under common Control with, such Person. As used
herein, "CONTROL", whether used as a noun or verb, refers to the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management or policies of a Person, whether through the ownership of voting
securities or otherwise.

     (b) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.

     (c) "HOLDER" means a Person that (i) is a party to this Agreement (or a
permitted transferee under Section 2.11 hereof) and (ii) owns Registrable
Securities.

     (d) "LLC AGREEMENT" means the BFE LLC Second Amended and Restated LLC
Agreement, dated June 19, 2007 among the Company and the members of BFE LLC.



     (e) "NASD" means the National Association of Securities Dealers, Inc.

     (f) "PARTICIPATING HOLDERS" means Holders participating, or electing to
participate, in an offering of Registrable Securities.

     (g) "PERSON" means any individual, firm, corporation, company, partnership,
trust, incorporated or unincorporated association, limited liability company,
joint venture, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind, and shall include any
successor (by merger or otherwise) of any such entity.

     (h) "REGISTRABLE SECURITIES" means shares of Common Stock held by Holders,
including shares of Common Stock deliverable or delivered in exchange for Units
pursuant to the LLC Agreement and the organizational documents of the Company;
provided, however, that equity interests that are considered to be Registrable
Securities shall cease to be Registrable Securities (A) upon the sale thereof
pursuant to an effective registration statement, (B) upon the sale thereof
pursuant to Rule 144 (or successor rule) under the Securities Act, (C) when such
securities cease to be outstanding or (D) when such securities become eligible
for sale under Rule 144(k) (or successor rule) under the Securities Act.

     (i) "REGISTRATION EXPENSES" mean all expenses (other than underwriting
discounts and commissions) arising from or incident to the performance of, or
compliance with, this Agreement, including, without limitation, (i) SEC, stock
exchange, NASD and other registration and filing fees, (ii) all fees and
expenses incurred in connection with complying with any securities or blue sky
laws (including fees, charges and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), (iii) all printing,
messenger and delivery expenses, (iv) the fees, charges and disbursements of
counsel to the Company and of its independent public accountants and any other
accounting and legal fees, charges and expenses incurred by the Company
(including any expenses arising from any special audits or "comfort letters"
required in connection with or incident to any registration), (v) the fees,
charges and disbursements of any special experts retained by the Company in
connection with any registration pursuant to the terms of this Agreement, (vi)
all internal expenses of the Company (including all salaries and expenses of its
officers and employees performing legal or accounting duties), (vii) the fees
and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange and (viii) Securities Act liability
insurance (if the Company elects to obtain such insurance), regardless of
whether any Registration Statement filed in connection with such registration is
declared effective. "REGISTRATION EXPENSES" shall also include fees, charges and
disbursements of one (1) firm of counsel to all of the Participating Holders
participating in any underwritten public offering pursuant to Article II hereof
(which shall be selected by a majority, based on the number of Registrable
Securities to be sold, of the Participating Holders).

     (j) "REGISTRATION STATEMENT" means any Registration Statement of the
Company filed with the SEC on the appropriate form pursuant to the Securities
Act which covers any of the Registrable Securities pursuant to the provisions of
this Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.


                                       2



     (k) "SEC" means the United States Securities and Exchange Commission.

     (l) "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

     (m) "SELLING EXPENSES" means the underwriting fees, discounts, selling
commissions and stock transfer taxes applicable to all Registrable Securities
registered by the Participating Holders.

                                   ARTICLE II
                               REGISTRATION RIGHTS

     SECTION 2.1 DEMAND REGISTRATION

     (a) Request by Holders. If the Company receives at any time after the
earlier of (i) the first anniversary of the date hereof or (ii) the completion
by the Company of a merger, consolidation, sale, transfer, lease or other
conveyance of all or substantially all of the assets or any other similar
business combination or transaction with another company listed on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq Global Market, a
written request from Holders that hold at least thirty-five percent (35%) of the
Registrable Securities then outstanding (the "REQUESTING HOLDERS") that the
Company register Registrable Securities held by Requesting Holders (a "DEMAND
REQUEST"), then the Company shall, within ten (10) days after receipt of such
Demand Request, give written notice of such request ("REQUEST NOTICE") to all
Holders. Each Demand Request shall (x) specify the number of Registrable
Securities that the Requesting Holders intend to sell or dispose of, (y) state
the intended method or methods of sale or disposition of the Registrable
Securities and (z) specify the expected price range (net of underwriting
discounts and commissions) acceptable to the Requesting Holders to be received
for such Registrable Securities. Following receipt of a Demand Request, the
Company shall:

          (i)     cause to be filed, as soon as practicable, but within ninety
                  (90) days of the date of delivery to the Company of the Demand
                  Request, a Registration Statement covering such Registrable
                  Securities which the Company has been so requested to register
                  by the Requesting Holders and other Holders who request to the
                  Company that their Registrable Securities be registered within
                  twenty (20) days of the mailing of the Request Notice,
                  providing for the registration under the Securities Act of
                  such Registrable Securities to the extent necessary to permit
                  the disposition of such Registrable Securities in accordance
                  with the intended method of distribution specified in such
                  Demand Request;

          (ii)    use its reasonable best efforts to have such Registration
                  Statement declared effective by the SEC as soon as practicable
                  thereafter; and

          (iii)   refrain from filing any other Registration Statements, other
                  than pursuant to a Registration Statement on Form S-4 or S-8
                  (or similar or successor forms), with respect to any other
                  securities of the Company until such date


                                       3



                  which is ninety (90) days following effectiveness of the
                  Registration Statement filed in response to the Demand
                  Request.

     (b) Effective Registration Statement. A registration requested pursuant to
this Section 2.1 shall not be deemed to have been effected (i) unless a
Registration Statement with respect thereto has become effective and remained
effective in compliance with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such Registration
Statement until such time as all of such Registrable Securities have been
disposed of in accordance with the intended methods of disposition by the
Holders thereof set forth in such Registration Statement; (ii) if, after it has
become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court and has not thereafter become effective, or if the offering of
Registrable Securities is not consummated for any reason, including, without
limitation, if the underwriters of an underwritten public offering advise the
Participating Holders that the Registrable Securities cannot be sold at a net
price per share equal to or above the net price disclosed in the preliminary
prospectus; (iii) if the conditions to closing specified in the underwriting
agreement, if any, entered into in connection with such registration are not
satisfied or waived; or (iv) if the Requesting Holders are cut back to fewer
than fifty percent (50%) of the Registrable Securities requested to be
registered.

     (c) Selection of Underwriters. In the event that the Company is required to
file a Registration Statement covering any Registrable Securities of any
Requesting Holders pursuant to Section 2.1(a) hereof and the proposed public
offering is to be an underwritten public offering, the managing underwriter
shall be one or more reputable nationally recognized investment banks selected
by a majority in interest of the Requesting Holders and reasonably acceptable to
the Company, which consent shall not be unreasonably withheld, delayed or
conditioned.

     (d) Priority for Demand Registration. Notwithstanding any other provision
of this Agreement, if the managing underwriter of an underwritten public
offering determines and advises the Participating Holders and the Company in
writing that the inclusion of all securities proposed to be included by the
Company and any other Holders in the underwritten public offering would
materially and adversely interfere with the successful marketing of the
Requesting Holders' Registrable Securities, then the Company and other Holders
shall not be permitted to include any securities in excess of the amount, if
any, of securities which the managing underwriter of such underwritten public
offering shall reasonably and in good faith agree in writing to include in such
public offering in addition to the amount of Registrable Securities to be
registered for the Requesting Holders. The Company will be obligated to include
in such Registration Statement, as to each Holder, only a portion of the
Registrable Securities such Holder has requested be registered equal to the
ratio which such Holder's requested Registrable Securities bears to the total
number of Registrable Securities requested to be included in such Registration
Statement by all Holders who have requested that their Registrable Securities be
included in such Registration Statement. It is acknowledged by the parties
hereto that pursuant to the foregoing provision, the securities to be included
in a registration requested by the Requesting Holders pursuant to this Section
2.1 shall be allocated: (i) first, to the Participating Holders, and (ii)
second, to the Company and any other holders of equity interests of the Company
requesting registration of securities of the Company.


                                       4



     (e) Limitation on Demand Registrations. The Company shall only be obligated
to effect three (3) Demand Requests pursuant to this Section 2.1.

     (f) Cancellation of Registration. A majority in interest of the
Participating Holders shall have the right to cancel a proposed registration of
Registrable Securities pursuant to this Section 2.1 when, (i) in their
discretion, market conditions are so unfavorable as to be seriously detrimental
to an offering pursuant to such registration or (ii) the request for
cancellation is based upon material adverse information relating to the Company
that is different from the information known to the Participating Holders at the
time of the Demand Request. Such cancellation of a registration shall not be
counted as one of the three (3) Demand Requests and notwithstanding anything to
the contrary in the Agreement, the Company shall be responsible for the expenses
of the Participating Holders incurred in connection with the registration prior
to the time of cancellation.

     SECTION 2.2. PIGGYBACK REGISTRATIONS.

     (a) Right to Include Registrable Securities. Subject to the limitations
contained in the last sentence of this Section 2.2, each time that the Company
proposes for any reason to register any of its equity interests under the
Securities Act, either for its own account or for the account of equity interest
holders exercising demand registration rights, other than a Demand Request
pursuant to Section 2.1 hereof or pursuant to a Registration Statement on Forms
S-4 or S-8 (or similar or successor forms) (a "PROPOSED REGISTRATION"), the
Company shall promptly give written notice of such Proposed Registration to all
of the Holders of Registrable Securities (which notice shall be given not less
than thirty (30) days prior to the expected effective date of the Company's
Registration Statement) and shall offer such Holders the right to request
inclusion of any of such Holder's Registrable Securities in the Proposed
Registration. No registration pursuant to this Section 2.2 shall relieve the
Company of its obligation to register Registrable Securities pursuant to a
Demand Request, as contemplated by Section 2.1 hereof. The rights to piggyback
registration may be exercised on an unlimited number of occasions.

     (b) Piggyback Procedure. Each Holder of Registrable Securities shall have
twenty (20) days from the date of receipt of the Company's notice referred to in
Section 2.2(a) above to deliver to the Company a written request specifying the
number of Registrable Securities such Holder intends to sell and such Holder's
intended method of disposition. Any Holder shall have the right to withdraw such
Holder's request for inclusion of such Holder's Registrable Securities in any
Registration Statement pursuant to this Section 2.2 by giving written notice to
the Company of such withdrawal; provided, however, that the Company may ignore a
notice of withdrawal made within twenty-four (24) hours of the time the
Registration Statement is to become effective. Subject to Section 2.2(d) below,
the Company shall use its commercially reasonable efforts to include in such
Registration Statement all such Registrable Securities so requested to be
included therein; provided, however, that the Company may at any time withdraw
or cease proceeding with any such Proposed Registration if it shall at the same
time withdraw or cease proceeding with the registration of all other Registrable
Securities originally proposed to be registered. In the event that the Proposed
Registration by the Company is, in whole or in part, an underwritten public
offering of securities of the Company, any request under this Section 2.2(b)
shall specify that the Registrable Securities be included in the underwriting on


                                       5



the same terms and conditions as the securities, if any, otherwise being sold
through underwriters under such registration.

     (c) Selection of Underwriters. The managing underwriter for any Proposed
Registration that involves an underwritten public offering shall be one or more
reputable nationally recognized investment banks selected by the Company and
reasonably acceptable to a majority in interest of the Holders, which consent
shall not be unreasonably withheld, delayed or conditioned.

     (d) Priority for Piggyback Registration. Notwithstanding any other
provision of this Agreement, if the managing underwriter of an underwritten
public offering determines and advises the Company and the Holders in writing
that the inclusion of all Registrable Securities proposed to be included by the
Holders of Registrable Securities in the underwritten public offering would
materially and adversely interfere with the successful marketing of the
Company's securities, then the Holders of Registrable Securities shall not be
permitted to include, in the aggregate, any Registrable Securities in excess of
the amount, if any, of Registrable Securities which the managing underwriter of
such underwritten public offering shall reasonably and in good faith agree in
writing to include in such public offering in addition to the amount of
securities to be registered for the Company (the "MAXIMUM OFFERING AMOUNT"). The
Company will be obligated to include in such Registration Statement only a
portion of the Registrable Securities such Holder has requested be registered
equal to the ratio which such Holder's requested Registrable Securities bears to
the total number of Registrable Securities requested to be included in such
Registration Statement by all Holders who have requested that their Registrable
Securities be included in such Registration Statement. It is acknowledged by the
parties hereto that pursuant to the foregoing provision, the securities to be
included in a registration initiated by the Company shall be allocated:

          (i)     first, to the Company;

          (ii)    second, pari passu to the Holders; and

          (iii)   third, to any others requesting registration of securities of
                  the Company.

If as a result of the provisions of this Section 2.2(d), any Holder shall not be
entitled to include more than fifty percent (50%) of its Registrable Securities
in a registration that such Holder has requested to be so included, such Holder
may withdraw such Holder's request to include Registrable Securities in such
Registration Statement.

     (e) Underwritten Offering. In the event that the Proposed Registration by
the Company is, in whole or in part, an underwritten public offering of
securities of the Company, any request under this Section 2.2 shall specify that
the Registrable Securities be included in the underwriting on the same terms and
conditions as the securities, if any, otherwise being sold through underwriters
under such registration.

     SECTION 2.3 FORM S-3 REGISTRATION. Any Holder or group of Holders holding
at least ten percent (10%) of the Registrable Securities (an "INITIATING FORM
S-3 HOLDER") may request at any time following the date hereof that the Company
file a Registration Statement under the Securities Act on Form S-3 (or similar
or successor form) covering the sale or other distribution


                                       6



of all or any portion of the Registrable Securities held by such Initiating Form
S-3 Holder pursuant to Rule 415 under the Securities Act ("FORM S-3 DEMAND") if
the Company is a registrant qualified to use Form S-3 (or any similar or
successor form) to register such Registrable Securities. If such condition is
met, the Company shall use its reasonable best efforts to register under the
Securities Act on Form S-3 (or any similar or successor form) at the earliest
practicable date, for sale in accordance with the method of disposition
specified in the Form S-3 Demand, the number of Registrable Securities specified
in such Form S-3 Demand. In connection with a Form S-3 Demand, the Company
agrees to include in the prospectus included in any Registration Statement on
Form S-3, such material describing the Company and intended to facilitate the
sale of securities being so registered as is reasonably requested for inclusion
therein by the Initiating Form S-3 Holders, whether or not the rules applicable
to preparation of Form S-3 require the inclusion of such information. Form S-3
Demands will not be deemed to be Demand Requests as described in Section 2.1
hereof and Holders shall have the right to request an unlimited number of Form
S-3 Demands. Notwithstanding the foregoing, the Company shall not be obligated
to file more than four (4) Registration Statements on Form S-3 pursuant to this
Section 2.3 in any given twelve (12) month period.

     SECTION 2.4 LOCK-UP AGREEMENTS. If any registration of Registrable
Securities shall be effected in connection with an underwritten public offering,
no Holder shall effect any public sale or distribution, including any sale
pursuant to Rule 144, of any shares of Common Stock or other security of the
Company (except as part of such underwritten public offering) during the period
beginning fourteen (14) days prior to the effective date of the applicable
Registration Statement until the earlier of: (i) such time as the Company and
the managing underwriter shall agree and (ii) one hundred and eighty (180) days.

     SECTION 2.5 REGISTRATION PROCEDURES.

     (a) Obligations of the Company. Whenever registration of Registrable
Securities is required pursuant to this Agreement, the Company shall use its
reasonable best efforts to effect the registration and sale of such Registrable
Securities in accordance with the intended method of distribution thereof as
promptly as possible, and in connection with any such request, the Company
shall, as expeditiously as possible:

          (i)     Preparation of Registration Statement; Effectiveness. Prepare
                  and file with the SEC (in any event not later than ninety (90)
                  days after receipt of a Demand Request to file a Registration
                  Statement with respect to Registrable Securities), a
                  Registration Statement on any form on which the Company then
                  qualifies, which counsel for the Company shall deem
                  appropriate and pursuant to which such offering may be made in
                  accordance with the intended method of distribution thereof
                  (except that the Registration Statement shall contain such
                  information as may reasonably be requested for marketing or
                  other purposes by the managing underwriter), and use its
                  reasonable best efforts to cause any registration required
                  hereunder to become effective as soon as practicable after the
                  initial filing thereof and remain effective for a period of
                  not less than one hundred and eighty (180) days (or such
                  shorter period in which all Registrable Securities have been
                  sold in accordance with the methods of


                                       7



                  distribution set forth in the Registration Statement);
                  provided, however, that, in the case of any registration of
                  Registrable Securities on Form S-3 which are intended to be
                  offered on a continuous or delayed basis, such one hundred and
                  eighty (180) day period shall be extended, if necessary, to
                  keep the Registration Statement effective until all such
                  Registrable Securities are sold, provided that Rule 415, or
                  any successor rule under the Securities Act, permits an
                  offering on a continuous or delayed basis. Notwithstanding the
                  foregoing, the Company may (A) defer the filing of a
                  Registration Statement for a period of not more than 90 days
                  (but not more than once in any twelve-month period) or (B)
                  suspend the use of a prospectus under a Registration Statement
                  on Form S-3 for a period not to exceed 30 days in any
                  three-month period or an aggregate of 90 days in any 12-month
                  period, in each case if the Board of Directors of the Company
                  determines in good faith that because of bona fide business
                  reasons (not including the avoidance of the Company's
                  obligations hereunder), including the acquisition or
                  divestiture of assets, pending corporate developments and
                  similar events, it is in the best interests of the Company to
                  delay the filing of such Registration Statement or to suspend
                  the use of such prospectus, and prior to delaying such filing
                  or suspending such use, the Company provides the Participating
                  Holders with written notice of such delay or suspension, which
                  notice need not specify the nature of the event giving rise to
                  such delay or suspension;

          (ii)    Participation in Preparation. Provide any Participating
                  Holder, any underwriter participating in any disposition
                  pursuant to a Registration Statement, and any attorney,
                  accountant or other agent retained by any Participating Holder
                  or underwriter (each, an "INSPECTOR" and, collectively, the
                  "INSPECTORS"), the opportunity to participate (including, but
                  not limited to, reviewing, commenting on and attending all
                  meetings) in the preparation of such Registration Statement,
                  each prospectus included therein or filed with the SEC and
                  each amendment or supplement thereto;

          (iii)   Due Diligence. For a reasonable period prior to the filing of
                  any Registration Statement pursuant to this Agreement, make
                  available for inspection and copying by the Inspectors such
                  financial and other information and books and records,
                  pertinent corporate documents and properties of the Company
                  and its subsidiaries and cause the officers, directors,
                  employees, counsel and independent certified public
                  accountants of the Company and its subsidiaries to respond to
                  such inquiries and to supply all information reasonably
                  requested by any such Inspector in connection with such
                  Registration Statement, as shall be reasonably necessary, in
                  the judgment of the respective counsel referred to in Section
                  2.5(a)(ii), to conduct a reasonable investigation within the
                  meaning of the Securities Act;


                                       8



          (iv)    General Notifications. Promptly notify in writing the
                  Participating Holders, the sales or placement agent, if any,
                  therefor and the managing underwriter of the securities being
                  sold, (A) when such Registration Statement or the prospectus
                  included therein or any prospectus amendment or supplement or
                  post-effective amendment has been filed, and, with respect to
                  any such Registration Statement or any post-effective
                  amendment, when the same has become effective, (B) when the
                  SEC notifies the Company whether there will be a "review" of
                  such Registration Statement, (C) of any comments (oral or
                  written) by the SEC and by the blue sky or securities
                  commissioner or regulator of any state with respect thereto
                  and (D) of any request by the SEC for any amendments or
                  supplements to such Registration Statement or the prospectus
                  or for additional information;

          (v)     10b-5 Notification. Promptly notify in writing the
                  Participating Holders, the sales or placement agent, if any,
                  therefor and the managing underwriter of the securities being
                  sold pursuant to any Registration Statement at any time when a
                  prospectus relating thereto is required to be delivered under
                  the Securities Act upon discovery that, or upon the happening
                  of any event as a result of which, any prospectus included in
                  such Registration Statement (or amendment or supplement
                  thereto) contains an untrue statement of a material fact or
                  omits to state any material fact required to be stated therein
                  or necessary to make the statements therein not misleading in
                  light of the circumstances under which they were made, and the
                  Company shall promptly prepare a supplement or amendment to
                  such prospectus and file it with the SEC (in any event no
                  later than ten (10) days following notice of the occurrence of
                  such event to each Participating Holder, the sales or
                  placement agent and the managing underwriter) so that after
                  delivery of such prospectus, as so amended or supplemented, to
                  the purchasers of such Registrable Securities, such
                  prospectus, as so amended or supplemented, shall not contain
                  an untrue statement of a material fact or omit to state any
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading in light of the
                  circumstances under which they were made;

          (vi)    Notification of Stop Orders; Suspensions of Qualifications and
                  Exemptions. Promptly notify in writing the Participating
                  Holders, the sales or placement agent, if any, therefor and
                  the managing underwriter of the securities being sold of the
                  issuance by the SEC of (A) any stop order issued or threatened
                  to be issued by the SEC or (B) any notification with respect
                  to the suspension of the qualification or exemption from
                  qualification of any of the Registrable Securities for sale in
                  any jurisdiction or the initiation or threatening of any
                  proceeding for such purpose, and the Company agrees to use its
                  reasonable best efforts to (x) prevent the issuance of any
                  such stop order, and in the event of such issuance, to obtain
                  the withdrawal of any such stop order and (y) obtain


                                       9



                  the withdrawal of any order suspending or preventing the use
                  of any related prospectus or suspending the qualification of
                  any Registrable Securities included in such Registration
                  Statement for sale in any jurisdiction at the earliest
                  practicable date;

          (vii)   Amendments and Supplements; Acceleration. Prepare and file
                  with the SEC such amendments, including post-effective
                  amendments to each Registration Statement as may be necessary
                  to keep such Registration Statement continuously effective for
                  the applicable time period required hereunder and if
                  applicable, file any Registration Statements pursuant to Rule
                  462(b) under the Securities Act; cause the related prospectus
                  to be supplemented by any required prospectus supplement, and
                  as so supplemented to be filed pursuant to Rule 424 (or any
                  similar provisions then in force) promulgated under the
                  Securities Act; and comply with the provisions of the
                  Securities Act and the Exchange Act with respect to the
                  disposition of all securities covered by such Registration
                  Statement during such period in accordance with the intended
                  methods of disposition by the sellers thereof set forth in
                  such Registration Statement as so amended or in such
                  prospectus as so supplemented. If a majority in interest of
                  the Participating Holders so request, request acceleration of
                  effectiveness of the Registration Statement from the SEC and
                  any post-effective amendments thereto, if any are filed;
                  provided that at the time of such request, the Company does
                  not in good faith believe that it is necessary to amend
                  further the Registration Statement in order to comply with the
                  provisions of this subparagraph. If the Company wishes to
                  further amend the Registration Statement prior to requesting
                  acceleration, it shall have five (5) days to so amend prior to
                  requesting acceleration;

          (viii)  Copies. Furnish as promptly as practicable to each
                  Participating Holder and Inspector prior to filing a
                  Registration Statement or any supplement or amendment thereto,
                  copies of such Registration Statement, supplement or amendment
                  as it is proposed to be filed, and after such filing such
                  number of copies of such Registration Statement, each
                  amendment and supplement thereto (in each case including all
                  exhibits thereto), the prospectus included in such
                  Registration Statement (including each preliminary prospectus)
                  and such other documents as each such Participating Holder or
                  underwriter may reasonably request in order to facilitate the
                  disposition of the Registrable Securities owned by such
                  Participating Holder;

          (ix)    Blue Sky. Use its reasonable best efforts to, prior to any
                  public offering of the Registrable Securities, register or
                  qualify (or seek an exemption from registration or
                  qualifications) such Registrable Securities under such other
                  securities or blue sky laws of such jurisdictions as any
                  Participating Holder or underwriter may request, and to
                  continue such qualification in effect in each such
                  jurisdiction for as long as is permissible pursuant to the
                  laws of such jurisdiction, or for as long as a Participating
                  Holder or underwriter requests or until all of such
                  Registrable Securities are sold,


                                       10



                  whichever is shortest, and do any and all other acts and
                  things which may be reasonably necessary or advisable to
                  enable any Participating Holder to consummate the disposition
                  in such jurisdictions of the Registrable Securities;

          (x)     Other Approvals. Use its reasonable best efforts to obtain all
                  other approvals, consents, exemptions or authorizations from
                  such governmental agencies or authorities as may be necessary
                  to enable the Participating Holders and underwriters to
                  consummate the disposition of Registrable Securities;

          (xi)    Agreements. Enter into customary agreements (including any
                  underwriting agreements in customary form), and take such
                  other actions as may be reasonably required in order to
                  expedite or facilitate the disposition of Registrable
                  Securities;

          (xii)   "Cold Comfort" Letter. Obtain a "cold comfort" letter from the
                  Company's independent public accountants in customary form and
                  covering such matters of the type customarily covered by "cold
                  comfort" letters as the managing underwriter may reasonably
                  request, and reasonably satisfactory to a majority in interest
                  of the Participating Holders;

          (xiii)  Legal Opinion. Furnish, at the request of any underwriter of
                  Registrable Securities on the date such securities are
                  delivered to the underwriters for sale pursuant to such
                  registration, an opinion, dated such date, of counsel
                  representing the Company for the purposes of such
                  registration, addressed to the Holders, and the placement
                  agent or sales agent, if any, thereof and the underwriters, if
                  any, thereof, covering such legal matters with respect to the
                  registration in respect of which such opinion is being given
                  as such underwriter may reasonably request and as are
                  customarily included in such opinions, and reasonably
                  satisfactory to a majority in interest of the Participating
                  Holders;

          (xiv)   SEC Compliance; Earnings Statement. Use its reasonable best
                  efforts to comply with all applicable rules and regulations of
                  the SEC and make available to its shareholders, as soon as
                  reasonably practicable, but no later than fifteen (15) months
                  after the effective date of any Registration Statement, an
                  earnings statement covering a period of twelve (12) months
                  beginning after the effective date of such Registration
                  Statement, in a manner which satisfies the provisions of
                  Section 11(a) of the Securities Act and Rule 158 thereunder;

          (xv)    Certificates; Closing. Provide officers' certificates and
                  other customary closing documents;


                                       11



          (xvi)   NASD. Cooperate with each Participating Holder and each
                  underwriter participating in the disposition of such
                  Registrable Securities and underwriters' counsel in connection
                  with any filings required to be made with the NASD;

          (xvii)  Road Show. Cause appropriate officers as are requested by a
                  managing underwriter to participate in a "road show" or
                  similar marketing effort being conducted by such underwriter
                  with respect to an underwritten public offering;

          (xviii) Listing. Use its reasonable best efforts to cause all such
                  Registrable Securities to be listed on each securities
                  exchange on which similar securities issued by the Company are
                  then listed and if not so listed, to be listed on the NASD
                  automated quotation system;

          (xix)   Transfer Agent, Registrar and CUSIP. Provide a transfer agent
                  and registrar for all Registrable Securities registered
                  pursuant hereto and a CUSIP number for all such Registrable
                  Securities, in each case, no later than the effective date of
                  such registration;

          (xx)    Private Sales. Use its reasonable best efforts to assist a
                  Holder in facilitating private sales of Registrable Securities
                  by, among other things, providing officers' certificates and
                  other customary closing documents reasonably requested by a
                  Holder; and

          (xxi)   Reasonable Best Efforts. Use its reasonable best efforts to
                  take all other actions necessary to effect the registration of
                  the Registrable Securities contemplated hereby.

     (b) Seller Information. The Company may require each Participating Holder
as to which any registration of such Holder's Registrable Securities is being
effected to furnish to the Company such information regarding such Holder and
such Holder's method of distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing. If a Holder refuses
to provide the Company with any of such information on the grounds that it is
not necessary to include such information in the Registration Statement, the
Company may exclude such Participating Holder's Registrable Securities from the
Registration Statement if the Company provides such Participating Holder with an
opinion of counsel to the effect that such information must be included in the
Registration Statement and such Participating Holder continues thereafter to
withhold such information. The exclusion of a Participating Holder's Registrable
Securities shall not affect the registration of the other Registrable Securities
to be included in the Registration Statement.

     (c) Notice to Discontinue. Each Participating Holder whose Registrable
Securities are covered by a Registration Statement filed pursuant to this
Agreement agrees that, upon receipt of written notice from the Company of the
happening of any event of the kind described in Section 2.5(a)(v), such
Participating Holder shall forthwith discontinue the disposition of Registrable
Securities until such Participating Holder's receipt of the copies of the
supplemented


                                       12



or amended prospectus contemplated by Section 2.5(a)(v) or until it is advised
in writing by the Company that the use of the prospectus may be resumed and has
received copies of any additional or supplemental filings which are incorporated
by reference into the prospectus, and, if so directed by the Company in the case
of an event described in Section 2.5(a)(v), such Participating Holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Participating Holder's possession, of the
prospectus covering such Registrable Securities which is current at the time of
receipt of such notice. If the Company shall give any such notice, the Company
shall extend the period during which such Registration Statement is to be
maintained effective by the number of days during the period from and including
the date of the giving of such notice pursuant to Section 2.5(a)(v) to and
including the date when the Participating Holder shall have received the copies
of the supplemented or amended prospectus contemplated by, and meeting the
requirements of, Section 2.5(a)(v).

     SECTION 2.6 REGISTRATION EXPENSES. Except as otherwise provided herein, all
Registration Expenses shall be borne by the Company. All Selling Expenses
relating to Registrable Securities registered shall be borne by the
Participating Holders of such Registrable Securities pro rata on the basis of
the number of Registrable Securities so registered.

     SECTION 2.7 INDEMNIFICATION

     (a) Indemnification by the Company. The Company agrees, notwithstanding
termination of this Agreement, to indemnify and hold harmless to the fullest
extent permitted by law, each Holder, each of their directors, officers,
employees, advisors, agents and general or limited partners (and the directors,
officers, employees, advisors and agents thereof), their respective Affiliates
and each Person who controls (within the meaning of the Securities Act or the
Exchange Act) any of such Persons, and each underwriter and each Person who
controls (within the meaning of the Securities Act or the Exchange Act) any
underwriter (collectively, "HOLDER INDEMNIFIED PARTIES") from and against any
and all losses, claims, damages, expenses (including, without limitation,
reasonable costs of investigation and fees, disbursements and other charges of
counsel, any amounts paid in settlement effected with the Company's consent,
which consent shall not be unreasonably withheld or delayed and any costs
incurred in enforcing the Company's indemnification obligations hereunder) or
other liabilities (collectively, "LOSSES") to which any such Holder Indemnified
Party may become subject under the Securities Act, Exchange Act, any other
federal law, any state or common law or any rule or regulation promulgated
thereunder or otherwise, insofar as such Losses (or actions or proceedings,
whether commenced or threatened, in respect thereof) are resulting from or
arising out of or based upon (i) any untrue, or alleged untrue, statement of a
material fact contained in any Registration Statement, prospectus or preliminary
prospectus (as amended or supplemented) or any document incorporated by
reference in any of the foregoing or resulting from or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
a prospectus, in light of the circumstances under which they were made), not
misleading or (ii) any violation by the Company of the Securities Act, Exchange
Act, any other federal law, any state or common law or any rule or regulation
promulgated thereunder or otherwise incident to any registration, qualification
or compliance and in any such case, the Company will promptly reimburse each
such Holder Indemnified Party for any legal and any other Losses reasonably
incurred in


                                       13



connection with investigating, preparing or defending any such claim, loss,
damage, liability, action or investigation or proceeding (collectively, a
"CLAIM"). Such indemnity obligation shall remain in full force and effect
regardless of any investigation made by or on behalf of the Holder Indemnified
Parties and shall survive the transfer of Registrable Securities by such Holder
Indemnified Parties.

     (b) Indemnification by Holders. In connection with any proposed
registration in which a Holder is participating pursuant to this Agreement, each
such Holder shall furnish to the Company in writing such information with
respect to such Holder as the Company may reasonably request or as may be
required by law for use in connection with any Registration Statement or
prospectus or preliminary prospectus to be used in connection with such
registration and each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, any underwriter retained by the Company and their
respective directors, officers, partners, employees, advisors and agents, their
respective Affiliates and each Person who controls (within the meaning of the
Securities Act or the Exchange Act) any of such Persons to the same extent as
the foregoing indemnity from the Company to the Holder Indemnified Parties as
set forth in Section 2.7(a) (subject to the exceptions set forth in the
foregoing indemnity, the proviso to this sentence and applicable law), but only
with respect to any such information furnished in writing by such Holder
expressly for use therein; provided, however, that the liability of any Holder
under this Section 2.7(b) shall be limited to the amount of the net proceeds
received by such Holder in the offering giving rise to such liability. Such
indemnity obligation shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holder Indemnified Parties (except as
provided above) and shall survive the transfer of Registrable Securities by such
Holder.

     (c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder (the "INDEMNIFIED PARTY") agrees to give prompt
written notice to the indemnifying party (the "INDEMNIFYING PARTY") after the
receipt by the Indemnified Party of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which the Indemnified Party intends to claim indemnification or contribution
pursuant to this Agreement; provided, however, that, the failure so to notify
the Indemnifying Party shall not relieve the Indemnifying Party of any liability
that it may have to the Indemnified Party hereunder unless and to the extent
such Indemnifying Party is materially prejudiced by such failure. If notice of
commencement of any such action is given to the Indemnifying Party as above
provided, the Indemnifying Party shall be entitled to participate in and, to the
extent it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and reasonably satisfactory to such Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party
agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense
of such action with counsel satisfactory to the Indemnified Party in its
reasonable judgment or (iii) the named parties to any such action (including,
but not limited to, any impleaded parties) reasonably believe that the
representation of such Indemnified Party and the Indemnifying Party by the same
counsel would be inappropriate under applicable standards of professional
conduct. In the case of clause (ii) above and (iii) above, the Indemnifying
Party shall not have the right to assume the defense of such action on behalf of
such Indemnified Party. No Indemnifying Party shall be liable for any


                                       14



settlement entered into without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the written consent
of the Indemnified Party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the Indemnified Party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (A)
includes an unconditional release of the Indemnified Party from all liability
arising out of such action or claim and (B) does not include a statement as to,
or an admission of, fault, culpability or a failure to act by or on behalf of
any Indemnified Party. The rights afforded to any Indemnified Party hereunder
shall be in addition to any rights that such Indemnified Party may have at
common law, by separate agreement or otherwise.

     (d) Contribution. If the indemnification provided for in this Section 2.7
from the Indemnifying Party is unavailable or insufficient to hold harmless an
Indemnified Party in respect of any Losses referred to herein, then the
Indemnifying Party, in lieu of indemnifying the Indemnified Party, shall
contribute to the amount paid or payable by the Indemnified Party as a result of
such Losses in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Party and the Indemnified Party, as well as any other
relevant equitable considerations. The relative faults of the Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, was
made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the Indemnifying Party's and Indemnified Party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such action; provided, however, that the liability of any Holder under this
Section 2.7(d) shall be limited to the amount of the net proceeds received by
such Holder in the offering giving rise to such liability. The amount paid or
payable by a party as a result of the Losses or other liabilities referred to
above shall be deemed to include, subject to the limitations set forth in
Sections 2.7(a), 2.7(b) and 2.7(c), any legal or other fees, charges or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.

     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution pursuant to this
Section 2.7(d).

     SECTION 2.8 RULE 144 AND RULE 144A; OTHER EXEMPTIONS. With a view to making
available to the Holders the benefits of Rule 144 and Rule 144A promulgated
under the Securities Act and other rules and regulations of the SEC that may at
any time permit a Holder to sell securities of the Company to the public without
registration, the Company covenants that it shall (i) file in a timely manner
all reports and other documents required to be filed by it under the Securities
Act and the Exchange Act and the rules and regulations adopted by the SEC
thereunder and (ii) take such further action as each Holder may reasonably
request (including, but not limited to, providing any information necessary to
comply with Rule 144 and Rule 144A, if available with respect to resales of the
Registrable Securities under the Securities Act), at all


                                       15



times from and after the date which is ninety (90) days following the date
hereof, all to the extent required from time to time to enable such Holder to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (x) Rule 144 and Rule 144A (if
available with respect to resales of the Registrable Securities) under the
Securities Act, as such rules may be amended from time to time or (y) any other
rules or regulations now existing or hereafter adopted by the SEC. Upon the
written request of a Holder, the Company shall deliver to the Holder a written
statement as to whether it has complied with such requirements.

     SECTION 2.9 CERTAIN LIMITATIONS ON REGISTRATION RIGHTS. No Holder may
participate in any Registration Statement hereunder unless such Holder completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements, and other documents reasonably required under the terms of such
underwriting arrangements, and agrees to sell such Holder's Registrable
Securities on the basis provided in any underwriting agreement approved by the
Holder or Holders entitled hereunder to approve such arrangements; provided,
however, that no such Holder shall be required to make any representations or
warranties to the Company or the underwriters in connection with any such
registration other than representations and warranties as to (i) such Holder's
ownership of its Registrable Securities to be sold or transferred, (ii) such
Holder's power and authority to effect such transfer and (iii) such matters
pertaining to compliance with applicable securities laws as may be reasonably
requested. Such Holders of Registrable Securities to be sold by such
underwriters may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of the
Company to and for the benefit of such underwriters, shall also be made to and
for the benefit of such Holders and that any or all of the conditions precedent
to the obligations of the underwriters under the underwriting agreement be
conditions precedent to the obligations of the Holders.

     SECTION 2.10 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company
represents and warrants that it has not granted registration rights prior to the
date hereof and agrees that from and after the date hereof, it shall not,
without the prior written consent of the Holders of at least fifty percent (50%)
of the Registrable Securities then outstanding, enter into any agreement (or
amendment or waiver of the provisions of any agreement) with any holder or
prospective holder of any securities of the Company that would grant such holder
registration rights that are more favorable, pari passu or senior to those
granted to the Investors hereunder.

     SECTION 2.11 TRANSFER OF REGISTRATION RIGHTS. The rights of a Holder
hereunder may be transferred or assigned in connection with a transfer of
Registrable Securities to (i) any Affiliate of a Holder, (ii) any subsidiary,
parent, partner, retired partner, limited partner, shareholder or member of a
Holder or (iii) any family member or trust for the benefit of any Holder, or
(iv) any transferee who, after such transfer, holds at least one thousand
(1,000) Registrable Securities (as adjusted for any stock dividends, stock
splits, combinations and reorganizations and similar events). Notwithstanding
the foregoing, such rights may only be transferred or assigned provided that all
of the following additional conditions are satisfied: (a) such transfer or
assignment is effected in accordance with applicable securities laws; (b) such
transferee or assignee agrees in writing to become subject to the terms of this
Agreement; and (c) the Company is given written notice by such Holder of such
transfer or assignment, stating


                                       16



the name and address of the transferee or assignee and identifying the
Registrable Securities with respect to which such rights are being transferred
or assigned.

                                   ARTICLE III
                               GENERAL PROVISIONS

     SECTION 3.1 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made in the LLC Agreement or any certificate or
instrument delivered to the Investors pursuant to or in connection with the LLC
Agreement shall survive the execution and delivery of the LLC Agreement and all
statements contained in any certificate or other instrument delivered by the
Company hereunder or thereunder or in connection herewith or therewith shall be
deemed to constitute representations and warranties made by the Company.

     SECTION 3.2 ENTIRE AGREEMENT. This Agreement and any certificates,
documents, instruments and writings that are delivered pursuant hereto,
constitutes the entire agreement and understanding of the parties in respect of
the subject matter hereof and supersedes all prior understandings, agreements or
representations by or among the parties, written or oral, to the extent they
relate in any way to the subject matter hereof. Some of the parties hereto have
entered into a Registration Rights Agreement, dated as of May 1, 2006 (the
"Existing LLC Registration Rights Agreement"), and such parties agree that all
obligations and rights under the Existing LLC Registration Rights Agreement are
hereby terminated and have lapsed.

     SECTION 3.3 ASSIGNMENT; BINDING EFFECT. Except as otherwise provided in
Section 2.11, no party may assign either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
other parties; provided that without the consent of any other party hereto the
rights of the Investors hereunder are assignable to an assignee or transferee
who acquires all of the Units held by an Investor, as the case may be. All of
the terms, agreements, covenants, representations, warranties and conditions of
this Agreement are binding upon, and inure to the benefit of and are enforceable
by, the parties and their respective successors and permitted assigns.

     SECTION 3.4 NOTICES. All notices, requests and other communications
provided for or permitted to be given under this Agreement must be in writing
and shall be given by personal delivery, by certified or registered United
States mail (postage prepaid, return receipt requested), by a nationally
recognized overnight delivery service for next day delivery, or by facsimile
transmission, to the address listed for each party in the LLC Agreement (or to
such other address as any party may give in a notice given in accordance with
the provisions hereof). All notices, requests or other communications will be
effective and deemed given only as follows: (i) if given by personal delivery,
upon such personal delivery, (ii) if sent by certified or registered mail, on
the fifth business day after being deposited in the United States mail, (iii) if
sent for next day delivery by overnight delivery service, on the date of
delivery as confirmed by written confirmation of delivery, (iv) if sent by
facsimile, upon the transmitter's confirmation of receipt of such facsimile
transmission, except that if such confirmation is received after 5:00 p.m. (in
the recipient's time zone) on a business day, or is received on a day that is
not a business day, then


                                       17



such notice, request or communication will not be deemed effective or given
until the next succeeding business day. Notices, requests and other
communications sent in any other manner, including by electronic mail, will not
be effective.

     SECTION 3.5 SPECIFIC PERFORMANCE; REMEDIES. Each party acknowledges and
agrees that the other parties would be damaged irreparably if any provision of
this Agreement were not performed in accordance with its specific terms or were
otherwise breached. Accordingly, the parties will be entitled to an injunction
or injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and its provisions in any action or
proceeding instituted in any state or federal court sitting in New York City,
New York having jurisdiction over the parties and the matter, in addition to any
other remedy to which they may be entitled, at law or in equity. Except as
expressly provided herein, the rights, obligations and remedies created by this
Agreement are cumulative and in addition to any other rights, obligations or
remedies otherwise available at law or in equity. Except as expressly provided
herein, nothing herein will be considered an election of remedies.

     SECTION 3.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

     (a) Submission to Jurisdiction. Any action, suit or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby shall only be
brought in any state or federal court sitting in New York City, New York, and
each party consents to the exclusive jurisdiction and venue of such courts (and
of the appropriate appellate courts therefrom) in any such action, suit or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such, action, suit or proceeding in any such court or that any such action, suit
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such action, suit or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, service of process on such party as
provided in Section 3.4 shall be deemed effective service of process on such
party.

     (b) Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES THAT ANY DISPUTE THAT MAY
ARISE OUT OF OR RELATING TO THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE SUCH PARTY HEREBY EXPRESSLY WAIVES ITS RIGHT TO
JURY TRIAL OF ANY DISPUTE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
OTHER AGREEMENTS RELATING HERETO OR ANY DEALINGS AMONG THEM RELATING TO THE
TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE OF THIS WAIVER IS INTENDED TO
ENCOMPASS ANY AND ALL ACTIONS, SUITS AND PROCEEDINGS THAT RELATE TO THE SUBJECT
MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH PARTY REPRESENTS THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT
IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING
WAIVER, (ii) SUCH PARTY UNDERSTANDS AND WITH THE ADVICE OF COUNSEL HAS


                                       18



CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY, AND (iv) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND REPRESENTATIONS IN THIS SECTION
3.6(b).

     SECTION 3.7 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
any choice of law principles.

     SECTION 3.8 HEADINGS. The article and section headings contained in this
Agreement are inserted for convenience only and will not affect in any way the
meaning or interpretation of this Agreement.

     SECTION 3.9 AMENDMENTS. This Agreement may not be amended or modified
without the written consent of the Company and the Holders of at least fifty
percent (50%) of the Registrable Securities then outstanding; provided, however,
that any amendment or modification that adversely affects the rights of one or
more Holders of Registrable Securities under this Agreement, in their capacity
as such, in a manner that is materially different from the manner in which such
amendment or modification affects the rights of other Holders of Registrable
Securities under this Agreement, in their capacity as such, shall require the
consent of each such adversely affected Holder.

     SECTION 3.10 EXTENSIONS; WAIVERS. Any party may, for itself only, (a)
extend the time for the performance of any of the obligations of any other party
under this Agreement, (b) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any such extension or
waiver will be valid only if set forth in a writing signed by the party to be
bound thereby. No waiver by any party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, may be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising
because of any prior or subsequent such occurrence. Neither the failure nor any
delay on the part of any party to exercise any right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy preclude any other or further exercise of the
same or of any other right or remedy.

     SECTION 3.11 SEVERABILITY. The provisions of this Agreement will be deemed
severable and the invalidity or unenforceability of any provision will not
affect the validity or enforceability of the other provisions hereof; provided
that if any provision of this Agreement, as applied to any party or to any
circumstance, is judicially determined not to be enforceable in accordance with
its terms, the parties agree that the court judicially making such determination
may modify the provision in a manner consistent with its objectives such that it
is enforceable, and/or to delete specific words or phrases, and in its modified
form, such provision will then be enforceable and will be enforced.

     SECTION 3.12 COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in
two or more counterparts, each of which will be deemed an original but all of
which together will


                                       19



constitute one and the same instrument. This Agreement will become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties. For purposes of determining whether a party has
signed this Agreement or any document contemplated hereby or any amendment or
waiver hereof, only a handwritten original signature on a paper document or a
facsimile copy of such a handwritten original signature shall constitute a
signature, notwithstanding any law relating to or enabling the creation,
execution or delivery of any contract or signature by electronic means.

     SECTION 3.13 CONSTRUCTION. This Agreement has been freely and fairly
negotiated among the parties. If an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties and no presumption or burden of proof will arise favoring or
disfavoring any party because of the authorship of any provision of this
Agreement. Any reference to any law will be deemed to refer to such law as in
effect on the date hereof and all rules and regulations promulgated thereunder,
unless the context requires otherwise. The words "include," "includes," and
"including" will be deemed to be followed by "without limitation." Pronouns in
masculine, feminine, and neuter genders will be construed to include any other
gender, and words in the singular form will be construed to include the plural
and vice versa, unless the context otherwise requires. The words "this
Agreement," "herein," "hereof," "hereby," "hereunder," and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless expressly so limited. The parties intend that each representation,
warranty, and covenant contained herein will have independent significance. If
any party has breached any covenant contained herein in any respect, the fact
that there exists another covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached will not detract from or mitigate the fact that the party is in breach
of the first covenant. Time is of the essence in the performance of this
Agreement.

     SECTION 3.14 ATTORNEYS' FEES. If any dispute among any parties arises in
connection with this Agreement, the prevailing party in the resolution of such
dispute in any action or proceeding will be entitled to an order awarding full
recovery of reasonable attorneys' fees and expenses, costs and expenses
(including experts' fees and expenses and the costs of enforcing this Section
3.14) incurred in connection therewith, including court costs, from the
non-prevailing party.

     SECTION 3.15 ADJUSTMENTS FOR STOCK SPLITS, ETC. Wherever in this Agreement
there is a reference to a specific number of shares of the Company's capital
stock of any class or series, then, upon the occurrence of any subdivision,
combination or stock dividend of such class or series of stock, the specific
number of shares so referenced in this Agreement will automatically be
proportionally adjusted to reflect the effect of such subdivision, combination
or stock dividend on the outstanding shares of such class or series of stock.

                            [SIGNATURE PAGES FOLLOW]


                                       20



     IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date first above written.


COMPANY                                BIOFUEL ENERGY CORP.


                                       By:      /s/ Scott H. Pearce
                                          --------------------------------------
                                       Name:    Scott H. Pearce
                                            ------------------------------------
                                       Title:   President & CEO
                                             -----------------------------------


                Signature page 1 to Registration Rights Agreement



BFE LLC:                               BIOFUEL ENERGY, LLC


                                       By:      /s/ Scott H. Pearce
                                          --------------------------------------
                                       Name:    Scott H. Pearce
                                            ------------------------------------
                                       Title:   President & CEO
                                             -----------------------------------


                Signature page 2 to Registration Rights Agreement



INVESTORS:                             GREENLIGHT CAPITAL, L.P.
                                       By:  Greenlight Capital, LLC,
                                       its general partner

                                       By:      /s/ David Einhorn
                                          --------------------------------------
                                       Name: David Einhorn
                                            ------------------------------------
                                       Title: Senior Managing Member
                                             -----------------------------------


                                       GREENLIGHT CAPITAL QUALIFIED, L.P.
                                       By:  Greenlight Capital, LLC,
                                       its general partner

                                       By:      /s/ David Einhorn
                                          --------------------------------------
                                       Name: David Einhorn
                                            ------------------------------------
                                       Title: Senior Managing Member
                                             -----------------------------------

                                       GREENLIGHT CAPITAL OFFSHORE, LTD.
                                       By:  Greenlight Capital, Inc.,


                                       By:      /s/ David Einhorn
                                          --------------------------------------
                                       Name: David Einhorn
                                            ------------------------------------
                                       Title: President
                                             -----------------------------------

                                       GREENLIGHT REINSURANCE, LTD.
                                       By:  DME Advisors, LP,


                                       By:      /s/ David Einhorn
                                          --------------------------------------
                                       Name: David Einhorn
                                            ------------------------------------
                                       Title: Principal
                                             -----------------------------------


                Signature page 3 to Registration Rights Agreement



                                       THIRD POINT PARTNERS LP
                                       By: Third Point Advisors L.L.C.,
                                       its general partner

                                       By:      /s/ Justin Nadler
                                          --------------------------------------
                                       Name:             Justin Nadler
                                            ------------------------------------
                                       Title:            Authorized Signatory
                                             -----------------------------------


                                       THIRD POINT PARTNERS QUALIFIED, L.P.
                                       By: Third Point Advisors L.L.C.,
                                       its general partner

                                       B y:     /s/ Justin Nadler
                                           -------------------------------------
                                       Name:             Justin Nadler
                                            ------------------------------------
                                       Title:            Authorized Signatory
                                             -----------------------------------


                                                /s/ Daniel S. Loeb
                                       -----------------------------------------
                                       Daniel S. Loeb


                                                /s/ Lawrence J. Bernstein
                                       -----------------------------------------
                                       Lawrence J. Bernstein


                                                /s/ Todd Q. Swanson
                                       -----------------------------------------
                                       Todd Q. Swanson


                Signature page 4 to Registration Rights Agreement



                                       BIOFUEL PARTNERS, LLC


                                       By:               /s/ Thomas J. Edelman
                                          --------------------------------------
                                       Name:             Thomas J. Edelman
                                             -----------------------------------
                                       Title:            Manager
                                              ----------------------------------


                                       CARGILL BIOFUELS INVESTMENTS, LLC


                                       By:               /s/ Dennis C. Inman
                                          --------------------------------------
                                       Name:             Dennis C. Inman
                                             -----------------------------------
                                       Title: Director - Cargill Biofuels
                                                         Investments, LLC
                                              ----------------------------------


                                                /s/ Thomas J. Edelman
                                       -----------------------------------------
                                       Thomas J. Edelman


                                                /s/ Barrie M. Damson
                                       -----------------------------------------
                                       Barrie M. Damson


                                       ETHANOL BUSINESS GROUP, LLC


                                       By:      /s/ Robert L. Swain
                                          --------------------------------------
                                       Name:             Robert L. Swain
                                             -----------------------------------
                                       Title:            Member
                                              ----------------------------------



                                                /s/ Elliot Jaffe
                                       -----------------------------------------
                                       Elliot Jaffe



                                                /s/ David J. Kornder
                                       -----------------------------------------
                                       David J. Kornder


                                                /s/ William W. Huffman, Jr.
                                       -----------------------------------------
                                       William W. Huffman, Jr.


                Signature page 5 to Registration Rights Agreement


                                                /s/ Timothy S. Morris
                                       -----------------------------------------
                                       Timothy S. Morris



                                                /s/ JonAlan C. Page
                                       -----------------------------------------
                                       JonAlan C. Page



                                                /s/ Scott H. Pearce
                                       -----------------------------------------
                                       Scott H. Pearce



                                                /s/ Irik P. Sevin
                                       -----------------------------------------
                                       Irik P. Sevin



                                       Snyder Family Investments, L.P.


                                       By:      /s/ John C. Snyder
                                          --------------------------------------
                                       Name:    John C. Snyder, President of
                                             -----------------------------------
                                       Snyder Operating Company, L.L.C.
                                       -----------------------------------------
                                       Title:   General Partner


                                                /s/  Lance T. Shaner
                                       -----------------------------------------
                                       Lance T. Shaner


                                                /s/ Daniel J. Simon
                                       -----------------------------------------
                                       Daniel J. Simon


                                       Nancy and John Snyder Foundation


                                       By:      /s/ John C. Snyder
                                          --------------------------------------
                                       Name:             John C. Snyder
                                             -----------------------------------
                                       Title:            President
                                             -----------------------------------

                Signature page 6 to Registration Rights Agreement




                                                /s/ Michael N. Stefanoudakis
                                       -----------------------------------------
                                       Michael N. Stefanoudakis



                                                /s/ Eric D. Streisand
                                       -----------------------------------------
                                       Eric D. Streisand


                                       WCIOSAQ CORP.


                                       By:      /s/ Max W. Batzer
                                          --------------------------------------
                                       Name:             Max W. Batzer
                                             -----------------------------------
                                       Title:            Director
                                              ----------------------------------


                                                /s/ Christine Eklund
                                       -----------------------------------------
                                       Christine Eklund


                                                /s/ Robert Crockett
                                       -----------------------------------------
                                       Robert Crockett


                                                /s/ Marc A. Smyth
                                       -----------------------------------------
                                       Marc Smyth


                                                /s/ Timothy DeFoe
                                       -----------------------------------------
                                       Timothy DeFoe


                Signature page 7 to Registration Rights Agreement

EX-10.3

                                                                    Exhibit 10.3

================================================================================


                          TAX BENEFIT SHARING AGREEMENT


                                  BY AND AMONG


                              BIOFUEL ENERGY CORP.


                                       AND


                                     MEMBERS



                              DATED: June 19, 2007


================================================================================




                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.01.  Definitions.....................................................1
SECTION 1.02.  Usage Generally; Interpretation.................................7

                                   ARTICLE II

                      DETERMINATION OF REALIZED TAX BENEFIT

SECTION 2.01.  Basis Adjustments...............................................7
SECTION 2.02.  Exchange Basis Schedule.........................................7
SECTION 2.03.  Tax Benefit Schedule............................................8
SECTION 2.04.  Procedures......................................................8
SECTION 2.05.  LLC Interest Sale...............................................9
SECTION 2.06.  Consistency.....................................................9
SECTION 2.07.  Cooperation....................................................10

                                   ARTICLE III

                              TAX BENEFIT PAYMENTS

SECTION 3.01.  Payments.......................................................10
SECTION 3.02.  No Duplicative Payments........................................11
SECTION 3.03.  No Return of Tax Benefit Payments..............................11
SECTION 3.04.  Withholding....................................................11

                                   ARTICLE IV

                            TERMINATION OF AGREEMENT

SECTION 4.01.  Optional Early Termination of Agreement........................11
SECTION 4.02.  Early Termination Notice and Exchange Procedures...............11
SECTION 4.03.  Payment upon Early Termination.................................12
SECTION 4.04.  Regular Termination of Agreement...............................13

                                    ARTICLE V

                         SUBORDINATION AND LATE PAYMENTS

SECTION 5.01.  Subordination..................................................13
SECTION 5.02.  Late Payments by the Corporation...............................13




                                   ARTICLE VI

                                  OTHER MATTERS

SECTION 6.01.  No Member Participation in the Corporation's Tax Matters.......14
SECTION 6.02.  Corporation Covenants..........................................14
SECTION 6.03.  Notices........................................................14
SECTION 6.04.  Counterparts...................................................15
SECTION 6.05.  Entire Agreement; No Third Party Beneficiaries.................15
SECTION 6.06.  Applicable Law.................................................15
SECTION 6.07.  Severability...................................................15
SECTION 6.08.  Successors; Assignment; Amendments.............................15
SECTION 6.09.  Titles and Subtitles...........................................16
SECTION 6.10.  Resolution of Disputes.........................................16
SECTION 6.11.  Reconciliation.................................................17


                                        2



                        TAX BENEFIT SHARING AGREEMENT (this "Agreement"), dated
                  as of June 19, 2007, by and among BioFuel Energy Corp., a
                  Delaware corporation (the "Corporation"), and the Members (as
                  defined below).

            WHEREAS, the Members currently hold membership interests ("Units")
in BioFuel Energy, LLC, a limited liability company organized under the laws of
Delaware and treated as a partnership for Federal income tax purposes (the
"LLC");

            WHEREAS, the Units may be exchanged by a Member (as defined below)
on a one-for-one basis for shares of common stock of the Corporation, par value
$0.01 per share (the "Common Shares") in accordance with the LLC Agreement (as
defined below) and the Certificate of Incorporation of the Corporation (any such
exchange, an "Exchange");

            WHEREAS, the LLC, and any direct or indirect subsidiary that is
treated as a partnership for Federal income tax purposes, will have the benefit
of an election under Section 754 of the Internal Revenue Code of 1986, as
amended (the "Code"), and comparable elections under applicable state and local
tax law, for each Taxable Year (as defined below) ending after the date hereof,
that will result in an adjustment to the tax basis of the assets owned by the
LLC (solely for the benefit of the Corporation) at the time of any Exchange
(such time, the "Exchange Date"; such assets and any asset whose tax basis is
determined, in whole or in part, by reference to the adjusted basis of any such
asset, the "Relevant Assets") by reason of such Exchange and the receipt of
payments under this Agreement;

            WHEREAS, the tax liability of the Corporation attributable to the
LLC may be reduced as a result of the tax benefits created by the Basis
Adjustments (as defined below) and the Corporation may receive additional tax
benefits attributable to Imputed Interest (as defined below); and

            WHEREAS, the parties to this Agreement desire for the Corporation to
make payments to the Members equal to a portion of the actual tax savings the
Corporation realizes that are attributable to Basis Adjustments and Imputed
Interest.

            NOW, THEREFORE, in consideration of the foregoing and the respective
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

            SECTION 1.01. Definitions. As used in this Agreement, the terms set
forth in this Section 1.01 shall have the following meanings:




            "Advisory Firm" means an accounting or law firm that is nationally
recognized as being expert in tax matters and that is selected by the Audit
Committee to act in the capacity of Advisory Firm as contemplated by this
Agreement.

            "Advisory Firm Letter" means a letter from the Advisory Firm stating
that the relevant schedule, notice or other information to be provided by the
Corporation to the Applicable Member (and all supporting schedules and work
papers relating thereto) were prepared in a manner consistent with the terms of
this Agreement and, to the extent such item involves matters not expressly
provided for in this Agreement, on a reasonable basis in light of the facts and
law in existence on the date such item is delivered to such Member and the
intent of the parties hereto.

            "Amended Schedule" is defined in Section 2.04(b).

            "Applicable Member" means any Member that becomes entitled to
payments under this Agreement by reason of an Exchange by such Member.

            "Audit Committee" means the audit committee of the board of
directors of the Corporation.

            "Basis Adjustment" means the adjustment to the tax basis of a
Relevant Asset under Sections 743(b) and 754 of the Code and comparable
provisions of applicable state and local tax law (as calculated pursuant to
Section 2.01) as a result of an Exchange and the related payments made pursuant
to this Agreement.

            "Business Day" means any calendar day that is not a Saturday, Sunday
or other calendar day on which commercial banks are required or authorized to be
closed in the City of New York.

            "Change of Control Event" means the consummation, through one or
more related transactions, of a merger, amalgamation, consolidation, statutory
share exchange, share purchase or similar corporate transaction involving the
Corporation (a "Reorganization") unless, immediately following such
Reorganization all the Persons who were the "beneficial owners" (as such term is
defined in Rule 13(d)-3 under the Exchange Act (or a successor rule thereto)) of
the Common Shares, or such other securities of the Corporation into which such
Common Shares shall be changed by reason of a Reorganization (the "Shares") or
other securities eligible to vote for the election of the board of directors of
Corporation (together, "Corporation Voting Securities") outstanding immediately
prior to the consummation of such Reorganization beneficially own, directly or
indirectly, more than 50% of the combined voting power of the then outstanding
voting securities of the corporation resulting from such Reorganization
(including a corporation that as a result of such transaction owns the
Corporation or all or substantially all of Corporation's assets either directly
or through one or more subsidiaries) (the "Continuing Corporation") in
substantially the same proportions as their ownership, immediately prior to the
consummation of such Reorganization, of the outstanding Corporation Voting
Securities (excluding any outstanding voting securities of the Continuing
Corporation that such beneficial owners hold immediately following


                                        2



the consummation of the Reorganization as a result of their ownership prior to
such consummation of voting securities of a company or other entity involved in,
or forming part of, such Reorganization other than the Corporation).

            "Closing Date" is defined in Section 6.02(b).

            "Code" is defined in the preamble.

            "Common Shares" is defined in the preamble.

            "Corporation" is defined in the preamble.

            "Covered Taxes" means any and all Taxes to which the Corporation is
subject, excluding for any Taxable Year any Taxes payable to any single Taxing
Authority that would be $10,000 or less for such Taxable Year if determined
without regard to tax benefits from all Basis Adjustments and Imputed Interest.

            "Corporation Return" means any Tax Return of the Corporation filed
with respect to Taxes of any Taxable Year.

            "Determination" shall have the meaning ascribed to such term in
Section 1313(a) of the Code or any similar provision of state and local tax law,
as applicable.

            "Early Termination Date" means the date of an Early Termination
Notice for purposes of determining the Early Termination Payment.

            "Early Termination Notice" is defined in Section 4.02(a).

            "Early Termination Schedule" is defined in Section 4.02(a).

            "Early Termination Payment" is defined in Section 4.03(b).

            "Early Termination Rate" means an interest rate equal to the sum of
(i) the yield to maturity of U.S. Treasury securities with a constant maturity
(the "Applicable Maturity") (as compiled and published in the most recent
Federal Reserve Statistical Release H 15 (519)) of ten (10) years and (ii) 300
basis points. If there are no U.S. Treasury securities with a constant maturity
of ten (10) years, the yield to maturity shall be interpolated from the U.S.
Treasury securities with constant maturities that are most nearly longer than
and shorter than the Applicable Maturity.

            "Exchange" is defined in the preamble.

            "Exchange Basis Schedule" is defined in Section 2.02.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute thereto.


                                        3



            "Exchange Date" is defined in the preamble.

            "Exchange Payment" is defined in Section 5.01.

            "Expert" is defined in Section 6.11.

            "Hypothetical Tax Basis" means, with respect to any Relevant Asset
at any time, the tax basis that such asset would have had at such time if no
Basis Adjustment attributable to the Applicable Member had been made.

            "Hypothetical Tax Liability" means, with respect to any Taxable
Year, the liability for Covered Taxes of the Corporation using the same methods,
elections, conventions and similar practices used on the relevant Corporation
Return, but using the Hypothetical Tax Basis instead of the tax basis of the
Relevant Assets and excluding any deduction attributable to the Imputed
Interest.

            "Imputed Interest" means any interest imputed under Sections 1272,
1274, 483 or any other provision of the Code and any similar provision of
applicable state or local tax law with respect to the Corporation's payment
obligations under this Agreement.

            "Interest Rate" means LIBOR plus 300 basis points.

            "Interest Sale" is defined in Section 2.05.

            "IRS" means the U.S. Internal Revenue Service.

            "LIBOR" means for each month (or portion thereof) during any period,
an interest rate per annum equal to the rate per annum reported, on the date two
days prior to the first day of such month, on the Telerate Page 3750 (or if such
screen shall cease to be publicly available, as reported on Reuters Screen page
"LIBO" or by any other publicly available source of such market rate) for London
interbank offered rates for U.S. dollar deposits for such month (or portion
thereof).

            "LLC" is defined in the preamble.

            "Manager" means the Corporation or any successor manager admitted to
the LLC pursuant to the LLC Agreement.

            "Market Value" means the price per Common Share determined as
follows:

            (a) if traded on a securities exchange (including the NASDAQ
      National Market), the Market Value shall be deemed to be the average of
      the closing prices of the Common Shares on such exchange on the applicable
      date, or, if there have been no sales on any such exchange on any day, the
      average of the


                                        4



      highest bid and lowest asked prices on such exchange as of 4:00 p.m., New
      York time, or, if on any day Common Shares are not traded on an exchange,
      the average of the highest bid and lowest asked prices on such day in the
      domestic over-the-counter market as reported by the National Quotation
      Bureau, Incorporated or any similar successor organization, in each such
      case averaged over a period of thirty (30) days consisting of the Business
      Day as of which the Market Value is being determined and the twenty-nine
      (29) consecutive Business Days prior to such day; or

            (b) if at any time the Common Shares are not traded on a securities
      exchange or quoted in the domestic over-the-counter market, the Market
      Value shall be the fair value thereof, as determined by the Manager.

            "Member" means any party to this Agreement (other than the
Corporation) listed in Schedule A, as amended from time to time.

            "LLC Agreement" means the Second Amended and Restated Limited
Liability Company Agreement of the LLC dated as of June 19, 2007.

            "Payment Date" means any date on which a payment is made pursuant to
this Agreement.

            "Person" means any individual, firm, corporation, partnership
(including any limited, general or limited liability partnership), company,
limited liability company, trust, joint venture, association, joint stock
company, unincorporated organization or similar entity or governmental entity.

            "Proportionate Share" means an amount equal to a fractional share of
the transferring Member's rights, interests and entitlements under this
Agreement, the numerator of which shall be the number of Units that have been
transferred to such transferee by the Member and the denominator of which shall
be the total number of Units held by the Member as of the date of this
Agreement.

            "Realized Tax Benefit" means, for a Taxable Year, the excess, if
any, of the Hypothetical Tax Liability over the actual liability for Covered
Taxes of the Corporation for such Taxable Year using the "with and without"
methodology less an allocable portion of the fees, charges and expenses of the
Advisory Firm paid by the Corporation in such Taxable Year. If all or a portion
of the actual tax liability for Covered Taxes for the Taxable Year arises as a
result of an audit by a Taxing Authority of any Taxable Year, such liability
shall not be included in determining the Realized Tax Benefit unless and until
there has been a Determination.

            "Realized Tax Detriment" means, for a Taxable Year, the excess, if
any, of the actual tax liability for Covered Taxes for the Corporation over
Hypothetical Tax Liability for such Taxable Year using the "with and without"
methodology, plus an allocable portion of the fees, charges and expenses of the
Advisory Firm paid by the Corporation in such Taxable Year. If all or a portion
of the actual tax liability for Covered Taxes for the Taxable Year arises as a
result of an audit by a Taxing Authority


                                        5



of any Taxable Year, such liability shall not be included in determining
Realized Tax Detriment unless and until there has been a Determination.

            "Reconciliation Procedures" mean those procedures set forth in
Section 6.11.

            "Relevant Assets" is defined in the preamble.

            "Schedule" means any of the Exchange Basis Schedule, Tax Benefit
Schedule, the Early Termination Schedule and Amended Schedule.

            "Senior Obligations" is defined in Section 5.01.

            "Subsidiaries" means any entity in which the Corporation, directly
or indirectly, possesses 50% or more of the total combined voting power of the
all classes of its stock or other equity interests.

            "Tax Benefit Payment" is defined in Section 3.01(b).

            "Tax Benefit Schedule" is defined in Section 2.03.

            "Tax Return" means any return, declaration, report or similar
statement required to be filed with respect to Taxes (including any attached
schedules or exhibits), including any information return, claim for refund,
amended return and declaration of estimated Tax.

            "Taxable Year" means a taxable year as defined in Section 441(b) of
the Code (and for the avoidance of doubt, may include a period of less than
twelve (12) months for which a Tax Return is filed) ending on or after the
Exchange Date in which there is a Basis Adjustment due to an Exchange.

            "Taxes" means any Federal, state or local taxes, assessments or
similar charges imposed on, or measured by, net income or profits and any
interest, additions to tax or penalties applicable or related to any such taxes,
assessments or similar charges.

            "Termination Event" is defined in Section 4.04(a).

            "Taxing Authority" means any Federal, state or local government, any
subdivision, agency, commission or authority thereof, or any other authority
exercising Tax regulatory authority.

            "Treasury Regulations" means the final, temporary and proposed
regulations under the Code as in effect for the relevant taxable period.

            "Units" is defined in the preamble.

            "Valuation Assumptions" mean, as of an Early Termination Date, the
assumptions that:


                                        6



            (1) in each Taxable Year ending on or after such Early Termination
Date, the Corporation will have taxable income sufficient to fully use all the
tax benefits arising from Basis Adjustments and Imputed Interest during such
Taxable Year,

            (2) the Federal income tax rates and state and local income tax
rates that will be in effect for each Taxable Year ending on or after such Early
Termination Date will be the same as those in effect on the Early Termination
Date, and

            (3) any loss carryover or other tax attribute carryover generated by
Basis Adjustments and/or Imputed Interest and available as of such Early
Termination Date will be used by the Corporation on a pro rata basis during the
five (5) year period beginning on the Early Termination Date (subject to any
applicable legal limitation on the use of such carryover during such period,
such as the expiration of any carry forward period).

            SECTION 1.02. Usage Generally; Interpretation. Whenever the context
may require, any pronoun includes the corresponding masculine, feminine and
neuter forms. Words in the singular or the plural include the plural or the
singular, as the case may be. The use of the word "or" is not exclusive. The
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation." All references herein to the preamble,
Articles, Sections and Schedules shall be deemed to be references to the
preamble, Articles, Sections and Schedules of this Agreement unless the context
otherwise requires.

                                   ARTICLE II

                      DETERMINATION OF REALIZED TAX BENEFIT

            SECTION 2.01. Basis Adjustments. The Corporation and each Applicable
Member agree that, as a result of an Exchange of Units for Common Shares, the
LLC's tax basis in the portion of the Relevant Assets attributable to such Units
shall be increased for the benefit of the Corporation by the excess, if any, of
(i) (A) the Market Value of the Common Shares and any cash transferred to the
Applicable Member pursuant to the Exchange plus (B) the amount of payments
received pursuant to this Agreement (except to the extent such payments are
treated as either Imputed Interest or interest for late payments by the
Corporation pursuant to Section 5.02) over (ii) the LLC's share of the basis in
such portion of the Relevant Assets immediately before the Exchange as provided
in Section 743(b) of the Code and the Treasury Regulations thereunder and
comparable provisions of applicable state and local tax law. The Corporation and
the Applicable Member also agree that, as a result of such Exchange and such
payments, there shall be a correlative increase in the tax basis of such Units.

            SECTION 2.02. Exchange Basis Schedule. Within forty five (45)
calendar days after the filing of the Federal income tax return of the
Corporation for each Taxable Year in which any Exchange has been effected, the
Corporation shall deliver to the Applicable Member a written schedule (the
"Exchange Basis Schedule") that shows, in reasonable detail, for purposes of
Covered Taxes, (i) the actual unadjusted tax basis of


                                        7



the Relevant Assets as of each applicable Exchange Date, (ii) the Basis
Adjustment with respect to the Relevant Assets as a result of the Exchanges
effected in such Taxable Year, calculated in the aggregate, (iii) the period or
periods, if any, over which the Relevant Assets are amortizable and/or
depreciable and (iv) the period or periods, if any, over which each Basis
Adjustment is amortizable and/or depreciable.

            SECTION 2.03. Tax Benefit Schedule. Within forty five (45) calendar
days after the filing of the Federal income tax return of the Corporation for
each Taxable Year ending on or after the date on which an Exchange occurs, the
Corporation shall provide to the Applicable Member a written schedule showing,
in reasonable detail, the calculation of the Realized Tax Benefit or Realized
Tax Detriment for such Taxable Year (a "Tax Benefit Schedule"). The Schedule
will become final as provided in Section 2.04(a) and may be amended as provided
in Section 2.04(b).

            SECTION 2.04. Procedures. (a) Review Procedure. Each time the
Corporation delivers to the Applicable Member an applicable Schedule under this
Agreement, the Corporation shall also (i) deliver to the Applicable Member (x)
supporting schedules and work papers providing in reasonable detail an
explanation of the preparation of the Schedule and (y) an Advisory Firm Letter
supporting such Schedule and (ii) allow the Applicable Member (or its
representatives) reasonable access to the appropriate representatives at the
Corporation and the Advisory Firm for purposes of a review of such Schedule. The
applicable Schedule shall become final and binding on the Corporation and the
Applicable Member unless such Member, within thirty (30) calendar days after
receiving an Exchange Basis Schedule or amendment thereto or Tax Benefit
Schedule or amendment thereto, provides the Corporation with notice of a
material objection to such Schedule made in good faith. If the Corporation and
the Applicable Member, negotiating in good faith, are unable to successfully
resolve the issues raised in such notice within sixty (60) calendar days of the
delivery of such notice, the Corporation and such Member shall employ the
Reconciliation Procedures as described in Section 6.11.

            (b) Schedule Amendment. The applicable Schedule for any Taxable Year
may be amended from time to time by the Corporation (with the consent of the
Audit Committee) (i) to reflect any Determination affecting such Schedule, (ii)
to correct any material inaccuracies in the Schedule identified as a result of
the receipt of additional factual information relating to a Taxable Year after
the date the Schedule was provided to the Applicable Member, (iii) to comply
with any Expert's determination under the Reconciliation Procedures, (iv) to
reflect any material change in the Realized Tax Benefit or Tax Detriment for
such Taxable Year attributable to a carryback or carryforward of a loss or other
tax item to such Taxable Year, (v) to reflect any material change in the
Realized Tax Benefit or Tax Detriment for such Taxable Year attributable to any
amended Tax Return filed for such Taxable Year, or (vi) to adjust the Exchange
Basis Schedule to take into account payments made pursuant to this Agreement
(such written schedule, an "Amended Schedule").

            (c) Applicable Principles. (i) The Realized Tax Benefit or Realized
Tax Detriment for each Taxable Year is intended to measure the decrease or
increase, if any,


                                        8



in the actual Covered Tax liability of the Corporation for such Taxable Year
attributable to Basis Adjustments and Imputed Interest attributable to the
Applicable Member, which decrease or increase shall be determined using a "with
and without" methodology. In furtherance of the purposes of this Agreement, the
Corporation shall claim all available deductions and other tax benefits
resulting from such Basis Adjustments and Imputed Interest on its Tax Returns.
To the extent, if any, that the Corporation is unable in any Taxable Year to
utilize all the deductions or other tax benefits attributable to all the Basis
Adjustments and all the Imputed Interest attributable to all the Members who
have engaged in Exchanges, the decrease in the actual Covered Tax Liability of
the Corporation for such Taxable Year shall be apportioned among all such
Members on a pro rata basis based upon the respective amounts of tax deductions
attributable to Basis Adjustments and Imputed Interest attributable to each such
Member arising in such Taxable Year (determined separately for each applicable
Covered Tax). In the event that the decrease in any Covered Tax of the
Corporation for any Taxable Year otherwise involves any interaction of the
effects of the Basis Adjustments and/or Imputed Interest attributable to
multiple Members, such decrease shall be apportioned among the Members on a fair
and equitable basis as reasonably determined by the Corporation.

            (ii) Any carryovers or carrybacks of any Tax item attributable to
Basis Adjustments and Imputed Interest (determined using a "with and without"
methodology) shall be considered to be subject to applicable law governing the
use, limitation and expiration of carryovers or carrybacks of the relevant type.
If a carryover or carryback of any Tax item includes a portion that is
attributable to Basis Adjustments or Imputed Interest and another portion that
is not, such portions shall be considered to be used in the order determined
using such "with and without" methodology.

            SECTION 2.05. LLC Interest Sale. For purposes of this Agreement, (i)
any sale or other disposition of all or any part of the Corporation's Interest
in the LLC (an "Interest Sale") shall be deemed to be comprised of a sale or
other disposition of a pro rata portion of each of the separate LLC interests
held by the Corporation (i.e., the original interest of the Corporation as of
the date of this Agreement and each additional interest acquired hereafter by
Exchange or otherwise), regardless of whether such separate interests can be (or
are) identified and separately conveyed, and (ii) notwithstanding any provision
herein to the contrary, for purposes of determining the payments due to the
Applicable Members hereunder attributable to such Interest Sale, each such
separate interest that was acquired from a Member pursuant to an Exchange shall
be treated as a Relevant Asset and the Basis Adjustment with respect thereto
shall be the excess of the tax basis of the Corporation in such interest
immediately after such Exchange over the tax basis of such Member in the
applicable Units immediately before such Exchange (with such Basis Adjustment to
be increased as appropriate to reflect payments by the Corporation to such
Member pursuant to this Agreement and to be decreased as appropriate to reflect
the depreciation or amortization attributable to the correlative Basis
Adjustments to the underlying assets of the LLC).

            SECTION 2.06. Consistency. Unless there is a Determination to the
contrary, the Corporation and each Applicable Member agree to report and cause
to be reported for all purposes, including Federal, state and local Tax purposes
and financial


                                        9



reporting purposes, all Tax-related items (including the Basis Adjustments and
each Tax Benefit Payment) in a manner consistent with that specified by the
Corporation in any Schedule required to be provided by or on behalf of the
Corporation under this Agreement. In the event that an Advisory Firm is replaced
with another firm acceptable to the Audit Committee, such replacement Advisory
Firm shall be required to perform its services under this Agreement using
procedures and methodologies consistent with the previous Advisory Firm, unless
otherwise required by law or the Audit Committee and each Applicable Member
agrees to the use of other procedures and methodologies.

            SECTION 2.07. Cooperation. Each Applicable Member shall (i) furnish
to the Corporation in a timely manner such information, documents and other
materials as the Corporation may reasonably request for purposes of making any
determination or computation necessary or appropriate under this Agreement,
preparing any Tax Return or contesting or defending any audit, examination or
controversy with any Taxing Authority, (ii) make itself and its representatives
available to the Corporation and its representatives to provide explanations of
documents and materials and such other information as the Corporation or its
representatives may reasonably request in connection with any of the matters
described in clause (i) above, and (iii) reasonably cooperate in connection with
any such matter.

                                   ARTICLE III

                              TAX BENEFIT PAYMENTS

            SECTION 3.01. (a) Payments. Within five (5) calendar days of a Tax
Benefit Schedule delivered to an Applicable Member becoming final, the
Corporation shall pay to the Applicable Member for such Taxable Year the Tax
Benefit Payment determined pursuant to Section 3.01(b). Each such Tax Benefit
Payment shall be made by wire transfer of immediately available funds to a bank
account of the Applicable Member previously designated by such Member to the
Corporation. For the avoidance of doubt, no Tax Benefit Payment shall be made in
respect of any estimated tax benefits realized by the Corporation.

            (b) A "Tax Benefit Payment" means an amount, not less than zero,
equal to 85% of the Realized Tax Benefit, if any, for a Taxable Year, as
increased by, (i) the amount of interest calculated at the Interest Rate from
the due date (without extensions) for filing the Corporation Return with respect
to Taxes for such Taxable Year, (ii) the amount of the excess, if any, of the
Realized Tax Benefit reflected on an Amended Tax Benefit Schedule for a previous
Taxable Year over the Realized Tax Benefit reflected on the prior Tax Benefit
Schedule for such previous Taxable Year, (iii) the amount of the excess, if any,
of the Realized Tax Detriment reflected on a Tax Benefit Schedule for a previous
Taxable Year and previously used to decrease a Tax Benefit Payment over the
Realized Tax Detriment reflected on an Amended Tax Benefit Schedule for such
previous Taxable Year; and as decreased by, (iv) the amount of the Realized Tax
Detriment, if any, for all previous Taxable Years and (v) the amount of the
excess, if any, of Realized Tax Benefit reflected on the prior Tax Benefit
Schedule for a previous Taxable Year over the Realized Tax Benefit reflected on
the Amended Tax Benefit


                                       10



Schedule for such previous Taxable Year; provided, however, that the amounts
described in this Section 3.01(b) shall not be taken into account in determining
a Tax Benefit Payment attributable to any Taxable Year to the extent such
amounts were taken into account in determining any Tax Benefit Payment in a
preceding Taxable Year.

            SECTION 3.02. No Duplicative Payments. It is intended that the
provisions of this Agreement will not result in a duplicative payment of any
amount (including interest) required under this Agreement, and this Agreement
shall be construed accordingly.

            SECTION 3.03. No Return of Tax Benefit Payments. For the avoidance
of doubt, the sole remedy for any mistake in the calculation of the Realized Tax
Benefit with respect to any Member shall be an adjustment to subsequent Tax
Benefit Payments by the Corporation to such Member as contemplated by Section
3.01(b) and after application of the procedures set forth in Section 2.04(b),
and in no event shall any Member that has received a Tax Benefit Payment be
required to return all or any portion of such Tax Benefit Payment to the
Corporation.

            SECTION 3.04. Withholding. The Corporation shall be entitled to
deduct and withhold from any payment payable pursuant to this Agreement such
amounts as the Corporation is required to deduct and withhold with respect to
the making of such payment under the Code or any provision of applicable state
or local tax law. To the extent that amounts are so withheld and paid over to
the appropriate Taxing Authority by the Corporation, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the
Applicable Member.

                                   ARTICLE IV

                            TERMINATION OF AGREEMENT

            SECTION 4.01. Optional Early Termination of Agreement. If a Change
of Control Event occurs after the fifth (5) anniversary of the date of this
Agreement, the Corporation (with the consent of the Audit Committee) may
terminate this Agreement by complying with the notice and Exchange provisions of
Section 4.02 and by paying to each Applicable Member its respective Early
Termination Payment. Upon such compliance with Section 4.02 and payment of all
Early Termination Payments, the Corporation shall not have any further payment
obligations under this Agreement in respect of any Member, other than for any
(a) Tax Benefit Payment agreed to by the Corporation and the Applicable Member
as due and payable but unpaid as of the Early Termination Notice and (b) Tax
Benefit Payment due for the Taxable Year ending with or including the date of
the Early Termination Notice (except to the extent that the amount described in
clause (b) is included in the Early Termination Payment). Once the Corporation
shall have made all the payments referred to in the preceding sentence, this
Agreement shall terminate.

            SECTION 4.02. Early Termination Notice and Exchange Procedures. (a)
If the Corporation chooses to exercise its right of early termination under


                                       11



Section 4.01, the Corporation shall deliver to each Member notice of such
election to exercise such right ("Early Termination Notice") and a schedule (the
"Early Termination Schedule") showing in reasonable detail the calculation such
Member's Early Termination Payment; provided, however, in the case of any Member
that still holds Units, such notice shall expressly state that such Member must
engage in an Exchange of such Units for Common Shares in order to be entitled to
an Early Termination Payment with respect to such Units and, in lieu of such
calculation with respect to such Units, such notice shall be accompanied by the
estimate of such Member's Early Termination Payment with respect to such Units
based upon Basis Adjustments determined by reference to the then current market
price of the Common Shares.

            (b) In the case of any Member that has previously engaged in an
Exchange of Units for Common Shares, the applicable Early Termination Schedule
relating to such Units shall become final and binding on the Corporation and
such Member unless such Member, within ten (10) calendar days after receiving
the Early Termination Schedule thereto, provides the Corporation with notice of
a material objection to such Schedule made in good faith. If the Corporation and
such Member, negotiating in good faith, are unable to successfully resolve the
issues raised in such notice within thirty (30) calendar days after such
Schedule was delivered to such Member, the Corporation and such Member shall
employ the Reconciliation Procedures as described in Section 6.11.

            (c) In the case of any Member that still holds Units at the time of
the delivery of the notice described in Section 4.02(a), the Corporation shall
cooperate in good faith with any request by such Member to engage in an Exchange
of such Units for Common Shares and such Exchange shall be effected as promptly
as reasonably practicable. Upon the occurrence of any such Exchange, the
Corporation shall deliver the schedule described in Section 4.02(a) with respect
to such Units and the procedures set forth in Section 4.02(b) shall apply to
determine the final Early Termination Payment with respect to such Units. Any
Member that still holds Units at the time of the delivery of the notice
described in Section 4.02(a) and that does not make a request to Exchange such
Units within thirty (30) days of its receipt of such notice shall be deemed to
have elected to continue to hold such Units and shall not be entitled to receive
any Early Termination Payment with respect to such Units (it being understood
that, if such Member had previously engaged in an Exchange with other Units,
such Member shall be entitled to an Early Termination Payment with respect to
such other Units).

            SECTION 4.03. Payment upon Early Termination. (a) Within three (3)
calendar days after agreement between the Applicable Member and the Corporation
of the Early Termination Schedule, the Corporation shall pay to the Applicable
Member an amount equal to the Early Termination Payment. Such payment shall be
made by wire transfer of immediately available funds to a bank account
designated by the Applicable Member.

            (b) The "Early Termination Payment" as of the date of an Early
Termination Schedule shall equal the present value, discounted at the Early
Termination Rate, of all future Tax Benefit Payments that would be required to
be paid by the


                                       12



Corporation to the Applicable Member beginning from the Early Termination Date
assuming the Valuation Assumptions are applied.

            SECTION 4.04. Regular Termination of Agreement. (a) Unless this
Agreement shall be terminated pursuant to the foregoing provisions of this
Article IV, this Agreement shall remain in effect and continue until the
Corporation (or any successor entity) shall have disposed of all its interests
in the LLC or the LLC shall have disposed of all its non-cash assets (either
such event, a "Termination Event") and the Corporation (or any successor entity)
shall have made all the payments required to be made by it to the Applicable
Members pursuant to this Agreement (as determined taking into account Section
4.04(b) (if applicable) and after completion of any review and reconciliation
procedures pursuant to Section 2.04 and Section 6.11). Once such disposition
shall have occurred and all such payments shall have been made, the Corporation
shall have no further payment obligations under this Agreement and this
Agreement shall terminate.

            (b) Notwithstanding any provision herein to the contrary, in the
event that a Termination Event occurs and the Corporation (or any successor
entity) has any loss carryover or other Tax attribute generated by Basis
Adjustments and/or Imputed Interest that may be used by the Corporation (or such
successor entity) after the Taxable Year during which such Termination Event
occurs, the final payment to be made to each Applicable Member pursuant to
Section 4.04(a) shall be increased as appropriate to reflect the present value
of the expected future benefit from such attribute (as determined using the
principles set forth in Section 4.03(b) and the defined terms used therein as
applied with reference to such Termination Event, except to the extent (if any)
that such principles would be manifestly unreasonable in the good faith view of
the Corporation (after consultation with the Advisory Firm) under the
circumstances existing as of the end of such Taxable Year).

                                    ARTICLE V

                         SUBORDINATION AND LATE PAYMENTS

            SECTION 5.01. Subordination. Notwithstanding any other provision of
this Agreement to the contrary, any Tax Benefit Payment or Early Termination
Payment required to be made by the Corporation to the Applicable Member under
this Agreement (an "Exchange Payment") shall rank subordinate and junior in
right of payment to any principal, interest or other amounts due and payable in
respect of any obligations in respect of indebtedness for borrowed money of the
Corporation and its Subsidiaries ("Senior Obligations") and shall rank pari
passu with all current or future unsecured obligations of the Corporation that
are not Senior Obligations.

            SECTION 5.02. Late Payments by the Corporation. The amount of any
payment not made by the Corporation to the Applicable Member when due under the
terms of this Agreement shall be payable together with any interest thereon,
computed at a floating rate equal to the Interest Rate plus 100 basis points and
commencing from the date on which such payment was due and payable.


                                       13



                                   ARTICLE VI

                                  OTHER MATTERS

            SECTION 6.01. No Member Participation in the Corporation's Tax
Matters. Except as otherwise expressly provided herein, the Corporation shall
have full responsibility for, and sole discretion over, all Tax matters
concerning the Corporation, including without limitation the preparation, filing
or amending of any Tax Return and defending, contesting or settling any issue
pertaining to Taxes raised by any Taxing Authority. Notwithstanding the
foregoing, the Corporation shall notify each Member of, and keep the Members
reasonably informed with respect to, any audit of the Corporation by any Taxing
Authority the outcome of which is reasonably expected to affect the amounts
required to be paid to the Members under this Agreement, and shall provide to
each Member reasonable opportunity to provide input to the Corporation and its
advisors concerning the conduct of any such audit.

            SECTION 6.02. Corporation Covenants. (a) The Corporation hereby
agrees and warrants to each Member (i) that it will not cause the LLC or any
material subsidiary of the LLC to convert into, or elect to be treated as, a
corporation for Tax purposes without the prior written consent of 75% in
interest of the Members (determined based upon Unit ownership as of the date of
this Agreement and before any Exchange), (ii) that it will not cause the LLC to
contribute any of its assets (other than any assets with a de minimis aggregate
gross value) into one or more subsidiaries that are treated as corporations for
Tax purposes, or cause the LLC to liquidate or distribute in kind any of its
non-cash assets to its members, without the prior written consent of 75% in
interest of the Members (as so determined), and (iii) that it will cause the
LLC, and any subsidiary that is treated as a partnership for Tax purposes, to
make valid Section 754 elections (and all comparable elections under applicable
state and local tax law) for its first Taxable Year ending after the date of
this Agreement and it will not seek to revoke any such election until the
Corporation has received all possible tax benefits from all Basis Adjustments
and Imputed Interest in respect of which the Corporation may be required to make
any payments under this Agreement to the Applicable Members.

            (b) The Corporation hereby agrees that prior to (i) any proposed
Interest Sale or (ii) any proposed sale or other disposition of all or any
substantial part of the non-cash assets of the LLC, it shall deliver to each
Member notice of such proposed transaction at least thirty (30) days prior to
the consummation thereof (the "Closing Date") and afford each Member that still
holds Units the opportunity to Exchange all or part of such Units prior to the
Closing Date.

            SECTION 6.03. Notices. All notices, requests, claims, demands and
other communications to be given or delivered under or by reason of the
provisions of this Agreement shall be in writing and shall be deemed duly given
and received when (i) delivered personally to the recipient, (ii) telecopied to
the recipient (with a hard copy sent to the recipient by a reputable overnight
courier service (charges prepaid) that same day) if telecopied before 5:00 p.m.
New York time on a Business Day, and otherwise on the next Business Day or (iii)
on the first Business Day following the date of dispatch if


                                       14



delivered by a reputable overnight courier service (charges prepaid). All
notices hereunder shall be delivered as set forth in Schedule B, or pursuant to
such other instructions as may be designated in writing by the party to receive
such notice. Any party may change its address or fax number by giving the other
party written notice of its new address or fax number in the manner set forth
above.

            SECTION 6.04. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need not contain
the signatures of more than one party, but each of which will be an original and
all of which together shall constitute one and the same agreement binding on all
the parties hereto.

            SECTION 6.05. Entire Agreement; No Third Party Beneficiaries. This
Agreement constitutes the complete agreement and understanding among the parties
and supersedes and preempts all prior representations, agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto and their respective successors and permitted
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

            SECTION 6.06. Applicable Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
giving effect to any choice of law or conflict of law, rules or provisions
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.

            SECTION 6.07. Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any term or other provision of this Agreement is
held to be invalid, illegal or incapable of being enforced by any applicable law
or rule in any jurisdiction, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
this Agreement will be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been contained
herein.

            SECTION 6.08. Successors; Assignment; Amendments. (a) No Member may
assign its rights under this Agreement to any person without the prior written
consent of the Corporation; provided, however, that (i) to the extent Units are
validly transferred in accordance with the terms of the LLC Agreement (other
than pursuant to an Exchange), the Proportionate Share of the transferring
Member's rights, interests and entitlements under this Agreement shall be
assigned to that transferee of those Units, which assignment shall be effective
upon such transferee's execution and delivery of a Joinder Agreement in the form
set forth in Schedule C, and (ii) any Member that has engaged in an Exchange may
pledge some or all of its rights, interests or entitlements to payments under
this Agreement to any U.S. money center bank in connection with a bona fide loan
or other indebtedness. In the event of any transfer of Units described in clause


                                       15



(i) above, the transferee of such Units shall be deemed to be a Member for
purposes of this Agreement.

            (b) No amendment to this Agreement shall be effective unless it is
(i) in writing, (ii) signed by the Corporation and 75% in interest of the
Members (determined based upon Unit ownership before any Exchange) and (iii)
approved by the Audit Committee.

            (c) All of the terms and provisions of this Agreement shall be
binding upon, shall inure to the benefit of and shall be enforceable by the
parties hereto and their respective successors, assigns, heirs, executors,
administrators and legal representatives. The Corporation shall require and
cause any direct or indirect successor (whether by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Corporation, by written agreement, expressly to assume and agree
to perform this Agreement in the same manner and to the same extent that the
Corporation would be required to perform if no such succession had taken place.

            SECTION 6.09. Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.

            SECTION 6.10. Resolution of Disputes. (a) Any disputes which are not
governed by Section 6.11 and which cannot be settled amicably, including any
ancillary claims of any party, arising out of, relating to or in connection with
the validity, negotiation, execution, interpretation, performance or
non-performance of this Agreement (including the validity, scope and
enforceability of this arbitration provision) shall be finally settled by
arbitration conducted by a single arbitrator in New York in accordance with the
then-existing Rules of Arbitration of the International Chamber of Commerce. If
the parties to the dispute fail to agree on the selection of an arbitrator
within ten (10) days of the receipt of the request for arbitration, the
International Chamber of Commerce shall make the appointment. The Audit
Committee shall represent the Corporation in the selection of the arbitrator.
The arbitrator shall be a lawyer and shall conduct the proceedings in the
English language. Performance under this Agreement shall continue if reasonably
possible during any arbitration proceedings.

            (b) Notwithstanding the provisions of paragraph (a), the Corporation
may bring an action or special proceeding in any court of competent jurisdiction
for the purpose of compelling a party to arbitrate, seeking temporary or
preliminary relief in aid of an arbitration hereunder, and/or enforcing an
arbitration award and, for the purposes of this paragraph (b), each Member (i)
expressly consents to the application of paragraph (c) of this Section 6.10 to
any such action or proceeding, (ii) agrees that proof shall not be required that
monetary damages for breach of the provisions of this Agreement would be
difficult to calculate and that remedies at law would be inadequate, and (iii)
irrevocably appoints the Corporation as such Member's agent for service of
process in connection with any such action or proceeding and agrees that service
of process upon such agent, who shall promptly advise such Member of any such
service of process, shall be deemed


                                       16



in every respect effective service of process upon the Member in any such action
or proceeding.

            (c) (i) EACH MEMBER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF COURTS LOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL
PROCEEDING BROUGHT IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH (B) OF THIS
SECTION 6.10, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR
CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS
AGREEMENT. Such ancillary judicial proceedings include any suit, action or
proceeding to compel arbitration, to obtain temporary or preliminary judicial
relief in aid of arbitration, or to confirm an arbitration award. The parties
acknowledge that the fora designated by this paragraph (c) have a reasonable
relation to this Agreement, and to the parties' relationship with one another;
and

            (ii) The parties hereby waive, to the fullest extent permitted by
      applicable law, any objection which they now or hereafter may have to
      personal jurisdiction or to the laying of venue of any such ancillary
      suit, action or proceeding brought in any court referred to in paragraph
      (c)(i) of this Section 6.10 and such parties agree not to plead or claim
      the same.

            SECTION 6.11. Reconciliation. In the event that the Corporation
(with the consent of the Audit Committee) and the Applicable Member are unable
to resolve a disagreement within the relevant period designated in this
Agreement, the matter shall be submitted for determination to a nationally
recognized expert (the "Expert") in the particular area of disagreement mutually
acceptable to both parties. The Expert shall be employed by a nationally
recognized accounting firm or a law firm (other than the Advisory Firm), and the
Expert shall not, and the firm that employs the Expert shall not, have any
material relationship with either the Corporation or the applicable Member or
other actual or potential conflicts of interest. The Expert shall resolve any
matter relating to the Exchange Basis Schedule or an amendment thereto within
thirty (30) calendar days and shall resolve any matter relating to a Tax Benefit
Schedule or an amendment thereto within fifteen (15) calendar days, in each case
after the matter has been submitted to the Expert for resolution.
Notwithstanding the preceding sentence, if the matter is not resolved before any
payment that is the subject of a disagreement is due or any Tax Return
reflecting the subject of a disagreement is due, such payment shall be made on
the date prescribed by this Agreement and such Tax Return may be filed as
prepared by the Corporation, subject to adjustment or amendment upon resolution.
The costs and expenses relating to the engagement of such expert or amending any
Tax Return shall be borne by the party who did not have the prevailing position,
or if a compromise is reached by the Corporation and the Applicable Member, the
costs and expenses shall be borne equally by the parties. The Expert shall
determine which party prevails. The determinations of the Expert pursuant to
this Section 6.11 shall be binding on the Corporation and the Applicable Member
absent manifest error.


                                       17



     IN WITNESS WHEREOF, the Corporation and each Member have duly executed this
Agreement as of the date first written above.


                                       BIOFUEL ENERGY CORP.


                                       By    /s/ Scott H. Pearce
                                          --------------------------------------
                                            Name:   Scott H. Pearce
                                            Title:  President & CEO










                                       GREENLIGHT CAPITAL, L.P.

                                       By: Greenlight Capital, LLC, its general
                                           partner

                                       By    /s/ David Einhorn
                                          --------------------------------------
                                            Name: David Einhorn
                                            Title: Senior Managing Member







                                       GREENLIGHT CAPITAL QUALIFIED, L.P.

                                       By: Greenlight Capital, LLC, its general
                                           partner

                                       By    /s/ David Einhorn
                                          --------------------------------------
                                            Name: David Einhorn
                                            Title: Senior Managing Member





                                       THIRD POINT PARTNERS LP


                                       By    /s/ Justin Nadler
                                          --------------------------------------
                                            Name:  Justin Nadler
                                            Title:  Authorized Signatory


                                            Address: 390 Park Avenue
                                                     New York, NY 10022





                                       THIRD POINT PARTNERS QUALIFIED LP


                                       By    /s/ Justin Nadler
                                          --------------------------------------
                                            Name:  Justin Nadler
                                            Title:  Authorized Signatory


                                            Address: 390 Park Avenue
                                                     New York, NY 10022





                                       DANIEL S. LOEB


                                       By   /s/ Daniel S. Loeb
                                          --------------------------------------




                                       LAWRENCE J. BERNSTEIN


                                       By   /s/ Lawrence J. Bernstein
                                          --------------------------------------







                                       TODD Q. SWANSON


                                       By   /s/ Todd Q. Swanson
                                          --------------------------------------







                                       THOMAS J. EDELMAN


                                       By    /s/ Thomas J. Edelman
                                          --------------------------------------





                                       WCIOSAQ CORP.


                                       By   /s/ Max W. Batzer
                                          --------------------------------------
                                            Name:  Max W. Batzer
                                            Title:  Director


                                            Address: WCIOSAQ Corp.
                                                     c/o Wynnefield Capital Inc.
                                                     450 7th Ave., Suite #509
                                                     NY, NY 10123





                                       Snyder Family Investments, L.P.


                                       By    /s/ John C. Snyder
                                          --------------------------------------
                                            Name:  John C. Snyder
                                            Title:  President of
                                            Snyder Operating Company, LLC,
                                            General Partner


                                            Address: 201 Main Street, Suite 1450
                                                     Fort Worth, TX 76102-3108





                                       NANCY AND JOHN SNYDER FOUNDATION


                                       By    /s/ John C. Snyder
                                          --------------------------------------
                                            Name:  John C. Snyder
                                            Title:  President


                                            Address: 201 Main Street, Suite 1450
                                                     Fort Worth, TX 76102-3108



                                       BARRIE M. DAMSON


                                       By    /s/ Barrie M. Damson
                                          --------------------------------------







                                       LANCE T. SHANER


                                       By          /s/ Lance T. Shaner
                                          --------------------------------------







                                       ELLIOT JAFFE


                                       By   /s/ Elliot Jaffe
                                          --------------------------------------





                                       SCOTT H. PEARCE


                                       By    /s/ Scott H. Pearce
                                          --------------------------------------







                                       DANIEL J. SIMON


                                       By    /s/ Daniel J. Simon
                                          --------------------------------------







                                       IRIK P. SEVIN


                                       By    /s/ Irik P. Sevin
                                          --------------------------------------





                                       CARGILL BIOFUELS INVESTMENTS, LLC


                                       By    /s/ Dennis C. Inman
                                          --------------------------------------
                                            Name:  Dennis C. Inman
                                            Title:  Director - Cargill Biofuels
                                            Investments, LLC







                                       BIOFUEL PARTNERS, LLC


                                       By    /s/ Thomas J. Edelman
                                          --------------------------------------
                                            Name:  Thomas J. Edelman
                                            Title:  Manager




                                       ERIC D. STREISAND


                                       By    /s/ Eric D. Streisand
                                          --------------------------------------



                                       JONALAN C. PAGE


                                       By    /s/ JonAlan C. Page
                                          --------------------------------------







                                       ETHANOL BUSINESS GROUP, LLC


                                       By    /s/ Robert L. Swain
                                          --------------------------------------
                                            Name:  Robert L. Swain
                                            Title:  Member


                                            Address: 3461 Frances Berkeley
                                                     Williamsburg, VA 23188


                                       MICHAEL N. STEFANOUDAKIS


                                       By    /s/ Michael N. Stefanoudakis
                                          --------------------------------------





                                       WILLIAM W. HUFFMAN, JR.


                                       By    /s/ William W. Huffman, Jr.
                                          --------------------------------------




                                       DAVID J. KORNDER


                                       By    /s/  David J. Kornder
                                          --------------------------------------




                                       TIMOTHY S. MORRIS


                                       By    /s/ Timothy S. Morris
                                          --------------------------------------







                                       CHRISTINE EKLUND


                                       By    /s/ Christine Eklund
                                          --------------------------------------





                                       ROBERT CROCKETT


                                       By    /s/ Robert Crockett
                                          --------------------------------------




                                       MARC SMYTH


                                       By    /s/ Marc S. Smyth
                                          --------------------------------------




                                       TIMOTHY DEFOE


                                       By    /s/ Timothy J. Defoe
                                          --------------------------------------






                                   Schedule A

                                 List of Members

Greenlight Capital, L.P.

Greenlight Capital Qualified, L.P

Third Point Partners LP

Third Point Partners Qualified LP

Daniel S. Loeb

Lawrence J. Bernstein

Todd Q. Swanson

Thomas J. Edelman

WCIOSAQ Corp.

Snyder Family Investments, L.P.

Nancy and John Snyder Foundation

Barrie M. Damson

Lance T. Shaner

Elliot Jaffe

Scott H. Pearce

Daniel J. Simon

Irik P. Sevin

Cargill BioFuels Investments, LLC

BioFuel Partners, LLC

Eric D. Streisand

JonAlan C. Page

Ethanol Business Group, LLC

Michael N. Stefanoudakis

William W. Huffman, Jr.

David J. Kornder

Timothy S. Morris

Christine Eklund

Robert Crockett

Marc Smyth

Timothy DeFoe

EX-10.4

                                                                    Exhibit 10.4
================================================================================



                             STOCKHOLDERS AGREEMENT

                                     BETWEEN

                              BIOFUEL ENERGY CORP.

                                       AND

                        CARGILL BIOFUELS INVESTMENTS, LLC


                              DATED: June 19, 2007


================================================================================




                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

                                    ARTICLE I

                                   Definitions

SECTION 1.01. Definitions......................................................1
SECTION 1.02. Other Defined Terms..............................................3
SECTION 1.03. Rules of Construction............................................3


                                   ARTICLE II

                              Transfer Restrictions

SECTION 2.01. Prohibited Parties...............................................3
SECTION 2.02. Termination Procedures...........................................4
SECTION 2.03. Cargill Confidential Information.................................4


                                   ARTICLE III

                         Business Expansion Restrictions

SECTION 3.01. Change in Project Scope..........................................4


                                   ARTICLE IV

                                  Miscellaneous

SECTION 4.01. Notices..........................................................5
SECTION 4.02. Successors and Assigns; Third-Party Beneficiaries................6
SECTION 4.03. Amendment and Waiver.............................................6
SECTION 4.04. Counterparts.....................................................6
SECTION 4.05. Specific Performance.............................................7
SECTION 4.06. Headings.........................................................7
SECTION 4.07. Severability.....................................................7
SECTION 4.08. Entire Agreement.................................................7
SECTION 4.09. Term of Agreement................................................7
SECTION 4.10. Further Assurances...............................................7
SECTION 4.11. Governing Law....................................................7
SECTION 4.12. Other Rights.....................................................7
SECTION 4.13. Consent to Jurisdiction; No Jury Trial...........................7


                                      - i -



                        This STOCKHOLDERS AGREEMENT, dated as of June 19, 2007,
                  is between BioFuel Energy Corp., a Delaware corporation (the
                  "Company"), and Cargill Biofuels Investments, LLC, a Delaware
                  limited liability company. Unless otherwise provided in this
                  Agreement, capitalized terms used herein shall have the
                  respective meanings given to them in Section 1.01.

            WHEREAS, the parties hereto wish to set forth certain understandings
regarding the relationship between the Company and Cargill (as defined below);
and

            WHEREAS, the parties hereto wish to provide for, among other things,
restrictions on the acquisition of Voting Securities by a Prohibited Party (each
as defined below).

            NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:

                                    ARTICLE I

                                   Definitions

            SECTION 1.01. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:

            "affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person; provided that for purposes of
this Agreement, neither the Company nor any of its Subsidiaries shall be deemed
an affiliate of Cargill. For the purposes of this definition, "control" when
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, by contract, or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.

            "Agreement" means this Agreement as the same may be amended,
supplemented or modified in accordance with the terms hereof.

            "BioFuel Production" means the business of developing, constructing,
owning and operating ethanol or biodiesel production and processing plants,
engaging in commercial sales of ethanol, biodiesel and byproducts, and engaging
in the mixing, transportation and storage of ethanol, biodiesel and byproducts,
in each case.

            "Board of Directors" means the Board of Directors of the Company.

            "Business Day" means any day other than Saturday, Sunday and any day
that is a legal holiday in New York, New York or a day on which banking
institutions in New York, New York are authorized by law or other governmental
action to close.




                                                                               2

            "Business Expansion" means an expansion of the Company's business
beyond BioFuel Production.

            "Business Expansion Response Period" has the meaning set forth in
Section 3.01(a).

            "Cargill" means Cargill Biofuels Investments, LLC, a Delaware
limited liability company, and any of its affiliates, so long as such affiliate
is also a controlled affiliate of Cargill, Incorporated, a Delaware corporation.

            "Cargill Arrangements" means the arrangements among Cargill Parent
or one or more of its controlled affiliates, on the one hand, and the Company or
one or more of its Subsidiaries, on the other hand, pertaining to (i) grain
elevator leases, (ii) corn supply, (iii) ethanol marketing, (iv) distilled dried
grains marketing, (v) corn risk management, (vi) energy risk management and
(vii) natural gas supply, to the extent any such arrangements are in place from
time to time.

            "Cargill Parent" means Cargill, Incorporated, a Delaware
corporation.

            "Certificate" means the certificate of incorporation, as may be
amended from time to time, of the Company.

            "Class B Stock" has the meaning set forth in the LLC Agreement.

            "Common Stock" means the shares of common stock of the Company, par
value $0.01 per share.

            "knowledge", as it relates to the Company or Cargill, means with
respect to any matter in question, that any officer of the Company or Cargill
has actual knowledge of such matter after reasonable inquiry and investigation.

            "LLC Agreement" means the Second Amended and Restated Limited
Liability Company Agreement of BioFuel Energy, LLC, a Delaware limited liability
company, dated June 19, 2007.

            "Members" has the meaning set forth in the LLC Agreement.

            "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.

            "Prohibited Party" means any one of the Persons listed on Schedule A
attached hereto, which may be updated by Cargill on an annual basis, and
affiliates of such Persons; provided that in no event may there be more than
five (5) Prohibited Parties at any time (excepting affiliates of such Prohibited
Parties).

            "Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or business entity of which
(i) if a corporation,




                                                                               3

a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof or (ii) if a limited liability company,
partnership, association or other business entity (other than a corporation), a
majority of partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association or other
business entity gains or losses or shall be or control any managing director or
general partner of such limited liability company, partnership, association or
other business entity. For purposes hereof, references to a "Subsidiary" of any
Person shall be given effect only at such times that such Person has one or more
Subsidiaries.

            "Units" has the meaning set forth in the LLC Agreement.

            "Voting Securities" means the number of securities of the Company
that is determined by adding together (a) the number of outstanding shares of
Common Stock and (b) the number of outstanding shares of Class B Stock.

            SECTION 1.02. Other Defined Terms. The following capitalized terms
are defined in this Agreement in the Section indicated below:

      Defined Term                                           Section
      ------------                                           -------
      Company                                                Preamble
      Control Event                                          2.01(a)
      Termination Notice                                     2.02

            SECTION 1.03. Rules of Construction. Unless the context otherwise
requires, references to sections or subsections refer to sections or subsections
of this Agreement. Whenever required by context, the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.

                                   ARTICLE II

                              Transfer Restrictions

            SECTION 2.01. Prohibited Parties. (a) Cargill Parent or any of its
controlled affiliates, as party to any of the Cargill Arrangements, shall have
the right, but not the obligation, to terminate, in its sole discretion, any or
all of the Cargill Arrangements in accordance with the procedures set forth in
Section 2.02 if a Prohibited Party obtains control of the Company (a "Control
Event"). The Company shall cause




                                                                               4

any of its controlled affiliates that are affected by any such termination not
to object to such termination. For purposes of the definition of "Control
Event", "control" shall mean either (i) the direct or indirect ownership of more
than thirty percent (30%) of the Voting Securities or (ii) the power to elect a
majority of the Board of Directors.

            (b) If a Control Event occurs, then, no later than 10 calendar days
following the date on which the Company learns or reasonably should have learned
of such Control Event, the Company must provide written notice to Cargill;
provided, however, that any failure by the Company to provide written notice to
Cargill of a Control Event does not diminish or derogate in any way the
termination rights regarding the Cargill Arrangements as contemplated by this
Section 2.01.

            SECTION 2.02. Termination Procedures. Any termination of the Cargill
Arrangements pursuant to Section 2.01 must be communicated by Cargill Parent or
one of the controlled affiliates of Cargill Parent, as an applicable party to
the Cargill Arrangement, by providing written notice to the Company (a
"Termination Notice") no later than 60 calendar days following the Company's
written notice to Cargill of a Control Event pursuant to Section 2.01(b). Any
such termination will be effective no earlier than 120 days following the date
of the Termination Notice; provided that the Company will use its reasonable
best efforts to cause the termination to be effective (by finding a replacement
for Cargill Parent or the applicable affiliate of Cargill Parent), as promptly
as possible.

            SECTION 2.03. Cargill Confidential Information. If Cargill obtains
knowledge of a Control Event (whether by receiving a written notice from the
Company pursuant to Section 2.01(b) or otherwise) then any of Cargill, Cargill
Parent or their respective affiliates may take whatever reasonable steps that
they deem appropriate or necessary to limit, manage, restrict or otherwise
control the disclosure to, and use by, the Company and its affiliates of any
confidential or proprietary information previously disclosed or that would
otherwise be disclosed by Cargill, Cargill Parent or their respective affiliates
pursuant to any Cargill Arrangements, unless and until such time as Cargill
Parent or all of the applicable affiliates of Cargill Parent have provided
written notice to the Company of their decision not to terminate any of the
Cargill Arrangements in connection with a Control Event, or, in the case where
Cargill gives notice of termination, the effective date of such termination;
provided that, until the effectiveness of any termination or expiration of the
Cargill Arrangements, Cargill Parent or its controlled affiliates, as an
applicable party to the Cargill Arrangements, shall use reasonable efforts to
minimize disruption to, and interference with, the Company's operations or the
performance of their respective obligations under the contracts governing the
Cargill Arrangements.

                                   ARTICLE III

                         Business Expansion Restrictions

            SECTION 3.01. Change in Project Scope. (a) Prior to effecting a
Business Expansion, the Company must obtain the approval of Cargill. Before
seeking Cargill's approval, the Company shall consult with Cargill regarding the
nature of the




                                                                               5

proposed Business Expansion and shall provide Cargill with details, projections,
business plans and any related materials as may be reasonably requested by
Cargill. Once the Company has provided Cargill with all reasonably requested
materials as contemplated by this Section 3.01(a), the Company shall provide
Cargill with a written request to effect the Business Expansion. No later than
45 calendar days following the Company's written request (the "Business
Expansion Response Period"), Cargill shall respond in writing to the Company
indicating whether Cargill grants its consent to the Company's request to effect
a Business Expansion. If Cargill does not consent or fails to respond within the
Business Expansion Response Period, then the Company and Cargill shall follow
the procedures described in Section 3.01(b).

            (b) If Cargill has not consented or has failed to respond to the
Company's request pursuant to Section 3.01(a) to effect a Business Expansion
prior to the end of the Business Expansion Response Period, then the Company
may, in its sole discretion, provide Cargill with a written notice, no later
than 30 calendar days following Cargill's written notice denying Cargill's
consent to the Business Expansion or the end of the Business Expansion Response
Period, advising Cargill that either (i) the Company has abandoned the proposed
Business Expansion or (ii)(A) Cargill must exchange the Units then owned by
Cargill for shares of Common Stock in accordance with Section 8.03 of the LLC
Agreement and (B) Cargill must sell the Common Stock then owned by Cargill (and
received in exchange for Units either as a result of the exchange described in
clause (ii)(A) above or as a result of an earlier exchange of Units) to the
Company or to one or more Members or other Persons reasonably acceptable to
Cargill (but not any Prohibited Party) designated by the Company, at a price
equal to the amount of Cargill's capital contributions (whether in cash or
in-kind) attributable to such shares of Common Stock. Any such sale must be
completed no later than 60 calendar days after the Company's notice to Cargill
and the consideration for such purchase must be in cash. Following completion of
the Company's purchase right as contemplated by this Section 3.01(b), the
Company will no longer be restricted with respect to any Business Expansion.

                                   ARTICLE IV

                                  Miscellaneous

            SECTION 4.01. Notices. All notices, demands or other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier service or personal delivery:

            (a) if to the Company:

                  BioFuel Energy Corp.
                  1801 Broadway, Suite 1060
                  Denver, CO 80202
                  Telephone: (303) 592-8110
                  Attention: Scott H. Pearce




                                                                               6

            (b) if to Cargill:

                  Cargill Biofuels Investments, LLC
                  c/o Cargill, Incorporated
                  15407 McGinty Road West
                  Wayzata, MN  55391-2399
                  Attention: Ethanol Strategic Account Leader / MS 62

            All such notices, demands and other communications shall be deemed
to have been duly given: (i) when delivered by hand, if personally delivered;
(ii) when delivered by courier, if delivered by commercial courier service;
(iii) five (5) Business Days after being deposited in the mail, postage prepaid,
if mailed; and (iv) when receipt is mechanically acknowledged, if telecopied.
Any party may by notice given in accordance with this Section 4.01 designate
another address or Person for receipts of notices hereunder.

            SECTION 4.02. Successors and Assigns; Third-Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon successors and
permitted assigns of the parties hereto. This Agreement is not assignable,
except in connection with a transfer of Units or Common Stock in accordance with
the LLC Agreement or the Certificate by Cargill to a controlled affiliate of
Cargill Parent. No Person other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.

            SECTION 4.03. Amendment and Waiver. (a) No failure or delay on the
part of any party hereto in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the parties hereto at law, in equity or otherwise.

            (b) Except as otherwise provided herein, any amendment, supplement
or modification of or to any provision of this Agreement shall be effective only
if it is made or given in writing and signed by each of the Company and Cargill.
Any waiver of any provision of this Agreement and any consent to any departure
by any party from the terms of any provision of this Agreement shall be
effective only if it is in writing and signed by the party waiving its right or
consenting to such departure. Any such amendment, supplement, modification,
waiver or consent shall be binding upon the Company and Cargill.

            SECTION 4.04. Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Any counterpart or other signature hereupon delivered by facsimile
shall be deemed for all purposes as constituting good and valid execution and
delivery of this Agreement by such party.




                                                                               7

            SECTION 4.05. Specific Performance. The parties hereto intend that
each of the parties have the right to seek damages or specific performance in
the event that any other party hereto fails to perform such party's obligations
hereunder. Therefore, if any party shall institute any action or proceeding to
enforce the provisions hereof, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff party
has an adequate remedy at law.

            SECTION 4.06. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

            SECTION 4.07. Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.

            SECTION 4.08. Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, representations, warranties or undertakings, other than those set
forth or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties with respect to such subject matter.

            SECTION 4.09. Term of Agreement. This Agreement shall become
effective upon the execution hereof and shall terminate (i) when (a) Cargill
ceases to hold any Common Stock or Units and (b) none of Cargill Parent or any
of its controlled affiliates is a provider to the Company of any of the services
contemplated by the Cargill Arrangements or (ii) upon the written agreement of
each of the parties hereto.

            SECTION 4.10. Further Assurances. Each of the parties shall, and
shall cause their respective affiliates to, execute such documents and perform
such further acts as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.

            SECTION 4.11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflict of laws principles.

            SECTION 4.12. Other Rights. The Company agrees that it will not
enter into, or cause or permit any of its Subsidiaries to enter into, any
agreement that conflicts with, limits or prohibits the exercise of the rights
granted to Cargill in this Agreement.

            SECTION 4.13. Consent to Jurisdiction: No Jury Trial. Any legal
action, suit or proceeding arising out of or relating to this Agreement may be
instituted in any federal court in the Southern District of New York, or in any
state court in which venue would otherwise be properly located in the Southern
District of New York, and each




                                                                               8

party waives any objection which such party may now or hereafter have to the
laying of the venue of any such action, suit or proceeding, and irrevocably
submits to the jurisdiction of any such court. Any and all service of process
and any other notice in any such action, suit or proceeding will be effective
against any party if given as provided herein. Nothing herein contained will be
deemed to affect the right of any party to serve process in any manner permitted
by law or to commence legal proceedings or otherwise proceed against any other
party in any jurisdiction other than New York. THE PARTIES HEREBY WAIVE TRIAL BY
JURY IN ANY ACTION, SUIT PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM
AGAINST THE OTHER IN ANY MATTERS ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS AGREEMENT.




            IN WITNESS WHEREOF, the undersigned have executed, or have caused to
be executed, this Agreement on the date first written above.

                                           BIOFUEL ENERGY CORP.

                                             by

                                                /s/ Scott H. Pearce
                                             -----------------------------------
                                             Name:  Scott H. Pearce
                                             Title: President & CEO


                                           CARGILL BIOFUELS INVESTMENTS, LLC

                                             by

                                                /s/ Patrick C. Bennett
                                             -----------------------------------
                                             Name: Patrick C. Bennett
                                             Title: Authorized Officer




                                                                      Schedule A

                               PROHIBITED PARTIES

Archer Daniels Midland Company
CHS Inc.
Tate & Lyle PLC
The Scoular Company
Bunge Limited

EX-10.5

Exhibit 10.5

SEPARATION, CONSULTING AND MUTUAL RELEASE AGREEMENT

THIS SEPARATION, CONSULTING AND MUTUAL RELEASE AGREEMENT (the “Agreement”) is between BioFuel Energy Corp., a Delaware corporation, together with its subsidiaries (the “Company”) and Eric D. Streisand (“Streisand”) (collectively, the “Parties”).

I. COVENANTS

In consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby agreed by and between the parties, as follows:

A. Separation. The Parties mutually agree that Streisand will cease all of his duties as an officer and employee with the Company as of 5:00 P.M., Mountain Standard Time on August 31, 2007 (the “Effective Date”).

(1) As a result of this separation, Streisand shall be legally-entitled to receive:

(a) Payment for all unpaid, accrued salary, net of applicable taxes and withholdings, earned by Streisand in connection with his employment with the Company through the Effective Date.

(b) Payment for thirteen (13) accrued, unused vacation days, net of applicable taxes and withholdings through the Effective Date.

(c) After the Effective Date, Streisand shall be eligible for continuation of medical and dental insurance coverage for eighteen (18) months or such longer period as covered under the Consolidated Omnibus Budget Reconciliation Act, as amended (“COBRA”) or similar applicable state laws and the insurance policies and rules applicable to the Company. If Streisand does not elect to continue medical and dental coverage under COBRA, Streisand’s current coverage elections will end on August 31, 2007 and Streisand will not be eligible to receive insurance or any other form of benefit from the Company after the Effective Date. Provided that Streisand elects to continue medical and dental coverage under COBRA, Streisand’s current coverage elections will be continued and paid for by the Company through a date no later than June 30, 2008 (such date to be determined under Section C below) and may be continued at Streisand’s expense thereafter until the end of Streisand’s eligibility under COBRA.

(2) All other benefits provided by the Company, including 401(k) plan, life insurance, AD & D insurance, LTD insurance and any other benefit offered by the Company, will terminate as of the Effective Date. All unvested options under the Company’s 2007 Equity Incentive Compensation Plan as of the Effective Date shall be terminated, forfeited and/or cancelled, and Streisand shall have no right to compensation, remuneration, distributions or dividends with respect to such unvested options.

2

B. Consulting Agreement.

(1) The Company agrees to engage Streisand to provide consulting services to the Company from September 1, 2007 through December 31, 2007 (the “Consultancy Period”) and to pay him in connection therewith the total sum of an amount equal to four (4) months’ salary (the “Consultancy Payment”) to be paid in equal monthly installments on the last day of each month through the end of the Consultancy Period;

(2) During the Consultancy Period, Streisand agrees to make himself available, upon reasonable notice, to assist the Company with discrete tasks which it may reasonably request on an as-needed basis;

(3) During the Consultancy Period, the Company agrees to permit Streisand to continue the use of his Company e-mail account to receive incoming messages to be forwarded to Streisand’s personal e-mail account;

(4) During the Consultancy Period, the Company agrees to permit Streisand to continue the use of a Company voicemail account at the Denver office with a mutually agreed upon outgoing message;

(5) During the Consultancy Period, the Company agrees to permit Streisand to continue the use of his Company laptop;

(6) Streisand may terminate the Consultancy Period at any time for any reason by providing the Company with two (2) days written notice of his intent to do so; the Company may terminate the Consultancy Period at any time for any reason by providing Streisand with thirty (30) days written notice of its intent to do so; and

(7) Should the Consultancy Period be terminated by Streisand, only any unpaid balance of the Consultancy Payment through the date of the termination shall be paid to Streisand; should the Consultancy Period be terminated by the Company, the unpaid balance of the total Consultancy Payment remaining at the time of termination shall be paid to Streisand; all payments hereunder shall be made as soon as administratively practicable following any such termination.

C. COBRA Payment. The Company agrees to pay the COBRA premium for Streisand through a date no later than June 30, 2008 (the “COBRA Payment”) subject to the following: if Streisand accepts other employment prior to June 30, 2008 which provides medical and dental benefits, then the COBRA Payment will cease as of the date Streisand becomes covered under the new health policy.

D. Nondisparagement. Streisand agrees not to disparage the Company or its officers, directors, shareholders, or employees, and the Company agrees not to disparage Streisand, in any matter likely to be harmful to the other party or their personal or business reputation. The parties

3

further agree that notwithstanding this non-disparagement agreement, each party shall respond accurately and fully to any question, inquiry, or request for information required by legal or administrative process, or, in the case of the Company, to fulfill any standard or legally required reporting or disclosure requirements. In response to any request concerning employment references for Streisand or any written or verified background check regarding Streisand, the Company shall provide the following information if requested: (i) Streisand’s dates of employment; (ii) Streisand’s rate of compensation at Two Hundred and Forty Thousand Dollars and No Cents ($240,000.00) per year; (iii) eligibility for receipt of an annual cash bonus; and (iv) Streisand’s last job title, Vice President-Corporate Development. Streisand authorizes, and the Company designates, Thomas J. Edelman, Scott H. Pearce and David J. Kornder to respond to any request concerning employment references for Streisand or any background check into Streisand’s employment.

E. Public Statements. The Parties agree that the language set forth on Exhibit A will be filed by the Company on a Form 8-K to disclose Streisand’s separation from the Company.

F. Release of All Claims by Streisand. In consideration of the promises and covenants made herein, Streisand, on behalf of Streisand and Streisand’s heirs, executors, administrators, personal representatives and assigns, does hereby RELEASE, ACQUIT AND FOREVER DISCHARGE the Company and its past, present and future affiliates, parents, subsidiaries and successors, and each of their past, present and future officers, directors, shareholders, employees, agents, representatives, attorneys, insurers and their respective successors and assigns (all of whom are hereinafter collectively referred to as “Releasees”) from any and all actions, causes of action, claims, demands, cost and expenses, including attorneys’ fees and liabilities of any kind or and nature whatsoever, in law or equity, whether known or unknown, accrued or to accrue hereafter, which Streisand ever had, now has or may hereafter have against Releasees, as of the date of this Agreement and through the Effective Date, arising out of any act, omission, transaction or occurrence, including, without limitation, those related to Streisand’s employment by the Company or the termination thereof. Without limiting the generality of the foregoing, it is understood and agreed that this Release constitutes a release of any claim or cause of action (i) in tort, including but not limited to claims for slander, libel, negligence, gross negligence, negligent supervision or training, conspiracy, intentional or negligent infliction of emotional distress, mental anguish, invasion of privacy, assault, battery, false imprisonment, tortious interference with contractual relations, wrongful discharge, pain and suffering, breach of covenant of good faith and fair dealing, invasion of privacy and (ii) for breach of any employment or other agreement existing between Streisand and the Company or (iii) otherwise related, in any way, to Streisand’s employment by the Company, including claims under Title VII of the Civil Rights Act of 1964 (and all of its amendments), the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, as amended, the Fair Credit Reporting Act, the Sarbanes-Oxley Act, the Colorado Civil Rights Act, the Colorado Wage Act, any applicable New York law or statute and any other statute or regulation governing the employment relationship or Streisand’s rights, or the Company’s obligations, in connection therewith. This Release also includes a release of any right to bring an administrative claim or charge against the Company regarding any matter relating to the Company, its business operations, or Streisand’s employment to the maximum

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extent permitted by law. Streisand agrees that this legal release is intended to be interpreted in the broadest possible manner in favor of the Company, to include all actual or potential legal claims that Streisand may have against the Company, except as specifically provided otherwise in this Agreement. Streisand covenants never to institute any action or other proceeding based in whole or part upon any right or claim released by this Agreement and acknowledges that if he does so, the Company is entitled to recover from Streisand any attorneys’ fees it expends to defend any such action or proceeding. Streisand hereby warrants that he has not assigned or transferred to any person any portion of any claim that is released, waived and discharged above.

G. Release of Claims by the Company. In consideration of the promises and covenants made herein, the Company, for itself, its affiliates, and any other person or entity that could or might act on behalf of it including, without limitation, its attorneys (all of whom are collectively referred to as “Company Releasers”), does hereby RELEASE, ACQUIT AND FOREVER DISCHARGE Streisand, his heirs, representatives, assigns, attorneys, and any and all other persons or entities that are now or may become liable to any Company Releaser on account of Streisand’s employment with the Company or separation therefrom, all of whom are collectively referred to as “Company Releasees,” of and from any and all actions, causes of action, claims, demands, costs and expenses, including attorneys’ fees, of every kind and nature whatsoever, in law or in equity, whether now known or unknown, that Company Releasers, or any person acting under any of them, may now have, or claim at any future time to have, based in whole or in part upon any act or omission occurring as of the date of this Agreement and through the Effective Date, without regard to present actual knowledge of such acts or omissions; EXCEPT for claims based on any fraudulent actions by Streisand and EXCEPT as specifically provided otherwise in this Agreement. The Company understands and agrees that by signing this Agreement, it is giving up its right to bring any legal claim against Streisand concerning, directly or indirectly, Streisand’s employment relationship with the Company. The Company agrees that this legal release is intended to be interpreted in the broadest possible manner in favor of Streisand, to include all actual or potential legal claims that the Company may have against Streisand, except as specifically provided otherwise in this Agreement.

H. Indemnification of Streisand. Notwithstanding the foregoing, the Company agrees to defend and indemnify Streisand against any legal action, arbitration, proceeding, claim or charge, action and/or proceeding against Streisand, individually and/or with others, to the same extent that Streisand would have been entitled to be defended and/or indemnified had he continued his employment with the Company.

II. CONFIDENTIAL INFORMATION

A. Protection of Trade Secrets and Confidential Information.

(1) Definition of “Confidential Information.” “Confidential Information” means all nonpublic information relating to or arising from the Company’s business, including, without limitation, trade secrets used, developed or acquired by the Company in connection with its business. Without limiting the generality of the foregoing, “Confidential Information” shall

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specifically include all information concerning the manner and details of the Company’s operation, organization and management; financial information and/or documents and nonpublic policies, procedures and other printed, written or electronic material generated or used in connection with the Company’s business; the Company’s business plans and strategies, including but not limited to all information associated with any ethanol project which the Company formed an intention to develop, form or acquire prior to the end of the Consultancy Period. “Confidential Information” does not include information that is in the public domain through no wrongful act on the part of Streisand or known to Streisand prior to employment with the Company.

(2) Streisand’s Use of Confidential Information. Except in connection with and in furtherance of Streisand’s work on the Company’s behalf, Streisand shall not, without the Company’s prior written consent, at any time, directly or indirectly: (i) use any Confidential Information for any purpose; or (ii) disclose or otherwise communicate any Confidential Information to any person or entity; or (iii) participate in any business opportunity that inevitably will result in the disclosure or use of any Confidential Information.

(3) Acknowledgments. Streisand acknowledges that during his employment with the Company, Streisand had access to Confidential Information, all of which was made accessible to Streisand only in strict confidence; that unauthorized disclosure of Confidential Information will damage the Company’s business; that Confidential Information would be susceptible to immediate competitive application by a competitor of the Company’s; that the Company’s business is substantially dependent on access to and the continuing secrecy of Confidential Information; that Confidential Information is novel, unique to the Company and known only to Streisand, the Company and certain key employees and contractors of the Company; that the Company shall at all times retain ownership and control of all Confidential Information; and that the restrictions contained in this agreement are reasonable and necessary for the protection of the Company’s legitimate business interests.

(4) Records Containing Confidential Information and Return of Company Property. “Confidential Records” means all documents and other records, whether in paper, electronic or other form, that contain or reflect any Confidential Information. All Confidential Records prepared by or provided to Streisand are and shall remain Company property. Streisand shall not, at any time, directly or indirectly: (i) copy or use any Confidential Record for any purpose; or (ii) show, give, sell, disclose or otherwise communicate any Confidential Record or the contents of any Confidential Record to any person or entity. Upon the termination of Streisand’s employment with the Company on the Effective Date, Streisand shall immediately deliver to the Company (and shall not keep in Streisand’s possession or deliver to any other person or entity) all Confidential Records and all other Company property in Streisand’s possession or control, including the return of the Company’s cellphone and files in Streisand’s possession; provided, however, that Streisand shall have access to such Confidential Records as necessary to provide consulting services during the Consultancy Period. This Agreement shall not prohibit Streisand from complying with any subpoena or court order, provided that Streisand shall at the earliest practicable date provide a copy of the subpoena or court order to the

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Company’s President, it being the parties’ intention to give the Company a fair opportunity to take appropriate steps to prevent the unnecessary and/or improper use or disclosure of Confidential Information and Confidential Records, as determined by the Company in its sole discretion.

(5) Third-Parties’ Confidential Information. Streisand acknowledges that, during his employment, the Company has received from third parties confidential or proprietary information, and that the Company must maintain the confidentiality of such information and use it only for authorized purposes. Streisand shall not use or disclose any such information without prior written authorization from the Company or the third party to whom the information belongs.

III. ADDITIONAL PROVISIONS

A. Streisand’s Voluntary Execution of Agreement. Except as expressly provided herein, Streisand acknowledges that he will not receive, nor is he entitled to, any payment or consideration. The mutual covenants, promises and payments (including the COBRA Payment and the Consultancy Payment) set forth herein are full and fair consideration for this Agreement including the release provisions hereof. Streisand acknowledges that in executing this Agreement, he has reviewed and understands its terms and has had an opportunity to seek advice of counsel of his own choosing, was fully advised of his rights under law, and has acted knowingly and voluntarily in the execution of this Agreement. By entering into this Agreement neither the Company nor Streisand admit any liability to the other.

B. Cumulative Rights. The Company’s rights and remedies under this Agreement hereof are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity.

C. Entire Agreement. This Agreement constitutes the complete, entire, final and exclusive agreement between Streisand and the Company and supersedes any prior agreement, whether written or oral, with regard to the subject matter hereof. This Agreement has been entered into by the Parties without reliance on any promise or representation, written or oral, other than those expressly contained herein.

D. Modification of Agreement Only in Writing. This Agreement may not be modified, except in writing, signed by Streisand and a duly authorized officer of the Company.

E. Governing Law and Jurisdiction. This Agreement has been drafted in accordance with and shall be construed and enforced in accordance with and governed by the laws of the State of Colorado.

F. Severability. The Parties intend that this Agreement be enforced according to its terms. If any one or more provision of this Agreement is determined to be invalid, illegal, or unenforceable, in whole or in part, this determination will not affect or impair any other provision of

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this Agreement. Any provision found to be invalid, illegal, or unenforceable shall be deemed, without further action on the part of the parties, to be modified, amended, or limited to the minimum extent necessary to render the provision valid and enforceable.

G. Waiver of Terms and Conditions. Except as specifically set forth in this Agreement, no waiver of any term or provision of this Agreement will be valid unless such waiver is in writing, signed by the party against whom enforcement of the waiver is sought. The waiver of any term or provision of this Agreement shall not apply to any subsequent breach of this Agreement.

H. Attorneys’ Fees. In the event of any proceeding, claim, or action being filed or instituted between the parties with respect to this Agreement, the prevailing party will be entitled to receive from the other party all costs, damages and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in connection with that action or proceeding, whether or not the controversy is reduced to judgment or award. The prevailing party will be that party who may be fairly said by the trier of fact to have prevailed on the major disputed issues.

I. No Other Representation. The Parties acknowledge that no promise or representations have been made to induce them to sign this Agreement other than as expressly set forth herein and that each has signed this Agreement as a free and voluntary act.

J. Captions. The captions in this Agreement are for convenience and reference only, and shall not define or limit any of the terms or provisions of this Agreement.

[SIGNATURES FOLLOW]

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SIGNATURE PAGE

IN WITNESS WHEREOF, the Parties execute this Separation, Consulting and Mutual Release Agreement.

BIOFUEL ENERGY CORP.
By:	/s/ David J. Kornder
	Name: David J. Kornder Title: Executive Vice President & Chief Financial Officer Date: August 9, 2007

/s/ Eric D. Streisand

Eric D. Streisand
Date: August 9, 2007

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EXHIBIT A

The following (or substantially similar) text shall be included in a Form 8-K to be filed with the SEC by the Company:

“The Company announced that effective August 31, 2007, Eric D. Streisand, the Company’s Vice President – Corporate Development, would be leaving the Company to pursue other business opportunities. The Company and Mr. Streisand have entered into a consulting agreement to facilitate an orderly transition of his duties.”

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott H. Pearce, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of BioFuel Energy Corp.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2007

/s/ Scott H. Pearce                                                 
Scott H. Pearce
President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David J. Kornder, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of BioFuel Energy Corp.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2007

/s/ David J. Kornder                                                
David J. Kornder
Executive Vice President and
Chief Financial Officer 

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BioFuel Energy, Corp. (the ‘‘Corporation’’) on Form 10-Q for the quarterly period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Scott H. Pearce, President and Chief Executive Officer of the Corporation, certify to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Scott H. Pearce                                                    

Scott H. Pearce
President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to BioFuel Energy Corp. and will be retained by BioFuel Energy Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of BioFuel Energy, Corp. (the ‘‘Corporation’’) on Form 10-Q for the quarterly period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, David J. Kornder, Executive Vice President and Chief Financial Officer of the Corporation, certify to my knowledge, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:

	1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ David J. Kornder                                                
David J. Kornder
Executive Vice President and
Chief Financial Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to BioFuel Energy Corp. and will be retained by BioFuel Energy Corp. and furnished to the Securities and Exchange Commission or its staff upon request.